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• | The 12 months ended August 31, 2022, were a very challenging period for financial markets. Vanguard Total Corporate Bond ETF returned –15.11% (based on net asset value), roughly in line with the expense-free –14.91% return of its benchmark. |
• | Early on, pent-up demand helped spur global growth and push unemployment rates down. The economic backdrop deteriorated, however, as inflation soared to multidecade highs, fueled in part by higher energy and food prices in the wake of Russia’s invasion of Ukraine. The Federal Reserve reacted by raising interest rates, which weighed on bond prices and sparked fears of recession. |
• | The yield of the bellwether 10-year U.S. Treasury bond rose significantly over the period, from 1.31% to 3.19%. As yield spreads widened for corporate bonds, they underperformed both Treasuries and mortgage-backed securities. |
• | By maturity, longer-term corporates suffered more than their shorter-term counterparts. By credit quality, bonds rated A held up the best but still averaged a decline of more than –14%. |
• | By sector, bonds issued by industrial companies and utilities weighed more on returns than those of financial institutions. |
Average Annual Total Returns Periods Ended August 31, 2022 | |||
One Year | Three Years | Five Years | |
Stocks | |||
Russell 1000 Index (Large-caps) | -12.96% | 12.14% | 11.61% |
Russell 2000 Index (Small-caps) | -17.88 | 8.59 | 6.95 |
Russell 3000 Index (Broad U.S. market) | -13.28 | 11.90 | 11.29 |
FTSE All-World ex US Index (International) | -19.00 | 3.48 | 2.12 |
Bonds | |||
Bloomberg
U.S. Aggregate Float Adjusted Index (Broad taxable market) |
-11.65% | -2.01% | 0.54% |
Bloomberg
Municipal Bond Index (Broad tax-exempt market) |
-8.63 | -0.83 | 1.28 |
FTSE Three-Month U.S. Treasury Bill Index | 0.44 | 0.56 | 1.10 |
CPI | |||
Consumer Price Index | 8.26% | 4.90% | 3.82% |
• | Based on actual fund return. This section helps you to estimate the actual expenses that you paid over the period. The ”Ending Account Value“ shown is derived from the fund’s actual return, and the third column shows the dollar amount that would have been paid by an investor who started with $1,000 in the fund. You may use the information here, together with the amount you invested, to estimate the expenses that you paid over the period. |
• | Based on hypothetical 5% yearly return. This section is intended to help you compare your fund‘s costs with those of other mutual funds. It assumes that the fund had a yearly return of 5% before expenses, but that the expense ratio is unchanged. In this case—because the return used is not the fund’s actual return—the results do not apply to your investment. The example is useful in making comparisons because the Securities and Exchange Commission requires all mutual funds to calculate expenses based on a 5% return. You can assess your fund’s costs by comparing this hypothetical example with the hypothetical examples that appear in shareholder reports of other funds. |
Six Months Ended August 31, 2022 | |||
Total Corporate Bond ETF | Beginning
Account Value 2/28/2022 |
Ending
Account Value 8/31/2022 |
Expenses
Paid During Period |
Based on Actual Fund Return | $1,000.00 | $ 902.10 | $0.19 |
Based on Hypothetical 5% Yearly Return | 1,000.00 | 1,025.00 | 0.20 |
Average Annual Total Returns Periods Ended August 31, 2022 | ||||
One
Year |
Since
Inception (11/7/2017) |
Final
Value of a $10,000 Investment | ||
Total
Corporate Bond ETF Net Asset Value |
-15.11% | 0.79% | $10,384 | |
Total
Corporate Bond ETF Market Price |
