Changes to our taxable money market fund lineup

Today, we’re announcing some changes to our taxable money market lineup that aim to better support your needs for principal preservation, liquidity, and competitive yields. We’ve observed and navigated two market crises in 12 years. With that as a backdrop, we believe it’s better to provide clients with a highly competitive yield by lowering expenses on a secure government portfolio rather than incurring risk in the prime market.

A look at the key changes

Vanguard Prime Money Market Fund will change its investment approach and be renamed Vanguard Cash Reserves Federal Money Market Fund. When this change goes into effect in late September 2020, the fund will invest almost exclusively in cash, U.S. government securities, and/or repurchase agreements that are collateralized solely by U.S. government securities or cash. While the fund has historically been managed more conservatively than its peer group, this change further lowers its risk.

Effective today, the minimum initial investment for the fund’s Admiral™ Shares is being lowered from $5 million to $3,000, making more than 1 million shareholders eligible for reduced expenses (0.10{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca} for Admiral Shares compared with 0.16{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca} for Investor Shares).

With these changes, Vanguard seeks to continue to deliver a money market fund with yields that are highly competitive to those of prime money market funds, while providing the safety and security of a portfolio of government securities. Our formula is as simple as it has been successful: prudent management and low costs.

Our decades of experience, deep investment expertise, and low costs have enabled Vanguard’s taxable money market funds to deliver highly competitive yields without taking undue risks. This approach has allowed Vanguard Prime Money Market Fund Admiral Shares to outperform 97{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca} of the competition over the past 2 decades.* More impressive, Vanguard Federal Money Market Fund Investor Shares has trailed Vanguard Prime Money Market Fund Investor Shares only slightly over the same time period.**

Vanguard’s government money market funds have outperformed their peer-group averages and are ranked within the top decile of peers over the 1-, 3-, 5-, and 10-year periods ended June 30, 2020. We believe a low-cost government money market fund has the potential to rival the yield of a prime money market fund and at lower levels of credit and liquidity risk. Vanguard’s government money market funds have delivered strong returns relative to prime money market funds, and at lower levels of risk.***

What you need to do

Existing Investor share owners (VMMXX): You have the option to immediately convert† to Admiral Shares to begin taking advantage of the lower expense ratio. You can find simple step-by-step instructions here. If you don’t initiate a conversion, you’ll be automatically converted sometime between late 2020 through 2021. Note: Our checkwriting service isn’t available for the fund’s Admiral share class. Checkwriting is available for Vanguard Federal Money Market Fund and other Vanguard money market funds.

Existing Admiral share owners (VMRXX): You don’t need to take any action.

Personal Advisor clients who own Investor Shares (VMMXX): You’ll automatically be converted† to Admiral Shares during the next quarterly rebalance. Contact an advisor if you have questions about this transition. Note: Our checkwriting service isn’t available for the fund’s Admiral share class. Checkwriting is available for Vanguard Federal Money Market Fund and other Vanguard money market funds.

Reopening the Treasury Money Market Fund

Vanguard Treasury Money Market Fund (VUSXX) has reopened to new investors, also effective today. The fund was closed in April, during a period of heightened volatility and increased interest in U.S. Treasury investments, to protect existing investors from an accelerated reduction in the fund’s yield.

Because of changes in the market environment, Vanguard believes it’s now in the best interests of shareholders to reopen the fund.

*For the 20-year period ended June 30, 2020, Vanguard Prime Money Market Fund Admiral Shares outperformed 97{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca} of its peer-group average. (Source: Lipper, a Thomson Reuters Company.) Results will vary for other time periods. Only funds with a minimum 20-year history were included in the comparison. Note that the competitive performance data shown represent past performance, which is not a guarantee of future results, and that all investments are subject to risks. For the most recent performance, visit our website at vanguard.com/performance.
**The performance of Vanguard Prime Money Market Fund Investor Shares is as follows: 1 year, 1.52{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca}; 5 years, 1.25{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca}; 10 years, 0.64{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca}; 20 years, 1.68{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca}; 30 years, 2.82{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca}; since inception (June 4, 1975), 4.85{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca}. The fund’s current 7-day SEC yield (August 21, 2020) is 0.05{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca}. The fund’s expense ratio is 0.16{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca}. The performance of the fund’s benchmark (Money Market Funds Average) is as follows: 1 year, 1.16{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca}; 5 years, 0.89{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca}; 10 years, 0.44{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca}. The performance of Vanguard Federal Money Market Fund Investor Shares is as follows: 1 year, 1.39{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca}; 5 years, 1.10{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca}; 10 years, 0.55{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca}; 20 years, 1.60{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca}; 30 years, 2.75{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca}; since inception (July 13, 1981), 4.09{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca}. The fund’s current 7-day SEC yield (August 21, 2020) is 0.09{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca}. The fund’s expense ratio is 0.11{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca}. The performance of the fund’s benchmark (US Government Money Market Funds Average) is as follows: 1 year, 0.93{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca}; 5 years, 0.68{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca}; 10 years, 0.34{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca}. Performance data are as of June 30, 2020. Sources: Bloomberg; Lipper, a Thomson Reuters Company. The performance data shown represent past performance, which is not a guarantee of future results. Investment returns will fluctuate. Current performance may be lower or higher than the performance data cited. For performance data current to the most recent month-end, visit our website at vanguard.com/performance. The yield quotation more closely reflects the current earnings of the fund than the total return quotation. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index.
***For the 1-, 3-, 5-, and 10-year periods ended June 30, 2020, 9 of 9 Vanguard money market funds outperformed their peer-group averages and 2 of 2 Vanguard government money market funds outperformed more than 70{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca} of all prime money market funds. (Source: Lipper, a Thomson Reuters Company.) Results will vary for other time periods. Only funds with a minimum 10-year history were included in the comparison. Note that the competitive performance data shown represent past performance, which is not a guarantee of future results, and that all investments are subject to risks. For the most recent performance, visit our website at vanguard.com/performance.
†Share class conversions aren’t a taxable event.

Notes:

Vanguard Prime Money Market Fund, until late September 2020: The fund is only available to retail investors (natural persons). You could lose money by investing in the fund. Although the fund seeks to preserve the value of your investment at $1 per share, it cannot guarantee it will do so. The fund may impose a fee upon the sale of your shares or may temporarily suspend your ability to sell shares if the fund’s liquidity falls below required minimums because of market conditions or other factors. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The fund’s sponsor has no legal obligation to provide financial support to the fund, and you should not expect that the sponsor will provide financial support to the fund at any time.

Vanguard Cash Reserves Federal Money Market Fund, after late September 2020, Vanguard Treasury Money Market Fund, and Vanguard Federal Money Market Fund: You could lose money by investing in the fund. Although the fund seeks to preserve the value of your investment at $1 per share, it cannot guarantee it will do so. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The fund’s sponsor has no legal obligation to provide financial support to the fund, and you should not expect that the sponsor will provide financial support to the fund at any time.

All investing is subject to risk, including the possible loss of the money you invest.