July 28, 1989
TO: UNIT INVESTMENT TRUST COMMITTEE NO. 39-89
RE: PERFORMANCE NUMBERS
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This morning, representatives of the ICI and four UIT
sponsors met with staff members of the SEC on the issue of UIT
performance numbers. Late this afternoon, the staff sent to the
ICI their proposed requirements for UIT performance. A copy of
the proposal is attached.
Our quick review indicates two major problems:
(l) The proposal would require all new series that quote
current return to also provide a yield quotation. As proposed,
the yield would have to reflect "delays in payments to
shareholders", which apparently requires use of an internal rate
of return formula (see number 3). We understand that sponsors
are not in a position to use this method on an immediate basis.
(2) All existing series would have to supply the
additional quotation on an annual basis, unless the discrepancy
is "unreasonably large". (See number 8.) This would require
sponsors to test every series on a daily basis.
We raised those two problems with the SEC staff. As to the
first problem, they asked sponsors to send them their proposed
yield formula with explanations. As to the second problem, they
asked the industry to suggest a method to identify existing
series where the discrepancy is "unreasonably large."
We will be arranging a conference call or meeting early
next week.
Mary K. Bellamy
Associate General Counsel
Craig S. Tyle
Assistant General Counsel