February 27, 2026
Prospectus
Vanguard Tax-Exempt Bond ETF
Exchange-traded
fund shares that are not individually redeemable and are listed on NYSE
Arca
Vanguard Tax-Exempt
Bond Index Fund ETF Shares (VTEB)
This Prospectus
contains financial data for the Fund through the fiscal year ended October 31,
2025.
The
Securities and Exchange Commission (SEC) has not approved or disapproved these
securities or passed upon the adequacy of this Prospectus. Any representation to
the contrary is a criminal offense.
(Fees paid directly from your investment)
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Transaction
Fee on Purchases and Sales |
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Transaction
Fee on Reinvested Dividends |
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Transaction
Fee on Conversion to ETF Shares |
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*
(Expenses that you pay each year as a percentage of the value of your investment)
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Management
Fees |
% |
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12b-1
Distribution Fee |
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Other
Expenses |
% |
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Total Annual
Fund Operating Expenses |
% |
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1
Year |
3
Years |
5
Years |
10
Years |
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$ |
$ |
$ |
$ |
1
2
Principal
Risks
3
4
5
6
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Total
Return |
Quarter |
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% |
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-
% |
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1
Year |
5
Years |
10
Years |
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Vanguard
Tax-Exempt Bond Index Fund ETF Shares |
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Based
on NAV |
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Return Before
Taxes |
% |
% |
% |
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Return After
Taxes on Distributions |
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Return After
Taxes on Distributions and Sale of
Fund
Shares |
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Based
on Market Price |
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Return Before
Taxes |
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S&P
National AMT-Free Municipal Bond Index
(reflects no
deduction for fees, expenses, or taxes) |
% |
% |
% |
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Bloomberg
Municipal Bond Index
(reflects no
deduction for fees, expenses, or taxes) |
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7
Investment
Advisor
The Vanguard Group, Inc. (Vanguard)
through its wholly owned subsidiary, Vanguard Capital Management (VCM). VCM
exercises portfolio management responsibilities for the Fund.
Portfolio
Manager
Justin A. Schwartz, CFA, Principal
of Vanguard and Portfolio Manager at VCM. He has managed the Fund since
2023.
Purchase
and Sale of Fund Shares
ETF Shares may only be bought and
sold in the secondary market through a brokerage firm. The price you pay or
receive for ETF Shares will be the prevailing market price, which may be more
(premium) or less (discount) than the NAV of the shares. The brokerage firm may
charge you a commission to execute the transaction. Unless imposed by your
brokerage firm, there is no minimum dollar amount you must invest and no minimum
number of shares you must buy. ETF Shares of the Fund cannot be directly
purchased from or redeemed with the Fund, except by certain authorized
broker-dealers. These broker-dealers may purchase and redeem ETF Shares only in
large blocks (creation units), typically in exchange for baskets of securities.
An investor in ETF Shares may incur
costs attributable to the difference between the highest price a buyer is
willing to pay to purchase ETF Shares (bid) and the lowest price a seller is
willing to accept for ETF Shares (ask) when buying or selling shares in the
secondary market (bid-ask spread). Recent information about the Fund and its ETF
Shares, including information on the Fund’s NAV, market price, premiums and
discounts, and bid-ask spreads, is available online at vanguard.com.
Tax
Information
The Fund’s
distributions, including any market discount
recognized by the Fund’s investments, may be taxable as ordinary income or
capital gains. A majority of the income dividends that you receive from the Fund
are expected to be exempt from federal income taxes. However, a portion of the
Fund’s distributions may be subject to federal, state, or local income taxes or to the federal alternative
minimum tax. You should consult your own tax advisor with respect to any
particular U.S. or non-U.S. tax consequences of your investment in the
Fund.
Payments
to Financial Intermediaries
The Fund and its advisor do not pay
financial intermediaries for sales of Fund shares.
8
More on the
Fund
This Prospectus provides
information about Vanguard Tax-Exempt Bond ETF, an exchange-traded class of
shares issued by Vanguard Tax-Exempt Bond Index Fund (the “Fund”). The Fund is a
series of Vanguard Municipal Bond Funds (the “Trust”). Unlike conventional
mutual fund shares, ETF shares of a mutual fund (“ETF Shares”) cannot be
purchased directly from or redeemed directly with the issuing fund by an
individual investor. Instead, only certain authorized broker-dealers
(“Authorized Participants”) can purchase and redeem ETF Shares directly from the
issuing fund at net asset value. Authorized Participants may purchase and redeem
ETF Shares from the issuing fund only in large blocks (creation units), usually
in exchange for baskets of securities. Funds may also issue and redeem creation
units in exchange for solely cash or a combination of cash and securities. These
trades may occur in-kind between Vanguard and the Authorized Participant.
Individual investors can purchase ETF Shares on the secondary market through a
broker. Reading this Prospectus will help you decide whether the Fund’s ETF
Shares are the right investment for you.
As you consider an investment in
the Fund’s ETF Shares, you should take into account your tolerance for
fluctuations in the securities markets. The costs of investing are another
important consideration. As a Fund shareholder, you will pay a proportionate
share of the costs of operating a Fund and any transaction costs incurred when
the Fund buys or sells securities, including costs generated by shareholders of
other share classes to the extent the Fund offers more than one share class.
These costs can erode a substantial portion of the gross income or the capital
appreciation the Fund achieves. Even seemingly small differences can, over time,
have a dramatic effect on the Fund’s performance.
|
Who
Should Invest in Tax-Exempt Funds? |
|
Because
yields on tax-exempt bonds (including some municipal bonds)
are
typically lower than those on taxable bonds, investing in a tax-exempt
fund makes
sense only if you stand to save more in taxes than you would
earn as
additional income while invested in a taxable fund.
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9
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Who
Should Invest in Tax-Exempt Funds? (continued) |
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To
determine whether an investment in a tax-exempt fund makes sense
for you,
you can compute the tax-exempt fund’s Taxable-Equivalent Yield.
This
figure enables you to take taxes into account when comparing your
potential
return on a tax-exempt fund with the potential return on a taxable
fund. To
compute it, divide the tax-exempt fund’s yield by the difference
between
100% and your federal tax bracket. For example, if you are in the
37% tax
bracket and subject to the 3.8% Net Investment Income tax, and
can earn a
tax-exempt yield of 5%, the Taxable-Equivalent Yield would be
8.45% (5%
divided by 59.2% [i.e., 100% – 37% – 3.8%]). |
|
In the
above example, an investment in the tax-exempt fund may make
sense for
you if the tax-exempt fund’s Taxable-Equivalent Yield of 8.45%
were
greater than the yield of a similar, though taxable, investment. Keep
in mind
that the example uses an assumed tax bracket. Make sure to
verify
your actual effective marginal rate before calculating
Taxable-Equivalent
Yields of your own. |
Investment
Objective and More on Principal Investment Strategies
In this section, you will find more
information about the Fund’s investment objective and the principal investment
strategies and policies that the Fund uses in pursuit of its investment
objective. The Trust’s board of trustees (the “Board”) oversees the Fund’s
management. The Board may approve changes to the Fund’s strategies or policies
in the interest of shareholders without shareholder approval unless the strategy
or policy is designated as fundamental.
Investment
Objective
The Fund seeks to track the
performance of a benchmark index that measures the investment-grade segment of
the U.S. municipal bond market.
The Fund’s investment objective is
fundamental and may not be materially changed without shareholder
approval.
Implementation
of Investment Objective
To achieve its investment
objective, the Fund employs an indexing, or passive, investment approach
designed to track the performance of its Target Index, the S&P National
AMT-Free Municipal Bond Index.
10
|
What are
Index Funds? |
|
Index
funds attempt to track—not outperform—the performance of a
specified
market index. An index is a group of securities whose overall
performance
is used as a standard to measure the investment
performance
of a particular market. Some indexes represent entire
markets,
such as the U.S. stock market, while others cover a segment of a
market,
such as short-term bonds. |
|
One cannot
invest directly in an index. Instead, an index fund’s advisor will
typically
seek to hold all, or substantially all, of the securities that make up
the fund’s
target index (often referred to as “replicating” an index or a “full
replication”
approach) or a representative sample of the securities that
make up a
fund’s target index (“sampling” an
index). |
Under normal circumstances, the
Fund invests at least 80% of its net assets, plus the amount of any borrowings
for investment purposes, in the bonds that make up the Target Index. Investments
in derivatives may be counted toward the Fund’s 80% policy to the extent that
they provide investment exposure to the securities included within the policy or
to one or more market risk factors associated with such securities. The Fund may
change this 80% policy only upon 60 days’ notice to shareholders. The Fund also
has a fundamental policy to, under normal circumstances, invest at least 80% of
its net assets, plus the amount of any borrowings for investment purposes, in
securities whose income is exempt from federal income taxes, including the
federal AMT. A fundamental policy may not be materially changed without
shareholder approval.
The Fund may become nondiversified,
as defined under the Investment Company Act of 1940, solely as a result of
tracking an index. This could occur due to events such as an index rebalance or
market movement. A nondiversified fund may invest a greater percentage of its
assets in the securities of particular issuers as compared with diversified
funds. A fund becomes nondiversified if, with respect to 75% of its total
assets, the fund: (1) purchases more than 10% of the outstanding voting
securities of any one issuer, or (2) purchases securities of any issuer when, as
a result, more than 5% of the fund’s total assets are invested in that issuer’s
securities. The Fund may become nondiversified without shareholder approval
pursuant to SEC relief.
