Securities and Exchange Commission
Washington, D. C. 20549-1004
Post-Effective
Amendment No. 13
to
Form S-6
For Registration under the Securities Act of 1933 of
Securities of Unit Investment Trusts Registered on
Form N-8B-2
Insured Municipals Income Trust, Series 58
(Exact Name of Trust)
Van Kampen Merritt Inc.
(Exact Name of Depositor)
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
(Complete address of Depositor's principal executive offices)
Van Kampen Merritt Inc. Chapman and Cutler
Attention: John C. Merritt Attention: Mark J. Kneedy
One Parkview Plaza 111 West Monroe Street
Oakbrook Terrace, Illinois 60181 Chicago, Illinois 60603
(Name and complete address of agents for service)
( X ) Check if it is proposed that this filing will become effective
on April 25, 1994 pursuant to paragraph (b) of Rule 485.
SERIES 58
INSURED MUNICIPALS 33,456 Units
INCOME TRUST
PROSPECTUS PART ONE
NOTE: Part One of this Prospectus may not be distributed unless accompanied by
Part Two.
Please retain both parts of this Prospectus for future reference.
In the opinion of counsel, interest income to the Trust and to
Unitholders, with certain exceptions, is exempt under existing law from all
Federal income taxes, but may be subject to state and local taxes. Capital
gains, if any, are subject to Federal tax.
THE TRUST
The above-named series of Insured Municipals Income Trust (the "Trust")
consists of an insured portfolio of interest-bearing obligations (the "Bonds"
or "Securities") issued by or on behalf of municipalities and other
governmental authorities or by certain United States territories or
possessions and their public authorities, the interest of which is, in the
opinion of recognized bond counsel to the issuing governmental authority,
exempt from all Federal income taxes under existing law. Each Unit represents
a fractional undivided interest in the principal and net income of the Trust
(see "Summary of Essential Information" in this Part One and "The Trust" in
Part Two).
The Units being offered by this Prospectus are issued and outstanding
Units which have been purchased by the Sponsor in the secondary market or from
the Trustee after having been tendered for redemption. The profit or loss
resulting from the sale of Units will accrue to the Sponsor. No proceeds from
the sale of Units will be received by the Trust.
PUBLIC OFFERING PRICE
The Public Offering Price of the Units of each Trust is equal to the
aggregate bid price of the Bonds in the portfolio of such Trust divided by the
number of Units of such Trust outstanding, plus a sales charge. The sales
charge is based upon the years to average maturity of the Bonds in the
portfolio. The sales charge ranges from 1.5% of the Public Offering Price
(1.523% of the aggregate bid price of the Bonds) for a Trust with a portfolio
with less than two years to average maturity to 5.7% of the Public Offering
Price (6.045% of the aggregate bid price of the Bonds) for a Trust with a
portfolio with sixteen or more years to average maturity. See "Summary of
Essential Information" in this Part One.
ESTIMATED CURRENT AND LONG-TERM RETURNS
Estimated Current and Long-Term Returns to Unitholders are indicated
under "Summary of Essential information" in this Part One. The methods of
calculating Estimated Current Returns and Estimated Long-Term Return are set
forth in Part Two of this Prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The Date of this Prospectus is April 20, 1994
Van Kampen Merritt
Page 1
<PAGE>
<TABLE>
INSURED MUNICIPALS INCOME TRUST, SERIES 58
Summary of Essential Financial Information
As of March 3, 1994
Sponsor: Van Kampen Merritt Inc.
Evaluator: American Portfolio Evaluation Services
(A division of a subsidiary of the
Sponsor)
Trustee: The Bank of New York
<CAPTION>
IM-IT
<S> <C>
-------------------
General Information
Principal Amount (Par Value) of Securities .............................................................. $ 6,635,000
Number of Units ......................................................................................... 33,456
Fractional Undivided Interest in Trust per Unit ......................................................... 1/ 33,456
Public Offering Price:
Aggregate Bid Price of Securities in Portfolio ...................................................... $ 7,667,829.49
Aggregate Bid Price of Securities per Unit .......................................................... $ 229.19
Sales charge 3.199% (3.1% of Public Offering Price excluding principal cash) ........................ $ 7.33
Principal Cash per Unit ............................................................................. $ .37
Public Offering Price per Unit <F1>.................................................................. $ 236.89
Redemption Price per Unit ............................................................................... $ 229.56
Excess of Public Offering Price per Unit over Redemption Price per Unit ................................. $ 7.33
Minimum Value of the Trust under which Trust Agreement may be terminated ................................ $ 6,339,000
Annual Premium on Portfolio Insurance ................................................................... $ 10,819.50
Minimum Principal Distribution ...$1.00 per Unit
Date of Deposit ..................November 18, 1981
Mandatory Termination Date .......December 31, 2030
Evaluator's Annual Fee (4) .......$8,876
Evaluations for purpose of sale, purchase or redemption of Units are
made as of 4:00 P.M. Eastern time on days of trading on the New York
Stock Exchange next following receipt of an order for a sale or purchase
of Units or receipt by The Bank of New York of Units tendered for
redemption.
</TABLE>
<TABLE>
Special Information Based on Various Distribution Plans
<CAPTION>
Semi-Annual
Monthly Quarterly
<S> <C> <C> <C>
------------- ------------- -------------
Calculation of Estimated Net Annual Unit Income:
Estimated Annual Interest Income per Unit ...................................... $ 23.99 $ 23.99 $ 23.99
Less: Estimated Annual Expense excluding Insurance ............................. $ .93 $ .81 $ .72
Less: Annual Premium on Portfolio Insurance .................................... $ .32 $ .32 $ .32
Estimated Net Annual Interest Income per Unit .................................. $ 22.74 $ 22.86 $ 22.95
Calculation of Estimated Interest Earnings per Unit:
Estimated Net Annual Interest Income ........................................... $ 22.74 $ 22.86 $ 22.95
Divided by 12, 4 and 2, respectively ........................................... $ 1.90 $ 5.72 $ 11.48
Estimated Daily Rate of Net Interest Accrual per Unit .............................. $ .06315 $ .06349 $ .06373
Estimated Current Return Based on Public Offering Price <F2><F3>.................... 9.61% 9.66% 9.70%
Estimated Long-Term Return <F2><F3>................................................. 3.74% 3.79% 3.82%
Record and Computation Dates .FIRST day of the month as follows: monthly -
each month; quarterly - March, June, September,
and December; semi-annual - June and December.
Distribution Dates ...........FIFTEENTH day of the month as follows: monthly -
each month; quarterly - March, June, September,
and December; semi-annual - June and December.
Trustee's Annual Fee .........$1.24, $0.98 and $0.69 per $1,000 principal
amount of Bonds respectively, for those portions
of the Trust under the monthly, quarterly and
semi-annual distribution plans.
<FN>
<F1>Plus accrued interest to the date of settlement (five business days
after purchase) of $3.10, $2.96 and $8.67 respectively, for those portions of
the Trust under the monthly, quarterly, and semi-annual distribution plans.
<F2>The Estimated Current Return and Estimated Long-Term Return are
increased for transactions entitled to a reduced sales charge.
<F3>The Estimated Current Return on an identical portfolio without the
insurance obtained by the Trust would have been 9.84% based on such
semi-annual distribution plan on such date, while the Estimated Long-Term
Return on an identical portfolio without the insurance obtained by the Trust
would have been 3.96%.
<F4>Notwithstanding information to the Contrary in Part Two of this
Prospectus, the Trust Indenture provides that as compensation for its
services, the Evaluator shall receive a fee of $5,200 annually. This fee may
be adjusted for increases in consumer prices for services under the category
"All Services Less Rent of Shelter" in the Consumer Price Index.
</TABLE>
Page 2
<PAGE>
PORTFOLIO
In selecting Bonds for the Insured Municipals Income Trust, Series 58,
the following facts, among others, were considered: (i) either the Standard &
Poor's Corporation rating of the Bonds was in no case less than "BBB-" or the
Moody's Investors Service, Inc. rating of the Bonds was in no case less than
"Baa", including provisional or conditional ratings, respectively (see
"Description of Securities Ratings" in Part Two), (ii) the prices of the Bonds
relative to other Bonds of comparable quality and maturity, (iii) the
availability and cost of insurance for the prompt payment of principal and
interest on the Bonds and (iv) the diversification of Bonds as to purpose of
issue and location of issuer. As of December 31, 1993, the Trust consists of 7
issues which are payable from the income of a specific project or authority.
The portfolio is divided by purpose of issue as follows: Escrowed, 1 (4%);
General Obligation, 1 (6%); Pre-refunded, 3 (83%) and Retail Electric, 2 (7%).
The portfolio consists of 7 Bond issues in 5 states. See "Bond Portfolio"
herein and "Description of Securities Ratings" in Part Two.
<TABLE>
PER UNIT INFORMATION
<CAPTION>
1984 1985 1986 1987 1988
<S> <C> <C> <C> <C> <C>
---------- --------- ---------- --------- ---------
Net asset value per
Unit at beginning of
period ........... $ 969.39 $ 957.67 1,020.52 1,058.47 $ 976.38
========== ========= ========== ========= =========
Net asset value per
Unit at end of
period ........... $ 957.67 1,020.52 1,058.47 $ 976.38 $ 944.20
========== ========= ========== ========= =========
Distributions to
Unitholders of
investment income
including accrued
interest to carry
paid
on Units redeemed
(average Units
outstanding for
entire period) <F1> $ 103.17 $ 103.03 $ 102.79 $ 101.04 $ 100.52
========== ========= ========== ========= =========
Distributions to
Unitholders from
Bond redemption
proceeds (average
Units outstanding
for entire period) $ -- $ 1.48 $ 11.72 $ 4.75 $ 1.91
========== ========= ========== ========= =========
Unrealized
appreciation
(depreciation) of
Bonds (per Unit
outstanding at end
of period) ....... $(11.70) $ 64.55 $ 50.40 $(76.86) $(30.04)
========== ========= ========== ========= =========
Distributions of
investment income by
frequency of payment
<F1>
Monthly ....... $ 102.83 $ 102.80 $ 102.64 $ 100.86 $ 100.32
Quarterly ..... $ 103.29 $ 103.09 $ 102.83 $ 101.06 $ 100.61
Semiannual .... $ 103.56 $ 103.30 $ 102.98 $ 101.26 $ 100.82
Units outstanding at
end of period .... 33,948 33,943 33,941 33,937 33,937
<FN>
<F1>Unitholders may elect to receive distributions on a monthly, quarterly or
semi-annual basis.
</TABLE>
<TABLE>
PER UNIT INFORMATION
<CAPTION>
1989 1990 1991 1992 1993
<S> <C> <C> <C> <C> <C>
---------- --------- ---------- --------- ---------
Net asset value per
Unit at beginning of
period ........... $ 944.20 $ 921.27 $ 878.75 $ 379.91 $ 262.02
========== ========= ========== ========= =========
Net asset value per
Unit at end of
period ........... $ 921.27 $ 878.75 $ 379.91 $ 262.02 $ 238.28
========== ========= ========== ========= =========
Distributions to
Unitholders of
investment income
including accrued
interest to carry
paid
on Units redeemed
(average Units
outstanding for
entire period) <F1> $ 100.28 $ 99.99 $ 86.22 $ 29.94 $ 24.31
========== ========= ========== ========= =========
Distributions to
Unitholders from
Bond redemption
proceeds (average
Units outstanding
for entire period) $ 1.33 $ 2.36 $ 471.07 $ 109.28 $ 15.32
========== ========= ========== ========= =========
Unrealized
appreciation
(depreciation) of
Bonds (per Unit
outstanding at end
of period) ....... $(21.34) $(40.19) $(10.24) $(11.52) $ (8.38)
========== ========= ========== ========= =========
Distributions of
investment income by
frequency of payment
<F1>
Monthly ....... $ 100.09 $ 99.79 $ 86.01 $ 29.74 $ 24.18
Quarterly ..... $ 100.34 $ 100.07 $ 86.22 $ 29.89 $ 24.36
Semiannual .... $ 100.56 $ 100.27 $ 86.52 $ 30.06 $ 24.49
Units outstanding at
end of period .... 33,937 33,935 33,916 33,541 33,503
<FN>
<F1>Unitholders may elect to receive distributions on a monthly, quarterly or
semi-annual basis.
</TABLE>
Page 3
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors of Van Kampen Merritt Inc. and the Unitholders of
Insured Municipals Income Trust, Series 58:
We have audited the accompanying statement of condition (including the
analysis of net assets) and the related portfolio of Insured Municipals Income
Trust, Series 58 as of December 31, 1993, and the related statements of
operations and changes in net assets for the three years ended December 31,
1993. These statements are the responsibility of the Trustee and the Sponsor.
Our responsibility is to express an opinion on such statements based on our
audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of tax-exempt securities owned at December
31, 1993 by correspondence with the Trustee. An audit also includes assessing
the accounting principles used and significant estimates made by the Trustee
and the Sponsor, as well as evaluating the overall financial statement
presentation. We believe our audit provides a reasonable basis for our
opinion.
In our opinion, the statements referred to above present fairly, in all
material respects, the financial position of Insured Municipals Income Trust,
Series 58 as of December 31, 1993, and the results of operations and changes
in net assets for the three years ended December 31, 1993, in conformity with
generally accepted accounting principles.
GRANT THORNTON
Chicago, Illinois
March 11, 1994
Page 4
<PAGE>
<TABLE>
INSURED MUNICIPALS INCOME TRUST
SERIES 58
Statement of Condition
December 31, 1993
<CAPTION>
IM-IT
<S> <C>
------------------
Trust property
Tax-exempt securities at market value, (cost $6,318,650) (note 1) ..................................... $ 7,837,858
Accrued interest ...................................................................................... 394,321
------------------
$ 8,232,179
==================
Liabilities and interest of Unitholders
Cash overdraft ........................................................................................ $ 249,099
Interest to Unitholders ................................................................................... 7,983,080
------------------
$ 8,232,179
==================
</TABLE>
<TABLE>
Analysis of Net Assets
<CAPTION>
<S> <C>
Interest of Unitholders (33,503 Units of fractional undivided interest outstanding)
Cost to original investors of 33,953 Units (note 1) ................................................... $ 33,953,000
Less initial underwriting commission (note 3) ................................................... 1,595,457
------------------
32,357,543
Less redemption of 450 Units .................................................................... 139,259
------------------
32,218,284
Undistributed net investment income
Net investment income ........................................................................... 36,656,030
Less distributions to Unitholders ............................................................... 36,508,730
------------------
147,300
Realized gain (loss) on Bond sale or redemption ....................................................... (33,297)
Unrealized appreciation (depreciation) of Bonds (note 2) .............................................. 1,519,208
Distributions to Unitholders of Bond sale or redemption proceeds ...................................... (25,868,415)
------------------
Net asset value to Unitholders ............................................................... $ 7,983,080
==================
Net asset value per Unit (33,503 Units outstanding) ....................................................... $ 238.28
==================
</TABLE>
The accompanying notes are an integral part of this statement.
Page 5
<PAGE>
<TABLE>
INSURED MUNICIPALS INCOME TRUST, SERIES 58
Statements of Operations--Years ended December 31,
<CAPTION>
1991 1992 1993
<S> <C> <C> <C>
------------------ ----------------- ------------------
Investment income
Interest income .................................................. $ 2,610,890 $ 963,526 $ 839,214
Expenses
Trustee fees and expenses ..................................... 28,468 17,558 15,688
Evaluator fees ................................................ 5,781 7,016 8,876
Insurance expense ............................................. 29,285 13,348 11,560
------------------ ----------------- ------------------
Total expenses .......................................... 63,534 37,922 36,124
------------------ ----------------- ------------------
Net Investment Income ......................................... 2,547,356 925,604 803,090
Realized gain (loss) from Bond sale or redemption
Proceeds ......................................................... 15,972,100 3,781,359 535,452
Cost ............................................................. 16,188,488 3,613,450 525,200
------------------ ----------------- ------------------
Realized gain (loss) .......................................... (216,388) 167,909 10,252
Net change in unrealized appreciation (depreciation)
of Bonds ........................................................... (347,325) (386,321) (280,702)
------------------ ----------------- ------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS ............................................ $ 1,983,643 $ 707,192 $ 532,640
================== ================= ==================
</TABLE>
<TABLE>
Statements of Changes in Net Assets--Years ended December 31,
<CAPTION>
1991 1992 1993
<S> <C> <C> <C>
------------------ ----------------- ------------------
Increase (decrease) in net assets
Operations:
Net investment income ......................................... $ 2,547,356 $ 925,604 $ 803,090
Realized gain (loss) on Bond sale or redemption ............... (216,388) 167,909 10,252
Net change in unrealized appreciation (depreciation)
of Bonds .................................................... (347,325) (386,321) (280,702)
------------------ ----------------- ------------------
Net increase (decrease) in net assets resulting
from operations .......................................... 1,983,643 707,192 532,640
Distributions to Unitholders from:
Net investment income ......................................... (2,925,156) (1,011,386) (814,843)
Bond sale or redemption proceeds .............................. (15,981,972) (3,691,850) (513,754)
Redemption of Units (note 4) ......................................... (11,885) (100,306) (9,504)
------------------ ----------------- ------------------
Total increase (decrease) .................................. (16,935,370) (4,096,350) (805,461)
Net asset value to Unitholders
Beginning of period ........................................... 29,820,261 12,884,891 8,788,541
------------------ ----------------- ------------------
End of period (including undistributed net investment income of
$244,835, $159,053 and $147,300, respectively) ..............
$ 12,884,891 $ 8,788,541 $ 7,983,080
================== ================= ==================
</TABLE>
The accompanying notes are an integral part of these statements.
