| |
Transaction
Fee on Purchases and Sales |
|
Transaction
Fee on Reinvested Dividends |
|
Transaction
Fee on Conversion to ETF Shares |
|
| |
Management
Fees |
|
12b-1
Distribution Fee |
|
Other
Expenses |
|
Total Annual
Fund Operating Expenses |
|
1
Year |
3
Years |
5
Years |
10
Years |
$ |
$ |
$ |
$ |
|
Total
Return |
Quarter |
|
|
|
|
- |
|
|
1
Year |
Since
Fund
Inception |
Fund
Inception
Date |
Vanguard
ESG US Corporate Bond ETF |
|
|
|
Based
on NAV |
|
|
|
Return Before
Taxes |
- |
|
|
Return After
Taxes on Distributions |
- |
- |
|
Return After
Taxes on Distributions and Sale of Fund
Shares |
- |
- |
|
Based
on Market Price |
|
|
|
Return Before
Taxes |
- |
|
|
Bloomberg
MSCI U.S. Corporate SRI Select Index
(reflects no
deduction for fees, expenses, or taxes) |
- |
|
|
Bloomberg
U.S. Corporate Bond Index
(reflects no
deduction for fees, expenses, or taxes) |
- |
|
|
Plain
Talk About Fund Expenses |
All funds
have operating expenses. These expenses, which are deducted
from a
fund’s gross income, are expressed as a percentage of the net assets
of the
fund. Assuming that operating expenses remain as stated in the Fees
and
Expenses section, Vanguard ESG U.S. Corporate Bond ETF Shares’
expense
ratio would be 0.12%, or $1.20 per $1,000 of average net assets.
The
average expense ratio for Corporate Debt Funds BBB-Rated in 2021 was
0.80%, or
$8.00 per $1,000 of average net assets (derived from data
provided
by Lipper, a Thomson Reuters Company, which reports on the
fund
industry). |
Plain
Talk About Costs of Investing |
Costs
are an important consideration in choosing an ETF. That is because
you,
as a shareholder, pay a proportionate share of the costs of operating a
fund
and any transaction costs incurred when the fund buys or sells
securities.
These costs can erode a substantial portion of the gross income
or
the capital appreciation a fund achieves. Even seemingly small differences
in
expenses can, over time, have a dramatic effect on a fund’s
performance. |
Type
of Bond (Maturity) |
After
a 1%
Increase |
After
a 1%
Decrease |
After
a 2%
Increase |
After
a 2%
Decrease |
Short-Term
(2.5 years) |
$977 |
$1,024 |
$954 |
$1,049 |
Intermediate-Term
(10 years) |
922 |
1,086 |
851 |
1,180 |
Long-Term
(20 years) |
874 |
1,150 |
769 |
1,328 |
Plain
Talk About Bonds and Interest Rates |
As
a rule, when interest rates rise, bond prices fall. The opposite is also
true:
Bond
prices go up when interest rates fall. Why do bond prices and interest
rates
move in opposite directions? Let’s assume that you hold a bond
offering
a 4% yield. A year later, interest rates are on the rise and bonds of
comparable
quality and maturity are offered with a 5% yield. With
higher-yielding
bonds available, you would have trouble selling your 4% bond
for
the price you paid—you would probably have to lower your asking price.
On
the other hand, if interest rates were falling and 3% bonds were being
offered,
you should be able to sell your 4% bond for more than you
paid. |
Plain
Talk About Bond Maturities |
A
bond is issued with a specific maturity date—the date when the issuer
must
pay back the bond’s principal (face value). Bond maturities range from
less
than 1 year to more than 30 years. Typically, the longer a bond’s
maturity,
the
more price risk you, as a bond investor, will face as interest rates
rise—but
also the higher the potential yield you could receive. Longer-term
bonds
are generally more suitable for investors willing to take a greater risk
of
price fluctuations to get higher and more stable interest income.
Shorter-term
bond investors should be willing to accept lower yields and
greater
income variability in return for less fluctuation in the value of their
investment.
