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The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Treasury Drops Ee Bond Rate

From Wire Reports

With interest rates falling, buyers of U.S. savings bonds in the next six months will be earning less.

The Treasury Department said interest rates on short-term bonds issued from November through April will be 4.75 percent, down from 5.25 percent, and for long-term bonds, 5.16 percent instead of 6.31 percent.

The Treasury adopted a new fluctuating rate system in May, dropping guaranteed minimum rates and pegging them to the market.

Series EE savings bonds will earn the new short-term rate for the first five years and the long-term rate after that through 17 years.

The short-term rate is equal to 85 percent of the average of six-month Treasury security yields for August through October. The long-term rate is equal to 85 percent of the average of five-year securities during the same period.

Fidelity looks abroad

Fidelity Investments plans to launch a series of single-country and regional funds as it tries to bolster its roster of international stock funds, according to reports filed with the Securities and Exchange Commission.

Fidelity expects to unveil funds this month to invest solely in the stock markets of the U.K., Hong Kong, Germany, France and small companies in Japan and another fund to invest in Scandinavian countries, according to the SEC filings.

Single-country funds are more risky than the average stock fund because they’re vulnerable to swings in both the stock and currency markets, analysts said.

“Fidelity isn’t nearly as successful running international funds as they are running domestic funds,” said Eric Kobren, who writes Fidelity Insight, a newsletter that tracks Fidelity and its funds. “It will be interesting to see what happens with these funds.”

Fidelity’s decision to market more international funds runs contrary to an apparent trend of mutual fund investors becoming more reluctant than a year ago to buy international funds, according to a recent survey published by Scudder, Stevens & Clark Inc.

About 58 percent of those surveyed who don’t already own an international fund have no plans to buy one, the Scudder report said, up from 49 percent in 1994.

‘Results sharing’ to grow

If you’re like the average working stiff, you probably aren’t thrilled about your raise this year. The average employee is receiving about 4 percent more in 1995 than in 1994, an increase that just edges out inflation, according to a study by Hewitt Associates, the Illinois consulting group.

What about 1996? Hewitt’s 19th annual survey, covering 1,811 companies, finds the average worker can expect, well, about 4 percent.

But there is a silver lining, assuming you’re willing to work pretty hard. “Overall earning potential for employees looks brighter than in recent years due to significant increases in company spending on results sharing,” Hewitt says.

“Results sharing” is consultant-speak for things like merit raises and bonuses. The companies surveyed by Hewitt reported they’re budgeting an average of 7.6 percent of their payrolls for such payments, about the same as they did this year but up from 5.9 percent in 1993.

‘Ruler stocks’ measure up

They’re called “ruler stocks,” say Marshall Acuff and John MacNeil of Smith Barney Inc., because they have the “unswerving ability to grow earnings over a considerable length of time.” They’re timely now, as corporate profits elsewhere begin to disappoint, and though they may not dazzle, they’re reliable.

Check them out: Abbott Labs, Thermo-Electron, Coca-Cola, Fifth Third Bancorp, McDonald’s, Automatic Data Processing, Stryker, Wal-Mart, Albertson’s, Microsoft, Home Depot, Paychex, Cooper Tire & Rubber, Pall, Sherwin-Williams, Merck, Student Loan Marketing, Star Banc, Molex and American Home Products.