VCRM Vanguard Core Tax-Exempt Bond ETF

Management style

Active

Asset class

Intermediate-Term Bond

Category

Muni National Interm

Risk / reward scale

Start of Risk Scale. On a scale of 1 to 5, 1 is less risk less reward, 5 is more risk more reward
The fund risk level is a 2

Less

More

End of Risk Scale.

Expense ratio

0.12%

as of 11/19/2024

as of 07/10/2025

Market price (MP)

$73.20

as of 07/11/2025

NAV price

$73.23

as of 07/11/2025

Overview

Key facts

IOV ticker symbol

VCRM.IV

CUSIP

922907712

Management style

Active

Asset class

Intermediate-Term Bond

Category

Muni National Interm

Inception date

11/19/2024

Fund Number

V040

Ratings

Risk / reward scale

Start of Risk Scale. On a scale of 1 to 5, 1 is less risk less reward, 5 is more risk more reward
The fund risk level is a 2

Less

More

End of Risk Scale.
Price

Minimum Investment

$1.00

as of 07/11/2025

Market price

$73.20

as of 07/11/2025

Market price change

decreased-$0.17 (-0.23%)

as of 07/11/2025

Expense Ratio

0.12%

as of 11/19/2024

NAV Price

$73.23

as of 07/11/2025

NAV Change

decreased-$0.10 (-0.14%)

as of 07/11/2025

Performance

YTD returns (MP)

-0.22%

as of 07/11/2025

YTD returns (NAV)

-0.03%

as of 07/11/2025

Product summary

The fund's investment objective seeks to provide total return through capital appreciation and current income that is exempt from federal personal income taxes. Under normal circumstances, the fund will invest at least 80% of its assets (plus any borrowings for investment purposes) in municipal bonds denominated in U.S. dollars from a variety of issuers that are primarily U.S. states or local governments or agencies whose interest is exempt from federal income taxes and the federal alternative minimum tax. The fund is expected to maintain, under normal market conditions, a dollar-weighted average maturity of between 8 and 20 years. The majority of the fund’s exposure to fixed income securities is expected to have credit quality that is investment-grade. The fund is subject to certain risks including interest rate risk, which is the chance that the price of the bonds in the portfolio will decline because of rising interest rates. Investors who are looking for a fund that may provide federal tax-exempt income and can tolerate moderate price and income fluctuations may wish to consider this fund.

Fund management

Vanguard Fixed Income Group

Performance & fees

Total returns
Month-end/Quarterly Pre-Tax Toggle

as of 06/30/2025

Recent returns

Average annual

Month-end3-Month totalYTD1-yr3-yr5-yr10-yr

Since inception

11/19/2024

VCRM (Market price)0.83%-0.07%-0.03%-0.19%
VCRM (NAV)
0.82%0.03%0.08%-0.23%

Benchmark

0.73%-0.14%-0.66%0.99%2.56%0.59%2.22%
Market Price/Nav Toggle

as of 06/30/2025

Year1st Qtr2nd Qtr3rd Qtr4th QtrYear-end

Benchmark

20250.04%-0.07%
2024-0.16% 1.63%

as of 12/31/2024

Year

Capital return by NAV

Income return by NAV

Total return by NAV

Total return by Market Price

Benchmark

2024-0.71% 0.40%-0.30%

as of 06/30/2025

1-yr3-yr5-yr10-yr

Since inception

11/19/2024

VCRM (Market price)-0.19%
VCRM (NAV)-0.23%

Benchmark

0.99%7.88%3.00%24.52%

Expense ratio

VCRM

0.12%

Average expense ratio of similar funds3

0.67%

Historical volatility measures

This fund does not have long enough history to provide historical volatility measures data.

The performance data shown represent past performance, which is not a guarantee of future results. Investment returns and principal value will fluctuate so that investors' shares, when sold, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data cited. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index.

