VSDM Vanguard Short Duration Tax-Exempt Bond ETF

Management style

Active

Asset class

Short-Term Bond

Category

Muni National Short

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 06/12/2025

Market price (MP)

$75.33

as of 06/13/2025

NAV price

$75.31

as of 06/13/2025

Overview

Key facts

IOV ticker symbol

VSDM.IV

CUSIP

922907696

Management style

Active

Asset class

Short-Term Bond

Category

Muni National Short

Inception date

11/19/2024

Fund Number

V039

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 06/13/2025

Market price

$75.33

as of 06/13/2025

Market price change

decreased-$0.02 (-0.03%)

as of 06/13/2025

Expense Ratio

0.12%

as of 11/19/2024

NAV Price

$75.31

as of 06/13/2025

NAV Change

decreased-$0.02 (-0.03%)

as of 06/13/2025

Performance

YTD returns (MP)

1.97%

as of 06/13/2025

YTD returns (NAV)

1.98%

as of 06/13/2025

Product summary

The fund's investment objective seeks to provide current income that is exempt from federal personal income taxes, with limited price volatility. 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 between 2 and 7 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 05/31/2025

Recent returns

Average annual

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

Since inception

11/19/2024

VSDM (Market price)0.67%0.15%1.62%1.72%
VSDM (NAV)
0.65%0.27%1.60%1.66%

Benchmark

0.60%0.13%1.22%4.02%2.39%1.14%1.60%
Market Price/Nav Toggle

as of 03/31/2025

Year1st Qtr2nd Qtr3rd Qtr4th QtrYear-end

Benchmark

20251.24%
20240.10% 2.09%

as of 12/31/2024

Year

Capital return by NAV

Income return by NAV

Total return by NAV

Total return by Market Price

Benchmark

2024-0.29% 0.35%0.06%

as of 05/31/2025

1-yr3-yr5-yr10-yr

Since inception

11/19/2024

VSDM (Market price)1.72%
VSDM (NAV)1.66%

Benchmark

4.02%7.34%5.83%17.24%

Expense ratio

VSDM

0.12%

Average expense ratio of similar funds3

0.56%

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 Jun 14 00:00:06GMT+0 2025

Market price change

decreased-$0.02 (-0.03%)

Open

$75.40

High

$75.40

Low

$75.32

Bid/Ask spread

-$73.81 (-∞%)

Volume

18,697

Size

1 X 0

Tick

DOWN

Quotes delayed at least 15 minutes. Source: FactSet.

Closing price

Closing price as of 06/13/2025

Market price change

decreased-$0.02 (-0.03%)

NAV

$75.31

NAV change

decreased-$0.02 (-0.03%)

30-day Median Bid/Ask spread

0.07%

52-week High

$75.57

as of 02/28/2025

52-week Low

$73.97

as of 04/09/2025

52-week Difference

$1.60 (2.16%)

Premium/Discount

$0.02

25-day Avg Volume

33,523.68

50-day Avg Volume

33,911.44

30 day SEC yield

3.42%

 

A SEC yield footnote code

 

as of 06/12/2025

Historical prices
Chart/Table Toggle
NameDateNAV
VSDM 06/13/2025
$75.31

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

FundamentalVSDM
Benchmark
Number of bonds 835 22246
Yield to maturity 3.9% 3.1%
Average coupon 4.3% 4.7%
Average stated maturity 4.3 years 3.3 years
Average duration 2.7 years
Alternative minimum tax (AMT)
Short-term reserves 0.9%
Fund total net assets as of 05/31/2025 $112.8 M
Stylebox

Fixed Income

Quality

Trsy/
Agcy
Inv Grd
Corp
Below
Inv
Grade

Duration

Short

Medium

Long

Weighted exposures

as of 05/31/2025

7.50%AAA
Credit rating4% of fundAAA 7.50%AA 39.50%A 33.10%BBB 13.00%BB 1.40%B or Lower 0.50%NR 5.00%

