Treasury Department Rolls Out Money Market Guarantee Program

October 6, 2008

On September 29, 2008, the U.S. Department of the Treasury announced the establishment of a Temporary Guarantee Program for Money Market Funds. Under this program, Treasury will guarantee that eligible money market fund investors will receive $1 for each money market share held as of September 19, 2008. The program is designed to respond to what Treasury called "temporary dislocations in the credit markets" that came after some money market funds saw their share prices fall below $1, known as "breaking the buck."

The temporary program was authorized for three months but may be extended until September 19, 2009. It provides coverage to shareholders for amounts they held in participating money market funds at the close of business on September 19, 2008. The program is triggered when share prices fall below $0.995 and the money market fund "breaks the buck". If a participating fund breaks the buck, the fund is required to liquidate within 29 days. After liquidation, Treasury will make a guarantee payment within 30 days.

To be eligible, money market funds must pay an enrollment fee based on the number of shares outstanding and the share price on September 19, 2008. The fees cover only the first three months of participation in the program. If the program is extended, additional fees may apply.

Only money market funds that are offered at $1 per share and are registered with the U.S. Securities and Exchange Commission are eligible to participate. Money market funds must apply to receive coverage. The program is not open to individual investors.