Page 6
<PAGE>
<TABLE>
INSURED MUNICIPALS INCOME TRUST
PORTFOLIO as of December 31, 1993
SERIES 58
_________________________________________________________________________________________________________________________________
<CAPTION>
December
31, 1993
Port- Redemption Market
folio Aggregate Name of Issuer, Title, Interest Rate and Rating Feature Value
Item Principal Maturity Date (Note 2) (Note 2) (Note 1)
<S> <C> <C> <C> <C> <C>
---------- ---------------- --------------------------------------------- ---------- -------------------------- ----------------
A $ -- 0 -- Wisconsin Housing Finance Authority Housing $ -- 0 --
Rehabilitation Loan Revenue Bond, 1981
Series A
13.875% Due 08/01/98
- ---------------------------------------------------------------------------------------------------------------------------------
B 405,000 Commonwealth of Pennsylvania Conservation & AA- 1994 @ 101.5 331,691
Reclamation Second Series U
2.000% Due 05/15/00
- ---------------------------------------------------------------------------------------------------------------------------------
C -- 0 -- County of St. Clair, Michigan Pollution -- 0 --
Control Revenue Bonds (The Detroit Edison
Company Belle River Plant Project) Series R
12.750% Due 11/01/01
- ---------------------------------------------------------------------------------------------------------------------------------
D -- 0 -- Altoona City Authority Blair County, -- 0 --
Pennsylvania Water Revenue Bonds, Series
of 1981
13.375% Due 11/15/01
- ---------------------------------------------------------------------------------------------------------------------------------
E -- 0 -- The Industrial Development Authority of The -- 0 --
County of Cochise (Arizona) Hospital
Revenue Bonds (Sierra Vista Community
Hospital Project) Series 1981
14.000% Due 04/01/03
- ---------------------------------------------------------------------------------------------------------------------------------
F -- 0 -- Alaska Industrial Development Authority -- 0 --
Economic Development Bonds, Series 51
through 216
13.250% Due 04/01/06
- ---------------------------------------------------------------------------------------------------------------------------------
G 555,000 The Turnpike Authority of Kentucky Resource AAA 1994 @ 102 712,264
Recovery Road Revenue Refunding Bonds 1981
Series A
13.125% Due 07/01/09
- ---------------------------------------------------------------------------------------------------------------------------------
H 1,200,000 The Turnpike Authority of Kentucky Toll Road AAA 1995 @ 101 1,370,520
Revenue Refunding Bonds 1981 Series A 1994 @ 100 S.F.
13.375% Due 07/01/10
- ---------------------------------------------------------------------------------------------------------------------------------
I -- 0 -- Port Authority of The City of Saint Paul -- 0 --
Industrial Development Revenue Bonds,
Series 1981-D
13.375% Due 05/01/11
- ---------------------------------------------------------------------------------------------------------------------------------
J 250,000 Regional Medical Center Board (Anniston, AAA 316,918
Alabama) Hospital Revenue Refunding and
Improvement Bonds (Northeastern Regional
Medical Center Project) Series 1979
8.000% Due 07/01/11**
- ---------------------------------------------------------------------------------------------------------------------------------
K 3,750,000 City of Farmington, New Mexico Power Revenue AAA 1996 @ 100 4,656,562
Bonds (San Juan Unit 4 Project) Series 1981
14.000% Due 07/01/11
- ---------------------------------------------------------------------------------------------------------------------------------
L -- 0 -- Texarkana, Texas Hospital Authority Hospital -- 0 --
Revenue Bonds, Series 1981 (Wadley
Hospital Project)
14.500% Due 10/01/12
</TABLE>
Page 7
<PAGE>
<TABLE>
INSURED MUNICIPALS INCOME TRUST
PORTFOLIO as of December 31, 1993
(continued) SERIES 58
_________________________________________________________________________________________________________________________________
<CAPTION>
December
31, 1993
Port- Redemption Market
folio Aggregate Name of Issuer, Title, Interest Rate and Rating Feature Value
Item Principal Maturity Date (Note 2) (Note 2) (Note 1)
<S> <C> <C> <C> <C> <C>
---------- ---------------- --------------------------------------------- ---------- -------------------------- ----------------
M $ 250,000 Public Utility District No. 1 of Chelan AA 1994 @ 101 $ 220,925
County, Washington, Columbia River-Rock 1994 @ 100 S.F.
Island Hydro-Electric System Revenue
Bonds, Issue of 1955 Second Series
3.750% Due 12/01/12
- ---------------------------------------------------------------------------------------------------------------------------------
N -- 0 -- Michigan State Housing Development Authority -- 0 --
Section 8 Assisted Mortgage Revenue Bonds,
1981 Series III
13.000% Due 04/01/14
- ---------------------------------------------------------------------------------------------------------------------------------
O -- 0 -- Municipal Electric Authority of Georgia -- 0 --
Power Revenue Bonds, Series G
12.750% Due 01/01/16
- ---------------------------------------------------------------------------------------------------------------------------------
P 250,000 Public Utility District No. 1 of Douglas A+ 1994 @ 100.5 228,978
County, Washington, Wells Hydroelectric 1994 @ 100 S.F.
Revenue Bonds, Series of 1963
4.000% Due 09/01/18
- ---------------------------------------------------------------------------------------------------------------------------------
Q -- 0 -- South Carolina Public Service Authority -- 0 --
(Santee Cooper) Electric System Expansion
Revenue Bonds, 1981 Series C
13.750% Due 07/01/21
---------------- ----------------
$ 6,660,000 $ 7,837,858
================ ================
_________________________________________________________________________________________________________________________________
</TABLE>
The accompanying notes are an integral part of this statement.
**The issuer of these Bonds has placed funds or securities in escrow against
payment of the issue on the date or dates indicated.
Page 8
<PAGE>
INSURED MUNICIPALS INCOME TRUST
SERIES 58
Notes to Financial Statements
December 31, 1991, 1992 and 1993
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Security Valuation--Tax-exempt municipal securities are stated at the
value determined by the Evaluator, American Portfolio Evaluation Services (a
division of a subsidiary of the Sponsor). The Evaluator may determine the
value of the Bonds (1) on the basis of current bid prices of the Bonds
obtained from dealers or brokers who customarily deal in Bonds comparable to
those held by the Trust, (2) on the basis of bid prices for comparable Bonds,
(3) by determining the value of the Bonds by appraisal or (4) by any
combination of the above. The Trust maintains insurance which provides for the
timely payment when due, of all principal and interest on Bonds owned by it.
Except in cases in which Bonds are in default, or significant risk of default,
this valuation does not include any value attributable to this insurance
feature since the insurance terminates as to any Bond at the time of its
disposition.
Security Cost--The original cost to the Trust was based on the
determination by Interactive Data Services, Inc. of the offering prices of the
Bonds on the date of deposit (November 18, 1981). Since the valuation is based
upon the bid prices the Trust recognized a downward adjustment of $460,768 on
the date of deposit resulting from the difference between the bid and offering
prices. This downward adjustment was included in the aggregate amount of
unrealized depreciation reported in the financial statements for the period
ended December 31, 1981.
Unit Valuation--The redemption price per Unit is the pro rata share of
each Unit based upon (1) the cash on hand in the Trust or monies in the
process of being collected, (2) the Bonds in the Trust based on the value
determined by the Evaluator and (3) interest accrued thereon, less accrued
expenses of the Trust, if any.
Federal Income Taxes--The Trust is not taxable for Federal income tax
purposes. Each Unitholder is considered to be the owner of a pro rata portion
of the Trust and, accordingly, no provision has been made for Federal income
taxes.
Other--The financial statements are presented on the accrual basis of
accounting. Any realized gains or losses from securities transactions are
reported on an identified cost basis.
NOTE 2--PORTFOLIO
Ratings--The source of all ratings, exclusive of those designated N/R, *
or # is Standard & Poor's Corporation. Ratings marked * are by Moody's
Investors Service, Inc. and ratings marked # are by Fitch Investors Service,
Inc. The ratings shown represent the latest published ratings of the Bonds.
For a brief description of rating symbols and their related meanings, see
`Description of Securities Ratings' in Part Two.
Redemption Feature--There is shown under this heading the year in which
each issue of Bonds is initially or currently callable and the call price for
that year. Each issue of Bonds continues to be callable at declining prices
thereafter (but not below par value) except for original issue discount Bonds
which are redeemable at prices based on the issue price plus the amount of
original issue discount accreted to redemption date plus, if applicable, some
premium, the amount of which will decline in subsequent years. `S.F.'
indicates a sinking fund is established with respect to an issue of Bonds.
Redemption pursuant to call provisions generally will, and redemption pursuant
to sinking fund provisions may, occur at times when the redeemed Bonds have an
offering side evaluation which represents a premium over par. To the extent
that the Bonds were deposited in the Trust at a price higher than the price at
which they are redeemed, this will represent a loss of capital when compared
with the original Public Offering Price of the Units. Conversely, to the
extent that the Bonds were acquired at a price lower than the redemption
price, this will represent an increase in capital when compared with the
original Public Offering Price of the Units. Distributions will generally be
reduced by the amount of the income which would otherwise have been paid with
respect to redeemed Bonds and there will be distributed to Unitholders the
principal amount in excess of $1 per Unit semi-annually and any premium
received on such redemption. However, should the amount available for
distribution in the Principal Account exceed $10.00 per Unit, the Trustee will
make a special distribution from the Principal Account on the next succeeding
monthly distribution date to holders of record on the related monthly record
date. The Estimated Current Return in this event may be affected by such
redemptions. For the Federal tax effect on Unitholders of such redemptions and
resultant distributions, see paragraph (3) under `Federal Tax Status of the
Trusts' and `Annual Unit Income and Estimated Current Returns' in Part
Two.
Page 9
<PAGE>
NOTE 2--PORTFOLIO (continued)
Insurance--Insurance coverage providing for the timely payment when due
of all principal and interest on the Bonds in the Trust has been obtained by
the Trust or by one of the Preinsured Bond Insurers (as indicated in the Bond
name). Such insurance does not guarantee the market value of the Bonds or the
value of the Units. For Bonds covered under the Trust's insurance policy the
insurance is effective only while Bonds thus insured are held in the Trust and
the insurance premium, which is a Trust obligation, is paid on a monthly
basis. The premium for insurance which has been obtained from various
insurance companies by the issuer of the Bond involved is payable by the
issuer. Insurance expense for the period reflects adjustments for redeemed or
sold Bonds.
An Accounting and Auditing Guide issued by the American Institute of
Certified Public Accountants states that, for financial reporting purposes,
insurance coverage of the type acquired by the Trust does not have any
measurable value in the absence of default of the underlying Bonds or
indication of the probability of such default. In the opinion of the
Evaluator, there is no indication of a probable default of Bonds in the
portfolio as of the date of these financial statements.
Unrealized Appreciation and Depreciation--An analysis of net unrealized
appreciation (depreciation) at December 31, 1993 is as follows:
<TABLE>
<CAPTION>
<S> <C>
Unrealized Appreciation $ 1,519,208
Unrealized Depreciation --
-----------------
$ 1,519,208
=================
</TABLE>
NOTE 3--OTHER
Marketability--Although it is not obligated to do so, the Sponsor intends
to maintain a market for Units and to continuously offer to purchase Units at
prices, subject to change at any time, based upon the aggregate bid price of
the Bonds in the portfolio of the Trust, plus interest accrued to the date of
settlement. If the supply of Units exceeds demand, or for other business
reasons, the Sponsor may discontinue purchases of Units at such prices. In the
event that a market is not maintained for the Units, a Unitholder desiring to
dispose of his Units may be able to do so only by tendering such Units to the
Trustee for redemption at the redemption price.
Cost to Investors--The cost to original investors was based on the
Evaluator's determination of the aggregate offering price of the Bonds per
Unit on the date of an investor's purchase, plus a sales charge of 4.9% of the
public offering price which is equivalent to 5.152% of the aggregate offering
price of the Bonds. The secondary market cost to investors is based on the
Evaluator's determination of the aggregate bid price of the Bonds per Unit on
the date of an investor's purchase plus a sales charge based upon the years to
average maturity of the Bonds in the portfolio. The sales charge ranges from
1.5% of the public offering price (1.523% of the aggregate bid price of the
Bonds) for a Trust with a portfolio with less than two years to average
maturity to 5.7% of the public offering price (6.045% of the aggregate bid
price of the Bonds) for a Trust with a portfolio with sixteen or more years to
average maturity.
Compensation of Evaluator--The Evaluator receives an annual fee for
regularly evaluating the Trust's portfolio. The fee may be adjusted for
increases under the category "All Services Less Rent of Shelter" in the
Consumer Price Index.
NOTE 4--REDEMPTION OF UNITS
During the years ended December 31, 1991, 1992 and 1993, 19 Units, 375
Units and 38 Units, respectively, were presented for redemption.
Page 10
FIRST FAMILY OF TRUSTS
INSURED MUNICIPALS
INCOME TRUST
PROSPECTUS
Part Two
In the opinion of counsel, interest income to the Trust and to Unitholders,
with certain exceptions, is excludable under existing law from gross income
for Federal income taxes, but may be subject to state and local taxes. Capital
gains, if any, are subject to Federal tax.
The Trust. The Trust consists of a series of National unit investment trusts
issued under the name Insured Municipals Income Trust (and including the
various series of the Discount Series, the Limited Maturity Series, the
Intermediate Series and the Short Intermediate Series) or under the name The
First National Dual Series Tax-Exempt Bond Trust. Each Trust consists of
interest- bearing obligations issued by or on behalf of municipalities and
other governmental authorities or issued by certain United States territories
or possessions and their public authorities, the interest on which is, in the
opinion of recognized bond counsel to the issuing governmental authority,
exempt from all Federal income taxes under existing law (the "Bonds" or
"Securities"). The objectives of the Trust are Federally tax-exempt income and
conservation of capital through an investment in a diversified, insured
portfolio of tax-exempt Bonds. The payment of interest and the preservation of
principal are, of course, dependent upon the continuing ability of the issuers
and/or obligors of the Bonds and of the insurers thereof to meet their
respective obligations. There is no assurance that the Trust's objectives will
be met. The Securities in the Discount Series were acquired at prices which
resulted in each Discount Series portfolio, as a whole, being purchased at a
deep discount from the aggregate par value of such Securities. Gains based
upon the difference, if any, between the value of the Securities at maturity,
redemption or sale and their purchase price at a discount (plus earned
original issue discount) will constitute capital gains with respect to a
Unitholder who is not a dealer with respect to his Units.
The Trust and "AAA" Rating. Insurance guaranteeing the payments of principal
and interest, when due, on the Securities in the portfolio of the Trust has
been obtained from a municipal bond insurance company either by the Trust, by
a prior owner of the Bonds, by the issuer of the Bonds involved or by the
Sponsor prior to the deposit of the Bonds in the Trust. All issues of the
Trust are insured under one or more insurance policies obtained by the Trust,
if any, except for certain issues of certain Trusts for which insurance has
been obtained by the issuer of the Bonds involved, by a prior owner of the
Bonds or by the Sponsor prior to the deposit of such Bonds in the Trust.
Insurance obtained by the Trust, if any, applies only while Bonds are retained
in the Trust while insurance obtained by a Bond issuer is effective so long as
such Bonds are outstanding. The Trustee, upon the sale of a Bond insured under
an insurance policy obtained by the Trust, has a right to obtain from the
insurer involved permanent insurance for such Bond upon the payment of a
single predetermined insurance premium and any expenses related thereto from
the proceeds of the sale of such Bond. Insurance relates only to the Bonds in
the Trust and not to the Units offered hereby or to the market value thereof.
As a result of such insurance, the Units of the Trust received a rating of
"AAA" by Standard & Poor's Corporation on the date the Trust was created.
Standard & Poor's Corporation has indicated that this rating is not a
recommendation to buy, hold or sell Units nor does it take into account the
extent to which expenses of the Trust or sales by the Trust of Bonds for less
than the purchase price paid by the Trust will reduce payment to Unitholders
of the interest and principal required to be paid on such Bonds. See
"Insurance on the Bonds" on page 8. No representation is made as to any
insurer's ability to meet its commitments.
Public Offering Price. The secondary market Public Offering Price will be
equal to the aggregate bid price of the Securities in the Trust and cash, if
any, in the Principal Account held or owned by the Trust plus the sales charge
referred to under "Public Offering". In addition, for Insured Municipals
Income Trust 152nd Insured Multi-Series and subsequent series' and Insured
Municipals Income Trust and Investors' Quality Tax-Exempt Trust, Multi-Series
213 and subsequent series', the Public Offering Price will include Purchased
Interest and accrued interest, if any. If the Bonds in the Trust were
available for direct purchase by investors, the purchase price of the Bonds
would not include the sales charge included in the Public Offering Price of
the Units.
NOTE: THIS PROSPECTUS MAY BE USED ONLY WHEN ACCOMPANIED BY PART ONE
Both parts of this Prospectus should be retained for future reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
This Prospectus is dated as of the date of the Prospectus Part I accompanying
this Prospectus Part II.
Van Kampen Merritt
THE TRUST
Each series of Insured Municipals Income Trust and The First National Dual
Series Tax-Exempt Bond Trust (Insured Series) (the "Trust") was created under
the laws of the State of New York pursuant to a Trust Agreement (the "Trust
Agreement"), between Van Kampen Merritt Inc., as Sponsor, American Portfolio
Evaluation Services, a division of Van Kampen Merritt Investment Advisory
Corp., as Evaluator, and The Bank of New York, as Trustee, or their respective
predecessors.
The Trust consists of a portfolio of interest bearing obligations issued by or
on behalf of states and territories of the United States, and political
subdivisions and authorities thereof, the interest on which is, in the opinion
of recognized bond counsel to the issuing authorities, excludable from gross
income for Federal income tax under existing law, but may be subject to state
and local taxes. Unless otherwise terminated as provided therein, the Trust
Agreement for all series except the Limited Maturity, Intermediate and Short
Intermediate Series will terminate at the end of the calendar year prior to
the fiftieth anniversary of its execution, while the Trust Agreement for the
Limited Maturity, Intermediate and Short Intermediate Series will terminate at
the end of the calendar year prior to the twentieth anniversary of its execute
on.
The portfolio of the Discount Series may consist of bonds that were purchased
at a "market" discount from par value at maturity. A primary reason for the
market values of the Securities having been less than their par values is that
the coupon interest rates on the Securities at the time they were purchased
and deposited in the Discount Series were lower than the current market
interest rates for newly issued bonds of comparable rating and type. The
current yields (coupon interest income as a percentage of market price) of
discount bonds are lower than the current yields of comparably rated bonds of
similar type newly issued at current interest rates because discount bonds
tend to increase in market value as they approach maturity and the full
principal amount becomes payable. Under present law, a discount bond held to
maturity will have a larger portion of its total return in the form of capital
gain and less in the form of tax-exempt interest income than a comparable bond
newly issued at current market rates. See "Federal Tax Status." Discount bonds
with a longer term to maturity tend to have a higher current yield and a lower
current market value than otherwise comparable bonds with a shorter term to
maturity. If interest rates rise, the market discount of discount bonds will
increase and the value of the bonds will decrease; and if interest rates
decline, the market discount of discount bonds will decrease and the value of
the bonds will increase. Market discount attributable to interest rate changes
does not necessarily indicate a lack of market confidence in the issuer.
Certain of the Bonds in the Trust are "zero coupon" bonds. Zero coupon bonds
are purchased at a deep discount because the buyer receives only the right to
receive a final payment at the maturity of the bond and does not receive any
periodic interest payments. The effect of owning deep discount bonds which do
not make current interest payments (such as the zero coupon bonds) is that a
fixed yield is earned not only on the original investment but also, in effect,
on all discount earned during the life of such obligation. This implicit
reinvestment of earnings at the same rate eliminates the risk of being unable
to reinvest the income on such obligation at a rate as high as the implicit
yield on the discount obligation, but at the same time eliminates the holder's
ability to reinvest at higher rates in the future. For this reason zero coupon
bonds are subject to substantially greater price fluctuations during periods
of changing market interest rates than are securities of comparable quality
which pay interest currently. See note (6) in "Notes to Portfolio" in Part One
of this Prospectus.