-15.16 | 0.78 | 10,381 | |
Bloomberg U.S. Corporate Bond Index | -14.91 | 0.96 | 10,471 | |
Bloomberg U.S. Aggregate Float Adjusted Index | -11.65 | 0.58 | 10,283 |
Cumulative Returns of ETF Shares: November 7, 2017, Through August 31, 2022 | ||
One
Year |
Since
Inception (11/7/2017) | |
Total Corporate Bond ETF Market Price | -15.16% | 3.81% |
Total Corporate Bond ETF Net Asset Value | -15.11 | 3.84 |
Bloomberg U.S. Corporate Bond Index | -14.91 | 4.71 |
Vanguard Short-Term Corporate Bond ETF | 37.2% |
Vanguard Long-Term Corporate Bond ETF | 35.2 |
Vanguard Intermediate-Term Corporate Bond ETF | 27.6 |
Shares | Market
Value• ($000) | |||||
Investment Companies (100.0%) | ||||||
U.S. Bond Funds (100.0%) | ||||||
Vanguard Short-Term Corporate Bond ETF | 2,832,757 | 215,431 | ||||
Vanguard Long-Term Corporate Bond ETF | 2,532,363 | 203,399 | ||||
Vanguard Intermediate-Term Corporate Bond ETF | 2,008,986 | 159,976 | ||||
Total Investment Companies (Cost $687,897) | 578,806 | |||||
Temporary Cash Investments (0.0%) | ||||||
Money Market Fund (0.0%) | ||||||
1 | Vanguard Market Liquidity Fund, 2.284% (Cost $281) | 2,810 | 281 | |||
Total Investments (100.0%) (Cost $688,178) | 579,087 | |||||
Other Assets and Liabilities—Net (0.0%) | (18) | |||||
Net Assets (100%) | 579,069 |
Cost is in $000. |
• | See Note A in Notes to Financial Statements. |
1 | Affiliated money market fund available only to Vanguard funds and certain trusts and accounts managed by Vanguard. Rate shown is the 7-day yield. |
($000s, except shares and per-share amounts) | Amount |
Assets | |
Investments in Securities, at Value—Affiliated Funds (Cost $688,178) | 579,087 |
Receivables for Investment Securities Sold | 1,194 |
Receivables for Accrued Income | 1 |
Total Assets | 580,282 |
Liabilities | |
Due to Custodian | 15 |
Payables for Investment Securities Purchased | 1,198 |
Total Liabilities | 1,213 |
Net Assets | 579,069 |
At August 31, 2022, net assets consisted of: |
|
Paid-in Capital | 693,467 |
Total Distributable Earnings (Loss) | (114,398) |
Net Assets | 579,069 |
Net Assets | |
Applicable
to 7,560,000 outstanding $.001 par value shares of beneficial interest (unlimited authorization) |
579,069 |
Net Asset Value Per Share | $76.60 |
Year
Ended August 31, 2022 | |
($000) | |
Investment Income | |
Income | |
Income Distributions Received from Affiliated Funds | 16,032 |
Net Investment Income—Note B | 16,032 |
Realized Net Gain (Loss) | |
Capital Gain Distributions Received from Affiliated Funds | 1,772 |
Affiliated Funds Sold1 | (10,788) |
Realized Net Gain (Loss) | (9,016) |
Change in Unrealized Appreciation (Depreciation) from Affiliated Funds | (111,968) |
Net Increase (Decrease) in Net Assets Resulting from Operations | (104,952) |
1 | Includes ($4,532,000) of net gain (loss) resulting from in-kind redemptions. |
Year Ended August 31, | ||
2022
($000) |
2021
($000) | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net Investment Income | 16,032 | 17,944 |
Realized Net Gain (Loss) | (9,016) | 10,516 |
Change in Unrealized Appreciation (Depreciation) | (111,968) | (18,980) |
Net Increase (Decrease) in Net Assets Resulting from Operations | (104,952) | 9,480 |
Distributions | ||
Total Distributions | (16,149) | (17,930) |
Capital Share Transactions | ||
Issued | 108,869 | 389,344 |
Issued in Lieu of Cash Distributions | — | — |
Redeemed | (103,767) | (304,510) |
Net Increase (Decrease) from Capital Share Transactions | 5,102 | 84,834 |
Total Increase (Decrease) | (115,999) | 76,384 |
Net Assets | ||
Beginning of Period | 695,068 | 618,684 |
End of Period | 579,069 | 695,068 |
