MODIFICATION OF SPECIAL ARBITRAGE RULE FOR CERTAIN FUNDS.

SEC. 206. MODIFICATION OF SPECIAL ARBITRAGE RULE FOR CERTAIN FUNDS. In the case of bonds issued after the date of the enactment of this Act and before August 31, 2009—(1) the requirement of paragraph (1) of section 648 of the Deficit Reduction Act of 1984 (98 Stat. 941) shall be treated as met with respect to the securities or obligations referred to in such section if such securities or obligations are held in a fund the annual distributions from which cannot exceed 7 percent of the average fair market value of the assets held in such fund except to the extent distributions are necessary to pay debt service on the bond issue, and (2) paragraph (3) of such section shall be applied by substituting “distributions from” for “the investment earnings of” both places it appears.