Business and Personal Finance Dictionary

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• MONEY MARKET FUND
  
  Money market mutual funds invest in stable, short-term debt securities, such as commercial paper, government bonds, and certificates of deposit (CDs), and try to maintain the value of each share in the fund at $1. Most funds offer check-writing privileges that do not trigger gains or losses, as writing a check against the value of a bond fund would. Tax-free money market funds invest in short-term municipal bonds and other tax-exempt debt. With a single-state fund, investors who reside in the state that issues the bonds the fund buys can enjoy triple tax-free earnings, which means they owe no local, state, or federal income tax. While taxable funds offer a slightly higher yield than those that are tax-free, you must pay income tax on all earnings distributions. Unlike bank money market accounts, money market funds are not insured by the Federal Deposit Insurance Corporation (FDIC). However, since they are considered securities at most brokerage firms, they may be insured by the Securities Investor Protection Corporation (SIPC) against the bankruptcy of the firm.
  
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