Money Market Fund Reform Resource Center - Wells Fargo Advantage Funds

Money Market Fund Reform Resource Center
	Additional Resources SEC Web site ICI Reform Resource Center This page will be updated with news about the Money Market Fund Reform as information becomes available. Be sure to visit this site periodically for the latest information.
Comment letter submitted to the Financial Stability Oversight Council opposing their recommendations 1-17-2013 Wells Fargo Funds Management today submitted a comment letter to the Financial Stability Oversight Council (FSOC) opposing their recommendations to the SEC regarding changes to money market fund regulations. A summary of our positions outlined in the comment letter can be found here. Read more Wells Fargo Funds Management today submitted a comment letter to the Financial Stability Oversight Council (FSOC) opposing their recommendations to the SEC regarding changes to money market fund regulations. A summary of our positions outlined in the comment letter can be found here. Read More Changes to money market fund regulations still an open topic 10-8-2012 The focus has now moved from the SEC to the Financial Stability Oversight Council (FSOC), which was created in 2010 by the Dodd-Frank law as an inter-agency body charged with mitigating systemic risks to the financial system. Read more The focus has now moved from the SEC to the Financial Stability Oversight Council (FSOC), which was created in 2010 by the Dodd-Frank law as an inter-agency body charged with mitigating systemic risks to the financial system. Read More SEC Will Not Vote on a Proposal Regarding Changes to Money Market Fund Regulation 8-23-2012 On August 22, Securities and Exchange Commission (SEC) Chairman Mary Schapiro issued a statement indicating that, in light of the stated positions of a majority of the SEC Commissioners, the SEC will not call for a vote on a proposal to modify money market fund regulation. Read more On August 22, Securities and Exchange Commission (SEC) Chairman Mary Schapiro issued a statement indicating that, in light of the stated positions of a majority of the SEC Commissioners, the SEC will not call for a vote on a proposal to modify money market fund regulation. Read More The State of Money Market Fund Reform 4-10-2012 As you are undoubtedly well aware, money market fund reform continues to be a hot topic. It is difficult to pick up a newspaper these days without reading about the Securities and Exchange Commission's (SEC's) quest for additional changes to money market funds. Read More In 2010, the SEC approved rule amendments that enhanced an already-strict money market fund regulatory structure. Many industry observers feel that these changes are sufficient, but the SEC seems determined to enact further change. The primary changes being discussed include moving from a stable $1.00 net asset value (NAV) to a floating NAV, the imposition of capital requirements, and restrictions on redemptions, but it is important to note that none of these changes have actually been proposed yet. In fact, discussions are ongoing, and the various reform options mentioned above have been met with significant opposition from the money market fund industry, from members of Congress, and from within the SEC itself. Once the official proposal is issued, there will be a period in which the money market fund industry and other interested parties will be able to provide comments, followed by a revision or adoption of the new regulations as well as a phase-in period. In other words, the implementation of any changes could be more than a year away. We are aware that the money market fund reform topic may be of some concern to you and your clients, and we want to let you know that we are actively engaged in the process. Over the past few years, Wells Fargo Advantage Funds has been an active industry participant in discussions regarding money market fund reform. Among other things, representatives from Wells Fargo have engaged in discussions with regulators and have actively participated in the Investment Company Institute (ICI) Money Market Working Group. Once the final proposal has been issued by the SEC, Wells Fargo Advantage Funds intends to submit a formal comment letter in response to the proposed changes. This comment letter will be made available to you as soon as it becomes public. For additional insight, please see a statement from the Executive Committee of ICI's Board of Governors. As you are undoubtedly well aware, money market fund reform continues to be a hot topic. It is difficult to pick up a newspaper these days without reading about the Securities and Exchange Commission's (SEC's) quest for additional changes to money market funds. Read More Money Market Reform Update: Compliance 10-31-2011 The Wells Fargo Advantage Money Market Funds are in compliance with all transaction processing changes required by amended Rule 2a-7 effective October 31, 2011. Read More The Wells Fargo Advantage Money Market Funds are in compliance with all transaction processing changes required by amended Rule 2a-7 effective October 31, 2011. Read More Joint Comment Letter Proposing Addition of NAV Buffer to Money Market Mutual Funds 5-5-2011 On May 3, 2011, Wells Fargo Funds Management, LLC submitted a joint letter with Fidelity Management & Research Company and The Charles Schwab