Each Unit initially offered represents a fractional undivided interest in the
principal and net income of the Trust. To the extent that any Units are
redeemed by the Trustee, the fractional undivided interest in the Trust
represented by each unredeemed Unit will increase, although the actual
interest in the Trust represented by such fraction will remain unchanged.
Units will remain outstanding until redeemed upon tender to the Trustee by
Unitholders, which may include the Sponsor or the Underwriters, or until the
termination of the Trust Agreement.
OBJECTIVES AND SECURITIES SELECTION
The objectives of the Trust are income exempt from Federal income taxation and
conservation of capital through an investment in a diversified, insured
portfolio of Federal tax-exempt obligations. There is, of course, no guarantee
that the Trust will achieve its objective. The Trust may be an appropriate
investment vehicle for investors who desire to participate in a portfolio of
tax-exempt fixed income securities with greater diversification than they
might be able to acquire individually. In addition, securities of the type
deposited in the Trust are often not available in small amounts.
Insurance guaranteeing the timely payment, when due, of all principal and
interest on the Bonds in the Trust has been obtained by the Trust from either
AMBAC Indemnity Corporation ("AMBAC Indemnity"), Financial Guaranty Insurance
Company ("Financial Guaranty") or a combination thereof (collectively, the
"Portfolio Insurers") or by the issuer of such Bonds, by a prior owner of such
Bonds, or by the Sponsor prior to the deposit of such Bonds in the Trust from
(1) AMBAC Indemnity or one of its subsidiaries, American Municipal Bond
Assurance Corporation ("AMBAC") or MGIC Indemnity Corporation ("MGIC
Indemnity"), (2) Financial Guaranty, (3) Municipal Bond Insurance Association
("MBIA"), (4) Bond Investors Guaranty Insurance Company ("BIG"), (5) National
Union Fire Insurance Company of Pittsburgh, PA. ("National Union"), (6)
Capital Guarantee Insurance Company ("Capital Guaranty"), (7) Capital Market
Assurance Corporation ("CapMAC") and/or (8) Financial Security Assurance Inc.
("Financial Security" or "FSA") (collectively, the "Preinsured Bond Insurers")
(see "Insurance on the Bonds"). Insurance obtained by the Trust is effective
only while the Bonds thus insured are held in the Trust. The Trustee has the
right to acquire permanent insurance from a Portfolio Insurer with respect to
each Bond insured by the respective Portfolio Insurer under a Trust portfolio
insurance policy. Insurance relating to Bonds insured by the issuer, by a
prior owner of such Bonds or by the Sponsor is effective so long as such Bonds
are outstanding. Bonds insured under a policy of insurance obtained by the
issuer, by a prior owner, or by the Sponsor from one of the Preinsured Bond
Insurers (the "Preinsured Bonds") are not additionally insured by the Trust.
No representation is made as to any
insurer's ability to meet its commitments.
Neither the Public Offering Price nor any evaluation of Units for purposes of
repurchases or redemptions reflects any element of value for the insurance
obtained by the Trust, if any, unless Bonds are in default in payment of
principal or interest or in significant risk of such default. See "Public
Offering Price". On the other hand, the value, if any, of Preinsured Bond
insurance is reflected and included in the market value of such Bonds.
In order for bonds to be eligible for insurance, they must have credit
characteristics which would qualify them for at least the Standard & Poor's
Corporation rating of "BBB " or at least the Moody's Investors Service, Inc.
rating of "Baa", which in brief represent the lowest ratings for securities of
investment grade (see "Description of Bond Ratings"). Insurance is not a
substitute for the basic credit of an issuer, but supplements the existing
credit and provides additional security therefor. If an issue is accepted for
insurance, a non-cancellable policy for the prompt payment of interest and
principal on the bonds, when due, is issued by the insurer. Any premium or
premiums relating to Preinsured Bond insurance is paid by the issuer, by a
prior owner of such Bonds or by the Sponsor, and a monthly premium is paid by
an Insured Trust for the portfolio insurance, if any, obtained by such Trust.
The Trustee has the right to obtain permanent insurance from a Portfolio
Insurer in connection with the sale of a Bond insured under the insurance
policy obtained from the respective Insurer by the Trust upon the payment of a
single predetermined insurance premium from the proceeds of the sale of such
Bond. Accordingly, any Bond in the Trust is eligible to be sold on an insured
basis. All bonds insured by the Portfolio Insurers and the Preinsured Bond
Insurers received a "AAA" rating by Standard & Poor's Corporation on the date
such bonds were deposited in the Trust. See "Insurance on the Bonds".
In selecting Bonds for the Trust, the following facts, among others, were
considered by the Sponsor: (a) either the Standard & Poor's Corporation rating
of the Bonds was in no case less than "BBB-" or the Moody's Investors Service,
Inc. rating of the Bonds was in no case less than "Baa" including provisional
or conditional ratings, respectively, or, if not rated, the Bonds had, in the
opinion of the Sponsor, credit characteristics sufficiently similar to the
credit characteristics of interest-bearing tax-exempt obligations that were so
rated as to be acceptable for acquisition by the Trust (see "Description of
Bond Ratings"), (b) the prices of the Bonds relative to other bonds of
comparable quality and maturity, (c) the diversification of Bonds as to
purpose of issue and location of issuer, and (d) the availability and cost of
insurance for the prompt payment of principal and interest, when due, on the
Bonds. Subsequent to the Date of Deposit, a Bond may cease to be rated or its
rating may be reduced below the minimum required as of the Date of Deposit.
Neither event requires elimination of such Bond from the portfolio but may be
considered in the Sponsor's determination as to whether or not to direct the
Trustee to dispose of the Bond (see "Trust Administration Portfolio
Administration").
To the best knowledge of the Sponsor, there was no litigation pending as of
the Date of Deposit in respect of any Securities which might reasonably be
expected to have a material adverse effect upon the Fund or any of the Trusts.
At any time after the Date of Deposit, litigation may be initiated on a
variety of grounds with respect to Securities in the Fund. Such litigation,
as, for example, suits challenging the issuance of pollution control revenue
bonds under environmental protection statutes, may affect the validity of such
Securities or the tax-free nature of the interest thereon. While the outcome
of litigation of such nature can never be entirely predicted, the Fund has
received or will receive opinions of bond counsel to the issuing authorities
of each Security on the date of issuance to the effect that such Securities
have been validly issued and that the interest thereon is exempt from Federal
income tax. In addition, other factors may arise from time to time which
potentially may impair the ability of issuers to meet obligations undertaken
with respect to the Securities.
TRUST PORTFOLIO
Portfolio Concentrations. Certain of the Bonds in the Trust may be general
obligations of a governmental entity that are backed by the taxing power of
such entity. In view of this an investment in the Trust should be made with an
understanding of the characteristics of such issuers and the risks which such
an investment may entail. All other Bonds in the Trust are revenue bonds
payable from the income of a specific project or authority and are not
supported by the issuer's power to levy taxes. General obligation bonds are
secured by the issuer's pledge of its faith, credit and taxing power for the
payment of principal and interest. Revenue bonds, on the other hand, are
payable only from the revenues derived from a particular facility or class of
facilities or, in some cases, from the proceeds of a special excise tax or
other specific revenue source. There are, of course, variations in the
security of the different Bonds in the Fund, both within a particular
classification and between classifications, depending on numerous factors. See
"General" for each Trust.
Certain of the Bonds in the Trust may be obligations which derive their
payment from mortgage loans. Certain of such housing bonds may be FHA insured
or may be single family mortgage revenue bonds issued for the purpose of
acquiring from originating financial institutions notes secured by mortgages
on residences located within the issuer's boundaries and owned by persons of
low or moderate income. In view of this an investment in the Trust should be
made with an understanding of the characteristics of such issuers and the
risks which such an investment may entail. Mortgage loans are generally
partially or completely prepaid prior to their final maturities as a result of
events such as sale of the mortgaged premises, default, condemnation or
casualty loss. Because these bonds are subject to extraordinary mandatory
redemption in whole or in part from such prepayments of mortgage loans, a
substantial portion of such bonds will probably be redeemed prior to their
scheduled maturities or even prior to their ordinary call dates. Extraordinary
mandatory redemption without premium could also result from the failure of the
originating financial institutions to make mortgage loans in sufficient
amounts within a specified time period. Additionally, unusually high rates of
default on the underlying mortgage loans may reduce revenues available for the
payment of principal of or interest on such mortgage revenue bonds. These
bonds were issued under Section 103A of the Internal Revenue Code, which
Section contains certain requirements relating to the use of the proceeds of
such bonds in order for the interest on such bonds to retain its tax-exempt
status. In each case the issuer of the bonds has covenanted to comply with
applicable requirements and bond counsel to such issuer has issued an opinion
that the interest on the bonds is exempt from Federal income tax under
existing laws and regulations. Certain issuers of housing bonds have
considered various ways to redeem bonds they have issued prior to the stated
first redemption dates for such bonds. In connection with the housing Bonds
held by the Trust, the Sponsor at the Date of Deposit was not aware that any
of the respective issuers of such Bonds were actively considering the
redemption of such Bonds prior to their respective stated initial call dates.
Certain of the Bonds in the Trust may be health care revenue bonds. In view of
this an investment in the Trust should be made with an understanding of the
characteristics of such issuers and the risks which such an investment may
entail. Ratings of bonds issued for health care facilities are often based on
feasibility studies that contain projections of occupancy levels, revenues and
expenses. A facility's gross receipts and net income available for debt may
service be affected by future events and conditions including, among other
things, demand for services and the ability of the facility to provide the
services required, physicians' confidence in the facility, management
capabilities, competition with other health care facilities, efforts by
insurers and governmental agencies to limit rates, legislation establishing
state rate-setting agencies, expenses, the cost and possible unavailability of
malpractice insurance, the funding of Medicare, Medicaid and other similar
third party payor programs, government regulation and the termination or
restriction of governmental financial assistance, including that associated
with Medicare, Medicaid and other similar third party payor programs. Pursuant
to recent Federal legislation, Medicare reimbursements are currently
calculated on a prospective basis utilizing a single nationwide schedule of
rates. Prior to such legislation Medicare reimbursements were based on the
actual costs incurred by the health facility. The current legislation may
adversely affect reimbursements to hospitals and other facilities for services
provided under the Medicare program. Such adverse changes also may adversely
affect the ratings of the Securities held in the portfolio of the Trust;
however, because of the insurance obtained by the Trust, the "AAA" rating of
the Units of the Trust would not be affected.
Certain of the Bonds in the Trust may be obligations of public utility
issuers, including those selling wholesale and retail electric power and gas.
In view of this an investment in the Trust should be made with an
understanding of the characteristics of such issuers and the risks which such
an investment may entail. General problems of such issuers would include the
difficulty in financing large construction programs in an inflationary period,
the limitations on operations and increased costs and delays attributable to
environmental considerations, the difficulty of the capital market in
absorbing utility debt, the difficulty in obtaining fuel at reasonable prices
and the effect of energy conservation. All of such issuers have been
experiencing certain of these problems in varying degrees. In addition,
Federal, state and municipal governmental authorities may from time to time
review existing, and impose additional, regulations governing the licensing,
construction and operation of nuclear power plants, which may adversely affect
the ability of the issuers of certain of the Bonds in the portfolio to make
payments of principal and/or interest on such Bonds.
Certain of the Bonds in the Trust may be obligations of issuers whose revenues
are derived from the sale of water and/or sewerage services. In view of this
an investment in the Trust should be made with an understanding of the
characteristics of such issuers and the risks which such an investment may
entail. Such bonds are generally payable from user fees. The problems of such
issuers include the ability to obtain timely and adequate rate increases,
population decline resulting in decreased user fees, the difficulty of
financing large construction programs, the limitations on operations and
increased costs and delays attributable to environmental considerations, the
increasing difficulty of obtaining or discovering new supplies of fresh water,
the effect of conservation programs and the impact of "no-growth" zoning
ordinances. All of such issuers have been experiencing certain of these
problems in varying degrees.
Certain of the Bonds in the Trust may be industrial revenue bonds ("IRBs"). In
view of this an investment in the Trust should be made with an understanding
of the characteristics of such issuers and the risks which such an investment
may entail. IRBs have generally been issued under bond resolutions pursuant to
which the revenues and receipts payable under the arrangements with the
operator of a particular project have been assigned and pledged to purchasers.
In some cases, a mortgage on the underlying project may have been granted as
security for the IRBs. Regardless of the structure, payment of IRBs is solely
dependent upon the creditworthiness of the corporate operator of the project
or corporate guarantor. Corporate operators or guarantors may be affected by
many factors which may have an adverse impact on the credit quality of the
particular company or industry. These include cyclicality of revenues and
earnings, regulatory and environmental restrictions, litigation resulting from
accidents or environmentally-caused illnesses, extensive competition and
financial deterioration resulting from a corporate restructuring pursuant to a
leveraged buy-out, takeover or otherwise. Such a restructuring may result in
the operator of a project becoming highly leveraged which may impact on such
operator's creditworthiness which in turn would have an adverse impact on the
rating and/or market value of such Bonds. Further, the possibility of such a
restructuring may have an adverse impact on the market for and consequently
the value of such Bonds, even though no actual takeover or other action is
ever contemplated or effected.
Certain of the Bonds in the Trust may be obligations that are secured by lease
payments of a governmental entity (hereinafter called "lease obligations").
Lease obligations are often in the form of certificates of participation. In
view of this an investment in the Trust should be made with an understanding
of the characteristics of such issuers and the risks which such an investment
may entail. Although the lease obligations do not constitute general
obligations of the municipality for which the municipality's taxing power is
pledged, a lease obligation lease is ordinarily backed by the municipality's
covenant to budget for, appropriate and make the payments due under the lease
obligation. However, certain lease obligations contain "non-appropriation"
clauses which provide that the municipality has no obligation to make lease
payments in future years unless money is appropriated for such purpose on a
yearly basis. A governmental entity that enters into such a lease agreement
cannot obligate future governments to appropriate for and make lease payments
but covenants to take such action as is necessary to include any lease
payments due in its budgets and to make the appropriations therefor.A
governmental entity's failure to appropriate for and to make payments under
its lease obligation could result in insufficient funds available for payment
of the obligations secured thereby. Although "non-appropriation" lease
obligations are secured by the leased property, disposition of the property in
the event of foreclosure might prove difficult.
Certain of the Bonds in the Trust may be obligations of issuers which are, or
which govern the operation of, schools, colleges and universities and whose
revenues are derived mainly from ad valorem taxes or for higher education
systems, from tuition, dormitory revenues, grants and endowments. In view of
this an investment in the Trust should be made with an understanding of the
characteristics of such issuers and the risks which such an investment may
entail. General problems relating to school bonds include litigation
contesting the State constitutionality of financing public education in part
from ad valorem taxes, thereby creating a disparity in educational funds
available to schools in wealthy areas and schools in poor areas. Litigation or
legislation on this issue may affect the sources of funds available for the
payment of school bonds in the Trust. General problems relating to college and
university obligations include the prospect of a declining percentage of the
population consisting of "college" age individuals, possible inability to
raise tuitions and fees sufficiently to cover increased operating costs, the
uncertainty of continued receipt of Federal grants and state funding, and
government legislation or regulations which may adversely affect the revenues
or costs of such issuers. All of such issuers have been experiencing certain
of these problems in varying degrees.
Certain of the Bonds in the Trust may be obligations which are payable from
and secured by revenues derived from the ownership and operation of facilities
such as airports, bridges, turnpikes, port authorities, convention centers and
arenas. In view of this an investment in the Trust should be made with an
understanding of the characteristics of such issuers and the risks which such
an investment may entail. The major portion of an airport's gross operating
income is generally derived from fees received from signatory airlines
pursuant to use agreements which consist of annual payments for leases,
occupancy of certain terminal space and service fees. Airport operating income
may therefore be affected by the ability of the airlines to meet their
obligations under the use agreements. The air transport industry is
experiencing significant variations in earnings and traffic, due to increased
competition, excess capacity, increased costs, deregulation, traffic
constraints and other factors, and several airlines are experiencing severe
financial difficulties. The Sponsor cannot predict what effect these industry
conditions may have on airport revenues which are dependent for payment on the
financial condition of the airlines and their usage of the particular airport
facility. Similarly, payment on Bonds related to other facilities is dependent
on revenues from the projects, such as user fees from ports, tolls on
turnpikes and bridges and rents from buildings. Therefore, payment may be
adversely affected by reduction in revenues due to such factors as increased
cost of maintenance, decreased use of a facility, lower cost of alternative
modes of transportation, scarcity of fuel and reduction or loss of rents.
Certain of the Bonds in the Trust may be obligations which are payable from
and secured by revenues derived from the operation of resource recovery
facilities. In view of this an investment in the Trust should be made with an
understanding of the characteristics of such issuers and the risks which such
an investment may entail. Resource recovery facilities are designed to process
solid waste, generate steam and convert steam to electricity. Resource
recovery bonds may be subject to extraordinary optional redemption at par upon
the occurrence of certain circumstances, including but not limited to:
destruction or condemnation of a project; contracts relating to a project
becoming void, unenforceable or impossible to perform; changes in the economic
availability of raw materials, operating supplies or facilities necessary for
the operation of a project or technological or other unavoidable changes
adversely affecting the operation of a project; administrative or judicial
actions which render contracts relating to the projects void, unenforceable or
impossible to perform; or impose unreasonable burdens or excessive
liabilities. The Sponsor cannot predict the causes or likelihood of the
redemption of resource recovery bonds in such a Trust prior to the stated
maturity of the Bonds.
Bond Redemptions. Because certain of the Bonds in the Trust may from time to
time under certain circumstances be sold or redeemed or will mature in
accordance with their terms and because the proceeds from such events will be
distributed to Unitholders and will not be reinvested, no assurance can be
given that the Trust will retain for any length of time its present size and
composition. Neither the Sponsor nor the Trustee shall be liable in any way
for any default, failure or defect in any Bond.
Certain of the Bonds in the Trust may be subject to redemption prior to their
stated maturity date pursuant to sinking fund provisions, call provisions or
extraordinary optional or mandatory redemption provisions or otherwise. A
sinking fund is a reserve fund accumulated over a period of time for
retirement of debt. A callable debt obligation is one which is subject to
redemption or refunding prior to maturity at the option of the issuer. A
refunding is a method by which a debt obligation is redeemed, at or before
maturity, by the proceeds of a new debt obligation. In general, call
provisions are more likely to be exercised when the offering side valuation is
at a premium over par than when it is at a discount from par. The exercise of
redemption or call provisions will (except to the extent the proceeds of the
called Bonds are used to pay for Unit redemptions) result in the distribution
of principal and may result in a reduction in the amount of subsequent
interest distributions and it may also offset the current return on Units of
the Trust. The portfolio contains a listing of the sinking fund and call
provisions, if any, with respect to each of the debt obligations.
