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To: Hawkmoon who wrote (88817)	3/19/2001 11:26:11 AM
From: patron_anejo_por_favor	Read Replies (1) \| Respond to of 95453

<<So if many of those MMF debt instruments go into default, wouldn't this just reduce the amount of interest that I receive rather than reducing the quantity of principle that was automatically transferred into that MMF by my broker?>> It would depend on how extensively your MMF's holdings begin defaulting. The first thing you'd see would be a a drop in the interest paid out. Keep in mind that these are very short term debt instruments for the most part, not bonds but commercial paper and the like, usually less than 30 day maturity. If the holdings continued defaulting or there was an especially large number of defaulting assets all at once, it would then start to reduce the principal (ie, the quoted value of your MMF would be less than 1.00, the so-called "breaking the buck" point). They are NOT obligated to make good you're principal losses, and they take efforts to warn about this in MMF prospecti. Admittedly, it's never happened since MMF's started in the U.S. around 1980...but then these are interesting times. I have the same problem with sweeps that you mentioned. My main broker won't allow funds needed for margin transactions (ie, short sales) to be in any but the "house" MMF. I've basically reduced my trading positions so that I have most of my reserve in US treasury-only MMF's. I think MMF's have abused their reputation of being "as good as cash" and it's got a pretty fair chance of biting some folks in the not-too-distant future. BTW, your point about MMF's increasing due to stock sales was valid, but they're also increasing due to the current refinancing boom stimulated by the recent fed funds rate cuts. Regards Patron