What do you do when your money fund sprouts fangs?

— -- You bought that cute little puppy because it seemed so sweet. Ten months later, however, it weighs 250 pounds, dines on postmen and sneaks smokes behind the shed.

Clearly, the dog you bought is no longer the dog you own today. Investors probably feel the same about their money market mutual fund: The investment they bought for safety, liquidity and yield has proved questionable on all counts. If you own a money fund — and the odds are good that you do — what should you do?

For the most part, you should relax: Most money funds are OK. But you should consider other options, particularly if you're investing for a long-term goal.

Money funds were born in the 1970s, when the law forbade banks from paying more than 5% on interest-bearing accounts, even though other interest rates were soaring. Enter the money fund, which invests in short-term, high-quality interest-bearing securities, such as Treasury bills, and distributes the interest, minus expenses, to shareholders. Money funds had two big innovations. Share prices were kept at a constant $1 a share. And many funds allowed you to write checks on your account. For all intents and purposes, a money fund functioned similarly to an interest-bearing checking account.

Money funds were popular in the 1980s, when rates were high. But they continued to grow in assets even when short-term interest rates plunged. People simply liked a safe, easily accessible account to park their cash.

All of which utterly fell apart when the Reserve Primary fund allowed its share price to fall to 97 cents on Sept. 16. The fund suspended redemptions on Sept. 19, although Reserve says the fund's share price has returned to $1.

And Putnam Investments announced Sept. 18 that it would liquidate one of its institutional money funds. The fund was merged Wednesday into a larger fund run by Federated Investors, and all shareholders received $1 a share.

Alarmed by the run on money funds — the run was entirely by institutional investors — the Treasury announced that it would temporarily guarantee assets in money funds as of the end of business on Sept. 19. Money added after that date isn't covered. Details are still being worked out.