Extraordinary optional redemptions and mandatory redemptions result from the
happening of certain events. Generally, events that may permit the
extraordinary optional redemption of Bonds or may require the mandatory
redemption of Bonds include, among others: a final determination that the
interest on the Bonds is taxable; the substantial damage or destruction by
fire or other casualty of the project for which the proceeds of the Bonds were
used; an exercise by a local, state or Federal governmental unit of its power
of eminent domain to take all or substantially all of the project for which
the proceeds of the Bonds were used; changes in the economic availability of
raw materials, operating supplies or facilities or technological or other
changes which render the operation of the project for which the proceeds of
the Bonds were used uneconomic; changes in law or an administrative or
judicial decree which renders the performance of the agreement under which the
proceeds of the Bonds were made available to finance the project impossible or
which creates unreasonable burdens or which imposes excessive liabilities,
such as taxes, not imposed on the date the Bonds are issued on the issuer of
the Bonds or the user of the proceeds of the Bonds; an administrative or
judicial decree which requires the cessation of a substantial part of the
operations of the project financed with the proceeds of the Bonds; an
overestimate of the costs of the project to be financed with the proceeds of
the Bonds resulting in excess proceeds of the Bonds which may be applied to
redeem Bonds; or an underestimate of a source of funds securing the Bonds
resulting in excess funds which may be applied to redeem Bonds. The issuer of
certain Bonds in a Trust may have sold or reserved the right to sell, upon the
satisfaction of certain conditions, to third parties all or any portion of its
rights to call Bonds in accordance with the stated redemption provisions of
such Bonds. In such a case the issuer no longer has the right to call the
Bonds for redemption unless it reacquires the rights from such third party. A
third party pursuant to these rights may exercise the redemption provisions
with respect to a Bond at a time when the issuer of the Bond might not have
called a Bond for redemption had it not sold such rights. The Sponsor is
unable to predict all of the circumstances which may result in such redemption
of an issue of Bonds. See "Trust Portfolio" and note (3) in "Notes to
Portfolio" in Part One of this Prospectus. See also the discussion of single
family mortgage and multi-family revenue bonds above for more information on
the call provisions of such bonds.
ESTIMATED CURRENT RETURNS AND ESTIMATED LONG-TERM RETURNS
As of the opening of business on the date indicated therein, the Estimated
Current Returns and the Estimated Long-Term Returns for each Trust under the
monthly and semi-annual distribution plans were as set forth under "Per Unit
Information" for the applicable Trust in Part One of this Prospectus.
Estimated Current Returns are calculated by dividing the Estimated Net Annual
Interest Income per Unit by the Public Offering Price. The Estimated Net
Annual Interest Income per Unit will vary with changes in fees and expenses of
the Trustee and the Evaluator and with the principal prepayment, redemption,
maturity, exchange or sale of Securities while the Public Offering Price will
vary with changes in the offering price of the underlying Securities and with
changes in Purchased Interest for those series which contain Purchased
Interest; therefore, there is no assurance that the present Estimated Current
Returns will be realized in the future. Estimated Long- Term Returns are
calculated using a formula which (1) takes into consideration, and determines
and factors in the relative weightings of, the market values, yields (which
takes into account the amortization of premiums and the accretion of
discounts) and estimated retirements of all of the Securities in the Trust and
(2) takes into account the expenses and sales charge associated with each
Trust Unit. Since the market values and estimated retirements of the
Securities and the expenses of the Trust will change, there is no assurance
that the present Estimated Long-Term Returns will be realized in the future.
Estimated Current Returns and Estimated Long-Term Returns are expected to
differ because the calculation of Estimated Long-Term Returns reflects the
estimated date and amount of principal returned while Estimated Current
Returns calculations include only Net Annual Interest Income and Public
Offering Price.
TRUST OPERATING EXPENSES
Compensation of Sponsor and Evaluator. The Sponsor will not receive any fees
in connection with its activities relating to the Trust. However, in
connection with certain series of the Trust, American Portfolio Evaluation
Services, a division of Van Kampen Merritt Investment Advisory Corp.,which is
a wholly-owned subsidiary of the Sponsor (the "Evaluator"), will receive an
annual supervisory fee, which is not to exceed the amount set forth under
"Summary of Essential Financial Information" in Part One of this Prospectus,
for providing portfolio supervisory services for such series. Such fee (which
is based on the number of Units outstanding in the Trust on January 1 of each
year) may exceed the actual costs of providing such supervisory services for
such series, but at no time will the total amount received for portfolio
supervisory services rendered to Series 65 and subsequent series of Insured
Municipals Income Trust in any calendar year exceed the aggregate cost to the
Evaluator of supplying such services in such year. In addition, the Evaluator
shall receive an annual evaluation fee in the amount set forth in "Summary of
Essential Financial Information" (which is based on the outstanding principal
amount of Securities on January 1 of each year) for regularly evaluating the
Trust's portfolio. Both of the foregoing fees may be increased without
approval of the Unitholders by amounts not exceeding proportionate increases
under the category "All Services Less Rent of Shelter" in the Consumer Price
Index published by the United States Department of Labor or, if such category
is no longer published, in a comparable category. The Sponsor and the dealers
will receive sales commissions and may realize other profits (or losses) in
connection with the sale of Units as described under "Public Offering".
Trustee's Fee. For its services, the Trustee will receive a fee from the Trust
based on the largest aggregate outstanding principal amount of Securities in
the Trust as of the opening of business on January 2 and July 2 of each year
as set forth under "Per Unit Information" for the applicable Trust in Part One
of this Prospectus. Such fee will be computed at the amounts set forth in Part
I to this Prospectus for that portion of the Trust under the semi-annual
distribution plan and for those portions of the Trust representing monthly and
quarterly distribution plans. The Trustee's fees are payable monthly on or
before the fifteenth day of each month from the Interest Account to the extent
funds are available and then from the Principal Account. Such fees may be
increased without approval of the Unitholders by amounts not exceeding
proportionate increases under the category "All Services Less Rent of Shelter"
in the Consumer Price Index published by the United States Department of Labor
or, if such category is no longer published, in a comparable category. Since
the Trustee has the use of the funds being held in the Principal and Interest
Accounts for future distributions, payment of expenses and redemptions and
since such Accounts are non-interest bearing to Unitholders, the Trustee
benefits thereby. Part of the Trustee's compensation for its services to the
Trust is expected to result from the use of these funds. For a discussion of
the services rendered by the Trustee pursuant to its obligations under the
Trust Agreement, see "Rights of Unitholders Reports Provided" and "Trust
Administration".
Insurance Premiums. The cost of the portfolio insurance obtained by the Trust,
if any, is the amount shown in "Summary of Essential Financial Information" in
Part One of this Prospectus. The premium is payable each year that the Trust
retains the Bonds. Premiums, if any, which are Trust obligations, are payable
monthly by the Trustee on behalf of the Trust. As Bonds in the portfolio are
redeemed by their respective issuers or are sold by the Trustee, the amount of
the premium will be reduced in respect of those Bonds no longer owned by and
held in the Trust. If the Trustee exercises the right to obtain permanent
insurance, the premiums payable for such permanent insurance will be paid
solely from the proceeds of the sale of the related Bonds. The premiums for
such permanent insurance with respect to each Bond will decline over the life
of the Bond. The Trust does not incur any expense for insurance which has been
obtained by an issuer of a Bond, since the premium or premiums for such
insurance have been paid by the respective issuers of such bonds. Bonds for
which insurance has been obtained by the issuer from one of the Preinsured
Bond Insurers are not additionally insured by the Trust. See "Objectives and
Securities Selection".
Miscellaneous Expenses. The following additional charges are or may be
incurred by the Trust: (a) fees of the Trustee for extraordinary services, (b)
expenses of the Trustee (including legal and auditing expenses) and of counsel
designated by the Sponsor, (c) various governmental charges, (d) expenses and
costs of any action taken by the Trustee to protect the Trust and the rights
and interests of Unitholders, (e) indemnification of the Trustee for any loss,
liability or expenses incurred by it in the administration of the Trust
without negligence, bad faith or willful misconduct on its part and (f)
expenditures incurred in contacting
Unitholders upon termination of the Trust.
The fees and expenses set forth herein are payable out of the Trust. When such
fees and expenses are paid by or owing to the Trustee, they are secured by a
lien on the portfolio of the Trust. If the balances in the Interest and
Principal Accounts are insufficient to provide for amounts payable by the
Trust, the Trustee has the power to sell Securities to pay such amounts.
INSURANCE ON THE BONDS
Insurance has been obtained by the Trust or by the issuer of such Bonds, or by
a prior owner of such Bonds, or by the Sponsor prior to the deposit of such
Bonds in the Trust guaranteeing prompt payment of interest and principal, when
due, in respect of the Bonds in the Trust. See "Objectives and Securities
Selection". An insurance policy obtained by the Trust, if any, is
non-cancellable and will continue in force so long as the Trust is in
existence, the respective Portfolio Insurer is still in business and the Bonds
described in such policy continue to be held by the Trust. Any portfolio
insurance premium for the Trust, which is an obligation of the Trust, is paid
by the Trust on a monthly basis. Non-payment of premiums on a policy obtained
by the Trust will not result in the cancellation of insurance but will force
the insurer to take action against the Trustee to recover premium payments due
it. The Trustee in turn will be entitled to recover such payments from the
Trust. Premium rates for each issue of Bonds protected by a policy obtained by
the Trust, if any, are fixed for the life of the Trust. The premium for any
Preinsured Bond insurance has been paid by such issuer, by a prior owner of
such Bonds or the Sponsor and any such policy or policies are non-cancellable
and will continue in force so long as the Bonds so insured are outstanding and
the respective Preinsured Bond Insurer remains in business. If the provider of
an original issuance insurance policy is unable to meet its obligations under
such policy or if the rating assigned to the claims-paying ability of any such
insurer deteriorates, the Portfolio Insurers have no obligation to insure any
issue adversely affected by either of the above described events.
The aforementioned portfolio insurance obtained by the Trust, if any,
guarantees the timely payment of principal and interest on the Bonds as they
fall due. For the purposes of insurance obtained by the Trust, "when due"
generally means the stated maturity date for the payment of principal and
interest. However, in the event (a) an issuer of a Bond defaults in the
payment of principal or interest on such Bond, (b) such issuer enters into a
bankruptcy proceeding or (c) the maturity of such Bond is accelerated, the
affected Portfolio Insurer has the option, in its sole discretion, after
receiving notice of the earliest to occur of such a default, bankruptcy
proceeding or acceleration to pay the outstanding principal amount of such
Bond plus accrued interest to the date of such payment and thereby retire the
Bond from the Trust prior to such Bond's stated maturity date. The insurance
does not guarantee the market value of the Bonds or the value of the Units.
Insurance obtained by the Trust, if any, is only effective as to Bonds owned
by and held in the Trust. In the event of a sale of any such Bond by the
Trustee, such insurance terminates as to such Bond on the date of sale.
Pursuant to an irrevocable commitment of the Portfolio Insurers, the Trustee,
upon the sale of a Bond covered under a portfolio insurance policy obtained by
the Trust, has the right to obtain permanent insurance with respect to such
Bond (i.e., insurance to maturity of the Bonds regardless of the indemnity of
the holder thereof) (the "Permanent Insurance") upon the payment of a single
predetermined insurance premium and any expenses related thereto from the
proceeds of the sale of such Bond. Accordingly, any Bond in the Trust is
eligible to be sold on an insured basis. It is expected that the Trustee would
exercise the right to obtain Permanent Insurance only if upon such exercise
the Trust would receive net proceeds (sale of Bond proceeds less the insurance
premium and related expenses attributable to the Permanent Insurance) from
such sale in excess of the sale proceeds if such Bonds were sold on an
uninsured basis. The insurance premium with respect to each Bond eligible for
Permanent Insurance would be determined based upon the insurability of each
Bond as of the Date of Deposit and would not be increased or decreased for any
change in creditworthiness of each Bond.
The Sponsor believes that the Permanent Insurance option provides an advantage
to the Trust in that each Bond insured by a Trust insurance policy may be sold
out of the Trust with the benefits of the insurance attaching thereto. Thus,
the value of the insurance, if any, at the time of sale, can be realized in
the market value of the Bond so sold (which is not the case in connection with
any value attributable to an Insured Trust's portfolio insurance). See "Public
Offering Price". Because any such insurance value may be realized in the
market value of the Bond upon the sale thereof upon exercise of the Permanent
Insurance option, the Sponsor anticipates that (a) in the event the Trust were
to be comprised of a substantial percentage of Bonds in default or significant
risk of default, it is much less likely that the Trust would need at some
point in time to seek a suspension of redemptions of Units than if the Trust
were to have no such option and (b) at the time of termination of the Trust,
if the Trust were holding defaulted Bonds or Bonds in significant risk of
default the Trust would not need to hold such Bonds until their respective
maturities in order to realize the benefits of the Trust's portfolio
insurance.
Except as indicated below, insurance obtained by the Trust, if any, has no
effect on the price or redemption value of Units. It is the present intention
of the Evaluator to attribute a value for such insurance (including the right
to obtain Permanent Insurance) for the purpose of computing the price or
redemption value of Units if the Bonds covered by such insurance are in
default in payment of principal or interest or in significant risk of such
default. The value of the insurance will be the difference between (i) the
market value of a Bond which is in default in payment of principal or interest
or in significant risk of such default assuming the exercise of the right to
obtain Permanent Insurance (less the insurance premium and related expenses
attributable to the purchase of Permanent Insurance) and (ii) the market value
of such Bonds not covered by Permanent Insurance. It is also the present
intention of the Trustee not to sell such Bonds to effect redemptions or for
any other reason but rather to retain them in the portfolio because value
attributable to the insurance cannot be realized upon sale. See "Public
Offering Price" herein for a more complete description of the Trust's method
of valuing defaulted Bonds and Bonds which have a significant risk of default.
Insurance obtained by the issuer of a Bond is effective so long as such Bond
is outstanding. Therefore, any such insurance may be considered to represent
an element of market value in regard to the Bonds thus insured, but the exact
effect, if any, of this insurance on such market value cannot be predicted.
The portfolio insurance policy or policies obtained by the Trust, if any, with
respect to the Bonds in the Trust were issued by one or more of the Portfolio
Insurers. Any other Preinsured Bond insurance policy (or commitment therefor)
was issued by one of the Preinsured Bond Insurers. See "Objectives and
Securities Selection".
AMBAC Indemnity Corporation ("AMBAC Indemnity") is a Wisconsin-domiciled stock
insurance corporation regulated by the Office of the Commissioner of Insurance
of the State of Wisconsin and licensed to do business in 50 states and the
District of Columbia and the Commonwealth of Puerto Rico, with admitted assets
of approximately $936,000,000 (unaudited) and statutory capital of
approximately $1,096,000,000 (unaudited) as of September 30, 1993. Statutory
capital consists of AMBAC Indemnity's policyholders' surplus and statutory
contingency reserve. AMBAC Indemnity is a wholly owned subsidiary of AMBAC
Inc., a 100% publicly-held company. Moody's Investors Service, Inc. and
Standard & Poor's Corporation have both assigned a triple-A claims-paying
ability rating to AMBAC Indemnity.
Copies of AMBAC Indemnity's financial statements prepared in accordance with
statutory accounting standards are available from AMBAC Indemnity. The address
of AMBAC Indemnity's administrative offices and its telephone number are One
State Street Plaza, 17th Floor, New York, New York, 10004 and (212) 668-0340.
AMBAC Indemnity has entered into quota share reinsurance agreement under which
a percentage of the insurance underwritten pursuant to certain municipal bond
insurance programs of AMBAC Indemnity has been and will be assumed by a number
of foreign and domestic unaffiliated reinsurers.
Municipal Bond Investors Assurance Corporation ("MBIA") is the principal
operating subsidiary of MBIA Inc., a New York Stock Exchange listed company.
MBIA, Inc. is not obligated to pay the debts of or claims against MBIA. MBIA
is a limited liability corporation rather than a several liability
association. MBIA is domiciled in the State of New York and licensed to do
business in all fifty states, the District of Columbia and the Commonwealth of
Puerto Rico. As of December 31, 1992, MBIA had admitted assets of $2.6 billion
(audited), total liabilities of $1.7 billion (audited), and total capital and
surplus of $896 million (audited) determined in accordance with statutory
accounting practices prescribed or permitted by insurance regulatory
authorities. As of September 30, 1993, MBIA had admitted assets of $3.0
billion (unaudited), total liabilities of $2.0 billion (unaudited), and total
capital and policyholders' surplus of $951 million (unaudited) determined in
accordance with statutory accounting practices prescribed or permitted by
insurance regulatory authorities. Copies of MBIA's year end financial
statements prepared in accordance with statutory accounting practices are
available from MBIA. The address of MBIA is 113 King Street, Armonk, New York
10504.
Effective December 31, 1989, MBIA Inc. acquired Bond Investors Group, Inc. On
January 5, 1990, MBIA acquired all of the outstanding stock of Bond Investors
Group, Inc., the parent of Bond Investors Guaranty Insurance Company (BIG),
now known as MBIA Insurance Corp. of Illinois. Through a reinsurance
agreement, BIG has ceded all of its net insured risks, as well as its unearned
premium and contingency reserves, to MBIA and MBIA has reinsured BIG's net
outstanding exposure.
Moody's Investors Service, Inc. rates all bond issues insured by MBIA "Aaa"
and short term loans "MIG 1," both designated to be of the highest quality.
Standard and Poor's Corporation rates all new issues insured by MBIA "AAA"
Prime Grade.
The Moody's Investors Service rating of MBIA should be evaluated independently
of the Standard & Poor's Corporation rating of MBIA. No application has been
made to any other rating agency in order to obtain additional ratings on the
Bonds. The ratings reflect the respective rating agency's current assessment
of the creditworthiness of MBIA and its ability to pay claims on its policies
of insurance. Any further explanation as to the significance of the above
ratings may be obtained only from the applicable rating agency.
The above ratings are not recommendations to buy, sell or hold the Bonds, and
such ratings may be subject to revision or withdrawal at any time by the
rating agencies. Any downward revision or withdrawal of either or both ratings
may have an adverse effect on the market price of the Bonds.
Financial Guaranty ("Financial Guaranty" or "FGIC") is a wholly-owned
subsidiary of FGIC Corporation (the "Corporation"), a Delaware holding
company. The Corporation is a wholly-owned subsidiary of General Electric
Capital Corporation ("GECC"). Neither the Corporation nor GECC is obligated to
pay the debts of or the claims against Financial Guaranty. Financial Guaranty
is domiciled in the State of New York and is subject to regulation by the
State of New York Insurance Department. As of September 30, 1993, the total
capital and surplus of Financial Guaranty was approximately $744,722,000.
