Price fund is tax-free for Md. investors

Municipal securities are main investment

March 30, 2001|By Bill Atkinson | Bill Atkinson,SUN STAFF

T. Rowe Price Associates Inc. said that it is launching a new Maryland tax-free money market fund today that generates income exempt from federal, state and local taxes for Maryland residents.

The fund, called the T. Rowe Price Maryland Tax-Free Money Market Fund, invests in short-term Maryland municipal securities and is designed to preserve investors' principal.

It is the Baltimore-based mutual fund company's third fund that invests primarily in Maryland municipal securities. The minimum initial investment is $2,500. "It really rounds out our Maryland fund offering," Joseph Lynagh, chairman of the fund's advisory committee, said yesterday. "We hope that this will be appealing to that larger group of investors who lie outside T. Rowe Price."

Price is launching the fund at a time when money is pouring into money market funds. In February, $54.9 billion of new money flowed into money market funds, compared with $14.9 billion in February 2000.

The sharp increase is largely due to institutional investors' pumping money into these funds as other short-term investments have suffered from falling interest rates, said John Collins, a spokesman at the Investment Company Institute, a Washington-based trade group that represents the mutual fund industry.

The rocky stock market has also helped money market funds, said Rami Shaalan, senior fund analyst at Weisenberger, Thomson Financial of Rockville.

"Money market funds seem very appealing at this point to investors," he said.

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