Special Report on Investment Trusts 3: Statistics make a date with bigger profits: Performance tables should be seen in the light of trusts' timing, writes Heather Connon

IN TWO months' time, private investors are likely to be bombarded with advertisements, mail-shots, and statistics extolling the virtues of investment trusts. 'Look,' they will say, 'if you had invested pounds 100 with us just five years ago, you would have made far more than if you'd just left it in the local building society. Equities are clearly the place to be.'

More sceptical investors should pause to wonder why November seems like such a good time to promote investment trusts. They should ask themselves why, if the claims are true, so little has been heard about them in recent months.

Such scepticism would be more than justified. The apparently staggering performance is, in fact, a statistical blip. In November, the stock market crash of October 1987 - in which 500 points were wiped off the value of shares in just two days - will slip out of the crucial five-year performance statistics for investment trusts and all other forms of equity-based investments.

That will have a dramatic impact on the performance figures. It will mean, for example, that many trusts will be able to claim they have done better than the building societies for the first time in five years.

The table shows the current value of pounds 100 invested in a selection of the larger investment trusts on 1 August 1987 - six weeks before the crash - and on 1 November 1987 - two weeks after it. The same amount in the highest-rate building society account on the earlier date would have produced pounds 155.25, better than any of the trusts. But 7 out of the 11 trusts did better from the later date, when a building society account would have grown to pounds 152.16.

Robin Pollok of Dunedin Fund Managers, which includes the Edinburgh Investment Trust in its range, thinks the change will 'galvanise everyone to produce figures for all the wrong reasons. I'd like to think it won't fool anyone.'

He thinks that service, range and management fees are as important to investors, but he admits that many financial advisers are fixated by the trust's place in the league tables - even although, as the adverts say, performances can go down as well as up.

David Smith of Fleming Investment Trust Management, one of the biggest in the investment trust sector, agrees. He cautions that it is more important to look at the consistency of performance, and to check that the manager who produced the star performance is still with the firm, than to focus on one set of statistics.

The other lesson of the statistics, however, is that the best time to buy is after a plunge in share prices. The dismal recent record of many Japanese and other far eastern trusts, consistently at the top of the tables in the late 1980s, is proof of that.

----------------------------------------------------------------------- THE DIFFERENCE THE CRASH MADE ----------------------------------------------------------------------- Value of pounds 100 invested, with net income reinvested, on the specified dates ----------------------------------------------------------------------- Trust 1 August 1987 1 November 87 pounds pounds ----------------------------------------------------------------------- Alliance 145.95 191.36 American 110.67 153.96 Anglo & Overseas 114.41 146.12 British Investment 124.35 148.51 Dunedin Worldwide 101.05 127.37 Edinburgh 126.03 166.68 Foreign & Colonial 122.46 168.90 Scottish American 123.10 164.93 Scottish Investment 110.93 143.49 Second Alliance 140.67 176.79 Witan 109.66 157.23 ----------------------------------------------------------------------- Source: Micropal -----------------------------------------------------------------------