Corporation to the Securities and Exchange Commission (SEC) expressing support for the idea of adding a net asset value (NAV) buffer to money market mutual funds. Read More On May 3, 2011, Wells Fargo Funds Management, LLC submitted a joint letter with Fidelity Management & Research Company and The Charles Schwab Corporation to the Securities and Exchange Commission (SEC) expressing support for the idea of adding a net asset value (NAV) buffer to money market mutual funds. Read More Response to SEC Proposal to Remove Credit Ratings 4-25-2011 On April 25, 2011, Wells Fargo Funds Management, LLC submitted a comment letter to the Securities and Exchange Commission (SEC) providing comments on the proposal to remove references to credit ratings. Read More On April 25, 2011, Wells Fargo Funds Management, LLC submitted a comment letter to the Securities and Exchange Commission (SEC) providing comments on the proposal to remove references to credit ratings. Read More Response to President's Working Group on Financial Markets 1-11-2011 On January 10, 2011, Wells Fargo Funds Management, LLC submitted a comment letter to the Securities and Exchange Commission (SEC) providing comments on the President's Working Group recommendations. Read More On January 10, 2011, Wells Fargo Funds Management, LLC submitted a comment letter to the Securities and Exchange Commission (SEC) providing comments on the President's Working Group recommendations. Read More Money Market Reform Update: Compliance 12-7-2010 The Wells Fargo Advantage Money Market Funds are in full compliance with all portfolio holdings disclosure changes required by amended Rule 2a-7 by December 7, 2010. Read More The Wells Fargo Advantage Money Market Funds are in full compliance with all portfolio holdings disclosure changes required by amended Rule 2a-7 by December 7, 2010. Read More President's Working Group Provides Update on Money Market Reform 10-21-2010 The President's Working Group on Financial Markets today released a report detailing a number of options for reforms related to money market funds. Read More The President's Working Group on Financial Markets today released a report detailing a number of options for reforms related to money market funds. Read More Money Market Reform Update: Compliance 10-7-2010 The Wells Fargo Advantage Money Market Funds are in full compliance with all portfolio holdings disclosure changes required by amended Rule 2a-7 by October 7, 2010. Read More The Wells Fargo Advantage Money Market Funds are in full compliance with all portfolio holdings disclosure changes required by amended Rule 2a-7 by October 7, 2010. Read More Money Market Reform Update: Compliance 6-30-2010 The U.S. Securities and Exchange Commission's (SEC) Money Market Reform rules were effective May 5, 2010, and, as of June 30, 2010, all fund firms were required to be in compliance with the second set of reforms pertaining to portfolio maturity. Read More The U.S. Securities and Exchange Commission's (SEC) Money Market Reform rules were effective May 5, 2010, and, as of June 30, 2010, all fund firms were required to be in compliance with the second set of reforms pertaining to portfolio maturity. Read More Money Market Reform Update: Compliance 5-28-2010 The U.S. Securities and Exchange Commission's (SEC) Money Market Reform rules were effective May 5, 2010, and, as of May 28, 2010, all fund firms are required to be in compliance with the first set of reforms pertaining to portfolio liquidity, credit quality, repurchase agreements, and stress-testing. Read More The U.S. Securities and Exchange Commission's (SEC) Money Market Reform rules were effective May 5, 2010, and, as of May 28, 2010, all fund firms are required to be in compliance with the first set of reforms pertaining to portfolio liquidity, credit quality, repurchase agreements, and stress-testing. Read More Fund Commentary 4-30-2010 Rates in the money markets have begun to move higher, despite the absence of action by the Federal Reserve. Credit concerns, supply pressures, and regulatory changes joined forces to place an upward pressure on money market yields and the slope of the yield curve. Read More Rates in the money markets have begun to move higher, despite the absence of action by the Federal Reserve. Credit concerns, supply pressures, and regulatory changes joined forces to place an upward pressure on money market yields and the slope of the yield curve. Read More Q&A: SEC Rule 2a-7 and How They Relate to Our Funds 3-5-2010 The SEC published full text of its final Money Market Reform rules (Release No. IC-29132), which were discussed and approved on January 27, 2010 at an Open Commission Meeting in Washington, D.C. Read More the SEC published full text of its final Money Market Reform rules (Release No. IC-29132), which were discussed and approved on January 27, 2010 at an Open Commission Meeting in Washington, D.C. Read More SEC Provides Update on Money Market Reform 1-27-2010 The U.S. Securities and Exchange Commission (SEC) proposed amendments to Rule 2a-7 and other rules under the Investment Company Act of 1940 governing the operation of money market funds. Read More The U.S. Securities and Exchange Commission (SEC) proposed amendments to Rule 2a-7 and other rules under the Investment Company Act of 1940 governing the operation of money market funds. Read More

