A 13% average

Though short-term interest rates were edging down, the January yields of money-market funds tended to keep rising as an aftereffect of last October’s decisive anti-inflation moves by the Federal Reserve. The yields of the funds listed here

averaged 13%, up from 12.8% in December. However, funds were beginning to report lower returns in February. The

threat of war in the Middle East sent foreign investors scurrying into the safe harbor of the dollar, according to John

Durham, president of Delaware Cash Reserve fund. This inflow, combined with normal post-Christmas slackening of loan demand, is what lowered interest rates, he says. The outlook for yields this spring is hazy. Durham thinks higher OPEC oil prices could weaken the dollar, forcing the Fed to raise interest rates again. But Heath McLendon, chairman of Shearson Daily Dividend fund, says interest rates may hold steady unless an economic slowdown prompts the Fed to let rates fall. In keeping with their opposite views. Delaware had shortened the life of its securities to an average of 10 days so that it could switch quickly if rates rose; Shearson, with a 60-day average maturity, was betting against higher rates.

Notes & Cautions: The 45 largest mutual funds with assets invested primarily in fixed-income securities are ranked by yield, as computed for Money by Lipper Analytical Services. Fund selection is based on Dec. 31 assets. High yields can reflect high risk. Some mutual funds pay salesmen and brokers Io sell their shares and add a sales charge to the net asset value at time of purchase. Sales charges shown ere the highest imposed by each fund; rales decline on
large purchases. Funds without sales charges, called no-load funds, sell shores by mail, phone or wife. We list their addresses and phone numbers the first month of every quarter. All yields are annual rates to investors, determined, except for money-market funds, by dividing 12 months’ dividends by the funds’ latest prices.