Security
Selection
The Fund invests by sampling its
Target Index. The advisor buys and sells securities for the Fund for the purpose
of tracking the Target Index. Using quantitative and qualitative methods, the
Fund’s advisor generally selects a representative sample of securities that
approximates the full Target Index in
11
terms of key risk factors and other
characteristics. These factors include country of origin, duration, cash flow,
credit quality, and callability of the underlying bonds. In addition, the Fund
keeps industry sector and subsector exposure within tight boundaries relative to
its Target Index. Because the Fund does not hold all of the securities included
in the Target Index, some of the securities (and issuers) that are held will
likely be overweighted (or underweighted) compared to the Target Index. The
maximum overweight (or underweight) is constrained at the issuer level with the
goal of producing well-diversified exposure in the portfolio.
The Fund seeks to minimize credit risk by purchasing a wide selection of the municipal securities included in the Target Index, which may make it less likely that the Fund will be hurt significantly by a particular bond issuer’s failure to pay principal or interest.
The Target Index is a market-value-weighted index designed to measure the performance of the investment-grade segment of the U.S. municipal bond market as determined by the Index Provider. The Target Index includes bonds issued by states, local governments, and agencies whose interest is exempt from U.S. federal income taxes and the federal alternative minimum tax.
The Fund seeks to minimize credit risk by purchasing a wide selection of the municipal securities included in the Target Index, which may make it less likely that the Fund will be hurt significantly by a particular bond issuer’s failure to pay principal or interest.
The Target Index is a market-value-weighted index designed to measure the performance of the investment-grade segment of the U.S. municipal bond market as determined by the Index Provider. The Target Index includes bonds issued by states, local governments, and agencies whose interest is exempt from U.S. federal income taxes and the federal alternative minimum tax.
|
What is
the Federal Alternative Minimum Tax? |
|
The
federal alternative minimum tax, or “AMT,” is a tax system designed to
ensure
that every individual pays at least some federal income tax. It
applies to
a limited number of taxpayers who claim significant tax
deductions
and credits. Certain tax-exempt bonds whose proceeds are
used to
fund private, for-profit organizations may be considered
“tax-preference
items” for purposes of the federal AMT. Although income
from bonds
subject to the federal AMT is exempt from federal income tax,
taxpayers
may have to pay the federal AMT on the income from bonds
that are
considered “tax-preference
items.” |
To be eligible for inclusion in the
Target Index, a bond must have a rating of at least investment-grade as
determined by a nationally recognized statistical rating organization. For the
avoidance of doubt, the Index Provider will use the lowest rating in determining
if a bond is investment-grade. Bonds eligible for inclusion in the Target Index
also must meet certain other conditions as determined by the Index Provider,
including, but not limited to, being denominated in the U.S. dollar and having a
minimum term to maturity or call date greater than one calendar month. Bonds
issued by U.S. territories and the commonwealth of Puerto Rico are excluded from
the Target Index, as are certain other bonds as determined by the Index
Provider.
12
The Target Index is reviewed and rebalanced on a monthly basis. Bonds are added to and removed from the Target Index in connection with the monthly rebalancing process. As of October 31, 2025, the number of bonds held by the Fund and the number of bonds included in the Target Index were 9,961 and 15,411, respectively.
The Target Index is owned, calculated, and controlled by the Index Provider in its sole discretion. Neither the advisor nor any of its affiliates has discretion to select Target Index components or change the Target Index’s methodology.
Additional
Information Regarding the Fund’s Investments
The Fund’s investments are
described in more detail below.
|
What are
Bonds? |
|
Generally
speaking, a bond represents
a debt or loan issued by, for
example, a
corporation, a government, or a financial institution. In most
instances,
the issuer agrees to pay the bondholder a fixed, variable, or
floating
rate of interest for a specified length of time, and to repay the bond
in full on
a specified maturity date. The
income earned by
a bond (or its
yield, when
expressed as a percentage of the bond’s price) can vary
based on
its maturity.
Longer-term bonds tend to have higher yields than
shorter-term
bonds, but are more sensitive to fluctuations in value. By
contrast,
shorter-term bonds are less likely to fluctuate in value, but tend
to have
lower yields. A bond’s duration is a
measure of how sensitive its
price is
to changes in interest rates. For example, if a bond has a duration
of 2
years, its price would fall by approximately 2% when interest rates
rise by
1%. On the other hand, the bond’s price would rise by
approximately
2% when interest rates fall by 1%. A bond’s credit
quality
rating is
an assessment of the issuer’s ability to make timely interest
payments
and repay the bond in full on its stated maturity date. The higher
a bond’s
credit quality, the greater the perceived chance that the issuer
will meet
its payment obligations (and vice versa). Investment-grade
bonds are
those whose credit quality is considered by independent bond
rating
agencies, or through independent analysis conducted by an advisor,
to be
sufficient to ensure timely payment of principal and interest under
current
economic circumstances. Below investment-grade securities,
which
include bonds commonly known as “junk bonds,” have lower credit
quality
ratings. |
• Municipal
Bonds are generally
issued by state and local governments, agencies, or other governmental
authorities (collectively, “municipalities”) to support their needs or finance
public projects. In some cases, municipal bonds may be issued to provide funding
for a third party permitted to use the proceeds, such as an airport or a
hospital. The interest payable on
13
municipal bonds
is generally exempt from federal income taxes and, in some cases, from state and
local taxes. Municipal bonds can be broadly categorized into general obligation
bonds and revenue bonds, although a wide variety of municipal bond structures
can exist within these categories. General obligation bonds are secured by the
full faith, credit, and taxing power of the issuer. This means that the interest
and principal payable on a general obligation bond does not need to come from a
particular source. By contrast, a revenue bond’s principal and interest payments
are payable only from the revenue generated or derived from the underlying
project. Conduit bonds are revenue bonds issued by municipalities in order to
provide funding for a third party. It is the third party, not the issuing
municipality, who is responsible for payments of interest and principal on a
conduit bond.
More on Fund
Risks
Investing in the securities markets
can result in a loss of principal. The Fund is subject to a variety of risks,
including the principal risks listed below, that can impact its net asset value
(NAV), performance, and ability to achieve its investment
objective.
More
on Principal Risks
General Market
Risk. The markets in
which the Fund invests can be affected by a variety of factors. These factors,
which can be real or perceived, may include economic, market, political, and
regulatory conditions and developments as well as local, regional, or global
events such as wars, military conflicts, natural disasters, and public health
issues. In addition, investor sentiment and expectations regarding these factors
can also impact the markets. Different parts of the market, including different
industries and sectors as well as different types of securities, may react
differently to factors that affect the market. These factors can contribute to
market uncertainty, market volatility, and fluctuations in the value of the
Fund’s investments, thereby resulting in potential losses to the Fund over short
or long periods.
Investing in
Bond Markets. The Fund
may be impacted by the general condition of the bond markets and by factors that
affect bonds and bond issuers. For example, as a general rule, bond prices and
interest rates move in opposite directions. When interest rates rise, bond
prices tend to fall, and when interest rates fall, bond prices tend to go up.
Bond income also is affected by changes in interest rates. Interest rates can
rise or fall for a number of reasons, including, but not limited to, central
bank monetary policy, inflationary or deflationary pressures, and changes in
general market and economic conditions. Changing interest rates, including, but
not limited to, rates that fall below zero, could have unpredictable effects on
the overall market and may
14
expose the bond markets in
particular to heightened volatility and potential illiquidity. The degree to
which the Fund is impacted by the following bond market risks may vary based on
factors disclosed throughout this Prospectus, such as the types of bonds in
which it invests and the overall credit quality, average maturity, and/or
average duration of its bond holdings.
Investing in the
Municipal Bond Market.
In addition to the general risks associated with bonds and the bond market,
municipal bonds are subject to unique risks. The prices and yields of municipal
bonds are highly dependent on the financial condition of municipal bond issuers
(i.e., their ability to make principal and interest payments) and the overall
condition of the municipal bond market. As a result, the values of the Fund’s
municipal bond holdings could be impacted significantly by economic, regulatory,
political, or other developments or circumstances affecting municipal bond
issuers. These developments or circumstances could include, but are not limited
to, rulings by governmental authorities regarding the tax-exempt status of
municipal bond income, litigation against or bankruptcy declared by a municipal
bond issuer, adverse economic conditions, or natural disasters, among others.
Any of these circumstances could create uncertainty in the municipal bond market
and/or adversely impact the ability of municipal bond issuers to make principal
and interest payments, which could result in a loss to the Fund.
Revenue bonds make up a significant
portion of the municipal bond market. Investing in revenue bonds will generally
subject the Fund to a higher degree of Credit
Risk and greater
sensitivity to adverse economic conditions than investing in general obligation
bonds. In addition, investing in conduit bonds, which are a special type of
revenue bond issued by a municipality but repaid by a third party, subjects the
Fund to the credit risk of the third party as opposed to the credit risk of the
issuing municipality.
The Fund also is subject to the
risk that all or a significant portion of its municipal bond holdings will be
affected in the same manner. Many municipal bonds are issued to finance similar
projects, which means adverse conditions in sectors related to these projects
could have an outsized impact on the municipal bond market and potentially on
the Fund. For example, a fund that holds a significant number of municipal bonds
issued to build hospitals can be expected to be affected by developments in the
health care sector.
