March 6, 1991
TO: MONEY MARKET FUNDS AD HOC COMMITTEE NO. 7-91
RE: DRAFT LETTER ON TAX-EXEMPT PROPOSAL
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Attached for your review is a draft letter to the SEC staff
on the Committee’s proposals relating to tax-exempt money market
funds. The draft letter reflects the proposals that were
approved by the Committee at the meeting on February 28, except
for the change discussed below.
The proposal concerning split-rated securities has been
modified slightly from what was approved at the meeting. Under
that proposal, a split-rated security would have automatically
been treated as having the higher rating, provided that at least
50% of the agencies rating that security assigned it the highest
rating. Instead, the letter recommends that Rule 2a-7 be
modified to permit the adviser to determine that such a security
be treated as being of the same quality as the higher rating,
provided that at least 50% of the agencies rating that security
have assigned it the higher rating (see pp. 4-5). We believe
that by requiring the adviser to evaluate the security instead of
automatically treating it as a first tier security would make our
recommendation for modifying the treatment of split-rated
securities more acceptable to the SEC.
Please review this letter with your portfolio managers and
provide me with your comments by March 19, 1991.
Amy B.R. Lancellotta
Assistant General Counsel
Attachment