For a Share Outstanding Throughout Each Period |
Year Ended August 31, |
November 7, 20171 to August 31, 2018 | |||
2022 | 2021 | 2020 | 2019 | ||
Net Asset Value, Beginning of Period | $92.55 | $92.62 | $89.19 | $81.59 | $85.00 |
Investment Operations | |||||
Net Investment Income2 | 2.141 | 2.229 | 2.638 | 2.825 | 2.081 |
Capital Gain Distributions Received2 | .237 | .053 | — | — | — |
Net Realized and Unrealized Gain (Loss) on Investments | (16.168) | (.131) | 3.614 | 7.717 | (3.445) |
Total from Investment Operations | (13.790) | 2.151 | 6.252 | 10.542 | (1.364) |
Distributions | |||||
Dividends from Net Investment Income | (2.148) | (2.221) | (2.822) | (2.942) | (2.046) |
Distributions from Realized Capital Gains | (.012) | — | — | — | — |
Total Distributions | (2.160) | (2.221) | (2.822) | (2.942) | (2.046) |
Net Asset Value, End of Period | $76.60 | $92.55 | $92.62 | $89.19 | $81.59 |
Total Return | -15.11% | 2.37% | 7.18% | 13.29% | -1.60% |
Ratios/Supplemental Data | |||||
Net Assets, End of Period (Millions) | $579 | $695 | $619 | $203 | $55 |
Ratio of Total Expenses to Average Net Assets | — | — | — | — | — 3 |
Acquired Fund Fees and Expenses | 0.04% | 0.04% | 0.05% | 0.05% | 0.07% 3 |
Ratio of Net Investment Income to Average Net Assets | 2.52% | 2.43% | 2.94% | 3.38% | 3.10% 3 |
Portfolio Turnover Rate4 | 14% | 10% | 40% | 12% | 4% |
1 | Inception. |
2 | Calculated based on average shares outstanding. |
3 | Annualized. |
4 | 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. |
Amount
($000) | |
Paid-in Capital | (4,532) |
Total Distributable Earnings (Loss) | 4,532 |
Amount
($000) | |
Undistributed Ordinary Income | 127 |
Undistributed Long-Term Gains | — |
Capital Loss Carryforwards | (2,232) |
Qualified Late-Year Losses | — |
Net Unrealized Gains (Losses) | (112,293) |
Year Ended August 31, | ||
2022
Amount ($000) |
2021
Amount ($000) | |
Ordinary Income* | 16,149 | 17,930 |
Long-Term Capital Gains | — | — |
Total | 16,149 | 17,930 |
* | Includes short-term capital gains, if any. |
Amount
($000) | |
Tax Cost | 691,380 |
Gross Unrealized Appreciation | 22 |
Gross Unrealized Depreciation | (112,315) |
Net Unrealized Appreciation (Depreciation) | (112,293) |
Year Ended August 31, | ||||
2022 Shares (000) |
2021 Shares (000) |
|||
Issued | 1,310 | 4,200 | ||
Issued in Lieu of Cash Distributions | — | — | ||
Redeemed | (1,260) | (3,370) | ||
Net Increase (Decrease) in Shares Outstanding | 50 | 830 |
Current Period Transactions | ||||||||
Aug.
31, 2021 Market Value ($000) |
Purchases
at Cost1 ($000) |
Proceeds
from Securities Sold2 ($000) |
Realized
Net Gain (Loss) ($000) |
Change
in Unrealized App. (Dep.) ($000) |
Income
($000) |
Capital
Gain Distributions Received ($000) |
Aug.
31, 2022 Market Value ($000) | |
Vanguard Intermediate-Term Corporate Bond ETF | 197,418 | 46,969 | 51,354 | (3,172) | (29,885) | 4,345 | 1,252 | 159,976 |
Vanguard Long-Term Corporate Bond ETF | 270,620 | 83,009 | 79,004 | (6,156) | (65,070) | 8,172 | — | 203,399 |
Vanguard Market Liquidity Fund | 24 | NA 3 | NA 3 | — | — | 1 | — | 281 |
Vanguard Short-Term Corporate Bond ETF | 226,998 | 71,397 | 64,491 | (1,460) | (17,013) | 3,514 | 520 | 215,431 |
Total | 695,060 | 201,375 | 194,849 | (10,788) | (111,968) | 16,032 | 1,772 | 579,087 |
1 | Includes $108,836,000 of portfolio securities received as a result of in-kind purchases of the fund’s capital shares. |
2 | Includes $103,735,000 of portfolio securities delivered as a result of in-kind redemptions of the fund’s capital shares. |
3 | Not applicable—purchases and sales are for temporary cash investment purposes. |