Copies of Financial Guaranty's financial statements, prepared on the basis of
statutory accounting principles, and the Corporation's financial statements,
prepared on the basis of statutory accounting principles, and the Corporations
financial statements, prepared on the basis of generally accepted accounting
principles, may be obtained by writing to Financial Guaranty at 115 Broadway,
New York, New York 10006, Attention: Communications Department, telephone
number: (212) 312-3000 or to the New York State Insurance Department at 160
West Broadway, 18th Floor, New York, New York 10013, Attention: Property
Companies Bureau, telephone number: (212) 602-0389.
In addition, Financial Guaranty Insurance Company is currently authorized to
write insurance in all 50 states and the District of Columbia.
Financial Security Assurance ("Financial Security" or "FSA") is a monoline
insurance company incorporated on March 16, 1984 under the laws of the State
of New York. The operations of Financial Security commenced on July 25, 1985,
and Financial Security received its New York State Insurance license on
September 23, 1985. Financial Security and its two wholly owned subsidiaries
are licensed to engage in the financial guaranty insurance business in 49
states, the District of Columbia and Puerto Rico.
Financial Security and its subsidiaries are engaged exclusively in the
business of writing financial guaranty insurance, principally in respect of
asset-backed and other collateralized securities offered in domestic and
foreign markets. Financial Security and its subsidiaries also write financial
guaranty insurance in respect of municipal and other obligations and reinsure
financial guaranty insurance policies written by other leading insurance
companies. In general, financial guaranty insurance consists of the issuance
of a guaranty of scheduled payments of an issuer's securities, thereby
enhancing the credit rating of those securities, in consideration for payment
of a premium to the insurer.
Financial Security is 91.6% owned by US West, Inc. and 8.4% owned by The Tokio
Marine and Fire Insurance Co., Ltd. ("Tokio Marine"). Neither U S WEST, Inc.
nor Tokio Marine is obligated to pay the debts of or the claims against
Financial Security. Financial Security is domiciled in the State of New York
and is subject to regulation by the State of New York Insurance Department. As
of March 1, 1993, the total policyholders' surplus and contingency reserves
and the total unearned premium reserve, respectively, of Financial Security
and its consolidated subsidiaries were, in accordance with generally accepted
accounting principles, approximately $479,110,000 (unaudited) and $231,686,000
(unaudited), and the total shareholders' equity and the total unearned premium
reserve, respectively, of Financial Security and its consolidated subsidiaries
were, in accordance with generally accepted accounting principles,
approximately $628,119,000 (unaudited) and $202,493,000 (unaudited). Copies of
Financial Security's financial statements may be obtained by writing to
Financial Security at 350 Park Avenue, New York, New York 10022, Attention:
Communications Department. Its telephone number is (212) 826-0100.
Pursuant to an intercompany agreement, liabilities on financial guaranty
insurance written by Financial Security or either of its subsidiaries are
reinsured among such companies on an agreed-upon percentage substantially
proportional to their respective capital, surplus and reserves, subject to
applicable statutory risk limitations. In addition, Financial Security
reinsures a portion of its liabilities under certain of its financial guaranty
insurance policies with unaffiliated reinsurers under various quota share
treaties and on a transaction-by-transaction basis. Such reinsurance is
utilized by Financial Security as a risk management device and to comply with
certain statutory and rating agency requirements; it does not alter or limit
Financial Security's obligations under any financial guaranty insurance
policy.
Financial Security's claims-paying ability is rated "Aaa" by Moody's Investors
Service, Inc., and "AAA" by Standard & Poor's Corporation, Nippon Investors
Service Inc., Duff & Phelps Inc. and Australian Ratings Pty. Ltd. Such ratings
reflect only the views of the respective rating agencies, are not
recommendations to buy, sell or hold securities and are subject to revision or
withdrawal at any time by such rating agencies.
Capital Guaranty Insurance Company ("Capital Guaranty") was incorporated in
Maryland on June 25, 1986, and is a wholly-owned subsidiary of Capital
Guaranty Corporation, a Maryland insurance holding company.
Capital Guaranty Corporation is owned by the following investors:
Constellation Investments, Inc., an affiliate of Baltimore Gas and Electric;
Fleet/Norstar Financial Group, Inc.; Safeco Corporation; Sibag Finance
Corporation, an affiliate of Siemens A.G.; and United States Fidelity and
Guaranty Company and management.
Capital Guaranty, headquartered in San Francisco, is a monoline financial
guaranty insurer engaged in the underwriting and development of financial
guaranty insurance. Capital Guaranty insures general obligation, tax supported
and revenue bonds structured as tax-exempt and taxable securities as well as
selectively insures taxable corporate/asset backed securities. Standard &
Poor's Corporation rates the claims paying ability of Capital Guaranty "AAA".
Capital Guaranty's insured portfolio currently includes over $9 billion in
total principal and interest insured. As of September 30, 1992, the total
policyholders' surplus of Capital Guaranty was $113,000,000 (unaudited), and
the total admitted assets were $220,000,000 (unaudited) as reported to the
Insurance Department of the State of Maryland. Financial statements for
Capital Guaranty Insurance Company, that have been prepared in accordance with
statutory insurance accounting standards, are available upon request. The
address of Capital Guaranty's headquarters and its telephone number are
Steuart Tower, 22nd Floor, One Market Plaza, San Francisco, CA 94105-1413 and
(415) 995-8000.
CapMAC is a New York-domiciled monoline stock insurance company which engages
only in the business of financial guarantee and surety insurance. CapMAC is
licensed in 48 states in addition to the District of Columbia, the
Commonwealth of Puerto Rico and the territory of Guam. CapMAC insures
structured asset-backed, corporate and other financial obligations in the
domestic and foreign capital markets. CapMAC may also provide financial
guarantee reinsurance for structured asset-backed, corporate and municipal
obligations written by other major insurance companies.
CapMAC's claims-paying ability is rated "Aaa" by Moody's Investors Service,
Inc. ("Moody's"), "AAA" by Standard & Poor's Corporation ("Standard &
Poor's"), and "AAA" by Duff & Phelps, Inc. ("Duff & Phelps"). Such ratings
reflect only the views of the respective rating agencies, are not
recommendations to buy, sell or hold securities and are subject to revision or
withdrawal at any time by such rating agencies.
CapMAC is wholly owned by CapMAC Holdings Inc. ("Holdings"), a company that is
owned by a group of institutional and other investors, including CapMAC's
management and employees. CapMAC commenced operations on December 24, 1987 as
an indirect, wholly-owned subsidiary of Citibank (New York State), a
wholly-owned subsidiary of Citicorp. On June 25, 1992, Citibank (New York
State) sold CapMAC to Holdings (the "Sale").
Neither Holdings nor any of its stockholders is obligated to pay any claims
under any surety bond issued by CapMAC or any debts of CapMAC or to make
additional capital contributions.
CapMAC is regulated by the Superintendent of Insurance of the State of New
York. In addition, CapMAC is subject to regulation by the insurance
departments of the other jurisdictions in which it is licensed. CapMAC is
subject to periodic regulatory examinations by the same regulatory
authorities.
CapMAC is bound by insurance laws and regulations regarding capital transfers,
limitations upon dividends, investment of assets, changes in control,
transactions with affiliates and consolidations and acquisitions. The amount
of exposure per risk that CapMAC may retain, after giving effect to
reinsurance, collateral or other security, is also regulated. Statutory and
regulatory accounting practices may prescribe appropriate rates at which
premiums are earned and the levels of reserves required. In addition, various
insurance laws restrict the incurrence of debt, regulate permissible
investments of reserves, capital and surplus, and govern the form of surety
bonds.
CapMAC's obligations under the Surety Bond(s) may be reinsured. Such
reinsurance does not relieve CapMAC of any of its obligations under the Surety
Bond(s).
THE [SURETY BOND(S)] [IS] [ARE] NOT COVERED BY THE PROPERTY/CASUALTY INSURANCE
SECURITY FUND SPECIFIED IN ARTICLE 76 OF THE NEW YORK INSURANCE LAW.
In connection with the Sale, Holdings and CapMAC entered into an Ownership
Policy Agreement (the "Ownership Policy Agreement"), which sets forth
Holdings' intent with respect to its ownership and control of CapMAC and
provides certain policies and agreements with respect to Holdings' exercise of
its control of CapMAC. In the Ownership Policy Agreement, Holdings has agreed
that, during the term of the Ownership Policy Agreement, it will not, and will
not permit any stockholder of Holdings to enter into any transaction the
result of which would be a change of control (as defined in the Ownership
Policy Agreement) of CapMAC, unless the long term debt obligations or
claims-paying ability of the person which would control CapMAC after such
transaction or its direct or indirect parent are rated in a high investment
grade category, unless Holdings or CapMAC has confirmed that CapMAC's
claims-paying ability rating by Moody's (the "Rating") in effect immediately
prior to any such change of control will not be downgraded by Moody's upon
such change of control or unless such change of control occurs as a result of
a public offering of Holdings' capital stock.
In addition, the Ownership Policy Agreement includes agreements (i) not to
change the "zero-loss" underwriting standards or policies and procedures of
CapMAC in a manner that would materially and adversely affect the risk profile
of CapMAC's book of business, (ii) that CapMAC will adhere to the aggregate
leverage limitations and maintain capitalization levels considered by Moody's
from time to time as consistent with maintaining CapMAC's Rating and (iii)
that until CapMAC's statutory capital surplus and contingency reserve
("qualified statutory capital") equal$250 million, CapMAC will maintain a
specified amount of qualified statutory capital in excess of the amount of
qualified statutory capital that CapMAC is required at such time to maintain
under the aggregate leverage limitations set forth in Article 69 of the New
York Insurance Law.
The Ownership Policy Agreement will terminate on the earlier of the date on
which a change of control of CapMAC occurs and the date on which CapMAC and
Holdings agree in writing to terminate the Ownership Policy Agreement;
provided that, CapMAC or Holdings has confirmed that CapMAC's Rating in effect
immediately prior to any such termination will not be downgraded upon such
termination.
As at December 31, 1991 and 1990, CapMAC had statutory capital and surplus of
approximately $232 million and $223 million, respectively, and had not
incurred any debt obligations. On June 26, 1992, CapMAC made a special
distribution (the "Distribution") to Holdings in connection with the Sale in
an aggregate amount that caused the total of CapMAC's statutory capital and
surplus to decline to approximately $150 million. Holdings applied
substantially all of the proceeds of the Distribution to repay debt owed to
Citicorp that was incurred in connection with the capitalization of CapMAC. As
of June 30, 1992, CapMAC had statutory capital and surplus of approximately
$150 million and had not incurred any debt obligations. In addition, at June
30, 1992 CapMAC had a statutory contingency reserve of approximately $13
million, which is also available to cover claims under surety bonds issued by
CapMAC. Article 69 of the New York State Insurance Law requires that CapMAC
establishes and maintains the contingency reserve.
In addition to its capital (including contingency reserve) and other
reinsurance available to pay claims under its surety bonds, on June 25, 1992,
CapMAC entered into a Stop Loss Reinsurance Agreement (the "Stop Loss
Agreement") with Winterthur Swiss Insurance Company (the "Reinsurer"), which
is rated AAA by Standard & Poor's and Aaa by Moody's, pursuant to which the
Reinsurer will be required to pay any losses incurred by CapMAC during the
term of the Stop Loss Agreement on the surety bonds covered under the Stop
Loss Agreement in excess of a specified amount of losses incurred by CapMAC
under such surety bonds (such specified amount initially being $100 million
and increasing annually by an amount equal to 66-2/3% of the increase in
CapMAC's statutory capital and surplus) up to an aggregate limit payable under
the Stop Loss Agreement of $50 million. The Stop Loss Agreement has an initial
term of seven years, is extendable for one-year periods and is subject to
early termination upon the occurrence of certain events.
CapMAC also has available a $100,000,000 standby corporate liquidity facility
(the "Liquidity Facility") provided by a syndicate of banks rated A1+ /P1 by
Standard & Poor's and Moody's, respectively, having a term of 360 days. Under
the Liquidity Facility CapMAC will be able, subject to satisfying certain
conditions, to borrow funds from time to time in order to enable it to fund
any claim payments or payments made in settlement or mitigation of claims
payments under its surety bonds, including the Surety Bond(s).
Copies of CapMAC's financial statements prepared in accordance with statutory
accounting standards, which differ from generally accepted accounting
principles, and filed with the Insurance Department of the State of New York
are available upon request. CapMAC is located at 885 Third Avenue, New York,
New York 10022, and its telephone number is (212) 755-1155.
In order to be in the Trust, Bonds must be insured by one of the Preinsured
Bond Insurers or be eligible for the insurance being obtained by the Trust. In
determining eligibility for insurance, the Preinsured Bond Insurers; AMBAC
Indemnity and Financial Guaranty, have applied their own standards which
correspond generally to the standards they normally use in establishing the
insurability of new issues of municipal bonds and which are not necessarily
the criteria used in the selection of Bonds by the Sponsor. To the extent the
standards of the Preinsured Bond Insurers; AMBAC Indemnity and Financial
Guaranty, are more restrictive than those of the Sponsor, the previously
stated Trust investment criteria have been limited with respect to the Bonds.
This decision is made prior to the Date of Deposit, as debt obligations not
eligible for insurance are not deposited in the Trust. Thus, all Bonds in the
portfolio are insured either by the Trust or by the issuer of the Bonds, by a
prior owner of such Bonds, or by the Sponsor prior to the deposit of such
Bonds in the Trust.
Because the Bonds are insured by one of the Portfolio Insurers or one of the
Preinsured Bond Insurers as to the timely payment of principal and interest,
when due, and on the basis of the various reinsurance agreements in effect,
Standard & Poor's Corporation has assigned to the Units of the Trust its "AAA"
investment rating. See "Description of Bond Ratings". The obtaining of this
rating by the Trust should not be construed as an approval of the offering of
the Units by Standard & Poor's Corporation or as a guarantee of the market
value of the Trust or of the Units.
The Estimated Current Return and the Estimated Long-Term Return on an
identical portfolio without the insurance obtained by the Trust would have
been higher than the Estimated Current Return and the Estimated Long-Term
Return on the Securities in the Trust after payment of the insurance premium.
An objective of portfolio insurance obtained by the Trust is to obtain a
higher yield on the Trust portfolio than would be available if all the
Securities in such portfolio had Standard & Poor's Corporation "AAA" rating
and yet at the same time to have the protection of insurance of prompt payment
of interest and principal, when due, on the Bonds. There is, of course, no
certainty that this result will be achieved. Preinsured bonds in the Trust
which have been insured by the issuer (all of which are rated "AAA" by
Standard & Poor's Corporation) may or may not have a higher yield than
uninsured bonds rated "AAA" by Standard & Poor's Corporation. In selecting
such Bonds for the portfolio, the Sponsor has applied the criteria
hereinbefore described.
In the event of nonpayment of interest or principal, when due, in respect of a
Bond, AMBAC Indemnity shall make such payment not later than 30 days and
Financial Guaranty shall make such payment within one business day after the
respective insurer has been notified that such nonpayment has occurred or is
threatened (but not earlier than the date such payment is due). The insurer,
as regards any payment it may make, will succeed to the rights of the Trustee
in respect thereof. All policies issued by the Portfolio Insurers and the
Preinsured Bond Insurers are substantially identical insofar as obligations to
the Trust are concerned.
The Internal Revenue Service has issued a letter ruling which holds in effect
that insurance proceeds representing maturing interest on defaulted municipal
obligations paid to holders of insured bonds, under policy provisions
substantially identical to the policies described herein, will be excludable
from Federal gross income under Section 103(a)(1) of the Internal Revenue Code
to the same extent as if such payments were made by the issuer of the
municipal obligations. Holders of Units in the Trust should discuss with their
tax advisers the degree of reliance which they may place on this letter
ruling. However, Chapman and Cutler, counsel for the Sponsor, has given an
opinion to the effect such payment of proceeds would be excludable from
Federal gross income if, and to the same extent as, such interest would have
been so excludable if paid by the issuer of the defaulted obligations. See
"Tax Status".
Each Portfolio Insurer is subject to regulation by the department of insurance
in each state in which it is qualified to do business. Such regulation,
however, is no guarantee that each Portfolio Insurer will be able to perform
on its contracts of insurance in the event a claim should be made thereunder
at some time in the future. At the date hereof, it is reported that no claims
have been submitted or are expected to be submitted to any of the Portfolio
Insurers which would materially impair the ability of such company to meet its
commitments pursuant to any contract of bond or portfolio insurance.
The information relating to each Portfolio Insurer has been furnished by such
companies. The financial information with respect to each Portfolio Insurer
appears in reports filed with state insurance regulatory authorities and is
subject to audit and review by such authorities. No representation is made
herein as to the accuracy or adequacy of such information or as to the absence
of material adverse changes in such information subsequent to the dates
thereof.
TAX STATUS
At the time of the closing for each Trust, Chapman and Cutler, counsel for the
Sponsor, rendered an opinion substantially to the effect that:
the Trust is not an association taxable as a corporation for Federal income
tax purposes and interest and accrued original issue discount on Securities
which is excludable from gross income under the Internal Revenue Code of 1986
(the \xd2 Code\xd3 ) will retain its status, except to the extent such
interest is subject to the alternative minimum tax and the environmental tax
(the "Superfund Tax") as noted below, when distributed to Unitholders;
each Unitholder is considered to be the owner of a pro rata portion of the
Trust under subpart E, subchapter J of chapter 1 of the Internal Revenue Code
of 1986 and will have a taxable event when the Trust disposes of a Security,
or when the Unitholder redeems or sells his Units. Unitholders must reduce the
tax basis of their Units for their share of accrued interest received by the
Trust, if any, on Securities delivered after the Unitholders pay for their
Units to the extent that such interest accrued on such Securities during the
period from the Unitholder's settlement date to the date such Securities are
delivered to the Trust and, consequently, such Unitholders may have an
increase in taxable gain or reduction in capital loss upon the disposition of
such Units. Gain or loss upon the sale or redemption of Units is measured by
comparing the proceeds of such sale or redemption with the adjusted basis of
the Units. If the Trustee disposes of Bonds (whether by sale, payment on
maturity, redemption or otherwise), gain or loss is recognized to the
Unitholder. The amount of any such gain or loss is measured by comparing the
Unitholder's pro rata share of the total proceeds from such disposition with
the Unitholder's basis for his or her fractional interest in the asset
disposed of. In the case of a Unitholder who purchases Units, such basis
(before adjustment for earned original issue discount and amortized bond
premium, if any) is determined by apportioning the cost of the Units among
each of the Trust assets ratably according to value as of the date of
acquisition of the Units. The tax cost reduction requirements of said Code
relating to amortization of bond premium may, under some circumstances, result
in the Unitholder realizing a taxable gain when his Units are sold or redeemed
for an amount equal to his original cost;
any proceeds paid under an insurance policy issued to the Trust by one of the
Portfolio Insurers with respect to the Bonds which represent maturing interest
on defaulted obligations held by the Trustee will be excludable from Federal
gross income if, and to the same extent as, such interest would have been so
excludable if paid by the issuer of the defaulted obligations; and
any proceeds paid under individual policies obtained by issuers of Bonds which
represent maturing interest on defaulted obligations held by the Trustee will
be excludable from Federal gross income if, and to the same extent as, such
interest would have been so excludable if paid in the normal course by the
issuer of the defaulted obligations.