Price

Current market price

Current price as of Sat Jul 12 00:00:06GMT+0 2025

Market price change

decreased-$0.17 (-0.23%)

Open

$73.36

High

$73.36

Low

$73.20

Bid/Ask spread

$91.55 (100.00%)

Volume

114,097

Size

0 X 1

Tick

DOWN

Quotes delayed at least 15 minutes. Source: FactSet.

Closing price

Closing price as of 07/11/2025

Market price change

decreased-$0.17 (-0.23%)

NAV

$73.23

NAV change

decreased-$0.10 (-0.14%)

30-day Median Bid/Ask spread

0.04%

52-week High

$76.05

as of 12/06/2024

52-week Low

$71.27

as of 04/09/2025

52-week Difference

$4.78 (6.71%)

Premium/Discount

-$0.03

25-day Avg Volume

69,766.08

50-day Avg Volume

71,392.58

30 day SEC yield

4.05%

 

A SEC yield footnote code

 

as of 07/10/2025

Historical prices
Chart/Table Toggle
NameDateNAV
VCRM 07/11/2025
$73.23

This chart can’t be displayed on mobile devices. For the best viewing experience, visit this page from your desktop or laptop.

Portfolio composition

Characteristics

as of 05/31/2025

FundamentalVCRM
Benchmark
Number of bonds 1068 18113
Yield to maturity 4.5% 4.0%
Average coupon 4.2% 4.5%
Average stated maturity 14.4 years 13.6 years
Average duration 7.3 years
Alternative minimum tax (AMT)
Short-term reserves 2.7%
Fund total net assets as of 05/31/2025 $272.1 M
Stylebox

Fixed Income

Quality

Trsy/
Agcy
Inv Grd
Corp
Below
Inv
Grade

Duration

Short

Medium

Long

Weighted exposures

as of 05/31/2025

11.20%AAA
Credit rating4% of fundAAA 11.20%AA 40.40%A 27.90%BBB 11.50%BB 2.00%B or Lower 0.30%NR 6.70%

Weighted equity exposures exclude any temporary cash investments and equity index futures. Some short-term fixed income securities are classified as cash and are excluded from the weighted bond exposures.

Holding details

as of 07/11/2025

Ticker Holdings CUSIP SEDOL Coupon Rate Maturity Date Effective Date Face Amount % of fund* Market value*
GRA GRAND RAPIDS 386226P24 5.000 % 04/01/2050 05/21/2025 $2,000,000 0.66 % $2,037,376
MASDEV MA DEV FIN AGY-B 57585BKC1 5.000 % 08/15/2055 05/06/2025 $1,875,000 0.65 % $2,012,541
NORHGR NTHRN MICHIGAN UNIV-A 665398PS6 5.500 % 06/01/2050 07/09/2025 $1,645,000 0.55 % $1,705,825
UNNHGR N TEXAS UNIV-A-REF 914729XH6 5.000 % 04/15/2032 05/14/2025 $1,500,000 0.54 % $1,680,387
BBEUTL BLACK BELT ENERGY GAS 09182RAR2 4.000 % 12/01/2049 05/16/2019 $1,675,000 0.54 % $1,676,573
LOSUTL LOS ANGELES DEPT WTR 5444954G6 5.000 % 07/01/2028 04/19/2018 $1,560,000 0.53 % $1,633,544
NRTWTR N TEXAS MUNI WTR DT 662903H89 5.000 % 09/01/2035 06/15/2025 $1,425,000 0.52 % $1,606,937
LASFAC OFFICE FACS CORP-REV 546405GG0 5.250 % 07/01/2050 07/15/2025 $1,500,000 0.50 % $1,534,456
LBHSCD LIBERTY HILL INDPT SD 530574TZ5 5.000 % 02/01/2058 05/15/2025 $1,500,000 0.49 % $1,517,643
SCSHSG SC HSG FIN & DEV-B 83712D8T6 5.000 % 01/01/2055 06/12/2025 $1,500,000 0.47 % $1,468,475
Name