The Rule Changes
One of the goals of the SEC's recently adopted money market fund rule changes is to reinforce conservative investment practices across the money market fund industry. Our security selection process has long emphasized conservative investment choices, and all of our money market funds maintain an approach to investing that prioritizes the preservation of capital and liquidity. As such, the spirit of the SEC's changes aligns well with our philosophy on money market investing.

As David D. Sylvester, head of Money Markets for Wells Capital Management, said in a recent portfolio management commentary, "We think it's a good idea for funds to focus on their liquidity, and these changes will help to sharpen that focus. We have long been advocates of managing money market funds in a highly liquid manner in an effort to provide adequate liquidity for shareholder redemptions, stabilize the net asset value (NAV), and to make a fund's yield more responsive to changes in the general level of interest rates. For this reason, the amendments largely codify our current investment practices."

In summary, we support the SEC's goal of strengthening the resiliency of money market funds through enhanced liquidity and improved credit quality.

The following is a summary of the approved money market fund rule changes along with our position on each rule change:

Amended Rules	Prior Rules	Our Position	Compliance Date
Portfolio Liquidity
Daily Liquidity: For all taxable money market funds, at least 10% of assets must be in cash, U.S. Treasury securities, or securities that convert into cash the next business day.	No daily liquidity provision.	All of the Wells Fargo Advantage Money Market Funds intend to satisfy these proposed requirements prior to the date required by the SEC.	5-28-2010
Weekly Liquidity: For all money market funds, at least 30% of assets must be in cash, U.S. Treasury securities, certain government securities maturing within 60 days, or securities that convert into cash the next five business days.	No weekly liquidity provision.
Illiquid Securities: Illiquid securities (i.e. a security that cannot be sold at carrying value within seven days) cannot exceed 5% of portfolio at time of purchase.	Illiquid securities cannot exceed 10% of fund assets.	A 5% limit will not materially alter our existing investment discipline. Some Wells Fargo Advantage Money Market Funds have invested small percentages of their portfolios in securities that are considered illiquid under current SEC rules.
Portfolio Maturity
Weighted Average Maturity (WAM)¹: Maximum WAM of 60 days.	Maximum WAM of 90 days.	This new requirement will not materially change our existing investment discipline. All of the Wells Fargo Advantage Money Market Funds are currently managed with WAMs of less than 60 days—the WAMs of our portfolios are currently below the industry average of comparable funds. We have historically not exceeded 60-day WAMs in any of our Funds.	6-30-2010
Weighted Average Final Maturity (WAFM)²: Maximum WAFM of 120 days.	No comparable requirement.	This new requirement will not materially change our existing investment discipline. Consistent with our history of generally maintaining shorter WAMs than the industry average, all of the Wells Fargo Advantage Money Market Funds are currently managed with WAFMs below 120 days.	6-30-2010
Credit Quality
Second Tier Securities³: Second tier exposure limited to 0.5% per issuer and 3% in total, maturing in 45 days or less.	1% per issuer, 5% total Maximum maturity of 397 days.	The rule changes are consistent with our current practice and would not alter our general investment discipline. As a general rule, the Wells Fargo Advantage Money Market Funds only purchase First Tier securities.	5-28-2010
Ratings Agencies: Fund board will annually designate four Nationally Recognized Statistical Rating Organizations (NRSROs) to be used to determine minimum ratings criteria.	No comparable requirement.	We are reviewing the capabilities of all NRSROs in order to provide the Board with the information that it needs to make this determination.	12-31-2010
Repurchase Agreements: To "look through," collateral must be cash items or government securities with creditworthy counterparties. Advisor must evaluate the creditworthiness of the repurchase counterparty.	Collateral must be "highly rated." No requirement with respect to the creditworthiness of repo counterparties.	We currently evaluate the creditworthiness of all of our repo counterparties and only enter into these agreements with approved entities.	5-28-2010
Know Your Investor
