Break the Buck

Definition: When a money-market fund doesn't have enough assets to cover every dollar invested in it (i.e. its net asset value falls below $1.00 per share).

After Lehman Brothers declared bankruptcy (the largest in the nation's history), one of the country's money-market funds — the $60 billion Reserve Primary Fund — broke the buck for the first time since 1994.

Usage: Money funds are designed to act like bank accounts. When you put $1 in you expect to get $1 out, including all the interest earned, any time you want. Faith in this promise vanished last Tuesday, when the Primary Fund — owned by the Reserve, the company that invented money-market funds — closed at 97 cents a share. In industry parlance, it "broke the buck.'' (Bloomberg, Sept. 24, 2008)