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 06/13/2025

Ticker Holdings CUSIP SEDOL Coupon Rate Maturity Date Effective Date Face Amount % of fund* Market value*
BAYTRN BAY AREA TOLL-VAR A 072024ST0 2.930 % 04/01/2036 05/24/2001 $800,000 0.65 % $794,080
TGYPWR TENNERGY CORP -A 880397CJ1 5.000 % 10/01/2054 07/03/2024 $655,000 0.56 % $684,987
NWCSCD NEW CANEY ISD-REMK 643154LB1 4.000 % 02/15/2050 07/01/2018 $650,000 0.54 % $661,561
CENPWR CENTRL PLAINS-A 154871CW5 5.000 % 05/01/2054 09/29/2023 $635,000 0.54 % $659,858
DISMFH DC HSG FIN AGY -REV 25477PPY5 5.000 % 06/01/2027 11/30/2023 $585,000 0.48 % $588,212
KYSPWR KY PUB ENERGY AUTH-A 74440DCZ5 4.000 % 12/01/2050 03/04/2020 $580,000 0.47 % $581,436
SEEPWR S E ENERGY AUTH-A-1 84136FBL0 5.500 % 01/01/2053 11/01/2022 $520,000 0.45 % $552,467
SANUTL SAN ANTONIO -REV 79625GHJ5 3.650 % 02/01/2053 06/01/2023 $535,000 0.43 % $533,514
ORSFAC OR FACS AUTH-A-REF 68608JVE8 5.000 % 06/01/2028 11/10/2016 $525,000 0.43 % $533,123
CCEDEV CA CMNTY CHOICE-D 13013JCS3 5.500 % 05/01/2054 06/15/2023 $500,000 0.43 % $525,467
Name

of issuer

Title of issuer Coupon/Yield Category of investment Cusip/Other id Effective maturity date Final maturity date Principal amount Amortized cost
2.930 % 072024ST0
5.000 % 880397CJ1
4.000 % 643154LB1
5.000 % 154871CW5
5.000 % 25477PPY5
4.000 % 74440DCZ5
5.500 % 84136FBL0
3.650 % 79625GHJ5
5.000 % 68608JVE8
5.500 % 13013JCS3
Ticker Description Shares
BAYTRN
TGYPWR
NWCSCD
CENPWR
DISMFH
KYSPWR
SEEPWR
SANUTL
ORSFAC
CCEDEV
Ticker Holdings CUSIP SEDOL Coupon Rate Maturity Date Effective Date Face Amount % of fund* Market value*
BAYTRN BAY AREA TOLL-VAR A 072024ST0 2.930 % 04/01/2036 05/24/2001 $800,000 0.65 % $794,080
TGYPWR TENNERGY CORP -A 880397CJ1 5.000 % 10/01/2054 07/03/2024 $655,000 0.56 % $684,987
NWCSCD NEW CANEY ISD-REMK 643154LB1 4.000 % 02/15/2050 07/01/2018 $650,000 0.54 % $661,561
CENPWR CENTRL PLAINS-A 154871CW5 5.000 % 05/01/2054 09/29/2023 $635,000 0.54 % $659,858
DISMFH DC HSG FIN AGY -REV 25477PPY5 5.000 % 06/01/2027 11/30/2023 $585,000 0.48 % $588,212
KYSPWR KY PUB ENERGY AUTH-A 74440DCZ5 4.000 % 12/01/2050 03/04/2020 $580,000 0.47 % $581,436
SEEPWR S E ENERGY AUTH-A-1 84136FBL0 5.500 % 01/01/2053 11/01/2022 $520,000 0.45 % $552,467
SANUTL SAN ANTONIO -REV 79625GHJ5 3.650 % 02/01/2053 06/01/2023 $535,000 0.43 % $533,514
ORSFAC OR FACS AUTH-A-REF 68608JVE8 5.000 % 06/01/2028 11/10/2016 $525,000 0.43 % $533,123
CCEDEV CA CMNTY CHOICE-D 13013JCS3 5.500 % 05/01/2054 06/15/2023 $500,000 0.43 % $525,467
Name

