File No. 33-7343 CIK No. 797497
Securities and Exchange Commission
Washington, D. C. 20549-1004
Post-Effective
Amendment No. 6
to
Form S-6
For Registration under the Securities Act of 1933 of
Securities of Unit Investment Trusts Registered on
Form N-8B-2
Voyageur Unit Investment Trust, Series 1
(Exact Name of Trust)
Voyageur Fund Managers, Inc.
(Exact Name of Depositor)
90 South Seventh Street, Suite 4400
Minneapolis, Minnesota 55402
(Complete address of Depositor's principal executive offices)
Voyageur Fund Managers, Inc. Chapman and Cutler
Attention: Thomas J. Abood Attention: Mark J. Kneedy
90 South Seventh Street, Suite 4400 111 West Monroe Street
Minneapolis, Minnesota 55402 Chicago, Illinois 60603
(Name and complete address of agents for service)
(X) Check if it is proposed that this filing will become effective on
November 22, 1995 pursuant to paragraph (b) of Rule 485.
VOYAGEUR UNIT INVESTMENT TRUST, SERIES 1
4, 295 UNITS
PROSPECTUS
Part One
Dated November 22, 1995
NOTE: PART ONE OF THIS PROSPECTUS MAY NOT BE DISTRIBUTED UNLESS ACCOMPANIED
BY PART TWO.
In the opinion of Counsel, interest income to the Trust and to Unit
holders, with certain exceptions, is exempt under existing law from all Federal
income taxes. In addition, the interest income is, in the opinion of Special
Counsel, exempt to the extent indicated from Minnesota State and local income
taxes. Capital gains, if any, are subject to tax.
THE TRUST
Voyageur Unit Investment Trust, Series 1 (the "Trust") consists of a fixed
portfolio of interest-bearing obligations issued by or on behalf of
municipalities and other governmental authorities within the State of Minnesota,
counties, municipalities, authorities and political subdivisions thereof, the
interest on which is, in the opinion of recognized bond counsel to the issuing
governmental authorities, exempt from all Federal income taxes and from
Minnesota State and local income taxes under existing law. At November 17, 1995,
each Unit represented a 1/4,295 undivided interest in the principal and net
income of the Trust (see "The Trusts" 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 is equal to the aggregate value of
the Bonds in the Portfolio of the Trust divided by the number of Units
outstanding, plus a sales charge of 5.50% of the Public Offering Price (5.820%
of the amount invested). At November 17, 1995, the Public Offering Price per
Unit was $746.87 plus net interest accrued to date of settlement (three business
days after such date) of $.43430, $.43555 and $.43697 for the monthly, quarterly
and semi-annual distribution plans, respectively (see "Public Offering" in Part
Two).
Please retain all parts of this Prospectus for future reference.
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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.
- --------------------------------------------------------------------------------
VOYAGEUR FUND MANAGERS, INC.
SPONSOR
ESTIMATED CURRENT RETURN AND ESTIMATED LONG-TERM RETURN
Estimated Current Return to Unit holders under the semi-annual distribution
plan was 7.02% per annum on November 17, 1995, 7.00% under the quarterly
distribution plan and 6.98% under the monthly distribution plan. Estimated
Long-Term Return to Unit holders under the semi-annual distribution plan was
5.55% per annum on November 17, 1995, 5.52% under the quarterly distribution
plan and 5.50% under the monthly distribution plan. Estimated Current Return is
calculated by dividing the Estimated Net Annual Interest Income per Unit by the
Public Offering Price. Estimated Long-Term Return is calculated using a formula
which (1) takes into consideration and determines and factors in the relative
weightings of the market values, yields (which take into account the
amortization of premiums and the accretion of discounts) and estimated
retirements of all of the Bonds in the Trust; (2) takes into account a
compounding factor and the expenses and sales charge associated with each Unit
of the Trust; and (3) takes into effect the tax-adjusted yield from potential
capital gains at the Date of Deposit. Since the market values and estimated
retirements of the Bonds and the expenses of the Trust will change, there is no
assurance that the present Estimated Current Return and Estimated Long-Term
Return indicated above will be realized in the future. Estimated Current Return
and Estimated Long-Term Return are expected to differ because the calculation of
the Estimated Long-Term Return reflects the estimated date and amount of
principal returned while the Estimated Current Return calculations include only
Net Annual Interest Income and Public Offering Price. The above figures are
based on estimated per Unit cash flows. Estimated cash flows will vary with
changes in fees and expenses, with changes in current interest rates, and with
the principal prepayment, redemption, maturity, call, exchange or sale of the
underlying Bonds. See "Estimated Current Return and Estimated Long-Term Return"
in Part Two.
<TABLE>
<CAPTION>
VOYAGEUR UNIT INVESTMENT TRUST, SERIES 1
SUMMARY OF ESSENTIAL INFORMATION AS OF NOVEMBER 17, 1995
SPONSOR: VOYAGEUR FUND MANAGERS, INC.
EVALUATOR: VOYAGEUR FUND MANAGERS, INC.
TRUSTEE: THE BANK OF NEW YORK
GENERAL INFORMATION
<S> <C>
Principal Amount of Bonds in the Trust $2,845,000
Number of Units 4,295
Fractional Undivided Interest in the Trust per Unit 1/4,295
Public Offering Price:
Aggregate Value of Bonds in the Portfolio $3,031,362
Aggregate Value of Bonds per Unit $705.79
Sales Charge 5.820% (5.50% of Public Offering Price) $41.08
Public Offering Price per Unit $746.87*
Redemption Price and Sponsor's Repurchase Price per Unit
($41.08 less than the Public Offering Price per Unit) $705.79*
Date Trust Established October 15, 1986
Mandatory Termination Date December 31, 2035
Evaluator's Fee: $.27 per $1,000 principal amount of bonds, with a minimum annual fee of $1,500.
Evaluations for purposes of sale, purchase or redemption of Units are made as of the close of trading
(4:00 p.m. Eastern time) on the New York Stock Exchange on each day which it is open.
Discretionary Liquidation Amount of the Trust is 20% of the original principal amount of Bonds in
the Trust.
Supervisory fee payable to the Sponsor Maximum of $.25 per Unit annually
</TABLE>
* Plus net interest accrued to date of settlement (three business days after
purchase) (see "Public Offering Price" herein and "Redemption" in Part
Two).
<TABLE>
<CAPTION>
VOYAGEUR UNIT INVESTMENT TRUST, SERIES 1
SUMMARY OF ESSENTIAL INFORMATION AS OF NOVEMBER 17, 1995
SPONSOR: VOYAGEUR FUND MANAGERS, INC.
EVALUATOR: VOYAGEUR FUND MANAGERS, INC.
TRUSTEE: THE BANK OF NEW YORK
PER UNIT INFORMATION BASED ON VARIOUS DISTRIBUTION PLANS
Semi-
Monthly Quarterly Annual
Calculation of Estimated Net Annual Income:
<S> <C> <C> <C>
Estimated Annual Interest Income $53.91 $53.91 $53.91
Less: Estimated Annual Expense $ 1.79 $ 1.64 $ 1.47
------- ------- -------
Estimated Net Annual Interest Income $52.12 $52.27 $52.44
====== ====== ======
Calculation of Interest Distribution:
Estimated Interest Distribution Per Unit $ 4.34 $13.07 $26.22
Divided by 12, 4 and 2, Respectively
Public Offering Price per Unit $746.87 $746.87 $746.87
Estimated Daily Rate of Net Interest Accrual $.14477 $.14518 $.14566
Estimated Current Return Based on
Public Offering Price 6.98% 7.00% 7.02%
Estimated Long-Term Return Based on
Public Offering Price 5.50% 5.52% 5.55%
</TABLE>
TRUSTEE'S ANNUAL FEE: $1.08, $.85 and $.60 per $1,000 principal amount of Bonds
for those portions of the Trust under the monthly, quarterly and semi-annual
distribution plans, respectively.
COMPUTATION DATES: Fifteenth day of the month as follows: monthly-each month;
quarterly- March, June, September and December; semi-annual-June and December.
DISTRIBUTION DATES: last day of the month as follows: monthly-each month;
quarterly - March, June, September and December; semi-annual-June and December.
ESTIMATED ANNUAL EXPENSES: Calculations based on financial data as of April 30,
1995. Actual expenses per unit may differ for each distribution plan.
INDEPENDENT AUDITORS' REPORT
To the Sponsor, Trustee and the Unitholders of
Voyageur Unit Investment Trust, Series 1:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of Voyageur Unit Investment Trust, Series 1 (the
Trust) as of April 30, 1995, and the related statements of operations and
changes in net assets for the years ended April 30, 1995 and 1994, and for the
five-month period ended April 30, 1993. These financial statements are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits 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. Investments held in
custody are confirmed to us by the trustee. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Voyageur Unit Investment Trust,
Series 1 at April 30, 1995, and the results of its operations and changes in its
net assets for the years ended April 30, 1995 and 1994, and the five-month
period ended April 30, 1993, in conformity with generally accepted accounting
principles.
KPMG PEAT MARWICK LLP
Minneapolis, Minnesota
August 11, 1995
VOYAGEUR UNIT INVESTMENT TRUST, SERIES 1
Statement of Assets and Liabilities
April 30, 1995
<TABLE>
<CAPTION>
Assets
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<S> <C>
Investments in securities, at market (cost $3,247,131)
(note 1 to schedule of investments) $ 3,251,788
Interest receivable 82,700
Receivable for investment securities sold 36,356
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Total assets $ 3,370,844
___________________________________________________________________________________________________________________
Liabilities and Net Assets
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Cash disbursements in excess of cash on demand deposit 38,733
Accrued liabilities 2,602
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Total liabilities 41,335
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Net assets (4,617 units of fractional undivided interest currently outstanding):
Original cost to investors of 5,262 units (note B) 4,956,000
Less:
Gross underwriting commissions (note C) (249,896)
Cost of securities sold or called since date of deposit (1,458,972)
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3,247,132
Net unrealized appreciation of investments (note D) 4,657
Undistributed investment income, net 84,267
Excess distribution of bond proceeds (6,547)
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Net assets 3,329,509
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Total liabilities and net assets $ 3,370,844
___________________________________________________________________________________________________________________
</TABLE>
See accompanying notes to financial statements.
<TABLE>
<CAPTION>
VOYAGEUR UNIT INVESTMENT TRUST, SERIES 1
Statements of Operations
Year Year Five Month
ended ended period ended
April 30, April 30, April 30,
1995 1994 1993 (H)
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<S> <C> <C> <C>
Investment income, interest $ 255,482 $ 265,127 $124,218
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Expenses:
Trustee fees and expenses 4,698 4,755 2,537
Evaluator fees 1,587 1,546 1,494
Sponsor fees 1,182 0 1,289
Accounting fees 2,300 2,500 2,321
Other 443 374 223
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Total expenses 10,210 9,175 7,864
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Investment income, net 245,272 255,952 116,354
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Realized and unrealized gain (loss) on investments, net (notes A and D):
Net realized gain on investments 698 12,626 21,108
Net change in unrealized appreciation
(depreciation) (68,327) (137,627) 86,282
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Net (loss) gain on investments (67,629) (125,001) 107,390
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Net increase in net assets
resulting from operations $ 177,643 $ 130,951 $ 223,744
___________________________________________________________________________________________________________________
</TABLE>
See accompanying notes to financial statements.
<TABLE>
<CAPTION>
VOYAGEUR UNIT INVESTMENT TRUST, SERIES 1
Statements of Changes in Net Assets
Year Year Five Month
ended ended period ended
April 30, April 30, April 30,
1995 1994 1993 (H)
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Operations:
<S> <C> <C> <C>
Investment income, net $ 245,272 $ 255,952 $ 116,354
Net realized gain on investments 698 12,626 21,108
Net change in unrealized (depreciation)
appreciation (68,327) (137,627) 86,282
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Net increase in net assets
resulting from operations 177,643 130,951 223,744
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Distributions to unitholders from (notes E and F):
Investment income, net (244,860) (256,863) (134,390)
Distributions, principal 0 (387,977) 0
Unit redemptions (136,794) (249,706) (21,423)
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Total distributions (381,654) (894,546) (155,813)
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Total increase (decrease)
in net assets (204,011) (763,595) 67,931
Net assets:
Beginning of period 3,533,520 4,297,115 4,229,184
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End of period $ 3,329,509 $ 3,533,520 $ 4,297,115
___________________________________________________________________________________________________________________
</TABLE>
See accompanying notes to financial statements.
VOYAGEUR UNIT INVESTMENT TRUST, SERIES 1
Notes to Financial Statements
April 30, 1995
(A) The financial statements of Voyageur Unit Investment Trust, Series 1 are
prepared on the accrual basis of accounting. Security transactions are
accounted for on the date the securities are purchased or sold. The Trust
will terminate on the mandatory termination date of December 31, 2035.
(B) Cost to investors represents the initial public offering price as of the
date of deposit, adjusted for the cost of bonds called or sold since the
date of deposit.
(C) The gross underwriting commission represents the aggregate sales charge
paid in connection with the initial public offering.
(D) At April 30, 1995, the gross unrealized market appreciation was $49,197 and
the gross unrealized market depreciation was $44,540. The net unrealized
market appreciation was $4,657.
(E) Distributions of net interest income to unitholders are paid monthly,
quarterly or semiannually based on the unitholder's election.
(F) During the current year ended April 30, 1995, 188 units were redeemed with
principal of $133,171 and interest of $3,623. Since October 1991, there has
been no active secondary market for the Trust's units.
(G) No provision for income taxes has been made because the Trust is not an
association taxable as a corporation for federal or Minnesota state income
tax purposes. Each unitholder will be treated as the owner of a pro rata
portion of the Trust and will be taxed on his or her pro rata share of net
investment income and securities gains or losses, if any.
(H) Effective April 30, 1993, Voyageur Unit Investment Trust, Series 1 changed
its financial reporting year end to April 30 (previously November 30).
<TABLE>
<CAPTION>
VOYAGEUR UNIT INVESTMENT TRUST, SERIES 1
Schedule of Investments
April 30, 1995
Aggregate
Ratings principal Title of bonds described Coupon rate Redemption Market
(2) amount in trust or contracted for and maturity features (3) value (1)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
A+ $ 40,000 Minnesota Housing Finance 7.125% @ 2-01-20 8-01-95 @ 101.5, $40,157
Agency Housing Development S.F. 2-01-99 @ 100
Revenue Bonds
AA 290,000 Bloomington Tax Increment 9.750% @ 2-01-08 2-01-05 @ 100 377,299
General Obligation Bonds
NR 300,000 Glencoe Electric Revenue 10.00% @ 5-01-99 Escrowed to 353,874
Bonds (4) maturity
AA 250,000 Minneapolis CDA & St. Paul 7.875% @ 7-01-17 7-01-96 @ 102, 253,093
HRA Home Ownership S.F. 1-01-07 @ 100
Mortgage Revenue Family
Housing Project Phase II
AAA 185,000 Minneapolis Convention Ctr. 7.750% @ 4-01-11 Prefunded 191,967
Sales Tax Revenue Bonds (5) 4-01-96 @ 102
AA 550,000 Minnetonka Multifamily Hsg. 7.500% @ 12-01-17 6-01-95 @ 103, 560,230
Revenue Bonds (Cedar Hills S.F. 12-01-08 @ 100
East) FHA Insured
A- 160,000 St. Cloud HRA Multifamly 8.125% @ 7-01-08 7-01-96 @ 102, 164,659
Hsg. Facility (St. Cloud S.F. 7-01-00 @ 100
Hospital) Revenue Bonds
A- 120,000 St. Cloud HRA Multifamily 8.375% @ 7-01-16 7-01-96 @ 102, 123,620
Hsg. Facility (St. Cloud S.F. 7-01-09 @ 100
Hospital) Revenue Bonds
A 350,000 St. Cloud Law Enforcement 7.250% @ 2-01-05 Prefunded 352,993
Revenue Bonds (Stearns Co. 2-01-96 @ 100
G.O. Lease)
AAA 465,000 Southern MN Municipal Power 7.000% @ 1-01-18 Prefunded 467,488
Agency Power Supply System 1-01-96 @ 100
Revenue Bonds 1983A
AAA 100,000 Regents of the University of 7.750% @ 2-01-10 2-01-96 @ 102, 103,234
Minnesota G.O. Refunding S.F. 2-01-06 @ 100
Bonds 1986A
A 255,000 Western MN Municipal Power 9.050% @ 1-01-00 1-01-96 @ 102 263,174
Agency Power Supply System
Revenue Bonds 1985A
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$3,065,000 Total bonds (cost $3,247,131) $3,251,788
_________________________________________________________________________________________________________________________
See notes to schedule of investments.
</TABLE>
VOYAGEUR UNIT INVESTMENT TRUST, SERIES 1
Notes to Schedule of Investments
April 30, 1995
(1) The market value is determined by the evaluator (a) on the basis of current
bid prices for the bonds; (b) if bid prices are not available, on the basis
of current bid prices for comparable bonds; (c) by causing the value of the
bonds to be determined by others engaged in the practice of evaluating,
quoting or appraising comparable bonds; or (d) by any combination of the
above. Determinations of the aggregate bid price of the bonds, for purposes
of secondary market transactions by the Sponsor and redemptions by the
Trustee, will be made on each business day on which the New York Stock
Exchange is open for business as of the Evaluation Time, effective for all
sales or redemptions made subsequent to the last preceding determination.
(2) All ratings (unaudited) are by Standard & Poor's Corporation.
(3) Unless otherwise indicated, there is shown under this heading the year in
which each issue of bonds initially is redeemable and the redemption price
for that year; each such issue continues to be redeemable at declining
prices thereafter, but not below par, "S.F." indicates a sinking fund has
been or will be established with respect to an issue of bonds. In addition,
certain bonds in the portfolio may be redeemed in whole or in part other
than by operation of the stated redemption or sinking fund provisions under
certain unusual or extraordinary circumstances specified in the instruments
setting forth the terms and provisions of such bonds. A sinking fund is a
reserve fund accumulated over a period of time for retirement of debt. A
callable bond is one which is subject to redemption prior to maturity at
the option of the issuer.
(4) This issue of bonds is secured by, and payable from, escrowed U.S.
government securities.
(5) Insurance has been obtained from AMBAC by the issuer of these bonds.
VOYAGEUR UNIT INVESTMENT TRUST, SERIES 1
PART ONE
MUST BE ACCOMPANIED BY PART TWO
--------------
PROSPECTUS
--------------
SPONSOR: Voyageur Fund Managers, Inc.
90 South Seventh Street, Suite 4400
Minneapolis, Minnesota 55402
TRUSTEE: The Bank of New York
101 Barclay Street
New York, New York 10286
This Prospectus does not constitute an offer to sell, or a solicitation of an
offer to buy, securities in any jurisdiction to any person to whom it is not
lawful to make such offer in such jurisdiction.
This Prospectus does not contain all the information set forth in the
registration statement and exhibits relating thereto, which the Trust has filed
with the 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.
VOYAGEUR UNIT INVESTMENT TRUST
SERIES 1
SERIES 2
SERIES 3
PART TWO
---------------------------
The investment objectives of the Trusts are to obtain for Unitholders
tax-exempt income and conservation of capital through investment in a
diversified portfolio of municipal bonds.
The interest on all bonds in the Trusts is, in the opinion of recognized
bond counsel to the issuers of the obligations, not includable in gross income
for federal income tax purposes or in taxable net income of individuals, estates
or trusts for Minnesota income tax purposes under existing laws (except in
certain instances depending upon the Unitholders). Such interest income is
subject to tax in the case of corporations subject to the Minnesota Corporate
Franchise Tax or the Corporate Alternative Minimum Tax and is a factor in the
computation of the Minimum Fee applicable to financial institutions. Interest on
certain bonds may be includable in income for purposes of the federal and
Minnesota alternative minimum taxes. Capital gains, if any, are subject to tax.
The minimum purchase is three Units. Only whole Units may be purchased. The
value of the Units of the Trusts will fluctuate with the value of the underlying
bonds.
THE INITIAL PUBLIC OFFERING OF UNITS IN THE TRUSTS HAS BEEN COMPLETED. THE
UNITS OFFERED HEREBY ARE ISSUED AND OUTSTANDING UNITS THAT HAVE BEEN ACQUIRED BY
THE SPONSOR EITHER BY PURCHASE FROM THE TRUSTEE OF UNITS TENDERED FOR REDEMPTION
OR IN THE SECONDARY MARKET.
THIS PROSPECTUS IS IN TWO PARTS. INVESTORS SHOULD READ AND RETAIN BOTH
PARTS OF THIS PROSPECTUS 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.
---------------------------
THE DATE OF THIS PROSPECTUS IS THAT DATE WHICH IS SET FORTH IN PART ONE OF THE
PROSPECTUS.
SUMMARY
THE TRUST
Voyageur Unit Investment Trust, Series 1-3 (herein referred to collectively
as the "TRUSTS" and individually as a "TRUST") are each one of a series of
similar but separate unit investment trusts consisting of a diversified
portfolio of interest-bearing municipal bonds (the "BONDS") issued by or on
behalf of the State of Minnesota and counties, municipalities, authorities and
political subdivisions thereof. The interest on the Bonds in each Trust is, in
the opinion of recognized bond counsel to the issuing governmental authorities,
not includable in gross income for federal income tax purposes or in taxable net
income of individuals, estates and trusts for Minnesota income tax purposes
under existing laws (except in certain instances depending upon the
Unitholders). Such interest income is includable in taxable income of
corporations and financial institutions for purposes of the Minnesota franchise
tax. Interest on certain Bonds may be includable in income for purposes of the
federal and Minnesota alternative minimum taxes. See "The Trusts--Portfolios."
OBJECTIVES
The objectives of each Trust are tax-exempt income for federal and State of
Minnesota income tax purposes and conservation of capital. There is, of course,
no guarantee that these objectives will be achieved since the payment of
interest and conservation of capital is dependent upon the continued ability of
the issuers of the Bonds to meet such obligations. See "The Trusts--Portfolios."
In addition, the continuing tax-exempt status of such interest may be dependent
upon compliance following the issuance of the Bonds with certain restrictions
and upon future tax legislation. See "The Trusts--Tax Status."
THE UNITS
As of the date of this Prospectus the fractional and undivided interest
represented by a Unit was that amount stated under "Summary of Essential
Information" in Part One. If Units in the Trusts are redeemed, the fractional
undivided interest represented by each unredeemed Unit will increase although
the actual interest in the Trust represented by such Unit will remain
essentially unchanged.
ESTIMATED CURRENT RETURN AND ESTIMATED LONG-TERM RETURN
As of the date indicated therein, Estimated Current Return and Estimated
Long-Term Return to Unitholders is set forth in the "Summary of Essential
Information" in Part One. The methods of calculating Estimated Current Return
and Estimated Long-Term Return are set forth under "Estimated Current Return and
Estimated Long-Term Return."
DISTRIBUTIONS OF INTEREST AND PRINCIPAL
Distributions of interest received by a Trust, pro rated on an annual
basis, will be made semiannually unless the Unitholder elects to receive them
quarterly or monthly. Distributions of funds in the Principal Account, if any,
will be made semi-annually. See "Rights of Unitholders--Distribution of Interest
and Principal."
PUBLIC OFFERING PRICE
The Public Offering Price of the Units is equal to the aggregate bid price
of the Bonds in a Trust's portfolio divided by the number of Units outstanding
in such Trust, plus accrued interest on the date of settlement and a sales
charge equal to 5.50% of the Public Offering Price per Unit (5.820% of the
aggregate offering price of the Bonds per Unit), subject to reduction for
certain quantity purchases (see "Public Offering--Offering Price"). If the
underlying Bonds in each Trust were available for direct purchase, the purchase
price of such Bonds would not include the sales charge included in the Public
Offering Price of the Units.
MARKET FOR UNITS
The Sponsor, although not obligated to do so, presently intends to maintain
a market for the Units, as more fully described under "Public Offering--Market
for Units." If such market is not maintained, a Unitholder may be able to
dispose of his Units only through redemption.
RISK FACTORS
An investment in the Trusts should be made with an understanding of the
risks associated therewith, including, among other factors, the inability of the
issuer to pay the principal of or interested on a bond when due, volatile
interest rates, early call provisions, and changes to the tax status of the
Bonds. See "The Trusts--Risk Factors."
THE TRUSTS
GENERAL
Voyageur Unit Investment Trust, Series 1-3 (herein referred to collectively
as the "TRUSTS" and individually as a "TRUST") are each one of a series of
similar but separate unit investment trusts created under the laws of the State
of New York by a Trust Indenture and Agreement and related Reference Trust
Agreement (the "TRUST AGREEMENTS") among Voyageur Fund Managers, Inc. who has
assumed responsibility of an affiliate, Dougherty Dawkins, Inc. (formerly
Dougherty, Dawkins, Strand & Bigelow Incorporated and Dougherty, Dawkins, Strand
& Yost Incorporated), as Sponsor, The Bank of New York, as Trustee, and Voyageur
Fund Managers, Inc. as Evaluator.
PORTFOLIOS
The objectives of each Trust are to obtain for Unitholders tax-exempt
income, for federal and State of Minnesota income tax purposes, and conservation
of capital through investment in a diversified portfolio of municipal bonds.
There is, of course, no guarantee that a Trust's objectives will be achieved.
The portfolio of Bonds for each Trust was chosen by the Sponsor with a view to
achieving a balance of income and diversification as to the purpose of issue and
safety of principal. The following factors, among others, were considered in
selecting the Bonds: (a) 100% of the aggregate principal amount of the bonds
deposited in a Trust are obligations of the State of Minnesota or of the
counties, municipalities, authorities or political subdivisions thereof, so that
the interest on all of such obligations, in the opinion of bond counsel to the
issuing governmental authorities, is not includable in gross income for federal
income tax purposes or in taxable net income of individuals, trusts and estates
for Minnesota income tax purposes under existing laws (except in certain
instances depending upon the Unitholders); (b) the Bonds are diversified as to
purpose of issue; and (c) in the opinion of the Sponsor, the Bonds are fairly
valued relative to other bonds of comparable quality and maturity.
