August 15, 1989
TO: UNIT INVESTMENT TRUST COMMITTEE NO. 51-89
RE: LET'S WORK TOGETHER
__________________________________________________________
As you know from the Investment Company Institute memo
accompanying this memo the UIT Committee must submit a yield
formula to the staff of the Securities and Exchange Commission by
December 7, 1989. That formula may turn out to be the
"Wesolowski-Hicks" formula, the Mutual Fund formula or something
brand new.
Until a UIT yield formula is adopted by the SEC, hopefully
to be used with Estimated Current Return, all of us must do
business under the SEC interim guidelines, whatever they may be
from week to week.
The UIT Committee does not have a favorable reputation for
agreeing on anything or for working together.
It is essential that during these difficult times, when
decisions are being made that will affect the future of all that
we put our differences aside and work together.
Since July 26, when the current situation started, the
committee has been able to achieve more favorable results by
presenting our case to the SEC staff through Matt Fink and the
ICI than individual sponsor contacts with the SEC staff. When we
work together we can accomplish more.
I believe there are three main goals over the next few
months that are very important to the industry.
1. Until a formula is adopted, it is necessary to issue new
unit trusts under the SEC guidelines (whatever they may
be). Please keep either Craig Tyle at the ICI or me
apprised of any changes in the "guidelines" which the SEC
staff wishes to make effective. I am not suggesting that
any of a sponsor's business decisions be subject to review
or approval. Any business decision must remain the sole
judgment of the individual sponsor. However if we
communicate the latest developments the industry will be in
a better position to promptly respond to any suggested new
guidelines.
2. Produce a yield formula that the Unit Trust industry can
unanimously accept and use in the prospectus and
advertising, both primary and secondary sales. These will
require good input and probably compromise. When we all
"sign off" on a formula, everyone backs the formula.
3. Meet with representatives of the mutual fund industry in an
effort to reach an agreement. Then, submit the formula to
the ICI executive committee for submission by the ICI to
the staff of the SEC. Of course, at this point, it is not
possible to know what compromises, if any, would be
necessary.
My message is simple. Forget the differences of the past.
We all have much more in common than we would sometimes think.
Let's all work together to get past these difficult and changing
times, put together an acceptable formula and move on to a
profitable future.
Robert E. Holley
Chairman