As filed with the Securities and Exchange Commission on April 28, 2000
Registration No. 33-37849*
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT
To
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
A. Exact name of trust: INSURED MUNICIPAL SECURITIES TRUST, NEW JERSEY
NAVIGATOR INSURED SERIES 3, NEW YORK NAVIGATOR
INSURED SERIES 13 & NEW JERSEY NAVIGATOR
INSURED SERIES 9; SERIES 31, NEW YORK
NAVIGATOR INSURED SERIES 14 & NEW JERSEY
NAVIGATOR INSURED SERIES 10; SERIES 32, NEW
YORK NAVIGATOR INSURED SERIES 16 & NEW JERSEY
NAVIGATOR INSURED SERIES 12; AND SERIES 33,
NEW YORK NAVIGATOR INSURED SERIES 17 & NEW
JERSEY NAVIGATOR INSURED SERIES 13
B. Name of depositor: ING FUNDS DISTRIBUTOR, INC.
C. Complete address of depositor's principal executive offices:
ING Funds Distributor, Inc.
1475 Dunwoody Drive
West Chester, Pennsylvania 19380
D. Name and complete address of agent for service:
PETER J. DeMARCO Copy of comments to:
Senior Vice President MICHAEL R. ROSELLA, ESQ.
ING Funds Distributor, Inc. Battle Fowler LLP
1475 Dunwoody Drive 75 East 55th Street
West Chester, Pennsylvania 19380 (212) 856-6858
It is proposed that this filing become effective (check appropriate box)
immediately upon filing pursuant to paragraph (b) of Rule 485
/x/ on April 29, 2000 pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a)
on ( date ) pursuant to paragraph (a) of Rule 485
================================================================================
* The Prospectus included in this Registration constitutes a combined
Prospectus as permitted by the Provisions of Rule 429 of the General
Rules and Regulations under the Securities Act of 1933 (the "Act").
Said Prospectus covers units of undivided interest in Insured Municipal
Securities Trust, New Jersey Navigator Insured Series 3, New York
Navigator Insured Series 13 & New Jersey Navigator Insured Series 9;
Series 31, New York Navigator Insured Series 14 and New Jersey
Navigator Insured Series 10; Series 32, New York Navigator Insured
Series 16 & New Jersey Navigator Insured Series 12 and Series 33, New
York Navigator Insured Series 17 & New Jersey Navigator Insured Series
13, covered by prospectuses heretofore filed as part of separate
registration statements on Form S-6 (Registration Nos. 33-37849,
33-56918, 33-60604, 33-52397 and 33-58167, respectively) under the Act.
This filing constitutes Post-Effective Amendment No. 9 for New Jersey
Navigator Insured Series 3; Post- Effective Amendment No. 7 for New
York Navigator Insured Series 13 & New Jersey Navigator Insured Series
9, and Series 31, New York Navigator Insured Series 14 & New Jersey
Navigator Insured Series 10; Post-Effective Amendment No. 6 for Series
32, New York Navigator Insured Series 16 & New Jersey Navigator Insured
Series 12 and Post- Effective Amendment No. 5 for Series 33, New York
Navigator Insured Series 17 & New Jersey Navigator Insured Series 13.
Each of the Registrants filed a Rule 24f-2 Notice for its fiscal year
ended December 31, 1999 on or about March 29, 2000.
175582.1
<PAGE>
Prospectus Part A Dated April 30, 2000
INSURED MUNICIPAL SECURITIES TRUST
NEW JERSEY NAVIGATOR INSURED
SERIES 3
The Trust is a unit investment trust designated Series 3 ("New Jersey
Navigator Trust") with an underlying portfolio of long-term insured tax-exempt
bonds and was formed to preserve capital and to provide interest income which,
in the opinions of bond counsel to the respective issuers, is, with certain
exceptions, currently exempt from regular federal income tax under existing law
and from New Jersey gross income tax. There can be no assurance that the Trust's
investment objectives will be achieved. Although the Supreme Court has
determined that Congress has the authority to subject the interest on bonds such
as the Bonds in the Trust to federal income taxation, existing law excludes such
interest from regular federal income tax. Such interest income may, however, be
a specific preference item for purposes of the federal individual and corporate
alternative minimum tax. (See "Description of Portfolio" in this Part A for a
list of those Bonds, if any, which pay interest income subject to the federal
individual alternative minimum tax.) In addition, capital gains are subject to
tax. (See "Tax Status" and "The Trust--Portfolio" in Part B of this Prospectus.)
