VANGUARD TREASURY FUND, 485BPOS, 2000-03-08

VANGUARD TREASURY FUND
485BPOS, 2000-03-08

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT (NO. 333-11763) UNDER
THE SECURITIES ACT OF 1933

PRE-EFFECTIVE AMENDMENT NO.

POST-EFFECTIVE AMENDMENT NO. 7
AND

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940

AMENDMENT NO. 8

VANGUARD TREASURY FUND
(EXACT NAME OF REGISTRANT AS SPECIFIED IN DECLARATION OF TRUST)

P.O. BOX 2600, VALLEY FORGE, PA 19482
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)

REGISTRANT'S TELEPHONE NUMBER (610) 669-1000

R. GREGORY BARTON, ESQUIRE
P.O. BOX 876
VALLEY FORGE, PA 19482

IT IS PROPOSED THAT THIS AMENDMENT BECOME EFFECTIVE:
ON MARCH 24, 2000, PURSUANT TO RULE 485(B) OF THE SECURITIES ACT OF 1933.

APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.

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VANGUARD(R)
MONEY MARKET
FUNDS

Prospectus
March 24, 2000

This prospectus contains
financial data for the
Funds through the
fiscal year ended
November 30, 1999.

VANGUARD PRIME
MONEY MARKET FUND

VANGUARD FEDERAL
MONEY MARKET FUND

VANGUARD TREASURY
MONEY MARKET FUND

[MEMBERS OF
THE VANGUARD GROUP LOGO]
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VANGUARD MONEY MARKET FUNDS

Prospectus

March 24, 2000

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CONTENTS
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1 FUND PROFILES 16 FINANCIAL HIGHLIGHTS

1 Vanguard Prime Money Market Fund 18 INVESTING WITH VANGUARD

4 Vanguard Federal Money Market Fund 18 Services and Account Features

7 Vanguard Treasury Money Market Fund 19 Types of Accounts

10 MORE ON THE FUNDS 20 Buying Shares

13 THE FUNDS AND VANGUARD 22 Redeeming Shares

13 INVESTMENT ADVISER 26 Transferring Registration

14 DIVIDENDS AND TAXES 26 Fund and Account Updates

15 SHARE PRICE GLOSSARY (inside back cover)

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WHY READING THIS PROSPECTUS IS IMPORTANT

This prospectus explains the objective, risks, and policies of Vanguard Prime
Money Market, Federal Money Market, and Treasury Money Market Funds. To
highlight terms and concepts important to mutual fund investors, we have
provided "Plain Talk(R)" explanations along the way. Reading the prospectus will
help you to decide which Fund, if any, is the right investment for you. We
suggest that you keep it for future reference.

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IMPORTANT NOTE

The Prime Money Market Fund offers two separate classes of shares: Investor and
Institutional. This prospectus offers the Fund's Investor Shares, which have an
investment minimum of $3,000 ($1,000 for IRAs) and are intended for individual
investors. Please call Vanguard's Institutional Investor Group at 1-800-523-1036
to obtain a separate prospectus that offers the Fund's Institutional Shares,
which have an investment minimum of $10 million and generally are not available
to investors who require special employee benefit plan services.
The Fund's separate share classes have different expenses; as a result,
their investment performances will vary. UNLESS OTHERWISE NOTED, ALL REFERENCES
IN THIS PROSPECTUS TO FEES, EXPENSES, AND INVESTMENT PERFORMANCE RELATE
SPECIFICALLY TO INVESTOR SHARES.

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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

<PAGE>

FUND PROFILE--
VANGUARD PRIME MONEY MARKET FUND

The following profile summarizes key features of Vanguard Prime Money Market
Fund.

INVESTMENT OBJECTIVE

The Fund seeks to provide current income while maintaining liquidity and a
stable share price of $1.

INVESTMENT POLICIES

The Fund invests primarily in high-quality, short-term money market instruments,
including certificates of deposit, banker's acceptances, commercial paper, and
other money market securities. To be considered high quality, a security
generally must be rated in one of the two highest credit-quality categories for
short-term securities by at least two nationally recognized rating services (or
by one, if only one rating service has rated the security). If unrated, the
security must be determined by the Fund's adviser to be of quality equivalent to
those in the two highest credit-quality categories. The Fund will maintain an
average maturity of 90 days or less. For more information, see "Security
Selection" under MORE ON THE FUNDS.

PRIMARY RISKS

THE FUND IS SUBJECT TO INCOME RISK, WHICH IS THE CHANCE THAT FALLING SHORT-TERM
INTEREST RATES WILL CAUSE THE FUND'S INCOME--AND THUS ITS TOTAL RETURN--TO
DECLINE. INCOME RISK IS GENERALLY HIGH FOR FUNDS THAT INVEST IN SHORT-TERM
SECURITIES. The Fund is also subject to:

- - Manager risk, which is the chance that poor security selection will cause
the Fund to underperform other funds with similar investment objectives.

- - Credit risk, which is the chance that the issuer of a security will fail to
pay interest and principal in a timely manner. Credit risk, which has the
potential to hurt the Fund's performance, should be low for the Fund.

AN INVESTMENT IN THE FUND IS NOT INSURED OR GUARANTEED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY. ALTHOUGH THE FUND
SEEKS TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1 PER SHARE, IT IS POSSIBLE
TO LOSE MONEY BY INVESTING IN THE FUND.

PERFORMANCE/RISK INFORMATION

The bar chart and table below provide an indication of the risk of investing in
the Fund. The bar chart shows the Fund's performance in each calendar year over
a ten-year period. The table shows how the Fund's average annual total returns
for one, five, and ten calendar years compare with those of a broad-based money
market index. Keep in mind that the Fund's past performance does not indicate
how it will perform in the future.

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----------------------------------------------------
ANNUAL TOTAL RETURNS
----------------------------------------------------

1990 8.27%
1991 6.14%
1992 3.74%
1993 3.01%
1994 4.08%
1995 5.82%
1996 5.29%
1997 5.44%
1998 5.38%
1999 5.01%
----------------------------------------------------

During the period shown in the bar chart, the highest return for a calendar
quarter was 2.03% (quarter ended June 30, 1990) and the lowest return for a
quarter was 0.72% (quarter ended June 30, 1993).

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AVERAGE ANNUAL TOTAL RETURNS FOR YEARS ENDED DECEMBER 31, 1999
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1 YEAR 5 YEARS 10 YEARS
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Vanguard Prime Money Market Fund 5.01% 5.39% 5.21%
Salomon Smith Barney 3-Month
Treasury Index 4.74 5.20 5.05
Lipper Money Market Fund Average* 4.49 4.88 4.73
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*Derived from data provided by Lipper Inc.
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If you would like to know the current seven-day yield for the Fund, call
Vanguard's Investor Information Department at 1-800-662-7447 (SHIP).

FEES AND EXPENSES

The following table describes the fees and expenses you may pay if you buy and
hold shares of the Fund. The expenses shown under Annual Fund Operating Expenses
are based upon those incurred in the fiscal year ended November 30, 1999.

SHAREHOLDER FEES (fees paid directly from your investment)
Sales Charge (Load) Imposed on Purchases: None
Sales Charge (Load) Imposed on Reinvested Dividends: None
Redemption Fee: None
Exchange Fee: None

ANNUAL FUND OPERATING EXPENSES (expenses deducted from the Fund's assets)
Management Expenses: 0.11%
12b-1 Distribution Fee: None
Other Expenses: 0.22%
TOTAL ANNUAL FUND OPERATING EXPENSES: 0.33%

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The following example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds. It illustrates the
hypothetical expenses that you would incur over various periods if you invest
$10,000 in the Fund. This example assumes that the Fund provides a return of 5%
a year, and that operating expenses remain the same. The results apply whether
or not you redeem your investment at the end of each period.

- -------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------------------------------------------
$34 $106 $185 $418
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THIS EXAMPLE SHOULD NOT BE CONSIDERED TO REPRESENT ACTUAL EXPENSES OR
PERFORMANCE FROM THE PAST OR FOR THE FUTURE. ACTUAL FUTURE EXPENSES MAY BE
HIGHER OR LOWER THAN THOSE SHOWN.

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ADDITIONAL INFORMATION

DIVIDENDS MINIMUM INITIAL INVESTMENT
Declared daily and distributed on the $3,000; $1,000 for IRAs and custodial
first business day of each month accounts for minors

INVESTMENT ADVISER NEWSPAPER ABBREVIATION
The Vanguard Group, Valley Forge, VangPr
Pa., since 1981
VANGUARD FUND NUMBER
INCEPTION DATE 030
June 4, 1975
CUSIP NUMBER
NET ASSETS AS OF NOVEMBER 30, 1999 922906201
$41.2 billion
TICKER SYMBOL
SUITABLE FOR IRAS VMMXX
Yes

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FUND PROFILE--
VANGUARD FEDERAL MONEY MARKET FUND

The following profile summarizes key features of Vanguard Federal Money Market
Fund.

INVESTMENT OBJECTIVE

The Fund seeks to provide current income while maintaining liquidity and a
stable share price of $1.