All Funds: Hold sufficient liquid securities to meet "foreseeable" redemptions. Funds are required to develop procedures to identify investors whose redemption requests may pose risks for the funds.	No comparable requirement.	We currently have a large trade communication process in place with our large intermediary clients in order to better manage large flows. In addition, we are finalizing the implementation of a shareholder flow model that we believe will satisfy the new requirements.	5-28-2010
Periodic Stress Testing
Monthly testing of a fund's ability to maintain a stable $1.00 net asset value (NAV) in the event of interest-rate or spread changes, shareholder redemptions, and credit changes.	No comparable requirement.	We have long analyzed the various factors related to the maintenance of a stable $1 NAV and the effects that a variety of adverse events might have on our Funds. We are reviewing these stress tests to verify they satisfy the new requirements.	5-28-2010
Disclosure
Portfolio Holdings: Portfolio holdings to be posted to fund's Web site at least monthly and maintained for a period of at least six months.	No portfolio holdings Web site disclosure requirement.	Holdings for all of the Wells Fargo Advantage Money Market Funds are currently posted daily on our publicly available Web site. We are in the process of designing an archive for the Wells Fargo Advantage holdings that would satisfy the six-month availability requirement.	10-7-2010
Monthly SEC Filing (Form N-MFP): Information about a fund's risk characteristics, yield, portfolio holdings, and mark-to-market ("shadow") NAV (this will be made public with a 60-day lag).	No disclosure requirement.	All of the Wells Fargo Advantage Money Market Funds intend to satisfy these proposed requirements prior to the date required by the SEC.	12-7-2010
Money Fund Operations
Funds may suspend redemptions if the NAV falls below $1.00 and, as a result, the fund will be liquidated; advisor systems must be able to process shareholder transactions at a price other than $1.00.	No comparable requirement.	This requirement will not alter the way the investments in the Wells Fargo Advantage Money Market Funds are managed. We currently have the ability to process purchases and redemptions electronically at a price other than $1.00/share for some of our distribution channels, and will be working to implement this process for all of our clients.	10-31-2011
Revision to Rule 17a-9: Affiliates may purchase securities from funds before a downgrade or default without prior approval by the SEC; SEC must still be notified if this occurs.	SEC approval was required prior to allowing affiliate purchases.	This enhanced capability will not alter the investment processes of the Wells Fargo Advantage Money Market Funds. This requirement enables money market fund sponsors to take more direct intervention to support the $1.00 NAV.	5-5-2010

¹Weighted Average Maturity (WAM): WAM calculates an average time to maturity of all of the securities held in the portfolio, weighted by each security's percentage of net assets. The calculation takes into account the final maturity of a fixed income security and the interest rate reset date for floating rate securities held in the portfolio. This is a way to measure a fund's sensitivity to potential interest rate changes.
²Weighted Average Final Maturity (WAFM): WAFM calculates a fund's average time to maturity for all of the securities held in the portfolio, weighted to their percentage of assets in the fund. In contrast to WAM, the WAFM calculation takes into account the final maturity date for each security held in the portfolio. This is a way to measure a fund's potential sensitivity to credit-spread changes.
³Second Tier Securities: Are eligible money market securities that, if rated, have received other then the highest short-term debt rating from the requisite NRSROs or, if unrated, have been determined by the fund's board of directors to be of comparable quality.

For more information on the rule changes, please visit the SEC Web site for the final Money Market Reform rules posting (Release No. IC-29132).

An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Wells Fargo Advantage Money Market Funds seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in a money market fund.

© 2013 Wells Fargo Funds Management, LLC. All rights reserved. Wells Fargo Funds Management, LLC, a wholly owned subsidiary of Wells Fargo & Company, provides investment advisory and administrative services for Wells Fargo Advantage Funds. Other affiliates of Wells Fargo & Company provide subadvisory and other services for the Funds. The Funds are distributed by Wells Fargo Funds Distributor, LLC, Member FINRA/SIPC, an affiliate of Wells Fargo & Company.

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May Lose Value

Wells Fargo Advantage Funds

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