Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-02-20
TRUSTS ARE AIDED
f. BY GAIN IN STOCKS
Portfolios Have Increased in
Value on Recent Rise
in Market.
Special Dispatch to The star.

Special Dispatch to The star.
NEW YORK. February 20.-paSsing
Of its dividend by the United Founders
Corporation, which has Just been an
nounced, affects over 10000 share
holders In the largest of the American
investment trusts. This dividend has
been paid in stock at the rate of one
SEVENTEEN of a share
The action of the directors of United
Founders has been anticipated for some
time. 1t was preceded a few weeks ago
cy the omission of its stock dividend by
American Founders Corporation, Of
which the United Founders Corporation
holds over 100000 shares high pro-
portion of the entire amount outstand-
Ing. Subsequently, the dividend on
Public Utility Holding Corporation of
America stock, in which United Found
ers has heavy investment, was also
discontinued; also that on the stock of
the United National Corporation, an
other investment trust. which. with
about 20 others, represents United
Founders portfolio of securities of in
veStment companies.
Causes for Omissions.
1t was explained by one close to the
United Founders management that the
omission of the dividend was due to the
railing income on its investments and
to the considerable amount of capital
which the corporation has placed in
stocks of companies that are on a nom
producing basis, as, for instance, United
States Electric Power Corporation. of
which United Founders hold over 4,000,-
600 shares of the class "A" and COM
mon stocks.
A significant feature of the dividend
changes downward in the last few
months has been the high percentage
Of reductions made by investment trusts
and trading corporations. In most cases
this has been due to q shrinkage in
their assets, which has compelled the
passing Of preferred dividends In order
to meet the requirements OF certain
State laws. There has also been neces-
sity for lower dividends in the absence
OF trading profits, which were helpful
In paying dividends in 1929 and during
part of 1880.
1t has frequently happened that the
regular income on investments, that Is
from interest on bonds and dividends
on stock owned, has not been sufficient
to cover the dividends of the holding
company, or at least to cover them by q
suff1cient margin to justify their pay
ment.
The upswing in stocks in the past
six weeks has been a great boom to
the investment trusts and trading COR
porations, most of which showed q high
percentage of shrinkage in their port
folios from the original cost prices.
Status Improved.
In as much as many of them have
large blocks of the popular industrial
and public utility shares that have
been moving up rapidly this year, the
appreciation since December 81 has
greatly improved their status and lifted
the liquidating value of their shares
many points. One comparatively small
company that had q depreciation at
the end of December of $4,000, 900 to-
day showed q shrinkage of less than
$lO,OOO,OO0. Even greater changes in
the aspect Of portfolios may be found
in an analysis Of lists of common stocks
displayed in their annual reports.
The fixed trusts have also benefited
from the rise in the general market.
Some of those that were brought out
In November and Immediately wit
messed a decline Of IS to $6 share in
the price OF their units, are now able
TO quote these units at approximately
the original figures.
There were rumors today Of impend-
ing important mergers in the invest
ment trust and trading corporation
field. 1t is understood that two COM
panies closely related and under the
same management, which figured in the
sensational investment trust stock mar.
ket Of 1929 and later showed q depre-
citation In the market value Of their
stocks Of IS to over 80 per cent, are
now considering union. There Is
still another group controlled by a pri-
vate banking firm which Is said TO be
considering consolidation of two of
its companies.
(Copyright, 1917