Early indications are that almost all Treasury money market funds, and many Government money market funds, will decline continued participation in the U.S. Treasury's Temporary Guarantee Program for Money Market Funds. But virtually all Prime and Tax-Exempt money funds are expected to sign up with Treasury to extend coverage through the new Sept. 18, 2009, deadline. Of those that have declared publicly so far, Dreyfus, First American, Schwab and Vanguard have gone with coverage on Prime and Tax-Exempt funds only, while Northern and Wells Fargo are covering all but their Treasury money funds. Funds have until Tuesday, April 13, to declare, so expect the rest to declare either tomorrow or Monday. (Funds are closed Friday due to the Good Friday Holiday.)
Dreyfus says in its "Update on Dreyfus Money Market Funds," posted April 8, "Dreyfus and BNY Mellon 'Prime' and 'Tax Exempt' Money Market Funds Have Filed for Extended Coverage in the U.S. Treasury Department's Temporary Guarantee Program for Money Market Funds through September 18, 2009. On March 31, 2009, The U.S. Treasury Department announced a further extension of Treasury's Temporary Guarantee Program for Money Market Funds until September 18, 2009. Only the Dreyfus and BNY Mellon 'prime' and 'tax exempt' money market funds have filed for extended coverage."
The Dreyfus release continues, "For shareholders of one of these funds, the Treasury's Temporary Guarantee Program will continue, through September 18, 2009, to provide a guarantee to participating shareholder accounts based on the number of shares held in such accounts as of the close of business on September 19, 2008. Any increase in the number of shares held in an account after the close of business on September 19, 2008 is not guaranteed. If the number of shares held in an account fluctuates over the period, even to 'zero,' investors will be covered for the number of shares held as of the close of business on September 19, 2008 or the current amount, whichever is less." View the list of participating Dreyfus funds here. For the Treasury's FAQ, click here.
On April 3, Schwab, the first to declare, said, "All Schwab money funds, with the exception of the Schwab U.S. Treasury Money Fund (SWUXX) and the Schwab Government Money Fund (SWGXX), intend to participate in the extension of the program." They add, It is important to note that Schwab money market funds continue to meet their two primary objectives: 1) always maintain a $1.00 net asset value; and, 2) continue to meet all daily redemption requests by clients. In order to meet our two primary objectives, the funds, as required by the regulations governing money market funds, invest only in high quality money market instruments that present minimal credit risk, meet strict diversification requirements, and mature in 13 months or less."
Vanguard's release says, "Trustees of the eight funds concluded that continued participation in the program would further help stabilize the short-term corporate and municipal credit markets, to the benefit of investors in all money market funds. Three Vanguard funds that invest primarily in high-quality, short-term U.S. government or government agency securities -- Admiral Treasury Money Market Fund, Treasury Money Market Fund, and Federal Money Market Fund -- will discontinue participation after April 30, 2009."
