Tuesday's press release says, "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."

Bill McNabb, Vanguard CEO, says, "Taking these preventative measures will protect fund shareholders and will help ensure that the yields of the funds remain competitive. 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," says the release. It continues, "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."

Finally, the release says, "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."

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