MONEY MARKET.

Auckland Star, Volume LXV, Issue 70, 23 March 1934, Page 4

MONEY MARKET.

CONSOLS AND STOCKS. FIRM WITH ADVANCES. (Received 11 a.m.) LONDON, March 22. The following table gives quotations for consols and colonial Inscribed stocks, compared with those of March 15:— Price. Variation £ s. d. b. d. Consols, 2J per cent ... SO 10 0 Same Funding Loan, 4, 1960-90 114 0 0 10 Ot War Loan, 3J, 1929 47 . 103 15 0 5 Of Conversion Loan, 3} ... 103 0 0 5 Of Victory Bonds, 4 110 15 0 5 Of Com'wealth, 5, 1945-75 . 11l 0 0 1 3f Com'wealth, (5. 1031-41 . 103 3 0 3 Ot 1 Com'wealth, 3J, 1030-37 103 0 0 2 6* Victorian, 3, 1920-49 .. 95 0 0 Same Victorian. 31. 1920-40 . 08 0 0 15 0* Victorian, 5, 1932-42 ... 300 10 0 2 fit Victorian, 43. 1040-00 .. 107 0 0 3 0* N.S.W., 3, 1035 1.. 101 0 0 1 3f N.S.W., 31, 1930-50 99 6 3 6.3* Queensland, 5, 1040-60 . 106 18 0 1 3* Queensland, 3. 1022-47 . 95 5 0 2 tit New Zealand, 4J, 1918-58 307 0 3 6 3* New Zealand, 3J, 1940 . 102 o 0 2 H New Zealand, 3, 1945 .. 9i o 0 5 Of New Zealand. 6, 1046-51 107 0 0 3 3f S. Australia, 31, 1030 .. 101 15 0 2 6f S.A., 3, 1010 or after, .. 85 5 0 45 Ot Tasmania, 34, 1020-10 .. 101 12 6 ' 7 tot Tasmania, 3, 1020-40 ... 99 0 0 Same W. Aus., 3A, 1920-35 ... 102 0 0 2 6* W. Aus., 3, 1015-35 101 17 0 2 0t flligher. 'Lower. BANK OF ENGLAND RETURNS. COIN HOLDING STEADY. SHOITI LOANS UNCHANGED. (Received 10 a.m.) LONDON, March 22. The Bank of England returns for the week ended March 22, as compared with those for the week ended March 15, are as follow:- Mar . 22. Mar. 15. £ • £ Note circulation ... 300,104,000 300.032,000 Coin 195.070.000 1!Kt,53i,000 Notes In reserve .. 81,615,000 5i,347,ut;0 Govt, deposits 12,107,000 12,244,000 Other deposits 143,016,000 14i,5.)0,000 Govt, securities .... 72,505,00t> 78,595,000 Other securities —. 18,401,000 17,334,000 proportion of reserve • to liabilities u3.00 oIAO SHORT LOANS AND BILLS. Short loans, I per cent, the same, and three months' bills, I per cent, compare with 29-32 per cent lust week. The Bank of England discount rate is 2 per cf*nt, to which it was rcduced from 2b per cent on June 30, 1032. EXCHANGE RATES. DOLLAR AND FRANC. LONDON, March 22. The American dollar is quoted at 5.U dollars to the puuuil stwiing aud tlie franc at 77^4-

(Full report published by arrangement.) j THE INVESTMENT EXECUTIVE TRUST OF NEW ZEALAND, LIMITED. REPORT TO FIRST MORTGAGE PERPETUAL INCOME DEBENTURE • HOLDERS, For Half-year ended December 31st, 1933. The' directors take pleasure in presenting to debenture-holders their report for the half-year ended December 31st, 1933, accompanied by the auditor's certificate which gives an analysis of the Trust's investments. Previously, annual reports were issued as at December 31st in each year. In June of last year the directors decided to fix the balancing date of the consolidated accounts at June 30Wi in each year. The debenture-holders' investment income as at December 31st in each year is now incorporated in the annual consolidated balance-sheet and accounts, copies of which arc distributed to debentureholders. The revenue accounts of the Trust comprise interest received from debentures, Government bonds, corporation stocks, dividends from ordinary and preference shares in banking, insurance and other companies in addition to profits derived from investment and exchange transactions. The rates of interest payable on each series, after making provision for shareholders' proportion of profits and debenture-holders' reserve, are: — "A" Series Debentures 4i% "2nd A" „ » "B" „ ■•• • 7 % "2nd B" „ .... 7 Vo The above rates of interest are free of income tax. In the report to debenture-holders for the year ending December 31st, 1932, their attention was drawn to the provisions of the National Expenditure Adjustment Act which would have the effect of reducing the income from Government and local body debentures, and we advised our "A" Series deben-ture-holders that in all probability the interest on their debentures would be lower for the current financial year than for the previous two years.

Tho National Expenditure Adjustment Act also affected the income from our "B" Series investments, because of the statutory 20 per cent reduction on dividends from preference shares and interest received from debentures.