Notwithstanding clause (a) in the preceding sentence, interest on certain Bonds
may be includable in income for purposes of the federal and Minnesota
alternative minimum taxes. Interest on such Bonds also is subject to tax in the
case of corporations subject to the Minnesota Corporate Franchise Tax or the
Corporate Alternative Minimum Tax and is a factor in the computation of the
Minimum Fee applicable to financial institutions.
The portfolios of the Trusts do not contain any issues of bonds the
interest on which is includable in the income of individuals, estates and trust
for purposes of the federal and Minnesota alternative minimum taxes. See
"Schedule of Investments" in Part One.
As of the date indicated therein, the Bonds in each Trust (computed as a
percentage of the aggregate principal amount of Bonds in such Trust on such
date) were rated by Standard & Poor's Corporation or by Moody's Investors
Service as described in "Schedule of Investments" in Part One. Unrated Bonds
were, in the opinion of the Sponsor, of comparable investment quality as of such
date. For a description of the meaning of the applicable rating symbols as
published by Standard & Poor's Corporation and Moody's Investors Service, see
"Description of Bond Ratings." There can be no assurance that the economic and
political conditions on which the ratings of the Bonds are based will continue
or that particular Bond issues may not be adversely affected by changes in
economic, political or other conditions that do not affect the above ratings.
State grants and aids represent a large percentage of the total revenues of
cities, towns, counties and school districts in Minnesota. Even with respect to
Bonds that are revenue obligations and not general obligations of the issuer,
there can be no assurance that fiscal problems of the State of Minnesota will
not adversely affect the market value or marketability of the Bonds or the
ability of the respective obligors to pay interest on and principal of the
Bonds.
RISK FACTORS. An investment in Units of a Trust should be made with an
understanding of the risks which an investment in fixed-rate long-term debt
obligations may entail, including the risk that the value of a Trust and hence
of the Units will decline with increases in interest rates. High inflation and
recession, together with the fiscal and monetary measures adopted to attempt to
deal with those and other economic problems, have contributed to recent wide
fluctuations in interest rates and thus in the value of fixed-rate obligations
generally. The Sponsor cannot predict future economic policies or their
consequences or, therefore, the course or extent of any similar fluctuations in
the future.
In addition, investors should be aware that the Internal Revenue Code
includes provisions that significantly affect the federal income tax treatment
of interest on certain tax-exempt bonds, the projects and activities that may be
financed from proceeds of tax-exempt bonds and the principal amount of certain
tax-exempt bonds that may be issued by governmental entities in certain states,
including the State of Minnesota. Proposals may be introduced before Congress in
the future, the purpose of which will be to further restrict or eliminate the
federal income tax exemption for interest on debt obligations similar to the
Bonds in the Trusts. See "The Trusts--Tax Status."
Although Minnesota state law provides that interest on Minnesota bonds is
exempt from Minnesota state income taxation, the Minnesota state legislature has
recently enacted a statement of intent that Minnesota bonds should be subject to
Minnesota state income taxation if a court decides that this exemption violates
the Commerce Clause of, or otherwise contravenes, the U.S. Constitution,
effective for the calendar year in which such a decision becomes final. It
cannot be predicted whether a court would render such a decision or whether, as
a result thereof, interest on Minnesota bonds and therefore distributions by a
Trust would become subject to Minnesota state income taxation.
An investment in Units of the Trusts should be made with an understanding
of the risks which investments in certain categories of bonds may entail, as
described below.
(a) GENERAL OBLIGATION BONDS -- Certain of the Bonds in the Trusts may
be general obligations of a governmental entity that are backed by the ad
valorem property taxing power of the entity. General obligation bonds are
secured by the issuer's pledge of its faith, credit and taxing power for
the payment of principal and interest. However, the taxing power of any
governmental entity may be limited by provisions of state constitutions or
laws and an entity's credit will depend upon many factors, including an
erosion of the tax base due to population declines, natural disasters,
declines in the state's industrial base or inability to attract new
industries, economic limits on the ability to tax without eroding the tax
base and the extent to which the entity relies upon federal or state aid,
access to capital markets or other factors beyond the entity's control.
In the early 1980s the State of Minnesota experienced financial
difficulties due to a downturn in the State's economy resulting from the
national recession. As a consequence, the State's revenues were
significantly lower than anticipated in the July 1, 1979 to June 30, 1981
biennium and the July 1, 1981 to June 30, 1983 biennium.
In response to revenue shortfalls, the legislature broadened and
increased the State sales tax, increased income taxes (by increasing rates
and eliminating deductions) and reduced appropriations and deferred payment
of State aid, including appropriations for and aids to local governmental
units. The State's fiscal problems affected other governmental units within
the State, such as local government, school districts and state agencies,
which, in varying degrees, also faced cash flow difficulties. In certain
cases, revenues of local governmental units and agencies were reduced by
the recession.
Because of the State's fiscal problems, Standard & Poor's Corporation
reduced its rating on the State's outstanding obligation bonds from AAA to
AA+ in August 1981 and to AA in March 1982. Moody's Investors Service, Inc.
lowered its rating on the State's outstanding general obligation bonds from
Aaa to Aa in April 1982. The State's economy recovered in the July 1, 1983
to June 30, 1985 biennium, and substantial reductions in the individual
income tax were enacted in 1984 and 1985. Standard & Poor's raised its
rating on the State's outstanding general obligation bonds to AA+ in
January 1985. In 1986, 1987, 1991, 1992 and 1993, legislation was required
to eliminate projected budget deficits by raising additional revenue,
reducing expenditures, including aids to political subdivisions and higher
education, reducing the State's budget reserve (cash flow account),
imposing a sales tax on purchases by local governmental units, and making
other budgetary adjustments. A budget forecast released by the Minnesota
Department of Finance on March 1, 1994 projected a balanced General Fund at
the end of the then current biennium, June 30, 1995, plus an increase in
the State's cash flow account from $360 million to $500 million. Total
projected expenditures and transfers for the biennium are $17.0 billion.
The forecast also projects, however, a shortage of $29.5 million in the
Local Government Trust Fund at June 30, 1995, against total projected
expenditures from the Fund of $1.8 billion for the biennium.
State grants and aids represent a large percentage of the total
revenues of cities, towns, counties and school districts in Minnesota. Even
with respect to Bonds that are revenue obligations of the issuer and not
general obligations of the State, there can be no assurance that the fiscal
problems referred to above will not adversely affect the market or
marketability of the Bonds or the ability of the respective obligors to pay
interest on and principal of the Bonds.
(b) INDUSTRIAL REVENUE BONDS ("IRBS") -- Certain of the Bonds in the
Trusts may be IRBs. IRBs, including pollution control revenue bonds, are
tax-exempt securities issued by states, municipalities, public authorities
or similar entities ("ISSUERS") to finance the cost of acquiring,
constructing or improving various projects, including pollution control
facilities and certain industrial development facilities. These projects
are usually operated by private entities. IRBs are not general obligations
of governmental entities backed by their taxing power. Issuers are
obligated to pay amounts due on the IRBs only to the extent that funds are
available from the unexpended proceeds of the IRBs, if any, or receipts or
revenues of the issuer under arrangements between the issuer and the
private operator of a project. These arrangements may be in the form of a
lease, installment sale agreement, conditional sale agreement or loan
agreement, but in each case the payments to the issuer from the private
entity are designed to be sufficient to meet the payments of amounts due on
the IRBs.
IRBs are generally issued under bond resolutions, agreements or trust
indentures pursuant to which the revenues and receipts payable under the
issuer's arrangements with the private operator of a particular project
have been assigned and pledged to the holders of the IRBs or a trustee for
the benefit of the holders of the IRBs. In certain cases, a mortgage on the
underlying project may be granted to the holders of the IRBs or a trustee
as additional security for the IRBs. In addition, IRBs are frequently
directly guaranteed by the private operator of the project or by another
affiliated company. Regardless of the structure, payment of IRBs is solely
dependent upon the creditworthiness of the private operator of the project
or the guarantor. Private operators or guarantors that are industrial or
commercial companies 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 (including that of
low-cost foreign companies), unfunded pension fund liabilities or
off-balance sheet items, and financial deterioration resulting from
leveraged buy-outs or takeovers.
In the opinion of bond counsel rendered on the date of issuance of
each IRB in each Trust's portfolio, the interest on the IRBs is not
includable in gross income for federal income tax purposes or in taxable
net income of individuals, estates and trusts for Minnesota income tax
purposes under existing laws (except in certain instance depending upon the
Unitholders). Such interest income is includable in taxable income of
corporations and financial institutions for purposes of the Minnesota
franchise tax. Interest on certain IRBs may be includable in income for
purposes of the federal and Minnesota alternative minimum taxes. See "The
Trusts--Tax Status." In the case of an IRB, this tax status is dependent
upon the issues and private obligor meeting certain conditions, and the
opinion of bond counsel assumes that these conditions will be met. However,
there can be no assurance that the issuer and the private obligor will meet
these conditions, in which event the interest on the IRB could be
determined to be taxable, perhaps retroactively from the date of issuance
of the IRB. Further, there can be no assurance that legislation will not be
enacted which could case interest on some or all of the IRBs as well as
other Bonds in the Trusts to be subject to tax.
In certain cases, an IRB may provide that if the interest on such IRB
should ultimately be determined to be taxable, the IRB would become due and
payable and, in addition, may provide that any related letter of credit or
other security could be called upon to satisfy all or part of the
obligation. In other cases, however, an IRB may not provide for the
acceleration or redemption of the IRB or a call upon the related letter of
credit or other security upon a determination of taxability. In those cases
in which an IRB does not provide protection from a determination of
taxability or in which both the private party and the bank or other entity
issuing the letter of credit or other security are unable to meet their
obligations to pay the amounts due on the IRB as a result of a
determination of taxability, the Sponsor may direct the Trustee to sell the
IRB and, since it would be sold as a taxable security, it is expected that
it would have to be sold at a substantial discount from current market
price. In addition, as mentioned above, Unitholders might be required to
pay income tax on interest received prior to the date of the determination
of taxability.
(c) REVENUE OBLIGATIONS OF UTILITIES -- Certain of the Bonds in the
Trusts may be revenue obligations of issuers engaged in the generation,
distribution and/or sale of electrical power (including the sale of
electricity generated through nuclear energy) and/or natural gas. The
ability of such issuers to make payments of principal of, or interest on,
such obligations is dependent, among other things, upon the continuing
ability of such issuers to derive sufficient revenues from their operations
to meet debt service requirements. General problems confronting such
issuers include the difficulty in financing construction projects during
inflationary periods, ongoing design modifications, schedule extensions,
strikes, restrictions on operations and increased costs and delays
attributable to applicable environmental laws, the difficulty in obtaining
fuel for energy generation at reasonable prices, the difficulty in
obtaining natural gas for resale, and the effects of present or proposed
energy or natural resource conservation programs. The Sponsor believes that
all of the issuers of such obligations have been experiencing these
problems to a greater or less extent. 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. Any delays in the licensing,
construction or operation of power plants, or the suspension of operations
of such power plants, which have been or are being financed by proceeds of
certain of the Bonds held in the Trusts, may affect the payment of interest
on, or the repayment of the principal amount of, such Bonds. The Sponsor is
unable to predict the ultimate form any such regulations may take or the
impact such regulations might have on the Bonds in the Trusts.
The ability of state and local joint action power agencies to make
payments on bonds they have issued is dependent in large part upon payments
made to them pursuant to power supply or similar agreements. Courts in
Washington and Idaho have held that certain agreements between the
Washington Public Power Supply System and certain of its participants are
unenforceable because the participants did not have the authority to enter
into the agreements. While these decisions are not specifically applicable
to agreements entered into by public entities in other states, they may
cause an examination of the legal structure and economic viability of
certain projects financed by joint action power agencies, which might
exacerbate some of the problems referred to above and possibly lead to
legal proceedings questioning the enforceability of agreements upon which
payment of these bonds may depend.
(d) HOUSING AUTHORITY OBLIGATION -- Certain of the Bonds in the Trusts
may be obligations of municipal housing authorities and single-family
mortgage revenue bonds. Weaknesses in federal housing subsidy programs and
their administration may result in a decrease of subsidiaries available for
payment of principal of and interest on housing authority bonds. Economic
developments, including fluctuations in interest rates and increasing
construction and operating costs, may also adversely impact on revenues of
housing authorities. In the case of some housing authorities, inability to
obtain additional financing could also reduce revenues available to pay
existing obligations. Single-family mortgage revenue bonds are subject to
extraordinary mandatory redemption at par in whole or in part from the
proceeds derived from prepayments of underlying mortgage loans and also
from the unused proceeds of the issue within a stated period which may be
within a year from the date of issue. For a discussion of the consequences
to Unitholders of such redemption, see "The Trusts--Portfolios--General
Considerations," below.
The tax exemption for certain housing authority bonds depends upon
qualification under Section 103A of the Internal Revenue Code of 1954, as
amended (the "1954 CODE") or Section 143 of the Internal Revenue Code of
1986 (the "1986 CODE") in the case of single-family mortgage bonds or under
Section 103(b)(4)(A) of the 1954 Code, Section 142(d) of the 1986 Code or
other provisions of federal law in the case of certain multi-family housing
bonds (including Section 8 assisted bonds). These sections of the Code or
other provision of federal law contain certain ongoing requirements
relating to the cost and location of the residences financed with the
proceeds of the single-family mortgage bonds and the income levels of
tenants of the rental projects financed with the proceeds of the
multi-family housing bonds. While the issuers of the bonds, and other
parties, including the originators and servicers of the single-family
mortgages and the owners of the rental projects financed with the
multi-family housing bonds, covenant to meet these ongoing requirements and
generally agree to institute procedures designed to insure that these
requirements are met, there can be no assurance that these ongoing
requirements will be consistently met. The failure to meet these
requirements could cause the interest on the bonds to become taxable,
possibly retroactively from the date of issuance, thereby reducing the
value of the bonds, subjecting Unitholders to unanticipated tax liabilities
and possibly requiring the Trustee to sell the bonds at the reduced value.
Furthermore, any failure to meet these ongoing requirements might not
constitute an event of default under the applicable mortgage or permit the
holder to accelerate payment of the bond or require the issuer to redeem
the bond. In any event, where the mortgage is insured by the Federal
Housing Administration ("FHA"), the consent of the FHA may be required
before insurance proceeds would become payable to redeem the mortgage
subsidy bonds.
(e) REVENUE BONDS OF HOSPITAL AND HEALTH CARE FACILITIES -- Certain of
the Bonds in the Trusts may be hospital revenue bonds (including health
care facilities, nursing homes and congregate care facilities). The ability
of the issuers of such Bonds to meet their obligations is dependent, among
other things, upon the revenues, costs and occupancy levels of the subject
facilities. Additionally, a major portion of hospital revenues typically is
derived from federal or state programs such as Medicare and Medicaid and
from Blue Cross and other insurers. Changes in the compensation and
reimbursement formulas of these governmental program or in the rates of
insurers may reduce revenues available for the payment of principal of, or
interest on, hospital revenue bonds. New government legislation or
regulations and other factors, such as the inability to obtain sufficient
malpractice insurance, may also adversely impact the revenues or costs of
hospitals and may also adversely affect the ratings of hospital revenue
bonds held in the Trusts.
(f) FACILITY REVENUE BONDS DEPENDENT UPON USER FEES -- Certain of the
Bonds in the Trusts may be facility revenue bonds payable from and secured
by the revenues from the ownership and operation of particular facilities,
such as airports, bridges, turnpikes, port authorities, convention centers
and arenas. Therefore, payment may be adversely affected by reduction in
revenues due to such factors as increased cost of maintenance or decreased
use of a facility, lower cost of alternative modes of transportation or
scarcity of fuel and reduction or loss of rents.
(g) REVENUE OBLIGATIONS OF UNIVERSITIES AND SCHOOLS -- Certain of the
Bonds in the Trusts may be revenue obligations of universities and schools.
The ability of universities and schools to meet their obligations is
dependent upon various factors, including the revenues, costs and
enrollment levels of the institutions. In addition, their ability may be
affected by declines in enrollment and tuition revenue, the availability of
federal, state and alumni financial support, the method and validity, under
state constitutions, of present systems of financing public education,
fluctuations in interest rates and construction costs, increased
maintenance and energy costs, failure or inability to raise tuition or room
charges, and adverse results of endowment fund investments.
GENERAL CONSIDERATIONS. Most of the Bonds are subject to redemption, in
whole or in part, prior to their stated maturity date pursuant to sinking fund
or optional redemption provisions. A listing of the initial sinking fund and
optional redemption provisions, if any, with respect to each of the Bonds is set
forth under "Schedule of Investments" in Part One. In general, an optional
redemption provision is more likely to be exercised when the offering price
valuation of a bond is higher than its optional redemption price, as might occur
in periods of declining interest rates, then when such price valuation is less
than the bond's optional redemption price. In addition, certain Bonds may be
redeemed in whole or in part other than by operation of the stated redemption or
sinking fund provisions under certain unusual or extraordinary circumstances
specified in the instruments setting forth the terms and provisions of such
Bonds. CERTAIN OF THE BONDS WERE ACQUIRED BY THE TRUSTS AT PRICES IN EXCESS OF
PRICES AT WHICH SUCH BONDS MAY BE REDEEMED IN THE FUTURE. To the extent that a
Bond in a Trust is redeemed at a price which is less than the valuation of such
Bond on the date a Unitholder of such Trust acquired his Units, the proceeds
distributable to such Unitholder in respect of such redemption will be less than
that portion of the purchase price for such Units which was attributable to such
Bond. Such proceeds, however, may be more or less than the valuation of such
Bond at the time of such redemption. Because certain of the Bonds may from time
to time under certain circumstances be sold or redeemed or will mature in
accordance with their terms and the proceeds from such events will be
distributed to Unitholders and will not be reinvested, no assurance can be given
that a Trust will retain for any length of time its present size and
composition. A reduction in the size of a Trust will reduce the Estimated Net
Annual Interest Income of such Trust and result in a taxable event to
Unitholders and may affect the Estimated Current Return. See "The
Trusts--Estimated Current Return to Unitholders" and "The Trusts--Tax Status."
To the best knowledge of the Sponsor, there is no litigation pending as of
the date of this Prospectus in respect of any Bonds which might reasonably be
expected to have a material adverse effect upon the Trusts. Litigation may be
initiated at any time in the future on a variety of grounds with respect to
Bonds in the Trusts. Such litigation may affect the validity of such Bonds or
the tax-free nature of the interest thereon. While the outcome of litigation of
such nature can never be entirely predicted, each Trust has received opinions of
bond counsel to the issuing authorities of each Bond on the date of issuance to
the effect that the Bonds in such Trust have been validly issued and that the
interest thereon is not includable in gross income for federal income tax
purposes or in taxable net income of individuals, estates and trusts for
Minnesota income tax purposes under existing laws (except in certain instances
depending upon the Unitholders). Such interest income is includable in taxable
income of corporations and financial institutions for purposes of the Minnesota
franchise tax. Interest on certain Bonds may be includable in income for
purposes of the federal and Minnesota alternative minimum taxes.
In addition, other factors may arise from time to time which may
potentially impair the ability of issuers to meet obligations undertaken with
respect to Bonds. THE SPONSOR, THE TRUSTEE AND THE EVALUATOR SHALL NOT BE LIABLE
IN ANY WAY FOR ANY DEFAULT, FAILURE OR DEFECT IN ANY BOND.
An amendment to the Federal Bankruptcy Act was enacted in 1978 relating to
the adjustment of indebtedness owed by any political subdivision or public
agency or instrumentality of any state, including municipalities. Among other
things, this amendment facilitates the use of proceedings under the Federal
Bankruptcy Act by any such entity to restructure or otherwise alter the terms of
its obligations, including those of the type comprising a Trust's portfolio. The
Sponsor is unable to predict the effect of this legislation on the Trusts.
THE UNITS
On the date indicated therein, each Unit represented the fractional
undivided interest in the principal and net interest of the Trust set forth
under "Summary of Essential Information" in Part One. If any Units of a Trust
are redeemed by the Trustee after such date, the fractional undivided interest
therein represented by each unredeemed Unit will increase, although the actual
interest in such Trust represented by each such Unit will remain essentially the
same. Units will remain outstanding until redeemed upon tender to the Trustee by
any Unitholder, which may include the Sponsor, or until the termination of the
applicable Trust Agreement.
ESTIMATED CURRENT RETURN AND ESTIMATED LONG-TERM RETURN
As of the date indicated in Part One, the Estimated Current Returns and the
Estimated Long-Term Returns were those indicated in the "Summary of Essential
Information." The 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, Sponsor and Evaluator and with the principal
prepayment, redemption, maturity, exchange or sale of Bonds while the Public
Offering Price will vary with changes in the offering price of the underlying
Bonds; 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 (i) 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 the Bonds in a Trust and (ii) takes into
account a compounding factor, the expenses and sales charge associated with each
Trust Unit. Since the market values and estimated retirements of the Bonds and
the expenses of a 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 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.
TAX STATUS
FEDERAL TAX STATUS
All Bonds deposited in the Trusts were accompanied by copies of opinions of
bond counsel to the issuers thereof, given at the time of original delivery of
the Bonds, to the effect that the interest thereon in excludable from gross
income for Federal income tax purposes. In connection with the offering of Units
of the Trusts, neither the Sponsor, the Trustee, the auditors nor their
respective counsel have made any review of the proceedings relating to the
issuance of the Bonds or the basis for such opinions. Gain realized on the sale
or redemption of the Bonds by the Trustee or of a Unit by a Unitholder is,
however, includable in gross income for Federal income tax purposes. Such gain
does not include any amounts received in respect of accrued interest or accrued
original issue discount, if any. It should be noted that under recently enacted
legislation described below that subjects accretion of market discount on
tax-exempt bonds to taxation as ordinary income, gain realized on the sale or
redemption of Bonds by the Trustee or of Units by a Unitholder that would have
been treated as capital gain under prior law is treated as ordinary income to
the extent it is attributable to accretion of market discount. Market discount
can arise based on the price a Trust pays for Municipal Bonds or the price a
Unitholder pays for his or her Units. In addition, bond counsel to the issuing
authorities rendered opinions as to the exemption of interest on such Bonds,
when held by residents of the state in which the issuers of such bonds are
located, from state income taxes and, where applicable, local income taxes.
In the opinion of Special Counsel to the Trusts:
Each Trust is not an association taxable as a corporation for Federal
income tax purposes and interest and accrued original issue discount on
Bonds which is excludable from gross income under the Internal Revenue Code
of 1986 (the "CODE") will retain its status when distributed to
Unitholders, except to the extent such interest is subject to the
alternative minimum tax, an additional tax on branches of foreign
corporations and the environmental tax (the "SUPERFUND TAX"), as noted
below.
Exemption of interest and accrued original issue discount on any Bond
for Federal income tax purposes does not necessarily result in
tax-exemption under the laws of the several states as such laws vary with
respect to the taxation of such securities and in many states all or part
of such interest and accrued issue discount may be subject to tax.
Each Unitholder is considered to be the owner of a pro rata portion of
each asset of the respective Trust in the proportion that the number of
Units of such Trust held by him bears to the total number of Units
outstanding of such Trust under subpart E, subchapter J of chapter 1 of the
Code and will have a taxable event when such Trust disposes of a Bond, 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 a
Trust, if any, on Bonds delivered after the date the Unitholders pay for
their Units to the extent that such interest accrued on such Bonds during
the period from the Unitholder's settlement date to the date such Bonds are
delivered to a 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's assets ratably according to
value as of the date of acquisition of the Units. The basis of each Unit
and of each Bond which was issued with original issue discount must be
increased by the amount of the accrued original issue discount and the
basis of each Unit and of the Unitholder's interest in each Bond which was
acquired by such Unitholder at a premium must be reduced by the annual
amortization of Bond premium. The tax cost reduction requirements of the
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.
Sections 1288 and 1272 of 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"). 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 effect 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 the 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 incur 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 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 a 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 each adjustment
time and the alternative tax net operating loss deduction). "Adjusted current
earnings" includes all tax-exempt interest, including interest on all of the
Bonds in a Trust and tax-exempt original issued discount. Unitholders are urged
to consult their tax advisers with respect to the particular tax consequences to
them including the corporate alternative minimum tax, the Superfund Tax and the
branch profits tax imposed by Section 884 of the Code.
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 a 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 apply to interest paid on indebtedness incurred to purchase or
improve a personal residence or to purchase goods or services for personal
consumption). Also, under Section 265 of the Code, certain financial
institutions that acquire Units would generally not to be able to deduct any of
the interest expense attributable to ownership of such Units. Investors with
questions regarding these issues should consult with their tax advisers.
In the case certain Bonds in the Trusts, the opinions of bond counsel
indicate that interest on such Bonds received by a "substantial user" of the
facilities being financed with the proceeds of these Bonds or persons related
thereto, for periods while such Bonds are held by such a user or related person,
will not be excludable from Federal gross income, although interest on such
Bonds received by others would be excludable from Federal gross income.
"Substantial user" and "related person" are defined under U.S. Treasury
Regulations. Any person who believes that he or she may be a "substantial user"
or a "related person" as so defined should contact his or her tax adviser.
In the case of corporations, the alternative tax rate applicable to
long-term capital gains is 35% effective for long-term capital gains realized in
taxable years beginning on or after January 1, 1993. For taxpayers other than
corporations, net capital gains are subject to a maximum marginal stated tax
rate of 28%. 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.
In the opinion of Special Counsel to the Trusts for New York tax matters,
the Trusts are not associations taxable as a corporation and the income of the
Trusts will be treated as the income of the Unitholders under the income tax
laws of the State of New York.
ALL STATEMENTS OF LAW IN THE PROSPECTUS CONCERNING EXCLUSION FROM GROSS
INCOME FOR FEDERAL, STATE OR OTHER TAX PURPOSES 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 its counsel has made any special review for the Trusts
of the proceedings relating to the issuance of the Bonds or of the basis for
such opinions.
Section 86 of Code, in general, provides 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 includible 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
31, 1993, up to 85 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 Social Security benefits received exceeds an "adjusted base amount."
The adjusted base amount is $34,000 for unmarried taxpayers, $44,000 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.