of issuer

Title of issuer Coupon/Yield Category of investment Cusip/Other id Effective maturity date Final maturity date Principal amount Amortized cost
5.000 % 386226P24
5.000 % 57585BKC1
5.500 % 665398PS6
5.000 % 914729XH6
4.000 % 09182RAR2
5.000 % 5444954G6
5.000 % 662903H89
5.250 % 546405GG0
5.000 % 530574TZ5
5.000 % 83712D8T6
Ticker Description Shares
GRA
MASDEV
NORHGR
UNNHGR
BBEUTL
LOSUTL
NRTWTR
LASFAC
LBHSCD
SCSHSG
Ticker Holdings CUSIP SEDOL Coupon Rate Maturity Date Effective Date Face Amount % of fund* Market value*
GRA GRAND RAPIDS 386226P24 5.000 % 04/01/2050 05/21/2025 $2,000,000 0.66 % $2,037,376
MASDEV MA DEV FIN AGY-B 57585BKC1 5.000 % 08/15/2055 05/06/2025 $1,875,000 0.65 % $2,012,541
NORHGR NTHRN MICHIGAN UNIV-A 665398PS6 5.500 % 06/01/2050 07/09/2025 $1,645,000 0.55 % $1,705,825
UNNHGR N TEXAS UNIV-A-REF 914729XH6 5.000 % 04/15/2032 05/14/2025 $1,500,000 0.54 % $1,680,387
BBEUTL BLACK BELT ENERGY GAS 09182RAR2 4.000 % 12/01/2049 05/16/2019 $1,675,000 0.54 % $1,676,573
LOSUTL LOS ANGELES DEPT WTR 5444954G6 5.000 % 07/01/2028 04/19/2018 $1,560,000 0.53 % $1,633,544
NRTWTR N TEXAS MUNI WTR DT 662903H89 5.000 % 09/01/2035 06/15/2025 $1,425,000 0.52 % $1,606,937
LASFAC OFFICE FACS CORP-REV 546405GG0 5.250 % 07/01/2050 07/15/2025 $1,500,000 0.50 % $1,534,456
LBHSCD LIBERTY HILL INDPT SD 530574TZ5 5.000 % 02/01/2058 05/15/2025 $1,500,000 0.49 % $1,517,643
SCSHSG SC HSG FIN & DEV-B 83712D8T6 5.000 % 01/01/2055 06/12/2025 $1,500,000 0.47 % $1,468,475
Name

of issuer

Title of issuer Coupon/Yield Category of investment Cusip/Other id Effective maturity date Final maturity date Principal amount Amortized cost
5.000 % 386226P24
5.000 % 57585BKC1
5.500 % 665398PS6
5.000 % 914729XH6
4.000 % 09182RAR2
5.000 % 5444954G6
5.000 % 662903H89
5.250 % 546405GG0
5.000 % 530574TZ5
5.000 % 83712D8T6
Ticker Description Shares
GRA
MASDEV
NORHGR
UNNHGR
BBEUTL
LOSUTL
NRTWTR
LASFAC
LBHSCD
SCSHSG
Ticker Holdings CUSIP SEDOL Coupon Rate Maturity Date Effective Date Face Amount % of fund* Market value*
GRA GRAND RAPIDS 386226P24 5.000 % 04/01/2050 05/21/2025 $2,000,000 0.66 % $2,037,376
MASDEV MA DEV FIN AGY-B 57585BKC1 5.000 % 08/15/2055 05/06/2025 $1,875,000 0.65 % $2,012,541
NORHGR NTHRN MICHIGAN UNIV-A 665398PS6 5.500 % 06/01/2050 07/09/2025 $1,645,000 0.55 % $1,705,825
UNNHGR N TEXAS UNIV-A-REF 914729XH6 5.000 % 04/15/2032 05/14/2025 $1,500,000 0.54 % $1,680,387
BBEUTL BLACK BELT ENERGY GAS 09182RAR2 4.000 % 12/01/2049 05/16/2019 $1,675,000 0.54 % $1,676,573
LOSUTL LOS ANGELES DEPT WTR 5444954G6 5.000 % 07/01/2028 04/19/2018 $1,560,000 0.53 % $1,633,544
NRTWTR N TEXAS MUNI WTR DT 662903H89 5.000 % 09/01/2035 06/15/2025 $1,425,000 0.52 % $1,606,937
LASFAC OFFICE FACS CORP-REV 546405GG0 5.250 % 07/01/2050 07/15/2025 $1,500,000 0.50 % $1,534,456
LBHSCD LIBERTY HILL INDPT SD 530574TZ5 5.000 % 02/01/2058 05/15/2025 $1,500,000 0.49 % $1,517,643
SCSHSG SC HSG FIN & DEV-B 83712D8T6 5.000 % 01/01/2055 06/12/2025 $1,500,000 0.47 % $1,468,475
Name

