Mutual fund sales continued to sizzle in August, but money market funds - which represent most of banks' fund assets - declined, according to the Investment Company Institute.

Investors dumped $45.9 billion into funds during the month through purchases and reinvested dividends, said the trade association for mutual funds.

Money Markets Down 0.7%

Overall, assets rose about 3% above the July 31 level. But the assets of money market funds dipped 0.7%, to $558.4 billion, from $562.6 billion at the end of July.

Money market funds make up 70% of bank fund assets, according to Lipper Analytical Services. Assets of these short-term funds were $581.2 billion at the end of August 1992.

Overall, fund assets reached $1.9 trillion on Aug. 31 - 23.7% more than a year earlier.

Leading Category

Sales of stock mutual funds totaled $19.4 billion in August, compared with $18 billion in July and $9.5 billion in August 1992.

Growth-and-income funds, with sales of $5.3 billion, led all fund categories.

August sales of bond and income mutual funds totaled $26.4 billion, compared with $25.6 billion in July and $20.3 billion in August 1992.

Total sales represent share purchases and reinvested dividends but exclude exchanges between funds. Redemptions of shares are not reflected.

Equities Surge

New sales, which exclude reinvested dividends, were $43.7 billion in August, compared with $41.2 billion in July and $28 billion in August of last year.

For stock funds, new sales totaled $19.1 billion, compared with $17.5 billion in July and $9.3 billion in August 1992.

New sales of bond and income funds were $24.6 billion, compared with $23.7 billion in July and $18.7 billion in August 1992.

Shareholders redeemed $20 billion in August - up from $18.1 billion the previous month and $14.2 billion in August 1992.

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