In its OnPoint publication, industry law firm Dechert released an article, "SEC Staff Issues Money Market Fund Reform Frequently Asked Questions." It says, "This Dechert OnPoint briefly discusses the background and the events leading up the FAQs and describes key responses from the Staff in the FAQs." On Funds that Invest Only in Securities that Mature in 60 Days or Less (FAQ No. 9) it says, "As discussed in the Adopting Release and in the FAQs, a floating NAV money market fund may use the amortized cost method of valuation to value certain portfolio securities with a remaining maturity of 60 days or less. However, in the FAQs, the Staff cautioned that a floating NAV money market fund may not disclose in its advertising, sales literature or prospectus that it will seek to maintain a stable NAV per share by investing only in securities with a remaining maturity of 60 days or less and valuing those securities using the amortized cost method of valuation. The Staff stated its belief that such a statement would be misleading to investors because "there will be market circumstances that may require a floating NAV money market fund's share price to fluctuate, regardless of how it limits its investment duration or its use of amortized cost for certain portfolio securities." Moreover, under Form N-1A, a floating NAV money market fund must disclose that its share price will fluctuate. The Staff expressed concern over the potential contradictions between this disclosure and a statement by a floating NAV fund that it will seek to maintain a stable NAV." On Amortized Cost Guidance (FAQ No. 10), it says, "The Adopting Release provided guidance on the use of the amortized cost method of valuation to value individual portfolio securities that mature in 60 days or less. Certain fund groups had questioned the scope of this guidance. The FAQs clarified that this guidance would generally not be relevant to stable NAV money market funds, given that those funds are allowed by Rule 2a-7 to use amortized cost to value their entire portfolio, and not just individual securities. This guidance is, however, relevant to floating NAV money market funds, as well as to non-money market funds, that use the amortized cost method of valuation to value individual portfolio securities that mature in 60 days or less." In conclusion it says, "The FAQs provided Staff guidance on many of the issues that have arisen under the Amendments and will undoubtedly have a profound effect on how the money market fund industry implements the Amendments. Although compliance with the most significant provisions of the Amendments -- the floating NAV requirement and the imposition of liquidity fees and redemption gates -- will not be required until October 14, 2016, money market fund advisers and their boards would be well-advised to consider the FAQs and the issues discussed above in advance of the compliance dates, in order to make sure that their funds are on track to comply with the Amendments by those dates."

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