Northern Trust, the 12th largest money fund manager with $89.1 billion, made a series of SEC filings outlining lineup changes for its Prime and Tax-Exempt money funds. Specifically, the $9.1 billion Northern Institutional Diversified Assets fund will be "going Government," the $3.8 billion Northern Inst Prime Obligations will remain a Prime Institutional fund and adopt a floating NAV, and the $7.4 billion Northern Trust Money Market Fund has been declared a Retail fund. Also, the Northern Inst Tax-Exempt Fund and Northern Trust California Municipal MMF are being liquidated; Northern Municipal Money Market Fund has been declared "Retail" and Northern Inst Municipal Money Market Fund will be "Institutional."
Diversified Assets Fund's filing says, "At a meeting held on May 26, 2016, the Board of Trustees of the Northern Institutional Funds approved the conversion of the Diversified Assets Portfolio to a "government money market fund" as defined under Rule 2a-7 of the Investment Company Act of 1940, as amended. The conversion, and the changes described below, will become effective on or about September 30, 2016. Shareholders will be provided an updated summary prospectus upon conversion.... In addition, the Portfolio will continue to use the amortized cost method of valuation to seek to maintain a stable net asset value of $1.00 per share, and will not be required to impose a liquidity fee or redemption gate that might apply to other types of money market funds should certain triggering events specified in Rule 2a-7 occur."
It continues, "Upon the Portfolio's conversion to a government money market fund, the Portfolio will also change its name to "Government Assets Portfolio." In connection with the conversion of the Portfolio to a government money market fund, it is anticipated that the Portfolio will transition its portfolio to securities that are eligible investments for a government money market fund prior to the Conversion Date. Because the yields on government securities generally may be expected to be lower than the yields on comparable non-government securities, it is anticipated that the Portfolio's yield may decrease as more assets are invested in government securities."
The filing for Northern Prime Obligations explains, "Effective on or before October 14, 2016 (but in no event earlier than September 30, 2016), it is expected that the Portfolio will no longer use the amortized cost method of valuation to seek to maintain a stable $1.00 NAV per share and will have a floating NAV rounded to the fourth decimal place, which means the Portfolio will be required to sell and redeem its shares based on a share price that will fluctuate based on the current market value of the securities in the Portfolio's holdings."
It adds, "In addition, effective as of October 14, 2016, the Portfolio may impose a liquidity fee upon the redemption of your shares or may temporarily suspend your ability to redeem shares if the Portfolio's weekly liquid assets falls below certain minimums and the Portfolio's Board of Trustees determines that the liquidity fee or suspension of redemptions is in the best interests of the Portfolio. As a result of these changes, the Portfolio will be designated as an "institutional money market fund." Shareholders will be given written notice before the effectiveness of these changes."
Northern Money Market Fund and the Northern Municipal MMF's filing says, "Effective on or before October 14, 2016, each of the Money Market Fund and Municipal Money Market Fund intends to qualify and operate as a "retail money market fund," as defined in Rule 2a-7 of the Investment Company Act of 1940, as amended. As a "retail money market fund" under Rule 2a-7, a Fund (1) is permitted to continue to use the amortized cost method of valuation to seek to maintain a stable net asset value ("NAV") of $1.00 share price, and (2) effective October 14, 2016, may impose a liquidity fee upon the redemption of your shares or may temporarily suspend your ability to redeem shares if the Fund's weekly liquid assets falls below certain minimums and the Fund's Board of Trustees determines that the liquidity fee or suspension of redemptions is in the best interests of the Fund."
It continues, "On or before October 14, 2016, the Funds will adopt policies and procedures reasonably designed to limit all beneficial owners of the Funds to natural persons. A natural person is an individual human being with a social security number, taxpayer identification number, passport, and/or other government-issued identification evidencing nationality or residence. Shareholders must furnish to a Fund, or an authorized financial intermediary, if any, an account application that provides certain information (e.g., social security number or government-issued identification, such as a driver's license or passport) that confirms that such shareholder is a natural person."
Northern adds, "Shareholders who do not qualify as a natural person, such as institutional investors, will not be permitted to own shares of the Funds, and such shareholders must redeem any shares held in the Funds prior to October 14, 2016 or will be involuntarily redeemed. Such shareholders will be provided advance written notice prior to being involuntarily redeemed."
Also, Northern Institutional Municipal Money Market Portfolio will remain Institutional and adopt a floating NAV. Its Prospectus Supplement explains, "Effective on or before October 14, 2016 (but in no event earlier than September 30, 2016), it is expected that the Municipal Portfolio will no longer use the amortized cost method of valuation to seek to maintain a stable $1.00 NAV per share and will have a floating NAV rounded to the fourth decimal place, which means the Portfolio will be required to sell and redeem its shares based on a share price that will fluctuate based on the current market value of the securities in the Portfolio's holdings."
It continues, "In addition, effective as of October 14, 2016, the Portfolio may impose a liquidity fee upon the redemption of your shares or may temporarily suspend your ability to redeem shares if the Portfolio's weekly liquid assets falls below certain minimums and the Portfolio's Board of Trustees determines that the liquidity fee or suspension of redemptions is in the best interests of the Portfolio. As a result of these changes, the Portfolio will be designated as an "institutional money market fund." Shareholders will be given written notice before the effectiveness of these changes."
In addition, Northern's $1.2 billion Institutional Tax-Exempt Fund is being liquidated, according to a separate filing. It says, "The Board of Trustees of Northern Institutional Funds has determined, after consideration of a number of factors, that it is in the best interests of the Tax-Exempt Portfolio and its shareholders that it be liquidated and terminated on or about October 14, 2016. The Portfolio will discontinue accepting orders from new investors for the direct purchase of Portfolio shares or exchanges into the Portfolio from other funds of the Trust after the close of business on July 29, 2016. For existing shareholders who purchase Portfolio shares through a Northern Trust sweep account, the Portfolio will remain available until October 7, 2016. The plan of liquidation for the Portfolio provides that the Portfolio will begin liquidating its assets as soon as is reasonable and practicable after the effective date of the plan of liquidation, but in no event later than the Liquidation Date."
Finally, the $376 million Northern Trust California Municipal Money Market Fund is also liquidating, states a Supplement. It says, "The Board of Trustees of Northern Funds has determined, after consideration of a number of factors, that it is in the best interests of the California Municipal Money Market Fund and its shareholders that it be liquidated and terminated on or about October 14."
