Money Fund Returns (4.99%) Beat Stock Returns in 2007; Repeat in '08? Money market mutual funds, as measured by our Crane 100 Money Fund Index, returned 4.99% in 2007. This compares to a total return of 3.53% for the Standard & Poor's 500 Index, the most widely used benchmark for stock market returns. The Dow Jones industrial average performed better, with a 6.4% return in '07, but money funds remain competitive nonetheless. Money fund yields, currently at 4.5%, remain well above their 5-year average annualized return of 2.85% and above their 10-year average return of 3.65%. Yields should continue drifting lower as funds digest teh end of a Dec. 11 Federal Reserve 1/4-point rate cut, and as the market prepares for an expected rate cut at the end of January. But we still expect cash funds to return over 4% in 2008 (our estimate is 4.25%), so money market funds should continue regaining market share from longer-term asset classes. Over the previous 10 years, the 100 largest money funds have returned: 1997 5.36%, 1998 5.30%, 1999 4.93%, 2000 6.18%, 2001 3.98%, 2002 1.56%, 2003 0.88%, 2004 1.07%, 2005 2.93%, and 2006 4.77%.

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