NOTES TO FINANCIAL STATEMENTS
Vanguard Money Market Funds comprise the Prime Money Market Fund, Federal Money Market Fund, and
Treasury Money Market Fund, each of which is registered under the Investment Company Act of 1940 as a
diversified open-end investment company, or mutual fund. The Prime Money Market Fund invests in short-term
debt instruments of companies primarily operating in specific industries; the issuers' abilities to meet their
obligations may be affected by economic developments in such industries. The Federal Money Market Fund
invests in short-term debt instruments issued by the U.S. government or its agencies and instrumentalities. The
Treasury Money Market Fund invests in short-term debt instruments backed by the full faith and credit of the
A. The following significant accounting policies conform to generally accepted accounting principles for U.S.
mutual funds. The funds consistently follow such policies in preparing their financial statements.
1. SECURITY VALUATION: Securities are valued at amortized cost, which approximates market value.
2. FEDERAL INCOME TAXES: Each fund intends to continue to qualify as a regulated investment company
and distribute all of its taxable income. Accordingly, no provision for federal income taxes is required in the
3. OTHER: Security transactions are accounted for on the date the securities are purchased or sold. Costs used
to determine realized gains (losses) on the sale of investment securities are those of the specific securities sold.
Discounts and premiums are accreted and amortized, respectively, to interest income over the lives of the
respective securities. Dividends from net investment income are declared daily and paid on the first business day
of the following month.
4. REPURCHASE AGREEMENTS: Securities pledged as collateral for repurchase agreements are held by a
custodian bank until the agreements mature. Each agreement requires that the market value of the collateral be