The Sponsor is ING Funds Distributor, Inc. (successor to Reich & Tang
Distributors, Inc.). The value of the Units of the Trust will fluctuate with the
value of the underlying bonds. Minimum purchase: 1 Unit.
This Prospectus consists of two parts. Part A contains the Summary of
Essential Information as of December 31, 1999 (the "Evaluation Date"), a summary
of certain specific information regarding the Trust and audited financial
statements of the Trust, including the related portfolio, as of the Evaluation
Date. Part B of this Prospectus contains a general summary of the Trust. Part A
of this Prospectus may not be distributed unless accompanied by Part B.
Investors should retain both parts of this Prospectus for future reference. The
Securities and Exchange Commission ("SEC") maintains a website that contains
reports, proxy and information statements and other information regarding the
Trust which is filed electronically with the SEC. The SEC's Internet address is
http:www.sec.gov. Offering materials for the sale of these units available
through the Internet are not being offered directly or indirectly to residents
of a particular state nor is an offer of these units through the Internet
specifically directed to any person in a state by, or on behalf of, the issuer.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE 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 TRUST. The Trust seeks to achieve its investment objectives
through investment in a fixed, diversified portfolio of long-term insured bonds
(the "Bonds") issued by or on behalf of states, municipalities and public
authorities which, because of irrevocable insurance, were rated "AAA" by
Standard & Poor's Rating Services, a division of The McGraw-Hill Companies. All
of the Bonds in the Trust were rated "AAA" by Standard & Poor's Corporation at
the time originally deposited in the Trust (see "Portfolio"). This rating
results from insurance relating only to the Bonds in the Trust and
110242.1
<PAGE>
not to Units of the Trust. The insurance does not remove market risk, as it does
not guarantee the market value of the Units. For a discussion of the
significance of such ratings, see "Description of Bond Ratings" in Part B of
this Prospectus. Some of the aggregate principal amount of the Bonds in the
Trust may be "Zero Coupon Bonds," which are original issue discount bonds that
provide for payment at maturity at par value, but do not provide for the payment
of current interest (for the amount of Zero Coupon Bonds in the Trust, and the
cost of such Bonds to the Trust, see "Description of Portfolio" in this Part A).
The payment of interest and preservation of capital are, of course, dependent
upon the continuing ability of the issuers of the Bonds or the insurer thereof
to meet their obligations.
Investment in the Trust should be made with an understanding of the
risks which an investment in long-term fixed rate debt obligations may entail,
including the risk that the value of the underlying portfolio will decline with
increases in interest rates, and that the value of Zero Coupon Bonds is subject
to greater fluctuation than coupon bonds in response to such changes in interest
rates. A Trust designated as a long-term trust must have a dollar-weighted
average portfolio maturity of more than ten years. (See "Portfolio" in Part B of
this Prospectus.)
Each Unit in the Trust represents a 1/2887th undivided interest in the
principal and net income of the Trust. The principal amount of Bonds deposited
in the Trust per Unit is reflected in the Summary of Essential Information. (See
"Organization" in Part B of this Prospectus.) The Units being offered hereby are
issued and outstanding Units which have been purchased by the Sponsor in the
secondary market.
INSURANCE. Each of the Bonds in the New Jersey Navigator Trust is
insured by a municipal bond guaranty insurance policy obtained by the Sponsor
(the "Navigator Sponsor-Insured Bonds") from MBIA Insurance Corporation ("MBIA
Corp.") covering regularly scheduled payments of principal thereof and interest
thereon when such amounts become due for payment but shall not have been paid.
