Contrary to what they said this spring (see our April 1 News, "All In: TDAM to Maintain Full MMF Roster; ICI Trends, Composition"), TD Asset Management has filed a Prospectus Supplement (497) to liquidate its TDAM Institutional Money Market Fund and TDAM Institutional Municipal Money Market Fund. TDAM, the 28th largest money fund manager with $6.4 billion (down from $7.8 billion 3 months ago), issued a March 31 press release ("TD Asset Management Announces Product Strategy for Money Market Funds) detailing its plans to maintain a full roster of Prime Retail, Prime Institutional, Tax-Exempt Retail, Tax-Exempt Inst MMFs, and Govt MMFs in its post-reform money fund lineup. But it appears to have changed its mind. We review the latest update as well as another recent liquidation and two fund merger filings below.
TDAM's new filing says, "On June 23, 2016, the Board of Directors (the "Board") of TD Asset Management USA Funds Inc. (the "Company") approved the liquidation of each of the TDAM Institutional Money Market Fund and the TDAM Institutional Municipal Money Market Fund, each a series of the Company, pursuant to the terms of a Plan of Liquidation for each Fund. The liquidations were proposed as a result of anticipated lack of demand in the marketplace for the Funds and potential difficulty in attracting and retaining assets given changes to the Funds that would be required by recent amendments to the rules that govern the operation of money market funds. Under these amendments, each Fund would have been required to price and transact in its shares at a floating net asset value ("NAV"), among other things."
It continues, "Under its Plan of Liquidation, the applicable Fund will be liquidated during the third quarter of 2016 (each, a "Liquidation Date"). On or before the applicable Liquidation Date, all portfolio securities of the relevant Fund will be converted to cash or cash equivalents, and the Fund will cease investing its assets in accordance with its stated investment objective and policies." (Note: Assets in the funds have shrunk to almost zero, so it appears the liquidations are imminent.)
The TDAM filing explains, "On the Liquidation Date, shareholders in the applicable Fund as of the Liquidation Date will receive, as a liquidating distribution, an amount equal to their proportionate interest in the net assets of the Fund, after the Fund has paid or provided for all of its charges, taxes, expenses, and liabilities. A shareholder may voluntarily redeem his or her shares prior to the relevant Liquidation Date to the extent that the shareholder wishes to do so. Shareholders remaining in a Fund just prior to the relevant Liquidation Date may bear increased transaction fees incurred in connection with the disposition of the Fund’s portfolio holdings."
It adds, "Although the liquidation is not expected to be a taxable event for a Fund, for taxable shareholders the automatic redemption of shares of the Fund on the Liquidation Date will generally be treated as any other redemption of shares, i.e., as a sale that may result in a gain or loss for federal income tax purposes. A Fund may also make a distribution of undistributed net income and/or net capital gains prior to its Liquidation Date. Shareholders, including shareholders that own Fund shares in a tax deferred account, such as an individual retirement account, 401(k) or 403(b) account, should consult their tax advisers regarding the tax treatment of the liquidations."
Finally, the 497 says, "In connection with its liquidation, effective June 23, 2016, each Fund will no longer be available for purchase by new investors. Effective August 15, 2016, each Fund will be closed to all investments, including through exchanges into the Fund from other funds of the Company. Investors may continue to redeem shares of each Fund."
A separate "Money Market Mutual Fund Reform FAQ" from brokerage firm TD Ameritrade explains the pending new money market fund regulations and says, "These regulations will impact money market mutual fund sweep options. If your account type is not considered a natural person (see below) and your cash sweep vehicle currently holds prime or municipal money market mutual funds that seek a stable value, you will receive notice that you need to change your sweep vehicle. The TD Bank FDIC Insured Deposit Account (IDA) and TD Ameritrade Cash will NOT be affected, as they are not money market mutual funds."
It adds, "The affected money market mutual fund cash sweeps include all classes of: Prime funds: TDAM Money Market Portfolio, Vanguard Prime Money Market; Municipal funds: TDAM California Municipal Portfolio, TDMA Municipal Portfolio, and TDAM New York Municipal Portfolio. (Watch for News on Morgan Stanley's shift of "sweep" assets from Prime and Muni funds into Govt MMFs and an update on overall brokerage sweep Prime and Muni to "Govie" conversions to date on Monday.)
In other news, as expected, Nicholas Money Market Fund is liquidating. Its latest filing says, "At a meeting held on August 1, 2016, the Board of Directors of the Fund (the “Board”) approved a Plan of Liquidation and Dissolution (the "Plan") of the Fund pursuant to which the assets of the Fund will be exchanged, redeemed, or liquidated on a pro rata basis to stockholders as described herein. The liquidation of the Fund is expected to occur during the third quarter of 2016.... If the liquidation is approved by stockholders, the Fund will cease to engage in any investment activities, except for the purpose of winding up its business and affairs, preserving the value of its assets, discharging or making reasonable provision for the payment of all of its liabilities and distributing its remaining assets to stockholders in accordance with the Plan."
Finally, a couple of filings gave notice of two pending mergers, one involving Dreyfus Prime Inst funds and one involving Wells Muni funds. The first details Dreyfus' plans to merge two funds. It says, "This Supplement updates and supplements the Prospectus/Proxy Statement (the "Prospectus/Proxy Statement") and related Statement of Additional Information (the "SAI"), each dated June 2, 2016, for the Special Meeting of Shareholders of Dreyfus Institutional Cash Advantage Fund (the "Fund"), a series of Dreyfus Institutional Cash Advantage Funds, relating to an Agreement and Plan of Reorganization providing for the transfer of all of the assets of the Fund to Dreyfus Institutional Preferred Money Market Fund (the "Acquiring Fund")." (See our August Money Fund Intelligence "profile" of Dreyfus for more details.)
The other, from Wells Fargo, says, "At a meeting held on August 9-10, 2016, the Wells Fargo Funds Trust Board of Trustees unanimously approved the merger of the Wells Fargo Municipal Money Market Fund ("Target Fund") into the Wells Fargo National Tax-Free Money Market Fund ("Acquiring Fund"). The merger was proposed by Wells Fargo Funds Management, LLC, investment manager to the Wells Fargo Funds.... The merger, if it is approved by shareholders and all conditions to the closing are satisfied, is expected to occur in January 2017. Prior to the merger, shareholders of the Target Fund may continue to purchase and redeem their shares subject to the limitations described in the Target Fund's Prospectus."
