On September 19, 2008, the Treasury announced the establishment of a temporary guaranty program for the U.S. money market mutual fund industry (the “Guaranty Program”). The Guaranty Program will insure the holdings of non-government, non-agency publicly offered Rule 2a-7 money market mutual funds. Both retail and institutional money market funds will be eligible to participate (“Eligible Money Market Funds”). Funds may choose, but are not required, to avail themselves of participation in the Guaranty Program for a fee (the amount of which is not yet known.)

The Guaranty Program has been established by Treasury action which makes up to $50 billion from the assets of the Stabilization Fund1 available to guarantee the payment to investors of Eligible Money Market Funds with a net asset value that falls below $1.00. Relief under the Guaranty Program will be trigged once a participating Eligible Money Market Fund’s board of directors acts to liquidate the fund and it is determined that shareholders would, absent the Guaranty Program, receive less than $1.00. The Guaranty Program will permit a participating Eligible Money Market Fund to liquidate in an orderly manner, with any shortfall to be covered by the Treasury. Despite the $50 billion allocation from the Exchange Stabilization Fund, the actual amount of insurance is not limited.

The Treasury has indicated that, despite the initiation of the Guaranty Program, it will not seek to regulate money market mutual funds. The U.S. Securities and Exchange Commission has been tasked with developing the Guaranty Program. The SEC is consulting with the Investment Company Institute for assistance in developing the Guaranty Program.