October 19, 1990
TO: UNIT INVESTMENT TRUST COMMITTEE NO. 46-90
RE: SEC STAFF LETTER ON DISCREPANCIES IN COMPUTATIONS OF
IRR AND ELTR
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Attached is a letter from Bob Plaze of the Division of
Investment Management in response to the Institute's August 28
letter to the staff pointing out discrepancies between
performance results for certain UITs as computed by the staff and
as computed by UIT sponsors. The letter notes three principal
reasons for the different results: (1) industry figures were
compounded, while the SEC figures were not, (2) the SEC
overstated the yields on individual bonds for secondary trusts
because they used an earlier date for computation and (3) the SEC
understated the IRR for trusts sponsored by Van Kampen Merritt
due to their treatment of accured interest. The letter also
notes other factors that contributed to the different results.
That letter concludes by stating that even the industry
results "indicate that a significant gap exists between the
internal rates of return of trusts and the yield figures that
ELTR and Wesolowski-Hicks generate".
Craig S. Tyle
Associate General Counsel
Attachment