| (a) Introduction.
(1) Certain open-end investment companies commonly
known as money market funds have investment characteristics and sales
patterns materially different from other types of mutual funds and
other securities. These funds, defined in subsection (b) of this section,
are designed to attract a large volume of comparatively short-term
investments by purchasers. As early redemptions are contemplated by
both purchaser and seller, and because these funds continuously offer
to repurchase their own securities and issue new securities to new
and repeat investors, an excessive amount of fees may be paid under
the Texas Securities Act, §4006.055, for the securities issued.
Therefore, pursuant to the Act, §4005.024, the State Securities
Board conditionally exempts from the fee provisions of the Texas Securities
Act certain investment company securities defined herein provided
all the requirements of this section are satisfied.
(2) Nothing in this section shall be construed to relieve
any open-end investment company from any condition or requirement
of registration under the Texas Securities Act except as specifically
stated herein or in Chapter 114 of this title (relating to Federal
Covered Securities).
(b) Definition. In this section, a "money market fund"
or "fund" is an open-end investment company which must meet all of
the following conditions.
(1) The fund must engage in a continuous offering of
its securities.
(2) The fund must hold itself out to be a money market
fund or an equivalent to a money market fund and must be in compliance
with the Investment Company Act of 1940, Rule 2a-7 (17 CFR §270.2a-7,
as amended).
(3) The fund must not pay or charge sales commissions
or redemption fees except nominal exchange fees which may not be used
for sales expenses or in lieu of initial sales charges or redemption
fees.
(4) The fund's total charges against net assets for
sales distribution activities and/or the servicing of shareholder
accounts must not be in excess of .25% of average net assets per annum.
(5) With the exception of mergers, consolidations,
or acquisitions of assets, or as noted in paragraph (6) of this subsection,
the fund's investments in other investment companies must be limited
to:
(A) 10% of the fund's total assets;
(B) other investment companies with substantially similar
investment objectives; and
(C) other investment companies with charges and fees
substantially similar to those set forth in paragraphs (3) and (4)
of this subsection.
(6) In the case of a master/feeder fund structure:
(A) feeder fund(s) must meet, or invest in a master
fund which meets, paragraphs (1)-(4) of this subsection;
(B) when viewed together, the master/feeder fund(s)
must meet paragraphs (3) and (4) of this subsection; and
(C) all feeder funds must have investment objectives
substantially similar to those of the master fund.
(7) A currently authorized fund which has been granted
money market status is not required to comply with this subsection
until the fund files its Year-End Report of Sales of Federal Covered
Securities by a Money Market Fund on Form 133.27, but it is required
to comply with the subsection as it was in effect at the time that
the fund was designated a money market fund for purposes of this section.
(c) Request for determination.
(1) At the time an applicant submits documents or fees
in connection with an authorization to sell federal covered securities,
or at any time thereafter, the applicant may request the Securities
Commissioner determine that the issuer is a money market fund as defined
in this section. The request shall be made in writing on Form 133.26
of this title (relating to Request for Determination of Money Market
Fund Status for Federal Covered Securities). The Securities Commissioner
shall review the request and any other information the Securities
Commissioner deems relevant to the determination of whether the issuer
is a money market fund for purposes of this section.
(2) If the request is made after the issuance of the
fund's original authorization, an amendment fee as prescribed by the
Texas Securities Act, §4006.001(1) will be required. Additional
sales information will be required since only the federal covered
securities authorized and sold after the date the Securities Commissioner
determines that the issuer is a money market fund will be subject
to the reduced fees under subsection (d) of this section.
(d) Conditional exemption. Subject to the other provisions
of this section, federal covered securities issued by money market
funds are exempt from the fee imposed by the Texas Securities Act, §4006.055,
provided all of the following requirements are satisfied at the time
of sale of the federal covered securities.
(1) An applicant has requested that the Securities
Commissioner determine that the issuer is a money market fund as defined
in this section.
(2) The Securities Commissioner has determined that
the issuer is a money market fund as defined in this section.
(3) For each filing of an original, renewal, or amended
authorization under the conditional exemption provided by this section,
the applicant has paid the filing fee required by the Act, §4006.001(1),
in addition to the reduced fee imposed by paragraph (5) of this subsection.
(4) During the current calendar year, the fund has
an aggregate authorized amount of $10 million of federal covered securities
for sale in Texas.
(5) The fund has paid the reduced authorization fee
imposed by this paragraph for the aggregate amount of federal covered
securities proposed to be sold during the current calendar year under
this conditional exemption. The reduced authorization fee imposed
by this paragraph for authorization of federal covered securities
in excess of the first $10 million aggregate amount of securities
sold is:
(A) for the next $10 million of federal covered securities
authorized, 1/20 of 1.0% of the aggregate amount to be sold;
(B) for the next $30 million of federal covered securities
authorized, 1/50 of 1.0% of the aggregate amount to be sold;
(C) for the next $50 million of federal covered securities
to be authorized, 1/100 of 1.0% of the aggregate amount to be sold;
and
(D) 1/200 of 1.0% of the aggregate amount on the remainder
of the federal covered securities authorized to be sold.
(e) Oversales. The reduced authorization fee schedule
imposed by subsection (d)(5) of this section shall not apply to any
federal covered securities authorized under the Act, §4006.151.
All fees paid for authorization of federal covered securities of money
market funds pursuant to §4006.151 shall be computed as set forth
in the Act, §§4006.001(1), 4006.055, and 4006.151.
(f) Unsold balance at end of calendar year. In any
calendar year, the fees required to be paid by a fund for sales that
year will be calculated under subsection (d)(4) and (5) of this section
without regard to the amount of fees paid or federal covered securities
sold in any other year. If, at the end of any calendar year a money
market fund has a remaining unsold balance of federal covered securities
authorized to be sold, the dollar amount of fees paid under subsection
(d) of this section for authorization of the unsold balance may be
reapplied to fees required in the next calendar year, but no unsold
balance of authorized but unsold federal covered securities will be
carried forward to the subsequent calendar year.
(g) Year end reports. To qualify for the reduced fees
accorded to a fund granted money market fund status pursuant to this
section, the fund must file a year end report of sales on Form 133.27
of this title (relating to Year-End Report of Sales of Federal Covered
Securities by a Money Market Fund) in January of each year which reflects
the amount of federal covered securities sold in the previous year,
the balance of fees paid for authorization of any unsold balance in
the previous year and the recalculated balance of authorized federal
covered securities at the beginning of the current year. In calculating
fees applied to sales during the previous year, fees will first be
applied at the higher rates specified in the reduced fee schedule
in subsection (d)(5) of this section, and then at more reduced rates
as sales volume increases, and not vice versa. Funds should consult
Form 133.27 in determining how to compute fees.
(h) Effect of noncompliance. If at any time the business
or plan of business of any fund has been altered so that it is no
longer a money market fund within subsection (b) of this section,
such an issuer shall not be entitled to any reduction of fees as provided
in subsection (d)(5) of this section. Such fund shall not be entitled
to any reduction in fees as provided in subsection (d)(5) of this
section for any sales of its securities from the time at which it
ceases to comply with subsection (b) of this section until the Securities
Commissioner redetermines in a Cont'd... |