INVESTMENT POLICIES

The Fund invests primarily in high-quality, short-term money market instruments
issued by U.S. government agencies. Most of the securities held by the Fund are
not backed by the full faith and credit of the U.S. government. The Fund will
maintain an average maturity of 90 days or less. For more information, see
"Security Selection" under MORE ON THE FUNDS.

PRIMARY RISKS

- - Manager risk, which is the chance that poor security selection will cause
the Fund to underperform other funds with similar investment objectives.

PERFORMANCE/RISK INFORMATION

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ANNUAL TOTAL RETURNS
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1990 8.07%
1991 5.96%
1992 3.68%
1993 2.98%
1994 4.03%
1995 5.77%
1996 5.24%
1997 5.38%
1998 5.31%
1999 4.94%
----------------------------------------------------

During the period shown in the bar chart, the highest return for a calendar
quarter was 1.99% (quarter ended June 30, 1990) and the lowest return for a
quarter was 0.72% (quarter ended June 30, 1993).

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AVERAGE ANNUAL TOTAL RETURNS FOR YEARS ENDED DECEMBER 31, 1999
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1 YEAR 5 YEARS 10 YEARS
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Vanguard Federal Money Market Fund 4.94% 5.33% 5.13%
Salomon Smith Barney 3-Month
Treasury Index 4.74 5.20 5.05
Lipper U.S. Government Money Market
Fund Average* 4.47 4.85 4.68
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*Derived from data provided by Lipper Inc.
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If you would like to know the current seven-day yield for the Fund, call
Vanguard's Investor Information Department at 1-800-662-7447 (SHIP).

FEES AND EXPENSES

ANNUAL FUND OPERATING EXPENSES (expenses deducted from the Fund's assets)
Management Expenses: 0.13%
12b-1 Distribution Fee: None
Other Expenses: 0.20%
TOTAL ANNUAL FUND OPERATING EXPENSES: 0.33%

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THIS EXAMPLE SHOULD NOT BE CONSIDERED TO REPRESENT ACTUAL EXPENSES OR
PERFORMANCE FROM THE PAST OR FOR THE FUTURE. ACTUAL FUTURE EXPENSES MAY BE
HIGHER OR LOWER THAN THOSE SHOWN.

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ADDITIONAL INFORMATION

DIVIDENDS MINIMUM INITIAL INVESTMENT
Declared daily and distributed on the $3,000; $1,000 for IRAs and custodial
first business day of each month accounts for minors

INVESTMENT ADVISER NEWSPAPER ABBREVIATION
The Vanguard Group, Valley Forge, VangFdl
Pa., since inception
VANGUARD FUND NUMBER
INCEPTION DATE 033
July 13, 1981
CUSIP NUMBER
NET ASSETS AS OF NOVEMBER 30, 1999 922906300
$5.2 billion
TICKER SYMBOL
SUITABLE FOR IRAS VMFXX
Yes

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FUND PROFILE--
VANGUARD TREASURY MONEY MARKET FUND

The following profile summarizes key features of Vanguard Treasury Money Market
Fund.

INVESTMENT OBJECTIVE

The Fund seeks to provide current income while maintaining liquidity and a
stable share price of $1.

INVESTMENT POLICIES

The Fund invests solely in high-quality, short-term money market securities
whose interest and principal payments are backed by the full faith and credit of
the U.S. government. At least 80% of the Fund's assets will always be invested
in U.S. Treasury securities; the remainder of the Fund's assets may be invested
in securities issued by U.S. government agencies or instrumentalities. The Fund
will maintain an average maturity of 90 days or less. For more information, see
"Security Selection" under MORE ON THE FUNDS.

PRIMARY RISKS

- - Manager risk, which is the chance that poor security selection will cause
the Fund to underperform other funds with similar investment objectives.

PERFORMANCE/RISK INFORMATION

<PAGE>

----------------------------------------------------
ANNUAL TOTAL RETURNS
----------------------------------------------------
1990 7.94%
1991 5.73%
1992 3.53%
1993 2.86%
1994 3.81%
1995 5.49%
1996 5.09%
1997 5.12%
1998 5.00%
1999 4.55%
----------------------------------------------------

During the period shown in the bar chart, the highest return for a calendar
quarter was 1.96% (quarter ended June 30, 1990) and the lowest return for a
quarter was 0.69% (quarter ended June 30, 1993).

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AVERAGE ANNUAL TOTAL RETURNS FOR YEARS ENDED DECEMBER 31, 1999
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1 YEAR 5 YEARS 10 YEARS
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Vanguard Treasury Money Market Fund 4.55% 5.05% 4.90%
Salomon Smith Barney 3-Month
Treasury Index 4.74 5.20 5.05
Lipper U.S. Treasury Money Market Fund
Average* 4.23 4.74 4.64
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*Derived from data provided by Lipper Inc.
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If you would like to know the current seven-day yield for the Fund, call
Vanguard's Investor Information Department at 1-800-662-7447 (SHIP).

FEES AND EXPENSES

ANNUAL FUND OPERATING EXPENSES (expenses deducted from the Fund's assets)
Management Expenses: 0.14%
12b-1 Distribution Fee: None
Other Expenses: 0.19%
TOTAL ANNUAL FUND OPERATING EXPENSES: 0.33%

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THIS EXAMPLE SHOULD NOT BE CONSIDERED TO REPRESENT ACTUAL EXPENSES OR
PERFORMANCE FROM THE PAST OR FOR THE FUTURE. ACTUAL FUTURE EXPENSES MAY BE
HIGHER OR LOWER THAN THOSE SHOWN.

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ADDITIONAL INFORMATION

DIVIDENDS MINIMUM INITIAL INVESTMENT
Declared daily and distributed on the $3,000; $1,000 for IRAs and custodial
first business day of each month accounts for minors

INVESTMENT ADVISER NEWSPAPER ABBREVIATION
The Vanguard Group, Valley Forge, VangTrsy
Pa., since inception

INCEPTION DATE VANGUARD FUND NUMBER
March 9, 1983 050

NET ASSETS AS OF NOVEMBER 30, 1999 CUSIP NUMBER
$4.6 billion 921948105

SUITABLE FOR IRAS TICKER SYMBOL
Yes VMPXX

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MORE ON THE FUNDS

The following sections discuss other important features of the Vanguard Money
Market Funds, including market exposure, security selection, and costs and
market-timing. You will also find detailed risk information about the Funds
throughout these sections.

MARKET EXPOSURE

Each Fund's primary policy is to invest in very high-quality money market
instruments--also known as cash reserves--that are considered short-term (that
is, they mature in 13 months or less). Each Fund will maintain an average
maturity of 90 days or less.

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PLAIN TALK ABOUT
MONEY MARKET INSTRUMENTS

The term "money market instruments" refers to a variety of short-term liquid
investments, usually with a maturity of 13 months or less. Some common types
are: Treasury bills and notes, which are securities issued by the U.S.
government; commercial paper, which are promissory notes issued by large
companies or financial firms; banker's acceptances, which are credit instruments
guaranteed by a bank; and negotiable certificates of deposit, which are issued
by banks in large denominations. Money market securities can pay a fixed,
variable, or floating rate of interest.
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[FLAG] EACH FUND IS SUBJECT TO INCOME RISK, WHICH IS THE CHANCE THAT A FUND'S
DIVIDENDS (THAT IS, INCOME) WILL DECLINE BECAUSE OF FALLING INTEREST RATES.
BECAUSE THE FUNDS' INCOME IS BASED ON SHORT-TERM INTEREST RATES--WHICH CAN
FLUCTUATE SIGNIFICANTLY OVER SHORT PERIODS--INCOME RISK IS EXPECTED TO BE
HIGH FOR ALL THREE FUNDS.

SECURITY SELECTION

The Vanguard Group, adviser to the Funds, selects high-quality money market
instruments. Each Fund focuses on securities of a particular class of issuer
(the U.S. government, U.S. government agencies, or non-government issuers). The
Funds are managed without regard to tax ramifications.

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PLAIN TALK ABOUT
CREDIT QUALITY

A money market instrument's credit quality depends upon the issuer's ability to
pay interest on the security and, ultimately, to repay the debt. The lower the
rating by one of the independent bond-rating agencies (for example, Moody's or
Standard & Poor's), the greater the chance (in the rating agency's opinion) the
security's issuer will default, or fail to meet its payment obligations. Direct
U.S. Treasury obligations (that is, securities issued by the U.S. government)
carry the highest credit ratings. All things being equal, money market
instruments with greater credit risk offer higher yields.
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[FLAG] EACH FUND IS SUBJECT TO MANAGER RISK, WHICH IS THE CHANCE THAT THE
ADVISER MAY DO A POOR JOB OF SELECTING SECURITIES.

<PAGE>

The Prime Money Market Fund invests primarily in certificates of deposit,
banker's acceptances, commercial paper, and other money market securities.
Commercial paper must be rated Prime-1 by Moody's Investors Service or A-1 by
Standard & Poor's Corporation. Securities that are unrated must be issued by a
company with a debt rating of A3 or better by Moody's or A- or better by
Standard & Poor's. The Prime Money Market Fund also invests in short-term
corporate, state, and municipal obligations rated A3 or better by Moody's or A-
or better by Standard & Poor's, and in securities that are considered suitable
for the Federal Money Market Fund (see below).

