Monday, Dec. 29, 1930

Investment Trusts

Until 1930, the usual form of U. S. investment trust was the general managership type, in which the management has the power to change investments at will. The bear market reminded investors that management may be fallible. Popular fancy then turned to the fixed trust, a U. S.-originated form. The fixed trust starts with a stated list of stocks which usually may be sold under certain contingencies such as the passing of a dividend. But no substitutions may be made. Prime reason for the fixed trust's success is the small investor's desire to share the fate of many companies, plus his inability or unwillingness to assemble his own portfolio of one or two shares of each stock. Novel fixed trusts have appeared. Last fortnight Merrill, Lynch & Co., specialists in chain stores, announced Chain Store Shareholders, Inc., to hold stock in 35 chains. Unusual is the appropriation of 50-c- a share by C. S. S. to advertise the chain store cause. Last week also, Selected Managements', Inc. was formed to invest in 14 investment trusts of the general management type, now quoted below their book-value.* There are almost 90 fixed trusts in existence. A fixed trust must be named well to give an impression of lasting strength. Typical names are: All America Investors, American Industries Participation Shares, Basic Industry Shares, Equity Trust Shares in America, Foremost Industries Trustee Shares, Fundamental Trust Shares, Leaders of Industry Shares, Major Corporation Shares, National Units of America Shares, Seasoned Securities, Super-Corporation of America Trust Shares.

* The 14: Adams Express, American European Securities, American International, Boston Personal Property Trust, Capital Administration, Chatham Phoenix Allied Corp., General Public Service, Insuranshares Certificates, Lehman Corp., Mayflower Associates, National Bond & Share, Shawmut Association, Tri-Continental Corp., United States & Foreign Securities.

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