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 Fund, will be subject to tax. A taxpayer whose
adjusted gross income already exceeds the base amount or the adjusted base
amount must include 50% or 85%, respectively, of his or her Social Security
benefits in gross income whether or not he or she 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.
For a discussion of the Minnesota tax status of income earned on Units of a
Trust, see the discussion of Minnesota tax status below. Except as noted
therein, the exemption of interest on state and local obligations for Federal
income tax purposes discussed above does not necessarily result in exemption
under the income or other tax laws of any state or city. The laws of the several
states vary with respect to the taxation of such obligations.
MINNESOTA STATE TAX STATUS
We understand that the Trusts only have income consisting of (i) interest
from bonds issued by the State of Minnesota and its political and governmental
subdivisions, municipalities and governmental agencies and instrumentalities and
bonds issued by possessions of the United States which would be exempt from
federal and Minnesota income taxation when paid directly to an individual, trust
or estate (the "BONDS"), (ii) gain on the disposition of such Bonds, and (iii)
proceeds paid under certain insurance policies issued to the Trustee or to the
issuers of the Bonds which represent maturing interest or principal payments on
defaulted Bonds held by the Trustee.
Neither the Sponsor nor its counsel have independently examined the Bonds
deposited in and held in a Trust. However, although no opinion is expressed
herein regarding such matters, it is assumed that: (i) the Bonds were validly
issued, (ii) the interest thereon is excludable from gross income for federal
income tax purposes and (iii) the interest thereon is exempt from income tax
imposed by Minnesota that is applicable to individuals, trusts and estates (the
"MINNESOTA INCOME TAX"). It should be noted that interest on the Bonds is
subject to tax in the case of corporations subject to the Minnesota Corporate
Franchise Tax or the Corporate Alternative Minimum Tax and is a factor in the
computation of the Minimum Fee applicable to financial institutions. The opinion
set forth below does not address the taxation of persons other than full time
residents of Minnesota.
In the opinion of Special Counsel to the Trusts:
(1) Each Trust is not an association taxable as a corporation and each
Unitholder of a Trust will be treated as the owner of a pro rata portion of
such Trust, and the income of such portion of such Trust will therefore be
treated as the income of the Unitholder for Minnesota Income Tax purposes;
(2) Income on the Bonds which is exempt from the Minnesota Income Tax
when received by a Unitholder of a Trust and which would be exempt from the
Minnesota Income Tax if received directly by a Unitholder, will retain its
status as exempt from such tax when received by such Trust and distributed
to such Unitholder;
(3) To the extent that interest on the Bonds, if any, is includible in
the computation of "alternative minimum taxable income" for federal income
tax purposes, such interest will also be includible in the computation of
"alternative minimum taxable income" for purposes of the Minnesota
Alternative Minimum Tax imposed on individuals, estates and trusts and on
corporations;
(4) Each Unitholder of a Trust will recognize gain or loss for
Minnesota Income Tax purposes if the Trustee disposes of a Bond (whether by
redemption, sale or otherwise) or if the Unitholder redeems or sells Units
of such Trust to the extent that such a transaction results in a recognized
gain or loss to such Unitholder for federal income tax purposes;
(5) Tax cost reduction requirements relating to amortization of bond
premium may, under some circumstances, result in Unitholders realizing
taxable gain for Minnesota Income Tax purposes when their Units are sold or
redeemed for an amount equal to or less than their original cost; and
(6) To the extent that interest derived from a Trust by a Unitholder
with respect to any Possession Bonds is excludable from gross income for
federal income tax purposes pursuant to 48 U.S.C. Section 745, 48 U.S.C.
Section 1423a and 48 U.S.C. Section 1403, such interest will not be subject
to either the Minnesota Income Tax or the Minnesota alternative minimum tax
imposed on individuals, estates and trusts. It should be noted that
interest relating to Possession Bonds is subject to tax in the case of
corporations subject to the Minnesota Corporate Franchise Tax or the
Corporate Alternative Minimum Tax.
We have not examined any of the Bonds deposited and held in the Trusts or
the proceedings for the issuance thereof or the opinions of bond counsel with
respect thereto, and therefore express no opinion to the exemption from State
income taxes of interest on the Bonds if received directly by a Unitholder.
EXPENSES AND CHARGES
SECONDARY MARKET EXPENSES. The cost of maintaining a secondary market,
including the preparation and printing of this Prospectus, advertising expenses
and legal fees, are currently paid by the Sponsor and not by the Trusts.
SPONSOR'S, TRUSTEE'S AND EVALUATOR'S FEES. The Sponsor's, Trustee's and
Evaluator's fees are set forth under "Summary of Essential Information" in Part
One. The Sponsor's fee may exceed the actual cost of providing portfolio
supervisory services for a Trust, but at no time will the total amount received
for portfolio supervisory services rendered to all series of Voyageur Unit
Investment Trust in any calendar year exceed the aggregate cost to the Sponsor
of supplying such services in such year. The Trustee's and Evaluator's fees for
each Trust are payable monthly on or before each monthly Distribution Date and
the Sponsor's annual fee for each Trust is payable annually on December 1, all
from the Interest Account of the appropriate Trust to the extent funds are
available and then from the Principal Account of such Trust. These fees may be
increased without approval of the Unitholders by amounts not exceeding
proportionate increases in consumer prices for services as measured by the
United States Department of Labor's Consumer Price Index entitled "All Services
Less Rent of Shelter" or, if such Index is no longer published, in a similar
index as determined by the Trustee and the Sponsor. If the balances in the
Principal and Interest Accounts are insufficient to provide for amounts payable
by a Trust, or amounts payable to the Trustee which are secured by its prior
lien on a Trust, the Trustee is permitted to sell Bonds to pay such amounts.
OTHER CHARGES. The following additional charges are or may be incurred by a
Trust: all expenses of the Trustee (including fees and expenses of counsel and
auditors) incurred in connection with its activities under the Trust Agreement,
including the expenses and costs of any action undertaken by the Trustee to
protect the Trust and the rights and interests of the Unitholders; fees of the
Trustee for any extraordinary services performed under the Trust Agreement;
indemnification of the Trustee for any loss or liability accruing to it without
gross negligence, bad faith or willful misconduct on its part, arising out of or
in connection with its acceptance or administration of the Trust;
indemnification of the Sponsor for any losses, liabilities and expenses incurred
in acting as Depositor of the Trust other than by reason of gross negligence,
bad faith or willful misconduct or by reason of reckless disregard of its
obligations and duties; all taxes and other governmental charges imposed upon
the Bonds or any part of the Trust (no such taxes or charges are being levied,
made or, to the knowledge of the Sponsor, contemplated); and, to the extent then
lawful as set forth in a written opinion of independent counsel to the Sponsor,
expenses (including legal, accounting and printing expenses) of maintaining
registration or qualification of the Units and/or the Trust under federal or
state securities laws subsequent to initial registration so long as the Sponsor
is maintaining a market for the Units.
The Trustee shall cause the accounts of each Trust to be audited not less
than annually by independent public accountants selected by the Sponsor. The
expense of an audit shall be an expense of each Trust; PROVIDED, HOWEVER, that
the Trustee shall not be required to have such an audit conducted if the cost to
a Trust would exceed $.50 per Unit on an annual basis. Unitholders covered by
the audit during the year may receive a copy of the audited financials upon
request.
The above expenses, including the Trustee's fee, when paid by or owing to
the Trustee are secured by a lien on the Trust from which such expenses are
payable. In addition, the Trustee is empowered to sell Bonds in order to make
funds available to pay all expenses.
PUBLIC OFFERING
OFFERING PRICE
The Public Offering Price of the Units in the secondary market is
determined by adding to the Evaluator's determination of the aggregate bid price
of the Bonds per Unit a sales charge of 5.82% thereof (except as provided below
for certain quantity purchases), equal to 5.50% of the Public Offering Price. A
proportionate share of accrued and undistributed interest payable with respect
to the Units on the date of settlement (five business days after order) is also
added to the Public Offering Price. Such accrued interest is not distributable
to Unitholders until Units are tendered for redemption or presented to the
Sponsor for repurchase by the Sponsor or until the termination of a Trust. See
"Rights of Unitholders--Distribution of Interest and Principal--Accrued
Interest."
The sales charge applicable to quantity purchases is reduced on a graduated
scale for sales to any purchaser of at least $100,000 or 100 Units and will be
applied on whichever basis is more favorable to the purchaser. Sales charges are
as follows:
<TABLE>
<CAPTION>
PERCENT OF PERCENT OF
OFFERING NET AMOUNT
DOLLAR AMOUNT PRICE INVESTED
<S> <C> <C>
Less than $100,000.......................................... 5.5% 5.820%
$100,000 but less than $500,000............................. 5.0 5.273
$500,000 but less than $1,000,000........................... 4.5 4.712
$1,000,000 or more.......................................... 4.0 4.167
- -------------------------
</TABLE>
The Public Offering Price of Units on the date of this Prospectus or on any
subsequent date may vary from the Public Offering Price set forth under "Summary
of Essential Information" in Part One in accordance with fluctuations in the
prices of the Bonds.
The aggregate bid price of the Bonds is determined by the Evaluator (a) on
the basis of current bid prices for the Bonds; (b) if bid prices are not
available, on the basis of current bid prices for comparable bonds; (c) by
causing the value of the Bonds to be determined by others engaged in the
practice of evaluating, quoting or appraising comparable bonds; or (d) by any
combination of the above. Determinations of the aggregate bid price of the
Bonds, for purposes of secondary market transactions by the Sponsor and
redemptions by the Trustee, will be made on each business day on which the New
York Stock Exchange is open for business as of the Evaluation Time, effective
for all sales or redemptions made subsequent to the last preceding
determination. See "Public Offering--Market for Units" and "Rights of
Unitholders-Redemption." For information relating to the calculation of the
Redemption Price, which, like the Public Offering Price in the secondary market,
is based upon the aggregate bid price of the underlying Bonds, see "Rights of
Unitholders--Redemption--Computation of Redemption Price per Unit."
DISTRIBUTION OF UNITS
Units acquired by the Sponsor in the secondary market referred to below are
offered to the public by this Prospectus at the current Public Offering Price.
The Sponsor has qualified the Units for sale in certain states. Units may
be sold to dealers who are members of the National Association of Securities
Dealers, Inc. at prices which include a concession from the Public Offering
Price (determined without any reductions for quantity purchases) of 3%, subject
to change from time to time.
Sales will be made only with respect to whole Units, and the Sponsor
reserves the right to reject, in whole or in part, any order for the purchase of
Units.
MARKET FOR UNITS
The Sponsor, although not obligated to do so, presently intends to maintain
a market for the Units at prices based upon each Unit's pro rata share of the
aggregate value of the Bonds determined (by the Evaluator) on the basis of the
bid side of the market. The Sponsor's repurchase price shall not be less than
the Redemption Price. See "Redemption--Computation of Redemption Price per
Unit." There is no sales charge incurred when a Unitholder sells Units back to
the Sponsor. Any Units repurchased by the Sponsor may be reoffered to the public
by the Sponsor at the Public Offering Price at the time, plus accrued interest.
If the supply of Units exceeds demand, or for any other reason, the Sponsor
may cease to maintain such a market in the Units at any time and from time to
time without notice. A secondary market in Units of a Trust will not be
maintained at any time during which the right of redemption for such Trust shall
have been suspended. See "Rights of Unitholders--Redemption--Tender of Units."
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, which is based upon
the aggregate bid price of the Bonds. IF A UNITHOLDER WISHES TO DISPOSE OF HIS
UNITS, HE SHOULD INQUIRE OF THE SPONSOR AS TO CURRENT MARKET PRICES PRIOR TO
MAKING A TENDER FOR REDEMPTION TO THE TRUSTEE. See "Rights of
Unitholders--Redemption."
Prospectuses relating to certain other unit investment trusts indicate an
intention, subject to change, on the part of the respective sponsors of such
trusts to repurchase units of those trusts on the basis of a price higher than
the bid prices of the securities in the trusts (i.e., on the basis of the
offering prices of such securities). Consequently, depending upon the prices
actually paid, the repurchase price of other sponsors for units of their trusts
may be computed on a somewhat more favorable basis than the repurchase price
offered by the Sponsor for Units of the Trusts in secondary market transactions.
As in the Trusts, the repurchase price per unit of such other trusts will depend
primarily upon the value of the securities in the portfolio of each such trust.
SPONSOR'S PROFITS
In maintaining a market for the Units (see "Public Offering--Market for
Units"), the Sponsor will realize profits or sustain losses in the amount of any
difference between the price at which it buys Units and the price at which it
resells or redeems such Units and to the extent it earns sales charges on
resales. Cash, if any, made available to the Sponsor prior to the settlement
date for the purchase of Units may be used in the Sponsor's business subject to
the limitations of the Securities Exchange Act of 1934 and may be of benefit to
the Sponsor.
RIGHTS OF UNITHOLDERS
CERTIFICATES
Ownership of Units is evidenced by 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.
Certificates may be issued in denominations of one Unit or any multiple
thereof. A Unitholder may be required to pay $2.00 per certificate reissued or
transferred, and to pay any governmental charge that may be imposed in
connection with each such transfer or interchange. For new certificates issued
to replace destroyed, stolen or lost certificates, the Unitholder must furnish
indemnity satisfactory to the Trustee and must pay such expenses as the Trustee
may incur. Mutilated certificates must be surrendered to the Trustee for
replacement.
DISTRIBUTION OF INTEREST AND PRINCIPAL
Interest received by the Trustee on the Bonds, including that part of the
proceeds of any disposition of Bonds which represents accrued interest, shall be
credited to the Interest Account of the appropriate Trust. All other moneys
received by the Trustee shall be credited to the Principal Account of the
appropriate Trust.
While interest will be distributed semi-annually, quarterly or monthly,
depending upon the method of distribution chosen, principal, including capital
gains, will be distributed only semi-annually. The Trustee is not required,
however, to make a distribution from the Principal Account unless the amount
available for distribution in such account equals at least $1.00 per Unit. In
addition, if at any time the pro rata share of cash in the Principal Account of
Unitholders exceeds $10.00 as of a monthly Record Date, the Trustee shall, to
the extent permitted under applicable law, on the next succeeding monthly
Distribution Date, distribute the Unitholders' pro rata share of the balance of
the Principal Account.
The pro rata share of cash in the Principal Account will be computed as of
each semi-annual Record Date and distributions to the Unitholders as of such
Record Date will be made on or shortly after the following Distribution Date.
Proceeds received from the disposition, including sale, call or maturity, of any
of the Bonds after a Record Date will be held in the Principal Account and
either used to pay for Units redeemed or distributed on the Distribution Date
following the next semi-annual Record Date.
The pro rata share of the Interest Account will be computed by the Trustee
each month as of each Record Date and distributions will be made on or shortly
after the fifteenth day of the month to Unitholders as of the Record Date who
are entitled to distributions at that time under the plan of distribution
chosen. Persons who purchase Units between a Record Date and a Distribution Date
will receive their first distribution on the Distribution Date following the
next Record Date under the applicable plan of distribution. 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.
Details of distributions per Unit under the various plans based upon
Estimated Net Annual Interest Income are set forth in the "Summary of Essential
Information" in Part One as of the date indicated therein. The amount of the
regular distributions will remain the same as long as the Trust portfolio and
Trust expenses remain the same.
The plan of distribution selected by a Unitholder 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. For the convenience of Unitholders, in May of each year the Trustee will
furnish each Unitholder a card to be returned to the Trustee, together with the
certificate to which it relates, by June 15 of such year if the Unitholder
wishes to change his plan of distribution. The change will become effective as
of June 2 of such year for the ensuing 12 months. Certificates should only be
sent by registered or certified mail to minimize the possibility of their being
lost or stolen. If the card and certificate are not returned to the Trustee, the
Unitholders will be deemed to have elected to continue the same plan.
Because Bond interest is not received by a Trust at a constant rate
throughout the year, any interest distribution may be more or less than the
amount actually deposited in the Interest Account and available for distribution
that month. In order to reduce fluctuations in distributions resulting from such
variances, the Trustee is required by the Trust Agreements to advance such
amounts as may be necessary to provide interest distributions of approximately
equal amounts. The Trustee will be reimbursed, without interest, for any such
advances from funds available from the Interest Account on the next ensuing
Record Date. Funds which are available for future distributions (including any
amount represented by accrued interest added to the Public Offering Price, see
"Public Offering--Offering Price"), payments of expenses and redemptions are in
accounts which are non-interest bearing to Unitholders and are therefore
available for use by, and will be of benefit to, the Trustee pursuant to normal
banking procedures.
As of the first day of each month, the Trustee will deduct from the
appropriate Interest Account and, to the extent funds are not sufficient
therein, from the appropriate Principal Account amounts necessary to pay the
expenses of each Trust. See "The Trusts--Expenses and Charges." 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 a Trust. Amounts
so withdrawn shall not be considered a part of a Trust's assets until such time
as the Trustee shall return all or any part of such amounts to the appropriate
account. In addition, the Trustee may withdraw from the Interest Account and the
Principal Account of a Trust such amounts as may be necessary to cover
redemption of Units of such Trust by the Trustee. See "Rights of
Unitholders--Redemption."
ACCRUED INTEREST. Accrued interest is the accumulation of unpaid interest
on a bond from the last day on which interest thereon was paid. Interest on
Bonds in a Trust is accounted for daily on an accrual basis. For this reason,
the Public Offering Price of Units will have added to it the proportionate share
of accrued interest to the date of settlement. Interest accrues to the benefit
of Unitholders commencing with the settlement date of their purchase
transaction.
Because of the varying interest payment dates of the Bonds, accrued
interest at any point in time prior to the termination of a Trust will be
greater than the amount of interest actually received by the Trust and
distributed to Unitholders. For example, a portion of the accrued interest paid
by a Unitholder when purchasing a Unit represents accrued interest which has
been accrued by a Trust but which will not be received by the Trust in time to
be distributed on the next Distribution Date. See "Public Offering--Offering
Price." As such accrued interest amounts are later received (generally over the
ensuing six months), additional amounts of unpaid interest will be continually
accrued by the Trust during its life and added to the value of the Units.
Therefore, during the life of a Trust there will always exist on each
Distribution Date an item of accrued interest that is added to the value of the
Units but which is not distributable to the Unitholders until a later
Distribution Date. Under customary procedures, if a Unitholder sells all or a
portion of his Units he will be entitled to receive his proportionate share of
all accrued interest payable with respect to the Units (including that portion
representing interest accrued but not yet received by a Trust) from the
purchaser of his Units. See "Public Offering--Market for Units." Similarly, if a
Unitholder redeems all or a portion of his Units, the Redemption Price per Unit
which he is entitled to receive from the Trustee will also include a
proportionate share of all accrued interest payable with respect to the Units.
See "Rights of Unitholders--Redemption--Computation of Redemption Price per
Unit." Thus, the accrued interest attributable to a Unit will not be entirely
recovered until the Unitholder either redeems or sells such Unit or until the
relevant Trust is terminated.
REINVESTMENT PLAN
Each Trust has terminated its Reinvestment Plan except with respect to
Unitholders participating in the Plan prior to September 1, 1989. The Plan will
remain open only with respect to Units held of record by participating
Unitholders on August 31, 1989. Any Units purchased after such date, whether by
participating Unitholders or by new Unitholders, will be ineligible.
Participants in the Reinvestment Plan have Trust distribution reinvested
automatically in one of several open-end, diversified management investment
companies (the "REINVESTMENT FUNDS") advised by Voyageur Fund Managers. Each
distribution of interest income, capital gains or principal on the participant's
Units is, on the applicable Distribution Date, automatically applied on that
date to purchase shares (or fractions thereof) of the Reinvestment Fund chosen
at net asset value as computed as of the close of trading on the New York Stock
Exchange on such date, plus the sales charge set forth in the prospectus of the
Reinvestment Fund. The sales charge is paid to Voyageur Fund Distributors, Inc.,
an affiliate of the Sponsor, as underwriter of the Reinvestment Funds.
REPORTS AND RECORDS
In connection with each distribution, the Trustee shall furnish Unitholders
a statement of the amount of interest, if any, and the amount of other receipts,
if any, which are being distributed, expressed in each case as a dollar amount
per Unit. Within a reasonable time after the end of each calendar year, the
Trustee will furnish to each person who at any time during the calendar year was
a Unitholder of record of a Trust a statement setting forth for each such Trust
(a) as to the Interest Account: interest received (including amounts
representing interest received upon any disposition of Bonds), deductions for
payment of applicable taxes and for fees and expenses of the Trust; and
distributions to Unitholders on redemption of their Units, and the balance
remaining after such deductions and distributions, 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; (b) as to the
Principal Account: the dates of disposition of any Bonds and the net proceeds
received therefrom (excluding any portion representing interest), deductions for
payment of applicable taxes and for fees and expenses of the Trust, the
distributions to Unitholders on redemptions of their Units, 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; (c) a list of
the Bonds disposed of during the calendar year and a list of the Bonds held, and
the number of Units outstanding on the last business day of such calendar year;
(d) the Redemption Price per Unit based upon the last computation thereof made
during such calendar year; and (e) amounts actually distributed during such
calendar year from the Interest Account and from the Principal Account,
separately stated, expressed both as total dollar amounts and as dollar amounts
representing the pro rata share of each Unit outstanding. The accounts of each
Trust shall be audited not less frequently than annually by independent
certified public accountants designated by the Sponsor, and the reports of such
accountants shall be furnished by the Trustee to Unitholders upon request.
The Trustee shall keep available for inspection by Unitholders, at all
reasonable times during usual business hours, books of record and accounts of
its transactions as Trustee, including records of the names and addresses of
Unitholders, certificates issued or held, a current list of Bonds in each
portfolio and a copy of the appropriate Trust Agreement.
REDEMPTION
TENDER OF UNITS. While it is anticipated that Units can be sold in the
secondary markets, Units may also be tendered to the Trustee for redemption at
its offices at 101 Barclay Street, New York, New York 10286, 20th floor, upon
payment of any relevant tax. At the present time there are no specific taxes
related to the redemption of the Units. No redemption fee will be charged by the
Sponsor or the Trustee. Units redeemed by the Trustee will be canceled.
Certificates for Units to be redeemed must be properly endorsed or
accompanied by a written instrument of transfer in form satisfactory to the
Trustee. Unitholders must sign exactly as their names appear 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.
Certificates should be sent only by registered or certified mail to minimize the
possibility of their being lost or stolen.
Within three business days following such tender Unitholders will be
entitled to receive in cash an amount for each Unit tendered equal to the
Redemption Price per Unit computed as of the Evaluation Time set forth in the
"Summary of Essential Information" in Part One on the date of tender. See
"Rights of Unitholders--Redemption--Computation of Redemption Price per Unit."
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 the Evaluation Time, the
date of tender is the next day on which the New York Stock 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. For
information relating to the purchase by the Sponsor of Units tendered to the
Trustee for redemption at prices equal to or in excess of the Redemption Price,
see "Rights of Unitholders--Redemption--Purchase by the Sponsor of Units
Tendered for Redemption."
Accrued interest paid on redemption shall be withdrawn from the Interest
Account of the applicable Trust or, if the balance therein is insufficient, from
the Principal Account of such Trust. All other amounts paid on redemption shall
be withdrawn from the Principal Account of the applicable Trust. The Trustee is
empowered to sell Bonds from a Trust in order to make funds available for
redemption of Units. Under each Trust Agreement, the Sponsor is obligated to
instruct the Trustee with respect to which Bonds are to be sold in such
circumstances. See "Sponsor--Responsibility." In deciding which Bonds should be
sold, the Sponsor intends to consider, among other things, such factors as: (a)
prevailing market conditions; (b) trading prices of the Bonds; (c) the effect on
interest distributions to Unitholders of the sale of various Bonds; (d) the
financial condition of the issuers thereof; and (e) the effect of the sale of
various Bonds on the investment character of the affected Trust. Such sales, if
required, could result in a sale of Bonds by the Trustee at a loss. To the
extent Bonds in a Trust portfolio are sold, the size and diversity of such Trust
will be reduced, and the Estimated Current Return and Estimated Long-Term Return
of the Units may be affected.
The Trustee reserves the right to suspend the right of redemption and to
postpone the date of payment of the Redemption Price per Unit for any period
during which the New York Stock Exchange is closed, other than weekend and
holiday closings, or trading on that Exchange is restricted or during which an
emergency exists as a result of which disposal or evaluation of the Bonds is not
reasonable practicable or for such other periods as the Securities and Exchange
Commission has by order permitted.
COMPUTATION OF REDEMPTION PRICE PER UNIT. The Redemption Price per Unit of
a Trust is the pro rata share of each Unit determined by the Trustee, as of the
Evaluation Time, on the basis of (a) cash on hand in such Trust (other than
funds covering contracts to purchase Bonds) or moneys in the process of being
collected; (b) the aggregate value of the Bonds in such Trust on the bid side of
the market (determined by the Evaluator); and (c) interest accrued thereon not
subject to collection, less (i) amounts representing taxes or governmental
charges payable out of such Trust; (ii) the accrued expenses of such Trust; and
(iii) cash held for distribution to Unitholders of record as of a date prior to
the determination. Accrued interest payable with respect to the Units from the
date of tender through the expected date of settlement also comprises a part of
the Redemption Price per Unit. For information relating to the Evaluator's
determination of the value of the Bonds in a Trust on the basis of their bid
prices, see "Public Offering--Offering Price."
PURCHASE BY THE SPONSOR OF UNITS TENDERED FOR REDEMPTION. Each Trust
Agreement requires that the Trustee notify the Sponsor of any tender of Units
for redemption. So long as the Sponsor is maintaining a bid in the secondary
market, the Sponsor, prior to the close of business on the second business day
following tender, may purchase any Units tendered to the Trustee for redemption
at the price so bid by making payment therefor to the Unitholder in an amount
not less than the Redemption Price on the date of tender. Payment for such Units
shall be made not later than the day on which the Units would otherwise have
been redeemed by the Trustee. See "Public Offering--Market for Units." Units
held by the Sponsor may be tendered to the Trustee for redemption as any other
Units. The decision of the Sponsor to redeem or not to redeem Units held by it
will not be affected by whether the Units were purchased from a Unitholder in
the secondary market or acquired from the Trustee in the manner described in
this paragraph. As noted above, the sale of Bonds to make funds available for
redemption will reduce the size and diversity of a Trust and may affect the
Estimated Current Return of the Units.