Among the certificates of deposit typically held by the Prime Money Market
Fund are Eurodollar and Yankee obligations, which are primarily certificates of
deposit issued in U.S. dollars by foreign banks and foreign branches of U.S.
banks. Eurodollar and Yankee obligations have risks similar to U.S. money market
instruments, such as income risk and credit risk. Other risks of Eurodollar and
Yankee obligations include the possibilities that: a foreign government will not
let U.S. dollar-denominated assets leave the country; the banks that issue
Eurodollar obligations may not be subject to the same regulations as U.S. banks;
and adverse political or economic developments will affect investments in a
foreign country. Before the Fund's adviser selects a Eurodollar or Yankee
obligation, however, the foreign issuer undergoes the same credit-quality
analysis and tests of financial strength as an issuer of domestic securities.

The Federal Money Market Fund invests primarily in securities issued by
U.S. government agencies whose interest and principal payments are not backed by
the full faith and credit of the U.S. government. These agencies include, among
others, the Federal Home Loan Bank, the Federal National Mortgage Association,
and the Federal Home Loan Mortgage Corporation. The Fund also may invest in
securities issued by the U.S. Treasury and U.S. government agencies that are
backed by the full faith and credit of the U.S. government.

The Treasury Money Market Fund invests solely in securities whose interest
and principal payments are backed by the full faith and credit of the U.S.
government. At least 80% of the Fund's assets will always be invested in U.S.
Treasury securities. The remainder of the Fund's assets may include securities
issued by U.S. government agencies, such as the Government National Mortgage
Association, the Small Business Administration, and the Federal Financing Bank.

[FLAG] EACH FUND IS SUBJECT, TO A LIMITED EXTENT, TO CREDIT RISK, WHICH IS THE
CHANCE THAT THE ISSUER OF A SECURITY WILL FAIL TO PAY INTEREST AND
PRINCIPAL IN A TIMELY MANNER.

The three Funds differ mainly in terms of credit risk. In absolute terms,
each Fund's credit quality is very high.

In relative terms, the Treasury Money Market Fund, which invests in
securities backed by the full faith and credit of the U.S. government, offers
the lowest credit risk--and generally the lowest yield--of the three Funds.

Not all of the securities included in the Federal Money Market Fund are
backed by the full faith and credit of the U.S. government, and so the potential
credit risk and yield for the Fund are somewhat higher than for the Treasury
Money Market Fund.

While the credit quality of its securities is very high, the Prime Money
Market Fund faces more risk because it invests in money market securities issued
by private companies. It is possible that one or more of these companies may
experience financial difficulties and, as a result, may fail to pay interest to
the Fund or return the Fund's principal when repayment

<PAGE>

is due. Therefore, the Prime Money Market Fund offers the highest credit risk,
and generally the highest yield, of the three Funds.

Bear in mind that, while each Fund invests in high-quality money market
instruments, the three Funds are not insured or guaranteed by the FDIC or any
other agency of the U.S. government.

[FLAG] THE PRIME AND FEDERAL MONEY MARKET FUNDS RESERVE THE RIGHT TO INVEST IN
REPURCHASE AGREEMENTS, WHICH ARE SUBJECT TO SPECIFIC RISKS.

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PLAIN TALK ABOUT
REPURCHASE AGREEMENTS

A means of investing money for a short period, repurchase agreements are
contracts in which a financial institution sells securities and agrees to
repurchase the securities on a specific date (normally the next business day)
and at a specific price.

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Repurchase agreements carry several risks. For instance, if the seller is
unable to repurchase the securities as promised, the Fund may experience a loss
when trying to sell the securities to another person. Or, if the seller becomes
insolvent, a bankruptcy court may determine that the securities do not belong to
the Fund and order that the securities be sold to pay off the seller's debts.
The Funds' adviser believes that these risks can be controlled through careful
security selection and monitoring.

[FLAG] THE FUNDS RESERVE THE RIGHT TO INVEST, TO A LIMITED EXTENT, IN
FLOATING-RATE SECURITIES, WHICH ARE TRADITIONAL TYPES OF DERIVATIVES.

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PLAIN TALK ABOUT
DERIVATIVES

A derivative is a financial contract whose value, or interest rate, is based on
(or "derived" from) a traditional security (such as a stock or bond), a money
market benchmark (such as U.S. Treasury bill rates or the Federal Funds
Effective Rate), an asset (such as a commodity like gold), or a market index
(such as the S&P 500 Index).
- --------------------------------------------------------------------------------

A floating-rate security's interest rate, as the name implies, is not set;
instead, it fluctuates periodically. Generally, the security's yield is based on
a U.S. dollar-based interest-rate benchmark such as the Federal Funds Rate, the
90-day Treasury bill rate, or the London Interbank Offered Rate (LIBOR). These
securities reset their yields on a periodic basis (for example, daily, weekly,
or quarterly) and are closely correlated to changes in money market interest
rates.

The Funds will not use derivatives for speculative purposes or as leveraged
investments that magnify the risks of an investment.

In addition, each Fund may invest up to 10% of its net assets in illiquid
securities. These are securities that cannot be readily resold or converted into
cash.

COSTS AND MARKET-TIMING

The Vanguard Money Market Funds serve both short- and long-term investor needs;
however, other Vanguard funds are intended for long-term investors only.
Investors who engage in excessive in-and-out trading activity generate
additional costs that are borne by all of a fund's shareholders. To minimize
these costs, Vanguard's stock, bond, and balanced funds

<PAGE>

have adopted policies to discourage short-term trading--which includes switching
back and forth from the Vanguard Money Market Funds. Please check other Vanguard
funds' prospectuses for specifics on the trading limitations of those funds.
Also, all Vanguard funds, including the Money Market Funds, reserve the right to
stop offering shares at any time or to reject specific purchase requests.

THE VANGUARD FUNDS DO NOT PERMIT MARKET-TIMING. DO NOT INVEST IN THESE
FUNDS IF YOU ARE A MARKET-TIMER.

- --------------------------------------------------------------------------------
PLAIN TALK ABOUT
VANGUARD'S UNIQUE CORPORATE STRUCTURE

The Vanguard Group is truly a MUTUAL mutual fund company. It is owned jointly by
the funds it oversees and thus indirectly by the shareholders in those funds.
Most other mutual funds are operated by for-profit management companies that may
be owned by one person, by a group of individuals, or by investors who own the
management company's stock. By contrast, Vanguard provides its services on an
"at cost" basis, and the funds' expense ratios reflect only these costs. No
separate management company reaps profits or absorbs losses from operating the
funds.
- --------------------------------------------------------------------------------

THE FUNDS AND VANGUARD

The Funds are members of The Vanguard Group, a family of more than 35 investment
companies with more than 100 funds holding assets worth more than $520 billion.
All of the Vanguard funds share in the expenses associated with business
operations, such as personnel, office space, equipment, and advertising.

Vanguard also provides marketing services to the funds. Although
shareholders do not pay sales commissions or 12b-1 distribution fees, each fund
pays its allocated share of The Vanguard Group's marketing costs.

INVESTMENT ADVISER

The Vanguard Group (Vanguard), P.O. Box 2600, Valley Forge, PA 19482, founded in
1974, serves as the Funds' adviser through its Fixed Income Group. As of
November 30, 1999, Vanguard served as adviser for about $354 billion in assets
including more than 40 Vanguard funds. Vanguard manages the Funds on an at-cost
basis, subject to the control of the Trustees and officers of the Funds. For the
fiscal year ended November 30, 1999, the investment advisory expenses for each
Fund represented an effective annual rate of 0.01% of each Fund's average net
assets.

The adviser places all orders for the purchase and sale of the Funds'
securities, and seeks out the best available price and most favorable execution
for all transactions.

<PAGE>

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PLAIN TALK ABOUT
THE FUNDS' ADVISER

The individuals responsible for overseeing the Funds' investments are:

IAN A. MACKINNON, Managing Director of Vanguard and head of Vanguard's Fixed
Income Group; has worked in investment management since 1974; primary
responsibility for Vanguard's internal fixed-income policy and strategy since
1981; B.A., Lafayette College; M.B.A., Pennsylvania State University.

ROBERT F. AUWAERTER, Principal of Vanguard and Fund Manager; has worked in
investment management since 1978; has managed portfolio investments since 1979;
B.S., University of Pennsylvania; M.B.A., Northwestern University.

JOHN HOLLYER, Principal of Vanguard and Fund Manager; has worked in investment
management since 1987; has managed portfolio investments since 1989; B.S.,
University of Pennsylvania.

DAVID R. GLOCKE, Principal of Vanguard and Fund Manager; has worked in
investment management since 1991; has managed portfolio investments since 1997;
B.S., University of Wisconsin.

