Yes. In addition to paying taxes on any of the capital gains and dividends distributed to you while you owned the funds, when you sell fund A and buy fund B in an exchange, you will also incur a capital gain or loss on sale of the shares of fund A.
The capital gain or loss will depend on your basis and when you purchased the shares. If you bought them more than a year ago, it will be long-term; less than a year is short-term. It will be a gain if your basis is less than your sales price, or a loss if the reverse is true.
Vanguard will send you a 1099-B in January with the sale on it. You'll report it on Form 8949 and/or Schedule D.