Tax-Exempt
Income Risk. There is
no guarantee that the interest payable on municipal bonds will remain exempt
from federal, state, or local income taxes. Tax-exempt income from the Fund’s
municipal bond holdings could be declared taxable, possibly with retroactive
effect, due to a variety of circumstances such as tax law changes, adverse
interpretations by tax authorities, or noncompliant
15
conduct by a municipal bond issuer.
Any of these circumstances could cause the prices of municipal bonds to decline
significantly or impair the Fund’s ability to achieve its investment
objective.
Interest Rate
Risk. The Fund’s
investments in bonds can be sensitive to interest rate changes and may be
affected differently depending on the overall interest rate environment. During
periods of rising interest rates, bond prices overall may decline, which could
result in a decline in the Fund’s value. The prices of longer-term bonds are
more sensitive to changes in interest rates than the prices of shorter-term
bonds.
Income
Risk. During periods
of falling interest rates, the Fund’s income may decline because the Fund may
have to invest new cash flow and cash from maturing bonds in bonds with lower
yields. The income paid by shorter-term bonds is subject to a higher degree of
fluctuation than the income paid by longer-term bonds.
Credit
Risk. Credit risk
refers to the chance that an issuer will default (fail to meet its credit
obligations) or fail to make payments in a timely manner, which could result in
a loss to the Fund. In addition, negative perceptions of an issuer’s ability to
make payments can cause the price of a security to decline. While all debt
securities are subject to credit risk to some extent, those with higher credit
quality ratings generally pose less credit risk than those with lower credit
quality ratings.
Municipal Bond
Liquidity Risk.
Limited trading in the municipal bond market and a relative lack of publicly
available information about the financial condition of municipal bond issuers
may make municipal bonds more difficult to value or sell than other types of
debt securities. If the Fund is unable to sell a security at an advantageous
time or price, its returns may be reduced.
Call
Risk. Certain bonds
held by the Fund may be callable. The issuer of a callable bond has the right to
“call” (redeem) the bond before its maturity date. When a bond is called, the
principal value of the bond is repaid earlier than anticipated (prepayment) and
the investor (in this case, the Fund) no longer receives the interest payments
that would have been paid up to the expected maturity date. In addition, bond
calls and the resulting prepayments cause the Fund to lose any price
appreciation that would have occurred between the time the bond was called and
its original maturity date.
During periods of falling interest
rates, it benefits issuers to call bonds with high interest rates. When this
occurs, the Fund likely will be forced to reinvest the proceeds of any called
bonds at a lower interest rate than that of the called bonds, resulting in a
decline in the Fund’s income and a potential loss in the value of the Fund’s
investments. If the proceeds from a called bond generate
16
taxable income, the Fund may need
to distribute income subject to federal personal income tax or to the federal
alternative minimum tax. If the Fund holds multiple callable bonds, frequent
bond calls (as is likely during periods of falling interest rates) and the
Fund’s subsequent reinvestment of the proceeds also would increase the Fund’s
turnover rate.
Extension Risk.
During periods of
rising interest rates, certain bonds held by the Fund may be paid off
substantially more slowly than originally anticipated. As a result, the value of
the bonds may fall, resulting in a decline in the Fund’s income and a potential
loss in the value of the Fund’s investments.
Regional
Focus. Economic,
political, or regulatory occurrences within a certain state may adversely affect
the value of municipal securities offered by issuers located within that state.
Because the Fund may invest a large portion of its assets in municipal bonds of
issuers located in any one state, its performance may be hurt disproportionately
by the poor performance of its investments in that region.
Index
Investing. The Fund is
subject to the following risks associated with index investing:
Passive
Management. The Fund
seeks to track the performance of its Target Index regardless of how the Target
Index is performing. The advisor’s use of an indexing, or passive, approach to
select and maintain investments for the Fund means that the advisor will select
investments for the purpose of tracking the Target Index and generally will not
use strategies to reduce negative impacts to the Fund during periods of market
volatility. As a result, the Fund’s performance may be lower than it would be if
it were actively managed.
Index Sampling
Strategy. Because the
Fund does not hold all of the securities included in its Target Index, it is
subject to the risk that the representative sample of securities selected by the
advisor will, in the aggregate, vary from the investment profile of the full
Target Index.
Tracking
Error. The performance
of the Fund’s investments, in the aggregate, may not match the investment
performance of its Target Index. It is important to understand that an index
fund will never perform exactly the same as its target index because, among
other things, an index fund has operating expenses and transaction costs and its
target index does not. Beyond these inherent differences in the operation of an
index fund versus the operation of its target index, there are a variety of
other factors that can cause or result in tracking error.These may include, but
are not limited to:
○
Price differences between the
securities held by the index fund and those included in its target
index
○
Cash flows into or out of the index
fund
17
○
The size of the index
fund
○
Compliance with new or existing
regulatory requirements
○
Portfolio transactions carried out
by the index fund’s advisor to minimize the distribution of capital
gains
○
Changes to the underlying
securities that make up the target index
○
Errors made by the provider of the
target index
Tracking error risk may be
heightened during times of increased market volatility or under other unusual
market conditions. An index fund using a sampling strategy may be more likely to
experience tracking error than an index fund using a replicating
strategy.
Index
Provider. The Fund is
subject to risks associated with its Index Provider. The securities that make up
the Target Index and their weighting in the Target Index are determined by the
Index Provider. The Index Provider does not provide any warranty or accept any
liability with respect to the quality, accuracy, or completeness of the Target
Index or any data used to compile the Target Index. Under normal circumstances,
the Index Provider rebalances (updates) the Target Index on a regular schedule.
However, the Index Provider may also rebalance the Target Index outside of the
regular schedule or delay or cancel a scheduled rebalance, which could result in
added costs for the Fund or cause the Fund to experience tracking error. The
Index Provider may make errors, and it is possible that such errors may not be
identified by the Index Provider for a period of time or at all. Any gains,
losses, or costs associated with or resulting from an error made by the Index
Provider will generally be borne by the Fund and, as a result, the Fund’s
shareholders. The Fund’s advisor does not provide any warranty or guarantee
against any errors made by the Index Provider.
Nondiversification. By tracking its broad-based Target
Index, the Fund could become nondiversified, as defined under the Investment
Company Act of 1940. Nondiversified funds invest a greater percentage of their
assets in a small number of issuers than diversified funds, their performance
may be negatively impacted by relatively few securities or even a single
security, and their shares may experience significant fluctuations in
value.
ETF Share
Trading. Because ETF
Shares trade on the secondary markets, they are subject to the following
risks:
ETF Shares
Trading at Prices Other Than NAV. ETF Shares may trade on a
national securities exchange at prices above, below, or at their most recent
NAV.The NAV of the Fund’s ETF Shares, which typically is calculated at the end
of each business day, will generally fluctuate with changes in the market value
of the Fund’s holdings. The market prices of ETF Shares will also fluctuate, in
some cases materially, in accordance with changes in NAV and the intraday
18
value of the Fund’s holdings, as
well as the relative supply of and demand for the ETF Shares on an exchange.
Differences between secondary market prices of ETF Shares and the intraday value
of the Fund’s holdings may be due largely to supply and demand forces in the
secondary market, which may not be the same forces as those influencing prices
for securities held by the Fund at a particular time.
Although it is expected that the
market price of an ETF Share typically will trade close to the value of the
Fund’s holdings, market prices are not expected to correlate exactly to the
Fund’s NAV due to timing reasons, supply and demand imbalances, and other
factors. In addition, disruptions to creations and redemptions; adverse
developments impacting market makers, authorized participants, or other market
participants; or high market volatility may result in the market price of ETF
Shares differing significantly from the Fund’s NAV or the intraday value of the
Fund’s holdings. As a result of these factors, among others, you may pay more
(premium) or less (discount) than NAV when you buy ETF Shares on the secondary
market, and you may receive more or less than NAV when you sell those shares.
These discounts and premiums are likely to be greatest during times of market
disruption or extreme market volatility.
Cost of Buying
or Selling Shares.
Individual investors who buy or sell ETF Shares through a broker may incur a
brokerage commission or other charges imposed by brokers. In addition, the
market price of ETF Shares, like the price of any security on an exchange,
includes a “bid-ask spread” charged by the market makers or other participants
that trade the particular security. The bid-ask spread is the difference between
the highest price a buyer is willing to pay to purchase ETF Shares (bid) and the
lowest price a seller is willing to accept for ETF Shares (ask) when buying or
selling shares in the secondary market. The bid-ask spread of the Fund’s ETF
Shares can vary over time based on the Fund’s trading volume and market
liquidity and may increase if the Fund’s trading volume, the bid-ask spread of
the Fund’s underlying securities, or market liquidity decrease. In times of
severe market disruption, including when trading of the Fund’s holdings may be
halted, the bid-ask spread may increase significantly. This means that ETF
Shares may trade at a discount to the Fund’s NAV, and the discount is likely to
be greatest during significant market volatility.
Short
Selling. ETF Shares,
similar to shares of other issuers listed on an exchange, may be sold short. In
a short sale, an investor “borrows” securities from a lender for a fee and then
sells the borrowed securities on the open market with the hope that the borrowed
securities decline in price before the investor has to repurchase the securities
to return them to the lender. Short sales of ETF Shares can increase their
volatility and lead to price decreases.
19
Lack of Active
Trading Market.
Although ETF Shares are listed on a national securities exchange, it is possible
that an active trading market may not be maintained. Although this could happen
at any time, it is more likely to occur during times of severe market
disruption. If you attempt to sell your ETF Shares when an active trading market
is not functioning, you may have to sell at a significant discount to NAV. In
extreme cases, you may not be able to sell your shares at all.