of issuer

Title of issuer Coupon/Yield Category of investment Cusip/Other id Effective maturity date Final maturity date Principal amount Amortized cost
2.930 % 072024ST0
5.000 % 880397CJ1
4.000 % 643154LB1
5.000 % 154871CW5
5.000 % 25477PPY5
4.000 % 74440DCZ5
5.500 % 84136FBL0
3.650 % 79625GHJ5
5.000 % 68608JVE8
5.500 % 13013JCS3
Ticker Description Shares
BAYTRN
TGYPWR
NWCSCD
CENPWR
DISMFH
KYSPWR
SEEPWR
SANUTL
ORSFAC
CCEDEV
Ticker Holdings CUSIP SEDOL Coupon Rate Maturity Date Effective Date Face Amount % of fund* Market value*
BAYTRN BAY AREA TOLL-VAR A 072024ST0 2.930 % 04/01/2036 05/24/2001 $800,000 0.65 % $794,080
TGYPWR TENNERGY CORP -A 880397CJ1 5.000 % 10/01/2054 07/03/2024 $655,000 0.56 % $684,987
NWCSCD NEW CANEY ISD-REMK 643154LB1 4.000 % 02/15/2050 07/01/2018 $650,000 0.54 % $661,561
CENPWR CENTRL PLAINS-A 154871CW5 5.000 % 05/01/2054 09/29/2023 $635,000 0.54 % $659,858
DISMFH DC HSG FIN AGY -REV 25477PPY5 5.000 % 06/01/2027 11/30/2023 $585,000 0.48 % $588,212
KYSPWR KY PUB ENERGY AUTH-A 74440DCZ5 4.000 % 12/01/2050 03/04/2020 $580,000 0.47 % $581,436
SEEPWR S E ENERGY AUTH-A-1 84136FBL0 5.500 % 01/01/2053 11/01/2022 $520,000 0.45 % $552,467
SANUTL SAN ANTONIO -REV 79625GHJ5 3.650 % 02/01/2053 06/01/2023 $535,000 0.43 % $533,514
ORSFAC OR FACS AUTH-A-REF 68608JVE8 5.000 % 06/01/2028 11/10/2016 $525,000 0.43 % $533,123
CCEDEV CA CMNTY CHOICE-D 13013JCS3 5.500 % 05/01/2054 06/15/2023 $500,000 0.43 % $525,467
Name

of issuer

Title of issuer Coupon/Yield Category of investment Cusip/Other id Effective maturity date Final maturity date Principal amount Amortized cost
2.930 % 072024ST0
5.000 % 880397CJ1
4.000 % 643154LB1
5.000 % 154871CW5
5.000 % 25477PPY5
4.000 % 74440DCZ5
5.500 % 84136FBL0
3.650 % 79625GHJ5
5.000 % 68608JVE8
5.500 % 13013JCS3
Ticker Description Shares
BAYTRN
TGYPWR
NWCSCD
CENPWR
DISMFH
KYSPWR
SEEPWR
SANUTL
ORSFAC
CCEDEV
Ticker Holdings CUSIP SEDOL Coupon Rate Maturity Date Effective Date Face Amount % of fund* Market value*
BAYTRN BAY AREA TOLL-VAR A 072024ST0 2.930 % 04/01/2036 05/24/2001 $800,000 0.65 % $794,080
TGYPWR TENNERGY CORP -A 880397CJ1 5.000 % 10/01/2054 07/03/2024 $655,000 0.56 % $684,987
NWCSCD NEW CANEY ISD-REMK 643154LB1 4.000 % 02/15/2050 07/01/2018 $650,000 0.54 % $661,561
CENPWR CENTRL PLAINS-A 154871CW5 5.000 % 05/01/2054 09/29/2023 $635,000 0.54 % $659,858
DISMFH DC HSG FIN AGY -REV 25477PPY5 5.000 % 06/01/2027 11/30/2023 $585,000 0.48 % $588,212
KYSPWR KY PUB ENERGY AUTH-A 74440DCZ5 4.000 % 12/01/2050 03/04/2020 $580,000 0.47 % $581,436
SEEPWR S E ENERGY AUTH-A-1 84136FBL0 5.500 % 01/01/2053 11/01/2022 $520,000 0.45 % $552,467
SANUTL SAN ANTONIO -REV 79625GHJ5 3.650 % 02/01/2053 06/01/2023 $535,000 0.43 % $533,514
ORSFAC OR FACS AUTH-A-REF 68608JVE8 5.000 % 06/01/2028 11/10/2016 $525,000 0.43 % $533,123
CCEDEV CA CMNTY CHOICE-D 13013JCS3 5.500 % 05/01/2054 06/15/2023 $500,000 0.43 % $525,467
Name

