The U.S. Treasury has extended its Temporary Guarantee Program for Money Market Funds through September 18, 2009. The program previously was scheduled to expire on April 30, 2009. The program cannot be extended past September 18, and the Emergency Economic Stabilization Act of 2008 prohibits any further use of the Exchange Stabilization Fund for the establishment of any future guaranty programs for the United States money market mutual fund industry, so it will not be possible to have a federal guarantee past that date unless another source of funding is found or Congress changes the law, neither of which is currently expected. Money market funds that wish to continue to participate in the program must submit a program extension payment and the required documents by 11:59 p.m. Washington, DC time on April 13, 2009.
The participation fee will continue to be based on funds' net asset values and outstanding shares on September 19, 2008, and will continue to be at the approximate rate of 4 or 6 basis points on an annualized basis. Specifically, the program extension participation payments will be calculated as follows:
For funds that on September 19, 2008, had a market-based net asset value greater than or equal to 99.75% of their stable share price, the payment will be 0.015%, or 1.5 basis points, multiplied by the number of shares outstanding on September 19, 2008; and
For funds that on that date had a market-based net asset value less than 99.75% (but at least 99.50%) of their stable share price, the payment will be 0.023%, or 2.3 basis points, multiplied by the number of shares then outstanding.
As with the prior extension, the fund's board, including a majority of its independent directors, must have determined that the fund's continued participation in the program is in the best interests of the participating fund and its shareholders. The board does not have to make a unitary decision; some money market funds or share classes may extend their participation, while others do not. However, only funds and classes that currently participate may extend their participation.
The program's web page, with a link to the March 31 press release and formal announcement, is at
For my prior posts on the program, see
John M. Baker <JMB@...
Stradley Ronon Stevens & Young, LLP http://www.stradley.com
1250 Connecticut Avenue, NW, Suite 500
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