Three fixed-income funds offered by Morgan Keegan & Co., whose assets have been difficult to price because of the subprime mortgage crisis, still cannot file annual reports, a spokeswoman said on Monday.
Morgan Keegan, a unit of Regions Financial Corp., said on Aug. 30 it was seeking a 15-day extension to file the annual reports with the Securities and Exchange Commission.
The challenge of pricing assets in volatile markets has led to further delays, said Kathy Ridley, a spokeswoman for Morgan Keegan. The funds held mortgage- and asset-backed securities.
“While this valuation process has taken longer than expected, significant work has been done and everyone involved is continuing to work diligently to complete the filings as soon as possible,” Ridley said in an e-mail.
The funds involved are the RMK Select High Fund Income (MKHIX.O: Quote, Profile, Research), the RMK Select Intermediate Bond Fund (MKIBX.O: Quote, Profile, Research) and the RMK Select Short Term Bond Fund (MSBIX.O: Quote, Profile, Research).
The three funds had net assets of about $2.3 billion as of March 31. But the Select High Income Fund has experienced significant redemptions, Morgan Keegan said in a supplement filing to the fund’s prospectus on Aug. 13.
As of Thursday, Sept. 13, the Select High Income Fund, which had $1.2 billion in assets in March, was down almost 32 percent in the third quarter and almost 34 percent year to date, according to Lipper Inc., a unit of Reuters Group Plc.
The lack of liquidity in the fund’s securities could result in the fund incurring greater losses on the sale of some its securities than under more stable market conditions, Morgan Keegan said in the supplement filing.
Once Morgan Keegan has finished its valuation process, the brokerage said it would move quickly to communicate directly with shareholders as well as through the RMK Funds Web site.