Money market mutual fund assets dropped for the first time in seven weeks, according to ICI's latest weekly "Money Market Fund Assets" report. ICI's most recent weekly, which reflects the `reclassification of $26 billion worth of Prime funds to Government (ICI's "Treasury"), says, "Total money market fund assets decreased by $14.75 billion to $2.70 trillion for the week ended Wednesday, November 4, the Investment Company Institute reported today. Among taxable money market funds, Treasury funds (including agency and repo) increased by $18.34 billion and prime funds decreased by $34.68 billion. Tax-exempt money market funds increased by $1.59 billion." The weekly update explains, "Assets of retail money market funds decreased by $1.48 billion to $889.40 billion. Among retail funds, Treasury money market fund assets increased by $910 million to $207.92 billion, prime money market fund assets decreased by $3.25 billion to $501.96 billion, and tax-exempt fund assets increased by $870 million to $179.52 billion. Assets of institutional money market funds decreased by $13.27 billion to $1.81 trillion. Among institutional funds, Treasury money market fund assets increased by $17.43 billion to $823.98 billion, prime money market fund assets decreased by $31.43 billion to $921.73 billion, and tax-exempt fund assets increased by $720 million to $67.04 billion." The down week snapped 6 straight weeks of asset gains for money market funds. Year-to-date, money market fund assets are down $31 billion, or 1.1%. Our Money Fund Intelligence XLS, which ships to subscribers Friday morning, will reflect a similar shift of Prime assets to Government assets, as the first wave of funds "go government" due to pending money market reforms. We reclassified $23.8 billion in 3 Franklin money funds, including Franklin MMF (now Govt MMF) and Franklin Institutional Fiduciary Trust (IFT) Money Market Portfolio (now IFT US Govt MMP) and $2.3 billion in Dreyfus Inst Res Money (now Inst Pref Govt MMF), which changed on Nov. 1. (Crane Data will also be shifting some Fidelity funds this month, and the $115 billion `Fidelity Cash Reserves next month. See MFI and MFI XLS for details._) According to our Money Fund Intelligence, MMFs rose by $56.5 billion for the motnh of October, and assets have averaged asset increases of over $100B in Q4 the past 4 years. So we expect assets to rebound in coming weeks and inflows as we head into yearend.

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