Bloomberg reveals TRP MMF charge
T. Rowe Price's earnings statement says, "The Company decided in the fourth quarter 2010 that it will make a capital contribution to certain of its sponsored money market mutual funds. The Company is making this contribution to offset the cumulative net losses realized by those funds in recent years in order to allay any fund shareholder concerns that might arise as a result of new SEC disclosure rules. This fourth quarter contribution to the funds will result in a one-time pre-tax charge of approximately $17 million. The Company's sponsored money market mutual funds have net assets totaling approximately $28 billion at September 30, 2010." Bloomberg's article on T. Rowe Price says, "T. Rowe said in the statement it will put capital into its money-market mutual funds in the current quarter to offset cumulative past losses 'in order to allay any fund shareholder concerns that might arise as a result of new SEC disclosure rules.'.... Kennedy said the contribution represents less than one-tenth of a penny out of the $1 net asset value of its money market funds, which had $28 billion in assets as of Sept. 30. The company didn’t identify the funds that had suffered losses.... New rules approved by the U.S. Securities and Exchange Commission in January require funds to disclose the mark-to-market net asset values of funds, so-called shadow NAVs, to the SEC beginning at the end of every month, beginning with November, according to Peter Crane, president of Crane Data LLC, a money-fund research firm in Westborough, Massachusetts. The data will then be made public 60 days later." We assume this is a result of an SIV-related support action, but it also appears to be the first preemptive move to "window dress" the new "shadow NAV" reporting. T. Rowe's funds had owned Whistlejacket and some other SIVs prior to default, but they hadn't been listed among funds with support actions. See also Crane Data's Oct. 20 News "Q3 Earnings: Schwab Reveals SIV Bailout, BNY Lower MMF Distr Fees".
