Evening star. [volume] (Washington, D.C.) 1854-1972, 1938-08-20
Trust Record Cited.

Faced with the problem of conserv-
ing assets while maintaining earning
power and dividend payments during
a period of continued stagnation of
business activity and when securities
markets we're depressed by intense
gloom and doubt, the open-end (mu-
tuaD investment companies on the
whole reported very satisfactory re-
suits for the first six months of 1885,
declares Donald J. Smith, director of
distribution for Fundamental Invest
tors. Inc.
When consideration is given to the
factors adversely affecting their earn
ing power, and consequently their divl-
dend disbursements, the operating rec
ords of this important branch of the
investment trust industry are all the
more favorable.
From their primary source of in
come. i. e.. dividends and interest re-
ceived on investments held. 20 leading
open-end (mutuaD investment COM
panies, in line with the general bust
ness recession, reported lower revenue
during the first half of 1888 than in
the same period of 1887, Gross in
come from this source, not including
security profits or losses, amounted to
$6,357,271 in the six months COM
pared to S8,244 453 in the like period
of 1887, decline of % per cent.
Such results compare favorably
with the combined earnings of indus
trial, railroad and utility companies
for the first six months of 1888, which
declined 81 per cent below the first
half of last year, as indicated by
Standard Statistics estimates Several
factors were important in this trend
toward diminishing income.
In the first instance the continued
slump in general business activity
resulted in the reduction or omission
of dividend payments by representa-
tive companies, the stocks of which
were held in the portfolios of open-end
investment companies. AS reported
in the National City Bank Bulletin
of August, 1888, dividends declared
in the first half of 1888, as compared
to first half of 1897, by industrial
groups were off as much as 72.7 per
cent for motor equipments, with the
average for all the companies reported
being down 22.2 per cent. Dividends
in January, which were Sc per cent
above last year, had fallen to 305 per
cent below last year by June.
Conservative Policy Seen.
I'm line with securities market
that was reactionary for 80 per cent
of the first half of 1888 most open
end investment companies followed a
conservative policy of holding a large
percentage of their assets in cash, and
cash equivalents, as defense against
a further decline in security values.
1T was not until late in the Sec
ond quarter. just prior to and follow
ing the stock market rise which had
its inception on June 20, that most of
these companies increased their in
vested position by purchasing millions
of dollars of securities, although a
few of the more far-sighted manage
ments increased their investment hold
lngs substantially during the last two
months of 1887, and the first quarter
Of 1888.
Such large holdings of cash, vary
ing among companies from Is per
cent to SO per cent of assets for a
major portion of the period, was a
further and very important factor in
the trend toward reduced earnings"
Furniture Trade Good.
Continuation of large-scale home
building in the District improved
conditions and somewhat lower furni-
ture prices are contributing to the
success of midsummer house furnish
ings sales by Washington stores, it
was learned yesterday from survey
of the city's leading merchants.
While in some instances sales are
not quite equal to last years, many
retailers reported that increased buy
ing at these August events had pushed
volume ahead of 1887.
Furniture and house furnishings
were reported. to be the brightest
spot in many local establishments
here Camera sales in several stroes
made CONSPICUOUS sales gains.
.----- Preferred Shares Retired.
The Second National Bank has
retired $500 more of its preferred
stock, bringing the total amount out
standing down to $115,00O.
The action, taken the first of this
month. increased the banks surplus
to S2350oO.
The Montgomery County National
Bank at Rockville retired $4,000 of
les preferred shares on the same
date. leaving total of $4,000 out