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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.


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102