NEW YORK, Sept 30 (Reuters) - Money-market fund Reserve Primary Fund REPXX.O RPLXX.O, whose price fell below $1 a share and “broke the buck” in mid-September, will return at least one-third of investors’ money in short order, according a report on the Wall Street Journal’s web site Tuesday.
The fund, run by New York based-Reserve Management Corp, said it would redeem $20 billion to investors in the fund as of Sept. 15, reimbursing investors for 30 percent to 40 percent of their original investments. A spokeswoman told the Journal that the outlay of $20 billion is what is “currently available at the fund at this time.”
The spokeswoman could not be reached immediately for comment.
The fund had about $65 billion in assets as of Aug 31, but that total had fallen to $23 billion on Sept 16, when its share price dropped under $1.
The partial distribution is expected to occur on or about Oct 13, and will be made in proportion to the number of shares each investor held as of the close of business Sept. 15, the Journal reported.
Investors have asked to redeem almost the entire $62 billion that was in the fund before the problem hit, but only about $10 billion has been redeemed, the Reserve spokeswoman told the Journal.
The fund’s assets tumbled because of its losses on debt issued by Lehman Brothers LEHMQ.PK , which filed for bankruptcy protection on Sept 15. The fund held $785 in Lehman Brothers commercial paper and medium term notes that have since been deemed worthless.
The fund’s chairman, Bruce Bent, is known as the “father” of money funds, after creating the first money market mutual fund in 1970. (Reporting by Phil Wahba; Editing by Louise Heavens)