GIANT MONEY MARKET FUND FREEZES REDEMPTIONS

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Money market breaks the buck, freezes redemptions
Reserve Primary Fund stung by Lehman collapse, investor withdrawals

By Sam Mamudi & Jonathan Burton, MarketWatch
Last update: 9:30 p.m. EDT Sept. 16, 2008

NEW YORK (MarketWatch) -- One of the original and largest money market
funds has put a seven-day freeze on investor redemptions after the net
asset value of its shares fell below $1, in a rare instance in the fund
industry of what is called "breaking the buck."


As of 4 p.m., Eastern, the value of the fund's share was 97 cents. The
Reserve said that redemption requests received before 3 p.m. will be paid
out at $1 a share. The company said Primary Fund will continue to accept
new money.

While Primary Fund's Lehman holding was small compared to the fund's
overall size, the fact that it froze redemptions reflects a surge in
redemption requests by investors.

The size and speed of the withdrawals was stunning. At 3 p.m. on Tuesday,
Primary Fund's assets stood at $23 billion, a $40 billion hit from the
$62.6 billion in the fund on Friday, a spokeswoman for The Reserve told
MarketWatch late Tuesday.

"Effective today and until further notice, the proceeds of redemptions
from The Primary Fund will not be transmitted to the redeeming investor
for a period of up to seven calendar days after the redemption," The
Reserve said in a prepared statement.

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