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Page 21 of 37 <br />(1) is registered with and regulated by the Securities and <br />Exchange Commission; <br />(2) provides the investing entity with a prospectus and <br />other information required by the Securities Exchange Act of 1934 (15 <br />U.S.C. Section 78a et seq.) or the Investment Company Act of 1940 (15 <br />U.S.C. Section 80a-1 et seq.); and <br />(3) complies with federal Securities and Exchange <br />Commission Rule 2a-7 (17 C.F.R. Section 270.2a-7), promulgated under <br />the Investment Company Act of 1940 (15 U.S.C. Section 80a-1 et seq.). <br />(b) In addition to a no-load money market mutual fund permitted <br />as an authorized investment in Subsection (a), a no-load mutual fund <br />is an authorized investment under this subchapter if the mutual fund: <br />(1) is registered with the Securities and Exchange <br />Commission; <br />(2) has an average weighted maturity of less than two <br />years; and <br />(3) either: <br />(A) has a duration of one year or more and is invested <br />exclusively in obligations approved by this subchapter; or <br />(B) has a duration of less than one year and the <br />investment portfolio is limited to investment grade securities, <br />excluding asset-backed securities. <br />(c) An entity is not authorized by this section to: <br />(1) invest in the aggregate more than 15 percent of its <br />monthly average fund balance, excluding bond proceeds and reserves <br />and other funds held for debt service, in mutual funds described in <br />Subsection (b); <br />(2) invest any portion of bond proceeds, reserves and <br />funds held for debt service, in mutual funds described in Subsection <br />(b); or <br />(3) invest its funds or funds under its control, including <br />bond proceeds and reserves and other funds held for debt service, in <br />any one mutual fund described in Subsection (a) or (b) in an amount <br />that exceeds 10 percent of the total assets of the mutual fund. <br />Amended by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995; <br />Acts 1997, 75th Leg., ch. 1421, Sec. 7, eff. Sept. 1, 1997; Acts <br />1999, 76th Leg., ch. 1454, Sec. 8, eff. Sept. 1, 1999. <br />4/18/2018 <br />