of issuer

Title of issuer Coupon/Yield Category of investment Cusip/Other id Effective maturity date Final maturity date Principal amount Amortized cost
5.000 % 386226P24
5.000 % 57585BKC1
5.500 % 665398PS6
5.000 % 914729XH6
4.000 % 09182RAR2
5.000 % 5444954G6
5.000 % 662903H89
5.250 % 546405GG0
5.000 % 530574TZ5
5.000 % 83712D8T6
Ticker Description Shares
GRA
MASDEV
NORHGR
UNNHGR
BBEUTL
LOSUTL
NRTWTR
LASFAC
LBHSCD
SCSHSG
Ticker Holdings CUSIP SEDOL Coupon Rate Maturity Date Effective Date Face Amount % of fund* Market value*
GRA GRAND RAPIDS 386226P24 5.000 % 04/01/2050 05/21/2025 $2,000,000 0.66 % $2,037,376
MASDEV MA DEV FIN AGY-B 57585BKC1 5.000 % 08/15/2055 05/06/2025 $1,875,000 0.65 % $2,012,541
NORHGR NTHRN MICHIGAN UNIV-A 665398PS6 5.500 % 06/01/2050 07/09/2025 $1,645,000 0.55 % $1,705,825
UNNHGR N TEXAS UNIV-A-REF 914729XH6 5.000 % 04/15/2032 05/14/2025 $1,500,000 0.54 % $1,680,387
BBEUTL BLACK BELT ENERGY GAS 09182RAR2 4.000 % 12/01/2049 05/16/2019 $1,675,000 0.54 % $1,676,573
LOSUTL LOS ANGELES DEPT WTR 5444954G6 5.000 % 07/01/2028 04/19/2018 $1,560,000 0.53 % $1,633,544
NRTWTR N TEXAS MUNI WTR DT 662903H89 5.000 % 09/01/2035 06/15/2025 $1,425,000 0.52 % $1,606,937
LASFAC OFFICE FACS CORP-REV 546405GG0 5.250 % 07/01/2050 07/15/2025 $1,500,000 0.50 % $1,534,456
LBHSCD LIBERTY HILL INDPT SD 530574TZ5 5.000 % 02/01/2058 05/15/2025 $1,500,000 0.49 % $1,517,643
SCSHSG SC HSG FIN & DEV-B 83712D8T6 5.000 % 01/01/2055 06/12/2025 $1,500,000 0.47 % $1,468,475
Name

