Money market mutual funds (money funds) seek current income and preservation of capital.
What are Money Funds?
Money funds seek to provide investors with as high a level of income as is consistent with the preservation of shareholders’ capital and liquidity. They also try to maintain a stable $1.00 share price. 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 dollar weighted average portfolio maturity for a money fund 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.
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.
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
Important Legal Information
All investments involve risk, including possible loss of principal.
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.
For more information on any of our funds, contact your financial advisor or download a free prospectus. Investors should carefully consider a fund’s investment goals, risks, sales charges and expenses before investing. The prospectus contains this and other information. Please read the prospectus carefully before investing or sending money.
This material is provided for educational purposes only and is not intended as investment advice or an offer or solicitation to buy or sell securities.
- 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.
- 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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