posted an another update on the progress of sorting out redemptions for its Primary Fund
. The company told investors that it was working as fast as it could to get them their money and assured them that the remaining balance of the fund was being managed in a fastidious manner. The company explained that when the fund's NAV went below a dollar a share on September 16, recordkeeping became a tad more complicated, resulting in a longer time horizon for the distributions. The company told investors that it was working with the fund's auditors at KPMG and its custodian bank, State Street,to make the distributions.
For the full story on the the death of the Reserve and its Primary Fund, see MFWire's timeline.
Company Press Release
Reserve Primary Fund Disbursement Update
New York, October 15, 2008 - We targeted an initial distribution of approximately $20 billion
from the Primary Fund on or about October 13 on a pro rata basis as being in the best interest
of treating all shareholders equally. We deeply apologize for the delay and would like to assure
each one of you that your money is safe. We remain steadfast in our commitment to properly
completing this complex task at the earliest possible date.
The Primary Fund was the world's third-largest money market mutual fund with many share
classes and types of investors. It serves hundreds of large corporations as well as hundreds of
brokerage firms across the U.S., which in turn serve several hundred thousand individual
clients. The Fund also serves retail direct investors, stock and commodity exchanges and
operates through the National Securities Clearing Corporation.
All of these clients are supported by complex technology at The Reserve as well as their own
systems, which had to be adjusted due to the decline of the net asset value below $1.00 on
September 16. Since then we have been working diligently to enhance our existing software
and add new programs to hasten the distribution process. Our broker dealer clients linked with
our systems are also striving to quickly make modifications and adjustments to ensure prompt
and accurate disbursements. We simply can't risk making mistakes that could result in your
money going to the wrong person or the wrong place, nor do we want any of our broker dealer
clients to receive data that they can't process and maintain on their technology platforms.
Throughout this entire process, we are continuing to manage your assets in a way that protects
them in this extremely illiquid and volatile market. The Reserve is working diligently to complete
the process of reconciling tens-of-thousands of individual transactions for all of our funds from
September 15 until today. We are working aggressively to make sure that all of the accounts
are in balance so that you may receive your money at the earliest possible time.
The cash position in the Primary Fund has been growing to the point where it is now about $25
billion, representing about 40 percent of your outstanding balance.
Please be assured that The Reserve is working closely with the fund's auditors at KPMG as
well as its custodian bank, State Street, to disburse the assets quickly. We pledge to keep you
informed as we move forward by issuing daily updates on the status of the distributions. We are
also adding more information detailing the status of your portfolio on our website, which
includes the cash positions of all of our funds.
Bottom line: The Reserve is working non-stop to complete a proper distribution of your funds as
soon as possible.
Please accept our deepest thanks for your patience as we work to resolve these issues.
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