Vanguard Treasury Money Market Funds to Merge After Closing to New Accounts

To preserve competitive yields in its money market funds, Vanguard will merge its Vanguard Admiral Treasury Money Market Fund (VUSXX) and Vanguard Treasury Money Market Fund (VMPXX).

• US Treasury Rates at a Glance

To protect current shareholders from dilution of yield that comes from new deposits, Vanguard also closed its "Vanguard Federal Money Market Fund" on June 2. The decision to close the fund was made "to protect the interests of current fund shareholders by limiting the fund's need to purchase new short-term federal agency securities that offer negligible yields."

The merger of Vanguard Treasury Money Market Fund, which has an expense ratio of 0.28%, into 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.

For similar reasons, Vanguard Admiral Treasury Money Market Fund and Vanguard Treasury Money Market Fund were closed to new accounts on January 26, 2009.

Vanguard Admiral Treasury Money Market Fund (VUSXX)

Closed to new investors
Category = Taxable Money Market
Expense ratio as of 12/29/2008 = 0.15%
SEC yield as of 06/03/2009 = 0.18%

Vanguard Treasury Money Market Fund (VMPXX)

Closed to new investors
Category = Taxable Money Market
Expense ratio as of 12/29/2008 = 0.28%
SEC yield as of 06/03/2009 = 0.05%

Vanguard Federal Money Market Fund (VMFXX)

Closed to new investors
Category = Taxable Money Market
Expense ratio as of 12/29/2008 = 0.28%
SEC yield as of 06/03/2009 = 0.34%

If you have less than a few million dollars to invest, I would look to invest in 6 month to 2 year CDs to get much better yield with FDIC and NCUA protection spread between several banks and credit unions.

For example, the 1-year US Treasury note is only paying 0.46% but you can get a 1-year CD at Ally Bank (formerly GMAC Bank) that pays 2.80%.

See "Very Best CD Rate Survey" to get an idea what the best CD rates are for terms from 6 months to 10 years.

More Information:

Charts for Vanguard Equity Index Funds:

• Total Stock Market (VTSMX)
• S&P500(VFINX)
• Extended Market (VEXMX)

Charts for Vanguard Fixed Income Funds:

• GNMA (VFIIX)
• Total Bond (VBMFX)
• TIPS (VIPSX)
• High-Yield/Junk Bond (VWEAX)

Money Market Fund Pages at Vanguard:

• Vanguard Admiral Treasury Money Market Fund (VUSXX)
• Vanguard Treasury Money Market Fund (VMPXX)
• Vanguard Federal Money Market Fund (VMFXX)

Read the full story: With yields at record lows, Vanguard announces changes to three money market funds