The offering price of any Units resold by the Sponsor will be in accord
with the Public Offering Price (see "Public Offering--Offering Price" described
in this Prospectus. Any profit resulting from the resale of such Units will
belong to the Sponsor, which likewise will bear any loss resulting from a lower
Public Offering or Redemption Price subsequent to its acquisition of such Units.
See "Public Offering--Sponsor's Profits."
SPONSOR
Voyageur Fund Managers, Inc. has assumed responsibility of an affiliate,
Dougherty Financial Group, Inc. (formerly Dougherty Dawkins, Inc., Dougherty,
Dawkins, Strand & Bigelow, Inc. and Dougherty, Dawkins, Strand & Yost, Inc.) as
Sponsor of the Trusts. Voyageur Fund Managers, Inc. is an indirect wholly-owned
subsidiary of Dougherty Financial Group, Inc., ("DFG")which is owned
approximately 49% by Michael E. Dougherty, approximately 49% by Pohlad Companies
and less than 1% by certain benefit plans for the employees of DFG and its
subsidiaries.
Mr. Dougherty co-founded the predecessor of DFG in 1977 and has served as
DFG's Chairman of the Board and Chief Executive Officer since inception. Pohlad
Companies is a holding company owned in equal parts by each of James O. Pohlad,
Robert C. Pohlad and William M. Pohlad. As of December 31, 1994, Voyageur Fund
Managers, Inc. served as the manager to six closed-end and ten open-end
investment companies (comprising 24 separate investment portfolios),
administered numerous private accounts and managed approximately $7.4 billion in
assets. The principal business address of Voyageur Fund Managers, Inc. is 90
South Seventh Street, Suite 4400, Minneapolis, Minnesota 55402. As of December
31, 1994, the total stockholders' equity of Voyageur Fund Managers, Inc. was
$5,675,766 (unaudited). (This paragraph relates only to the Sponsor and not to
the Trusts or to any of the Underwriters. 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 information will be made available by the Sponsor upon request.)
LIMITATIONS ON LIABILITY
The Sponsor is liable for the performance of its obligations arising from
its responsibilities under the Trust Agreements, but will not be liable or
responsible in any way for depreciation or loss incurred by reason of the sale
of any Bonds and will be under no liability to Unitholders for taking any action
or refraining from any action in good faith pursuant to the Trust Agreements or
for errors in judgment, except in cases of its own willful misfeasance, bad
faith, gross negligence or reckless disregard of its obligations and duties. See
"The Trusts--Portfolios" and "Sponsor--Responsibility."
RESPONSIBILITY
Under the Trust Agreements, the Sponsor is obligated to instruct the
Trustee with respect to which Bonds are to be sold in the circumstances
described under "Rights of Unitholders--Redemption" and is also empowered to
direct the Trustee to dispose of Bonds when certain events occur that adversely
affect the value of Bonds, including default in payment of interest or
principal, default in payment of interest or principal on other obligations of
the same issuer, institution of legal proceedings, default under other documents
adversely affecting debt service, decline in price or the occurrence of other
market or credit factors, or decline in projected income pledged for debt
service on revenue Bonds and advanced refunding that, in the opinion of the
Sponsor, may be detrimental to the interest of the Unitholders.
It is the responsibility of the Sponsor to instruct the Trustee to reject
any offer made by an issuer of any of the Bonds to issue new obligations in
exchange and substitution for any Bonds pursuant to a refunding or refinancing
plan, except that the Sponsor may instruct the Trustee to accept such an offer
or to take any action with respect thereto as the Sponsor may deem proper if the
issuer is in default with respect to such Bonds or in the written opinion of the
Sponsor the issuer will probably default in respect to such Bonds in the
foreseeable future.
Any obligations so received in exchange or substitution will be held by the
Trustee subject to the terms and conditions of the Trust Agreements to the same
extent as Bonds originally deposited thereunder. Within five days after the
deposit of obligations in exchange or substitution for underlying Bonds in the
portfolio of a Trust, the Trustee is required to give notice thereof to each
Unitholder of such Trust, identifying the Bonds eliminated and the Bonds
substituted therefor.
REGISTRATION
If at any time the Sponsor shall resign or fail to perform any of its
duties under the Trust Agreements or becomes incapable of acting or becomes
bankrupt or its affairs are taken over by public authorities, then the Trustee
may appoint a successor sponsor or terminate the applicable Trust Agreement and
liquidate the affected Trust.
TRUSTEE
The Trustee is The Bank of New York, a trust company organized under the
laws of New York, with offices at 101 Barclay Street, New York, New York 10286,
(800) 225-5145. 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 or
Governors of the Federal Reserve System, and its deposits are insured by the
Federal Deposit Insurance Corporation to the extent permitted by law. The
Trustee commenced operations on February 3, 1986 when it acquired the unit
investment trust division of Fidata Trust Company New York.
The duties of the Trustee are primarily ministerial in nature. It did not
participate in the selection of Bonds for any Trust portfolio.
LIMITATIONS ON LIABILITY
The Trustee shall not be liable or responsible in any way for depreciation
or loss incurred by reason of the disposition of any moneys, Bonds or
certificates or in respect of any evaluation or for any action taken in good
faith reliance on prima facie properly executed documents, except in cases of
its own willful misfeasance, bad faith, gross negligence or reckless disregard
of its obligations and duties. In addition, the Trustee shall not be personally
liable for any taxes or other governmental charges imposed upon or in respect of
a Trust which the Trustee may be required to pay under current or future law of
the United States or any other taxing authority having jurisdiction. See "The
Trusts--Portfolios."
RESPONSIBILITY
For information relating to the responsibilities of the Trustee under the
Trust Agreements, see "Rights of Unitholders."
RESIGNATION
By executing an instrument in writing and filing the same with the Sponsor,
the Trustee and any successor may resign. In such an event the Sponsor is
obligated to appoint a successor trustee as soon as possible. If the Trustee
becomes incapable of acting or becomes bankrupt or its affairs are taken over by
public authorities, the Sponsor may remove the Trustee and appoint a successor
as provided in the Trust Agreements. Such resignation or removal shall become
effective upon the acceptance of appointment by the successor trustee. If upon
resignation of a trustee a successor trustee has not been appointed or, if
appointed, has not 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 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.
EVALUATOR
The Evaluator is Voyageur Fund Managers, Inc., a registered investment
adviser which performs portfolio evaluation services, municipal research, asset
management and investment advisory services. See "Sponsor" above.
LIMITATIONS ON LIABILITY
The Trustee, the Sponsor and the Unitholders may rely upon any evaluation
furnished by the Evaluator and shall have no responsibility for the accuracy
thereof. Determinations by the Evaluator under the Trustee Agreements shall be
made in good faith upon the basis of the best information available to it;
provided however, that the Evaluator shall not be under any liability to the
Trustee, the Sponsor or the Unitholders for errors in judgment. But this
provision shall not protect the Evaluator in cases of willful misfeasance, bad
faith, gross negligence or reckless disregard of its obligations and duties.
RESPONSIBILITY
Each Trust Agreement requires the Evaluator to evaluate the Bonds on the
basis of their bid prices on each business day on which the New York Exchange is
open for business as of the Evaluation Time.
RESIGNATION
The Evaluator may resign or may be removed by the Sponsor and the Trustee,
and the Sponsor and the Trustee are to use their best efforts to appoint a
satisfactory successor. Such resignation or removal shall become effective upon
the acceptance of appointment by the successor evaluator. If upon resignation of
the Evaluator no successor has accepted appointment within 30 days after notice
of resignation, the Evaluator may apply to a court of competent jurisdiction for
the appointment of a successor.
AMENDMENT AND TERMINATION OF THE TRUST AGREEMENTS
AMENDMENT
The Sponsor and the Trustee have the power to amend the Trust Agreements
without the consent of any of the Unitholders when the purpose of such an
amendment is (a) to cure any ambiguity or to correct or supplement any provision
of the Trust Agreements 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 interests of the Unitholders. In addition, the Sponsor and
the Trustee may amendment a Trust Agreement with the consent of the Unitholders
evidencing 51% of the Units of the related Trust then outstanding, provided that
no such amendment will reduce the interest in such Trust of any Unitholder
without the consent of such Unitholder or reduce the percentage of Units
required to consent to any such amendment without the consent of all the
Unitholders of such Trust. In no event, however, shall a Trust Agreement be
amended to extend its Mandatory Termination Date, to increase the number of
Units issuable thereunder, to permit the deposit or acquisition of securities
either in addition to or in substitution for any of the Bonds initially
deposited in the related Trust, except for the substitution of certain refunding
securities for such Bonds, or to permit the Trustee to engage in business or
investment activities not specifically authorized in such Trust Agreement as
originally executed. In the event of any amendment, the Trustee is obligated to
notify promptly all Unitholders of the substance of such amendment.
TERMINATION
The Trust shall terminate upon the maturity, redemption, sale or other
disposition, as the case may be, of the last of the Bonds. In addition, a Trust
may be terminated at any time by the consent of 51% of the Unitholders or by the
Trustee when the value of such Trust as determined by the Trustee is less than
the discretionary liquidation amount set forth under "Summary of Essential
Information" in Part One. The value of a Trust may decrease below its optional
termination value by reason, among other things, of the sale or redemption of
the Bonds as well as a decline in the value of the Bonds as the result of
fluctuations in interest rates and/or other market factors. In no event may a
Trust continue beyond the Mandatory Termination Date set forth under "Summary of
Essential Information" in Part One. In the event of termination, written notice
thereof will be sent by the Trustee to all Unitholders of such Trust. Within a
reasonable period after termination of a Trust, the Trustee will sell any bonds
remaining in such Trust and, after paying all expenses and charges incurred by
such Trust will distribute to each Unitholder of such Trust, upon surrender for
cancellation of his certificate for Units, his pro rata share of the balance
remaining in the Interest and Principal Accounts.
LEGAL OPINIONS
Certain legal matters in connection with the Units offered hereby have been
passed upon by Chapman and Cutler, Chicago, Illinois, as special counsel to the
Sponsor.
INDEPENDENT AUDITORS
The Financial Statements, including the Schedules of Investments, appearing
in Part One of this Prospectus are included herein in reliance upon the reports
of KPMG Peat Marwick LLP, independent auditors, and upon the authority of that
firm as experts in accounting and auditing.
DESCRIPTION OF BOND RATINGS
STANDARD & POOR'S CORPORATION
A 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 upon 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, upon the following
considerations:
(a) 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;
(b) Nature of and provisions of the obligation; and
(c) Protection afforded by, and relative position of, the obligation
in the event of bankruptcy, reorganization or other arrangement 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 degrees.
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
bonds in this category than in higher rated categories.
BB, B, CCC, CC: Bonds rated BB, B, CCC and CC are regarded, on balance, as
predominately speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and CC the highest degree of speculation. While
such bonds will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.
Plus (+) or Minus (-): To provide more detailed indications of credit
quality, the ratings from "AAA" to "BB" may be modified by the addition of a
plus or minus sign to show relative standing within the major rating categories.
#: Indicates that continuance of the rating is contingent upon Standard &
Poor's receipt of closing documentation confirming investments and cash flows.
Provisional Ratings: A provisional rating, indicated by the letter "p"
following a rating, assumes the successful completion of the project being
financed by the issuance of the bonds being rated and indicates that payment of
debt service requirement 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
A summary of the meaning of the applicable rating symbols as published by
Moody's follows:
Aaa: Bonds which are rated Aaa are judged to be of 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 visualized are most unlikely to impair the
fundamentally strong position of such issues.
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 grade 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.
A: Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium 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.
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.
Ba: Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B: Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
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.
Moody's applies numerical modifiers 1, 2 and 3 in each rating
classification from "Aa" through "B" in its corporate rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the security ranks in the lower end of its generic category.
TAX FREE VS. TAXABLE INCOME
As of the date of this Prospectus, the following table shows the
approximate taxable estimated current returns for individuals that are
equivalent to tax-exempt estimated current returns under combined Federal and
Minnesota State taxes using the published Federal and Minnesota State tax rates
scheduled to be in effect. The table illustrates approximately what you would
have to earn on taxable investments to equal the tax-exempt estimated current
return in your income tax bracket. For cases in which more than one State
bracket falls within a Federal bracket, the highest State bracket is combined
with the Federal bracket. The combined Minnesota State and Federal tax rates
shown reflect the fact that State tax payments are currently deductible for
Federal tax purposes. The table does not show the approximate taxable estimated
current returns for individuals that are subject to the alternative minimum tax.
The taxable equivalent estimated current returns may be somewhat higher than the
equivalent returns indicated in the table for those individuals who have
adjusted gross incomes in excess of $114,700. The table does not reflect the
effect of limitations on itemized deductions and the deduction for personal
exemptions. They were designed to phase out certain benefits of these deductions
for higher income taxpayers. These limitations, in effect, raise the marginal
maximum Federal tax rate to approximately 44 percent for taxpayers filing a
joint return and entitled to four personal exemptions and to approximately 41
percent for taxpayers filing a single return entitled to only one personal
exemption. These limitations are subject to certain maximums, which depend on
the number of exemptions claimed and the total amount of the taxpayer's itemized
deductions. For example, the limitation on itemized deductions will not cause a
taxpayer to lose more than 80% of his allowable itemized deductions, with
certain exceptions. See "Tax Status" for a more detailed discussion of recent
Federal tax legislation, including a discussion of provisions affecting
corporations.
<TABLE>
<CAPTION>
Taxable Income ($1,000's) Tax-Exempt Estimated Current Return
------------------------- -----------------------------------
Single Joint Tax 5% 5 1/2% 6% 61/2% 7% 71/2% 8%
Return Return Bracket Equivalent Taxable Estimated Current Returns
------ ------ ------- -------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0 - 23.35 $ 0 - 39.00 21.8% 6.39% 7.03% 7.67% 8.31% 8.95% 9.59% 10.23%
23.35 - 56.55 39.00 - 94.25 34.1 7.59 8.35 9.10 9.86 10.62 11.38 12.14
56.55 - 117.95 94.25 - 143.60 36.9 7.92 8.72 9.51 10.30 11.09 11.89 12.68
117.95 - 256.50 143.60 - 256.50 41.4 8.53 9.39 10.24 11.09 11.95 12.80 13.65
Over 256.50 Over 256.50 44.7 9.04 9.95 10.85 11.75 12.66 13.56 14.47
</TABLE>
================================================================================
No person is authorized to give any information or to make any representations
not contained in this Prospectus, and any information or representation not
contained herein must not be relied upon as having been authorized by the
Trusts, the Trustee or the Sponsor. This Prospectus does not constitute an offer
to sell or a solicitation of an offer to buy securities in any state to any
person to whom it is not lawful to make such offer in such state.
TABLE OF CONTENTS
Page
Summary............................................2
The Trusts.........................................3
Public Offering...................................17
Rights of Unitholders.............................20
Sponsor...........................................25
Trustee...........................................26
Evaluator.........................................27
Amendment and Termination
of the Trust Agreements.........................28
Legal Opinions....................................29
Independent Auditors..............................29
Description of Bond Ratings.......................29
Tax Free vs. Taxable Income.......................31
This Prospectus contains information concerning the Trusts and the Sponsor, but
does not contain all of the information set forth in the Trusts' registration
statements, amendments and exhibits relating thereto, which have been filed with
the 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.
================================================================================
================================================================================
PROSPECTUS
PART TWO
VOYAGEUR UNIT
INVESTMENT TRUST
SERIES 1
SERIES 2
SERIES 3
Voyageur Fund Managers, Inc.
90 South Seventh Street, Suite 4400
Minneapolis, Minnesota 55402
Trustee:
The Bank of New York
101 Barclay Street
New York, New York 10286
================================================================================
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,
Voyageur Unit Investment Trust, Series 1, 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 Minneapolis and State of Minnesota on the 22nd day
of November, 1995.
Voyageur Unit Investment Trust, Series 1
(Registrant)
By Voyageur Fund Managers, Inc.
(Depositor)
By /S/Thomas J. Abood
-----------------------------
General Counsel
(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 November 22, 1995:
Michael E. Dougherty
- --------------------------
Michael E. Dougherty Chairman of the Board of Directors
and Director
John G. Taft
- --------------------------
John G. Taft Chief Executive Officer
and Director
Edward J. Kohler
- --------------------------
Edward J. Kohler Director
Frank C. Tonnemaker
- --------------------------
Frank C. Tonnemaker Director
Jane M. Wyatt
- --------------------------
Jane M. Wyatt Director
Thomas J. Abood signs this document pursuant to a Power of Attorney filed
with the Securities and Exchange Commission with the initial Registration
Statement on Form S-6 for Voyageur Tax-Exempt Trust, Series 5 (Registration No.
33-62681).
VOYAGEUR UNIT INVESTMENT TRUST
SERIES 1 AND SUBSEQUENT SERIES
- --------------------------------------------------------------------------------
TRUST INDENTURE AND AGREEMENT
Among
DOUGHERTY, DAWKINS, STRAND & YOST INCORPORATED,
as Depositor
WALL STREET TRUST, A BANK OF NEW YORK DIVISION,
as Trustee
and
AMERICAN PORTFOLIO ADVISORY SERVICE INC.,
as Evaluator
- --------------------------------------------------------------------------------
Dated: /s/October 15, 1986
-------------
TRUST INDENTURE AND AGREEMENT
--------------------
TABLE OF CONTENTS
(This Table of Contents is not part of this
Trust Indenture and Agreement, but is provided
only for convenience of reference)
ARTICLE AND SECTION PAGE
- ------------------- ----
PREAMBLE.......................................................................1
ARTICLE I - DEFINITIONS .......................................................2
ARTICLE II - DEPOSIT OF BONDS; ACCEPTANCE OF TRUST'S
FORM AND ISSUANCE OF CERTIFICATES ................................5
Section 2.01 - Deposit of Bonds.......................................5
Section 2.02 - Acceptance of Trust....................................5
Section 2.03 - Issue of Certificates..................................6
Section 2.04 - Form of Certificates...................................6
ARTICLE III - ADMINISTRATION OF TRUST..........................................7
Section 3.01 - Initial Cost...........................................7
Section 3.02 - Interest Account...................................... 7
Section 3.03 - Principal Account......................................7
Section 3.04 - Reserve Account........................................8
Section 3.05 - Distribution...........................................8
Section 3.06 - Distribution Statements...............................13
Section 3.07 - Sale of Bonds.........................................15
Section 3.08 - Refunding Bonds.......................................17
Section 3.09 - Bond Counsel..........................................17
Section 3.10 - Notice and Sale by Trustee............................18
Section 3.11 - Trustee Not to Amortize...............................18
Section 3.12 - Liability of Depositor................................18
Section 3.13 - Notice to Depositor...................................18
Section 3.14 - Limited Replacement of Special Bonds..................19
ARTICLE IV - EVALUATION OF BONDS; EVALUATOR...................................21
Section 4.01 - Evaluation by Evaluator...............................21
Section 4.02 - Tax Reports...........................................21
Section 4.03 - Evaluator's Compensation..............................21
Section 4.04 - Liability of Evaluator................................22
Section 4.05 - Successor Evaluator...................................22
ARTICLE V - TRUST FUND EVALUATION, REDEMPTION,
PURCHASE, TRANSFER, INTERCHANGE OR
REPLACEMENT OF CERTIFICATES.......................................24
Section 5.01 - Trust Fund Evaluation.................................24
Section 5.02 - Redemptions by Trustee; Purchase by
Depositor...........................................24
Section 5.03 - Transfer or Interchange of Certificates...............27
Section 5.04 - Certificates Mutilated, Destroyed,
Stolen or Lost......................................27
ARTICLE VI - TRUSTEE..........................................................28
Section 6.01 - General Definition of Trustee's
Liabilities, Rights and Duties......................28
Section 6.02 - Books, Records and Reports............................31
Section 6.03 - Indenture and List of Bonds on File...................32
Section 6.04 - Compensation..........................................32
Section 6.05 - Removal and Resignation of Trustee;
Successor...........................................33
Section 6.06 - Qualifications of Trustee.............................35
ARTICLE VII - RIGHTS OF CERTIFICATEHOLDERS....................................35
Section 7.01 - Beneficiaries of Trust................................35
Section 7.02 - Rights, Terms and Conditions..........................35
ARTICLE VIII - DEPOSITOR......................................................36
Section 8.01 - Liabilities...........................................36
Section 8.02 - Discharge.............................................36
Section 8.03 - Successors............................................37
Section 8.04 - Resignation...........................................37
Section 8.05 - Exclusion from Liability..............................38
Section 8.06 - Annual Fee............................................39
ARTICLE IX - ADDITIONAL COVENANTS; MISCELLANEOUS
PROVISIONS.......................................................39
Section 9.01 - Amendments............................................39
Section 9.02 - Termination...........................................40
Section 9.03 - Construction..........................................43
Section 9.04 - Registration of Units.................................43
Section 9.05 - Written Notice........................................43
Section 9.06 - Severability..........................................44
Section 9.07 - Dissolution of Depositor Not to
Terminate...........................................44
EXECUTION.....................................................................44
EXHIBIT A - FORM OF CERTIFICATE OF OWNERSHIP.................................A-1
TRUST INDENTURE AND AGREEMENT
Dated /s/October 15, 1986
-------------
THIS TRUST INDENTURE AND AGREEMENT, dated as of /s/ October 15, 1986, among
Dougherty, Dawkins, Strand & Yost Incorporated (the "Depositor"), The Bank of
New York through its Wall Street Trust division (the "Trustee") and American
Portfolio Advisory Service Inc. (the "Evaluator").
WITNESSETH THAT:
In consideration of the premises and of the mutual agreements herein
contained, the Depositor, the Trustee and the Evaluator agree as follows:
INTRODUCTION
This Trust Indenture and Agreement effective as of the day and year first
above written shall be applicable to Voyageur Unit Investment Trust, Series 1
and to all subsequent series of Voyageur Unit Investment Trust formed on or
subsequent to the date hereof for which the applicability and the incorporation
by reference of this Trust Indenture and Agreement is specified in the
applicable Reference Trust Agreement relating to such series. For each series of
Voyageur Unit Investment Trust to which this Trust Indenture and Agreement is to
be applicable, the Sponsor, the Trustee and the Evaluator shall execute a
Reference Trust Agreement (or supplement or amendment to such Reference Trust
Agreement) incorporating by reference this Trust Indenture and Agreement and
designating any exclusion from or exception to such incorporation by reference
for the purposes of that series or variation of the terms hereof for the
purposes of that series and specifying for that series (a) the Bonds deposited
in trust at that time and the number of Units delivered by the Trustee in
exchange for the Bonds pursuant to Section 2.03, (b) the initial fractional
undivided interest represented by each Unit, (c) the First Distribution Date,
(d) the First General Record Date, (e) the First Settlement Date, (f) the amount
of the Trustee advancement with respect to any "when-issued" Bonds deposited in
the Trust pursuant to Section 3.05(a), (g) the amount of the distribution to be
made on the First Distribution Date pursuant to Section 3.05(a), and (h) any
other change or addition contemplated or permitted by this Trust Indenture and
Agreement.
ARTICLE I
DEFINITIONS
Whenever used in this Indenture, the following words and phrases, unless
the context clearly indicates otherwise, shall have the following meanings:
"Basic Agreements" shall mean this Trust Indenture and Agreement dated
___________, 1986 as originally executed, or if amended as hereinafter provided,
as so amended, exclusive of the terms contained in the Reference Trust
Agreement.
"Bond" shall mean such of the interest-bearing tax-exempt obligations,
including "when-issued" and/or regular way contracts, if any, for the purchase
of certain bonds and certified checks, cash or an irrevocable letter of credit
or a combination thereof in the amount required for such purchase, deposited in
an irrevocable trust and listed in Exhibit A to the Reference Trust Agreement,
and any obligations received in exchange or substitution for such obligations
pursuant to Sections 3.08 or 3.14 hereof, as may from time to time continue to
be held as a part of any Trust Fund.
"Business Day" shall mean any day other than a Saturday or Sunday, or a
legal holiday or a day on which banking institutions are authorized by law to
close in the City of New York, or a day on which the New York Stock Exchange is
closed.
"Certificate" shall mean any one of the certificates executed by the
Trustee and the Depositor evidencing ownership of an undivided fractional
interest in the Trust Fund substantially in the form of the Certificate of
Ownership in Exhibit A hereto.
"Certificateholder" shall mean the registered holder of any Certificate as
recorded on the books of the Trustee, his legal representatives and heirs and
the successors of any corporation, partnership or other legal entity which is a
registered holder of any Certificate and as such shall be deemed a beneficiary
of the trust created by this Indenture to the extent of his pro rata share
thereof.
"Contract Bonds" shall mean Bonds which are to be acquired by the Trust
Fund pursuant to contracts, including (a) Bonds listed in Exhibit A to the
Reference Trust Agreement and (b) Bonds which the Depositor has contracted to
purchase for the Trust Fund pursuant to Section 3.14 hereof.
"Depositor" shall mean Dougherty, Dawkins, Strand & Yost Incorporated and
its successors in interest, or any successor depositor or depositors as
hereinafter provided for.
"Evaluation Time" shall mean 4:00 p.m. in the City of New York, New York,
during the initial offering period and thereafter.
"Evaluator" shall mean American Portfolio Advisory Service Inc. and its
successors in interest, or any successor evaluator as hereinafter provided for.
"Failed Contract Notice" shall mean the notice given by the Depositor to
the Trustee of the Depositor's inability to deliver a Special Bond to the
Trustee after the Depositor is notified that the Special Bond will not be
delivered by the seller thereof to the Depositor.
"First Distribution Date" shall have the meaning assigned to it in Part II
of the Reference Trust Agreement.
"First General Record Date" shall have the meaning assigned to it in Part
II of the Reference Trust Agreement.
"First Settlement Date" shall have the meaning assigned to it in Part II of
the Reference Trust Agreement.
