September 21, 1990
TO: UNIT INVESTMENT TRUST COMMITTEE NO. 44-90
RE: INSTITUTE LETTER ON S&P ALGORITHM FOR COMPUTING IRR
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The Institute has learned that Standard & Poor's
Corporation has informed the SEC staff that they have developed
an algorithm for computing IRR on unit trusts that does not
require generation of a cash flow table. If true, this might
substantially reduce the time required to compute IRR.
Attached is a copy of a letter the Institute sent to the
staff with respect to the S&P method. The letter raised various
questions about the method and noted that neither the Institute
nor any of its members have had a chance to review it. The
letter also reiterates the Institute's belief that, in addition
to the comparative levels of difficulty in computing IRR vs.
ELTR, there are several other reasons why ELTR is a preferable
long-term measure of UIT performance.
We will keep you informed of developments.
Craig. S. Tyle
Associate General Counsel
Attachment