A money-market fund — the Reserve's Primary Fund — has broken the buck, as a result of Lehman Brothers Holdings Inc.'s bankruptcy filing, the first time since 1994 that a money-market fund's net asset value has dipped below the $1-a-share level.

New York money manager the Reserve said Tuesday that its Primary Fund is valuing its debt securities issued by Lehman, which have a face value of $785 million, at zero effective at 4 p.m. EDT Tuesday.

As a result, the net asset value of the Primary Fund, which had $64.85 billion in assets as of May 31, was 97 cents per share as of 4 p.m., the firm said in a statement late Tuesday. All redemption requests received prior to 3 p.m. EDT Tuesday will be redeemed at NAV of $1, it said.

The Primary Fund's board of trustees approved the action "after reviewing the unprecedented market events of the past several days and their impact" on the fund, and taking into account recommendations by Reserve Management Co., the fund's investment manager, the firm's statement said.

In addition, effective Tuesday and until further notice, the proceeds of redemptions from the Primary Fund will not be transmitted to the redeeming investor for up to seven days after the redemption. The delay will not apply to debt card transactions, ACH transactions or checks written against assets of the Primary Fund provided that any such transaction from an investor, individually or in the aggregate, does not exceed $10,000, the firm said.

The fund will continue to accept purchase orders.

Effective Wednesday, the Primary Fund's NAV will be calculated once a day at 5 p.m. EDT.

The Reserve had no comment on the action beyond its statement.

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