A Prospectus Supplement filing for Invesco Liquid Assets Portfolio and Invesco STIC Prime Portfolio tells us, "This supplement amends the Summary and Statutory Prospectuses and Statement of Additional Information of the above referenced Funds and is in addition to any other supplement(s), unless otherwise specified. You should read this supplement in conjunction with the Summary and Statutory Prospectuses and SAI and retain it for future reference. On June 11, 2024, the Board of Trustees of Short-Term Investments Trust approved a Plan of Liquidation and Dissolution, which authorizes the termination, liquidation and dissolution of the Funds." (Note: For those attending our Money Fund Symposium this week in Pittsburgh, we hope you're enjoying the show! Attendees and Crane Data subscribers may access the conference binder and materials via our "Money Fund Symposium 2024 Download Center.")
It explains, "In order to effect such liquidation, the Funds will close to investments by new accounts after the close of business on July 15, 2024. Existing shareholders will continue to be able to invest in the Fund until the close of business on or about August 14, 2024 when no further purchases or exchanges into the Fund will be accepted as the Fund prepares for liquidation on or about August 28, 2024 as described below. The liquidation may occur sooner if at any time before the Liquidation Date there are no shares outstanding in the Fund. The liquidation may also be delayed or occur sooner if unforeseen circumstances arise. Shareholders of the Fund may redeem their shares at any time prior to the Liquidation Date. The Fund reserves the right, in its discretion, to modify the extent to which sales of shares are limited prior to the Liquidation Date."
Invesco says, "To prepare for the closing and liquidation of the Fund, the Fund's portfolio managers may increase the Fund's assets held in cash and similar instruments in order to pay for Fund expenses and meet redemption requests. As a result, the Fund may deviate from its stated investment strategies and policies and may no longer be managed to meet its investment objective. On or promptly after the Liquidation Date, the Fund will make a liquidating distribution to each remaining shareholder equal to the shareholder's proportionate interest in the net assets of the Fund, in complete redemption and cancellation of the Fund's shares held by the shareholder, and the Fund will be dissolved."
They write, "If necessary, the Fund will declare and pay a dividend to distribute to its shareholders all of the Fund's remaining investment company taxable income, if any, and all of the Fund's net capital gain, if any (after reduction for any capital loss carry-forward) and any additional amounts necessary to avoid any excise tax. Alternatively, the Fund may, if eligible, treat some or all of such amounts distributed to its shareholders as being paid out as dividends as part of the liquidating distributions. The Fund's liquidation may be a taxable event to its shareholders. Please consult your tax advisor about the potential tax consequences."
Invesco adds, "At any time prior to the Liquidation Date, shareholders may redeem their shares of the Fund pursuant to the procedures set forth in the prospectus under 'Redeeming Shares,' as it may be supplemented. Shareholders who wish to avoid being liquidated out of the Fund altogether may also exchange their shares prior to the Liquidation Date for shares of certain other Invesco funds, subject to the requirements and restrictions on exchanges as described in the prospectus under 'Exchange Policy,' as it may be supplemented. Any such redemption or exchange of Fund shares for shares of another eligible Invesco fund may be considered a taxable event for federal income tax purposes, except for exchanges in a tax-advantaged retirement plan or account. Shareholders who hold their shares in the Fund through financial intermediaries should contact their financial representatives to discuss their options with respect to the liquidation and the distribution of their redemption proceeds."
In related news, UBS Select Prime Preferred Fund announced that the fund will change to Retail. It states, "The purpose of this supplement is to update certain information for UBS Select Prime Preferred Fund, a series of UBS Series Funds. First, at the recommendation of UBS Asset Management (Americas) LLC, the fund's administrator (and advisor to the related master fund), the Board of Trustees (the “Board”) of the Trust approved the conversion of the fund to operate as a 'retail money market fund' as defined in Rule 2a‑7 under the Investment Company Act of 1940, as amended."
UBS explains, "A 'retail money market fund' is defined as a money market fund that has policies and procedures reasonably designed to limit all beneficial owners of the fund to natural persons. As a result, investments in the fund will be limited to shareholder accounts beneficially owned by natural persons. The conversion is scheduled to take place after the close of business on August 16, 2024."
They tell us, "The fund's conversion to a retail money market fund will not result in any change to the fund's investment objective or principal investment strategies. After the conversion and until the consummation of the Reorganization (as defined below), the fund will continue to calculate its net asset value to four decimal places (e.g., $1.0000) using market-based pricing, and its share price will fluctuate."
UBS writes, "Before the Effective Date, UBS Asset Management (US) Inc., the fund's distributor, and authorized financial intermediaries will be required to take steps to remove any shareholder accounts that are not beneficially owned by natural persons. As a result, if your shares are held in an account that does not qualify as being beneficially owned by a natural person, your shares will be involuntarily redeemed by the fund, which may result in a taxable gain or loss. Neither the fund nor UBS AM (or its affiliates) will be responsible for any loss in an investor’s account or tax liability resulting from an involuntary redemption."
A document titled, "Frequently Asked Questions answered for UBS Select Prime (FNAV) MMFs UBS Asset Management" says, "On July 12, 2023, the US Securities and Exchange Commission (SEC) voted to amend the rules governing how money market mutual funds (MMFs) are structured and may operate. The rules were last amended in 2016 to seek to mitigate fund risk, enhance fund regulation and provide transparency for investors. The SEC has introduced new mandatory liquidity fees under the money market fund rule (known as Rule 2a-7) which applies to institutional prime (also known as floating rate NAV or 'FNAV' funds) and institutional tax-free money market funds and takes effect beginning on October 2, 2024."
Finally, it adds, "The decision by the Board of Trustees of Master Trust/UBS Series Funds to close the UBS Select Prime FNAV MMFs was driven by the new mandatory liquidity fee rules described above, which will apply from October 2, 2024. This means there will be a risk every day of a liquidity fee being applied to redemption orders which increases the operational risk and costs to the funds."