of issuer

Title of issuer Coupon/Yield Category of investment Cusip/Other id Effective maturity date Final maturity date Principal amount Amortized cost
5.000 % 386226P24
5.000 % 57585BKC1
5.500 % 665398PS6
5.000 % 914729XH6
4.000 % 09182RAR2
5.000 % 5444954G6
5.000 % 662903H89
5.250 % 546405GG0
5.000 % 530574TZ5
5.000 % 83712D8T6
Ticker Description Shares
GRA
MASDEV
NORHGR
UNNHGR
BBEUTL
LOSUTL
NRTWTR
LASFAC
LBHSCD
SCSHSG
Ticker Holdings CUSIP SEDOL Coupon Rate Maturity Date Effective Date Face Amount % of fund* Market value*
GRA GRAND RAPIDS 386226P24 5.000 % 04/01/2050 05/21/2025 $2,000,000 0.66 % $2,037,376
MASDEV MA DEV FIN AGY-B 57585BKC1 5.000 % 08/15/2055 05/06/2025 $1,875,000 0.65 % $2,012,541
NORHGR NTHRN MICHIGAN UNIV-A 665398PS6 5.500 % 06/01/2050 07/09/2025 $1,645,000 0.55 % $1,705,825
UNNHGR N TEXAS UNIV-A-REF 914729XH6 5.000 % 04/15/2032 05/14/2025 $1,500,000 0.54 % $1,680,387
BBEUTL BLACK BELT ENERGY GAS 09182RAR2 4.000 % 12/01/2049 05/16/2019 $1,675,000 0.54 % $1,676,573
LOSUTL LOS ANGELES DEPT WTR 5444954G6 5.000 % 07/01/2028 04/19/2018 $1,560,000 0.53 % $1,633,544
NRTWTR N TEXAS MUNI WTR DT 662903H89 5.000 % 09/01/2035 06/15/2025 $1,425,000 0.52 % $1,606,937
LASFAC OFFICE FACS CORP-REV 546405GG0 5.250 % 07/01/2050 07/15/2025 $1,500,000 0.50 % $1,534,456
LBHSCD LIBERTY HILL INDPT SD 530574TZ5 5.000 % 02/01/2058 05/15/2025 $1,500,000 0.49 % $1,517,643
SCSHSG SC HSG FIN & DEV-B 83712D8T6 5.000 % 01/01/2055 06/12/2025 $1,500,000 0.47 % $1,468,475
Name

of issuer

Title of issuer Coupon/Yield Category of investment Cusip/Other id Effective maturity date Final maturity date Principal amount Amortized cost
5.000 % 386226P24
5.000 % 57585BKC1
5.500 % 665398PS6
5.000 % 914729XH6
4.000 % 09182RAR2
5.000 % 5444954G6
5.000 % 662903H89
5.250 % 546405GG0
5.000 % 530574TZ5
5.000 % 83712D8T6
Ticker Description Shares
GRA
MASDEV
NORHGR
UNNHGR
BBEUTL
LOSUTL
NRTWTR
LASFAC
LBHSCD
SCSHSG

Distributions

Realized/Unrealized gains

as of 05/31/2025

Realized gain

-$0.06

% of NAV

decreased-0.08%

Unrealized gains of NAV

-$1.11

% of NAV

decreased-1.52%

Fiscal year end

10/31/2025

Distribution schedule

Monthly

How your fund can affect your taxes

A fund's capital gains and losses can reveal the tax implications of holding a particular fund in a taxable account. This is true of both realized and unrealized capital gains and losses.

These tax implications don't apply to investors holding a fund in a tax-deferred account, such as an IRA or employer-sponsored retirement plan.

Learn about realized and unrealized gains and losses

How your fund can affect your taxes

A fund's capital gains and losses can reveal the tax implications of holding a particular fund in a taxable account. This is true of both realized and unrealized capital gains and losses.

These tax implications don't apply to investors holding a fund in a tax-deferred account, such as an IRA or employer-sponsored retirement plan.