Sections 1288 and 1272 of the Internal Revenue Code of 1986 (the "Code")
provide a complex set of rules governing the accrual of original issue
discount. These rules provide that original issue discount accrues either on
the basis of a constant compound interest rate or ratably over the term of the
Bond, depending on the date the Bond was issued. In addition, special rules
apply if the purchase price of a Bond exceeds the original issue price plus
the amount of original issue discount which would have previously accrued
based upon its issue price (its "adjusted issue price") to prior owners. The
application of these rules will also vary depending on the value of the Bond
on the date a Unitholder acquires his Units and the price the Unitholder pays
for his Units. Investors with questions regarding these Code sections should
consult with their tax advisers.
"The Revenue Reconciliation Act of 1993" (the "Tax Act") subjects tax-exempt
bonds to the market discount rules of the Code effective for bonds purchased
after April 30,1993. In general, market discount is the amount (if any) by
which the stated redemption price at maturity exceeds an investor's purchase
price (except to the extent that such difference, if any, is attributable to
original issue discount not yet accrued). Market discount can arise based on
the price a Trust pays for Bonds or the price a Unitholder pays for his or her
Units. Under the Tax Act, accretion of market discount is taxable as ordinary
income; under prior law the accretion had been treated as capital gain. Market
discount that accretes while a Trust holds a Bond would be recognized as
ordinary income by the Unitholders when principal payments are received on the
Bond, upon sale or at redemption (including early redemption), or upon the
sale or redemption of his or her Units, unless a Unitholder elects to include
market discount in taxable income as it accrues. The market discount rules are
complex and Unitholders should consult their tax advisers regarding these
rules and their application.
In the case of certain corporations, the alternative minimum tax and the
Superfund Tax for taxable years beginning after December 31, 1996 depend upon
the corporation's alternative minimum taxable income, which is the
corporation's taxable income with certain adjustments. One of the adjustment
items used in computing the alternative minimum taxable income and the
Superfund Tax of a corporation (other than an S Corporation, Regulated
Investment Company, Real Estate Investment Trust, or REMIC) is an amount equal
to 75% of the excess of such corporation's "adjusted current earnings" over an
amount equal to its alternative minimum taxable income (before such adjustment
item and the alternative minimum tax net operating loss deduction). "Adjusted
current earnings" includes all tax exempt interest, including interest on the
Bonds in the Trust. Corporate unitholders are urged to consult their tax
advisers with respect to the particular tax consequences to them resulting
from purchasing Units of the Trust, including the corporate alternative
minimum tax, the Superfund Tax and the branch profits tax imposed by Section
884 of the Co de.
Counsel for the Sponsor has also advised that under Section 265 of the Code,
interest on indebtedness incurred or continued to purchase or carry Units of
the Trust is not deductible for Federal income tax purposes. The Internal
Revenue Service has taken the position that such indebtedness need not be
directly traceable to the purchase or carrying of Units (however, these rules
generally do not consider interest on indebtedness incurred to purchase or
improve a personal residence). Also, under Section 265 of the Code, certain
financial institutions that acquire Units would generally not be able to
deduct any of the interest expense attributable to ownership of such Units.
Investors with questions regarding this issue should consult with their tax
advisers.
In the case of certain of the Bonds in the Trust, the opinions of bond counsel
indicate that interest on such securities received by a "substantial user" of
the facilities being financed with the proceeds of these securities, or
persons related thereto, for periods while such securities are held by such a
user or related person, will not be exempt from Federal income taxes, although
interest on such securities received by others would be exempt from Federal
income taxes. "Substantial user" and "related person" are defined under U.S.
Treasury Regulations. Any person who believes he or she may be a substantial
user or related person as so defined should contact his or her tax adviser.
At the time of closing, special counsel to the Trust for New York tax matters,
have rendered opinions substantially to the effect that the Trust is not an
association taxable as a corporation and the income of the Trust will be
treated as the income of the Unitholders under the then existing income tax
laws of the State and City of New York.
All statements in the Prospectus concerning exclusion from gross income for
Federal, state or other taxes are the opinions of counsel and are to be so
construed.
At the respective times of issuance of the Bonds, opinions relating to the
validity thereof and to the exclusion of interest thereon from Federal gross
income are rendered by bond counsel to the respective issuing authorities.
Neither the Sponsor nor Chapman and Cutler has made any special review for the
Trust of the proceedings relating to the issuance of the Bonds or of the basis
for such opinions.
In the case of corporations, the alternative tax rate applicable to long-term
capital gains is 34%, effective for long-term capital gains realized after
December 31, 1986. For taxpayers other than corporations, net capital gains
are subject to a maximum marginal stated tax rate of 28 percent. However, it
should be noted that legislative proposals are introduced from time to time
that affect tax rates and could affect relative differences at which ordinary
income and capital gains are taxed. Under the Code, taxpayers must disclose to
the Internal Revenue Service the amount of tax-exempt interest earned during
the year.
Section 86 of the Internal Revenue Code provides, in general, that fifty
percent of Social Security benefits are includible in gross income to the
extent that the sum of "modified adjusted gross income" plus fifty percent of
the Social Security benefits received exceeds a "base amount". The base amount
is $25,000 for unmarried taxpayers, $32,000 for married taxpayers filing a
joint return and zero for married taxpayers who do not live apart at all times
during the taxable year and who file separate returns. Modified adjusted gross
income is adjusted gross income determined without regard to certain otherwise
allowable deductions and exclusions from gross income and by including tax
exempt interest. To the extent that Social Security benefits are includable in
gross income, they will be treated as any other item of gross income.
In addition, Under the Tax Act, for taxable years beginning after December
3'1,1993, Up to 85% of Social Security benefits are includible in gross income
to the extent that the sum of "modified adjusted gross income" plus 50% of
Social Security benefits received exceeds an "adjusted base amount." The
adjusted base amount is $34,000 for unmarried taxpayers, $44,ooo for married
taxpayers filing a joint return, and zero for married taxpayers who do not
live apart at all times during the
taxable year and who file separate returns.
Although tax-exempt interest is included in modified adjusted gross income
solely for the purpose of determining what portion, if any, of Social Security
benefits will be included in gross income, no tax-exempt interest, including
that received from the Trust, will be subject to tax. A taxpayer whose
adjusted gross income already exceeds the base amount must include fifty
percent of his Social Security benefits in gross income whether or not he
receives any tax-exempt interest. A taxpayer whose modified adjusted gross
income (after inclusion of tax-exempt interest) does not exceed the base
amount need not include any Social Security benefits in gross income.
PUBLIC OFFERING
General. Units are offered at the Public Offering Price. In the secondary
market the Public Offering Price is based on the aggregate bid price of the
Securities in the Trust and includes a sales charge determined in accordance
with the table set forth below, which is based upon the dollar weighted
average maturity of each trust. In addition, for Insured Municipals Income
Trust, 152nd Insured Multi-Series and subsequent series' and Insured
Municipals Income Trust and Investors' Quality Tax-Exempt Trust, Multi-Series
213 and subsequent series', the Public Offering Price will also include
Purchased Interest. For purposes of computation, Bonds will be deemed to
mature on their expressed maturity dates unless: (a) the Bonds have been
called for redemption or funds or securities have been placed in escrow to
redeem them on an earlier call date, in which case such call date will be
deemed to be the date upon which they mature; or (b) such Bonds are subject to
a "mandatory tender", in which case such mandatory tender will be deemed to be
the date upon which they mature.
The effect of this method of sales charge computation will be that different
sales charge rates will be applied to each Trust based upon the dollar
weighted average maturity of such Trust's Portfolio, in accordance with the
following schedule:
Years To Maturity Sales Charge Years To Maturity Sales Charge
1 1.523% 9 4.712%
2 2.041 10 4.932
3 2.564 11 4.932
4 3.199 12 4.932
5 3.842 13 5.374
6 4.058 14 5.374
7 4.275 15 5.374
8 4.493 16 to 30 6.045
The sales charges in the above table are expressed as a percentage of the
aggregate bid prices of the securities in the Trust. Expressed as a percent of
the Public Offering Price (excluding Purchased Interest for those Trusts which
contain Purchased Interest), the sales charge on a Trust consisting entirely
of a portfolio of Bonds with 15 years to maturity would be 5.10%.
THE FOLLOWING SECTION: "ACCRUED INTEREST (ACCRUED INTEREST TO CARRY)," APPLIES
TO INSURED MUNICIPALS INCOME TRUST, 151st INSURED MULTI-SERIES AND ALL PRIOR
SERIES, AND TO INSURED MUNICIPALS INCOME TRUST AND INVESTORS' QUALITY
TAX-EXEMPT TRUST, MULTI-SERIES 212 AND ALL PRIOR SERIES ONLY.
ACCRUED INTEREST (ACCRUED INTEREST TO CARRY)
Accrued interest to carry consists of two elements. The first element arises
as a result of accrued interest which is the accumulation of unpaid interest
on a bond from the last day on which interest thereon was paid. Interest on
Securities in each Trust is actually paid either monthly, quarterly, if
applicable, or semi-annually to such Trust. However, interest on the
Securities in each Trust is accounted for daily on an accrual basis. Because
of this, each Trust always has an amount of interest earned but not yet
collected by the Trustee because of coupons that are not yet due. For this
reason, the Public Offering Price will have added to it the proportionate
share of accrued and undistributed interest to the date of settlement.
The second element of accrued interest to carry arises because of the
structure of the Interest Account. The Trustee has no cash for distribution to
Unitholders of a Trust until it receives interest payments on the Securities
in such Trust. The Trustee is obligated to provide its own funds, at times, in
order to advance interest distributions. The Trustee will recover these
advancements when such interest is received. Interest Account balances are
established so that it will not be necessary on a regular basis for the
Trustee to advance its own funds in connection with such interest
distributions. The Interest Account balances are also structured so that there
will generally be positive cash balances and since the funds held by the
Trustee may be used by it to earn interest thereon, it benefits thereby. If a
Unitholder sells or redeems all or a portion of his Units or if the Bonds in a
Trust are sold or otherwise removed or if a Trust is liquidated, he will
receive at that time his proportionate share of the accrued interest to carry
computed to the settlement date in the case of sale or liquidation and to the
date of tender in the case of redemption.
THE FOLLOWING SECTION: "PURCHASED AND ACCRUED INTEREST," APPLIES TO INSURED
MUNICIPALS INCOME TRUST, 152nd INSURED MULTI-SERIES AND ALL SUBSEQUENT SERIES,
AND TO INSURED MUNICIPALS INCOME TRUST AND INVESTORS' QUALITY TAX-EXEMPT
TRUST, MULTI-SERIES 213 AND ALL SUBSEQUENT SERIES ONLY.
PURCHASED AND ACCRUED INTEREST
Purchased Interest. Purchased Interest is a portion of the unpaid interest
that has accrued on the Securities from the later of the last payment date on
the Securities or the date of issuance thereof through the First Settlement
Date and is included in the calculation of the Public Offering Price.
Purchased Interest will be distributed to Unitholders as Units are redeemed or
Securities mature or are called. See "Summary of Essential Financial
Information" in Part One of this Prospectus for the amount of Purchased
Interest per Unit for each Trust. Purchased Interest is an element of the
price Unitholders will receive in connection with the sale or redemption of
Units prior to the termination of a Trust.
Accrued Interest. Accrued Interest is an accumulation of unpaid interest on
securities which generally is paid semi-annually, although a Trust accrues
such interest daily. Because of this, a Trust always has an amount of interest
earned but not yet collected by the Trustee. For this reasons, the Public
Offering Price of Units will have added to it the proportionate share of
accrued interest to the date of settlement. Unitholders will receive on the
next distribution date of a Trust the amount, if any, of accrued interest paid
on their Units.
As indicated in "Purchased Interest", accrued interest as of the First
Settlement Date includes Purchased Interest. In an effort to reduce the amount
of Purchased Interest which would otherwise have to be paid by Unitholders,
the Trustee may advance a portion of such accrued interest to the Sponsor as
the Unitholder of record as of the First Settlement Date. Consequently, the
amount of accrued interest to be added to the Public Offering Price of Units
will include only accrued interest from the First Settlement Date to the date
of settlement (other than the Purchased Interest already included therein),
less any distributions from the Interest Account subsequent to the First
Settlement Date. See "DistributionsDistribution of Interest and Principal."
Because of the varying interest payment dates of the Securities, accrued
interest at any point in time will be greater than the amount of interest
actually received by a Trust and distributed to Unitholders. If a Unitholder
sells or redeems all or a portion of his Units, he will be entitled to receive
his proportionate share of the Purchased Interest and accrued interest from
the purchaser of his Units. Since the Trustee has the use of the funds
(including Purchased Interest) held in the Interest Account for distributions
to Unitholders and since such Account is non-interest-bearing to Unitholders,
the Trustee benefits thereby.
Offering Price. The Public Offering Price of the Units will vary from the
amounts stated under "Summary of Essential Financial Information" in Part One
of this Prospectus in accordance with fluctuations in the prices of the
underlying Securities in the Trust. The price of the Units as of the opening
of business on the date of Part One of this Prospectus was determined by
adding to the determination of the aggregate bid price of the Bonds the amount
of the sales charge expressed as a percentage of the aggregate bid price of
the Securities plus Purchased Interest for those Trusts which contain
Purchased Interest, and dividing the sum so obtained by the number of Units
outstanding. This computation produced a gross profit equal to the sales
charge expressed as a percentage of the Public Offering Price (excluding
Purchased Interest). For secondary market purposes an appraisal and adjustment
with respect to the Trust will be made by the Evaluator as of 4:00 P.M.
Eastern time on days on which the New York Stock Exchange is open for each day
on which any Unit of the Trust is tendered for redemption, and it shall
determine the aggregate value of the Trust as of 4:00 P.M. Eastern time on
such other days as may be necessary.
The aggregate price of the Securities in the Trust has been and will be
determined on the basis of bid prices: (a) on the basis of current market
prices for the Securities obtained from dealers or brokers who customarily
deal in bonds comparable to those held by the Trust; (b) if such prices are
not available for any particular Securities, on the basis of current market
prices for comparable bonds; (c) by causing the value of the Securities to be
determined by others engaged in the practice of evaluation, quoting or
appraising comparable bonds; or (d) by any combination of the above. Market
prices of the Securities will generally fluctuate with changes in market
interest rates. Unless Bonds are in default in payment of principal or
interest or in significant risk of such default, the Evaluator will not
attribute any value to the insurance obtained by the Trust.
The Evaluator will consider in its evaluation of Bonds which are in default in
payment of principal or interest or, in the Sponsor's opinion, in significant
risk of such default (the "Defaulted Bonds") the value of the insurance
guaranteeing interest and principal payments. The value of the insurance will
be equal to the difference between (i) the market value of Defaulted Bonds
assuming the exercise of the right to obtain Permanent Insurance (less the
insurance premiums and related expenses attributable to the purchase of
Permanent Insurance) and (ii) the market value of such Defaulted Bonds not
covered by Permanent Insurance. In addition, the Evaluator will consider the
ability of the affected Portfolio Insurer to meet its commitments under any
Trust insurance policy, including the commitments to issue Permanent
Insurance. It is the position of the Sponsor that this is a fair method of
valuing the Bonds and the insurance obtained by the Trust and reflects a
proper valuation method in accordance with the provisions of the Investment
Company Act of 1940.
Although payment is normally made five business days following the order for
purchase, payment may be made prior thereto. However, delivery of certificates
representing Units so ordered will be made five business days following such
order or shortly thereafter. A person will become the owner of Units on the
date of settlement provided payment has been received. Cash, if any, made
available to the Sponsor prior to the date of settlement for the purchase of
Units may be used in the Sponsor's business and may be deemed to be a benefit
to the Sponsor, subject to the limitations of the Securities Exchange Act of
1934. See "Rights of Unitholders-Redemption of Units" for information
regarding the ability to redeem Units ordered for purchase.
Unit Distribution. Units repurchased in the secondary market, if any, may be
offered by this Prospectus at the secondary Public Offering Price in the
manner described.
Broker-dealers or others will be allowed a concession or agency commission in
connection with secondary market transactions in the amount of 70% of the
applicable sales charge as determined using the table found in "Public
Offering General". Certain commercial banks are making Units of the Trust
available to their customers on an agency basis. A portion of the sales charge
(equal to the agency commission referred to above) is retained by or remitted
to the banks. Under the Glass-Steagall Act, banks are prohibited from
underwriting Trust Units; however, the Glass-Steagall Act does permit certain
agency transactions and the banking regulators have not indicated that these
particular agency transactions are not permitted under such Act. In addition,
state securities laws on this issue may differ from the interpretations of
federal law expressed herein and banks and financial institutions may be
required to register as dealers pursuant to state law. The minimum purchase in
the secondary market will be one Unit.
Broker-dealers of the Trusts and/or others may be eligible to participate in a
program in which such firms receive from the Sponsor a nominal award for each
of their registered representatives who have sold a minimum number of units of
unit investment trusts created by the Sponsor during a specified time period.
In addition, at various times the Sponsor may implement other programs under
which the sales forces of brokers, dealers, and/or others may be eligible to
win other nominal awards for certain sales efforts, or under which the Sponsor
will reallow to any such brokers, dealers, and/or others that sponsor sales
contests or recognition programs conforming to criteria established by the
Sponsor, or participate in sales programs sponsored by the Sponsor, an amount
not exceeding the total applicable sales charges on the sales generated by
such persons at the public offering price during such programs. Also, the
Sponsor in its discretion may from time to time pursuant to objective criteria
established by the Sponsor pay fees to qualifying brokers, dealers or others
for certain services or activities which are primarily intended to result in
sales of Units of the Trust. Such payments are made by the Sponsor out of its
own assets, and not out of the assets of the Trust. These programs will not
change the price Unitholders pay for their Units or the amount that the Trust
will receive from the Units sold.
The Sponsor reserves the right to reject, in whole or in part, any order for
the purchase of Units and to change the amount of the concession or agency
commission to dealers and others from time to time.
Sponsor and Dealer Profits. Dealers will receive the gross sales commission as
described under "Public Offering General" above.
