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Vanguard to designate prime and tax-exempt MMFs for individuals

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Vanguard has revealed plans for its money market mutual fund lineup enabling individual and institutional investors to continue to have access to cash management vehicles at a stable USD1 net asset value (NAV). 

The moves are in response to rules adopted by the Securities and Exchange Commission (SEC) in 2014, the last compliance date for which is in October 2016. 

"We are pleased to preserve Vanguard's money market funds as a stable-price cash management option for our individual and institutional clients," says Vanguard CEO Bill McNabb. "Our retail clients will continue to have the choice to invest in our taxable and tax-exempt money market funds, and all investors, including institutional clients, will be able to invest in our newly reopened Federal Money Market Fund." 

Vanguard plans to designate its USD133.4 billion Prime Money Market Fund and its six tax-exempt funds (one national and five state municipal money funds) as "retail funds," meaning that individual investors will continue to have access to these funds at a stable USD1 NAV. 

In addition, Vanguard announced two name changes, effective December 2015: 

• Institutional Shares of Vanguard Prime Money Market Fund (ticker symbol: VMRXX) will be renamed Admiral Shares. 

• Vanguard Admiral Treasury Money Market Fund (ticker symbol: VUSXX) will be renamed Vanguard Treasury Money Market Fund. 

Vanguard is reopening its USD2.8 billion Federal Money Market Fund immediately. All investors, including institutional investors, will now have access to a money fund with a stable USD1 NAV that will not be subject to new liquidity-fee or redemption-gate requirements. 

Under the new rules, the SEC has defined US government money funds as those that invest at least 99.5% (formerly 80%) of their total assets in cash, government securities, and/or repurchase agreements that are collateralised solely by government securities or cash. Such funds are excluded from the floating NAV requirements, as well as the new fee and gate requirements. 

The Federal Money Market Fund and the USD9.6 billion Treasury Money Market Fund currently invest more than 99.5% of their total assets in U.S. government securities or repurchase agreements, and plans to operate in accordance with the new definition of a government money market fund. The Treasury Money Market Fund will remain closed to new investors. 

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