Mr. Auwaerter, Mr. Hollyer, and Mr. Glocke manage the Funds on a day-to-day
basis. Mr. MacKinnon is responsible for setting the Funds' broad investment
policies and for overseeing the Fund Managers.
- --------------------------------------------------------------------------------

DIVIDENDS AND TAXES

FUND DISTRIBUTIONS

Each Fund distributes to shareholders virtually all of its net income (interest
less expenses). The Fund's income dividends accrue daily and are distributed on
the first business day of every month. You can receive your income dividends in
cash, or you can have them automatically reinvested in more shares of the Fund.

BASIC TAX POINTS

Vanguard will send you a statement each year showing the tax status of all your
distributions. In addition, taxable investors should be aware of the following
basic tax points:

- - Distributions are taxable to you for federal income tax purposes whether or
not you reinvest these amounts in additional Fund shares.

- - Distributions declared in December--if paid to you by the end of
January--are taxable for federal income tax purposes as if received in
December.

- - Any dividends that you receive are taxable to you as ordinary income for
federal income tax purposes.

- - Dividend distributions that you receive may be subject to state and local
income taxes. Depending on your state's rules, however, any dividends
attributable to interest earned on direct obligations of the U.S. Treasury
may be exempt from state and local taxes. Vanguard will notify you each
year how much, if any, of your dividends may qualify for this exemption.

<PAGE>

GENERAL INFORMATION

BACKUP WITHHOLDING. By law, Vanguard must withhold 31% of any taxable
distributions or redemptions from your account if you do not:

- - provide us with your correct taxpayer identification number;

- - certify that the taxpayer identification number is correct; and

- - confirm that you are not subject to backup withholding.

Similarly, Vanguard must withhold from your account if the IRS instructs us to
do so.

FOREIGN INVESTORS. The Vanguard funds generally do
not offer their shares for sale outside of the United States. Foreign investors
should be aware that U.S. withholding and estate taxes may apply to any
investments in Vanguard funds.

INVALID ADDRESSES. If a dividend or capital gains
distribution check mailed to your address of record is returned as
undeliverable, Vanguard will automatically reinvest all future distributions
until you provide us with a valid mailing address.

TAX CONSEQUENCES. This
prospectus provides general tax information only. If you are investing through a
tax-deferred retirement account, such as an IRA, special tax rules apply. Please
consult your tax adviser for detailed information about a fund's tax
consequences for you.

SHARE PRICE

Each Fund's share price, called its net asset value, or NAV, is calculated each
business day after the close of regular trading on the New York Stock Exchange
(the NAV is not calculated on holidays or other days when the Exchange is
closed). Each Fund's NAV is expected to remain at a constant $1. Although the
stable share price is not guaranteed, the Funds are managed and securities are
purchased to maintain that price.

The instruments held by the Funds are valued on the basis of amortized
cost, which does not take into account unrealized capital gains or losses.

Newspapers typically list money market fund yields weekly, separately from
listings for other mutual funds. Different newspapers use different
abbreviations for the Funds, but the most common are VANGPR, VANGFDL, and
VANGTRSY.

<PAGE>

FINANCIAL HIGHLIGHTS

The following financial highlights tables are intended to help you understand
each Fund's financial performance for the past five years, and certain
information reflects financial results for a single Fund share in each case. The
total returns in each table represent the rate that an investor would have
earned or lost each year on an investment in the Fund (assuming reinvestment of
all dividend distributions). This information has been derived from the
financial statements audited by PricewaterhouseCoopers LLP, independent
accountants, whose report--along with each Fund's financial statements--is
included in the Funds' most recent annual report to shareholders. You may have
the annual report sent to you without charge by contacting Vanguard.

- --------------------------------------------------------------------------------
PLAIN TALK ABOUT
HOW TO READ THE FINANCIAL HIGHLIGHTS TABLES

This explanation uses the Prime Money Market Fund Investor Shares as an example.
The Fund began fiscal 1999 with a net asset value (price) of $1.00 per share.
During the year, the Fund earned $0.049 per share from investment income
(interest and dividends).

Shareholders received $0.049 per share in the form of dividend distributions.
The earnings ($0.049 per share) minus the distributions ($0.049 per share)
resulted in a share price of $1.00 at the end of the year. For a shareholder who
reinvested the distributions in the purchase of more shares, the total return
from the Fund was 4.97% for the year.

As of November 30, 1999, the Fund had $39.4 billion in net assets. For the year,
its expense ratio was 0.33% ($3.30 per $1,000 of net assets), and its net
investment income amounted to 4.85% of its average net assets.

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
VANGUARD PRIME MONEY MARKET FUND
INVESTOR SHARES
YEAR ENDED NOVEMBER 30,
--------------------------------------------------------
1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------
NET ASSET VALUE,
BEGINNING OF YEAR $1.00 $1.00 $1.00 $1.00 $1.00
- --------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income .049 .053 .053 .052 .057
Net Realized and
Unrealized Gain (Loss)
on Investments -- -- -- -- --
--------------------------------------------------------
Total from Investment
Operations .049 .053 .053 .052 .057
--------------------------------------------------------
DISTRIBUTIONS
Dividends from Net
Investment Income (.049) (.053) (.053) (.052) (.057)
Distributions from
Realized Capital
Gains -- -- -- -- --
--------------------------------------------------------
Total Distributions (.049) (.053) (.053) (.052) (.057)
- --------------------------------------------------------------------------------
NET ASSET VALUE, END
OF YEAR $1.00 $1.00 $1.00 $1.00 $1.00
================================================================================

TOTAL RETURN 4.97% 5.42% 5.41% 5.31% 5.82%
================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of
Year (Millions) $39,430 $33,732 $26,480 $22,218 $18,764
Ratio of Total
Expenses to Average
Net Assets 0.33% 0.33% 0.32% 0.32% 0.32%
Ratio of Net
Investment Income to
Average Net Assets 4.85% 5.28% 5.28% 5.18% 5.64%
================================================================================

<PAGE>

- --------------------------------------------------------------------------------
VANGUARD FEDERAL MONEY MARKET FUND
YEAR ENDED NOVEMBER 30,
--------------------------------------------------------
1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------
NET ASSET VALUE,
BEGINNING OF YEAR $1.00 $1.00 $1.00 $1.00 $1.00
- --------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income .048 .052 .052 .051 .056
Net Realized and
Unrealized Gain (Loss)
on Investments -- -- -- -- --
--------------------------------------------------------
Total from Investment
Operations .048 .052 .052 .051 .056
--------------------------------------------------------
DISTRIBUTIONS
Dividends from Net
Investment Income (.048) (.052) (.052) (.051) (.056)
Distributions from
Realized Capital Gains -- -- -- -- --
--------------------------------------------------------
Total Distributions (.048) (.052) (.052) (.051) (.056)
- --------------------------------------------------------------------------------
NET ASSET VALUE, END
OF YEAR $1.00 $1.00 $1.00 $1.00 $1.00
================================================================================

TOTAL RETURN 4.89% 5.35% 5.35% 5.26% 5.77%
================================================================================

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of
Year (Millions) $5,243 $4,263 $3,495 $3,100 $2,637
Ratio of Total
Expenses to Average
Net Assets 0.33% 0.33% 0.32% 0.32% 0.32%
Ratio of Net
Investment Income to
Average Net Assets 4.79% 5.21% 5.22% 5.13% 5.61%
================================================================================

- --------------------------------------------------------------------------------
VANGUARD TREASURY MONEY MARKET FUND
YEAR ENDED NOVEMBER 30,
--------------------------------------------------------
1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------
NET ASSET VALUE,
BEGINNING OF YEAR $1.00 $1.00 $1.00 $1.00 $1.00
- --------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income .044 .050 .050 .050 .053
Net Realized and
Unrealized Gain (Loss)
on Investments -- -- -- -- --
--------------------------------------------------------
Total from Investment
Operations .044 .050 .050 .050 .053
--------------------------------------------------------
DISTRIBUTIONS
Dividends from Net
Investment Income (.044) (.050) (.050) (.050) (.053)
Distributions from
Realized Capital Gains -- -- -- -- --
--------------------------------------------------------
Total Distributions (.044) (.050) (.050) (.050) (.053)
- --------------------------------------------------------------------------------
NET ASSET VALUE, END
OF YEAR $1.00 $1.00 $1.00 $1.00 $1.00
================================================================================

TOTAL RETURN 4.51% 5.06% 5.10% 5.11% 5.47%
================================================================================

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of
Year (Millions) $4,593 $3,942 $3,237 $2,917 $2,527
Ratio of Total
Expenses to Average
Net Assets 0.33% 0.33% 0.32% 0.32% 0.32%
Ratio of Net
Investment Income to
Average Net Assets 4.41% 4.94% 4.98% 4.99% 5.33%
================================================================================

"Standard & Poor's(R)," "S&P(R)," "S&P 500(R)," "Standard & Poor's 500," and
"500" are trademarks of The McGraw-Hill Companies, Inc.

<PAGE>

- --------------------------------------------------------------------------------
INVESTING WITH VANGUARD

Are you looking for the most convenient way to open or add money to a Vanguard
account? Obtain instant access to fund information? Establish an account for a
minor child or for your retirement savings?