The words "herein," "hereby," "herewith," "hereof," "hereinafter,"
"hereunder," "hereinabove," "hereafter," "heretofore" and similar words or
phrases of reference and association shall refer to this Indenture in its
entirety.
"Indenture" shall mean the Basic Agreement as further amended, supplemented
or varied by the Reference Trust Agreement.
"Mandatory Termination Date" shall mean the end of the calendar year
immediately preceding the fiftieth anniversary of the date of the Indenture.
"Monthly Computation Date" shall mean the first day of each month
commencing with the First General Record Date.
"Monthly Distribution Date" shall mean the fifteenth day of each month
following a Monthly Computation Date.
"Prospectus" means the final prospectus relating to the registration of the
Units of the Trust under the Securities Act of 1933.
"Purchase Period" shall mean the period prior to or simultaneous with the
giving of the Failed Contract Notice or within 20 days thereafter during which
period the Depositor shall, if possible, purchase or enter into a contract to
purchase a New Bond.
"Quarterly Computation Date" shall mean the first day of March, June,
September and December, commencing with the first such date after the First
General Record Date.
"Quarterly Distribution Date" shall mean the fifteenth day of March, June,
September and December following a Quarterly Computation Date.
"Reference Trust Agreement" shall mean a supplement to the Basic Agreement,
the purpose of which shall be to amend, supplement and/or vary certain of the
terms contained in the Basic Agreement. Each Reference Trust Agreement, together
with the Basic Agreement to the extent that such Reference Trust Agreement
incorporates it by reference, defines all the terms, rights and duties relevant
to the series of Voyageur Unit Investment Trust to which such Reference Trust
Agreement relates.
"Replacement Bonds" shall mean bonds to be held as Bonds hereunder having
been purchased or held subject to contracts to purchase in replacement of failed
Special Bonds.
"Semi-Annual Computation Date" shall mean the first day of June and
December, commencing with the first such date after the First General Record
Date.
"Semi-Annual Distribution Date" shall mean the fifteenth day of June and
December following a Semi-Annual Computation Date.
"Special Bonds" shall mean Contract Bonds, other than pursuant to a
contract to purchase a Replacement Bond, including those purchased on a when, as
and if issued basis, which shall have failed due to any occurrence, act or event
beyond the control of the Depositor or the Trustee.
"Total Units" shall have the meaning assigned to it in Part II of the
Reference Trust Agreement.
"Trust" or "Trust Fund" shall mean the Trust created by this Indenture,
which shall consist of the Bonds held for the Trust Fund pursuant and subject to
this Indenture together with all undistributed interest received or accrued
thereon, and any undistributed cash realized from the sale, redemption,
liquidation or maturity thereof. Such amounts as may be on deposit in the
Reserve Account hereinafter established for the Trust Fund shall be excluded
from the Trust Fund.
"Trustee" shall mean The Bank of New York through its Wall Street Trust
division, or any successor trustee as hereinafter provided for.
"Unit" shall mean the fractional undivided interest in and ownership of the
Trust Fund equal to the fraction of the Trust Fund specified in Part II of the
Reference Trust Agreement, the denominator of which shall be decreased by the
number of any such Units redeemed as provided in Section 5.02.
"Unit Value" shall mean the value of the pro rata share of each Unit
determined on the basis of any evaluation under Section 5.01 hereof.
Words importing singular number shall include the plural number in each
case, and vice versa, and words importing person shall include corporations and
associations, as well as natural persons.
ARTICLE II
DEPOSIT OF BONDS; ACCEPTANCE OF TRUST'S
FORM AND ISSUANCE OF CERTIFICATES
SECTION 2.01 - DEPOSIT OF BONDS. The Depositor, concurrently with the
execution and delivery of the Reference Trust Agreement, will deposit with the
Trustee in Trust the Bonds listed in Exhibit A to such Reference Trust Agreement
in bearer form or duly endorsed in blank or accompanied by all necessary
instruments of assignment and transfer in proper form to be held, administered
and applied by the Trustee as herein provided. The Depositor shall deliver the
Bonds listed on said Exhibit A to the Trustee which were not actually delivered
concurrently with the execution and delivery of the Reference Trust Agreement
within 90 days after said execution and delivery, or if the contract to buy any
Bonds between the Depositor and the seller of such Bonds is terminated by such
seller for any reason beyond the control of the Depositor, the Depositor shall
forthwith take the remedial action specified in Section 3.14.
SECTION 2.02 - ACCEPTANCE OF TRUST. The Trustee hereby accepts the Trust
herein created for the use and benefit of the Certificateholders, subject to the
terms and conditions of this Indenture.
SECTION 2.03 - ISSUE OF CERTIFICATES. By executing a Reference Trust
Agreement, the Trustee will thereby acknowledge receipt of the deposit relating
to the Trust to which such Reference Trust Agreement relates, and simultaneously
with the receipt of said deposit will execute Certificates substantially in the
form of Exhibit A hereto representing the ownership of an aggregate of the Total
Units of such Trust. Pending receipt of evidence satisfactory to it of the
effectiveness of the registration statement relating to the Certificates under
the Securities Act of 1933, the Certificates will be held by the Trustee for the
account of the Depositor; provided, however, that notwithstanding any provision
to the contrary contained in this Indenture and in lieu of the receipt of
Certificates evidencing ownership of Units of the Trust, the Depositor or any
Underwriter of the Trust listed under the caption "Public Offering-Underwriting
Account" in the Prospectus, at its option, may elect that Units of the Trust
owned by it during the initial offering period be reflected by book entry on the
books and records of the Trustee. For all purposes, such Depositor or
Underwriter shall be deemed the owner of such Units as if a Certificate
evidencing ownership of Units of the Trust had actually been issued by the
Trustee. The Units reflected by book entry on the books and records of the
Trustee may be transferable by the registered owner of such Units by written
instrument in form satisfactory to the Trustee. The registered owner of Units
reflected by book entry on the books and records of the Trustee shall have the
right at any time to obtain Certificates evidencing ownership of such Units.
SECTION 2.04 - FORM OF CERTIFICATES. Each Certificate referred to in
Section 2.03 is, and each Certificate hereafter issued shall be, in
substantially the form contained in Exhibit A hereto, numbered serially for
identification, in fully registered form, transferable only on the books of the
Trustee as herein provided, executed manually or in facsimile by an authorized
officer of the Trustee and in facsimile by the President or one of the Vice
Presidents of the Depositor and dated the date of execution and delivery by the
Trustee; provided, however, that the Trustee and the Depositor are authorized to
take all actions necessary to make the Certificates eligible for deposit at, and
for transfer on the books and records of, the Depository Trust Company, 55 Water
Street, New York, New York 10041 and Midwest Securities Trust Company, One
Financial Place, 440 South LaSalle Street, Chicago, Illinois 60605. The Trustee
and the Depositor consent to the taking of all such actions. If and when the
Certificates become depository-eligible, in lieu of the receipt of a Certificate
evidencing ownership of Units of the Trust, any Certificateholder of the Trust
who is a participant in the Depository Trust Company or Midwest Securities Trust
Company, at such Certificateholder's option, may elect that Units of the Trust
owned by such Certificateholder be reflected by book entry on the books and
records of the appropriate depository.
ARTICLE III
ADMINISTRATION OF TRUST
SECTION 3.01 - INITIAL COST. The cost of the initial preparation, printing
and execution of the Certificates and this Indenture, the fees of the Evaluator
during the initial offering period, the initial fees of the Trustee and the
Trustee's counsel and other reasonable expenses in connection therewith shall be
paid by the Depositor; provided, however, that the liability on the part of the
Depositor for such initial costs, fees and expenses shall not include any fees,
costs or other expenses incurred in connection herewith after the execution of
this Indenture and the deposit referred to in Section 2.01.
SECTION 3.02 - INTEREST ACCOUNT. The Trustee shall collect the interest on
the Bonds for the Trust Fund as it becomes payable (including all interest
accrued but unpaid prior to the date of deposit of the Bonds in Trust and
including that part of the proceeds of the sale, liquidation, redemption or
maturity of any Bonds which represents accrued interest thereon) and credit such
interest to a separate account for the Trust Fund to be known as the "Interest
Account."
SECTION 3.03 - PRINCIPAL ACCOUNT.
(a) The Bonds and all moneys (except moneys delivered to the Trustee
pursuant to subsection (b) hereof) other than amounts credited to the Interest
Account, received by the Trustee in respect of the Bonds for the Trust Fund,
shall be credited to a separate account for the Trust Fund to be known as the
Principal Account."
(b) Moneys and/or irrevocable letters of credit which are required to cover
contracts to purchase bonds are hereby declared to be held in trust by the
Trustee for such purchase and shall not be deemed to be part of the Principal
Account until (i) the Depositor fails timely to purchase a Contract Bond and has
not given the Failed Contract Notice (pursuant to Section 3.14) at which time
the moneys and/or letters of credit attributable to the Contract Bond not
purchased by the Depositor shall be credited to the Principal Account; or (ii)
the Depositor has given the Trustee the Failed Contract Notice at which time the
moneys and/or letters of credit attributable to failed contracts referred to in
such Notice shall be credited to the Principal Account; provided, however, that
if the Depositor also notifies the Trustee in the Failed Contract Notice that it
has purchased or entered into a Contract to purchase a Replacement Bond
(pursuant to Section 3.14), the Trustee shall not credit such moneys and/or
letters of credit to the Principal Account unless the Replacement Bond shall
also have failed or is not delivered by the Depositor within two Business Days
after the settlement date of such Replacement Bond, in which event the Trustee
shall forthwith credit such moneys and/or letters of credit to the Principal
Account. The Trustee shall in any case forthwith credit to the Principal
Account, and/or cause the Depositor to deposit in the Principal Account, the
difference, if any, between the purchase price of the failed Contract Bond and
the purchase price of the Replacement Bond, together with any sales charge and
accrued interest applicable to such difference and distribute such moneys to the
Certificateholders pursuant to Section 3.05.
SECTION 3.04 - RESERVE ACCOUNT. From time to time the Trustee shall
withdraw from the cash on deposit in the Interest Account or the Principal
Account of the Trust Fund such amounts as it, in its sole discretion, shall deem
necessary to establish a reserve for any applicable taxes or other governmental
charges that may be payable out of the Trust Fund. Such amounts so withdrawn
shall be credited to a separate account for the Trust Fund which shall be known
as the "Reserve Account." The Trustee shall not be required to distribute to the
Certificateholders any of the amounts in the Reserve Account; provided, however,
that if the Trustee shall, in its sole discretion, determine that such amounts
are no longer necessary for payment of any applicable taxes or other
governmental charges, then it shall promptly deposit such amounts in the
appropriate account.
SECTION 3.05 - DISTRIBUTION.
(a) The Trustee, as of the First Settlement Date, shall advance out of its
own funds and cause to be deposited in and credited to the Interest Account such
amount as may be required to permit payment of the amount of interest accrued on
the Bonds in the Trust through such date, and shall pay to the Certificateholder
then of record, namely the Depositor, such amount. The Trustee shall also
advance from its own funds and pay to the appropriate persons, in an amount not
to exceed the amount set forth in Part II of the Reference Trust Agreement,
interest which accrues on any "when-issued" Bonds deposited in the Trust from
the First Settlement Date to the respective dates of delivery to the Trust of
any of such Bonds. The Trustee shall be entitled to be reimbursed, without
interest, for such advancement, subject to Section 6.04, and such reimbursement
shall be made from the interest received by the Trust.
The next distribution of funds from the Interest Account shall be made on
the First Distribution Date to all holders of record as of the First General
Record Date. Subsequent distributions shall be made as hereinafter provided.
As of each Monthly Computation Date, commencing with the first General
Record Date, the Trustee shall, with respect to the Trust Fund:
(i) deduct from the Interest Account or, to the extent funds are not
available in such Account, from the Principal Account and pay to itself
individually the amounts that it is at the time entitled to receive
pursuant to Sections 6.02 and 6.04 and this Section 3.05;
(ii) deduct from the Interest Account or, to the extent funds are not
available in such Account, from the Principal Account and pay to the
Evaluator the amount that it is at the time entitled to receive pursuant to
Section 4.03;
(iii) deduct from the Interest Account or, to the extent funds are not
available in such Account, from the Principal Account and pay to the
Depositor the amount that it is at the time entitled to receive pursuant to
Section 8.06;
(iv) deduct from the Interest Account or, to the extent funds are not
available in such Account, from the Principal Account an amount equal to
the unpaid fees and expenses, if any, including registration charges, Blue
Sky fees, printing costs, attorneys' fees, accounting costs and other
miscellaneous out-of-pocket expenses, as certified to by the Depositor,
incurred in keeping the registration of the Units and the Trust on a
current basis pursuant to Section 9.04; provided, however, that no portion
of such amount shall be deducted or paid unless the payment thereof from
the Trust is at that time permitted under the Investment Company Act of
1940 as evidenced by an opinion of independent counsel to the Depositor;
and
(v) deduct from the Interest Account or, to the extent funds are not
available in such Account, from the Principal Account and pay to bond
counsel, as hereinafter provided for, an amount equal to unpaid fees and
expenses, if any, of such bond counsel as certified to by the Depositor.
On the Semi-Annual Distribution Date, commencing with the first such date
following the First Distribution Date, or within a reasonable period of time
thereafter, the Trustee shall, with respect to the Trust, distribute by mail to
each Certificateholder of record at the close of business on the preceding
Semi-Annual Computation Date, at his post office address, such holder's pro rata
share of the balance of the Interest Account of the Trust plus such holder's pro
rata share of the cash balance of the Principal Account of the Trust, each
computed as of the preceding Semi-Annual Computation Date. The Trustee shall not
be required to make a distribution from the Principal Account unless the cash
balance on deposit therein available for distribution shall be sufficient to
distribute at least $1.00 per Unit.
(b) In the event the amount on deposit in any Interest Account on a
Semi-Annual Distribution Date is not sufficient for the payment of the amount of
interest to be distributed on the basis of the aforesaid computation, the
Trustee shall advance out of its own funds and cause to be deposited in and
credited to the Interest Account such amount as may be required to permit
payment of the monthly interest distribution to be made on such SemiAnnual
Distribution Date and shall be entitled to be reimbursed, without interest, out
of interest received by the Trust Fund on the first Semi-Annual Computation Date
following the date of such advance on which such reimbursement may be made
without reducing the amount of the Interest Account to an amount less than that
required for the next ensuing semi-annual, quarterly or monthly interest
distribution.
(c) In lieu of the semi-annual distributions of interest set forth above, a
Certificateholder may elect to receive payments from the Interest Account on a
quarterly or monthly basis. The distribution made on the First Distribution Date
to Certificateholders as of the First General Record Date, however, shall be
made to or upon the order of all holders of Certificates regardless of whether
they have chosen to receive subsequent distributions on a different basis.
Certificateholders desiring to receive quarterly or monthly distributions
and who purchase their Certificates prior to the First General Record Date may
elect at the time of purchase to receive distributions on a quarterly or monthly
basis by notice to the Trustee. Those indicating no preference will be deemed to
have elected to receive semi-annual distributions. Such notice shall be
effective with respect to subsequent distributions until changed by further
notice to the Trustee. In May of each year, the Trustee will furnish each
Certificateholder a card to be returned to the Trustee by June 15 of each year
if the Certificateholder wishes to change his plan of distribution. Those
wishing to change shall so indicate on the card and return it to the Trustee and
accompany the card by the surrender of the Certificate to which it relates.
Changes may be made only as herein provided and will become effective as of June
2 of such year to continue until further notice.
For quarterly distributions, the share of the balance in the Interest
Account to be distributed to or upon the order of a Certificateholder who has
elected to receive quarterly distributions, after the distribution on the First
Distribution Date, shall be computed as of the Quarterly Computation Date
commencing with the first such day subsequent to the First General Record Date
and the date of the Certificate and distribution shall be made as provided
herein on or shortly after the Quarterly Distribution Date to the
Certificateholder of record on the Quarterly Computation Date. Such computation
shall be made on the basis of one-quarter of the estimated annual interest
income to the Trust Fund for the ensuing 12 months for the Certificateholders
who have elected to receive quarterly distributions, after deduction of the
estimated costs and expenses to be incurred on behalf of such Certificateholders
during the 12-month period for which such interest income has been estimated.
For monthly distributions, the share of the balance in the Interest Account
to be distributed to or upon the order of a Certificateholder who has elected to
receive monthly distributions, after the distribution on the First Distribution
Date, shall be computed as of the Monthly Computation Date commencing with the
first such day subsequent to the First General Record Date and the date of the
Certificate and distribution shall be made as provided herein on or shortly
after the Monthly Distribution date to the Certificateholder of record on the
Monthly Computation Date. Such computation shall be made on the basis of
one-twelfth of the estimated annual interest income to the Trust Fund for the
ensuing 12 months for the account of Certificateholders who have elected to
receive monthly distributions, after deduction of the estimated costs and
expenses to be incurred on behalf of such Certificateholders during the 12-month
period for which such interest income has been estimated.
If on any Monthly Computation Date the pro rata share of the distributable
cash balance of the Principal Account exceeds $10.00, the Trustee shall, to the
extent permitted by the Investment Company Act of 1940 and the rules and
regulations thereunder or an exemptive order issued by the Securities and
Exchange Commission thereunder, on the next succeeding Monthly Distribution
Date, distribute by mail to each Certificateholder of record as of the close of
business on the immediately preceding Monthly Computation Date at his or her
address appearing on such Computation Date in the registration books of the
Trustee, such Certificateholder's pro rata share of the balance of the Principal
Account.
To the extent practicable, the Trustee shall allocate the expenses of the
Trust Fund among Units, giving effect to differences in administrative and
operational cost among those who have chosen to receive distributions
semi-annually, quarterly or monthly.
In the event the amount on deposit in the Interest Account for a quarterly
or monthly distribution is not sufficient for the payment of the amount of
interest to be distributed to Certificateholders participating in such
distributions on the basis of the aforesaid computations, the Trustee shall
advance its own funds and cause to be deposited in and credited to the Interest
Account such amounts as may be required to permit payment of the quarterly or
monthly interest distribution to be made as aforesaid and shall be entitled to
be reimbursed, without interest, out of interest received by the Trust Fund
subsequent to the date of such advance and subject to the condition that any
such reimbursement shall be made only under conditions which will not reduce the
funds in or available for the Interest Account to an amount less than required
for the next ensuing distribution of interest. Distributions to
Certificateholders who are participating in one of the optional plans for
distribution of interest shall not be affected because of advances by the
Trustee for the purpose of equalizing distributions to Certificateholders
participating in a different plan.
(d) The amounts to be so distributed to each Certificateholder shall be
that pro rata share of the cash balance of such Interest and Principal Accounts,
computed as set forth above, as shall be represented by the Units evidenced by
the outstanding Certificate or Certificates registered in the name of such
Certificateholder.
In the computation of each such share, fractions of less than one cent
shall be omitted. After any such distribution provided for above, any cash
balance remaining in any Interest Account or any Principal Account shall be held
in the same manner as other amounts subsequently deposited in each of such
Accounts, respectively.
For the purpose of distribution as herein provided, the holders of record
on the registration books of the Trustee at the close of business on each
Semi-Annual, Quarterly or Monthly Computation Date shall be conclusively
entitled to such distribution, and no liability shall attach to the Trustee by
reason of payment to any such registered Certificateholder of record. Nothing
herein shall be construed to prevent the payment of amounts from any Interest
Account and any Principal Account to individual Certificateholders by means of
one check, draft or other proper instrument, provided that the appropriate
statement of such distribution shall be furnished therein as provided in Section
3.06 hereof.
(e) If the Depositor (i) fails to replace any failed Special Bond or (ii)
is unable or fails to enter into any contract for the purchase of any
Replacement Bond in accordance with Section 3.14, the Trustee shall distribute
to all Certificateholders the principal and accrued interest attributable to
such Special Bond at the next Monthly Distribution Date which is more than 30
days after the expiration of the Purchase Period or at such earlier time or in
such manner as the Trustee in its sole discretion deems to be in the best
interest of the Certificateholders. To the extent funds are provided by the
Depositor, the Trustee will also distribute at such time the sales charge
attributable to such Special Bond.
If any contract for a Replacement Bond in replacement of a Special Bond
shall fail, the Trustee shall distribute the principal and accrued interest
attributable to the Special Bond to the Certificateholders at the next Monthly
Distribution Date which is more than 30 days after the date on which the
contract in respect of such Replacement Bond failed or at such earlier time or
in such earlier manner as the Trustee in its sole discretion determines to be in
the best interests of the Certificateholders. To the extent funds are provided
by the Depositor, the Trustee will also distribute at such time the sales charge
attributable to such Special Bond.
If, at the end of the Purchase Period, less than all moneys attributable to
the failed Special Bond have been applied or allocated by the Trustee pursuant
to a contract to purchase Replacement Bonds, the Trustee shall distribute the
remaining moneys to Certificateholders at the next Monthly Distribution Date
which is more than 30 days after the end of the Purchase Period or at such
earlier time thereafter as the Trustee in its sole discretion deems to be in the
best interests of the Certificateholders.
SECTION 3.06 - DISTRIBUTION STATEMENTS. With each distribution from the
Interest or Principal Accounts of the Trust Fund, the Trustee shall set forth,
either in the instrument by means of which payment of such distribution is made
or in an accompanying statement, the amount being distributed from each such
account expressed as a dollar amount per Unit.
In the event that the issuer of any of the Bonds in the Trust Fund shall
fail to make payment when due of any interest or principal and such failure
results in a change in the amount which would otherwise be distributed as a
monthly distribution, the Trustee shall, with the first such distribution for
the Trust Fund following such failure, set forth in an accompanying statement
(a) the name of the issuer and the Bond, (b) the amount of the reduction in the
distribution for the Trust Fund per Unit resulting from such failure, (c) the
percentage of the aggregate principal amount of Bonds which such Bond
represents, and (d) to the extent then determined, information regarding any
disposition or legal action with respect to such Bond.
Within a reasonable period of time after the last Business Day of each
calendar year, the Trustee shall furnish to each person who at any time during
such calendar year was a Certificateholder of the Trust Fund a statement for the
Trust Fund setting forth, with respect to such calendar year:
(a) as to the Interest Account:
(i) the amount of interest received on the Bonds (including any earned
original issue discount),
(ii) the amounts paid in connection with purchases of Replacement
Bonds pursuant to Section 3.14 and for redemption pursuant to Section 5.02,
(iii) the deductions for payment of applicable taxes, compensation of
the Evaluator, fees and expenses of the Trustee and bond counsel, and the
annual fee of the Depositor for portfolio supervisory services, and
(iv) the balance remaining after such distributions and deductions,
expressed both as a total dollar amount and as a dollar amount per Unit
outstanding on the last Business Day of such calendar year;
(b) as to the Principal Account:
(i) the dates of the sale, maturity, liquidation or redemption of any
of the Bonds and the net proceeds received therefrom, excluding any portion
thereof credited to the Interest Account,
(ii) the amount paid for purchases of Replacement Bonds pursuant to
Section 3.14 and for redemptions pursuant to Section 5.02,
(iii) the deductions for payment of applicable taxes, compensation of
the Evaluator, fees and expenses of the Trustee and bond counsel, and the
annual fee of the Depositor for portfolio supervisory services, and
(iv) the balance remaining after such distributions and deductions,
expressed both as a dollar amount and as a dollar amount per Unit
outstanding on the last Business Day of such calendar year; and
(c) the following information:
(i) a list of Bonds disposed of during such calendar year and a list
of the Bonds held as of the last Business Day of such calendar year,
(ii) the number of Units outstanding on the last Business Day of such
calendar year,
(iii) the Unit Value (as defined in Article I) based upon the last
Trust Fund evaluation made during such calendar year, and
(iv) the amounts actually distributed during such calendar year from
the Interest and Principal Accounts, separately stated and expressed both
as total dollar amounts and as dollar amounts per Unit outstanding on the
record dates for such distributions.
SECTION 3.07 - SALE OF BONDS. In order to maintain the sound investment
character of the Trust Fund, the Depositor may direct the Trustee to sell Bonds
at such price and time and in such manner as shall be determined by the
Depositor, provided that the Depositor has determined that any one or more of
the following conditions exist:
(a) that there has been a default on such Bonds in the payment of principal
or interest, or both, when due and payable;
(b) that an action or proceeding has been instituted in law or in equity
seeking to restrain or enjoin the payment of principal or interest on any such
Bonds, attacking the constitutionality of any enabling legislation, or alleging
and seeking to have judicially determined the illegality of the issuing body or
the constitution of its governing body or officers, the illegality, irregularity
or omission of any necessary acts or proceedings preliminary to the issuance of
such Bonds, or seeking to restrain or enjoin the performance by the officers or
employees of any such issuing body of any improper or illegal act in connection
with the administration of funds necessary for debt service on such Bonds or
otherwise; or that there exists any other legal question or impediment affecting
such Bonds or the payment of debt service on the same;
(c) that there has occurred any breach of covenant or warranty in any
resolution, ordinance, trust, indenture or other document which would adversely
affect either immediately or contingently the payment of debt service on such
Bonds, or other general credit standing, or otherwise impair the sound
investment character of such Bonds;
(d) that there has been a default in the payment of principal of or
interest on any other outstanding obligations of an issuer of such Bonds;
(e) that in the case of revenue bonds, the revenues and income of the
facility or project or other special funds expressly charged and pledged for
debt service on any such Bonds shall fall substantially below the estimated
revenues or income calculated by the proper officials charged with the
acquisition, construction or operation of such facility or project, so that, in
the opinion of the Depositor, the retention of such Bonds would be detrimental
to the sound investment character of the Trust Fund and to the interest of the
Certificateholders;
(f) that the price of any such Bonds has declined to such an extent, or
such other market or credit factor exists, so that in the opinion of the
Depositor the retention of such Bonds would be detrimental to the Trust Fund and
to the interest of the Certificateholders;
(g) that such Bonds are the subject of an advance refunding (for the
purposes of this Section 3.07(g), an "advance refunding" shall mean when
refunding bonds are issued and the proceeds thereof are deposited in an
irrevocable trust to retire the Bonds on or before their redemption date); or
(h) that as of any Record Date such Bonds are scheduled to be redeemed and
paid prior to the next succeeding Monthly Distribution Date; provided, however,
that as the result of such sale the Trustee will receive funds in an amount
sufficient to enable the Trustee to include in the distribution from the
appropriate Principal Account on such next succeeding Semi-Annual Distribution
Date at least $.50 per Unit.
