Evening star., 1939-04-15
Investment Trusts
Fail 10 Hold Gains
In Asset Values
CIosed-End Management
Firms Affected by
Market Declines
Special Dispatch to The Star.

SpeSAdi DASphtSH 10 Aue StdJ.
NEW YORK. April 15.-The
higher level Of stock prices in 1898
permitted leading closed-end man
agement investment trusts to re-
coup some Of their heavy 1887 losses
in asset value. 1t Is evident from
the trend of security markets that
most Of the improvement had van
ished by the end of last March and
that asset positions were back to
near those of December 81, 1897,
according to the annual investment
trust survey by H. E. Hansen in the
current issue of the Annalist.
"As Is usually the case in a rising
stock market, assets last year
showed a somewhat smaller gain
17.4 per cent? than leading stock
averages. Other outstanding de-
velopments included a further de-
cline in invested capital, sharp
drop in invested income (off 54.6
per cent?, 14.3 per cent reduction
in expenses, interest and taxes; a
loss of $l5,94300O on the sale of
securities as compared with a profit
of s7,512,000 in 1897; a marked drop
IN dividends paid both on common
and preferred shares, and sos per
cent decrease in cash on hand at
the end of the year.
1888 Fairly Satisfactory
"On the basis of the principal
criterion by which operations are
usually judged-a comparison OF
changes in net assets and listed
security prices-1938 was a reason
ally satisfactory year. Sixty-si,
trusts showed an adjusted increase
IN net assets of 1874 per cent, COM
pared with a gain of 28.7 per cent
in our weighted average of 80 stocks
during that same period. Part o1
this slower rise in assets must bt
attributed to smaller improve.
ment in bond prices than in stock
prices, although the percentage ot
bonds to total investments helc
is comparatively small for mos
companies. Expressed in someWha,
different terms, last years rise ir
net assets was equivalent to about
80 per cent of the 1923 ,O98 900 ad.
Justed loss in assets in 1887.
The income showing of thu
sixty-six closed-end trusts was de.
cidedly unfavorable, gross income
which consists largely of dividend.
received, falling much more sharply
than total dividend declarations.
Expenses Reduced.
Expenses, interest and taxes con.
tinued to decline, partly because
Of the further decrease in fixet
charges, but at smaller rate thar
gross income. Net investment in
come consequently was more thar
cut in half. This was a moderate
. ly greater setback than that in
CURED by all leading corporations
Despite the higher level of Sc
curity prices, "losed-end trust
showed a substantial loss on trad
ing account last year as compared
with profit in 1887. Most com.
panies entered 1888 with large
amounts of unrealized depreciation
on investments, and +-ading losse.
undoubtedly arose from switching
OF holdings. Additional factors II
the loss probably were the March
break and the September crisi.
setback in stock prices~
"Closed-end trusts entered 1913!
fairly fully invested, cash on hane
at the year end representing only g.!
per cent of total net assets, a.
compared with 1876 per cent at ths
end of 1887 1t would thus appear
that trusts were not very LIQUID al
the time of the market break las
month and there was not much casl
available to act as cushion"