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Money Funds

Money market mutual funds (money funds) seek current income and preservation of capital.

What are Money Funds?

Money funds provide investors with current income and are managed to maintain a stable $1.00 share price. Because of their stability, money funds are often used for cash reserves or money that might be needed right away.

Money funds typically invest in short-term, high-quality fixed income securities, such as Treasury bills, short-term bank certificates of deposit (CDs), banker's acceptances and commercial paper issued by corporations. The average maturity of a money fund's portfolio must be 60 days or less to help protect against interest rate risk. Any income money funds provide is generally determined by short-term interest rates.

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Check Writing Privileges

For most money funds, you may request free money fund checks on your account application. Check writing privileges typically allow you to write an unlimited number of checks against your account. Some restrictions apply.1 Please see a prospectus for more details.

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Taxable vs. Tax-Exempt Money Funds

Depending on an investor's needs and tax bracket, it may make sense to consider a tax-exempt money fund. These money funds invest in debt obligations of state and local government agencies, and seek to pay dividends that are free from federal tax and, sometimes, state and local income taxes as well.2

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Important Legal Information

An investment in a money fund is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. Although money funds seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in them.

Investors should carefully consider a fund’s investment goals, risks, charges and expenses before investing. Download a summary prospectus and/or prospectus, which contains this and other information. Please carefully read a prospectus before you invest or send money.

Footnotes

    1. At Franklin Templeton, a $10 fee will be charged to your account if a check is written for an amount below the minimum of $500. If we receive a check written for an amount that exceeds the total value of the shares in your account, the check may be returned unpaid and a $10 fee will be charged to your account.
    2. For investors subject to the alternative minimum tax, a small portion of fund dividends may be taxable. Distributions of capital gains are generally taxable.

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    For U.S. residents only.