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FED ERAL RE SE R V E BANK OF NEW YORK f Circular No. 3 6 7 8 * 1 L March 23, 1951 J VALUATION OF NONMARKETABLE DIRECT OBLIGATIONS OF THE UNITED STATES IN COMMON TRUST FUNDS To all Member Banks in the Second Federal Reserve D istrict: Following is the text o f a statement issued by the Board of Governors of the Federal Reserve System: The recent Treasury Department announcement regarding a new investment series o f 2 % % Treasury Bonds which will be offered March 26, 1951, in exchange for outstanding 2 % % Treasury Bonds o f June 15 and December 15, 1967-72, has given cause to inquiries concerning the question whether, in the periodic valuation o f assets in a Common Trust Fund operated in accordance with the provisions o f Section 1 7 (c ) o f the B oa rd ’s Regulation F , it would be permis sible to value the new nonmarketable 2 % % Treasury Bonds at par value or whether such bonds should be valued at the market value o f the 5-year 1 /2% Treasury Notes fo r which they 1 will be exchangeable. In a statement published in the Federal Reserve Bulletin fo r A p ril 1948 at page 397, regarding a similar inquiry relating to the valuation o f Series G United States Savings Bonds, reference was made to the fact that Regulation F does not undertake to prescribe any precise basis or method o f valuation and that the only provision o f the Regulation which is pertinent to this matter is the requirement, contained in Section 1 7 ( c ) ( 1 ) , that the written Plan fo r the operation o f a Common Trust Fund shall include, among other things, provisions relating to the basis and method o f valuing the assets in the Fund. A ccordingly, Regulation F does not prohibit the valuing o f Series G United States Savings Bonds, or other nonmarketable direct obligations o f the United States, at par value in the periodic valuation o f assets in a Common Trust Fund, and such action is permissible if it is consistent with the terms o f the written Plan governing the Common Trust Fund and with applicable State law. Additional copies o f this circular will be furnished upon request. A llan S peoul, President.