Upon receipt of such direction from the Depositor, upon which the Trustee
shall rely, the Trustee shall proceed to sell the specified Bonds in accordance
with such direction; provided, however, that the Trustee shall not sell any
Bonds upon receipt of a direction from the Depositor if it has determined that
the conditions in subdivision (h) above exist, unless the Trustee shall receive
on account of such sale the full principal amount of such Bonds, plus the
premium, if any, and the interest accrued and to accrue thereon to the date of
the redemption of such Bonds. The Trustee shall not be liable or responsible in
any way for depreciation or loss incurred by reason of any sale made pursuant to
any such direction or by reason of the failure of the Depositor to give any such
direction, and in the absence of such direction the Trustee shall have no duty
to sell any Bonds under this Section 3.07 except to the extent otherwise
required by Section 3.10 of this Indenture.
SECTION 3.08 - REFUNDING BONDS. In the event that an offer shall be made by
an obligor of any of the Bonds to issue new obligations in exchange and
substitution for any issue of Bonds pursuant to a plan for the refunding or
refinancing of such Bonds, the Depositor shall instruct the Trustee in writing
to reject such offer and either to hold or sell such Bonds, except that if (a)
the issuer is in default with respect to such Bonds or (b) in the opinion of the
Depositor, given in writing to the Trustee, the issuer will probably default
with respect to such Bonds in the reasonably foreseeable future, the Depositor
shall instruct the Trustee in writing to accept or reject such offer or take any
other action with respect thereto as the Depositor may deem proper. Any
obligation so received in exchange shall be deposited in trust hereunder and
shall be subject to the terms and conditions of this Indenture to the same
extent as the Bonds originally deposited in trust hereunder. Within five days
after such deposit, notice of such exchange and deposit shall be given by the
Trustee to each Certificateholder, including an identification of the Bond
eliminated and the Bonds substituted therefor. Except as set forth in this
Section 3.08 and in Section 3.14, the acquisition by the Trust Fund of any
securities other than the Bonds is prohibited.
SECTION 3.09 - BOND COUNSEL. The Depositor may employ from time to time as
it may deem necessary a firm of municipal bond attorneys for any legal services
that may be required in connection with the disposition of Bonds pursuant to
Section 3.07 or the substitution of any securities for Bonds as the result of
any refunding permitted under Section 3.08. The fees and expenses of such bond
counsel shall be paid by the Trustee from the Interest and Principal Accounts as
provided for in Section 3.05(c) hereof.
SECTION 3.10 - NOTICE AND SALE BY TRUSTEE. If at any time the principal of
or interest on any of the Bonds shall be in default and not paid or provision
for payment thereof shall not have been duly made, the Trustee shall notify the
Depositor thereof. If within 30 days after such notification the Depositor has
not given any instructions to the Trustee to sell or to hold such Bonds or has
not taken any other action in connection with such Bonds, the Trustee shall sell
such Bonds forthwith, and the Trustee shall not be liable or responsible in any
way for depreciation or loss incurred by reason of such sale.
SECTION 3.11 - TRUSTEE NOT TO AMORTIZe. Nothing in this Indenture, or
otherwise, shall be construed to require the Trustee to make any adjustments
between the Interest and Principal Accounts of the Trust Fund by reason of any
premium or discount in respect of any of the Bonds.
SECTION 3.12 - LIABILITY OF DEPOSITOR. The Depositor shall be under no
liability to the Certificateholders for any action taken or for refraining from
the taking of any action in good faith pursuant to this Indenture or for errors
in judgment, but shall be liable only for its own gross negligence, lack of good
faith or willful misconduct. The Depositor may rely in good faith upon any
paper, order, notice, list, affidavit, receipt, opinion, endorsement,
assignment, draft or any other document of any kind prima facie properly
executed and submitted to it by the Trustee, bond counsel or any other persons
pursuant to this Indenture and in furtherance of its duties.
SECTION 3.13 - NOTICE TO DEPOSITOR. In the event that the Trustee shall
have been notified at any time of any action to be taken or proposed to be taken
by holders of the Bonds (including but not limited to the making of any demand,
direction, request, giving of any notice, consent or waiver or the voting with
respect to any amendment or supplement to any indenture, resolution, agreement
or other instrument under or pursuant to which the Bonds have been issued), the
Trustee shall promptly notify the Depositor and shall thereupon take such action
or refrain from taking any action as the Depositor shall in writing direct;
provided, however, that if the Depositor shall not within five Business Days of
the giving of such notice to the Depositor direct the Trustee to take or refrain
from taking any action, the Trustee shall take such action as it, in its sole
discretion, shall deem advisable. Neither the Depositor nor the Trustee shall be
liable to any person for any action or failure to take action with respect to
this Section 3.13.
SECTION 3.14 - LIMITED REPLACEMENT OF SPECIAL BONDS. If any contract in
respect to Contract Bonds, other than a contract to purchase a Replacement Bond,
including those purchased on a when, as and if issued basis, shall have failed
due to any occurrence, act or event beyond the control of the Depositor or the
Trustee, the Depositor shall give the Trustee the "Failed Contract Notice."
During the Purchase Period, the Depositor shall, if possible, purchase or enter
into a contract to purchase a Replacement Bond as part of the Trust in
replacement of the failed Special Bond, subject to the satisfaction of all of
the following conditions in the case of each purchase or contract to purchase:
(a) Each Replacement Bond (i) shall bear interest that is excludable from
gross income for federal and Minnesota income tax purposes and that is treated
for purposes of the federal alternative minimum tax the same as the interest on
the Special Bond it replaces, (ii) shall have a fixed maturity date (whether or
not entitled to the benefits of any sinking, redemption, purchase or similar
fund) not exceeding the date of maturity of the Special Bond it replaces and not
less than ten years after the date of purchase, (iii) shall be purchased at a
price that results in a yield to maturity and current return, in each case as of
the Date of Deposit, which is approximately equivalent to the yield to maturity
and the current return of the Special Bond which it replaces, (iv) shall be
payable as to principal and interest in legal tender of the United States of
America, and (v) shall not be a when, as and if issued Bond.
(b) Each Replacement Bond shall be rated at least equal to the Special Bond
which it replaces by Standard & Poor's Corporation or Moody's Investors Service
or comparably rated by any other nationally recognized credit rating service
rating debt obligations which shall be designated by the Depositor and shall be
satisfactory to the Trustee.
(c) The purchase price of the Replacement Bonds (exclusive of accrued
interest) shall not exceed the principal attributable to the Special Bonds
(i.e., the cost of the Special Bonds on the Date of Deposit, exclusive of
accrued interest).
(d) No deposit of Replacement Bonds shall be made after the earlier of (i)
90 days after the date of execution and delivery of the Reference Trust
Agreement or (ii) the First Distribution Date.
(e) The Depositor shall furnish a notice to the Trustee (which may be part
of the Failed Contract Notice) in respect of the Replacement Bonds purchased or
to be purchased that shall (i) identify the Replacement Bonds, (ii) state that
the contract to purchase, if any, entered into by the Depositor is satisfactory
in form and substance, and (iii) state that the foregoing conditions of clauses
(a) through (e) have been satisfied with respect to the Replacement Bonds.
Notwithstanding anything to the contrary in this Section 3.14, no
substitution of Replacement Bonds will be made without an opinion of counsel
that such substitution will not adversely affect the federal and Minnesota
income tax status of the Trust Fund, if such Replacement Bonds when added to all
previously purchased Replacement Bonds in the Trust Fund exceed 15% of the
principal amount of Bonds initially deposited in the Trust Fund.
Upon satisfaction of the foregoing conditions with respect to any
Replacement Bond, the Depositor shall pay the purchase price for the Replacement
Bond from its own resources or, if the Trustee has credited any moneys and/or
letters of credit attributable to the failed Special Bond to the Principal
Account, the Trustee shall pay the purchase price of the Replacement Bond upon
directions from the Depositor from the moneys and/or letters of credit so
credited to the Principal Account. If the Depositor has paid the purchase price
and, in addition, the Trustee has credited moneys of the Depositor to the
Principal Account, the Trustee shall forthwith return to the Depositor the
portion of such moneys that is not properly distributable to Certificateholders
pursuant to Section 3.05.
Whenever the Replacement Bond is acquired by the Depositor pursuant to the
provisions of this Section 3.14, the Trustee shall, within five days thereafter,
mail to all Certificateholders notices of such acquisition, including an
identification of the failed Special Bonds and the Replacement Bonds acquired.
If paid by the Trustee, the purchase price of the Replacement Bonds shall be
paid out of the funds in the Principal Account reserved for the purchase of the
failed Special Bonds. The Trustee shall not be liable or responsible in any way
for depreciation or loss incurred by reason of any purchase made pursuant to any
such directions, and in the absence of such directions the Trustee shall have no
duty to purchase any Bonds under this Indenture. The Depositor shall not be
liable for any failure to instruct the Trustee to purchase any Replacement Bonds
or for errors of judgment in respect of this Section 3.14; provided, however,
that this provision shall not protect the Depositor against any liability to
which it would otherwise be subject by reason of willful misfeasance, bad faith
or gross negligence in the performance of its duties or by reason of its
reckless disregard of its obligations and duties hereunder.
ARTICLE IV
EVALUATION OF BONDS; EVALUATOR
SECTION 4.01 - EVALUATION BY EVALUATOR. The Evaluator shall separately and
promptly determine and promptly furnish to the Trustee and the Depositor upon
request the value of each issue of Bonds (treating separate maturities of Bonds
as separate issues) as of the Evaluation Time on the bid side of the market on
the days on which the Trustee shall make the Trust Fund Evaluation required by
Section 5.01 and, in addition, as of the Evaluation Time on the offering side of
the market each Business Day during the initial public offering period as
determined by the Depositor. In making the evaluations, the Evaluator may
determine the value of each issue of the Bonds in the Trust Fund by the
following methods or any combination thereof which it deems appropriate: (a) on
the basis of current bid or offering prices of such Bonds as obtained from
investment dealers or brokers (including the Depositor) who customarily deal in
public bonds comparable to those held by the Trust Fund, or (b) if bid or
offering prices are not available for any of such Bonds, on the basis of bid or
offering prices for comparable bonds, or (c) by causing the value of the Bonds
to be determined by others engaged in the practice of evaluating, quoting or
appraising comparable bonds. The Evaluator shall also make an evaluation of the
Bonds deposited in the Trust Fund as of the Evaluation Time on the day prior to
the day said Bonds are deposited under this Indenture. Such evaluation shall be
made on the same basis as set forth above and shall be based upon offering
prices of said Bonds. In addition to the methods of determining the value of the
Bonds described above, the Evaluator may make the initial evaluation in whole or
in part by reference to the Blue List of Current Municipal Offerings (a daily
publication containing the current public offering prices of public bonds of all
grades currently being offered by dealers and banks). The Evaluator's
determination of the offering price of the Bonds as of the Evaluation Time on
the day prior to the date of deposit shall be included in Exhibit A attached to
the Reference Trust Agreement.
SECTION 4.02 - TAX REPORTS. For the purpose of permitting
Certificateholders to satisfy any reporting requirements of applicable federal
or state tax law, the Evaluator shall make available to the Trustee and the
Trustee shall transmit to any Certificateholder upon request any determinations
which concern the Trust Fund to which such Certificateholder's certificate
relates made by it pursuant to Section 4.01.
SECTION 4.03 - EVALUATOR'S COMPENSATION. As compensation for its services
hereunder, the Evaluator shall receive against a statement therefor submitted to
the Trustee monthly on or before each Monthly Computation Date an amount equal
to 1/12 of its annual fee of $.27 per $1,000 principal amount of Bonds, based
upon the value of the principal amount of Bonds in the Trust on January 1 (or on
the date of deposit of the Bonds in the Trust Fund with respect to the first
year); provided that the minimum annual fee which the Evaluator shall receive is
$1,500. The Evaluator may from time to time adjust its compensation; provided,
however, that the total adjustment upward does not, at the time of such
adjustment, exceed the percentage of the total increase, after the date hereof,
in consumer prices for services as measured by the United States Department of
Labor Consumer Price Index entitled "All Services Less Rent" or, if such index
is no longer published, a similar index. The consent or concurrence of any
Certificateholder hereunder shall not be required for any such adjustment or
increase. If the cash balances in the Interest and Principal Accounts shall be
insufficient to provide for amounts payable pursuant to this Section 4.03, the
Trustee shall have the power to sell (a) Bonds from the current list of Bonds
designated to be sold pursuant to Section 5.02 hereof or (b) if no such Bonds
have been so designated, such Bonds as the Trustee may see fit to sell in its
own discretion, and to apply the proceeds of any such sale in payment of the
amounts payable pursuant to this Section 4.03. The Trustee shall not be liable
or responsible in any way for depreciation or loss incurred by reason of any
sale of Bonds made pursuant to this Section 4.03.
SECTION 4.04 - LIABILITY OF EVALUATOR. The Trustee, the Depositor and the
Certificateholders may rely upon any evaluation furnished by the Evaluator and
shall have no responsibility for the accuracy thereof. The determinations made
by the Evaluator hereunder shall be made in good faith upon the basis of the
best information available to it. The Evaluator shall be under no liability to
the Trustee, the Depositor or the Certificateholders for errors in judgment;
provided, however, that this provision shall not protect the Evaluator against
any liability to which it would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of its duties or
by reason of its reckless disregard of its obligations and duties hereunder.
SECTION 4.05 - SUCCESSOR EVALUATOR
(a) The Evaluator may resign and be discharged hereunder by executing an
instrument in writing resigning as Evaluator and filing the same with the
Depositor and the Trustee not less than 60 days before the date specified in
such instrument when, subject to Section 4.05(e), such resignation is to take
effect. Upon receiving such notice of resignation, the Depositor and the Trustee
shall use their best efforts to appoint a successor evaluator having
qualifications and at a rate of compensation satisfactory to the Depositor and
the Trustee. Such appointment shall be made by written instrument executed by
the Depositor and the Trustee, in duplicate, one copy of which shall be
delivered to the resigning Evaluator and one copy to the successor evaluator.
The Depositor and the Trustee may remove the Evaluator at any time upon 30 days'
written notice and appoint a successor evaluator having qualifications and at a
rate of compensation satisfactory to the Depositor and the Trustee. Such
appointment shall be made by written instrument executed by the Depositor and
the Trustee, in duplicate, one copy of which shall be delivered to the Evaluator
so removed and one copy to the successor evaluator. Notice of such resignation
or removal and appointment of a successor evaluator shall be mailed by the
Trustee to each Certificateholder.
(b) Any successor evaluator appointed hereunder shall execute, acknowledge
and deliver to the Depositor and the Trustee an instrument accepting such
appointment hereunder, and such successor evaluator without any further act,
deed or conveyance shall become vested with all the rights, powers, duties and
obligations of its predecessor hereunder with like effect as if originally named
Evaluator herein and shall be bound by all the terms and conditions of this
Indenture.
(c) In case at any time the Evaluator shall resign and no successor
evaluator shall have been appointed and have accepted appointment within 30 days
after notice of resignation has been received by the Depositor and the Trustee,
the Evaluator may forthwith apply to a court of competent jurisdiction for the
appointment of a successor evaluator. Such court may thereupon, after such
notice, if any, as it may deem proper and prescribe, appoint a successor
evaluator.
(d) Any corporation into which the Evaluator hereunder may be merged or
with which it may be consolidated, or any corporation resulting from any merger
or consolidation to which the Evaluator hereunder shall be a party, shall be the
successor evaluator under this Indenture without the execution or filing of any
paper, instrument or further act to be done on the part of the parties hereto,
anything herein, or in any agreement relating to such merger or consolidation,
by which the Evaluator may seek to retain certain powers, rights and privileges
theretofore obtained for any period of time following such merger or
consolidation, to the contrary notwithstanding.
(e) Any resignation or removal of the Evaluator and appointment of a
successor evaluator pursuant to this Section shall become effective upon
acceptance of appointment by the successor evaluator as provided in subsection
(b) hereof.
ARTICLE V
TRUST FUND EVALUATION, REDEMPTION, PURCHASE,
TRANSFER, INTERCHANGE OR REPLACEMENT OF CERTIFICATES
SECTION 5.01 - TRUST FUND EVALUATION. The Trustee shall make an evaluation
of the Trust Fund as of the Evaluation Time (a) on each Business Day on which
any Unit is tendered for redemption if prior to the Evaluation Time that day,
otherwise on the following Business Day, (b) on each Business Day after the
initial public offering period, and (c) on any other day desired by the Trustee
or requested by the Depositor. Such evaluations shall take into account and
itemize separately (i) the cash on hand in the Trust Fund (other than cash
declared held specifically for purchase of Contract Bonds under Section 3.14
hereof) or moneys in the process of being collected from matured interest
coupons or bonds matured or called for redemption prior to maturity, (ii) the
value of each issue of the Bonds (including Contract Bonds) on the bid side of
the market as determined by the Evaluator pursuant to Section 4.01, and (iii)
interest accrued thereon not subject to collection and distribution. For each
such evaluation there shall be deducted from the sum of the above (A) amounts
representing any applicable taxes or governmental charges payable out of the
Trust Fund and for which no deductions shall have previously been made for the
purpose of addition to the Reserve Account, (B) amounts representing accrued
expenses of the Trust Fund, including but not limited to unpaid fees and
expenses of the Trustee, the Sponsor, the Evaluator and bond counsel, in each
case as reported by the Trustee to the Evaluator on or prior to the date of
evaluation, and (C) cash held for distribution to Certificateholders of record
as of a date prior to the evaluation then being made. The value of the pro rata
share of each Unit determined on the basis of any such evaluation, the Unit
Value, shall be effective as to (1) all orders received by the Depositor for the
purchase or sale of Units and (2) all Units received by the Trustee for
redemption prior to the Evaluation Time utilized but subsequent to the preceding
evaluation.
SECTION 5.02 - REDEMPTIONS BY TRUSTEE; PURCHASE BY DEPOSITOR. Any
Certificate tendered for redemption by a Certificateholder or his duly
authorized attorney to the Trustee at its corporate trust office in the City of
New York shall be redeemed by the Trustee on the seventh calendar day following
the day on which tender for redemption is made, provided that if such day of
redemption is not a Business Day, then such Certificate shall be redeemed on the
first Business Day prior thereto (being herein called the "Redemption Date").
Subject to payment by such Certificateholder of any tax or other governmental
charges which may be imposed thereon, such redemption is to be made by payment
on the Redemption Date of the cash equivalent to the Unit Value, determined by
the Evaluator as of the Evaluation Time next following the time at which the
tender for redemption is made, plus accrued interest to, but not including, the
Redemption Date, multiplied by the number of Units of the Trust Fund represented
by such Certificate (herein called the "Redemption Price"). Units received for
redemption by the Trustee on any day after the Evaluation Time will be held by
the Trustee until the next day on which the New York Stock Exchange is open for
trading and will be deemed to have been tendered on such day for redemption at a
Redemption Price based upon the Unit Value computed on that day. Units will be
deemed to be "tendered" to the Trustee when the Trustee is in physical receipt
of the Certificate or Certificates representing such Units in the form and with
such documentation as is required to accomplish transfers of Units pursuant to
Section 5.03 hereof.
The Trustee may in its discretion, and shall when so directed by the
Depositor, suspend the right of redemption or postpone the date of payment of
the Redemption Price for more than seven calendar days following the day on
which tender for redemption is made (a) for any period during which the New York
Stock Exchange is closed other than customary weekend and holiday closings or
during which trading on the New York Stock Exchange is restricted, (b) for any
period during which an emergency exists as a result of which disposal by the
Trust Fund of the Bonds is not reasonably practicable or it is not reasonably
practicable fairly to determine in accordance herewith the value of the Bonds,
or (c) for such other period as the Securities and Exchange Commission may by
order permit; and shall not be liable to any person or in any way for any loss
or damage which may result from any such suspensions or postponement.
Not later than the close of business on the day of tender of a Unit for
redemption by a Certificateholder other than the Depositor, the Trustee shall
notify the Depositor of such tender. The Depositor shall have the right to
purchase such Unit by notifying the Trustee of its election to make such
purchase as soon as practicable thereafter but in no event subsequent to the
close of business on the second Business Day after the day on which such Unit
was tendered for redemption. Such purchase shall be made by payment for such
Unit by the Depositor to the Certificateholder not later than the close of
business on the Redemption Date of an amount not less than the Redemption Price
which would otherwise be payable by the Trustee to such Certificateholder.
Any Certificate so purchased by the Depositor may at the option of the
Depositor be tendered to the Trustee for redemption at the corporate trust
office of the Trustee in the manner provided in the first paragraph of this
Section 5.02.
If the Depositor does not elect to purchase any Certificate tendered to the
Trustee for redemption, or if a Certificate is being tendered by the Depositor
for redemption, that portion of the Redemption Price which represents interest
shall be withdrawn from the Interest Account of the Trust Fund to the extent
available. The balance paid on any redemption, including accrued interest, if
any, shall be withdrawn from the Principal Account of the Trust Fund to the
extent that funds are available for such purpose. If such available balance
shall be insufficient, the Trustee shall sell such of the Bonds currently
designated for such purpose by the Depositor as the Trustee in its sole
discretion shall deem necessary. In the event that funds are withdrawn from such
Principal Account for payment of accrued interest, the Principal Account shall
be reimbursed for such funds so withdrawn when sufficient funds are next
available in such Interest Account.
The Depositor shall maintain with the Trustee a current list of Bonds in
the Trust Fund designated to be sold for the purpose of redemption of
Certificates tendered for redemption and not purchased by the Depositor, and for
payment of expenses hereunder, provided that if the Depositor shall for any
reason fail to maintain such a list, the Trustee in its sole discretion may
designate a current list of Bonds in the Trust Fund for such purposes. The net
proceeds of any sales of Bonds from such list representing principal shall be
credited to the Principal Account of the Trust and the proceeds of such sales
representing accrued interest shall be credited to the Interest Account of the
Trust Fund.
The Trustee shall not be liable or responsible in any way for depreciation
or loss incurred by reason of any sale of Bonds made pursuant to this Section
5.02.
Certificates evidencing Units redeemed pursuant to this Section 5.02 shall
be cancelled by the Trustee and the Unit or Units evidenced by such Certificates
shall be terminated by such redemptions.
SECTION 5.03 - TRANSFER OR INTERCHANGE OF CERTIFICATES. A Certificate may
be transferred by the registered holder thereof by presentation and surrender of
such Certificate at the corporate trust office of the Trustee properly endorsed
or accompanied by a written instrument or instruments of transfer in form
satisfactory to the Trustee and executed by the Certificateholder or his
authorized attorney, whereupon a new registered Certificate or Certificates for
the same number of Units of the Trust Fund executed by the Trustee and the
Depositor will be issued in exchange and substitution therefor. Certificates
issued pursuant to this Indenture are interchangeable for one or more other
Certificates of the Trust Fund in an equal aggregate number of Units and all
Certificates issued shall be issued in denominations as may be requested by the
Certificateholder of one Unit or any multiple thereof. The Trustee may deem and
treat the person in whose name any Certificate shall be registered upon the
books of the Trustee as the owner of such Certificate for all purposes hereunder
and the Trustee shall not be affected by any notice to the contrary, nor be
liable to any person or in any way for so deeming and treating the person in
whose name any Certificate shall be so registered.
A sum sufficient to pay any tax or other governmental charge that may be
imposed in connection with any such transfer or interchange shall be paid by the
Certificateholder to the Trustee. The Trustee may require a Certificateholder to
pay $2.00 for each new Certificate issued on any such transfer or interchange.
All Certificates cancelled pursuant to this Indenture shall be disposed of
by the Trustee without liability on its part.
SECTION 5.04 - CERTIFICATES MUTILATED, DESTROYED, STOLEN OR LOST. In case
any Certificate shall become mutilated or be destroyed, stolen or lost, the
Trustee shall execute and deliver a new Certificate of the Trust Fund in
exchange and substitution therefor upon the holder's furnishing the Trustee with
proper identification and indemnity satisfactory to the Trustee, complying with
such other reasonable regulations and conditions as the Trustee may prescribe
and paying such expenses as the Trustee may incur. Any mutilated Certificate
shall be duly surrendered and cancelled before any new Certificate shall be
issued in exchange and substitution therefor. Upon the issuance of any new
Certificate, a sum sufficient to pay any tax or other governmental charge and
the fees and expenses of the Trustee may be imposed. Any such new Certificate
issued pursuant to this Section shall constitute complete and indefeasible
evidence of ownership in the Trust Fund, as if originally issued, whether or not
the lost, stolen or destroyed Certificate shall be found at any time.
In the event the Trust Fund has terminated or is in the process of
termination, the Trustee may, instead of issuing a new Certificate in exchange
and substitution for any Certificate which shall have become mutilated or shall
have been destroyed, stolen or lost, make the distributions in respect of such
mutilated, destroyed, stolen or lost Certificate (without surrender thereof
except in the case of a mutilated Certificate) as provided in Section 9.02
hereof if the Trustee is furnished with such security or indemnity as it may
require to save it harmless, and in the case of destruction, loss or theft of a
Certificate, evidence to the satisfaction of the Trustee of the destruction,
loss or theft of such Certificate and of the ownership thereof.