The stated maturity of a bond may differ from the effective
maturity
of a bond, which takes into consideration that an action such as a
call
or refunding may cause bonds to be repaid before their stated
maturity
dates. |
Plain
Talk About Credit Quality |
A
bond’s credit quality rating is an assessment of the issuer’s ability to
pay
interest
on the bond and, ultimately, to repay the principal. The lower the
credit
quality, the greater the perceived chance that the bond issuer will
default,
or fail to meet its payment obligations. All things being equal, the
lower
a bond’s credit quality, the higher its yield should be to compensate
investors
for assuming additional risk. |
Plain
Talk About Types of Bonds |
Bonds
are issued (sold) by many sources: Corporations issue corporate
bonds;
the federal government issues U.S. Treasury bonds; agencies of the
federal
government issue agency bonds; financial institutions issue
asset-backed
bonds; and mortgage holders issue “mortgage-backed”
pass-through
certificates. Each issuer is responsible for paying back the
bond’s
initial value as well as for making periodic interest payments. Many
bonds
issued by government agencies and entities are neither guaranteed
nor
insured by the U.S. government.
|
Plain
Talk About U.S. Government-Sponsored Enterprises |
A
variety of U.S. government-sponsored enterprises (GSEs), such as the
Federal
Home Loan Mortgage Corporation (FHLMC), the Federal National
Mortgage
Association (FNMA), and the Federal Home Loan Banks (FHLBs),
issue
debt and mortgage-backed securities. Although GSEs may be chartered
or
sponsored by acts of Congress, they are not funded by congressional
appropriations.
In September of 2008, the U.S. Treasury placed FNMA and
FHLMC
under conservatorship and appointed the Federal Housing Finance
Agency
(FHFA) to manage their daily operations. In addition, the U.S. Treasury
entered
into purchase agreements with FNMA and FHLMC to provide them
with
capital in exchange for senior preferred stock. Generally, a GSE’s
securities
are neither issued nor guaranteed by the U.S. Treasury and are not
backed
by the full faith and credit of the U.S. government. In most cases,
these
securities are supported only by the credit of the GSE, standing alone. In
some
cases, a GSE’s securities may be supported by the ability of the GSE to
borrow
from the U.S. Treasury or may be supported by the U.S. government in
some
other way. Securities issued by the Government National Mortgage
Association
(GNMA), however, are backed by the full faith and credit of the
U.S.
government. |
Plain
Talk About Derivatives |
Derivatives
can take many forms. Some forms of derivatives—such as
exchange-traded
futures and options on securities, commodities, or
indexes—have
been trading on regulated exchanges for decades. These
types
of derivatives are standardized contracts that can easily be bought and
sold
and whose market values are determined and published daily. On the
other
hand, non-exchange-traded derivatives—such as certain swap
agreements—tend
to be more specialized or complex and may be more
difficult
to accurately value. |
Plain
Talk About Vanguard’s Unique Corporate Structure |
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. |
Plain
Talk About Distributions |
As
a shareholder, you are entitled to your portion of a fund’s income from
interest
as well as capital gains from the fund’s sale of investments. Income
consists
of interest the fund earns from its money market and bond
investments.
Capital gains are realized whenever the fund sells securities for
higher
prices than it paid for them. These capital gains are either short-term
or
long-term, depending on whether the fund held the securities for one year
or
less or for more than one
year. |
Vanguard
Fund |
Inception
Date |
Vanguard
Fund
Number |
CUSIP
Number |
Vanguard
ESG U.S. Corporate Bond ETF |
9/22/20 |
4158 |
921910691 |
|
Year Ended August
31, |
September 22
20201 to
August
31, |
For a
Share Outstanding Throughout Each Period |
2022 |
2021 |
Net
Asset Value, Beginning of Period |
$74.86 |
$75.00 |
Investment
Operations |
|
|
Net
Investment Income2 |
1.542 |
1.211 |
Net
Realized and Unrealized Gain (Loss) on Investments |
(12.307) |
(.330) |
Total from
Investment Operations |
(10.765) |
.881 |
Distributions |
|
|
Dividends
from Net Investment Income |
(1.445) |
(1.021) |
Distributions
from Realized Capital Gains |
— |
— |
Total
Distributions |
(1.445) |
(1.021) |
Net
Asset Value, End of Period |
$62.65 |
$74.86 |
Total
Return |
-14.54% |
1.20% |
Ratios/Supplemental
Data |
|
|
Net
Assets, End of Period (Millions) |
$338 |
$217 |
Ratio of
Total Expenses to Average Net Assets |
0.12%3 |
0.12%4 |
Ratio of
Net Investment Income to Average Net Assets |
2.26% |
1.74%4 |
Portfolio
Turnover Rate5 |
34% |
24% |
|
|
1 |
Inception. |
2 |
Calculated
based on average shares outstanding. |
3 |
The
ratio of expenses to average net assets for the period net of reduction
from custody fee offset arrangements
was
0.12%. |
4 |
Annualized. |
5 |
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. |