Vanguard can help. Our goal is to make it easy and pleasant for you to do
business with us.

The following sections of the prospectus briefly explain the many services
we offer. Booklets providing detailed information are available on the services
marked with a [BOOK]. Please call us to request copies.
- --------------------------------------------------------------------------------

SERVICES AND ACCOUNT FEATURES
Vanguard offers many services that make it convenient to buy, sell, or exchange
shares, or to obtain fund or account information.
- --------------------------------------------------------------------------------
TELEPHONE REDEMPTIONS (SALES AND EXCHANGES)
Automatically set up for each Fund unless you notify us otherwise.
- --------------------------------------------------------------------------------
CHECKWRITING [CHECK]
Method for drawing money from your account by writing a check for $250 or more.
- --------------------------------------------------------------------------------
VANGUARD(R) DIRECT DEPOSIT SERVICE [BOOK]
Automatic method for depositing your paycheck or U.S. government payment
(including Social Security and government pension checks) into your account.
- --------------------------------------------------------------------------------
VANGUARD(R) AUTOMATIC EXCHANGE SERVICE [BOOK]
Automatic method for moving a fixed amount of money from one Vanguard fund
account to another.
- --------------------------------------------------------------------------------
VANGUARD FUND EXPRESS(R) [BOOK]
Electronic method for buying or selling shares. You can transfer money between
your Vanguard fund account and an account at your bank, savings and loan, or
credit union on a systematic schedule or whenever you wish.
- --------------------------------------------------------------------------------
VANGUARD DIVIDEND EXPRESS(TM) [BOOK]
Electronic method for transferring dividend and/or capital gains distributions
directly from your Vanguard fund account to your bank, savings and loan, or
credit union account.
- --------------------------------------------------------------------------------
VANGUARD TELE-ACCOUNT(R) 1-800-662-6273 (ON-BOARD) [BOOK]

Toll-free 24-hour access to Vanguard fund and account information--as well as
some transactions--by using any touch-tone phone. Tele-Account provides total
return, share price, price change, and yield quotations for all Vanguard funds;
gives your account balances and history (e.g., last transaction, latest dividend
distribution); and allows you to sell or exchange shares to and from most
Vanguard funds.

- --------------------------------------------------------------------------------
ACCESS VANGUARD(TM) www.vanguard.com [COMPUTER]

You can use your personal computer to perform certain transactions for most
Vanguard funds by accessing our website. To establish this service, you must
register through our website. We will then mail you an account access password
that allows you to process the following financial and administrative
transactions online:

- - Open a new account.*
- - Buy, sell, or exchange shares of most funds.
- - Change your name/address.

<PAGE>

- - Add/change fund options (including dividend options, Vanguard Fund Express,
bank instructions, checkwriting, and Vanguard Automatic Exchange Service).
(Some restrictions may apply.) Please call our Client Services Department
for assistance.

*Only current Vanguard shareholders can open a new account online, by exchanging
shares from other existing Vanguard accounts.
- --------------------------------------------------------------------------------
INVESTOR INFORMATION DEPARTMENT: 1-800-662-7447 (SHIP) TEXT TELEPHONE:
1-800-952-3335
Call Vanguard for information on our funds, fund services, and retirement
accounts, and to request literature.
- --------------------------------------------------------------------------------

CLIENT SERVICES DEPARTMENT: 1-800-662-2739 (CREW) TEXT TELEPHONE: 1-800-749-7273

Call Vanguard for information on your account, account transactions, and account
statements.
- --------------------------------------------------------------------------------
SERVICES FOR CLIENTS OF VANGUARD'S INSTITUTIONAL DIVISION: 1-888-809-8102
Vanguard's Institutional Division offers a variety of specialized services for
large institutional investors, including the ability to effect account
transactions through private electronic networks and third-party recordkeepers.
- --------------------------------------------------------------------------------

TYPES OF ACCOUNTS

Individuals and institutions can establish a variety of accounts with Vanguard.
- --------------------------------------------------------------------------------
FOR ONE OR MORE PEOPLE
Open an account in the name of one (individual) or more (joint tenants) people.
- --------------------------------------------------------------------------------
FOR HOLDING PERSONAL TRUST ASSETS [BOOK]
Invest assets held in an existing personal trust.
- --------------------------------------------------------------------------------
FOR INDIVIDUAL RETIREMENT ACCOUNTS [BOOK]
Open a traditional IRA account or a Roth IRA account. Eligibility and other
requirements are established by federal law and Vanguard custodial account
agreements. For more information, please call 1-800-662-7447 (SHIP).
- --------------------------------------------------------------------------------
FOR AN ORGANIZATION [BOOK]
Open an account as a corporation, partnership, endowment, foundation, or other
entity.
- --------------------------------------------------------------------------------
FOR THIRD-PARTY TRUSTEE RETIREMENT INVESTMENTS
Open an account as a retirement trust or plan based on an existing corporate or
institutional plan. These accounts are established by the trustee of the
existing plan.
- --------------------------------------------------------------------------------
VANGUARD PROTOTYPE PLANS
Open a variety of retirement accounts using Vanguard prototype plans for
individuals, sole proprietorships, and small businesses. For more information,
please call 1-800-662-2003.
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
A NOTE ON INVESTING WITH VANGUARD THROUGH OTHER FIRMS
You may purchase or sell Fund shares through a financial intermediary such as a
bank, broker, or investment adviser. If you invest with Vanguard through an
intermediary, please read that firm's program materials carefully to learn of
any special rules that may apply. For example, special terms may apply to
additional service features, fees, or other policies. Consult your intermediary
to determine when your order will be priced.
- --------------------------------------------------------------------------------

<PAGE>

BUYING SHARES

You buy your shares at the Fund's next-determined share price (net asset value)
after Vanguard receives your request, which should be $1 per share. Before your
contribution to a money market fund can be invested, it must be converted to
"federal funds," which are Federal Reserve deposits that banks and other
financial institutions draw upon to meet short-term cash needs--and which fund
advisers must use to pay for the securities they buy. Vanguard converts your
money market investment to federal funds, which usually takes one business day.
Because of this conversion period, your money market account will be credited on
the business day following the day your investment is received. You will begin
earning dividends on your investment on the next calendar day. For example, if
your check is received on a Thursday before the close of trading on the New York
Stock Exchange, your account will be credited the next business day (Friday) and
you will begin earning dividends on Saturday.

Each of the Funds is offered on a no-load basis, meaning that you do not
pay sales commissions or 12b-1 distribution fees.
- --------------------------------------------------------------------------------
MINIMUM INVESTMENT TO . . .
open a new account
$3,000 (regular account); $1,000 (traditional IRAs and Roth IRAs).

add to an existing account
$100 by mail or exchange; $1,000 by wire.
- --------------------------------------------------------------------------------
A NOTE ON LOW BALANCES

The Fund reserves the right to close any nonretirement fund account whose
balance falls below the minimum initial investment. The Fund will deduct a $10
annual fee in June if your nonretirement account balance at that time is below
$2,500. The low balance fee is waived for investors who have aggregate Vanguard
account assets of $50,000 or more.

- --------------------------------------------------------------------------------
BY MAIL TO . . . [ENVELOPE]
open a new account

Complete and sign the account registration form and enclose your check.

add to an existing account
Mail your check with an Invest-By-Mail form detached from your confirmation
statement to the address listed on the form. Please do not alter Invest-By-Mail
forms, since they are fund- and account-specific.

Make your check payable to: The Vanguard Group-(insert appropriate Fund number;
see below)
Vanguard Prime Money Market Fund-30
Vanguard Federal Money Market Fund-33
Vanguard Treasury Money Market Fund-50

All purchases must be made in U.S. dollars, and checks must be drawn on U.S.
banks.

First-class mail to: Express or Registered mail to:
The Vanguard Group The Vanguard Group
P.O. Box 1110 455 Devon Park Drive
Valley Forge, PA 19482-1110 Wayne, PA 19087-1815

<PAGE>

For clients of Vanguard's Institutional Division . . .

First-class mail to: Express or Registered mail to:
The Vanguard Group The Vanguard Group
P.O. Box 2900 455 Devon Park Drive
Valley Forge, PA 19482-2900 Wayne, PA 19087-1815
- --------------------------------------------------------------------------------
IMPORTANT NOTE: To prevent check fraud, Vanguard will not accept checks made
payable to third parties.
- --------------------------------------------------------------------------------
BY TELEPHONE TO . . . [TELEPHONE]
open a new account

add to an existing account

Call Vanguard Tele-Account* 24 hours a day--or Client Services during business
hours--to exchange from another Vanguard fund account with the same registration
(name, address, taxpayer identification number, and account type). (Note that
some restrictions apply to index fund accounts.) Use Vanguard Fund Express (see
"Services and Account Features") to transfer assets from your bank account. Call
Client Services before your first use to verify that this option is available.

