Reader’s Digest Story Left Out Some Key Data

To the Editor:

Your article on Reader’s Digest and its related funds (“Falling Price of Reader’s Digest Stock Is Big Blow to Wallace Funds,” February 26) omits some important information that might have helped your readers better understand how well the nine Wallace-related foundations have fared despite the company’s difficulties:

From 1985 (the date by which all the foundations had been formed and endowed) to 1997, the collective assets of the foundations increased from $482-million to $3.1-billion, not including the $1.32-billion paid out in grants during the same period.

This long-term performance and grant-making record significantly exceeds the results that would have been expected from a fully diversified port folio over the same period of time.

The chart that accompanied the story only shows income to the seven supporting organizations from Reader’s Digest dividends. It does not account for income or significant unrealized gains from other investments made possible by diversification that has been ongoing since 1990.

The article ignores that this diversification process, which has reduced the charities’ collective holdings of Reader’s Digest stock from 92.7 per cent in 1985 to 39.6 per cent in 1998, makes them far less dependent than ever on the company’s fortunes.

We realize that the impetus for The Chronicle’s coverage was dissatisfaction among a handful of shareholders with the future directions of the company. Perhaps all shareholders would be better served if those minority views were balanced by those of others, including ourselves, who believe that management’s plans to restore the company’s performance is in everyone’s best interests over the long term.

In the meantime, we will be as diligent in the management of all the foundations’ assets as we have been over the past years, insuring a healthy flow of grants to many worthwhile organizations and causes.

M. Christine DeVita
President
DeWitt Wallace-Reader’s Digest Fund
and Lila Wallace-Reader’s Digest Fund
New York