Muni ladder ETF MUND offers annual tax-exempt principal

Northern Trust’s 2055 Tax-Exempt Distributing Ladder ETF (MUND) holds municipal bonds scheduled to mature each calendar year through 2055. The fund allocates assets across those yearly rungs and makes an annual distribution of principal to shareholders. The fund also pays interest that is generally exempt from federal income tax.

Each rung corresponds to a calendar year between now and 2055. The portfolio contains municipal securities with maturity dates matching those years. The fund aims for relatively even allocation across rungs to provide a steady stream of maturing bonds over time.

When an underlying bond matures, MUND distributes the principal to shareholders once a year instead of automatically reinvesting it. Distributions therefore include returned principal as well as interest income.

The ETF structure provides intraday liquidity and diversification across many issuers and maturities. Shares trade at market prices and are not individually redeemed for the underlying bonds.

Operational and market risks affect the fund. An ETF does not guarantee repayment of principal in the same way an individual bond does; any return of principal depends on the fund’s portfolio and market conditions. The fund’s net asset value can decline as it distributes income and principal. Brokerage commissions, fees and other expenses reduce investor returns.

Tax treatment varies by investor and by the specific securities held. Municipal interest is generally exempt from federal income tax; state and local tax treatment depends on the bond and the investor’s state of residence. The fund prospectus provides detailed information on objectives, holdings, risks, charges and expenses and is available through the fund’s distributor.

Laddered bond strategies stagger maturities to manage interest-rate and reinvestment timing. Traditional individual-bond ladders commonly reinvest proceeds into later rungs to maintain a rolling ladder. MUND’s distributing ladder model passes matured principal to shareholders annually, differing from passive municipal bond ETFs that focus on total return.

Fixed-income risks for the fund include interest-rate sensitivity and credit risk. Annual principal distributions affect cash flow and tax reporting for investors.