ARTICLE VI
TRUSTEE
SECTION 6.01 - GENERAL DEFINITION OF TRUSTEE'S LIABILITIES, RIGHTS AND
DUTIES. The Trustee shall in its discretion undertake such action as it may deem
necessary at any and all times to protect the Trust Fund and the rights and
interests of the Certificateholders thereof pursuant to the terms of this
Indenture; provided, however, that the expenses and costs of such actions,
undertakings or proceedings shall be reimbursable to the Trustee from the
Interest and Principal Accounts of the Trust Fund concerned, and the payment of
such costs and expenses shall be secured by a prior lien on the Trust Fund. In
addition to and notwithstanding the other duties, rights, privileges and
liabilities of the Trustee, as otherwise set forth, the liabilities of the
Trustee are further defined as follows:
(a) All moneys deposited with or received by the Trustee hereunder shall be
held by it without interest in trust as part of the Trust Fund or Reserve
Account until required to be disbursed in accordance with the provisions of this
Indenture and such moneys will be segregated by separate recordation on the
trust ledger of the Trustee so long as such practice preserves a valid
preference under applicable law, or if such preference is not so preserved the
Trustee shall handle such moneys in such other manner as shall constitute the
segregation and holding thereof in trust within the meaning of the Investment
Company Act of 1940.
(b) The Trustee shall be under no liability for any action taken in good
faith on any appraisal, paper, order, list, demand, request, consent, affidavit,
notice, opinion, direction, evaluation, endorsement, assignment, resolution,
draft or other document whether or not of the same kind prima facie properly
executed, or for the disposition of moneys, Bonds or Certificates pursuant to
this Indenture, or in respect of any evaluation which it is required to make or
is required or permitted to have made by others under the Indenture or
otherwise, except by reason of its own willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties hereunder; provided, however, that the
Trustee shall not in any event be liable or responsible for any evaluation made
by the Evaluator. The Trustee may construe any of the provisions of this
Indenture, insofar as the same may appear to be ambiguous or inconsistent with
any other provisions hereof, and any construction of any such provisions by the
Trustee in good faith shall be binding upon the parties hereto.
(c) The Trustee shall not be responsible for or in respect of the recitals
herein, the validity or sufficiency of this Indenture or for the due execution
hereof by the Depositor or the Evaluator, or for the form, character,
genuineness, sufficiency, value or validity of any Bonds or for or in respect to
the validity or sufficiency of the Certificates or of the due execution thereof
by the Depositor, and the Trustee shall in no event assume or incur any
liability, duty or obligation to any Certificateholder or the Depositor other
than as expressly provided for herein. The Trustee shall not be responsible for
or in respect of the validity of any signatures by or on behalf of the Depositor
or the Evaluator.
(d) The Trustee shall not be under any obligation to appear in, prosecute
or defend any action, which in its opinion may involve it in expense or
liability, unless as often as required by the Trustee it shall be furnished with
reasonable security and indemnity against such expense or liability, and any
pecuniary cost of the Trustee from such action shall be deductible from and a
charge against the Interest and Principal Accounts of the Trust Fund. The
Trustee shall in its discretion undertake such action as it may deem necessary
at any and all times to protect the Trust Fund and the rights and interests of
the Certificateholders pursuant to the terms of this Indenture; provided,
however, that the expenses and costs of such actions, undertakings or
proceedings shall be reimbursable to the Trustee from the Interest and Principal
Accounts of the Trust Fund, and the payment of such costs and expenses shall be
secured by a lien on the Trust Fund prior to the interests of the
Certificateholders.
(e) The Trustee may employ agents, attorneys, accountants and auditors and
shall not be answerable for the default or misconduct of any such agents,
attorneys, accountants or auditors if such agents, attorneys, accountants or
auditors shall have been selected with reasonable care. The Trustee shall be
fully protected in respect of any action under this Indenture taken, or
suffered, in good faith by the Trustee, in accordance with the opinion of its
counsel. The fees and expenses charged by such agents, attorneys, accountants or
auditors shall constitute an expense of the Trustee reimbursable from the
Interest and Principal Accounts of the Trust Fund as set forth in Section 6.04
hereof.
(f) If at any time there is only one Depositor acting hereunder and such
Depositor shall fail to undertake or perform any of the duties which by the
terms of this Indenture are required by it to be undertaken or performed or such
Depositor shall become incapable of acting or shall be adjudged bankrupt or
insolvent, or a receiver of the Depositor or of its property shall be appointed,
or any public officer shall take charge or control of the Depositor or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then in any such case the Trustee may:
(i) appoint a successor depositor who shall act hereunder in all
respects in place of the Depositor, which successor shall be satisfactory
to the Trustee, and which may be compensated annually, at rates deemed by
the Trustee to be reasonable under the circumstances, by deduction from the
Interest Account or, to the extent funds are not available in such Account,
from the Principal Account of the Trust Fund, but no such deduction shall
be made exceeding such reasonable amount as the Securities and Exchange
Commission may prescribe in accordance with Section 26(a)(2)(C) of the
Investment Company Act of 1940, or any successor provision; or
(ii) terminate this Indenture and the trust created hereby and
liquidate the Trust Fund in the manner provided in Section 9.02.
(g) If (i) the principal amount of Bonds held in the Trust, as shown by any
evaluation by the Trustee pursuant to Section 5.01 hereof, shall be less than
20% of the principal amount of Bonds deposited in the Trust or (ii) by reason of
the aggregate redemption by the Depositor, and/or one or more Underwriters, of
Units not theretofore sold constituting more than 60% of the number of Units
initially authorized, the net worth of the Trust Fund is reduced to less than
40% of the aggregate principal amount of Bonds deposited in the Trust, the
Trustee may in its discretion, and shall when so directed by the Depositor,
terminate this Indenture and the Trust created hereby, only insofar as they
relate to the Trust Fund, and liquidate the Trust Fund, all in the manner
provided in Section 9.02.
(h) The Trustee is authorized and empowered to execute and file on behalf
of the Trust Fund any and all documents in connection with consents to service
of process, required to be filed under the securities laws of the various states
in order to permit the sale of Units of the Trust Fund in such states by the
Depositor.
(i) In no event shall the Trustee be liable for any taxes or other
governmental charges imposed upon or in respect of the Bonds or upon the
interest thereon or upon it as Trustee hereunder or upon or in respect of the
Trust Fund which it may be required to pay under any present or future law of
the United States of America or of any other taxing authority having
jurisdiction in the premises. For all such taxes and charges and for any
expenses, including counsel fees, which the Trustee may sustain or incur with
respect to such taxes or charges, the Trustee shall be reimbursed and
indemnified out of the Interest and Principal Accounts of the Trust Fund, and
the payment of such amounts so paid by the Trustee shall be secured by a lien on
the Trust Fund prior to the interests of the Certificateholders.
(j) The Trustee, except by reason of its own gross negligence, lack of good
faith or willful misconduct, shall not be liable for any action taken, omitted
or suffered to be taken by it in good faith and believed by it to be authorized
or within the discretion or rights or powers conferred upon it by this
Indenture.
SECTION 6.02 - BOOKS, RECORDS AND REPORTS. The Trustee shall with respect
to the Trust Fund keep proper books of record and account of all the
transactions under this Indenture at its corporate trust office, including a
record of the name and address of, and the Certificates issued by the Trust Fund
and held by, every Certificateholder, and the books and records of the Trust
Fund shall be open to inspection by any Certificateholder of the Trust Fund at
all reasonable times during the usual business hours.
The Trustee shall cause, at Trust expense, audited statements as to the
assets and income of the Trust to be prepared on an annual basis by independent
public accountants selected by the Depositor; provided, however, if the cost to
the Trust for preparation of such statements shall exceed an amount equivalent
to $.50 per Unit on an annual basis then the Trustee shall not be required to
have such statements prepared. Any such report shall be provided to a
Certificateholder upon request.
The Trustee shall make such annual or other reports as may from time to
time be required under any applicable state or federal statute or rule or
regulation thereunder.
SECTION 6.03 - INDENTURE AND LIST OF BONDS ON FILE. The Trustee shall keep
a certified copy in duplicate original of this Indenture on file at its
corporate trust office available for inspection at all reasonable times during
the usual business hours by any Certificateholder, together with a current list
of the Bonds in the Trust Fund.
SECTION 6.04 - COMPENSATION. For services performed under this Indenture
the Trustee shall be paid with respect to the Trust Fund $.60 per annum per
$1,000 principal amount of Bonds for those portions of the Trust Fund
representing the semi-annual distribution plan, $.85 per annum per $1,000
principal amount of Bonds for those portions of the Trust Fund representing the
quarterly distribution plan and $1.08 per annum per $1,000 principal amount of
Bonds for those portions of the Trust Fund representing the monthly distribution
plan.
The Trustee will advance any amounts necessary to cover any excess of (a)
the accrued interest on when, as and if issued Bonds delivered after the First
Settlement Date over (b) the amounts paid by Certificateholders and available
under the letter of credit furnished-by the Depositor, and will be reimbursed
therefor when funds become available from interest payments on the particular
Bonds with respect to which such payments have been made. In order to provide
income to the Certificateholders for this period of non-accrual, the Trustee
will during the first year reduce its fee in an amount equal to the amount of
interest that would have so accrued on such Bonds between the First Settlement
Date and such dates of delivery, up to a maximum of $.60 per Unit.
Such compensation shall be payable in monthly installments equal to
one-twelfth of the estimated annual compensation and shall be computed on the
basis of the greatest amount of such principal amount of Bonds in the Trust Fund
at any time during the period with respect to which such compensation is being
computed. The Trustee may from time to time adjust its compensation as set forth
above; provided, however, that total adjustment upward does not, at the time of
such adjustment, exceed the percentage of the total increase, after the date
hereof, in consumer prices for services as measured by the United States
Department of Labor Consumer Price Index entitled "All Services Less Rent" or,
if such index is no longer published, a similar index. The consent or
concurrence of any Certificateholder hereunder shall not be required for any
such adjustment or increase. Such compensation shall be deemed to provide only
for the usual normal and proper functions undertaken as Trustee pursuant to this
Indenture and, in addition, the Trustee shall charge the Interest and Principal
Accounts of the Trust Fund for any and all expenses, including the fees of
counsel which may be retained by the Trustee in connection with its activities
hereunder, and disbursements incurred hereunder and any extraordinary services
performed by the Trustee hereunder. The Trustee shall be indemnified from the
Trust Fund and held harmless against any loss or liability accruing to it
without gross negligence, bad faith or willful misconduct on its part, arising
out of or in connection with the acceptance or administration of this Trust,
including the costs and expenses (including counsel fees) of defending itself
against any claim or liability in the premises and including any loss, liability
or expense incurred in acting pursuant to written directions to the Trustee
given by the Depositor from time to time in accordance with the provisions of
this Indenture or in undertaking actions from time to time which the Trustee
deems necessary in its discretion to protect the Trust Fund and the rights and
interests of the Certificateholders pursuant to the terms of this Indenture. If
the cash balances in the Interest and Principal Accounts shall be insufficient
to provide for amounts payable pursuant to this Section 6.04, the Trustee shall
have the power to sell (a) Bonds from the current list of Bonds designated to be
sold pursuant to Section 5.02 hereof or (b) if no such Bonds have been so
designated, such Bonds as the Trustee may see fit to sell in its own discretion,
and to apply the proceeds of any such sale in payment of the amounts payable
pursuant to this Section 6.04. The Trustee shall not be liable or responsible in
any way for depreciation or loss incurred by reason of any sale of Bonds made
pursuant to this Section 6.04. All moneys payable to the Trustee pursuant to
this Section shall be secured by a lien on the Trust Fund prior to the interests
of the Certificateholders.
SECTION 6.05 - REMOVAL AND RESIGNATION OF TRUSTEE; SUCCESSOR. The following
provisions shall provide for the removal and resignation of the Trustee and the
appointment of any successor trustee:
(a) The Trustee or any trustee or trustees hereafter appointed may resign
and be discharged of the trust created by this Indenture by executing an
instrument in writing resigning as Trustee of such trust and filing the same
with the Depositor and mailing a copy of a notice of resignation to all
Certificateholders then of record not less than 60 days before the date
specified in such instrument when, subject to Section 6.05(e), such resignation
is to take effect. Upon receiving such notice of resignation, the Depositor
shall promptly appoint a successor trustee as hereinafter provided by written
instrument, in duplicate, one copy of which shall be delivered to the resigning
Trustee and one copy to the successor trustee. In case at any time the Trustee
shall become incapable of acting, or shall be adjudged a bankrupt or insolvent,
or a receiver of the Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then in
any such case the Depositor may remove the Trustee and appoint a successor
trustee by written instrument, in duplicate, one copy of which shall be
delivered to the Trustee so removed and one copy to the successor trustee;
provided that a notice of such removal and appointment of a successor trustee
shall be mailed by the Depositor to each Certificateholder then of record. For
the purpose of mailing this notice, the Trustee or its successor shall give the
Depositor access to the name and address of every Certificateholder.
(b) Any successor trustee appointed hereunder shall execute, acknowledge
and deliver to the Depositor and to the retiring Trustee an instrument accepting
such appointment hereunder, and such successor trustee without any further act,
deed or conveyance shall become vested with all the rights, powers, duties and
obligations of its predecessor hereunder with like effect as if originally named
Trustee herein and shall be bound by all the terms and conditions of this
Indenture. Upon the request of such successor trustee, the Depositor and the
retiring Trustee shall, upon payment of any amount due the retiring Trustee, or
provision therefor to the satisfaction of such retiring Trustee, execute and
deliver an instrument acknowledged by them transferring to such successor
trustee all the rights and powers of the retiring Trustee; and the retiring
Trustee shall transfer, deliver and pay over to the successor trustee all Bonds
and moneys at the time held by it hereunder, together with all necessary
instruments of transfer and assignment or other documents properly executed
necessary to effect such transfer and such of the records or copies thereof
maintained by the retiring Trustee in the administration hereof as may be
requested by the successor trustee, and shall thereupon be discharged from all
duties and responsibilities under this Indenture. The retiring Trustee shall,
nevertheless, retain a lien upon all Bonds and moneys at the time held by it
hereunder to secure any amounts then due the retiring Trustee.
(c) In case at any time the Trustee shall resign and no successor trustee
shall have been appointed and have accepted appointment within 30 days after
notice of resignation has been received by the Depositor, the retiring Trustee
may forthwith apply to a court of competent jurisdiction for the appointment of
a successor trustee. Such court may thereupon, after such notice, if any, as it
may deem proper and prescribe, appoint a successor trustee.
(d) Any corporation into which any trustee hereunder may be merged or with
which it may be consolidated, or any corporation resulting from any merger or
consolidation to which any trustee under this Indenture shall be the Trustee
under this Indenture without the execution or filing of any paper, instrument or
further act to be done on the part of the parties hereto, anything herein, or in
any agreement relating to such merger or consolidation, by which any such
trustee may seek to retain certain powers, rights and privileges theretofore
obtaining for any period of time following such merger or consolidation, to the
contrary notwithstanding.
(e) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to this Section shall become effective upon
acceptance of appointment by the successor trustee as provided in subsection (b)
hereof.
SECTION 6.06 - QUALIFICATIONS OF TRUSTEE. The Trustee shall be a
corporation organized and doing business under the laws of the United States or
the State of New York which is authorized under such laws to exercise corporate
trust powers and having at all times an aggregate capital, surplus and undivided
profits of not less than $5,000,000 and having its principal office and place of
business in the Borough of Manhattan, in the City of New York and State of New
York.
ARTICLE VII
RIGHTS OF CERTIFICATEHOLDERS
SECTION 7.01 - BENEFICIARIES OF TRUST. By the purchase and acceptance or
other lawful delivery and acceptance of any Certificate, the Certificateholder
shall be deemed to be a beneficiary of the Trust created by this Indenture and
vested with all right, title and interest in the Trust Fund to the extent of the
Unit or Units set forth and evidenced by such Certificate, subject to the terms
and conditions of this Indenture and of such Certificate.
SECTION 7.02 - RIGHTS, TERMS AND CONDITIONS. In addition to the other
rights and powers set forth in the other provisions and conditions of this
Indenture, the Certificateholders of the Trust Fund shall have the following
rights and powers and shall be subject to the following terms and conditions:
(a) A Certificateholder may at any time tender his Certificate or
Certificates to the Trustee for redemption in accordance with Section 5.02.
(b) The death or incapacity of any Certificateholder shall not operate to
terminate this Indenture or the Trust, nor entitle his legal representatives or
heirs to claim an accounting or to take any action or proceeding in any court of
competent jurisdiction for a partition or winding up of the Trust Fund, nor
otherwise affect the rights, obligations and liabilities of the parties hereto
or any of them. Each Certificateholder expressly waives any right he may have
under any rule of law or the provisions of any statute, or otherwise, to require
the Trustee at any time to account, in any manner other than as expressly
provided in this Indenture, in respect of the Bonds or moneys from time to time
received, held and applied by the Trustee hereunder.
(c) No Certificateholder shall have any right to vote or in any manner
otherwise control the operation and management of the Trust Fund or the
obligations of the parties hereto, nor shall anything herein set forth or
contained in the terms of the Certificates be construed so as to constitute the
Certificateholders from time to time as partners or members of any association;
nor shall any Certificateholder ever be under any liability to any third persons
by reason of any action taken by the parties to this Indenture, or any other
cause whatsoever.
(d) No Certificateholder shall purchase fewer than three Units of the Trust
Fund.
ARTICLE VIII
DEPOSITOR
SECTION 8.01 - LIABILITIES. The Depositor shall be liable in accordance
herewith for the obligations imposed upon and undertaken by the Depositor
hereunder.
SECTION 8.02 - DISCHARGE. The following provisions shall provide for the
discharge of the Depositor and the liability of the Depositor in the event of
the discharge of the Depositor:
(a) In the event that the Depositor shall fail to undertake or perform any
of the duties which by the terms of this Indenture are required by it to be
undertaken or performed and such failure shall continue for 30 days after notice
to the Depositor from the Trustee or if the Depositor shall become incapable of
acting or shall be adjudged a bankrupt or insolvent, or a receiver of the
property of the Depositor shall be appointed or any public officer shall take
charge or control of the Depositor or its property or affairs for the purpose of
rehabilitation, conservation or liquidation, then such Depositor shall forthwith
be and shall be deemed to be discharged forever as a Depositor hereunder.
(b) Notwithstanding the discharge of a Depositor in accordance with this
Section 8.02, such Depositor shall continue to be fully liable in accordance
with the provisions hereof in respect of action taken or refrained from under
this Indenture by the Depositor before the date of such discharge as fully and
to the same extent as if no discharge had occurred.
SECTION 8.03 - SUCCESSORS. The covenants, provisions and agreements herein
contained shall in every case be binding upon any successor to any depositor and
shall be binding upon the general partners of any successor depositor which may
be a partnership and upon the capital interest of the limited partners of any
successor depositor which may be a partnership. In the event of the death,
resignation or withdrawal of any partner of any successor depositor which may be
a partnership, the partner so dying, resigning or withdrawing shall be relieved
of all further liability hereunder if at the time of such death, resignation or
withdrawal such successor depositor maintains a net worth (determined in
accordance with generally accepted accounting principles) of at least $100,000.
In the event of an assignment by any Depositor to a successor corporation or
partnership as permitted by the next following sentence, such Depositor and, if
such Depositor is a partnership, its partners, shall be relieved of all further
liability under this Indenture. Any Depositor may transfer all or substantially
all of its assets to a corporation or partnership which carries on the business
of such Depositor, if at the time of such transfer such successor duly assumes
all the obligations of such Depositor under this Indenture.
SECTION 8.04 - RESIGNATION. If at any time any Depositor shall desire to
resign its position as Depositor hereunder, the Depositor desiring to resign may
resign by delivering to the Trustee an instrument executed by such resigning
Depositor and the resigning Depositor shall be discharged and shall no longer be
liable in any manner hereunder except as to acts or omissions occurring prior to
such delivery; provided, however, that concurrently with or subsequent to such
resignation the Trustee may appoint a new depositor to assume the duties of the
resigning Depositor by an instrument executed by the Trustee and the new
depositor. Such new depositor shall not be under any liability hereunder for
occurrences or omissions prior to the execution of such instrument.
SECTION 8.05 - EXCLUSION FROM LIABILITY. The following provisions shall
provide for certain exclusions from the liability of the Depositor:
(a) The Depositor shall not be under any liability to the Trust Fund or the
Certificateholders for any action taken or for refraining from the taking of any
action in good faith pursuant to this Indenture, or for errors in judgment or
liable or responsible in any way for depreciation or loss incurred by reason of
the sale of any Bonds; provided, however, that this provision shall not protect
the Depositor against any liability to which it would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence in the performance
of its duties or by reason of reckless disregard of its obligations and duties
hereunder. The Depositor may rely in good faith upon any power, order, notice,
list, affidavit, receipt, evaluation, opinion, endorsement, assignment, draft or
any other document of any kind prima facie properly executed and submitted to it
by the Trustee, bond counsel, the Evaluator or any other person. The Depositor
shall in no event be deemed to have assumed or incurred any liability, duty or
obligation to any Certificateholder or the Trustee other than as expressly
provided for herein.
(b) The Depositor shall not be under any obligation to appear in, prosecute
or defend any legal action which in its opinion may involve it in any expense or
liability; provided, however, that the Depositor may in its discretion undertake
any such action which it may deem necessary or desirable in respect to this
Indenture and the rights and duties of the parties hereto and the interests of
the Certificateholders hereunder.
(c) None of the provisions of this Indenture shall be deemed to protect or
purport to protect the Depositor against any liability to the Trust Fund or to
the Certificateholders to which the Depositor would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence in the performance
of the duties of the Depositor, or by reason of the Depositor's reckless
disregard of the obligations and duties of the Depositor under this Indenture.
SECTION 8.06 - ANNUAL FEE. For services performed under this Indenture, the
Depositor will be paid against a statement therefor submitted to the Trustee
annually on or before December 1 of each year up to $.25 per Unit outstanding on
such December 1 as reimbursement of the costs incurred by the Depositor in
rendering its portfolio supervisory services with respect to the portfolio of
the Trust, unless such fee shall not be permitted by any governmental regulatory
agency having jurisdiction to regulate the payments of such fees. This fee may
exceed the actual costs of supervising the portfolio of this Trust but the total
amount of fees received under this Section 8.06 by the Depositor in any calendar
year, together with similar fees received by it in connection with other series
of Voyageur Unit Investment Trust in such calendar year, shall not exceed the
aggregate cost of supplying such services. The Depositor will calculate the
actual cost of its services by keeping records of the amount of time spent by
each employee of the Depositor working on the portfolio supervision and
determining what portion of such employee's salary to allocate to such services.
The Depositor shall also keep detailed records of the appropriate allocation of
the cost of periodicals, computer time, communications expenses and other
related expenses.
The $.25 per Unit outstanding ceiling of the Depositor's fees may be
increased from time to time by amounts not exceeding the proportionate increase
during the period from the date of this Indenture to the date of any such
increase in consumer prices for services as measured by the United States
Department of Labor Consumer Price Index entitled "All Services Less Rent" or,
if such index is no longer published, a similar index.
ARTICLE IX
ADDITIONAL COVENANTS; MISCELLANEOUS PROVISIONS
SECTION 9.01 - AMENDMENTS. This Indenture may be amended from time to time
by the parties hereto or their respective successors, without the consent of any
of the Certificateholders (a) to cure any ambiguity or to correct or supplement
any provision contained herein which may be defective or inconsistent with any
other provision contained herein, or (b) to make such other provision in regard
to matters or questions arising hereunder as shall not adversely affect the
interests of the Certificateholders, and this Indenture may also be amended from
time to time by the parties hereto or their successors with the consent of
holders of Certificates evidencing 51% of the Units at the time outstanding
under the Indenture of the Trust Fund for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions hereof or of
modifying in any manner the rights of the holders of Certificates of the Trust
Fund; provided, however, that the parties hereto may not amend this Indenture
without the consent of 100% of the Certificateholders of the Trust Fund so as to
(i) reduce the aforesaid percentage of Units the holders of which are required
to consent to certain amendments or (ii) reduce the interest in the Trust Fund
represented by Units evidenced by any Certificate; and provided further that the
parties hereto may not amend this Indenture so as to (A) extend the Mandatory
Termination Date, (B) increase the number of Units issuable hereunder, except as
provided in Section 5.04 hereof, above the Total Units for the Trust or such
lesser amount as may be outstanding at any time during the term of this
Indenture, (C) subject to Sections 3.08 and 3.14 hereof, permit the deposit or
acquisition hereunder of interest-bearing obligations or other securities either
in addition to or in substitution for any of the Bonds, or (D) permit the
Trustee to engage in business or investment activities not specifically
authorized by this Indenture.
Promptly after the execution of any such amendment, the Trustee shall
furnish written notification to all then outstanding Certificateholders of the
substance of such amendment, except that no such notification need be given if
the amendment merely is to do one or more of the following: to cure an ambiguity
or to correct or supplement any provision contained herein which may be
defective or inconsistent with any other provision contained herein.
SECTION 9.02 - TERMINATION. This Indenture and the Trust created hereby
shall terminate as to the Trust upon the maturity, redemption, sale or other
disposition as the case may be of the last Bond held hereunder in the Trust
Fund, unless sooner terminated as herein specified, and may be terminated at any
time by written instrument executed by the Depositor and consented to by holders
of Certificates evidencing 51% of all Units then outstanding under this
Indenture; provided that in no event shall this Trust continue beyond the
Mandatory Termination Date. In addition, as set forth in Section 6.01(g), if (i)
the principal amount of Bonds held in the Trust, as shown by any evaluation by
the Trustee pursuant to Section 5.01 hereof, shall be less than 20% of the
principal amount of Bonds deposited in the Trust or (ii) by reason of the
aggregate redemption by the Depositor, and/or one or more Underwriters, of Units
not theretofore sold constituting more than 60% of the number of Units initially
authorized, the net worth of the Trust Fund is reduced to less than 40% of the
aggregate principal amount of Bonds deposited in the Trust, the Trustee may in
its discretion, and shall when so directed by the Depositor, terminate this
Indenture and the Trust created hereby insofar as they relate to the Trust Fund.
