November 28, 1989
TO: UNIT INVESTMENT TRUST MEMBERS NO. 65-89
TAX MEMBERS NO. 46-89
RE: IRS REVENUE RULING ON POWER TO INCREASE SIZE OF TRUST
INVESTMENT
__________________________________________________________
The attached IRS Revenue Ruling addresses the issue of
under what circumstances a unit investment trust can increase in
size without losing its classification as a trust.
The ruling involves a trust agreement provision permitting
the trust's creator to increase the size of the trust by
conveying to the trustee, within 90 days following the creation
of the trust, additional securities that are substantially
similar to those initially deposited. The trust's creator will
then sell to new investors the additional certificates received
in exchange for the additional securities deposited. Each
certificate will represent an identical undivided ownership
interest in the assets of the trust.
The Revenue Ruling concludes that such an arrangement will
not cause the investment trust to fail to be classified as a
trust because the power to introduce new investors and new
securities to the investment trust is 1) intended solely to
facilitate the organization of the trust; 2) limited to a short
period at the inception of the trust; and 3) neither intended nor
available for use throughout the term of the trust to vary the
beneficiaries' investment.
We will keep you informed of developments.
Keith D. Lawson
Assistant General Counsel
Attachment