Learn about realized and unrealized gains and losses
Dividend income and capital gains
Type$/Share Payable date Record date Ex-dividend date Distribution yield
Dividend$0.23350007/03/202507/01/202507/01/2025
Dividend$0.21600006/04/202506/02/202506/02/20253.36%
Dividend$0.17980005/05/202505/01/202505/01/20253.00%
Dividend$0.22270004/03/202504/01/202504/01/20253.76%
Dividend$0.19030003/05/202503/03/202503/03/20253.30%
Dividend$0.18010002/05/202502/03/202502/03/20252.15%
Dividend$0.30040012/27/202412/24/202412/24/2024

Fund management

Vanguard Core Tax-Exempt Bond ETF seeks to provide a moderate and sustainable level of current income that is exempt from federal personal income taxes. The fund has no limitations on the maturity of individual securities but is expected to maintain a dollar-weighted average maturity of between 8 and 20 years. Although the fund may invest in municipal bonds of any quality, the fund’s advisor intends to invest a majority of the fund’s assets in investment-grade municipal bonds. The fund’s advisor, Vanguard Fixed Income Group, seeks to add value by making small adjustments to the fund’s maturity structure based on factors such as interest-rate outlook and slope of the yield curve. Vanguard’s independent research capabilities assist in identifying specific issues and market sectors that represent good relative value.

Vanguard Fixed Income Group
Launched in 1975, The Vanguard Group, Malvern, Pennsylvania, is among the world’s largest equity and fixed income managers. As chief investment officer, Gregory Davis, CFA, oversees Vanguard’s Equity Index, Investment Strategy, Quantitative Equity, and Fixed Income Groups. Sara Devereux, principal and global head of Fixed Income Group, has direct oversight responsibility for all money market, bond, and stable value portfolios managed by the Fixed Income Group. The Fixed Income Group offers actively managed investments in U.S. Treasury, corporate, and tax-exempt securities, as well as passively managed index portfolios. Since 1981, it has refined techniques in total-return management, credit research, and index sampling to seek to deliver consistent performance with transparency and risk control. The group has advised Vanguard Core Tax-Exempt Bond ETF since 2024.
Stephen M. McFee
CFA, Portfolio manager.
Advised the fund since 2024. Worked in investment management since 2007. B.A. and B.S., East Stroudsburg University. M.S., Saint Joseph’s University.
Mathew M. Kiselak
Principal, Portfolio manager.
Advised the fund since 2024. Worked in investment management since 1987. B.S., Pace University.

Performance & fees

1
Effective July 15, 2024, the market price returns are calculated using the official closing price as reported by the ETF’s primary exchange. Prior to July 15, 2024, the market price returns were calculated using the midpoint between the bid and ask prices as of the closing time of the New York Stock Exchange (typically 4 p.m., Eastern time). The returns shown do not represent the returns you would receive if you traded shares at other times.
2
A broad, market value-weighted index designed to measure the performance of the investment-grade tax-exempt U.S. municipal bond market.
3

Most recent data available. © 2023 Morningstar, Inc. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; (3) does not constitute investment advice offered by Morningstar; and (4) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.

Portfolio composition

4

Credit-quality ratings are measured on a scale that generally ranges from AAA (highest) to D (lowest). “NR” is used to classify securities for which a rating is not available. NR securities may include internal money market funds, derivatives, and futures. U.S. Treasury, U.S. agency, and U.S. agency mortgage-backed securities appear under “U.S. Government.” Credit-quality ratings for each issue are either obtained from Bloomberg using ratings derived from Moody’s Investors Service (Moody’s), Fitch Ratings (Fitch), and Standard & Poor’s (S&P), or directly from Moody’s and S&P. Credit-quality ratings obtained from Bloomberg use the following methodologies: When ratings from all three agencies are available, the median rating is used; when ratings from only two of the agencies are available, the lower rating is used; and when one rating is available, that rating is used. Credit-quality ratings obtained directly from Moody’s and S&P use the higher rating for each issue.

5

Alternative minimum tax (AMT) percentage represents the fund's income subject to the AMT as of the date indicated.

© 2023 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.

Vanguard ETFs as a share class: Vanguard ETFs® (exchange-traded funds) are a class of shares listed for trading on an exchange. The shares are available only through a broker, including Vanguard Brokerage Services®.

Vanguard ETF® Shares are not redeemable with the issuing fund other than in very large aggregations worth millions of dollars. Instead, investors must buy and sell Vanguard ETF Shares in the secondary market and hold those shares in a brokerage account. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling.