Written notice of any termination, specifying the time or times at which the
Certificateholders may surrender their Certificates for cancellation, shall be
given by the Trustee to each Certificateholder of the terminated Trust Fund, at
his address appearing in the registration books of the Trustee. Within a
reasonable period of time after such termination of the Trust Fund, the Trustee
shall fully liquidate the Bonds then held in the Trust Fund, if any, and shall
with respect to the Trust Fund in the case of a termination of the Trust:
(a) deduct from the Interest Account or, to the extent that funds are not
available in such Account, from the Principal Account and pay to itself
individually an amount equal to the sum of (i) its accrued compensation for its
ordinary recurring services in connection with the Trust Fund, (ii) any
compensation due it for its extraordinary services in connection with the Trust
Fund, and (iii) any costs, expenses or indemnities in connection with the Trust
Fund as provided herein;
(b) deduct from the Interest Account or, to the extent that funds are not
available in such Account, from the Principal Account and pay any unpaid fees
and expenses of the Evaluator and of bond counsel in connection with the Trust
Fund, if any, as directed and certified to by the Depositor;
(c) deduct from the Interest Account or, to the extent that funds are not
available in such Account, from the Principal Account an amount equal to the
unpaid fees and expenses, if any, of the Depositor, including registration
charges, expenses of registering the Trust or the Units under various state laws
as required, printing costs, attorneys' fees, auditing costs and other
miscellaneous out-of-pocket expenses, as certified to by the Depositor, incurred
in keeping the registration of the Units and the Trust on a current basis
pursuant to Section 9.04; provided, however, that no portion of such amount
shall be deducted or paid unless the payment thereof from the Trust is at that
time permitted under the Investment Company Act of 1940 as evidenced by an
opinion of independent counsel to the Depositor;
(d) deduct from the Interest Account or the Principal Account any amounts
which may be required to be deposited in the Reserve Account to provide for
payment of any applicable taxes or other governmental charges and any other
amounts which may be required to meet expenses incurred of the Trust Fund under
this Indenture;
(e) distribute to each Certificateholder of the Trust Fund, upon surrender
for cancellation of his Certificate or Certificates, such holder's pro rata
share of the balance of the Interest Account;
(f) distribute to each Certificateholder of the Trust Fund, upon surrender
for cancellation of his Certificate or Certificates, such holder's pro rata
share of the balance of the Principal Account; and
(g) together with such distribution to each Certificateholder as provided
for in (e) and (f), furnish to each such Certificateholder a final distribution
statement as of the date of the computation of the amount distributable to
Certificateholders, setting forth the data and information in substantially the
form and manner provided for in Section 3.06 hereof.
The amounts to be so distributed to each Certificateholder shall be that
pro rata share of the balance of the total Interest and Principal Accounts of
the Trust Fund as shall be represented by the Units therein evidenced by the
outstanding Certificate or Certificates held of record by such
Certificateholder.
The Trustee shall be under no liability with respect to moneys held by it
in the Interest, Reserve and Principal Accounts upon termination except to hold
the same in trust without interest until disposed of in accordance with the
terms of this Indenture.
In the event that all of the Certificateholders shall not surrender their
Certificates for cancellation within six months after the time specified in the
above-mentioned written notice, the Trustee shall give a second written notice
to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the liquidation distribution with respect thereto. If
within one year after the second notice all the Certificates shall not have been
surrendered for cancellation, the Trustee may take steps, or may appoint an
agent to take appropriate steps, to contact the remaining Certificateholders
concerning surrender of their Certificates and the cost thereof shall be paid
out of the moneys and other assets which remain in trust hereunder in the Trust
Fund.
SECTION 9.03 - CONSTRUCTION. This Indenture is delivered in the State of
New York and all laws or rules of construction of such state shall govern the
rights of the parties hereto and the Certificateholders and the interpretation
of the provisions hereof.
SECTION 9.04 - REGISTRATION OF UNITS. The Depositor agrees and undertakes
on its own part to initially register the Units and the Trust Fund with the
Securities and Exchange Commission and under the Blue Sky laws of such states as
the Depositor may select. If the Depositor shall maintain a market in the Units,
the Depositor shall, if required by applicable law, keep the registration of the
Units and the Trust Fund with the Securities and Exchange Commission and under
the applicable securities laws of such states as the Depositor may select on a
current basis. Registration charges, Blue Sky fees, printing costs, attorneys'
fees and other miscellaneous out-of-pocket expenses incurred pursuant to this
Section and related to all Units shall be borne by the Trust only to the extent
and in the manner provided for by Section 3.05. To the extent that such expenses
cannot be borne by the Trust, they shall be borne by the Depositor. The
Depositor shall be under no obligation to maintain a market in the Units and, if
it shall maintain such a market, it may cease to do so immediately at any time
and from time to time and without notice. The Depositor shall do all things that
may be necessary or required to comply with this provision and the Trustee shall
not incur any liability or be under any obligation in connection therewith.
SECTION 9.05 - WRITTEN NOTICE. Any notice, demand, direction or instruction
to be given to the Depositor hereunder shall be in writing and shall be duly
given if mailed or delivered to the Depositor at Dougherty, Dawkins, Strand &
Yost Incorporated, 100 South Fifth Street, Suite 2300, Minneapolis, Minnesota
55402, Attention: Kenneth E. Dawkins, or at such other address as shall be
specified by the Depositor to the other parties hereto in writing. Any notice,
demand, direction or instruction to be given to the Trustee shall be in writing
and shall be duly given if mailed or delivered to the corporate trust office of
the Trustee, The Bank of New York, Wall Street Trust division, 67 Broad Street,
New York, New York 10004, Attention: UIT Administration, or such other address
as shall be specified to the other parties hereto by the Trustee in writing. Any
notice, demand, direction or instruction to be given to the Evaluator shall be
in writing and shall be duly given if mailed or delivered to American Portfolio
Advisory Service Inc., 1001 Warrenville Road, Lisle, Illinois 60532, Attention:
President. Any notice to be given to the Certificateholders shall be duly given
if mailed or delivered to each Certificateholder at the address of such holder
appearing in the registration books of the Trustee.
SECTION 9.06 - SEVERABILITY. If any one or more of the covenants,
agreements, provisions or terms of this Indenture shall be held contrary to any
express provision of law or contrary to policy of express law, though not
expressly prohibited, or against public policy, or shall for any reason
whatsoever be held invalid, then such covenants, agreements, provisions or terms
shall be deemed severable from the remaining covenants, agreements, provisions
or terms of this Indenture and shall in no way affect the validity or
enforceability of the other provisions of this Indenture or of the Certificates
or the rights of the holders thereof.
SECTION 9.07 - DISSOLUTION OF DEPOSITOR NOT TO TERMINATE. The dissolution
of the Depositor from or for any cause whatsoever shall not operate to terminate
this Indenture insofar as the duties and obligations of the Trustee and the
Evaluator are concerned.
IN WITNESS WHEREOF, the Depositor has caused this Trust Indenture and
Agreement to be executed for Dougherty, Dawkins, Strand & Yost Incorporated by
its President or one of its Vice Presidents with its corporate seal to be hereto
affixed and attested to by its Secretary or one of its Vice Presidents; The Bank
of New York through its Wall Street Trust division has caused this Trust
Indenture and Agreement to be executed by one of its Vice Presidents or
Assistant Vice Presidents and its corporate seal to be hereto affixed and
attested to by one of its Vice Presidents, Assistant Vice Presidents or
Assistant Treasurers; and American Portfolio Advisory Services Inc. has caused
this Trust Indenture and Agreement to be executed by its President or one of its
Vice Presidents and its corporate seal to be hereto affixed and attested to by
its Secretary or one of its Assistant Secretaries; all as of the day, month and
year first above written.
DOUGHERTY, DAWKINS, STRAND
& YOST INCORPORATED, Depositor
By /s/Kenneth E. Dawkins
-----------------------------
Its /s/Executive Vice President
-----------------------------
ATTEST:
By /s/Tom S. Nelson
-------------------------
Its/s/Senior Vice President
-------------------------
[Corporate Seal]
STATE OF NEW YORK )
) SS
COUNTY OF NEW YORK)
I, /s/Donna R. Krettzer, a Notary Public in and for the said County in the
State aforesaid, do hereby certify that /s/Kenneth E. Dawkins and /s/Tom S.
Nelson, personally known to me to be the same persons whose names are subscribed
to the foregoing instrument and personally known to me to be a /s/Executive Vice
President and a /s/Senior Vice President, respectively, of Dougherty, Dawkins,
Strand & Yost Incorporated, appeared before me this day in person, and
acknowledged that they signed, sealed with the corporate seal of Dougherty,
Dawkins, Strand & Yost Incorporated, and delivered the said instrument as their
free and voluntary act as such /s/Executive Vice President and /s/Senior Vice
President, respectively, and as the free and voluntary act of Dougherty,
Dawkins, Strand & Yost Incorporated for the uses and purposes therein set forth.
GIVEN, under my hand and notarial seal this /s/15th day of /s/October,
1986.
/s/Donna R. Krettzer
-----------------------
Notary Public
[NOTARY STAMP]
THE BANK OF NEW YORK,
Wall Street Trust division,
Trustee
By /s/Jim Sanablia
------------------------
Its /s/VP
----------------------
ATTEST:
By /s/Patrick Griffan
------------------
Its /s/Asst. VP
---------------
[Corporate Seal]
STATE OF NEW YORK )
) SS
COUNTY OF NEW YORK)
I, /s/Donna R. Krettzer, a Notary Public in and for the said County in the
State aforesaid do hereby certify that /s/Jim Sanablia and /s/Patrick Griffan,
personally known to me to be the same persons whose names are subscribed to the
foregoing instrument and personally known to me to be a /s/Vice President and
a[n] /s/Asst. Vice President, respectively, of The Bank of New York, Wall Street
Trust division, appeared before me this day in person, and acknowledged that
they signed, sealed with the corporate seal of The Bank of New York, Wall Street
Trust division, and delivered the said instrument as their free and voluntary
act as such /s/Vice President and /s/Asst. Vice President, respectively, and as
the free and voluntary act of The Bank of New York, Wall Street Trust division,
for the uses and purposes therein set forth.
GIVEN, under my hand and notarial seal this /s/15th day of /s/October ,
1986.
/s/Donna R. Krettzer
-----------------------
Notary Public
[SEAL]
My commission expires:
/s/8/31/88
AMERICAN PORTFOLIO ADVISORY
SERVICE INC.,
Evaluator
By /s/Frederick T. Croft
-------------------------
Its /s/ 1st Vice President
----------------------
ATTEST:
By /s/Scott E. Martin
--------------------------
Its /s/Assistant Secretary
----------------------
[Corporate seal]
STATE OF ILLINOIS )
) SS
COUNTY OF DU PAGE )
I, /s/Patricia A. Leopold, a Notary Public in and for the said County in
the State aforesaid, do hereby certify that /s/Scott E. Martin and Frederick T.
Croft, personally known to me to be the same persons whose names are subscribed
to the foregoing instrument and personally known to me to be a /s/Asst.
Secretary and a /s/First Vice President, respectively, of American Portfolio
Advisory Service Inc., appeared before me this day in person, and acknowledged
that they signed, sealed with the corporate seal of American Portfolio Advisory
Service Inc., and delivered the said instrument as their free and voluntary act
as such Asst. Secretary and First Vice President, respectively, and as the free
and voluntary act of American Portfolio Advisory Service Inc., for the uses and
purposes therein set forth.
GIVEN, under my hand and notarial seal this /s/14th day of /s/October,
1986.
/s/Patrica A Leopold
-----------------------
Notary Public
[SEAL]
My commission expires:
"My Commission Expires Jan. 8, 1990"
[Notary Stamp]
EXHIBIT A
FORM OF CERTIFICATE OF OWNERSHIP
(Face of Certificate)
No. Units
CERTIFICATE OF OWNERSHIP
-- evidencing -
An Undivided Interest
in the
Voyageur Unit Investment Trust
CUSIP Series Plan of Distribution
----- ------ --------------------
- --------------------------------------------------------------------------------
This is to certify that ____________________ is the owner and registered
holder of this Certificate evidencing the ownership of ________ unit(s) of
undivided interest in the series of the Voyageur Unit Investment Trust specified
on the face hereof (hereinafter called the "Trust Fund"), created by the Trust
Indenture and Agreement and related Reference Trust Agreement (hereinafter
collectively referred to as the "Indenture") among Dougherty, Dawkins, Strand &
Yost Incorporated, as Depositor (hereinafter called the "Depositor"), The Bank
of New York through its Wall Street Trust division, as Trustee (hereinafter
called the "Trustee"), and American Portfolio Advisory Service Inc., as
Evaluator (hereinafter called the "Evaluator"). The Trust Fund consists of (a)
such of the municipal obligations deposited in trust and listed in Exhibit A of
the Reference Trust Agreement and any other obligations that may be deposited in
the Trust Fund in exchange or substitution therefor in accordance with the
Indenture, as may from time to time continue to be held as part of the Trust
Fund, and (b) such cash amounts as from time to time may be held in the Interest
Account of the Trust Fund and the Principal Account maintained under the
Indenture in the manner described below.
At any given time this Certificate shall represent a fractional undivided
interest in the Trust Fund, the numerator of which fraction shall be the number
of units set forth on the face hereof and the denominator of which shall be the
total number of units of undivided fractional interest represented by all
Certificates of the Trust Fund which are outstanding at such time. Such
Certificates include Units of the Trust Fund, if any, held in book entry form on
the books of the Trustee.
The Depositor hereby grants and conveys all of its right, title and
interest in and to the Trust Fund to the extent of the fractional undivided
interest represented hereby to the registered holder of this Certificate subject
to and in pursuance of the Indenture, all the terms, conditions and covenants of
which are incorporated herein as if fully set forth at length.
The registered holder of this Certificate is entitled at any time upon
tender of this Certificate to the Trustee at its corporate trust office in the
City of New York, and upon payment of any tax or other governmental charges, to
receive, on the seventh calendar day following the day on which such tender is
made, or, if such calendar day is not a business day, on the first business day
prior to such calendar day, an amount in cash equal to the evaluation of the
fractional undivided interest in the Trust evidenced by this Certificate, upon
the basis provided for in the Indenture. The right of redemption may be
suspended and the date of payment may be postponed for any period during which
the New York Stock Exchange is closed or trading on that Exchange is restricted,
for any period during which an emergency exists so that disposal of the
obligations held in the Trust Fund is not reasonably practicable or it is not
reasonably practicable to determine fairly the value of such obligations, or for
such other periods as the Securities and Exchange Commission may by order
permit.
Interest received by the Trustee as part of the Trust Fund (including
interest accrued and unpaid prior to the day of deposit of any obligation in the
Trust Fund and that part of the proceeds of the sale, liquidation, redemption or
maturity of any such obligation which represents accrued interest) shall be
credited by the Trustee to the Interest Account. The fractional undivided
interest represented by this Certificate in the balance in the Interest Account
(after the deductions referred to below) shall be computed as of the First
Settlement Date, as defined in the Indenture, and paid to the Depositor on such
date. The next computation shall be made as of the First General Record Date, as
defined in the Indenture, and an amount in cash equal to the share of the
Interest Account represented by this Certificate shall be distributed on the
fifteenth day of the month following the month in which the First General Record
Date occurs, or within a reasonable period of time thereafter, to or upon the
order of the registered holder of this Certificate at the close of business on
the First General Record Date. Thereafter, distributions will be made as of the
first day of June and December of each year, commencing with the first such day
following the date of this Certificate, and an amount in cash equal to the share
of the Interest Account represented by this Certificate will be distributed on
the fifteenth day of June and December, respectively, or within a reasonable
period of time thereafter, to or upon the order of the registered holder of this
Certificate at the close of business on the first day of the month in which the
distribution is made.
All moneys (other than interest) received by the Trustee as part of the
Trust Fund (including amounts received from the sale, liquidation, redemption or
maturity of any obligations held in the Trust Fund) shall be credited by the
Trustee to a separate Principal Account. The fractional undivided interest
represented by this Certificate in the cash balance in the Principal Account
(after the deductions referred to below) shall be computed as of the First
General Record Date and thereafter as of June 1 and December 1 of each year,
commencing with the first such day following the First General Record Date. The
first distribution of funds from the Interest Account shall be made as provided
in the Indenture and, thereafter, an amount in cash equal to the sum of said
fractional undivided interests in the Interest Account and Principal Account,
computed as set forth above, shall be distributed on the fifteenth day of June
and December, or within a reasonable period of time thereafter, to the
registered holder of this Certificate at the close of business on the first day
of the month in which such distribution is made. The Trustee shall not be
required to make a distribution from the Principal Account unless the cash
balance on deposit therein available for such distribution shall be sufficient
to distribute at least $1.00 per Unit.
Distributions from the Interest and Principal Accounts shall be made by
mail at the post office address of the holder hereof appearing in the
registration books of the Trustee.
From time to time deductions shall be made from the Interest Account and
Principal Account, as more fully set forth in the Indenture, for redemptions,
compensation of the Trustee, the Depositor and the Evaluator, reimbursement of
certain expenses incurred by or on behalf of the Trustee or the Depositor,
certain legal expenses and payment of, or the establishment of a reserve for,
applicable taxes, if any.
Within a reasonable period of time after the end of each calendar year the
Trustee shall furnish to the registered holder of this Certificate a statement
setting forth, among other things, the amounts received and deductions therefrom
and the amounts distributed during the preceding year in respect of interest on,
and sales, redemptions or maturities of, obligations held in the Trust Fund.
This Certificate shall be transferable by the registered holder hereof by
presentation and surrender hereof at the corporate trust office of the Trustee
properly endorsed on the reverse hereof or accompanied by a written instrument
or instruments of transfer in form satisfactory to the Trustee and executed by
the registered holder hereof or his authorized attorney. Certificates of the
Trust Fund are interchangeable for one or more Certificates in an equal
aggregate number of Units of undivided interest in the Trust Fund at the
corporate trust office of the Trustee, in denominations of a single Unit of
undivided interest or any multiple thereof.
The holder hereof may be required to pay a charge of $2.00 per Certificate
issued in connection with the transfer or interchange of this Certificate and
any tax or other governmental charge that may be imposed in connection with the
transfer, interchange or other surrender of this Certificate. The holder of this
Certificate, by virtue of the acceptance hereof, assents to and shall be bound
by the terms of the Indenture, a copy of which is on file and available for
inspection at the corporate trust office of the Trustee, to which reference is
made for all the terms, conditions and covenants thereof.
The Trustee may deem and treat the person in whose name this Certificate is
registered upon the books of the Trustee as the owner hereof for all purposes
and the Trustee shall not be affected by any notice to the contrary.
The Trust Fund and the Indenture, only insofar as it relates to the Trust
Fund, shall terminate upon the maturity, redemption, sale or other disposition
of the last bond held thereunder; provided, however, that in no event shall the
Indenture and the Trust Fund continue beyond the end of the calendar year
immediately preceding the fiftieth anniversary of the date of the Indenture. The
Indenture also provides that the Trust Fund may be terminated at any time by the
written consent of holders of Certificates evidencing 51% of the then
outstanding Units of the Trust Fund. The Indenture further provides that the
Trust Fund may be terminated if the value of the Trust Fund decreases to 20% or
less of the principal amount of bonds originally deposited in the Trust Fund or
in the event of a redemption by the Depositor and/or one or more Underwriters of
Units not theretofore sold in a number sufficient to reduce the net worth of the
Fund to less than 40% of the principal amount of bonds originally deposited in
the Trust Fund. Upon any termination, the Trustee shall fully liquidate the
bonds then held and distribute pro rata the funds then held in the Trust Fund
upon the surrender of the Certificates, all in the manner provided in the
Indenture. Upon termination, the Trustee shall be under no further obligation
with respect to the Trust Fund, except to hold the funds in Trust without
interest until distribution as aforesaid and shall have no duty upon any such
termination to communicate with the holder hereof other than by mail at the
address of such holder appearing in the registration books of the Trustee.
This Certificate shall not become valid or binding for any purpose until
properly executed by the Trustee under the Indenture.
IN WITNESS WHEREOF, Dougherty, Dawkins, Strand & Yost Incorporated, as
Depositor, has caused this Certificate to be executed in facsimile by its
Executive Vice President and The Bank of New York through its Wall Street Trust
division, as Trustee, has caused this Certificate to be executed in its
corporate name by an authorized officer.
Date:
DOUGHERTY, DAWKINS, STRAND &
YOST INCORPORATED, Depositor
By ____________________________
Executive Vice President
THE BANK OF NEW YORK,
Wall Street Trust division,
Trustee
By ____________________________
Authorized Officer
(REVERSE OF CERTIFICATE)
The following abbreviations, when used in the inscription on the face of
this Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship
and not as tenants in common
UNIF TRANS MIN ACT________________ Custodian
(Cust)
_____________ under Uniform Transfers
(Minor)
to Minors Act ______________________
(State)
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
Please insert Social Security or other identifying number of assignee.
________________________________
For value received, the undersigned hereby sells, assigns and transfers
unto _________________ the within Certificate and all rights hereunder, and does
hereby irrevocably constitute and appoint ______________________ attorney to
transfer the within Certificate on the books of the Trustee, with full power of
substitution in the premises.
Date:
______________________________
NOTICE: The signature to this
assignment must correspond
with the name as it appears on
the face of this Certificate
in every particular.
Signature guarantee must be
made by the Depositor, a
member of the New York,
American, Midwest or Pacific
Stock Exchange, or a
commercial bank or trust
company having its principal
office or correspondent
in the City of New York.
Signature Guaranteed:
______________________________
______________________________
STATEMENT REGARDING DISTRIBUTIONS
On the face of this Certificate it is indicated whether the registered
holder hereof has elected to receive distributions from the Interest Account
monthly, quarterly or semi-annually.
This Certificate by its terms provides that distributions from the Interest
Account shall be computed as of the First Settlement Date and paid to the
Depositor on such date. The next computation shall be made as of the First
General Record Date and an amount in cash equal to the share of the Interest
Account represented by this Certificate shall be distributed on the fifteenth
day of the month following the month in which the First General Record Date
occurs, or within a reasonable period of time thereafter, to or upon the order
of the registered holder of this Certificate at the close of business on the
First General Record Date. Thereafter, distributions will be made as of the
first day of June and December of each year, commencing with the first such day
following the date of this Certificate, and an amount in cash equal to the share
of the Interest Account represented by this Certificate will be distributed on
the fifteenth day of June and December, respectively, or within a reasonable
period of time thereafter, to or upon the order of the registered holder of this
Certificate at the close of business on the first day of the month in which the
distribution is made.
If the registered holder hereof has elected the monthly or quarterly
option, then he agrees that, in lieu of the distributions provided by this
Certificate, the fractional undivided interest represented by this Certificate
in the balance of the Interest Account shall be computed monthly or quarterly,
respectively, as indicated on the face hereof. All Certificateholders of record,
however, regardless of the plan of distribution selected, will receive the
distribution to be made on the First Distribution Date and thereafter
distributions will be made monthly, quarterly or semi-annually, depending upon
the plan of distribution chosen by the holder hereof.
If quarterly distributions have been selected, the fractional undivided
interest represented by this Certificate in the balance of the Interest Account,
after the First Distribution Date, as defined in the Indenture, and after the
deductions referred to in this Certificate, will be computed as of the first day
of March, June, September and December, commencing with the first such day after
the First General Record Date, and subsequent to the date of this Certificate,
and an amount in cash as thus computed distributed to or upon the order of the
holder at such date of computation on or shortly after the fifteenth day of each
such month.
If monthly distributions have been selected, the fractional undivided
interest represented by this Certificate in the balance in the Interest Account,
after the First Distribution Date and after the deductions referred to in this
Certificate, will be computed as of the first day of each month of each year,
commencing with the first such day after the First General Record Date, and
subsequent to the date of this Certificate, and an amount in cash as thus
computed distributed to or upon the order of the holder at such date of
computation on or shortly after the fifteenth day of each such month.
The plan of distribution chosen by the registered holder hereof may be
changed by written notice to the Trustee not later than June 15 in any calendar
year by surrender to the Trustee of this Certificate, together with a completed
form for selection of a plan of distribution provided by the Trustee. A plan of
distribution shall continue in effect until changed as herein provided. A change
in a plan of distribution may only be made as indicated herein and will be
effective as of June 2 for the ensuing 12 months.
In the event the amount on deposit in the Interest Account is not
sufficient for the payment of the amount of interest to be distributed to
Certificateholders participating in a distribution, the Trustee shall advance
its own funds and cause to be deposited in and credited to the Interest Account
such amounts as may be required to permit payment of the distribution to be made
and shall be entitled to be reimbursed, without interest, out of interest
received by the Trust Fund subsequent to the date of such advance and subject to
the condition that any such reimbursement shall be made only under conditions
which will not reduce the funds in or available for the Interest Account to an
amount less than required for the next ensuing distribution of interest.
Distributions to Certificateholders who are participating in one of the optional
plans for distribution of interest shall not be affected because of advancements
by the Trustee for the purpose of equalizing distributions to Certificateholders
participating in a different plan.
INDEPENDENT AUDITORS' CONSENT
The Sponsor, Trustee and the Unitholders of
Voyageur Unit Investment Trust, Series 1, Series 2 and Series 3:
We consent to the use of our reports included herein and to the reference
of our Firm under the heading "Independent Auditors" in Part Two of the
Prospectus.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
November 21, 1995
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM AMENDMENT NUMBER 6 TO
FORM S-6 AND IS QUALIFIED IN ITS ENTIRETY TO REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<CIK> 0000797497
<NAME> VOYAGEUR UNIT INVESTMENT TRUST, SERIES 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-30-1995
<PERIOD-START> MAY-01-1994
<PERIOD-END> APR-30-1995
<INVESTMENTS-AT-COST> 3,247,131
<INVESTMENTS-AT-VALUE> 3,251,788
<RECEIVABLES> 119,056
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,370,844
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 41,335
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,329,509
<SHARES-COMMON-STOCK> 4617
<SHARES-COMMON-PRIOR> 4805
<ACCUMULATED-NII-CURRENT> 84,267
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 4657
<OVERDISTRIBUTION-GAINS> 6547
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 3,329,509
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 255,482
<OTHER-INCOME> 0
<EXPENSES-NET> 10,210
<NET-INVESTMENT-INCOME> 245,272
<REALIZED-GAINS-CURRENT> 698
<APPREC-INCREASE-CURRENT> (68,327)
<NET-CHANGE-FROM-OPS> 177,643
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 244,860
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 136,794
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 188
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (204,011)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