Owing to the exceptionally wide spread of investments held by the Trust, income is being continually received from dividends, interest, etc. The directors felt that debenture-holders might prefer to have interim interest paid quarterly instead of one interim half-yearly payment. Three interim quarterly payments of interest will consequently be made in future—on May 31st, August 31st and November 30th in each year. The final payment of interest in each year ending December 31st, after incorporating all income from New Zealand and overseas investments, will be paid, as usual, in the following March.

From the above table of interest rates, debenture-holders will notice that the income from the "Second B" Series for the period under review corresponds with income from the "B" Series.

Those debenture-holders who have taken advantage of the premium upon their original "B" Series and re-invested the proceeds in the "Secorjd B" Series, will receive approximately 71 per cent on their original investment.

The directors have noticed that during the year a few of our debentureholders have been transferring their debentures at prices considerably below their value. While debenture-holders may sell at any prices they please, we are of the opinion that most of such selling has been due to pressure brought by interests which are opposed to the Trust. The propaganda issued by our opponents during the past two years was of a. very questionable character and was, apparently, prompted more by self-interest than in the interests of investors. Debenture-holders who disposed of their debentures because of this surreptitious propaganda must ultimately regret their action. While the security offered to an investor in a well-conducted investment Trust is greater than ho can obtain from any other type of investment, tlio income is also, as a rule, larger than he can secure from an individual investment. This ie due to the fact that the Trust not only derives its profits from interest and dividends on its investments, but from taking advantage of market fluctuations. This factor probably accounts for the misrepresentations made by our opponents when they state that such profits are paid out of capital. The Trust's stock-in-tradc consists of its investments. When a mercantile concern sells its goods at prices which show a net difference, say, of 6 per cent between the cost price and the selling price, after allowing for all expenses, and pays the surplus 6 per cent to its shareholders in the form of dividends, it cannot be said that such a payment is made from capital. The Trust is in a, similar position, except that between the periods of purchase and sale it accumulates dividends, and interest in addition to the profits from investment transactions.

The security offered by the Investmerit Executive Trust of New Zealand, Limited, to its debenture-holders is a first mortgage on the securities held. This Trust cannot create any charge or borrow any money on a overdraft, or otherwise, on the security of investments. This feature of absolute security to the debenture-holder is a cardinal principle of the Investment Executive Trust of New Zealand, Limited. The Trust does not claim that it will pay abnormally high rates of interest, but it does claim that, because of the system on which it operates, it is in a position to make larger profits than undertakings which rely 011 a more restricted source of income. The Investment Executive Trust of New Zealand, Limited, is the pioneer of investment trusts in the Dominion. The trust system has been in vogue in Great Britain for over fifty years, and no method of investing has yet been found which ena.bles the small investor to obtain a share in such n large number of sound securities which, as an individual, it would be impossible for him to secure. Moreover, many of the securities of the British trusts now stand on ttio London Stock Exchange at premiums ranging up to 300 per cent. Many of the investment trusts of Great Britain have for years paid dividends on their shares ranging from 10 per cent to 20 per cent. We have just received the report of the eii'htli annual general Meeting of the Charterhouse investment Trust, Limited, Loudon, ii)

which the chairman, Sir Arthur Mar-| shall, stated that the aggregate net profits earned by the Trust during its life amounted to an average of 14 per cent per annum. With the introduction of Its "Second A" and "Second B" debentures, the Investment Executive Trust is able to bnild up larger reserves than were possible under the original issues. The directors' wish to record their appreciation of the support and cooperation of debenture-holders throughout the Dominion. Such co-operation has contributed in no small degree towards maintaining the Trust, in a strong and sound financial position.

W. A. PILIvINGTON, Chairman. Auckland, March 20, 1934. ANALYSIS OF INVESTMENTS as at. 3.lst December, 1933. Auditor's Certificate. . I hereby certify that the following is a. true analysis of the investments of the company according to the books and investment registers of the company as at 31st December, 1933, analysed according to class and divisions hereunder: — "A" Series: , Government Stocks and Bonds, Municipal. Power Board. Harbour, Hospital, Drainage, and Transport Board Debentures 100% Total 100% "B " Series : (1) Government Stocks, Local Authority Debentures, Company and Corporation Debentures 36.902% (2) Preference and Ordinary Shares of Banks, Insurance, Investment, and Finance Companies .... 21.526% (3) Preference and Ordinary Sbares in Public Utility, Shipping, and Industrial Companies 41.272% Total 100.000% "2nd B" Series: (1) Government Stocks, Local Authority Debentures, Company and Corporation Debentures 57.202% (2) Preference and Ordinary Shares of Banks, Insurance. Investment and Finance Companies 8.882% (3) Preference and Ordinary Shares In Public Utility, Shipping, and Industrial Companies 4.216% Total 100.000% (Signed) M. C. O'NEILL, A.P.A., N.Z., Auditor. 19th March, 1934.