European Stars And Stripes (Newspaper) - May 22, 1988, Darmstadt, Hesse                                Page 20 investor s the stars and stripes sunday May 22, 1988 by Bill Doyle q. We own shafts of an option income Mutual fund. On March 30, we received a quarterly distribution of 37 cents per share of which six cents was dividend income and 31 cents was Short term Capi Tal  at the same time the per share net asset value was reduced by 30 cents. Therefore All the fund did was return our own Money. The fund s literature says the cur rent distribution rate is 16.88 per cent based on $8.77 per share asset _. Value. Why is do in the fund allowed to state that percentage when it is Only returning our Money a. Beginning with 1987, Federal tax Laws require most Mutual funds to distribute to their share holders 97 percent of their net dividend income and 98 percent of their net capital gains. After deducting its operating expenses a Mutual fund passes on to its shareholders the interest and or dividends it has collected on securities it holds As investments. The capital gains come from the net prom a fund realizes by Selling some of those securities at higher prices than it paid for them. With an option income fund part or All of the capital gains distribution can come from premiums collected from the Sale of of Lions on stocks the fund holds. A Mutual fund s asset value per share is calculated by adding up All the fund s assets mostly invest ment securities and Cash on hand and then dividing by the number of fund shares outstanding meaning owned by investors. That per share asset value can change Day to Day As the Market values of its investment securities go up or Down. When the fund makes a distribution it has less Cash. So the amount of the distribution is automatically deducted from per share asset value on the sex distribution Date. This is similar to the sex dividend procedure on individual stocks. That downward Price adjustment on your shares had to total 37 cents six cents for the dividend and 31 cents for the capital gains. Because the per share asset value dropped 30 cents at the same Lime it s Clear that the Market values of the fund s hold ing Rose seven cents. The statement about the current distribution rate being 16.88 percent could be mis leading. It will hold up Only if Over the Fuu year the fund makes four quarterly distributions of 37 cents each. That would total $ 1.48 and on $8.77 per share asset value that docs work out to 16.88 percent. However As every Mutual fund prospectus is required to Point out past performance is no Gua Rantee of future  dividends Seldom change too much but capital gains can swing wildly from one period to the next. O. I heard thai some Mutual funds do not distribute their capital gains to shareholders. Instead they use some complicated tax proce Dure. Is that True a. Yes for a Small number of Mutual funds. Rather than passing the capital gains along to shareholders that Type of fund pays income tax on those gains. Then each share Holder takes a credit for his or her proportionate share of the tax when tiling an income lax return. Market declines for third week new York up Stock prices suffered their third straight weekly de Cline last week As the Dow Jones Indus trial average closed Friday at 19s2.s9, Down 37.96 Points for the week. Broad Market indicators also declined. The new York Stock Exchange Compo site Index fell 2 Points to 146.72 and Standard & poor s 500-Stock Index dropped 4.81 to close at 293.42. Declines led advances 1,220-611 among the 2,171 issues traded. Big Board volume totalled 784,094,580 shares compared with 765,380,500 the previous week and 857,l61,630a year ago. The Market made its Best gain on new York Exchange monday when the Dow Rose 17.08, but worries thai the Economy was growing too fast erupted after tuesday s report that the . Trade deficit shrank to $9.7 billion in March tuesday s 21.22-Point loss carried through the rest of the week As the Dow industrials dropped 35.32 Points on wednesday gain co 7.63 Points on thurs Day then gave up another 6.13 on Friday. On the nose trading floor last week Philadelphia electric was the most actively traded listed Issue off i to 17 i. It was followed by get Down 1 i to 34vi. Get carries a High quarterly dividend of 7 percent and monday was the last Day an investor could own the Stock and collect the current dividend. New Tow up1 such dim Edison Brown Toman Union Cvet to Colne Ploue Imite Lucky store company   fwd Moto co ism top Bou co Tow is Moil Kiwi Zlocki in trading Fili Sim  is 2.938joo2.421.00 2 to 6001.650.600 1.5m.6001.501.000 my Lego u49.000l.jmmo 1,070800 1.062.700 1.024.200 1.010.400 997.300 21 u 18 h 47 h 170 he 16 � 31 u 21 vl44 it 14 h 40 u 47 109 Uson Novort he Obj. On i Hunch unc Huott Otlet on Oki Ute let american Exchange new York up the 10 most Kim Ilock in am Tun Stock etching Compline us log f Xuy. Stock urn Ull Nick of. Konopl tool 675.400 13-32 up 1-32winguib m5.soo 10h until my mucin 275 do 13 oh1� knt clip  440 up Lon Mittl 169.101 ii h  147.700 25 h on u i tap a 114.100 20k until  112.700 4 Upu of a pm 10s.200 9u Cennano Loewn 102.400 in Uncino Mbonu Ulcy among the Blue chips at to slipped a to 26%. Ism fell % to i09a, general motors fell % to 74 i. General electric gained to 40v. And Ford lost i to 47. Union Carbide fell 4vi to i8 a. The chemical giant said wednesday it in tends to slash its quarterly dividend by 46  the american Stock Exchange the Macx Market value Index Sank 6.10 to close at 291.84. While the National association of securities dealers Index fell 6.45 to 366.03.declines outnumbered advances 565 258 among 1,034 issues traded on inc Macx. Volume totalled 46,135,010, shares compared with 43,471,035 traded a week earlier and 59,498,690 traded in inc same week a year earlier. Dome Petroleum led the Macx actives up 1/32 to i 3/32. Amdahl Fol Lowed off 2 /4 to 44%. . Industries was third Down it to 7 i. Time bomb explodes in Istanbul injuring 10 Istanbul Turkey a a time bomb exploded at a bus terminal in Istanbul injuring 10 people police said. Istanbul police chief Unal Erkan said that inc bomb was hidden in a Dustbin. April budget surplus recorded Washington a income tax payments in april helped shrink inc fed eral budget deficit by $13.9 billion but inc surplus was less than a year ago Leav ing government red Ink 24.6 percent higher than last year the Treasury department said Friday. The april surplus representing the difference Between what the government took in and what it spent last month helped hold the deficit for the first seven months of the fiscal year to $105.0 Bil lion. But that figure was much higher than the $84.3 billion in red Ink during the first seven months of fiscal year 1987, when the total annual deficit eventually amounted to $150.2 billion. Economists say the april report Indi Cates the Reagan administration will have a Tough Lime meeting its goal of a $146.7 billion deficit for fiscal 1988, which ends sept. 30, or even the con Gressional budget office projection of $157 billion. Michael k. Evans head of an economic forecasting service in Washington said the april report indicates the deficit for inc car will be Between $170 billion and $175 billion. April s the big month. After that in s All arithmetic. The belief thai in was going to stay below $150 billion was just pure fiction he said. The april surplus bolstered by $53.3 billion in individual income tax pay ments was about $5 billion less than expected by private economists. They had been waiting for the report to Sec what effect the new income tax Law would have. Some had thought inc new lax Law would provide a Small Windfall. However Evans said inc average me Dian taxpayer enjoyed a tax Cut. People who used deductions and shelters paid More than they did the year before but the rank and file paid less he said. April income tax collections were 25.8 percent less than the same month a year earlier. 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