We recently announced changes to our Prime Money Market Fund aimed at better supporting your needs for core conservation and liquidity, while striving to deliver competitive yields in the long run.
The main change
Effective September 2, Vanguard Prime Money Market Fund has a new name and investment strategy and changes in the share class of its investors. Here are the details of the changes:
- We have changed the name of the fund Vanguard Cash Reserve Federal Money Market Fund.
- We have updated the fund’s prospectus to reflect the fund’s new investment strategy, which focuses on cash investments, U.S. government securities, and / or repurchase agreements in parallel with U.S. government securities or cash only.
- We have closed the investor share category of the fund for new investors. Investor shares are available for additional purchase by existing shareholders, but we will phase out investors ’shares in the next few months. Customers can invest in the fund’s admiral res shares, whose investment drops to a low of 3,000 3,000 by the end of August, making more than 1 million shareholders eligible for the low-cost share category (0.10% for admiral shares compared to 0.16% for investor shares).
All you have to do
Current Investor Shares (VMMX) Owners: To start taking advantage of the low cost ratio, you immediately have the option to convert investing shares into admiral shares. Here are simple step-by-step instructions. If you do not initiate the conversion, we expect your shares to be automatically converted from late April to August 2021. Note: Our Check Writing Services Fund is not available for Admiral Share Class and will not be converted to Admiral Share Class. Check writing is available for Vanguard Federal Money Market Fund and other Vanguard Money Market Funds.
Current Admiral Shares (VMRX) Owners: You do not need to take any action.
Vanguard Personal Advisor Clients who own Investor Shares (VMMX): We will automatically convert your investor shares into admiral shares during the next quarterly rehab. Contact an advisor if you have any questions about this transfer. Note: Our check writing service is not available for the Admiral Share class of the fund. Check writing is available for Vanguard Federal Money Market Fund and other Vanguard Money Market Funds.
The Vanguard Cash Reserve Federal Money Market Fund is designated as a government money market fund, which is expected to reduce the fund’s credit risk and strengthen its liquidity.
A government money market fund must have a repurchase agreement with at least .5.5% of its assets in cash, U.S. government securities, and / or securities in full U.S. government securities or cash. In contrast, a retail prime money market fund can invest heavily in specific securities issued by companies – typically, commercial paper – as well as securities issued by the U.S. government and other money market securities.
With these changes, Vanguard wants to continue to provide money market funds with highly competitive yields with major money market fund production while providing security and safety of a portfolio of government securities. Our formula is as simple as it has been successful: prudent management and low cost.
All investments are at risk, including the potential loss of money you invest.
Vanguard Cash Reserve Federal Money Market Fund and Vanguard Federal Money Market Fund: You can lose money by investing in funds. Although the fund wants to save your investment value at $ 1 per share, it cannot guarantee whether it will. Investments in funds are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The sponsor of the fund has no legal obligation to provide financial support to the fund and you do not expect the sponsor to provide financial support to the fund at any time.