Trading
Halt. Trading of ETF
Shares on an exchange may be halted by the activation of individual or
market-wide trading halts (which halt trading for a specific period of time when
the price of a particular security or overall market prices decline by a
specified percentage). Trading of ETF Shares may also be halted if (1) the
shares are delisted from the listing exchange without first being listed on
another exchange or (2) exchange officials determine that such action is
appropriate in the interest of a fair and orderly market or for the protection
of investors. If a trading halt or unanticipated early closing of an exchange
occurs, a shareholder may be unable to purchase or sell ETF
Shares.
Authorized
Participants. Only
Authorized Participants may engage in creation or redemption transactions
directly with the Fund. The Fund has a limited number of financial institutions
that may act as Authorized Participants. The Fund’s Authorized Participants are
not obligated to engage in creation or redemption transactions. To the extent
that the Fund’s Authorized Participants are unable to or choose not to proceed
with creation and/or redemption transactions with respect to the Fund and no
other Authorized Participants step forward to engage in creation or redemption
transactions with the Fund, the Fund’s ETF Shares may trade at a discount to NAV
and possibly face trading halts and/or delisting.
Additional
Risks
Geopolitical and
Sanctions Risk. Due to
growing dependencies between global economies, geopolitical events can
negatively affect all securities, markets, and economies. It is possible that
events which only impact one geographic area could have negative short- or
long-term effects on markets, issuers, and/or exchanges in the United States and
other countries.
At times, the United States, other
governments, or other supranational bodies (e.g., the United Nations) may impose
sanctions on countries and/or entities in response to geopolitical events or
other priorities. Compliance with sanctions could impact the Fund, including the
Fund’s ability to transact in or obtain exposure to certain foreign securities
and assets. Sanctions also could cause significant losses to the Fund’s
investments and its performance could be negatively impacted. In lieu of
sanctions, companies or specific goods that the company produces could be
subjected to trade embargoes or tariffs, which can
20
also affect securities markets and
create volatility. So long as sanctions do not prohibit investment in the
company or issuer, the Fund typically also would not be prohibited from
investing in the affected company or issuer.
ETF Share Class
Risks. By investing in
the ETF Shares of a fund that also offers conventional mutual fund shares, you
could be subject to costs and/or tax impacts that you would not be subject to if
you invested in exchange-traded shares offered by a fund without a conventional
mutual fund share class. These costs include brokerage and other transaction
costs associated with the Fund buying and selling portfolio securities in
response to conventional mutual fund share class inflows and outflows, cash drag
as a result of the Fund holding the cash necessary to satisfy conventional
mutual fund share class transactions, and taxable capital gains distributions if
the Fund has to sell portfolio holdings at a gain in order to satisfy mutual
fund share class redemptions.
Potential
Redemption Activity Impacts. The Vanguard funds can be
negatively impacted by certain large redemptions. These redemptions could occur
due to a single shareholder or multiple shareholders deciding to sell a large
quantity of shares of a fund or a share class of the fund. Large redemptions can
occur for many reasons, either as a result of actions taken by the Vanguard
funds or their advisors, or as a result of events unrelated to actions taken by
the Vanguard funds or their advisors. Actions taken by the Vanguard funds or
their advisors could include, but are not limited to, changes to a fund’s
advisor(s), changes to a fund’s portfolio manager(s), changes to the composition
of a fund’s portfolio, and/or other product changes or launches that, for
example, result in shareholders redeeming shares of one fund to purchase shares
of another fund or investment vehicle. For a fund of funds, actions taken by the
Vanguard funds or their advisors could include a withdrawal from an underlying
fund or a change in the allocation to underlying funds. Events unrelated to
actions taken by the Vanguard funds or their advisors could include shareholders
selling out of a fund in response to market movements or regulatory
changes.
A large redemption could adversely
affect a fund’s liquidity and NAV. For example, a large redemption could require
a fund’s manager to sell portfolio holdings at unplanned or inopportune times.
The manager’s sale of these holdings, which is a taxable event, could require
the fund to distribute any corresponding capital gains or other taxable income
to the fund’s remaining shareholders; see Dividends,
Distributions, and Taxes in the Investing in
Vanguard ETF® Shares
section for additional
information. The increased trading activity could also increase underlying costs
for the fund due to commissions paid by the fund. When large redemptions occur,
the Vanguard funds reserve the right to pay all or part of the redemptions
in-kind and/or delay
21
payment of the redemption proceeds
for up to seven calendar days; see “Methods Used to Meet Redemption Requests”
under Purchase,
Redemption, and Exchange of Fund Shares in the Investing in
Vanguard ETF® Shares
section.
Investing in
Derivatives. Investing
in derivatives may present risks different from, and/or greater than, those
associated with investing directly in stocks, bonds, or other types of
investments. Derivatives could expose the Fund to increased volatility and/or
significant loss. Certain derivatives have an inherent leverage component,
providing the Fund exposure to a sizable position in an underlying asset with a
relatively small upfront investment at the time the Fund enters into the
derivatives position. For these derivatives, an adverse change in the value or
price of the underlying asset could result in a loss substantially greater than
the amount invested in the derivative itself. Some derivatives require the Fund
to enter into a contract with a counterparty. If the counterparty is unable or
unwilling to fulfill its contractual obligation, the Fund may experience a loss.
A liquid market may not always exist for the Fund’s derivatives positions. The
Fund may be unable to sell or otherwise exit its derivatives position at desired
times or prices, which could also result in a loss to the Fund. Some
derivatives, particularly OTC derivatives, can be complex and often are valued
subjectively. Valuation may be more difficult in times of market turmoil since
many investors and market makers may be reluctant to purchase complex
instruments or quote prices for them. Improper valuations can result in
increased cash payment requirements to counterparties or a loss of value to the
Fund.
Derivatives may not perform as
intended, which may result in losses to the Fund. For example, derivatives used
for hedging or as a substitute for a portfolio instrument may not provide the
expected benefits, particularly during adverse market conditions. The use of
derivatives is also subject to legal risk, which includes the risk of loss
resulting from insufficient or unenforceable contractual documentation,
insufficient capacity or authority of the Fund’s counterparty, and operational
risk, which includes documentation or settlement issues, system failures,
inadequate controls, and human error.
Other Investment
Policies
In addition to employing its
principal investment strategies, the Fund may use the following other investment
strategies and types of investments in order to achieve its investment
objective.
22
Substitute
Index
The Fund reserves the right to
substitute a different index for the index it currently tracks if the current
index is discontinued, if the Fund’s agreement with the provider of its Target
Index is terminated, or for any other reason determined in good faith by the
Board. In any such instance, the substitute index would represent the same
market segment as the Target Index.
Other
Types of Investments
Some of the following investments may generate taxable income. As a result, the Fund may need to distribute income subject to federal personal income tax or to the federal AMT.
Up to 20% of the Fund’s assets may be used to purchase 144A securities, which are nonpublic, investment-grade securities exempt from registration requirements under Rule 144A of the Securities Act of 1933, as well as smaller public issues or medium-term notes not included in the Fund’s Target Index because of the small size of the issue. The vast majority of such securities will have characteristics and risks similar to the bonds included in the Fund’s Target Index. Subject to the same 20% limit, the Fund may also purchase other investments that are not included in its Target Index (such as those described below) or may hold bonds that were included in the Target Index when acquired but subsequently have been removed.
The Fund may purchase tax-exempt securities on a “when-issued” basis. When investing in “when-issued” securities, the Fund agrees to buy the securities at a certain price on a certain date, even if the market price of the securities at the time of delivery is higher or lower than the agreed-upon purchase price.
The Fund may invest in municipal bond structured products that, in the opinion of the Fund’s advisor, are consistent with the Fund’s investment objective. Such investments may include long-term municipal securities with a demand feature (e.g., variable rate demand obligations or notes).
The Fund may invest in derivatives. In general, a derivative is a financial contract whose value is based on the value of a financial asset (such as a stock, a bond, or a currency), a physical asset (such as gold, oil, or wheat), a market index, or a reference rate. The Fund may invest in derivatives only if the expected risks and rewards of the derivatives are consistent with the investment objective, policies, strategies, and risks of the Fund as disclosed in this prospectus. In particular, derivatives will be used only when they may help the advisor accomplish one or more of the following:
• Invest in eligible asset classes
with greater efficiency and lower cost than is possible through direct
investment.
• Add value when these instruments
are favorably priced.
23
• Adjust sensitivity to changes in
interest rates.
The Fund’s investments in
derivatives may include fixed income futures contracts, fixed income options,
interest rate swaps, total return swaps, credit default swaps, or other
derivatives.
The Fund may invest a small portion
of its assets in shares of exchange-traded funds (ETFs). These ETFs typically
provide returns similar to those of bonds listed in the index, or in a subset of
the index, the Fund seeks to track. The Fund may purchase ETFs when doing so
will reduce the Fund’s transaction costs, facilitate cash management, mitigate
risk, or have the potential to add value because the instruments are favorably
priced. Vanguard receives no additional revenue from Fund assets invested in ETF
shares of other Vanguard funds. Fund assets invested in ETF shares of other
Vanguard funds are excluded when allocating to the Fund its share of the costs
of Vanguard’s operations.
Cash
Management
The Fund’s daily cash balance may
be invested in one or more Vanguard CMT Funds, which are used as cash management
vehicles for the Vanguard funds. When investing in a CMT Fund, the Fund bears
its proportionate share of the expenses of the CMT Fund in which it invests.
