Imply a percentage return on the investment in the shares of investment companies, except when the rate of return is expressed as a ratio of dividends paid from net investment income and adjustment has been made for capital gains distributions.

Perhaps oddly, general “feelings” surrounding the stock market, such as positivism and pessimism, tend to have a measurable effect on the value of stocks. A general peculiarity is that, in the past, the discount at which closed-end-company shares sold has generally been larger at low levels of the stock market.

The essence of such plans is that the investment pool shall at all times consist of two portionsemdash a defensive pool consisting of securities having relatively small price fluctuations (high-grade bonds and preferred stocks) and an aggressive pool made up of securities having considerable price volatility (mainly common stocks). As security prices rise, the defensive portion of the pool is to be enlarged relative to the aggressive segment.

A repurchasing agreement between an investor and an open-ended company can, under some circumstances, act as a pool of cash from which the investor can draw funds when needed. Unfortunately, open-end companies have no guarantees like those of the Federal banks.

Investment companies use a number of different ways to cut the costs of research, and these cost cutting measures are becoming increasingly popular.

One group of investment companies uses the services of a company that serves all the funds in the group. Another investment company has, for some years, employed an advisory council to make recommendations. Decisions are made by the board of directors.

The precise method of determining the net asset value of each share of stock and its offering price is often set forth clearly in the prospectus of management companies. Bid and asked prices are shown. The fact that management-company shares are sold continuously has produced a unique selling mechanism.

As a result of the division of investment companies into those whose prime object is income and those that stress capital gains, investors have perplexing problems of choice. “Growth funds” have become the popular designation of those whose policy emphasizes investment in stocks promising the greatest capital appreciation.

Institutional Shareholders Mutual Fund, Incorporated, which invests in common stocks, is owned by New York State mutual savings banks.

Besides changes in the law, the long-term record of common stocks and the inflationary tendencies prevailing during the 1950s induced managers of college endowment funds and pension funds to invest in common stocks.

Among the several services offered to investors by most holding companies, one of increasing popularity is the accumulation plan. Through the Monthly Investment Plan of the New York Stock Exchange, investors have a similar opportunity for accumulation of shares of a number of closed-end companies.

The Investment Company Act of 1940 makes companies responsible for the way they conduct investment business, giving them oversight and ensuring they operate under a series of rules. Holding company proxy solicitation is subject to Commission regulation.