June 4, 1990
TO: UNIT INVESTMENT TRUST COMMITTEE NO. 25-90
RE: INSTITUTE DRAFT RESPONSE TO STAFF MEMO ON YIELD PROPOSAL
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As we previously informed you, the SEC Division of
Investment Management has sent a memorandum to the Institute,
questioning various aspects of its proposed standard yield
formula, ELTR. (See Memorandum to Unit Investment Trust
Committee No. 19-90, dated April 27, 1990.)
Attached is a copy of a draft of the Institute's response
to the memorandum. The response argues that unit trusts should
compute their yield in a manner similar to mutual funds. It
notes that three of the elements of the ELTR formula about which
the staff raised questions -- treatment of the sales charge,
compounding and failure to time-weight -- are treated in the same
way as under the mutual fund formula. The letter also addresses
other points raised in the staff memorandum.
The Institute's response has been promised to the staff by
July 1. If you have any comments, please call me by Friday, June
15.
Craig S. Tyle
Associate General Counsel
Attachment