When soaring inflation began to make passbook savings accounts passÃ‰, Wall Street created alternatives for its retail trade--notably, so-called money-market funds (MMFs). These open-end investment companies, which at last count had over $40 billion under management, provide individuals with access to US Treasury bills, negotiable certificates of deposit, commercial paper, and other high-yielding short-term credit instruments that once were the private preserve of financial pros. In this knowledgeable, if occasionally haphazard, handbook, Donoghue examines the various money markets open to those with modest amounts of cash to put gainfully to work (e.g., six-month money-market certificates from banks, Negotiated-Order-of-Withdrawal accounts, unit investment trusts); but, as the publisher of three MMF news letters, he has an unabashed bias in their favor. An MMF purchase, Donoghue writes, is like ""buying a form of savings account which has a variable rate of return floating along with the general interest rate trend in the money market."" To the more venturesome, seeking to keep ahead rather than abreast of fluctuations in interest rates, Donoghue commends his SLY (for safety, liquidity, and yield) system; in brief, this approach involves monitoring the average maturity index of MMFs, which can be checked weekly in major metropolitan dailies, The Wall Street Journal, and Donoghue's Money Fund Report. A consensus of professional opinion, the index moves counter to the trend of future interest rates, Donoghue maintains: when the index rises from its norm of 40-to-45 days, rates can be expected to decline (and vice versa). The faster the index changes, moreover, the sharper will be the upcoming adjustment. Using this practicable premise, Donoghue offers MMF-based strategies illustrating how returns may be maximized under a variety of circumstances. Now and again, however, his method of presenting information leaves something to be desired: directions for purchasing Treasury bills directly from the Federal reserve, for instance, are tucked away in a chapter which examines the merits of borrowing against paid-up life policies to invest in MMFs. Still, Donoghue's is the first book to deal solely with the subject--and he sets a high standard for the inevitable successors.