Re: Unit Investment Trusts

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In Reply to: Re: Unit Investment Trusts posted by Mark on June 25, 1999 at 08:12:00:

: I am not familiar with "in-kind" rollovers, so please explain.

O.K. Here goes...

Let's say I invest $10,000 in a Dogs-of-the-Dow Unit Trust (10,000 shares at
$1.00 each) on 1/1/98 (call this Series 98-1). Come 1/1/99, it's time to roll
into the next series (99-1). To keep things simple, let's say the investment
has appreciated in value to $11,000 ($1.10 per share), with each of the 10
stocks in the trust contributing equally to the $1000 gain.

Let's say for Series 99-1, 8 of the Dogs are the same as Series 98-1.

With a "standard" rollover, your entire 98-1 position would be sold and all
new shares in the 99-1 position would be purchased (11,000 shares at $1.00
each). You would realize a $1000 cap gain in this case, and the 99-1 basis
would be $11,000.

With an "in-kind" rollover, the trust, through some accounting wizardry, would
treat your rollover as if only the stocks which are no longer Dogs were sold.
In this case, you would only realize a $200 capital gain (but your 99-1 basis
would be $10,200). You would still end up with 11,000 shares at $1.00 each.

I hope this explanation is somewhat clear.

Dennis

Replies:

• Re: Unit Investment Trusts Mark 18:58:29 6/25/99 (3)
  • Re: Unit Investment Trusts Dennis Kowallek 07:01:29 6/26/99 (2)
    • Re: Unit Investment Trusts Mark 10:14:48 6/26/99 (1)
      • Re: Unit Investment Trusts Dennis Kowallek 15:37:15 6/26/99 (0)