Vanguard receives no additional revenue from Fund assets invested in a CMT Fund.
Investment in a CMT Fund may generate taxable income for the Fund and
potentially may require the Fund to distribute income subject to federal
personal income tax or to the federal AMT.
Temporary
Defensive Measures
The Fund may temporarily depart
from its normal investment policies and strategies when the advisor believes
that doing so is in the Fund’s best interest, so long as the strategy or policy
employed is consistent with the Fund’s investment objective. For instance, the
Fund may invest beyond its normal limits in derivatives or exchange-traded funds
that are consistent with the Fund’s investment objective when those instruments
are favorably priced or provide needed liquidity, as might be the case when the
Fund receives large cash flows that it cannot prudently invest immediately. By
temporarily departing from its normal investment policies, the Fund may
distribute income subject to federal personal income tax or the federal AMT and
may otherwise fail to meet its investment objective.
Portfolio
Holdings
Please consult the Fund’s
Statement of
Additional Information
or Vanguard’s website for a description of the policies and procedures that
govern disclosure of the Fund’s portfolio holdings.
24
Management and
Distribution of the Fund
The Fund is a member of The
Vanguard Group, Inc. (Vanguard), a family of over 200 funds. All of the funds
that are members of Vanguard (other than funds of funds) share in the expenses
associated with administrative services and business operations, such as
personnel, office space, and equipment.
Vanguard Marketing Corporation
provides marketing services to the funds. Although fund shareholders do not pay
sales commissions or 12b-1 distribution fees, each fund (other than a fund of
funds) or each share class of a fund (in the case of a fund with multiple share
classes) pays its allocated share of the Vanguard funds’ marketing
costs.
|
How is
Vanguard’s Corporate Structure Unique? |
|
Vanguard
is owned jointly by the funds it oversees and thus indirectly by
the
shareholders in those funds. Most other mutual funds are operated by
management
companies that are owned by third parties—either public or
private
stockholders—and not by the funds they
serve. |
Investment
Advisor
The Vanguard Group, Inc., P.O. Box
2600, Valley Forge, PA 19482, which began operations in 1975, serves as advisor
to the Fund through Vanguard Capital Management (VCM). VCM exercises portfolio
management responsibilities for the Fund. As of October 31, 2025, Vanguard
served as advisor for approximately $9.8 trillion in assets.
Vanguard, through VCM, provides investment advisory
services to the Fund pursuant to the Funds’ Service Agreement and subject to the
supervision and oversight of the trustees and officers of the Fund.
VCM, P.O. Box 2600, Valley Forge,
PA 19482, is a wholly owned subsidiary of Vanguard and was established in
2025.
For the fiscal year ended October
31, 2025, the advisory expenses represented an effective annual rate of 0.01% of
the Fund’s average net assets.
The Fund reserves the right to
utilize a multimanager approach in the future. Under the terms of an SEC
exemption, the Board may, without prior approval from shareholders, change the
terms of an advisory agreement with a third-party investment advisor or hire a
new third-party investment advisor—either as a replacement for an existing
advisor or as an additional advisor. Any significant change in the Fund’s
advisory arrangement will be communicated to shareholders in writing. As
Vanguard is the Fund’s sponsor and overall manager, Vanguard, through VCM, may provide investment
advisory services to the Fund under certain circumstances. Vanguard may also
25
recommend to the Board that an
advisor be hired, terminated, or replaced or that the terms of an existing
advisory agreement be revised. The Fund has filed an application seeking an SEC
exemption with respect to investment advisors that are wholly owned subsidiaries
of Vanguard. If the exemption is granted, the Fund may rely on the new SEC
relief.
A discussion regarding the basis
for the Board’s approval of the Fund’s investment advisory
arrangement is available in the Fund’s Form
N-CSR filed with the SEC for the fiscal period ended April 30 and in the
applicable Financial Statements and Other Information document available on the
Fund’s website.
The manager
primarily responsible for the day-to-day management of the Fund
is:
Justin A.
Schwartz, CFA,
Principal of Vanguard, Head of Money Markets
and Municipal Index, and Portfolio
Manager at VCM. He has been with Vanguard and worked in investment management
since 2004, has managed investment portfolios since 2010, and has managed the
Fund since 2023. Education: B.S., University of Richmond.
The Fund’s
Statement
of Additional Information provides
information about the portfolio manager’s compensation, other accounts under
management, and ownership of shares of the Fund.
26
Investing in
Vanguard ETF®
Shares
Each Vanguard fund may offer one or
more share classes. If a Vanguard fund offers multiple share classes, each share
class has the same investment objective, strategies, and policies. However,
because different share classes can have different expenses, their investment
returns may differ. Vanguard and the Fund have received an exemptive order from
the SEC that permits the Fund to offer conventional mutual fund shares and ETF
shares. This Prospectus offers the Fund’s ETF Shares.
The Fund’s ETF Shares are listed
for trading on NYSE Arca. You can buy and sell ETF Shares on the secondary
market in the same way you buy and sell any other exchange-traded
security—through a broker. Your broker may charge a commission to execute a
transaction. Unless imposed by your broker, there is no minimum dollar amount
you must invest and no minimum number of ETF Shares you must buy.
Your ownership of ETF Shares will
be shown on the records of the broker through which you hold the shares.
Vanguard will not have any record of your ownership. Your account information
will be maintained by your broker, which will provide you with account
statements, confirmations of your purchases and sales of ETF Shares, and tax
information. Your broker also will be responsible for ensuring that you receive
income and capital gains distributions, as well as shareholder reports and other
communications from the fund whose ETF Shares you own. You will receive other
services (e.g., dividend reinvestment and average cost information) only if your
broker offers these services.
Redemption of ETF
Shares by Authorized Participants
Unlike conventional (i.e., not
exchange-traded) mutual fund shares, ETF Shares cannot be purchased directly
from or redeemed directly with the issuing fund by an individual investor.
Instead, only Authorized Participants can purchase and redeem ETF Shares
directly from the issuing fund. Authorized Participants may purchase and redeem
ETF Shares from the issuing fund only in large blocks (creation units), usually
in exchange for baskets of securities. Funds may also issue and redeem creation
units in exchange for solely cash or a combination of cash and securities. These
trades may occur in-kind between Vanguard and the Authorized Participant. If
cash is used to meet redemptions, the Fund typically obtains such cash through
positive cash flows or the sale of Fund holdings consistent with the Fund’s
investment objective and strategy.
Under certain circumstances,
including under stressed market conditions, the Fund may borrow money (subject
to certain regulatory conditions and if available under board-approved
procedures) through an interfund lending
27
facility; through a bank
line-of-credit, including a joint committed credit facility; or through an
uncommitted line-of-credit from Vanguard in order to meet redemption
requests.
Conversion
Privilege
Owners of conventional shares
issued by the Fund may convert those shares to ETF Shares of equivalent value of
the same fund. Please note that investors who own conventional shares through a
401(k) plan or other employer-sponsored retirement or benefit plan generally may
not convert those shares to ETF Shares and should check with their plan sponsor
or recordkeeper. ETF Shares, whether acquired through a conversion or purchased
on the secondary market, cannot be converted to conventional shares by a
shareholder. Also, ETF Shares of one fund cannot be exchanged for ETF Shares of
another fund.
ETF Shares must be held in a
brokerage account. Thus, before converting conventional shares to ETF Shares,
you must have an existing, or open a new, brokerage account. This account may be
with Vanguard Brokerage Services® or with any other brokerage firm.
To initiate a conversion of conventional shares to ETF Shares, please contact
your broker.
Vanguard Brokerage Services does
not impose a fee on conversions from Vanguard conventional shares to Vanguard
ETF Shares. However, other brokerage firms may charge a fee to process a
conversion. Vanguard reserves the right, in the future, to impose a transaction
fee on conversions or to limit, temporarily suspend, or terminate the conversion
privilege.
Converting conventional shares to
ETF Shares is generally accomplished as follows. First, after your broker
notifies Vanguard of your request to convert, Vanguard will transfer your
conventional shares from your account to the broker’s omnibus account with
Vanguard (an account maintained by the broker on behalf of all its customers who
hold conventional Vanguard fund shares through the broker). After the transfer,
Vanguard’s records will reflect your broker, not you, as the owner of the
shares. Next, your broker will instruct Vanguard to convert the appropriate
number or dollar amount of conventional shares in its omnibus account to ETF
Shares of equivalent value, based on the respective NAVs of the two share
classes.
Your Fund’s transfer agent will
reflect ownership of all ETF Shares in the name of the Depository Trust Company
(DTC). The DTC will keep track of which ETF Shares belong to your broker, and
your broker, in turn, will keep track of which ETF Shares belong to
you.
Because the DTC is unable to handle
fractional shares, only whole shares can be converted. For example, if you owned
300.25 conventional shares, and this was equivalent in value to 90.75 ETF
Shares, the DTC account would receive 90 ETF Shares. Conventional shares with a
value equal to 0.75 ETF Shares (in
28
this example, that would be 2.481
conventional shares) would remain in the broker’s omnibus account with Vanguard.
Your broker then could either (1) credit your account with 0.75 ETF Shares or
(2) redeem the 2.481 conventional shares for cash at NAV and deliver that cash
to your account. If your broker chose to redeem your conventional shares, you
would realize a gain or loss on the redemption that must be reported on your tax
return (unless you hold the shares in an IRA or other tax-deferred account).
