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Debt Ceiling Questions: LPL Cash Accounts

With so much discussion in the news about our nation's deficit challenges, I know that some clients may have concerns about the security of their investments, particularly those with exposure to U.S. Treasuries. To address any concerns you may have, I would like to share with you some information about your investment.

Insured Cash Account
Funds held in an insured cash account (ICA) are insured by the FDIC for up to $250,000 per bank for individuals and IRAs and up to $500,000 for joint accounts. By utilizing multiple banks, cash in the ICA is insured up to a maximum of $1,500,000 per account for individuals, trusts, and IRAs and up to $3,000,000 for joint accounts.

Although the FDIC is a government agency, the insurance is funded through an assessment on the banks that are covered under the program. As of December 31, 2010, the FDIC Deposit Insurance Fund had approximately $81 billion in assets. Please visit www.fdic.gov for more information on the FDIC.

Money Market Funds
The J.P. Morgan money market fund sweeps have varying percentages of U.S. Treasury obligations, ranging from less than 1% in the Prime fund to around 5% in the U.S. Government fund. J.P. Morgan and the other money market fund providers are monitoring the potential impacts of a downgrade or default very closely; however, they have indicated that, in the event of a downgrade, they would not be required to sell their Treasury or Agency holdings.

Although J.P. Morgan is not anticipating a large volume of redemptions, it has taken appropriate steps, including significantly raising the level of liquidity, to meet potential demands. For additional information, please refer to this Investment Bulletin from J.P. Morgan.

I hope this information helps to address any questions you may have about your assets in insured cash accounts or money market funds. If you have any additional questions or would like to request a prospectus for any of the money market funds, please don't hesitate to contact me.


 

An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund.

 

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