When discussing the money fund industry in the context of the Council’s recommendations, there is a fundamental issue we feel must be addressed: that different types of shareholders invest in the same money funds, but have different objectives, and vastly different investing behaviors. Some investors use money funds to earn higher returns while others in the same funds use them as a convenient and necessary cash management tool.

We appreciate that the Council has made room to address these differences in its recommendations. We believe that any attempt to rationalize reform by viewing money funds as a single, homogeneous form would be inappropriate as the “one size fits all” approach is too simplistic in today’s or any market environment.

Looking beyond the notional arguments some have made in favor of a floating NAV, we believe that any attempt to detach a money fund from its 40-year marriage to the $1.00 NAV will effectively remove the perceived barrier between a money fund and all other mutual funds. If this distinction were to be removed, we feel the likelihood of confusion on the part of retail investors will grow exponentially. Once implemented, it may become difficult for investors to differentiate a money fund from other short-term bond funds, those that are not subject to the rigorous provisions of Rule 2a-7 that have much higher risk profiles, and can have price volatility of 10 times or more than that of a money market fund.