The closed-end fund industry has gained added evidence to marshall in proxy fights when institutional investors press to open closed-end funds.

An Investment Company Institute survey has found that the typical closed-end fund shareholder has a median annual household income of $56,000 and median household assets, including retirement savings, of $250,000. The survey also suggested that an overwhelming majority of closed-end fund shareholders were long-term investors rather than arbitrageurs looking to take advantage of inefficiencies in closed-end fund pricing. Approximately 2.3 million households owned closed-end funds last year, according to the ICI.

The ICI conducted the survey of 3,000 households in May, 1998. It made the survey results and analysis public in the April edition of Fundamentals, an ICI publication which summarizes the trade group's research.

The ICI study further supports the view that individuals with a long-term investing horizon rather than institutional shareholders represent the typical owner of shares of a closed-end fund, said Brian M. Smith, executive director of the Closed-End Fund Association, a trade group in Kansas City.

"The individual investor is the market here," Smith said.

That has become an important point in the past year for closed-end fund proponents. Last year, institutional investors helped lead many proxy fights against closed-end fund advisory firms in a press to open them. When the proxy campaigns were successful, institutional investors were free to redeem their stakes at net asset value, a move that brought quick profits.

Closed-end fund proponents such as Smith have argued that in most cases, open-ending hurt the typical individual closed-end fund shareholder. That shareholder is an individual with a long-term perspective, the industry contends. The argument against open-ending funds found some support in September, when a study by Wiesenberger of Rockville, Md., concluded that open-ending funds hurt long-term investors by creating substantial capital gains taxes.

The ICI's survey did not indicate the median or average length of time closed-end shareholders held their investments. It did show, however, that 76 percent of closed-end fund shareholders purchased their first closed-end funds before 1996. Only 14 percent of shareholders sold closed-end fund shares between January, 1997 and April, 1998, according to the survey. The ICI, which said it based its survey on responses from households, presumably did not poll institutional investors who hold closed-end funds.

ICI officials with detailed knowledge of the survey were not available for comment.

The results of the ICI survey were not surprising, said Thomas J. Herzfeld, whose firm, Thomas J. Herzfeld Advisors of Miami, invests in closed-end funds. The medians appear to represent a "blend" of investors with substantially different profiles, Herzfeld said.

For example, individuals near or below the median probably hold a substantial stake in closed-end bond funds, Herzfeld said. High net-worth individuals probably account for much of the holdings in tax-exempt bond funds, he said. Institutions with substantially greater assets have migrated to such closed-end fund products as single-country funds, Herzfeld said.

His own firm, which has a $1 million account minimum, is seeing increased interest in closed-end funds from entities such as pension funds for large companies, state retirement funds and foreign banks, Herzfeld said.

The ICI survey found that the typical closed-end fund shareholder owned stakes in two funds with a total value of $12,000. The survey found that 81 percent of the closed-end fund shareholders also owned open-end funds.

The Closed-End Fund Association said that the 532 closed-end funds that trade on U.S. stock exchanges had approximately $123 billion in assets under management as of April 23.

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