| March 18, 2015 | ||
| Asen Parachkevov, Esq. | ||
| U.S. Securities and Exchange Commission | via electronic filing | |
| 100 F Street, N.E. | ||
| Washington, DC 20549 | ||
| RE: | Vanguard Municipal Bond Funds | |
| File No. 2-57689 | ||
| Post-Effective Amendment No. 81 – Vanguard Tax-Exempt Bond Index Fund (the “Fund”) | ||
Dear Mr. Parachkevov,
This letter responds to your comments provided on February 24, 2015 on the above referenced post-effective amendment. Unless noted otherwise, the comments and responses below relate to both the Fund’s conventional share class and exchange-traded share class (“ETF Share Class”).
| Comment 1: | Prospectus (ETF Share Class) |
| Comment: | Please identify the exemptive order upon which the Fund’s ETF Share Class will rely. |
| Response: | The Fund’s ETF Share Class will rely on the following Commission order:In the Matter |
| of Vanguard Bond Index Funds, IC Rel. Nos. 27750 (Mar. 9, 2007) (notice) and 27773 | |
| (Apr. 2, 2007) (order). | |
| Comment 2: | Prospectus (ETF Share Class) |
| Comment: | Please confirm that the Fund’s disclosure is consistent with the conditions articulated in |
| the relevant Commission notice and order. | |
| Response: | We confirm that the disclosure is consistent with the above referenced Commission |
| notice and order as well as Form N-1A. | |
| Comment 3: | Prospectus – Fund Summary – Fees and Expenses |
| Comment: | Please review the portfolio turnover disclosure for consistency with Item 3 of Form N- |
| 1A. | |
| Response: | We have reviewed the disclosure and will modify it to include the following statement: |
| “The Fund pays transaction costs, such as commissions, when it buys and sells securities | |
| (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher | |
| transaction costs and may result in more taxes when Fund shares are held in a taxable | |
| account. These costs, which are not reflected in annual fund operating expenses or in the | |
| previous expense examples, reduce the Fund’s performance.” | |
| Asen Parachkevov, Esq. |
| March 18, 2015 |
| Page 2 |
| Comment 4: | Prospectus – Fund Summary – Principal Risks |
| Comment: | Please consider whether any additional risk disclosure would be appropriate in light of |
| IM Guidance 2014-01, Risk Management in Changing Fixed Income Market Conditions. | |
| Response: | We have considered the IM Guidance and have determined that the Fund’s risk |
| disclosure is appropriate. | |
| Comment 5: | Prospectus – More on the Fund – Other Investment Policies and Risks |
| Comment: | Please confirm that the Fund’s disclosure relating to principal investment strategies |
| should not include reference to the Fund’s use of derivatives, U.S. Treasury futures, and | |
| exchange-traded funds. | |
| Response: | We confirm that the Fund’s disclosure relating to principal investment strategies is |
| appropriate. | |
| Comment 6: | Prospectus – More on the Fund – Temporary Investment Measures |
| Comment: | Please consider whether the disclosure should elaborate on the extent to which the Fund |
| will use derivatives and exchange-traded funds. | |
| Response: | We have considered the disclosure and determined that it is appropriate. |
| Comment 7: | Tandy Requirements |
| As required by the SEC, the Fund acknowledges that: | |
| • | The Fund is responsible for the adequacy and accuracy of the disclosure in the filing. |
| • | Staff comments or changes in response to staff comments in the filings reviewed by the staff |
| do not foreclose the Commission from taking any action with respect to the filing. | |
| • | The Fund may not assert staff comments as a defense in any proceeding initiated by the |
| Commission or any person under the federal securities laws of the United States. | |
| Please contact me at (610) 669-1605 with any questions or comments regarding the above response. | |
| Thank you. | |
| Sincerely, | |
Brian P. Murphy
Senior Counsel
The Vanguard Group, Inc.