Total returns: Short-term total return information is provided only as a service. Historical performance—particularly short-term performance—is no guarantee of future returns. Price, yield, and return on an actual investment will fluctuate, and you may have a gain or loss when you sell. Average annual returns include changes in price and reinvestments of dividends and capital gains. Since-inception returns for less than 1 year and year-to-date returns aren't annualized. Index performance is provided as a benchmark but isn't illustrative of any particular investment. You can't invest in an index.

Standardized returns: To see quarterly fee-adjusted returns, refer to the Price & Performance details.

Expense ratios: Expense ratios are displayed on Overview. For investments that are less than 1 fiscal year old, expense ratios are estimated.

Risk: All investing is subject to risk, including the possible loss of the money you invest. Funds that concentrate on a relatively narrow market sector face the risk of higher share-price volatility. Investments in stocks or bonds issued by non-U.S. companies are subject to risks including country/regional risk and currency risk.

Vanguard average ETF expense ratio: 0.05%. Industry average ETF expense ratio: 0.22%. All averages are asset-weighted. Industry average excludes Vanguard. Sources: Vanguard and Morningstar, Inc., as of December 31, 2023.

The fund is designed for investors with a low tolerance for risk, but you could still lose money by investing in it. The fund is subject to the following risks, which could affect the fund's performance, and the level of risk may vary based on market conditions:

  • Interest rate risk: The chance that bond prices overall will decline because of rising interest rates.
  • Income risk: The chance that the fund's income will decline because of falling interest rates.
  • Call risk: The chance that during periods of falling interest rates, issuers of callable bonds may call (redeem) securities with higher coupon rates or interest rates before their maturity dates. The fund would then lose any price appreciation above the bond’s call price and would be forced to reinvest the unanticipated proceeds at lower interest rates, resulting in a decline in the fund's income. Such redemptions and subsequent reinvestments would also increase the fund‘s portfolio turnover rate.
  • Prepayment risk: The chance that during periods of falling interest rates, homeowners will refinance their mortgages before their maturity dates, resulting in prepayment of mortgage-backed securities held by the fund. The fund would then lose any price appreciation above the mortgage’s principal and would be forced to reinvest the unanticipated proceeds at lower interest rates, resulting in a decline in the fund’s income. Such prepayments and subsequent reinvestments would also increase the fund’s portfolio turnover rate.
  • Extension risk: The chance that during periods of rising interest rates, certain debt securities will be paid off substantially more slowly than originally anticipated, and the value of those securities may fall.
  • Credit risk: The chance that a bond issuer will fail to pay interest or principal in a timely manner or that negative perceptions of the issuer’s ability to make such payments will cause the price of that bond to decline. In general, credit risk should be relatively low for the fund because it invests primarily in bonds that are considered to be of high quality.
  • Liquidity risk: The chance that the fund may not be able to sell a security in a timely manner at a desired price.
  • Manager risk: The chance that poor security selection will cause the fund to underperform relevant benchmarks or other funds with a similar investment objective. 
  • Tax risk: The chance that all or a portion of the tax-exempt income from municipal bonds held by the fund will be declared taxable, possibly with retroactive effect, because of unfavorable changes in tax laws, adverse interpretations by the Internal Revenue Service or state or local tax authorities, or noncompliant conduct of a bond issuer.
  • Regional risk: The chance that economic, political, or regulatory occurrences within a certain state may adversely affect the value of securities offered by issuers located within that state. Because the fund may invest a large portion of its assets in securities located in any one state, the fund's performance may be hurt disproportionately by the poor performance of its investments in that area.
  • Nondiversification risk: The chance that the fund’s performance may be hurt disproportionately by the poor performance of bonds issued by just a few issuers or even a single issuer. The fund is considered nondiversified, which means that it may invest a greater percentage of its assets in bonds issued by a small number of issuers as compared with diversified funds.