As part of its continuing efforts to support stability in money market funds, the U.S. Treasury Department has announced an extension of Treasury's Temporary Guarantee Program for Money Market Funds until April 30, 2009. The program will continue to provide coverage to shareholders up to amounts that they held in participating money market funds as of the close of business on September 19.
This latest extension of the program is available only to money market funds already participating in the program that meet the extension requirements.
To continue participation in the program, funds must make a program extension payment and submit the extension notice by December 5. The amount of the payment for the extension period will be based on a fund's net asset value as of September 19:
- For funds that had a market-based net asset value greater than or equal to 99.75 percent of their stable share price, the payment will be 0.015 percent, 1.5 basis points, multiplied by the number of shares outstanding on September 19.
- For funds that had a market-based net asset value less than 99.75 percent of their stable share price but greater than or equal to 99.50 percent of their stable share price, the payment will be 0.022 percent, 2.2 basis points, multiplied by the number of shares outstanding on September 19.
Fund directors should note that continued participation in the guarantee program also requires the fund's board, including a majority of the members who are not interested persons of the fund, to have determined that the fund's continued participation in the program is in the best interests of the fund and its shareholders. Since this must happen by December 5, it means that funds and their boards again will have a bit of a scramble to approve participation, this time over a holiday period. Funds and advisers also must provide a Bring-Down Notice, essentially confirming that their representations and warranties were still accurate on December 19, 2008, and that the fund's market-based NAV was not less than $0.995 on that date. The Bring-Down Notice must be delivered by 11:59 p.m. Washington time on December 29, 2008.
The full text of the Treasury's announcement is available at: http://www.treas.gov/press/releases/hp1290.htm
The text of the Extension Notice and Instructions is available at: http://www.treas.gov/press/releases/reports/moneymarketextension.pdf
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