Is the Paypal Money Market Fund Safe?

The PayPal Money Market Fund (the “Fund”) is designed primarily as an automatic sweep investment for uninvested cash balances in PayPal customer accounts. PayPal customers may choose to have their free cash balances swept
into the Fund in order to earn income until the cash is used. Shares of the Fund will be automatically redeemed to pay for transactions such as payments, purchases and other electronic money transfers from PayPal customer accounts. The fund is a feeder fund for Barclay Global Investors who manage over a trillion dollars and are considered blue-chip fund managers. Despite the fund’s unique way of raising funds, the holdings of the fund are similar to other money funds and aims to maintain a net asset value of $1. Investors considering using the PayPal Money Market should consider it at safe as a mutual fund money market run by a company with a large asset base. The risk, if any, might be that PayPal customer’s service and website is a separate entity than Barclay’s Global Investors and liquidations would by initiated by PayPal and not Barclays. PayPal offers a minimum deposit of $1. The current 7-day average yield of the fund is 5.03%. The historical returns (as detailed below) of the PayPal Money Market have been very competitive.

PayPal Money Market Fund Average Annual Total Returns vs 90-day T-Bills
(as of December 31, 2006)

One Year:

PayPal Return of 4.88% vs 4.86% for the 90-day T-Bill

Five Years:

PayPal Return of 2.49% vs 2.43% for the 90-day T-Bill

Since Inception date of November 18, 1999:

PayPal Return of 3.02% vs 3.04% for the 90-day T-Bill