"The U.S. Treasury Department announced yesterday that it agreed to assist with the liquidation of The Reserve Fund's U.S. Government Fund, due to unique and extraordinary circumstances," said a press release issued by the Treasury. It says, "The fund, which Treasury accepted into its temporary guarantee program for money market funds, has not made a claim to Treasury under the program. In a separate agreement with the fund, the Treasury has agreed to serve as a buyer of last resort for the fund's securities, which consist of short-term U.S. government and government sponsored enterprise securities. This action is being taken to ensure that the fund is liquidated in an orderly and timely fashion."
The Treasury continues, "The agreement grants the fund a 45-day period where it will continue to sell assets at or above their amortized cost. At the conclusion of this period, Treasury's Exchange Stabilization Fund will purchase any remaining securities at amortized cost, up to an amount required to ensure that each shareholder receives $1 for every share they own. This extraordinary action is in response to the unique situation of the money market fund. This fund was permitted to suspend share redemptions as of September 17, in accordance with an order issued by the Securities and Exchange Commission."
"No other funds participating in Treasury's temporary guarantee program received a similar order from the SEC. Because of this, Treasury does not foresee a need to take similar actions with regard to any other funds participating in Treasury's temporary guarantee program. Treasury's agreement with the fund requires the fund's adviser and its trustees to waive their fees accrued after November 19 to the extent that fund shareholders do not receive distributions of $1 per share," adds the Treasury release.
The Reserve's press release quotes President Bruce R. Bent, "Because of this agreement the Government Fund will be able to return all of the Fund's money to investors early next year. This agreement allows us to achieve our goal of preservation of capital but enables investors to get their money back sooner. I want to thank our investors for their patience and understanding during these past few months."
The company's release adds, "Currently the Fund's assets are approximately $6.3 billion, including $231 million in cash. From now until January 3, the Fund will continue to accumulate cash as securities mature or are sold at or above amortized cost. As part of the agreement with the U.S. Department of the Treasury, the Fund will make an interim distribution to Fund shareholders when $1 billion in cash has been accumulated, although the timing of this distribution may be deferred by the Board of Trustees until the accounts of the Fund shareholders have been reconciled to the extent necessary for a distribution."