Vanguard Tele-Account Client Services
1-800-662-6273 1-800-662-2739

*You must obtain a Personal Identification Number (PIN) through Tele-Account at
least seven days before you request your first exchange.
- --------------------------------------------------------------------------------
IMPORTANT NOTE: Once you have initiated a telephone transaction and a
confirmation number has been assigned, the transaction cannot be revoked. We
reserve the right to refuse any purchase request.

- --------------------------------------------------------------------------------
BY WIRE TO OPEN A NEW ACCOUNT OR ADD TO AN EXISTING ACCOUNT [WIRE]

Call Client Services to arrange your wire transaction. Wire transactions to
retirement accounts are only available for asset transfers and rollovers from
other financial institutions. Individual IRA contributions will not be accepted
by wire.

Wire to:
FRB ABA 021001088
HSBC Bank USA

For credit to:
Account: 000112046
Vanguard Incoming Wire Account

In favor of:
Vanguard Prime Money Market Fund-30
Vanguard Federal Money Market Fund-33
Vanguard Treasury Money Market Fund-50
[Account number, or temporary number for a new account]
[Registered account owner(s)]
[Registered address]

<PAGE>

If you buy fund shares through a federal funds wire, your investment begins
earning dividends the next calendar day. You can begin earning dividends
immediately if you notify Vanguard by 10:45 a.m. Eastern time that you intend to
make a wire purchase that day.
- --------------------------------------------------------------------------------
You can redeem (that is, sell or exchange) shares purchased by check or Vanguard
Fund Express at any time. However, while your redemption request will be
processed at the next-determined net asset value after it is received, your
redemption proceeds will not be available until payment for your purchase is
collected, which may take up to ten calendar days.
- --------------------------------------------------------------------------------
A NOTE ON LARGE PURCHASES

It is important that you call Vanguard before you invest a large dollar amount.
It is our responsibility to consider the interests of all Fund shareholders, and
so we reserve the right to refuse any purchase that may disrupt the Fund's
operation or performance.

- --------------------------------------------------------------------------------

REDEEMING SHARES

This section describes how you can redeem--that is, sell or exchange--a Fund's
shares.

When Selling Shares:
- - Vanguard sends the redemption proceeds to you or a designated third party.*
- - You can sell all or part of your Fund shares at any time.

*May require a signature guarantee; see footnote on page 23.

When Exchanging Shares:
- - The redemption proceeds are used to purchase shares of a different Vanguard
fund.
- - You must meet the receiving fund's minimum investment requirements.
- - Vanguard reserves the right to revise or terminate the exchange privilege,
limit the amount of an exchange, or reject an exchange at any time, without
notice.

- - In order to exchange into an account with a different registration
(including a different name, address, or taxpayer identification number),
you must include the guaranteed signatures of all current account owners on
your written instructions.

In both cases, your transaction will be based on the Fund's next-determined
share price, subject to any special rules discussed in this prospectus.
- --------------------------------------------------------------------------------
NOTE: Once a redemption is initiated and a confirmation number given, the
transaction CANNOT be canceled.

- --------------------------------------------------------------------------------

HOW TO REQUEST A REDEMPTION
You can request a redemption from your Fund account in any one of three ways:
online, by telephone, or by mail. You can also sell shares by check.

The Vanguard funds whose shares you cannot exchange online or by telephone
are VANGUARD U.S. STOCK INDEX FUNDS, VANGUARD BALANCED INDEX FUND, VANGUARD
INTERNATIONAL STOCK INDEX FUNDS, VANGUARD REIT INDEX FUND, and VANGUARD GROWTH
AND INCOME FUND. These funds do, however, permit online and telephone exchanges
within IRAs and some other retirement accounts. If you sell shares of these
funds online, a redemption check will be sent to your address of record.

- --------------------------------------------------------------------------------

<PAGE>

- --------------------------------------------------------------------------------
ONLINE REQUESTS [COMPUTER]
ACCESS VANGUARD at www.vanguard.com

You can use your personal computer to sell or exchange shares of most Vanguard
funds by accessing our website. To establish this service, you must register
through our website. We will then mail you an account access password that will
enable you to sell or exchange shares online (as well as perform other
transactions).

- --------------------------------------------------------------------------------
TELEPHONE REQUESTS [TELEPHONE]
All Account Types Except Retirement:
Call Vanguard Tele-Account 24 hours a day--or Client Services during business
hours--to sell or exchange shares. You can exchange shares from a Fund to open
an account in another Vanguard fund or to add to an existing Vanguard fund
account with an identical registration.

Retirement Accounts:
You can exchange--but not sell--shares by calling Tele-Account or Client
Services.

Vanguard Tele-Account Client Services
1-800-662-6273 1-800-662-2739
- --------------------------------------------------------------------------------
SPECIAL INFORMATION: We will automatically establish the telephone redemption
option for your account, unless you instruct us otherwise in writing. While
telephone redemption is easy and convenient, this account feature involves a
risk of loss from unauthorized or fraudulent transactions. Vanguard will take
reasonable precautions to protect your account from fraud. You should do the
same by keeping your account information private and immediately reviewing any
account statements that we send to you. Make sure to contact Vanguard
immediately about any transaction you believe to be unauthorized.
- --------------------------------------------------------------------------------
We reserve the right to refuse a telephone redemption if the caller is unable to
provide:
- - The ten-digit account number.
- - The name and address exactly as registered on the account.
- - The primary Social Security or employer identification number as registered
on the account.

- - The Personal Identification Number, if applicable (for instance,
Tele-Account).

Please note that Vanguard will not be responsible for any account losses
due to telephone fraud, so long as we have taken reasonable steps to verify the
caller's identity. If you wish to remove the telephone redemption feature from
your account, please notify us in writing.
- --------------------------------------------------------------------------------
A NOTE ON UNUSUAL CIRCUMSTANCES
Vanguard reserves the right to revise or terminate the telephone redemption
privilege at any time, without notice. In addition, Vanguard can stop selling
shares or postpone payment at times when the New York Stock Exchange is closed
or under any emergency circumstances as determined by the U.S. Securities and
Exchange Commission. If you experience difficulty making a telephone redemption
during periods of drastic economic or market change, you can send us your
request by regular or express mail. Follow the instructions on selling or
exchanging shares by mail in this section.
- --------------------------------------------------------------------------------
MAIL REQUESTS [ENVELOPE]
All Account Types Except Retirement:
Send a letter of instruction signed by all registered account holders. Include
the fund name and account number and (if you are selling) a dollar amount or
number of shares OR (if you are exchanging) the name of the fund you want to
exchange into and a dollar amount or

<PAGE>

number of shares. To exchange into an account with a different registration
(including a different name, address, taxpayer identification number, or account
type), you must provide Vanguard with written instructions that include the
guaranteed signatures of all current owners of the fund from which you wish to
redeem.

Vanguard Retirement Accounts:
For information on how to request distributions from:
- - Traditional IRAs and Roth IRAs--call Client Services.
- - SEP-IRAs, SIMPLE IRAs, 403(b)(7) custodial accounts, and Profit-Sharing and
Money Purchase Pension (Keogh) Plans--call Individual Retirement Plans at
1-800-662-2003.

Depending on your account registration type, additional documentation may be
required.

First-class mail to: Express or Registered mail to:

The Vanguard Group The Vanguard Group
P.O. Box 1110 455 Devon Park Drive
Valley Forge, PA 19482-1110 Wayne, PA 19087-1815

For clients of Vanguard's Institutional Division . . .

First-class mail to: Express or Registered mail to:
The Vanguard Group The Vanguard Group
P.O. Box 2900 455 Devon Park Drive
Valley Forge, PA 19482-2900 Wayne, PA 19087-1815
- --------------------------------------------------------------------------------
CHECK REQUESTS [CHECK]
You can sell shares by writing a check for $250 or more.
- --------------------------------------------------------------------------------
A NOTE ON LARGE REDEMPTIONS

It is important that you call Vanguard before you redeem a large dollar amount.
It is our responsibility to consider the interests of all fund shareholders and
so we reserve the right to delay delivery of your redemption proceeds--up to
seven days--if the amount may disrupt the Fund's operation or performance.
If you redeem more than $250,000 worth of Fund shares within any 90-day
period, the Fund reserves the right to pay part or all of the redemption
proceeds above $250,000 in-kind, i.e., in securities, rather than in cash. If
payment is made in-kind, you may incur brokerage commissions if you elect to
sell the securities for cash.

- --------------------------------------------------------------------------------

OPTIONS FOR REDEMPTION PROCEEDS

You may receive your redemption proceeds in one of four ways: check, wire (money
market funds and other daily dividend funds only), exchange to another Vanguard
fund, or Fund Express Redemption.

- --------------------------------------------------------------------------------
CHECK REDEMPTIONS
Normally, Vanguard will mail your check within two business days of a
redemption.
- --------------------------------------------------------------------------------
WIRE REDEMPTIONS [WIRE]
The wire redemption option is not automatic; you must establish it by completing
a special form or the appropriate section of your account application. Wire
redemptions can be initiated by mail or by telephone during Vanguard's business
hours, but not online.

