Features

• Bond funds are synonymous with income funds. They are investment companies that invest primarily in bonds or other types of securitized debt. Funds can specialize in government (low risk, low return), municipal, corporate, convertible, zero coupon (high risk, high return) or a hybrid combination. These types of bonds vary in terms of volatility, time period, risk and return.
  
  

Read Prospectus

• While bonds are safe, they are still subject to credit (default), interest rate (volatility), and prepayment (issuers paying off the bond early at low interest rates) risk. Always read the prospectus thoroughly before buying shares to understand the terms and conditions of the offering.
  
  

Tax-Exempt Bond Funds

• Some bond funds only invest in municipal bonds, which are exempt from federal (and usually state) taxes. The fund prospectus will tell you what portion of the fund is tax-exempt.
  
  

Ultra-Short Bond Funds

• Some bond funds only invest in short-term debt securities. These funds are called ultra-short bond funds. Ultra-short bond funds have a higher risk profile than money market funds or certificates of deposit.