Please consult your broker for information on how it will handle the conversion
process, including whether it will impose a fee to process a
conversion.
If you convert your conventional
shares to ETF Shares through Vanguard Brokerage Services, all conventional
shares for which you request conversion will be converted to ETF Shares of
equivalent value. Because no fractional shares will have to be sold, the
transaction will not be taxable.
Here are some important points to
keep in mind when converting conventional shares of a Vanguard fund to ETF
Shares:
• The conversion process can take
anywhere from several days to several weeks, depending on your broker. Vanguard
generally will process conversion requests either on the day they are received
or on the next business day. Vanguard imposes conversion blackout windows around
the dates when a fund with ETF Shares declares dividends. This is necessary to
prevent a shareholder from collecting a dividend from both the conventional
share class currently held and also from the ETF share class to which the shares
will be converted.
• Until the conversion process is
complete, you will remain fully invested in a fund’s conventional shares, and
your investment will increase or decrease in value in tandem with the NAV of
those shares.
• The conversion transaction is
nontaxable except, if applicable, to the very limited extent previously
described.
Pricing of Fund
Shares
ETF Shares may only be bought and
sold in the secondary market. The price you pay or receive for the ETF Shares
will be the prevailing market price, which may be more or less than the Fund’s
NAV. Your transaction will be priced at the NAV only if you purchase or redeem
your ETF Shares in creation unit blocks (an option available only to certain
authorized broker-dealers), or if you convert your conventional fund shares to
ETF Shares. NAV is typically calculated as of the close of regular trading on
the New York Stock Exchange (“NYSE”), generally 4 p.m., Eastern time, on each
day that the NYSE is open for business (a business day). In the rare event the
NYSE experiences unanticipated disruptions and is unavailable at the close of
the trading day, NAVs will be calculated as of the close of regular trading on
the Nasdaq (or another alternate exchange if the Nasdaq is unavailable, as
determined at Vanguard’s discretion),
29
generally 4 p.m., Eastern time. The
time selected for NAV calculation in this rare event generally shall also serve
as the conclusion of the trading day. On U.S. holidays or other days when the
NYSE is closed, the NAV is not calculated, and the Vanguard funds do not sell or
redeem shares. However, on those days the value of a fund’s assets may be
affected to the extent that the fund holds securities that change in value on
those days (such as foreign securities that trade on foreign markets that are
open).
If a fund only has one share class,
the NAV per share is computed by dividing the total assets, minus liabilities,
of a fund by the number of fund shares outstanding. If a fund has more than one
share class, each share class has its own NAV, which is computed by dividing the
total assets, minus liabilities, allocated to the share class by the number of
fund shares outstanding for that class. The value of securities and other
investments held by the Vanguard funds is determined pursuant to the valuation
policies and procedures adopted by the Vanguard funds’ boards of trustees.
Vanguard has been designated as the valuation designee for the Vanguard funds
pursuant to Rule 2a-5 under the Investment Company Act of 1940, subject to
oversight by the Vanguard funds’ boards of trustees.
Securities for which market
quotations are readily available are valued at their market value, based on
quotations provided by independent third-party pricing sources. Such securities
are generally valued at their official closing price, the last reported sales
price, or if there were no sales that day, the mean between the closing bid and
asking prices, from the principal exchange or market on which they are traded. A
fund’s investments in any mutual fund shares, including institutional money
market fund shares, are valued at the NAVs of the mutual fund shares. A fund’s
investments in any ETF shares or closed-end fund shares are valued at the market
value of those shares.
When the market quotations are not
readily available or do not accurately reflect the value of a security or other
investment, such security or other investment is priced at fair value, generally
based on information provided by independent third-party pricing services, in
accordance with the valuation policies and procedures adopted by the Vanguard
funds’ boards of trustees. Fair value represents a good faith determination of
the value of a fund’s investments. The fair value of a security or other
investment is the amount that the owner might reasonably expect to receive upon
the current sale of the security or other investment. Fair-value pricing may
require subjective determinations. It is possible that the price determined
through fair-value pricing may differ from the price quoted or published by
other sources and may not be the price at which those investments could have
been sold during the period in which the fair value was used.
Fair-value pricing may be used in a
variety of circumstances. For example, it may be used if the value of a security
or other investment has been materially affected by events occurring after the
close of the principal exchange or market
30
on which the security is traded but
before the funds’ NAV is calculated. These events might be company-specific
(e.g., earnings report, merger announcement), country-specific (e.g.,
significant price movements in U.S. or a foreign market), or regional/global
events (e.g., natural disaster, economic or political news, interest rate
change, act of terrorism). These events could affect a single security or a
large number of securities in a particular market, and it most commonly occurs
with foreign portfolio holdings because many foreign markets operate at times
that do not coincide with those of the major U.S. markets. Events that could
affect the value of the foreign portfolio holdings may occur between the close
of the foreign market and the time a fund’s NAV is calculated. The values of any
foreign securities held by a fund are converted into U.S. dollars using an
exchange rate obtained from an independent third party as of the close of
regular trading on the NYSE.
In addition, fair-value pricing may
be used if trading in a security is halted and does not resume before a fund’s
pricing time, a security does not trade in the course of a day and a fund holds
enough of the security that its price could affect the NAV, or if the trading
market on which a security is listed is suspended or closed and no appropriate
alternative trading market is available.
Fixed income securities are
generally valued based on information furnished by independent pricing services
and are priced at fair value. Pricing services may use matrix pricing or
valuation models that utilize certain inputs and assumptions to derive values.
Pricing services generally value fixed income securities assuming orderly
transactions of an institutional round lot size, but a fund may hold or transact
in such securities in smaller odd lot sizes. Odd lots may trade at lower prices
than institutional round lots.
Failures by third-party pricing
services to carry out their obligations to the Vanguard funds (e.g., any errors
in the data provided by third-party pricing services) could result in delays in
the calculation of the funds’ NAVs and/or the inability to calculate the NAVs
over extended time periods. The funds may be unable to recover any losses
associated with such failures.
The Vanguard funds have authorized
certain financial intermediaries and their designees, and may, from time to
time, authorize certain funds of funds for which Vanguard serves as the
investment advisor (Vanguard Funds of Funds), to accept orders to purchase or
redeem fund shares on behalf of the Vanguard funds. In these circumstances, the
Vanguard fund will be deemed to receive an order when accepted by the authorized
financial intermediary, its designee, or one of the Vanguard Funds of Funds, and
the order will be executed using the NAV next calculated after such
acceptance.
Vanguard’s website will show the
previous day’s closing NAV and closing market price for the Fund’s ETF shares.
The website also discloses, in the Premium/Discount analysis section of a fund’s
Price and Performance page,
31
how frequently the fund traded at a
premium or discount to NAV (based on closing NAVs and market prices) and the
magnitudes of such premiums and discounts.
Dividends,
Distributions, and Taxes
Fund
Distributions
The Fund generally distributes to
shareholders virtually all of its net income (interest less expenses) as well as
any net short-term or long-term capital gains realized from the sale of its
holdings. The Fund may also make distributions that are treated as a return of
capital. Income dividends generally are declared monthly and distributed
monthly; capital gains distributions, if any, generally occur annually in
December. In addition, the Fund may make a supplemental distribution at some
other time during the year.
From time to time, Vanguard and/or
a fund’s board of trustees may adjust a fund’s fees and expenses and/or reduce,
refund, reimburse, waive, or otherwise return to the funds and their
shareholders a portion of prior fees and expenses (collectively, “expense
adjustments”). Fund performance and potentially shareholder distributions, will
reflect such expense adjustments. If you sell all or part of your investment in
a fund before an expense adjustment occurs, then you will not receive the
economic benefit, if any, of such expense adjustment. An expense adjustment at
any given time does not imply or guarantee that similar or additional expense
adjustments will be made in the future.
Reinvestment
of Distributions
In order to reinvest dividend and
capital gains distributions, investors in the Fund’s ETF Shares must hold their
shares at a broker that offers a reinvestment service. This can be the broker’s
own service or a service made available by a third party, such as the broker’s
outside clearing firm or the Depository Trust Company (DTC). If a reinvestment
service is available, distributions of income and capital gains can
automatically be reinvested in additional whole and fractional ETF Shares of the
Fund. If a reinvestment service is not available, investors will receive their
distributions in cash. To determine whether a reinvestment service is available
and whether there is a commission or other charge for using this service,
consult your broker.
Mutual fund share class holders
will receive dividend payments before holders of ETF Shares. As with all
exchange-traded funds, reinvestment of dividend and capital gains distributions
in additional ETF Shares will occur two business days or more after the
ex-dividend date (the date when a distribution of dividends or capital gains is
deducted from the price of the Fund’s shares). The exact number of days depends
on your broker. During that time, the amount of your distribution will not be
invested in the Fund and therefore will not share in the Fund’s income, gains,
and losses.
32
Basic
Tax Points
Investors in
taxable accounts should be aware of the following basic federal income tax
points:
• A majority of the
income dividends that you receive are expected to be exempt from federal and
alternative minimum taxes.
• Distributions of capital gains and
any investment income that is not exempt from federal income tax are taxable to
you whether or not you reinvest these amounts in additional Fund shares.
• Distributions declared and recorded
in December—if paid to you by the end of January—are generally taxable as if
received in December.
• Any short-term
capital gains distribution that you receive is taxable to you as ordinary
income.
• Any distribution of net long-term
capital gains is taxable to you as long-term capital gains, no matter how long
you have owned shares in the Fund.