As stated under "Market for Units" below, the Sponsor intends to, and certain
of the dealers may, maintain a secondary market for the Units of the Trust. In
so maintaining a market, the Sponsor or any such dealer will realize profits
or sustain losses in the amount of any difference between the price at which
Units are purchased and the price at which Units are resold. In addition, the
Sponsor or any such dealer will also realize profits or sustain losses
resulting from a redemption of such repurchased Units at a price above or
below the purchase price for such Units, respectively.
Market for Units. Although they are not obligated to do so, the Sponsor
intends to, and certain of the dealers may, maintain a market for the Units
offered hereby and to offer continuously to purchase such Units at prices,
subject to change at any time, based upon the aggregate bid prices of the
Securities in the portfolio of the Trust, plus Purchased Interest, if any,
plus interest accrued to the date of settlement plus any principal cash on
hand, less any amounts representing taxes or other governmental charges
payable out of the Trust and less any accrued Trust expenses. If the supply of
Units exceeds demand or if some other business reason warrants it, the Sponsor
and/or the dealers may either discontinue all purchases of Units or
discontinue purchases of Units at such prices. In the event that a market is
not maintained for the Units and the Unitholder cannot find another purchaser,
a Unitholder desiring to dispose of his Units may be able to dispose of such
Units only by tendering them to the Trustee for redemption at the Redemption
Price, which is based upon the aggregate bid price of the Securities in the
portfolio of such Trust, plus Purchased Interest, if any, and any accrued
interest. The aggregate bid prices of the underlying Securities in the Trust
are expected to be less than the related aggregate offering prices. See
"Rights of Unitholders Redemption of Units." A Unitholder who wishes to
dispose of his Units should inquire of his broker as to current market prices
in order to determine whether there is in existence any price in excess of the
Redemption Price and, if so, the amount thereof.
RIGHTS OF UNITHOLDERS
Certificates. The Trustee is authorized to treat as the record owner of Units
that person who is registered as such owner on the books of the Trustee.
Ownership of Units of the Trust is evidenced by separate registered
certificates executed by the Trustee and the Sponsor. Certificates are
transferable by presentation and surrender to the Trustee properly endorsed or
accompanied by a written instrument or instruments of transfer. A Unitholder
must sign exactly as his name appears on the face of the certificate with the
signature guaranteed by a participant in the Securities Transfer Agents
Medallion Program ("STAMP") or such other signature guaranty program in
addition to, or in substitution for, STAMP, as may be accepted by the Trustee.
In certain instances the Trustee may require additional documents such as, but
not limited to, trust instruments, certificates of death, appointments as
executor or administrator or certificates of corporate authority.
Although no such charge is now made or contemplated, the Trustee may require a
Unitholder to pay a reasonable fee for each certificate reissued (other than
as a result of a change in plan of distribution) or transferred and to pay any
governmental charge that may be imposed in connection with each such transfer
or interchange. Destroyed, stolen, mutilated or lost certificates will be
replaced upon delivery to the Trustee of satisfactory indemnity, evidence of
ownership and payment of expenses incurred. Mutilated certificates must be
surrendered to the Trustee for replacement.
Distributions of Interest and Principal. Interest received by the Trust,
including that part of the proceeds of any disposition of Securities which
Purchased Interest and/or represents accrued interest, is credited by the
Trustee to the Interest Account. Other receipts are credited to the Principal
Account. All distributions will be net of applicable expenses. The pro rata
share of cash in the Principal Account will be computed as of the semi-annual
record date, and distributions to the Unitholders as of such record date will
be made on or shortly after the fifteenth day of such month. For Insured
Municipals Income Trust, 152nd Insured Multi-Series and subsequent series' and
for Insured Municipals Income Trust and Investors' Quality Tax-Exempt Trust,
Multi-Series 213 and subsequent series', such computation and distribution
will occur monthly. Proceeds received from the disposition of any of the
Securities after such record date and prior to the following distribution date
will be held in the Principal Account and not distributed until the next
distribution date. The Trustee is not required to pay interest on funds held
in the Principal or Interest Accounts (but may itself earn interest thereon
and therefore benefits from the use of such funds) nor to make a distribution
from the Principal Account unless the amount available for distribution
therein shall equal at least $1.00 per Unit.
The distribution to the Unitholders as of each record date will be made on the
following distribution date or shortly thereafter and shall consist of an
amount substantially equal to such portion of the Unitholders' pro rata share
of the Estimated Net Annual Unit Income in the Interest Account after
deducting estimated expenses attributable as is consistent with the
distribution plan chosen. Only monthly distributions are available for Insured
Because interest payments are not received by the Trust at a constant rate
throughout the year, such interest distribution may be more or less than the
amount credited to the Interest Account as of the record date. For the purpose
of minimizing fluctuation in the distributions from the Interest Account, the
Trustee is authorized to advance such amounts as may be necessary to provide
interest distributions of approximately equal amounts. The Trustee shall be
reimbursed, without interest, for any such advances from funds in the Interest
Account on the ensuing record date. Persons who purchase Units between a
record date and a distribution date will receive their first distribution on
the second distribution date after the purchase.
As of the first day of each month, the Trustee will deduct from the Interest
Account and, to the extent funds are not sufficient therein, from the
Principal Account, amounts necessary to pay the expenses of the Trust (as
determined on the basis set forth under "Trust Operating Expenses"). The
Trustee also may withdraw from said accounts such amounts, if any, as it deems
necessary to establish a reserve for any governmental charges payable out of
the Trust. Amounts so withdrawn shall not be considered a part of the Trust's
assets until such time as the Trustee shall return all or any part of such
amounts to the appropriate accounts. In addition, the Trustee may withdraw
from the Interest and Principal Accounts such amounts as may be necessary to
cover redemptions of Units by the Trustee.
Distribution. Distributions of interest received by the Trust, prorated on an
annual basis, will be made semi-annually unless the Unitholder has elected to
receive them monthly or quarterly. Distributions of funds from the Principal
Account will be made on a semi-annual basis, except under the special
circumstances outlined in "Rights of Unitholders Distribution of Interest and
Principal" above. Record dates for monthly distributions will be the first day
of each month, record dates for quarterly distributions will be the first day
of March, June, September and December, and record dates for semi-annual
distributions will be the first day of June and December. Distributions will
be made on the fifteenth day of the month subsequent to the respective record
dates. Unitholders of Insured Municipals Income Trust, 152nd Insured
Multi-Series and subsequent series', and Insured Municipals Income Trust and
Investors' Quality Tax-Exempt Trust, Multi- Series 213 and subsequent series'
will receive distributions of income and principal, if any, on a monthly
basis.
Change of Distribution Option. The plan of distribution selected by a
Unitholder of Insured Municipals Income Trust, 151st Insured Multi-Series and
prior series' and Insured Municipals Income Trust and Investors' Quality
Tax-Exempt Trust, Multi-Series 212 and prior series'; will remain in effect
until changed. Unitholders purchasing Units in the secondary market will
initially receive distributions in accordance with the election of the prior
owner. Unitholders may change the plan of distribution in which they are
participating. For the convenience of Unitholders, the Trustee will furnish a
card for this purpose; cards may also be obtained upon request from the
Trustee. Unitholders desiring to change their plan of distribution may so
indicate on the card and return it, together with their certificate and such
other documentation that the Trustee may then require, to the Trustee.
Certificates should be sent only by registered or certified mail to minimize
the possibility of their being lost or stolen. If the card and certificate are
properly presented to the Trustee, the change will become effective for all
subsequent distributions.
Reinvestment Option. Unitholders of the Trust may elect to have each
distribution of interest income, capital gains and/or principal on their Units
automatically reinvested in shares of any of the open ended mutual funds
(except for B Shares) listed under "Trust Administration Sponsor" which are
registered in the Unitholder's state of residence. Such mutual funds are
hereinafter collectively referred to as the "Reinvestment Funds."
Each Reinvestment Fund has investment objectives which differ in certain
respects from those of the Trust. The prospectus relating to each Reinvestment
Fund describes the investment policies of such fund and sets forth the
procedures to follow to commence reinvestment. A Unitholder may obtain a
prospectus for the respective Reinvestment Funds from Van Kampen Merritt Inc.
at One Parkview Plaza, Oakbrook Terrace, Illinois 60181. Texas residents who
desire to reinvest may request that a broker-dealer registered in Texas send
the prospectus relating to the respective fund.
After becoming a participant in a reinvestment plan, each distribution of
interest income, capital gains and/or principal on the participant's Units
will, on the applicable distribution date, automatically be applied, as
directed by such person, as of such distribution date by the Trustee to
purchase shares (or fractions thereof) of the applicable Reinvestment Fund at
a net asset value as computed as of the close of trading on the New York Stock
Exchange on such date, plus a sales charge of $1.00 per $100 of reinvestment
except if the participant selects the Van Kampen Merritt Money Market Fund or
the Van Kampen Merritt Tax Free Money Market in which case no sales charge
applies. A minimum of one-half of such sales charge would be paid to Van
Kampen Merritt Inc.
Confirmations of all reinvestments by a Unitholder into a Reinvestment Fund
will be mailed to the Unitholder by such Reinvestment Fund.
A participant may at any time prior to five days preceding the next succeeding
distribution date, by so notifying the Trustee in writing, elect to terminate
his or her reinvestment plan and receive future distributions on his or her
Units in cash. There will be no charge or other penalty for such termination.
Each Reinvestment Fund, its sponsor and investment adviser shall have the
right to terminate at any time the reinvestment plan relating to such fund.
Reports Provided. The Trustee shall furnish Unitholders in connection with
each distribution a statement of the amount of interest and, if any, the
amount of other receipts (received since the preceding distribution) being
distributed expressed in each case as a dollar amount representing the pro
rata share of each Unit outstanding. For as long as the Trustee deems it to be
in the best interests of the Unitholders, the accounts of the Trust shall be
audited, not less frequently than annually, by independent certified public
accountants and the report of such accountants shall be furnished by the
Trustee to Unitholders upon request. Within a reasonable period of time after
the end of each calendar year, the Trustee shall furnish to each person who at
any time during the calendar year was a registered Unitholder a statement (i)
as to the Interest Account: interest received (including amounts representing
interest received upon any disposition of Securities) and the percentage of
such interest by states in which the issuers of the Securities are located,
the amount of Purchased Interest, deductions for applicable taxes and for fees
and expenses of the Trust (including insurance costs), for redemptions of
Units, if any, and the balance remaining after such distributions and
deductions, expressed in each case both as a total dollar amount and as a
dollar amount representing the pro rata share of each Unit outstanding on the
last business day of such calendar year; (ii) as to the Principal Account: the
dates of disposition of any Securities and the net proceeds received therefrom
(excluding any portion representing accrued interest), the amount paid for
redemptions of Units, if any, deductions for payment of applicable taxes and
fees and expenses of the Trustee, the amount of "when issued" interest treated
as a return of capital, if any, and the balance remaining after such
distributions and deductions expressed both as a total dollar amount and as a
dollar amount representing the pro rata share of each Unit outstanding on the
last business day of such calendar year; (iii) a list of the Securities held
and the number of Units outstanding on the last business day of such calendar
year; (iv) the Redemption Price per Unit based upon the last computation
thereof made during such calendar year; and (v) amounts actually distributed
during such calendar year from the Interest and Principal Accounts, separately
stated, expressed both as total dollar amounts and as dollar amounts
representing the pro rata share of each Unit outstanding.
In order to comply with Federal and state tax reporting requirements,
Unitholders will be furnished, upon request to the Trustee, evaluations of the
Securities in the Trust furnished to it by the Evaluator.
Redemption of Units. A Unitholder may redeem all or a portion of his Units by
tender to the Trustee at its Unit Investment Trust Division, 101 Barclay
Street, 20th Floor, New York, New York 10286, of the certificates representing
the Units to be redeemed, duly endorsed or accompanied by proper instruments
of transfer with signature guaranteed (or by providing satisfactory indemnity,
as in connection with lost, stolen or destroyed certificates) and by payment
of applicable governmental charges, if any. Thus, redemption of Units cannot
be effected until certificates representing such Units have been delivered to
the person seeking redemption or satisfactory indemnity provided. No
redemption fee will be charged. On the seventh calendar day following such
tender, or if the seventh calendar day is not a business day, on the first
business day prior thereto, the Unitholder will be entitled to receive in cash
an amount for each Unit equal to the Redemption Price per Unit next computed
after receipt by the Trustee of such tender of Units. The "date of tender" is
deemed to be the date on which Units are received by the Trustee, except that
as regards Units received after 4:00 P.M. Eastern time on days of trading on
the New York Stock Exchange, the date of tender is the next day on which such
Exchange is open for trading and such Units will be deemed to have been
tendered to the Trustee on such day for redemption at the redemption price
computed on that day.
Under regulations issued by the Internal Revenue Service, the Trustee will be
required to withhold a specified percentage of the principal amount of a Unit
redemption if the Trustee has not been furnished the redeeming Unitholder's
tax identification number in the manner required by such regulations. Any
amount so withheld is transmitted to the Internal Revenue Service and may be
recovered by the Unitholder only when filing a return. Under normal
circumstances the Trustee obtains the Unitholder's tax identification number
from the selling broker. However, at any time a Unitholder elects to tender
Units for redemption, such Unitholder should provide a tax identification
number to the Trustee in order to avoid this possible "back-up withholding" in
the event the Trustee has not been previously provided such number.
Purchased Interest, if applicable, and accrued interest paid on redemption
shall be withdrawn from the Interest Account of the Trust or, if the balance
therein is insufficient, from the Principal Account. All other amounts will be
withdrawn from the Principal Account. The Trustee is empowered to sell
underlying Securities in order to make funds available for redemption. Units
so redeemed shall be cancelled.
The Redemption Price per Unit will be determined on the basis of the bid price
of the Securities in the Trust as of 4:00 P.M. Eastern time on days of trading
on the New York Stock Exchange on the date any such determination is made.
While the Trustee has the power to determine the Redemption Price per Unit
when Units are tendered for redemption, such authority has been delegated to
the Evaluator which determines the price per Unit on a daily basis. The
Redemption Price per Unit is the pro rata share of each Unit in the Trust
determined on the basis of (i) the cash on hand in the Trust or monies in the
process of being collected, (ii) the value of the Securities in the Trust
based on the bid prices of the Securities, except for those cases in which the
value of insurance has been included, (iii) Purchased Interest for each Trust
and (iv) interest accrued thereon, less (a) amounts representing taxes or
other governmental charges payable out of the Trust and (b) the accrued
expenses of the Trust. The Evaluator may determine the value of the Securities
in the Trust by employing any of the methods set forth in "Public Offering
Price". In determining the Redemption Price per Unit no value will be assigned
to the portfolio insurance maintained by the Trust on the Bonds in the Trust
unless such Bonds are in default in payment of principal or interest or in
significant risk of such default. On the other hand, Bonds insured under a
policy obtained by the issuer thereof are entitled to the benefits of such
insurance at all times and such benefits are reflected and included in the
market value of such Bonds. For a description of the situations in which the
Evaluator may value the insurance obtained by the Trust, see "Public Offering
Price".
The price at which Units may be redeemed could be less than the price paid by
the Unitholder. As stated above, the Trustee may sell Securities to cover
redemptions. When Securities are sold, the size and diversity of the Trust
will be reduced. Such sales may be required at a time when Securities would
not otherwise be sold and might result in lower prices than might otherwise be
realized.
The right of redemption may be suspended and payment postponed for any period
during which the New York Stock Exchange is closed, other than for customary
weekend and holiday closings, or during which the Securities and Exchange
Commission determines that trading on that Exchange is restricted or an
emergency exists, as a result of which disposal or evaluation of the
Securities in the Trust is not reasonably practicable, or for such other
periods as the Securities and Exchange Commission may by order permit. Under
certain extreme circumstances the Sponsor may apply to the Securities and
Exchange Commission for an order permitting a full or partial suspension of
the right of Unitholders to redeem their Units.
TRUST ADMINISTRATION
Sponsor Purchases of Units. The Trustee shall notify the Sponsor of any tender
of Units for redemption. If the Sponsor's bid in the secondary market at that
time equals or exceeds the Redemption Price per Unit, it may purchase such
Units by notifying the Trustee before the close of business on the second
succeeding business day and by making payment therefor to the Unitholder not
later than the day on which the Units would otherwise have been redeemed by
the Trustee. Units held by the Sponsor may be tendered to the Trustee for
redemption as any other Units.
The offering price of any Units acquired by the Sponsor will be in accord with
the Public Offering Price described in the then currently effective prospectus
describing such Units. Any profit resulting from the resale of such Units will
belong to the Sponsor which likewise will bear any loss resulting from a lower
offering or redemption price subsequent to its acquisition of such Units.
Portfolio Administration. The Trustee is empowered to sell, for the purpose of
redeeming Units tendered by any Unitholder, and for the payment of expenses
for which funds may not be available, such of the Bonds designated by the
Evaluator as the Trustee in its sole discretion may deem necessary. The
Evaluator, in designating such Bonds, will consider a variety of factors,
including (a) interest rates, (b) market value and (c) marketability. To the
extent that Bonds are sold which are current in payment of principal and
interest in order to meet redemption requests and defaulted Bonds are retained
in the portfolio in order to preserve the related insurance protection
applicable to said Bonds, the overall quality of the Bonds remaining in the
Trust's portfolio will tend to diminish. Except as described below and in
certain other unusual circumstances for which it is determined by the Trustee
to be in the best interests of the Unitholders or if there is no alternative,
the Trustee is not empowered to sell Bonds which are in default in payment of
principal or interest or in such significant risk of such default and for
which value has been attributed for the insurance obtained by the Trust.
Because of such restrictions on the Trustee under certain circumstances the
Sponsor may seek a full or partial suspension of the right of Unitholders to
redeem their Units. See "Rights of Unitholders Redemption of Units". The
Sponsor is empowered, but not obligated, to direct the Trustee to dispose of
Bonds in the event of an advanced refunding.
The Sponsor is required to instruct the Trustee to reject any offer made by an
issuer of any of the Bonds to issue new obligations in exchange or
substitution for any Bond pursuant to a refunding or refinancing plan, except
that the Sponsor may instruct the Trustee to accept or reject such an offer or
to take any other action with respect thereto as the Sponsor may deem proper
if (1) the issuer is in default with respect to such Bond or (2) in the
written opinion of the Sponsor the issuer will probably default with respect
to such Bond in the reasonably foreseeable future. Any obligation so received
in exchange or substitution will be held by the Trustee subject to the terms
and conditions of the Trust Agreement to the same extent as Bonds originally
deposited thereunder. Within five days after the deposit of obligations in
exchange or substitution for underlying Bonds, the Trustee is required to give
notice thereof to each Unitholder, identifying the Bonds eliminated and the
Bonds substituted therefor. Except as stated herein, the acquisition by the
Trust of any securities other than the Bonds initially deposited is not
permitted.
