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Chapter 11. Mutual Funds > Tax-Free Bond Funds

Tax-Free Bond Funds

Among the tax-free bond funds are the following:

  • State municipal bond funds. These funds invest primarily in municipal bonds issued by a particular state. These funds seek high after-tax income for residents of individual states.

  • State municipal bond funds—general. These funds invest primarily in single-state municipal bonds with an average maturity of more than five years or no specific stated maturity. The income from these funds is largely exempt from federal as well as state income tax for residents of the state.

  • State municipal bond funds—short-term. These funds invest primarily in single-state municipal bonds with an average maturity of one to five years. The income of these funds is largely exempt from federal as well as state income tax for residents of the state.

  • National municipal bond funds. These funds invest primarily in the bonds of various municipal issuers in the United States. These funds seek high current income free from federal tax.

  • National municipal bond funds—general. These funds invest primarily in municipal bonds with an average maturity of more than five years or no specific stated maturity.

  • National municipal bond funds—short-term. These funds invest primarily in municipal bonds with an average maturity of one to five years.


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