• Capital gains
distributions can occur when the Fund sells assets at a gain. Capital gains
distributions vary from year to year as a result of the Fund’s investment
activities and cash flows, including those due to redemption activity by Fund
shareholders.
• Capital gains distributions may
occur if Vanguard, the Fund, or its advisor makes
changes that would impact the Fund directly or indirectly, including changes to
the Fund’s portfolio or advisors or changes to any other Vanguard fund or
product that would involve the redemption of shares of the Fund and the related
sale of the Fund’s investments. Such changes could, depending on the timing,
result in capital gains distributions in the current fiscal year, subsequent
fiscal year, or both.
• Your cost basis in the Fund will be
decreased by the amount of any return of capital that you receive. This, in
turn, will affect the amount of any capital gain or loss that you realize when
selling your Fund shares.
• Return of capital
distributions generally are not taxable to you until your cost basis has been
reduced to zero. If your cost basis is at zero, return of capital distributions
will be treated as capital gains.
• Exempt-interest
dividends from a tax-exempt fund are taken into account in determining the
taxable portion of any Social Security or railroad retirement benefits that you
receive.
• Income paid from
tax-exempt bonds whose proceeds are used to fund private, for-profit
organizations may be subject to the federal alternative minimum
tax.
• A sale of Fund shares is a taxable
event. This means that you may have a capital gain to report as income, or a
capital loss to report as a deduction, when you complete your tax
return.
33
• If you purchase shares before an
ex-dividend date when a fund has realized but not yet distributed income or
capital gains, the purchase price may include the amount of the upcoming
distribution, and you may pay the full price for the shares and later receive a
portion of the purchase price back as a taxable distribution. In such case, you
generally will be taxed upon receipt of such distribution, even though the
distribution effectively represents a return of a portion of your purchase
price. This is known as “buying a dividend.”
Individuals, trusts, and estates
whose income exceeds certain threshold amounts are subject to a 3.8% Medicare
contribution tax on “net investment income.” Net investment income takes into
account distributions paid by the Fund (except exempt-interest dividends) and
capital gains from any sale of Fund shares.
Income dividends and capital gains
distributions that you receive, as well as your gains or losses from any sale of
Fund shares, may be subject to state and local income taxes.
Income dividends
from interest earned on municipal securities of a state or its political
subdivisions are generally exempt from that state’s income taxes. Almost all
states, however, tax interest earned on municipal securities of other
states. Vanguard
(or your intermediary) will annually provide you with information to help report
your earnings by state from the Fund on your annual tax
returns.
This Prospectus provides general
tax information only. Please consult your own tax advisor for detailed
information about any tax consequences for you.
Frequent Trading
Limitations
Unlike frequent trading of a
Vanguard fund’s conventional share classes, frequent trading of ETF Shares
generally does not disrupt portfolio management or otherwise harm fund
shareholders. The vast majority of trading in ETF Shares occurs on the secondary
market. Because these trades do not involve the issuing fund, they do not pose
potential harm to the fund or its shareholders. Certain broker-dealers are
authorized to purchase and redeem ETF Shares directly with the issuing fund.
Because these trades typically are effected in kind (i.e., for securities and
not for cash), or are assessed a transaction fee when effected in cash, they do
not cause any of the harmful effects to the issuing fund (as previously noted)
that may result from frequent trading. For these reasons, the boards of trustees
of Vanguard funds that issue ETF Shares have determined that it is not necessary
to adopt policies and procedures to detect and deter frequent trading and
market-timing of ETF Shares.
34
Financial
Highlights
Financial
highlights information is intended to help you understand a fund’s performance
for the past five years (or, if shorter, its period of operations). Certain
information reflects financial results for a single fund share. Total return
represents the rate that an investor would have earned or lost each period on an
investment in a fund or share class (assuming reinvestment of all
distributions). This information has been obtained from the financial statements
audited by PricewaterhouseCoopers LLP, an independent registered public
accounting firm, whose report, along with fund financial statements, is included
in a fund’s most recent annual Financial Statements and Other Information. You
may obtain a free copy of a fund’s latest disclosure documents upon
request.
Vanguard
Tax-Exempt Bond Index Fund ETF Shares
|
For a
Share Outstanding
Throughout
Each Period |
Year Ended October
31, | ||||
|
2025 |
2024 |
2023 |
2022 |
2021 | |
|
Net
Asset Value, Beginning of Period |
$50.28 |
$47.36 |
$47.58 |
$54.63 |
$54.17 |
|
Investment
Operations |
|
|
|
|
|
|
Net
Investment Income1 |
1.667 |
1.594 |
1.423 |
1.009 |
.937 |
|
Net
Realized and Unrealized Gain (Loss) on Investments |
.151 |
2.877 |
(.282) |
(7.119) |
.467 |
|
Total from
Investment Operations |
1.818 |
4.471 |
1.141 |
(6.110) |
1.404 |
|
Distributions |
|
|
|
|
|
|
Dividends
from Net Investment Income |
(1.628) |
(1.551) |
(1.361) |
(.940) |
(.944) |
|
Distributions
from Realized Capital Gains |
— |
— |
— |
— |
— |
|
Total
Distributions |
(1.628) |
(1.551) |
(1.361) |
(.940) |
(.944) |
|
Net
Asset Value, End of Period |
$50.47 |
$50.28 |
$47.36 |
$47.58 |
$54.63 |
|
Total
Return |
3.73% |
9.50% |
2.31% |
-11.30% |
2.60% |
|
Ratios/Supplemental
Data |
|
|
|
|
|
|
Net
Assets, End of Period (Millions) |
$41,422 |
$35,204 |
$28,209 |
$20,759 |
$14,139 |
|
Ratio of
Total Expenses to Average Net Assets |
0.04%2 |
0.05%2 |
0.05%2 |
0.05%2 |
0.05% |
|
Ratio of
Net Investment Income to Average Net Assets |
3.36% |
3.17% |
2.87% |
1.97% |
1.70% |
|
Portfolio
Turnover Rate3 |
23% |
19% |
23% |
23% |
11% |
|
1 |
Calculated
based on average shares outstanding. |
|
2 |
The ratio of
expenses to average net assets for the period net of reduction from
custody fee
offset
arrangements was 0.04%, 0.05%, 0.05%, and 0.05%,
respectively. |
|
3 |
Excludes the
value of portfolio securities received or delivered as a result of in-kind
purchases or
redemptions of the fund’s capital shares, including ETF Creation
Units. |
35
Additional
Information
A Precautionary
Note to Investment Companies. The Fund’s ETF Shares are issued
by a registered investment company, and therefore the acquisition of such shares
by other investment companies and private funds is subject to the restrictions
of Section 12(d)(1) of the Investment Company Act of 1940 (the 1940 Act). SEC
Rule 12d1-4 under the 1940 Act permits registered investment companies to invest
in other registered investment companies beyond the limits in Section 12(d)(1),
subject to certain conditions, including that funds with different investment
advisors must enter into a fund of funds investment
agreement.
Forum
Selection. The Trust’s
Bylaws designate Delaware courts as the exclusive forum for certain claims
against or related to the Trust, a trustee, an officer, or other employee of the
Trust, except that, unless the Trust otherwise consents in writing, the U.S.
Federal District Courts are the exclusive forum for the resolution of complaints
under the Securities Act of 1933 or the 1940 Act. These provisions may limit a
shareholder’s ability to bring a claim in a different forum and may result in
increased shareholder costs in pursuing such a claim.
Shareholder
Rights. The Fund’s
Agreement and Declaration of Trust, as amended, requires a shareholder bringing
a derivative action on behalf of the Trust that is subject to a pre-suit demand
to collectively hold at least 10% of the outstanding shares of the Trust or at
least 10% of the outstanding shares of the series or class to which the demand
relates and to undertake to reimburse the Trust for the expense of any counsel
or advisors used when considering the merits of the demand in the event that the
board of trustees determines not to bring such action. In each case, these
requirements do not apply to claims arising under the federal securities laws to
the extent that any such federal securities laws, rules, or regulations do not
permit such application. The Trust’s Bylaws also provide that shareholders waive
the right to trial by jury to the fullest extent permitted by
law.
Joint Committed
Credit Facility. The
Fund participates, along with other funds managed by Vanguard, in a committed
credit facility provided by a syndicate of lenders pursuant to a credit
agreement that may be renewed annually; each Vanguard fund is individually
liable for its borrowings, if any, under the credit facility. The amount and
terms of the committed credit facility are subject to approval by the Board and
renegotiation with the lender syndicate on an annual basis.
36
Securities
Market Indexes
Listed below is the broad-based securities market index, as referenced in the Fund’s Average Annual Total Returns table:
Listed below is the broad-based securities market index, as referenced in the Fund’s Average Annual Total Returns table:
Bloomberg
Municipal Bond Index.
An index that includes most investment-grade tax-exempt bonds that are issued by
state and local governments.
Certain affiliates of the Fund and
the advisor may purchase and resell ETF Shares pursuant to this
Prospectus.
|
Vanguard
Fund |
Inception
Date |
|
Vanguard
Fund
Number |
CUSIP
Number |
|
Vanguard
Tax-Exempt Bond Index Fund |
|
|
|
|
|
ETF
Shares |
8/21/2015 |
|
4391 |
922907746 |
Inception Date means the date on
which the assets of a fund (or one of its share classes) are first invested in
accordance with the fund’s investment objective. For funds with a subscription
period, the inception date is the day after that period ends. Investment
performance is generally measured from the inception date.
