Federated Investors Reported Q4 Earnings last night and hosted a conference call at 9:00 a.m. this morning. The third-largest money fund manager's earnings release says, "Money market assets in both funds and separate accounts were $313.3 billion at Dec. 31, 2009, down $42.4 billion or 12 percent from $355.7 billion at Dec. 31, 2008 and down $4.8 billion or 2 percent from $318.1 billion at Sept. 30, 2009. Money market mutual fund assets were $281.6 billion at Dec. 31, 2009, down $45.7 billion or 14 percent from $327.3 billion at Dec. 31, 2008 and down $6.0 billion or 2 percent from $287.6 billion at Sept. 30, 2009." It continues, "The decrease in revenue primarily reflects a $54.1 million increase in voluntary fee waivers related to certain money market funds in order to maintain positive or zero net yields. This increase in fee waivers was largely offset by a related decrease in marketing and distribution expenses of $40.7 million such that the net impact on operating income was a decrease of $13.4 million. In addition, revenue decreased due to lower average money market managed assets.... In Q4 2009, Federated derived 56 percent of its revenue from money market assets." In other news, see Investment News' "Danger on the money market horizon: Rising rates could sink funds", which says, "In the past, when the Federal Reserve hiked rates, these institutions would pull their money out of money funds and go into overnight repurchase agreements and short-term commercial paper. That allowed them to pick up additional yield, because those instruments would more quickly reflect the higher rates."

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