We reported at the end of 2014 that Touchstone Investments would liquidate its money market funds (see our Dec. 26 News, "Touchstone to Liquidate Money Funds, Victim of SEC's MMF Reforms"), subject to approval by the fund's Board of Trustees. However, at its meeting on February 12, the board voted to change its plan to liquidate its money market funds. Instead, the $675 million Touchstone Institutional MMF, the $264 million Touchstone MMF S, and the $64 million Touchstone MMF will be reorganized and run by Dreyfus Corp. Touchstone's latest filing says, "At a meeting of the Board of Trustees of Touchstone Investment Trust (the "Board") held on February 12, 2015, the Board rescinded the plans to close and liquidate each of Touchstone Institutional Money Market Fund and Touchstone Money Market Fund (each, a "Fund" and together, the "Funds"). In addition, the Board approved, with respect to each Fund, an Agreement and Plan of Reorganization (the "Agreement") between the Fund and a comparable money market fund advised by The Dreyfus Corporation ("Dreyfus"), pursuant to which the Fund would be reorganized on a tax-free basis with and into the applicable Dreyfus money market fund."
It continues, "Specifically, pursuant to Touchstone Institutional Money Market Fund's Agreement, Touchstone Institutional Money Market Fund will be reorganized into Dreyfus Cash Management, advised by Dreyfus, and shareholders of Touchstone Institutional Money Market Fund will become shareholders of Institutional Class shares of Dreyfus Cash Management (a "Reorganization"). Pursuant to Touchstone Money Market Fund's Agreement, Touchstone Money Market Fund will be reorganized into General Money Market Fund, Inc., advised by Dreyfus, and Class A and Class S shareholders of Touchstone Money Market Fund will become shareholders of Class A shares of General Money Market Fund, Inc. (also, a "Reorganization")."
Touchstone's filing goes on, "A combined special meeting of shareholders of each of Touchstone Institutional Money Market Fund and Touchstone Money Market Fund is expected to be held on or about May 8, 2015 and approval of each Agreement will be voted on at that time. A joint proxy statement/prospectus containing more information regarding each reorganization will be provided in advance of the meeting to shareholders of record of Touchstone Institutional Money Market Fund and Touchstone Money Market Fund as of March 10, 2015. If an Agreement is approved at the combined special meeting and certain conditions required are satisfied, the Reorganization is expected to take place on or about June 5, 2015."
Touchstone will also reorganize its Tax-Exempt funds, the Touchstone Ohio Tax-Free MMF A and Touchstone Ohio Tax-Free MMF I, as well as the Touchstone Tax-Free MMF A and Touchstone Tax-Free MMF S. The Tax Free MMF filing says, "At a meeting of the Board of Trustees of Touchstone Tax-Free Trust (the "Board") held on February 12, 2015, the Board rescinded the plan to close and liquidate Touchstone Tax-Free Money Market Fund (the "Fund"). In addition, the Board approved an Agreement and Plan of Reorganization (the "Agreement") between the Fund and General Municipal Money Market Fund, a comparable money market fund advised by The Dreyfus Corporation ("Dreyfus") pursuant to which the Fund would be reorganized on a tax-free basis with and into General Municipal Money Market Fund. Specifically, pursuant to the Agreement, Touchstone Tax-Free Money Market Fund will be reorganized into General Municipal Money Market Fund, advised by Dreyfus, and Class A and Class S shareholders of Touchstone Tax-Free Money Market Fund will become shareholders of Class A shares of General Municipal Money Market Fund (the "Reorganization")."
It adds, "A special meeting of shareholders of Touchstone Tax-Free Money Market Fund is expected to be held on or about May 8, 2015 and approval of the Agreement will be voted on at that time. A joint proxy statement/prospectus containing more information regarding the Reorganization will be provided in advance of the meeting to shareholders of record of Touchstone Tax-Free Money Market Fund as of March 10, 2015. If the Agreement is approved at the special meeting and certain conditions required are satisfied, the Reorganization is expected to take place on or about June 5, 2015."
We also learned this month that MFS has switched both of its remaining Prime funds to Government money funds. Specifically, the MFS Money Market Fund, a Prime Retail Fund with $387 million in assets, converted into the MFS US Government Money Market Fund, according to SEC filings. Also, the $119 million MFS Cash Reserve Fund, a Prime Retail Fund with $119 million in assets, converted into the MFS Government Cash Reserve Fund. (These changes went into effect late last year, but the renaming will show up in our MFI XLS this month.)
In the respective filings, MFS says the "Principal Investment Strategies" of both of the funds were restated as follows: "MFS (Massachusetts Financial Services Company, the fund's investment adviser) normally invests at least 80% of the fund's net assets in U.S. Government money market instruments and repurchase agreements collateralized by U.S. Government securities. In buying and selling investments for the fund, MFS seeks to comply with Securities and Exchange Commission rules for money market funds regarding credit quality, diversification, liquidity, and maturity. MFS stresses maintaining a stable $1.00 share price, liquidity, and income."
MFS is not the only fund company to shift from Prime to Government in recent months. Fidelity announced in late January that it was converting three prime MMFs to Government MMFs, the $112 billion Fidelity Cash Reserves, the $12 billion Fidelity MMT Retirement Portfolio, and the $3 billion Fidelity VIP MM Portfolio. BlackRock, reported the Wall Street Journal, is also considering shifting Prime Retail assets to Government funds.