<PAGE>

For Money Market Funds:

For telephone requests made by 10:30 a.m. Eastern time, the wire will arrive at
your bank by the close of business that same day. Requests made by 4 p.m.
Eastern time will arrive at your bank by the close of business on the following
business day.

For Other Daily Dividend Funds:
For telephone requests made by 4 p.m. Eastern time, the wire will arrive at your
bank by the close of business on the following business day.

- --------------------------------------------------------------------------------
NOTE: Wire redemptions of less than $5,000 are subject to a $5 processing fee.
- --------------------------------------------------------------------------------
EXCHANGE REDEMPTIONS
As described above, an exchange involves using the proceeds of your redemption
to purchase shares of another Vanguard fund.
- --------------------------------------------------------------------------------

FUND EXPRESS REDEMPTIONS
Vanguard will electronically transfer funds to your pre-linked checking or
savings account.

- --------------------------------------------------------------------------------
FOR OUR MUTUAL PROTECTION
For your best interests and ours, Vanguard applies these additional requirements
to redemptions:

REQUEST IN "GOOD ORDER"
All redemption requests must be received by Vanguard in "good order." This means
that your request must include:
- - The Fund name and account number.
- - The amount of the transaction (in dollars or shares).
- - Signatures of all owners exactly as registered on the account (for mail
requests).
- - Signature guarantees (if required).*
- - Any supporting legal documentation that may be required.
- - Any outstanding certificates representing shares to be redeemed.

*For instance, a signature guarantee must be provided by all registered account
shareholders when redemption proceeds are to be sent to a different person or
address. A signature guarantee can be obtained from most commercial and savings
banks, credit unions, trust companies, or member firms of a U.S. stock
exchange.

TRANSACTIONS ARE PROCESSED AT THE NEXT-DETERMINED SHARE PRICE AFTER VANGUARD HAS
RECEIVED ALL REQUIRED INFORMATION.
- --------------------------------------------------------------------------------
RETURN YOUR SHARE CERTIFICATES
Any portion of your account represented by share certificates cannot be redeemed
until you return the certificates to Vanguard. Certificates must be returned
(unsigned), along with a letter requesting the sale or exchange you wish to
process, via certified mail to:

The Vanguard Group
455 Devon Park Drive
Wayne, PA 19087-1815
- --------------------------------------------------------------------------------

ALL TRADES ARE FINAL
Vanguard will not cancel any transaction request (including any purchase or
redemption) that we believe to be authentic once the request has been initiated
and a confirmation number assigned.

- --------------------------------------------------------------------------------

<PAGE>

- --------------------------------------------------------------------------------

UNCASHED CHECKS
Please cash your distribution or redemption checks promptly. Vanguard will not
pay interest on uncashed checks.

- --------------------------------------------------------------------------------

TRANSFERRING REGISTRATION

You can transfer the registration of your Fund shares to another owner by
completing a transfer form and sending it to Vanguard.

First-class mail to: Express or Registered mail to:
The Vanguard Group The Vanguard Group
P.O. Box 1110 455 Devon Park Drive
Valley Forge, PA 19482-1110 Wayne, PA 19087-1815

For clients of Vanguard's Institutional Division . . .

FUND AND ACCOUNT UPDATES

STATEMENTS AND REPORTS
We will send you account and tax statements to help you keep track of your Fund
account throughout the year as well as when you are preparing your income tax
returns.

In addition, you will receive financial reports about your Fund twice a year.
These comprehensive reports include an assessment of the Fund's performance (and
a comparison to its industry benchmark), an overview of the financial markets, a
report from the adviser, and the Fund's financial statements which include a
listing of the Fund's holdings.
To keep each Fund's costs as low as possible (so that you and other
shareholders can keep more of the Fund's investment earnings), Vanguard attempts
to eliminate duplicate mailings to the same address. When two or more Fund
shareholders have the same last name and address, we send just one Fund report
to that address--instead of mailing separate reports to each shareholder. If you
want us to send separate reports, notify our Client Services Department at
1-800-662-2739.

- --------------------------------------------------------------------------------
CONFIRMATION STATEMENT
Sent each time you buy, sell, or exchange shares; confirms the trade date and
the amount of your transaction.
- --------------------------------------------------------------------------------
PORTFOLIO SUMMARY [BOOK]
Mailed quarterly for most accounts; shows the market value of your account at
the close of the statement period, as well as distributions, purchases, sales,
and exchanges for the current calendar year.
- --------------------------------------------------------------------------------
FUND FINANCIAL REPORTS
Mailed in January and July for these Funds.
- --------------------------------------------------------------------------------

<PAGE>

- --------------------------------------------------------------------------------
TAX STATEMENTS
Generally mailed in January; report previous year's dividend distributions,
proceeds from the sale of shares, and distributions from IRAs or other
retirement accounts.
- --------------------------------------------------------------------------------
CHECKWRITING STATEMENT
Sent monthly to shareholders using Vanguard's checkwriting option. Our statement
provides images of the front and back of each checkwriting draft paid in the
previous month. This consolidated statement is sent instead of the original
canceled drafts, which will not be returned.
- --------------------------------------------------------------------------------

<PAGE>

(THIS PAGE INTENTIONALLY LEFT BLANK.)

<PAGE>

GLOSSARY OF INVESTMENT TERMS

DIVIDEND INCOME
Payment to shareholders of income from interest or dividends generated by a
fund's investments.

EXPENSE RATIO
The percentage of a fund's average net assets used to pay its expenses. The
expense ratio includes management fees, administrative fees, and any 12b-1
distribution fees.

INVESTMENT ADVISER
An organization that makes the day-to-day decisions regarding a fund's
investments.

LIQUIDITY
The degree of a security's marketability (that is, how quickly the security can
be sold at a fair price and converted to cash).

MONEY MARKET FUND
A mutual fund that seeks to provide income, liquidity, and a stable share price
by investing in very short-term, liquid investments.

MONEY MARKET INSTRUMENTS
Short-term, liquid investments (usually with a maturity of 13 months or less),
which include U.S. Treasury bills, bank certificates of deposit (CDs),
repurchase agreements, commercial paper, and banker's acceptances.

MUTUAL FUND
An investment company that pools the money of many people and invests it in a
variety of securities in an effort to achieve a specific objective over time.

NET ASSET VALUE (NAV)
The market value of a mutual fund's total assets, minus liabilities, divided by
the number of shares outstanding. The value of a single share is called its
share value or share price.

PRINCIPAL
The amount of money you put into an investment.

SECURITIES
Stocks, bonds, money market instruments, and interests in other investment
vehicles.

TOTAL RETURN
A percentage change, over a specified time period, in a mutual fund's net asset
value, with the ending net asset value adjusted to account for the reinvestment
of all distributions of dividends and capital gains.

VOLATILITY
The fluctuations in value of a mutual fund or other security. The greater a
fund's volatility, the wider the fluctuations between its high and low prices.

YIELD
Income (interest or dividends) earned by an investment, expressed as a
percentage of the investment's price.

<PAGE>

[SHIP(R) LOGO]
[THE VANGUARD GROUP(R) LOGO]

Post Office Box 2600
Valley Forge, PA 19482-2600

FOR MORE INFORMATION
If you'd like more information about
Vanguard Money Market Funds, the
following documents are available
free upon request:

ANNUAL/SEMIANNUAL REPORT
TO SHAREHOLDERS
Additional information about the
Funds' investments is available in
the Funds' annual and semiannual
reports to shareholders.

STATEMENT OF ADDITIONAL
INFORMATION (SAI)
The SAI provides more detailed
information about the Funds.

The current annual and semiannual
reports and the SAI are
incorporated by reference into
(and are thus legally a part of)
this prospectus.

To receive a free copy of the latest
annual or semiannual report or the
SAI, or to request additional
information about the Funds or other
Vanguard funds, please contact us
as follows:

THE VANGUARD GROUP
INVESTOR INFORMATION DEPARTMENT
P.O. BOX 2600
VALLEY FORGE, PA 19482-2600

TELEPHONE:
1-800-662-7447 (SHIP)

TEXT TELEPHONE:
1-800-952-3335

WORLD WIDE WEB:
WWW.VANGUARD.COM

If you are a current Fund shareholder
and would like information about
your account, account transactions,
and/or account statements,
please call:

CLIENT SERVICES DEPARTMENT
TELEPHONE:
1-800-662-2739 (CREW)

TEXT TELEPHONE:
1-800-749-7273

INFORMATION PROVIDED BY THE
SECURITIES AND EXCHANGE
COMMISSION (SEC)
You can review and copy
information about the Funds
(including the SAI) at the SEC's
Public Reference Room in
Washington, DC. To find out more
about this public service, call the
SEC at 1-800-SEC-0330. Reports and
other information about the Funds
are also available on the SEC's
website (www.sec.gov), or you can
receive copies of this information,
for a fee, by writing the Public
Reference Section, Securities and
Exchange Commission, Washington,
DC 20549-0102.

