Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-03-31
TRUSTS AFFECTED
BY DIVIDEND CUTS
Trading Policies Recalled as
Many Stock Issues Show
Price Declines.
BY CHARLES F. sPEARE.
Special Dispatch to The Star.

Special Dispatch to The Star.
NEW YORK, March 31-There Is un-
derstood to have been some slowing up
in the distribution of fixed trust shares
recently, owing to the unsettlement IN
the stock market and to the large num-
Der of dividends that have been passed
or reduced on the shares prominently
listed in the portfolios Of these trusts.
1t was announced yesterday that one
of the newer fixed trusts had eliminated
from its portfolio the stock Of the
Texas Corporation and replaced 1t with
Proctor g. Gamble stock. This substitu-
ton was in conformity with a part OF
the contract, which compelled the trust
to eliminate any stock that had had its
rating lowered by a prominent rating
agency.
Regarded as Good Investment.
Texas Corporation has long been re-
garded as one of the highest grade
members Of the oil group. BY many 1t
was ranked close to the Standard Oil
Company shares in point of credit
There is scarcely a fixed trust portfolio
with a diversified list of stocks that does
not include Texas Corporation shares
while number of fixed trusts that spe-
cialiZe entirely in the securities of oil
producing and refining companies 1t
represents high unit proportion of the
entire holdings.
Among the older fixed trusts there
we're different kinds of arbitrary policies
that became effective when a stock re-
duced or passed its dividend. In some
instances, 1t was necessary to sell the
stock and distribute the proceeds to
the shareholders in the corporation
There has been some variation in the
Interpretation of the phrase regular
dividend" in connection with the atti-
tude of trust toward member of its
portfolio whose dividend was reduced
1t has been found that the term "regu-
lar" applied more to the date of pay
ment than to the amount of payment,
and that so long as dividend was paid
on the same date as previously the stock
affected was retained in the portfolio.
Stocks that figure prominently in
nearly all Of the fixed trusts with a d.
versif1ed portfolio and which have re-
duced or passed their dividends in the
last six months are Anaconda Copper
American Radiator g. Sanitary Corpo-
ration, Westinghouse Electric, Mont
gomery Ward, Lehigh Valley, Delaware
Lackawanna & Western, Baltimore 8.
Ohio, New York Central, National Cash
Register, Kennecott Copper and Rock
Island.
Newer Trusts.
The newer fixed trusts, or those
which were created last year, are less
rigid in their regulations governing the
substitution or elimination of members
of their portfolios than are the older
trusts. Their arrangements have accom-
modated themselves to the vicissitudes
of business and markets and have given
themselves opportunities to get out OF
securities with an unpromising future
and into others that have a more IA
vorable outlook. There has been a dis
position to compromise between the exs
treme latitude given to the manage
and the rtgidity of the original fixed
trusts.
Consequently. there are many differ
ent kinds of fixed trusts operating at
present. Quite number have been
formed simply to take advantage Of the
present depreciation In securities with
the expectation that, within two or three
years, these trusts may be liquidated
and their shareholders realize a SUBJ
Stantial appreciation on their invest
ment. One trust was formed a few
months ago in which the provision was
100 per cent might be sold Immediately
an increment Of 140 per cent. There
were a lot of low priced shares that rose
from 100 to 200 and 300 per cent be-
tween the bottom figures Of last De-
cember and the peak Of this years mar
ket in February. Not many Of them,
however, were regarded as proper candi-