If any default in the payment of principal or interest on any Bond occurs and
no provision for payment is made therefor either pursuant to the portfolio
insurance, or otherwise, within 30 days, the Trustee is required to notify the
Sponsor thereof. If the Sponsor fails to instruct the Trustee to sell or to
hold such Bond within 30 days after notification by the Trustee to the Sponsor
of such default, the Trustee may in its discretion sell the defaulted Bond and
not be liable for any depreciation or loss thereby incurred.
Amendment or Termination. The Sponsor and the Trustee have the power to amend
the Trust Agreement without the consent of any of the Unitholders when such an
amendment is (a) to cure an ambiguity or to correct or supplement any
provision of the Trust Agreement which may be defective or inconsistent with
any other provision contained therein or (b) to make such other provisions as
shall not adversely affect the interest of the Unitholders (as determined in
good faith by the Sponsor and the Trustee), provided that the Trust Agreement
may not be amended to increase the number of Units issuable thereunder or to
permit the deposit or acquisition of securities either in addition to or in
substitution for any of the Securities initially deposited in the Trust,
except for the substitution of certain refunding securities for such Bonds. In
the event of any amendment, the Trustee is obligated to notify promptly all
Unitholders of the substance of such amendment.
All Trusts other than those indicated in the next sentence may be terminated
at any time by consent of Unitholders representing 100% of the Units of the
Trust then outstanding. Each series of Insured Municipals Income Trust, Series
98 and subsequent series may be terminated at any time by consent of the
Unitholders representing 51% of the Units of such Trust then outstanding. In
addition, a Trust may be terminated by the Trustee when the value of the
Trust, as shown by any semi-annual evaluation, is less than that indicated
under "Summary of Essential Financial Information" in Part One of this
Prospectus.
The Trust Agreement provides that the Trust shall terminate upon the
redemption, sale or other disposition of the last Security held in the Trust,
but in no event shall it continue beyond the end of the year indicated under
"The Trust". In the event of termination of the Trust, written notice thereof
will be sent by the Trustee to each Unitholder thereof at his address
appearing on the registration books of the Trust maintained by the Trustee.
Within a reasonable time thereafter the Trustee shall liquidate any Securities
then held in the Trust and shall deduct from the funds of the Trust any
accrued costs, expenses or indemnities provided by the Trust Agreement,
including estimated compensation of the Trustee and costs of liquidation and
any amounts required as a reserve to provide for payment of any applicable
taxes or other governmental charges. The sale of Securities in the Trust upon
termination may result in a lower amount than might otherwise be realized if
such sale were not required at such time. For this reason, among others, the
amount realized by a Unitholder upon termination may be less than the
principal amount of Securities represented by the Units held by such
Unitholder. The Trustee shall then distribute to each Unitholder his share of
the balance of the Interest and Principal Accounts. With such distribution the
Unitholders shall be furnished a final distribution statement of the amount
distributable. At such time as the Trustee in its sole discretion shall
determine that any amounts held in reserve are no longer necessary, it shall
make distribution thereof to Unitholders in the same manner.
Notwithstanding the foregoing, in connection with final distributions to
Unitholders, it should be noted that because the portfolio insurance obtained
by the Trust is applicable only while Bonds so insured are held by the Trust,
the price to be received by the Trust upon the disposition of any such Bond
which is in default, by reason of nonpayment of principal or interest, will
not reflect any value based on such insurance. Therefore, in connection with
any liquidation, it shall not be necessary for the Trustee to, and the Trustee
does not currently intend to, dispose of any Bond or Bonds if retention of
such Bond or Bonds, until due, shall be deemed to be in the best interest of
Unitholders, including, but not limited to situations in which a Bond or Bonds
so insured are in default and situations in which a Bond or Bonds so insured
have a deteriorated market price resulting from a significant risk of default.
Since the Bonds which are insured by insurance obtained by the Bond issuer
will reflect the value of the related insurance, it is the present intention
of the Sponsor not to direct the Trustee to hold any of such Bonds after the
date of termination. All proceeds received, less applicable expenses, from
insurance on defaulted Bonds not disposed of at the date of termination will
ultimately be distributed to Unitholders of record as of such date of
termination as soon as practicable after the date such defaulted Bond or Bonds
become due and applicable insurance proceeds have been received by the
Trustee.
Limitation on Liabilities. The Sponsor, the Evaluator and the Trustee shall be
under no liability to Unitholders for taking any action or for refraining from
taking any action in good faith pursuant to the Trust Agreement, or for errors
in judgment, but shall be liable only for their own willful misfeasance, bad
faith or negligence (gross negligence in the case of the Sponsor) in the
performance of their duties or by reason of their reckless disregard of their
obligations and duties hereunder. The Trustee shall not be liable for
depreciation or loss incurred by reason of the sale by the Trustee of any of
the Securities. In the event of the failure of the Sponsor to act under the
Trust Agreement, the Trustee may act thereunder and shall not be liable for
any action taken by it in good faith under the Trust Agreement.
The Trustee shall not be liable for any taxes or other governmental charges
imposed upon or in respect of the Securities or upon the interest thereon or
upon it as Trustee under the Trust Agreement or upon or in respect of the
Trust which the Trustee maybe required to pay under any present or future law
of the United States of America or of any other taxing authority having
jurisdiction. In addition, the Trust Agreement contains other customary
provisions limiting the liability of the Trustee.
The Trustee, Sponsor and Unitholders may rely on any evaluation furnished by
the Evaluator and shall have no responsibility for the accuracy thereof.
Determinations by the Evaluator under the Trust Agreement shall be made in
good faith upon the basis of the best of information available to it,
provided, however, that the Evaluator shall be under no liability to the
Trustee, Sponsor or Unitholders for errors in judgment. This provision shall
not protect the Evaluator in any case of willful misfeasance, bad faith, gross
negligence or reckless disregard to its obligations and duties.
Sponsor. Van Kampen Merritt Inc., a Delaware corporation, is the Sponsor of
the Trust. Van Kampen Merritt Inc. is primarily owned by Clayton, Dubilier &
Rice, Inc., a New York-based private investment firm. Van Kampen Merritt Inc.
management owns a significant minority equity position. Van Kampen Merritt
Inc. specializes in the underwriting and distribution of unit investment
trusts and mutual funds. The Sponsor is a member of the National Association
of Securities Dealers, Inc. and has its principal office at One Parkview
Plaza, Oakbrook Terrace, Illinois 60181 (708) 684-6000. It maintains a branch
office in Philadelphia and has regional representatives in Atlanta, Dallas,
Los Angeles, New York, San Francisco, Seattle and Tampa. As of September 30,
1993, the total stockholders' equity of Van Kampen Merritt Inc. was
$200,885,000 (unaudited). (This paragraph relates only to the Sponsor and not
to the Trust. The information is included herein only for the purpose of
informing investors as to the financial responsibility of the Sponsor and its
ability to carry out its contractual obligations. More detailed financial
information will be made available by the Sponsor upon request.)
As of November 30, 1993, the Sponsor and its affiliates managed, or supervised
approximately $38.5 billion of investment products, of which over $25 billion
is invested in municipal securities. The Sponsor managed $23 billion of
assets, consisting of $8.2 billion for 19 open end mutual funds, $8.3 billion
for 33 closed-end funds and $6.5 billion for 51 institutional accounts. The
Sponsor has also deposited over $23.5 billion of unit investment trusts. Based
on cumulative assets deposited, the Sponsor believes that it is the largest
sponsor of insured municipal unit investment trusts, primarily through the
success of its Insured Municipal Income Trust or the IM-IT trust. The Sponsor
also provides surveillance and evaluation services at cost for approximately
$15.5 billion of unit investment trust assets outstanding. Since 1976, the
Sponsor has opened over one million retail investor accounts through retail
distribution firms. Van Kampen Merritt Inc. is the Sponsor of the various
series of the trusts listed below and the distributor of the mutual funds and
closed-end funds listed below. Unitholders may only invest in the trusts,
mutual funds and closed-end funds which are registered for sale in the state
of residence of such Unitholder. In order for a Unitholder to invest in the
trusts, mutual funds and closed-end funds listed below, such Unitholder must
obtain a prospectus relating to the trust or fund involved. A prospectus is
the only means by which an offer can be delivered to investors.
If the Sponsor shall fail to perform any of its duties under the Trust
Agreement or become incapable of acting or become bankrupt or its affairs are
taken over by public authorities, then the Trustee may (i) appoint a successor
Sponsor at rate of compensation deemed by the Trustee to be reasonable and not
exceeding amounts prescribed by the Securities and Exchange Commission, (ii)
terminate the Trust Agreement and liquidate the Trust as provided therein or
(iii) continue to act as Trustee without terminating the Trust Agreement.
Trustee. The Trustee is The Bank of New York, a trust company organized under
the laws of New York. The Bank of New York has its offices at 101 Barclay
Street, New York, New York 10286 (800) 221-7668. The Bank of New York is
subject to supervision and examination by the Superintendent of Banks of the
State of New York and the Board of Governors of the Federal Reserve System,
and its deposits are insured by the Federal Deposit Insurance Corporation to
the extent permitted by law.
The duties of the Trustee are primarily ministerial in nature. It did not
participate in the selection of Securities for the Trust portfolio.
In accordance with the Trust Agreement, the Trustee shall keep proper books of
record and account of all transactions at its office for the Trust. Such
records shall include the name and address of, and the certificates issued by
the Trust to, every Unitholder of the Trust. Such books and records shall be
open to inspection by any Unitholder at all reasonable times during the usual
business hours. The Trustee shall make such annual or other reports as may
from time to time be required under any applicable state or Federal statute,
rule or regulation (see "Unitholders Explanations - Public Offering - Reports
Provided"). The Trustee is required to keep a certified copy or duplicate
original of the Trust Agreement on file in its office available for inspection
at all reasonable times during the usual business hours by any Unitholder,
together with a current list of the Securities held in the Trust.
Under the Trust Agreement, the Trustee or any successor trustee may resign and
be discharged of the Trust created by the Trust Agreement by executing an
instrument in writing and filing the same with the Sponsor. The Trustee or
successor trustee must mail a copy of the notice of resignation to all
Unitholders then of record, not less than 60 days before the date specified in
such notice when such resignation is to take effect. The Sponsor upon
receiving notice of such resignation is obligated to appoint a successor
trustee promptly. If, upon such resignation, no successor trustee has been
appointed and has accepted the appointment within 30 days after notification,
the retiring Trustee may apply to a court of competent jurisdiction for the
appointment of a successor. The Sponsor may remove the Trustee and appoint a
successor trustee as provided in the Trust Agreement at any time with or
without cause. Notice of such removal and appointment shall be mailed to each
Unitholder by the Sponsor. Upon execution of a written acceptance of such
appointment by such successor trustee, all the rights, powers, duties and
obligations of the original trustee shall vest in the successor. The
resignation or removal of a Trustee becomes effective only when the successor
trustee accepts its appointment as such or when a court of competent
jurisdiction appoints a successor trustee.
Any corporation into which a Trustee may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which a Trustee shall be a party, shall be the successor trustee. The Trustee
must be a banking corporation organized under the laws of the United States or
any state and having at all times an aggregate capital, surplus and undivided
profits of not less than $5,000,000.
OTHER MATTERS
Legal Opinions. The legality of the Units offered hereby has been passed upon
by Chapman and Cutler, 111 West Monroe Street, Chicago, Illinois 60603, as
counsel for the Sponsor. Various counsel have acted as counsel for the Trustee
and as special counsel for the Trust for New York tax matters.
Independent Certified Public Accountants. The statement of condition and the
related securities portfolio included in Part One of this Prospectus have been
audited by Grant Thornton, independent certified public accountants, as set
forth in their report in Part One of this Prospectus, and are included herein
in reliance upon the authority of said firm as experts in accounting and
auditing.
DESCRIPTION OF SECURITIES RATINGS*
Standard & Poor's Corporation. A Standard & Poor's Corporation ("Standard &
Poor's") corporate or municipal bond rating is a current assessment of the
creditworthiness of an obligor with respect to a specific debt obligation.
This assessment of creditworthiness may take into consideration obligors such
as guarantors, insurers or lessees.
The bond rating is not a recommendation to purchase or sell a security,
inasmuch as it does not comment as to market price.
The ratings are based on current information furnished to Standard & Poor's by
the issuer and obtained by Standard & Poor's from other sources it considers
reliable. The ratings may be changed, suspended or withdrawn as a result of
changes in, or unavailability of, such information. The ratings are based, in
varying degrees, on the following considerations:
*As published by the rating companies.
Likelihood of default capacity and willingness of the obligor as to the timely
payment of interest and repayment of principal in accordance with the terms of
the obligation.
Nature of and provisions of the obligation.
Protection afforded by, and relative position of, the obligation in the event
of bankruptcy, reorganization or other arrangements under the laws of
bankruptcy and other laws affecting creditors' rights.
AAA This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.
AA Bonds rated AA also qualify as high-quality debt obligations. Capacity to
pay principal and interest is very strong, and in the majority of instances
they differ from AAA issues only in small degree.
A Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions.
BBB Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay interest and repay
principal for debt in this category than in higher rated categories.
Plus (+) or Minus (-): To provide more detailed indications of credit quality,
the ratings from "AA" to "BBB" may be modified by the addition of a plus or
minus sign to show relative standing within the major rating categories.
Provisional Ratings: A provisional rating "(p)" assumes the successful
completion of the project being financed by the issuance of the bonds being
rated and indicates that payment of debt service requirements is largely or
entirely dependent upon the successful and timely completion of the project.
This rating, however, while addressing credit quality subsequent to
completion, makes no comment on the likelihood of, or the risk of default upon
failure of, such completion. Accordingly, the investor should exercise his own
judgment with respect to such likelihood and risk.
Moody's Investors Service, Inc. A brief description of the applicable Moody's
Investors Service, Inc. ("Moody's")
rating symbols and their meanings follows:
Aaa Bonds which are rated Aaa are judged to be the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge". Interest payments are protected by a large, or by an exceptionally
stable, margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues. With the occasional
exception of oversupply in a few specific instances, the safety of obligations
of this class is so absolute that their market value is affected solely by
money market fluctuation.
Aa Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high grad e bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuations of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities. These Aa bonds are high grade, their market value virtually immune
to all but money market influences, with the occasional exception of
oversupply in a few specific instances.
A Bonds which are rated A possess many favorable investment attributes and
are to be considered as higher medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may
be present which suggest a susceptibility to impairment sometime in the
future. The market value of A rated bonds may be influenced to some degree by
credit circumstances during a sustained period of depressed business
conditions. During periods of normalcy, bonds of this quality frequently move
in parallel with Aaa and Aa obligations, with the occasional exception of
oversupply in a few specific instances.
Baa Bonds which are rated Baa are considered as medium grade obligations;
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Moody's bond rating symbols may contain numerical modifiers of a generic
rating classification. The modifier 1 indicates that the bond ranks at the
high end of its category; the modifier 2 indicates a mid-range ranking; and
the modifier 3 indicates that the issue ranks in the lower end of its generic
rating category.
Con Bonds for which the security depends upon the completion of some act or
the fulfillment of some condition are rated conditionally. These are bonds
secured by (a) earnings of projects under construction, (b) earnings of
projects unseasoned in operating experience, (c) rentals which begin when
facilities are completed, or (d) payments to which some other limiting
condition attaches. Parenthetical rating denotes probable credit stature upon
completion of construction or elimination of basis of condition.
INTENTIONALLY LEFT BLANK
No person is authorized to give any information or to make any representation
not contained in this Prospectus; and any information or representation not
contained herein must not be relied upon as having been authorized by the
Trust, the Sponsor or the dealers. This Prospectus does not constitute an
offer to sell, or a solicitation of an offer to buy, securities in any state
to any persons to whom it is not lawful to make such offer in such state.
TABLE OF CONTENTS
Title Page
The Trust 2
Objectives and Securities Selection 2
Trust Portfolio 3
Estimated Current Returns and Estimated Long-Term Returns 6
Trust Operating Expenses 6
Insurance on the Bonds 7
Tax Status 12
Public Offering 13
Rights of Unitholders 16
Trust Administration 19
Other Matters 21
Description of Bond Ratings 21
This Prospectus does not contain all the information set forth in the
registration statements and exhibits relating thereto, which the Trust has
filed with Securities and Exchange Commission, Washington, D.C. under the
Securities Act of 1933 and the Investment Company Act of 1940, and to which
reference is hereby made.
INSURED MUNICIPALS
INCOME TRUST
PROSPECTUS PART TWO
Note: This Prospectus May Be Used Only When Accompanied by Part One. Both
Parts of this Prospectus should be retained for future reference.
The Prospectus is dated as of the date of the Prospectus Part I accompanying
this Prospectus Part II.
Sponsor: Van Kampen Merritt
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
and
Mellon Bank Center
1735 Market Street Suite 1300
Philadelphia, Pennsylvania 19103
Contents of Post-Effective Amendment
to Registration Statement
This Post-Effective Amendment to the Registration Statement
comprises the following papers and documents:
The facing sheet
The prospectus
The signatures
The Consent of Independent Accountants
Signatures
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Insured Municipals Income Trust, Series 58, certifies that it
meets all of the requirements for effectiveness of this Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and
has duly caused this Post-Effective Amendment to its Registration
Statement to be signed on its behalf by the undersigned thereunto duly
authorized, and its seal to be hereunto affixed and attested, all in the
City of Chicago and State of Illinois on the 25th day of April, 1994.
Insured Municipals Income Trust,
Series 58
(Registrant)
By Van Kampen Merritt Inc.
(Depositor)
By Sandra A. Waterworth
Vice President
(Seal)
Pursuant to the requirements of the Securities Act of 1933, this
Post Effective Amendment to the Registration Statement has been signed
below by the following persons in the capacities on April 25, 1994:
Signature Title
John C. Merritt Chairman, Chief Executive )
Officer and Director )
)
William R. Rybak Senior Vice President and )
Chief Financial Officer )
)
Ronald A. Nyberg Director )
)
William R. Molinari Director )
Sandra A. Waterworth
(Attorney in Fact)*
____________________
* An executed copy of each of the related powers of attorney was filed
with the Securities and Exchange Commission in connection with the
Registration Statement on Form S-6 of Insured Municipals Income
Trust, 113th Insured Multi-Series (File No. 33-46036) and the same
are hereby incorporated herein by this reference.
Consent of Independent Certified Public Accountants
We have issued our report dated March 4, 1994 accompanying the
financial statements of Insured Municipals Income Trust, Series 58 as of
December 31, 1993, and for the period then ended, contained in this Post-
Effective Amendment No. 13 to Form S-6.
We consent to the use of the aforementioned report in the Post-
Effective Amendment and to the use of our name as it appears under the
caption "Auditors".
Grant Thornton
Chicago, Illinois
April 25, 1994