Vanguard Prime and Federal Money
Market Funds' Investment Company
Act file number: 811-2554

Vanguard Treasury Money Market
Fund's Investment Company Act file
number: 811-7803

P030N-03/24/2000

<PAGE>

VANGUARD(R)
MONEY MARKET
FUNDS

Participant Prospectus
March 24, 2000

This prospectus contains
financial data for the
Funds through the
fiscal year ended
November 30, 1999.

VANGUARD PRIME
MONEY MARKET FUND

VANGUARD FEDERAL
MONEY MARKET FUND

VANGUARD TREASURY
MONEY MARKET FUND

[MEMBERS OF
THE VANGUARD GROUP LOGO]
<PAGE>

VANGUARD MONEY MARKET FUNDS

Participant Prospectus

March 24, 2000

- --------------------------------------------------------------------------------
CONTENTS
- --------------------------------------------------------------------------------

1 FUND PROFILES 14 DIVIDENDS AND TAXES

1 Vanguard Prime Money Market Fund 14 SHARE PRICE

4 Vanguard Federal Money Market Fund 15 FINANCIAL HIGHLIGHTS

7 Vanguard Treasury Money Market Fund 17 INVESTING WITH VANGUARD

10 MORE ON THE FUNDS 17 ACCESSING FUND INFORMATION BY
COMPUTER

13 THE FUNDS AND VANGUARD GLOSSARY (inside back cover)

13 INVESTMENT ADVISER

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
WHY READING THIS PROSPECTUS IS IMPORTANT

This prospectus explains the objective, risks, and policies of Vanguard Prime
Money Market Fund, Vanguard Federal Money Market Fund, and Vanguard Treasury
Money Market Fund. To highlight terms and concepts important to mutual fund
investors, we have provided "Plain Talk(R)" explanations along the way. Reading
the prospectus will help you to decide which Fund, if any, is the right
investment for you. We suggest that you keep it for future reference.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
IMPORTANT NOTE

The Prime Money Market Fund offers two separate classes of shares: Investor and
Institutional. This prospectus offers the Fund's Investor Shares to participants
in employer-sponsored retirement or savings plans. Please call Vanguard to
obtain separate prospectuses that offer:
- - Investor Shares for private investors ($3,000 minimum)--1-800-662-7447
- - Institutional Shares for very large investors ($10 million
minimum)--1-800-523-1036
The Fund's separate share classes have different expenses; as a result,
their investment performances will vary. UNLESS OTHERWISE NOTED, ALL REFERENCES
IN THIS PROSPECTUS TO FEES, EXPENSES, AND INVESTMENT PERFORMANCE RELATE
SPECIFICALLY TO INVESTOR SHARES.

- --------------------------------------------------------------------------------

<PAGE>

FUND PROFILE--
VANGUARD PRIME MONEY MARKET FUND

The following profile summarizes key features of Vanguard Prime Money Market
Fund.

INVESTMENT OBJECTIVE

The Fund seeks to provide current income while maintaining liquidity and a
stable share price of $1.

INVESTMENT POLICIES

PRIMARY RISKS

- - Manager risk, which is the chance that poor security selection will cause
the Fund to underperform other funds with similar investment objectives.

PERFORMANCE/RISK INFORMATION

<PAGE>

----------------------------------------------------
ANNUAL TOTAL RETURNS
----------------------------------------------------

1990 8.27%
1991 6.14%
1992 3.74%
1993 3.01%
1994 4.08%
1995 5.82%
1996 5.29%
1997 5.44%
1998 5.38%
1999 5.01%
----------------------------------------------------

If you would like to know the current seven-day yield for the Fund, call
Vanguard's Investor Information Department at 1-800-662-7447 (SHIP).

FEES AND EXPENSES

ANNUAL FUND OPERATING EXPENSES (expenses deducted from the Fund's assets)
Management Expenses: 0.11%
12b-1 Distribution Fee: None
Other Expenses: 0.22%
TOTAL ANNUAL FUND OPERATING EXPENSES: 0.33%

<PAGE>

THIS EXAMPLE SHOULD NOT BE CONSIDERED TO REPRESENT ACTUAL EXPENSES OR
PERFORMANCE FROM THE PAST OR FOR THE FUTURE. ACTUAL FUTURE EXPENSES MAY BE
HIGHER OR LOWER THAN THOSE SHOWN.

- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION

DIVIDENDS NEWSPAPER ABBREVIATION
Declared daily and distributed on the VangPr
first business day of each month
VANGUARD FUND NUMBER
INVESTMENT ADVISER 030
The Vanguard Group, Valley Forge,
Pa., since 1981 CUSIP NUMBER
922906201
INCEPTION DATE
June 4, 1975 TICKER SYMBOL
VMMXX
NET ASSETS AS OF NOVEMBER 30, 1999
$41.2 billion

- --------------------------------------------------------------------------------

<PAGE>

FUND PROFILE--
VANGUARD FEDERAL MONEY MARKET FUND

The following profile summarizes key features of Vanguard Federal Money Market
Fund.

INVESTMENT OBJECTIVE

The Fund seeks to provide current income while maintaining liquidity and a
stable share price of $1.

INVESTMENT POLICIES

PRIMARY RISKS

- - Manager risk, which is the chance that poor security selection will cause
the Fund to underperform other funds with similar investment objectives.

PERFORMANCE/RISK INFORMATION

<PAGE>

----------------------------------------------------
ANNUAL TOTAL RETURNS
----------------------------------------------------
1990 8.07%
1991 5.96%
1992 3.68%
1993 2.98%
1994 4.03%
1995 5.77%
1996 5.24%
1997 5.38%
1998 5.31%
1999 4.94%
----------------------------------------------------

-----------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR YEARS ENDED DECEMBER 31, 1999
-----------------------------------------------------------------
1 YEAR 5 YEARS 10 YEARS
-----------------------------------------------------------------
Vanguard Federal Money Market Fund 4.94% 5.33% 5.13%
Salomon Smith Barney 3-Month
Treasury Index 4.74 5.20 5.05
Lipper U.S. Government Money Market
Fund Average* 4.47 4.85 4.68
-----------------------------------------------------------------
*Derived from data provided by Lipper Inc.
-----------------------------------------------------------------

If you would like to know the current seven-day yield for the Fund, call
Vanguard's Investor Information Department at 1-800-662-7447 (SHIP).

FEES AND EXPENSES

ANNUAL FUND OPERATING EXPENSES (expenses deducted from the Fund's assets)
Management Expenses: 0.13%
12b-1 Distribution Fee: None
Other Expenses: 0.20%
TOTAL ANNUAL FUND OPERATING EXPENSES: 0.33%

<PAGE>

THIS EXAMPLE SHOULD NOT BE CONSIDERED TO REPRESENT ACTUAL EXPENSES OR
PERFORMANCE FROM THE PAST OR FOR THE FUTURE. ACTUAL FUTURE EXPENSES MAY BE
HIGHER OR LOWER THAN THOSE SHOWN.

- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION

DIVIDENDS NEWSPAPER ABBREVIATION
Declared daily and distributed on the VangFdl
first business day of each month
VANGUARD FUND NUMBER
INVESTMENT ADVISER 033
The Vanguard Group, Valley Forge,
Pa., since inception CUSIP NUMBER
922906300
INCEPTION DATE
July 13, 1981 TICKER SYMBOL
VMFXX
NET ASSETS AS OF NOVEMBER 30, 1999
$5.2 billion

- --------------------------------------------------------------------------------

<PAGE>

FUND PROFILE--
VANGUARD TREASURY MONEY MARKET FUND

The following profile summarizes key features of Vanguard Treasury Money Market
Fund.

INVESTMENT OBJECTIVE

The Fund seeks to provide current income while maintaining liquidity and a
stable share price of $1.

INVESTMENT POLICIES

PRIMARY RISKS

- - Manager risk, which is the chance that poor security selection will cause
the Fund to underperform other funds with similar investment objectives.

PERFORMANCE/RISK INFORMATION

<PAGE>

If you would like to know the current seven-day yield for the Fund, call
Vanguard's Investor Information Department at 1-800-662-7447 (SHIP).

FEES AND EXPENSES

ANNUAL FUND OPERATING EXPENSES (expenses deducted from the Fund's assets)
Management Expenses: 0.14%
12b-1 Distribution Fee: None
Other Expenses: 0.19%
TOTAL ANNUAL FUND OPERATING EXPENSES: 0.33%

<PAGE>

THIS EXAMPLE SHOULD NOT BE CONSIDERED TO REPRESENT ACTUAL EXPENSES OR
PERFORMANCE FROM THE PAST OR FOR THE FUTURE. ACTUAL FUTURE EXPENSES MAY BE
HIGHER OR LOWER THAN THOSE SHOWN.

- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION

DIVIDENDS NEWSPAPER ABBREVIATION
Declared daily and distributed on the VangTrsy
first business day of each month
VANGUARD FUND NUMBER
INVESTMENT ADVISER 050
The Vanguard Group, Valley Forge,
Pa., since inception CUSIP NUMBER
921948105
INCEPTION DATE
March 9, 1983 TICKER SYMBOL
VMPXX
NET ASSETS AS OF NOVEMBER 30, 1999
$4.6 billion