Vanguard Announces Changes to Three Money Market Funds
03 June 2009 - 6:03AM
Business Wire
Vanguard has announced plans to merge the $6.7 billion Vanguard
Treasury Money Market Fund (VMPXX) into the lower-cost $21.8
billion Vanguard Admiral� Treasury Money Market Fund (VUSXX). The
merger is planned for early August.
In addition, Vanguard has closed the Vanguard Federal Money
Market Fund to all new accounts and to additional purchases from
current institutional accounts. A $10,000 daily investment limit
has been placed on current retail accounts.
�Taking these preventative measures will protect fund
shareholders and will help ensure that the yields of the funds
remain competitive,� said Bill McNabb, Vanguard CEO. �It is quite
possible that yields on government-backed securities, and
consequently the Vanguard Admiral Treasury Money Market and
Vanguard Federal Money Market Funds, will remain quite low for the
foreseeable future. Shareholders may wish to consider switching to
alternative Vanguard fund options that are consistent with their
goals and risk tolerance.�
Vanguard offers several other high-quality money market funds,
including Vanguard Prime Money Market Fund (VMMXX) and Vanguard�s
national and state-specific tax-exempt money market funds.
The merger of the Vanguard Treasury Money Market Fund, which has
an expense ratio of 0.28%, into the Admiral Treasury Money Market
Fund, with its lower expense ratio of 0.15%, will reduce expenses
for Treasury Fund shareholders. After the merger, the fund is
expected to maintain its expense ratio of 0.15%. Additionally,
reducing new cash flow into the Vanguard Federal Money Market Fund
may slow the decline of that fund�s yield.
Vanguard�s actions come amid continuing strong demand for
government-backed securities, which have served as a safe-haven
during the global financial crisis. This increased demand, coupled
with cuts to prevailing interest rates by the Federal Reserve, has
driven yields of government-backed securities to record lows, with
current one- and three-month Treasury bills yielding less than
0.20%. As securities in Vanguard money market funds mature, the
reinvestment of assets into new, lower-yielding securities
decreases the funds� yields.
About Vanguard
Vanguard, headquartered in Valley Forge, Pennsylvania, is one of
the world�s largest investment management companies and a leading
provider of company-sponsored retirement plan services. Vanguard
manages more than $1.1 trillion in U.S. mutual fund assets,
including nearly $490 billion in retirement assets. Vanguard offers
more than 150 funds to U.S. investors and more than 50 additional
funds in non-U.S. markets.
Vanguard Marketing Corporation, Distributor.
Asset figures as of May 31, 2009 unless otherwise noted.
For more information, visit www.vanguard.com, or call
800-662-7447 to obtain a fund prospectus. Investment objectives,
risks, charges, expenses, and other important information about a
fund are contained in the prospectus; read and consider it
carefully before investing.
An investment in a money market fund is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any
other government agency. Although a money market fund seeks to
preserve the value of your investment at $1 per share, it is
possible to lose money by investing in such a fund
Notwithstanding the preceding statements, Vanguard Prime Money
Market Fund, Vanguard Variable Insurance Money Market Portfolio and
all of Vanguard's tax-exempt money market funds are participating
in the U.S. Treasury's Temporary Guarantee Program for Money Market
Funds. The Program generally does not guarantee any new investments
in these funds made after September 19, 2008 and is scheduled to
expire on September 18, 2009. For more information, please see each
fund's most recent prospectus as supplemented on April 8, 2009.
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