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CD PROCEEDS PLAY MINOR ROLE AS SOURCE FOR INVESTMENT IN STOCK AND BOND MUTUAL FUNDS, SURVEY DATA SHOW

 WASHINGTON, Nov. 5 /PRNewswire/ -- According to analysis of survey data by the Investment Company Institute (ICI), the national association of the mutual fund industry, relatively few individuals used the proceeds from certificates of deposit as the source of money for their most recent investment in stock or bond mutual funds. The analysis was based on a random telephone survey of U.S. households conducted by Phoenix-Hecht, a nationally recognized polling organization.
 The proceeds from maturing CDs were used by fewer than 6 percent of individuals who invested in stock or bond mutual funds between July 1991 and July 1993 -- even those who invested in the long-term funds for the first time, according to the survey data. New investors most frequently used current income sources for making their long-term mutual fund investments.
 Analyzing data collected in Phoenix-Hecht's survey, the institute focused on individuals who made investments in long-term mutual funds between July 1991 and July 1993. A comparison was made of new investors (those who made a stock or bond fund investment for the first time) with "seasoned" investors (those who added a new long-term fund to their existing fund holdings during the same period).
 According to the institute's analysis, 43 percent of new investors in long-term mutual funds paid for their most recent long-term mutual fund investment from current income sources, such as bonuses, cash reserves or tax refunds. Among the 38 percent of new investors who made the most recent long-term fund investment with the proceeds from other financial holdings, only 5.3 percent used proceeds from certificates of deposit.
 Among "seasoned" investors (those who previously owned stock or bond funds and were not making their first investment), 37 percent used current income to make their most recent long-term mutual fund investment. Forty-four percent of the "seasoned" investors used the proceeds from other investments. Those who used money from maturing CDs represented 5.7 percent.
 The analysis found that new investors are younger, with a median age of 40, compared with 45 for the "seasoned" group. The median household income for the new investors is somewhat lower than that of the seasoned investors--$55,000 for the former, compared with $64,000 for the latter, among those surveyed. The new investors' stock and bond mutual fund holdings average $41,200, compared with $89,300 for the seasoned group.
 The new investors are somewhat more likely than the seasoned investors to purchase mutual fund shares through banks, savings & loans, and credit unions. Sixteen percent of the new investors made their most recent long-term fund purchase through a depository or thrift institution, compared with 11 percent of seasoned investors.
 The difference between new and seasoned investors is less pronounced in their use of other fund distribution channels, according to the survey. Among both the new and the seasoned groups, 25 percent invested directly with the mutual fund company.
 -0- 11/5/93
 /CONTACT: John Collins, 202-955-3535, or Erick Kanter, 202-955-3530, both of the Investment Company Institute/


CO: Investment Company Institute ST: District of Columbia IN: FIN SU:

IH-DC -- DC016 -- 1289 11/05/93 14:40 EST
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Publication:PR Newswire
Date:Nov 5, 1993
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