of issuer

Title of issuer Coupon/Yield Category of investment Cusip/Other id Effective maturity date Final maturity date Principal amount Amortized cost
2.930 % 072024ST0
5.000 % 880397CJ1
4.000 % 643154LB1
5.000 % 154871CW5
5.000 % 25477PPY5
4.000 % 74440DCZ5
5.500 % 84136FBL0
3.650 % 79625GHJ5
5.000 % 68608JVE8
5.500 % 13013JCS3
Ticker Description Shares
BAYTRN
TGYPWR
NWCSCD
CENPWR
DISMFH
KYSPWR
SEEPWR
SANUTL
ORSFAC
CCEDEV
Ticker Holdings CUSIP SEDOL Coupon Rate Maturity Date Effective Date Face Amount % of fund* Market value*
BAYTRN BAY AREA TOLL-VAR A 072024ST0 2.930 % 04/01/2036 05/24/2001 $800,000 0.65 % $794,080
TGYPWR TENNERGY CORP -A 880397CJ1 5.000 % 10/01/2054 07/03/2024 $655,000 0.56 % $684,987
NWCSCD NEW CANEY ISD-REMK 643154LB1 4.000 % 02/15/2050 07/01/2018 $650,000 0.54 % $661,561
CENPWR CENTRL PLAINS-A 154871CW5 5.000 % 05/01/2054 09/29/2023 $635,000 0.54 % $659,858
DISMFH DC HSG FIN AGY -REV 25477PPY5 5.000 % 06/01/2027 11/30/2023 $585,000 0.48 % $588,212
KYSPWR KY PUB ENERGY AUTH-A 74440DCZ5 4.000 % 12/01/2050 03/04/2020 $580,000 0.47 % $581,436
SEEPWR S E ENERGY AUTH-A-1 84136FBL0 5.500 % 01/01/2053 11/01/2022 $520,000 0.45 % $552,467
SANUTL SAN ANTONIO -REV 79625GHJ5 3.650 % 02/01/2053 06/01/2023 $535,000 0.43 % $533,514
ORSFAC OR FACS AUTH-A-REF 68608JVE8 5.000 % 06/01/2028 11/10/2016 $525,000 0.43 % $533,123
CCEDEV CA CMNTY CHOICE-D 13013JCS3 5.500 % 05/01/2054 06/15/2023 $500,000 0.43 % $525,467
Name

of issuer

Title of issuer Coupon/Yield Category of investment Cusip/Other id Effective maturity date Final maturity date Principal amount Amortized cost
2.930 % 072024ST0
5.000 % 880397CJ1
4.000 % 643154LB1
5.000 % 154871CW5
5.000 % 25477PPY5
4.000 % 74440DCZ5
5.500 % 84136FBL0
3.650 % 79625GHJ5
5.000 % 68608JVE8
5.500 % 13013JCS3
Ticker Description Shares
BAYTRN
TGYPWR
NWCSCD
CENPWR
DISMFH
KYSPWR
SEEPWR
SANUTL
ORSFAC
CCEDEV

Distributions

Realized/Unrealized gains

as of 05/31/2025

Realized gain

$0.00

% of NAV

-0.00%

Unrealized gains of NAV

$0.02

% of NAV

increased0.02%

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$0.19630006/04/202506/02/202506/02/2025
Dividend$0.19330005/05/202505/01/202505/01/20253.15%
Dividend$0.15800004/03/202504/01/202504/01/20252.64%
Dividend$0.20320003/05/202503/03/202503/03/20253.52%
Dividend$0.19580002/05/202502/03/202502/03/20252.33%
Dividend$0.26360012/27/202412/24/202412/24/2024

Fund management

Vanguard Short Duration Tax-Exempt Bond ETF seeks current income exempt from federal tax by investing in municipal bonds with a dollar-weighted average nominal maturity between 2 and 7 years. The fund emphasizes high credit quality, with a majority of the fund’s holdings rated investment-grade. 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 Short Duration Tax-Exempt Bond ETF since 2024.
Adam M. Ferguson
CFA, Portfolio manager.
Advised the fund since 2024. Worked in investment management since 2008. B.S., Wilmington University. M.B.A., Drexel University.
James M. D'Arcy
CFA, Portfolio manager.
Advised the fund since 2024. Worked in investment management since 1996. B.A., University of Colorado.

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 with maturities between one month and 7 years.
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 a fund's investment in Vanguard Market Liquidity Fund or Vanguard Municipal Low Duration Fund, each of which invests in high-quality money market instruments and may serve as a cash management vehicle for the Vanguard funds, trusts, and accounts. 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 obtained from Moody's and S&P, and the higher rating for each issue is used.

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.