National Tax-Exempt Money Market Fund

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National Tax-Exempt Money Market Fund

A mutual fund that invests predominantly or exclusively in municipal bonds with maturities of less than one year. Tax-exempt money market funds are intended to provide a return at little risk (compared to other investments) that is nonetheless better than the risk-free rate of return. Because it invests in municipal bonds, dividends from the fund are tax-free at the federal level (though they may be subject to state tax unless all bonds in the fund are issued in the state where the holder resides).
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