CGS identifiers have been provided by
CUSIP Global Services, managed on behalf of the American Bankers Association by
FactSet Research Systems Inc., and are not for use or dissemination in a manner
that would serve as a substitute for any CUSIP service. The CUSIP Database, ©
2026 American Bankers Association. “CUSIP” is a registered trademark of the
American Bankers Association.
CFA® is a registered trademark owned by
CFA Institute.
37
The S&P National AMT-Free
Municipal Bond Index is a product of S&P Dow Jones Indices LLC, a division
of S&P Global, or its affiliates (“SPDJI”), and has been licensed for use by
Vanguard. Standard & Poor’s®, and S&P® are registered trademarks of
Standard & Poor’s Financial Services LLC, a division of S&P Global
(“S&P”) and Dow Jones® is a registered trademark of Dow
Jones Trademark Holdings LLC (“Dow Jones”). The trademarks have been licensed to
SPDJI and have been sublicensed for use for certain purposes by Vanguard.
Vanguard Tax-Exempt Bond ETF is not sponsored, endorsed, sold or promoted by
SPDJI, Dow Jones, S&P, or any of their respective affiliates (collectively,
“S&P Dow Jones Indices”). S&P Dow Jones Indices make no representation
or warranty, express or implied, to the owners of Vanguard Tax-Exempt Bond ETF
or any member of the public regarding the advisability of investing in
securities generally or in Vanguard Tax-Exempt Bond ETF particularly or the
ability of the S&P National AMT-Free Municipal Bond Index to track general
market performance. S&P Dow Jones Indices’ only relationship to Vanguard
with respect to the S&P National AMT-Free Municipal Bond Index is the
licensing of the Index and certain trademarks, service marks and/or trade names
of S&P Dow Jones Indices and/or its licensors. The S&P National AMT-Free
Municipal Bond Index is determined, composed and calculated by S&P Dow Jones
Indices without regard to Vanguard or Vanguard Tax-Exempt Bond ETF. S&P Dow
Jones Indices have no obligation to take the needs of Vanguard or the owners of
Vanguard Tax-Exempt Bond ETF into consideration in determining, composing or
calculating the S&P National AMT-Free Municipal Bond Index. S&P Dow
Jones Indices are not responsible for and have not participated in the
determination of the prices, and amount of Vanguard Tax-Exempt Bond ETF or the
timing of the issuance or sale of Vanguard Tax-Exempt Bond ETF or in the
determination or calculation of the equation by which Vanguard Tax-Exempt Bond
ETF is to be converted into cash, surrendered or redeemed, as the case may be.
S&P Dow Jones Indices have no obligation or liability in connection with the
administration, marketing or trading of Vanguard Tax-Exempt Bond ETF. There is
no assurance that investment products based on the S&P National AMT-Free
Municipal Bond Index will accurately track index performance or provide positive
investment returns. S&P Dow Jones Indices LLC is not an investment advisor.
Inclusion of a security within an index is not a recommendation by S&P Dow
Jones Indices to buy, sell, or hold such security, nor is it considered to be
investment advice.
S&P DOW JONES INDICES DOES NOT GUARANTEE THE ADEQUACY, ACCURACY, TIMELINESS AND/OR THE COMPLETENESS OF THE INDEX OR ANY DATA RELATED THERETO OR ANY COMMUNICATION, INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNICATION (INCLUDING ELECTRONIC COMMUNICATIONS) WITH RESPECT THERETO. S&P DOW JONES INDICES SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS, OMISSIONS, OR DELAYS THEREIN. S&P DOW JONES INDICES MAKE NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE OR AS TO RESULTS TO BE OBTAINED BY VANGUARD, OWNERS OF VANGUARD TAX-EXEMPT BOND ETF, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P NATIONAL AMT-FREE MUNICIPAL BOND INDEX OR WITH RESPECT TO ANY DATA RELATED THERETO. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER SHALL S&P DOW JONES INDICES BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS, TRADING LOSSES, LOST TIME OR GOODWILL, EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE. THERE ARE NO THIRD PARTY BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN S&P DOW JONES INDICES AND VANGUARD, OTHER THAN THE LICENSORS OF S&P DOW JONES INDICES.
S&P DOW JONES INDICES DOES NOT GUARANTEE THE ADEQUACY, ACCURACY, TIMELINESS AND/OR THE COMPLETENESS OF THE INDEX OR ANY DATA RELATED THERETO OR ANY COMMUNICATION, INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNICATION (INCLUDING ELECTRONIC COMMUNICATIONS) WITH RESPECT THERETO. S&P DOW JONES INDICES SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS, OMISSIONS, OR DELAYS THEREIN. S&P DOW JONES INDICES MAKE NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE OR AS TO RESULTS TO BE OBTAINED BY VANGUARD, OWNERS OF VANGUARD TAX-EXEMPT BOND ETF, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P NATIONAL AMT-FREE MUNICIPAL BOND INDEX OR WITH RESPECT TO ANY DATA RELATED THERETO. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER SHALL S&P DOW JONES INDICES BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS, TRADING LOSSES, LOST TIME OR GOODWILL, EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE. THERE ARE NO THIRD PARTY BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN S&P DOW JONES INDICES AND VANGUARD, OTHER THAN THE LICENSORS OF S&P DOW JONES INDICES.
38
“Bloomberg®” and Bloomberg
Municipal Bond Index (the “Index”) are service marks of Bloomberg Finance L.P.
and its affiliates, including Bloomberg Index Services Limited (“BISL”), the
administrator of the index (collectively, “Bloomberg”), and have been licensed
for use for certain purposes by Vanguard.
Vanguard Tax-Exempt
Bond ETF (the “Fund”) is not sponsored, endorsed, sold or promoted by Bloomberg.
Bloomberg does not make any representation or warranty, express or implied, to
the owners of or counterparties to the Fund or any member of the public
regarding the advisability of investing in securities or commodities generally
or in the Fund particularly. The only relationship of Bloomberg to Vanguard is
the licensing of certain trademarks, trade names and service marks and of the
Index, which are determined, composed and calculated by BISL without regard to
Vanguard or the Fund. Bloomberg has no obligation to take the needs of Vanguard
or the owners of the Fund into consideration in determining, composing or
calculating the Index. Bloomberg is not responsible for and has not participated
in the determination of the timing, price, or quantities of the Fund to be
issued. Bloomberg shall not have any obligation or liability, including, without
limitation, to customers of the Fund, in connection with the administration,
marketing or trading of the Fund.
BLOOMBERG DOES NOT
GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE INDEX OR ANY DATA RELATED
THERETO AND SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS OR INTERRUPTIONS
THEREIN. BLOOMBERG DOES NOT MAKE ANY WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS
TO BE OBTAINED BY VANGUARD, OWNERS OF THE FUND OR ANY OTHER PERSON OR ENTITY
FROM THE USE OF THE INDEX OR ANY DATA RELATED THERETO. BLOOMBERG DOES NOT MAKE
ANY EXPRESS OR IMPLIED WARRANTIES AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE
INDEX OR ANY DATA RELATED THERETO. WITHOUT LIMITING ANY OF THE FOREGOING, TO THE
MAXIMUM EXTENT ALLOWED BY LAW, BLOOMBERG, ITS LICENSORS, AND ITS AND THEIR
RESPECTIVE EMPLOYEES, CONTRACTORS, AGENTS, SUPPLIERS, AND VENDORS SHALL HAVE NO
LIABILITY OR RESPONSIBILITY WHATSOEVER FOR ANY INJURY OR DAMAGES—WHETHER DIRECT,
INDIRECT, CONSEQUENTIAL, INCIDENTAL, PUNITIVE OR OTHERWISE—ARISING IN CONNECTION
WITH THE FUND OR INDEX OR ANY DATA OR VALUES RELATING THERETO—WHETHER ARISING
FROM THEIR NEGLIGENCE OR OTHERWISE, EVEN IF NOTIFIED OF THE POSSIBILITY
THEREOF.
39
Connect with
Vanguard® ˃ vanguard.com
For
More Information
If you would like
more information about Vanguard Tax-Exempt Bond ETF, the following documents are
available free upon request:
Annual/Semiannual
Reports to Shareholders and Form N-CSR
Additional
information about the Fund’s investments is available in the Fund’s annual and
semiannual reports to shareholders and in Form N-CSR. In the annual report, you
will find a discussion of the market conditions and investment strategies that
significantly affected the Fund’s performance during its last fiscal year. In
Form N-CSR, you will find the Fund’s annual and semiannual financial
statements.
Statement
of Additional Information (SAI)
The SAI provides more detailed
information about the Fund’s ETF Shares and is incorporated by reference into
(and thus legally a part of) this Prospectus.
To obtain a free copy
of the latest annual or semiannual report, financial statements, or the SAI, or
to request additional information about Vanguard ETF Shares, please visit
https://vgi.vg/fund-literature or contact us as
follows:
Telephone:
866-499-8473; Text telephone for people with hearing impairment:
800-749-7273
Information
Provided by the SEC
Reports and other
information about the Fund are available in the EDGAR database on the SEC’s
website at sec.gov, or you can receive copies of this information, for a fee, by
electronic request at the following email address:
[email protected].
Fund’s Investment
Company Act file number: 811-02687
© 2026 The
Vanguard Group, Inc. All rights reserved.
Vanguard
Marketing Corporation, Distributor.
P 4391
022026