For discussion of the effect of an occurrence of non-payment of principal or
interest on any Bonds in the New Jersey Navigator Trust see "Portfolio
Supervision" in Part B of this Prospectus. The premiums for the Navigator
Sponsor-Insured Bonds are obligations of the Sponsor. Additionally, some of the
Bonds in the New Jersey Navigator Trust may be Pre-Insured Bonds (as described
below). The premium for the Pre-Insured Bonds is an obligation of the issuers,
underwriters or prior owners of those Bonds. The insurance policy or policies
relating to the Navigator Sponsor-Insured Bonds provides that, to the extent
that Bonds are both Pre-Insured Bonds and Navigator Sponsor-Insured Bonds,
coverage is effective after a claim has been made upon the insurer of the
Pre-Insured Bonds.
Some of the Bonds in the New Jersey Navigator Trust may additionally
be insured by a municipal bond guaranty insurance policy obtained by issuers,
underwriters or prior owners of the Bonds ("Pre-Insured Bonds") and issued by
one of the insurance companies described under "Insurance on the Bonds" in Part
B of this Prospectus (the "Insurance Companies"). Such insurance covers the
scheduled payment of principal thereof and interest thereon when such amounts
shall become due for payment but shall not have been paid by the issuer or any
other insurer thereof.
None of the insurance will cover accelerated payments of principal or
penalty interest or premiums unrelated to taxability of interest on the Bonds.
The insurance relates only to the prompt payment of principal of and interest on
the securities in the portfolios, and does not remove market risks nor does it
guarantee the market value of Units in the Trusts. The terms of the insurance
are more fully described under "Insurance on the Bonds" in `Part B of this
Prospectus. No representation is made herein as to any Bond insurer's ability to
meet its obligations under a policy of insurance relating
A-2
110242.1
<PAGE>
to any of the Pre-Insured Bonds. In addition, investors should be aware that
subsequent to the Date of Deposit the rating of the claims-paying ability of the
insurer of an underlying Pre-Insured Bond may be downgraded.
All of the Bonds in the New Jersey Navigator Trust are covered by
insurance obtained by the Sponsor from MBIA Corp. and 66.6% of the Bonds in the
New Jersey Navigator Trust are Pre-Insured Bonds. The approximate percentage of
the aggregate principal amount of the Trust that is insured by each Insurance
Company with respect to Pre-Insured Bonds is as follows: Financial Guaranty
Insurance Company ("Financial Guaranty"), 7.9%; and Financial Security Assurance
Inc. ("Financial Security"), 58.7%.
PUBLIC OFFERING PRICE. The secondary market Public Offering Price of
each Unit is equal to the aggregate offering price of the Bonds in such Trust
divided by the number of Units outstanding, plus a sales charge of 4.0% of the
Public Offering Price, or 4.167% of the net amount invested in Bonds per Unit.
In addition, accrued interest to the expected date of settlement is added to the
Public Offering Price. If Units had been purchased on the Evaluation Date, the
Public Offering Price per Unit would have been $892.90 plus accrued interest of
$6.02 under the monthly distribution plan, $10.55 under the semi-annual
distribution plan and $10.64 under the annual distribution plan, for a total of
$898.92, $903.45 and $903.54, respectively. The Public Offering Price per Unit
can vary on a daily basis in accordance with fluctuations in the aggregate bid
price of the Bonds. (See "Public Offering--Offering Price" in Part B of this
Prospectus.)
ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN. Units of each
Trust are offered to investors on a "dollar price" basis (using the computation
method described under "Public Offering--Offering Price" in Part B) as
distinguished from a "yield price" basis often used in offerings of tax exempt
bonds (involving the lesser of the yield as computed to maturity of bonds or to
an earlier redemption date). Since they are offered on a dollar price basis, the
rate of return on an investment in Units of each Trust is measured in terms of
"Estimated Current Return" and "Estimated Long Term Return".
Estimated Long Term Return is calculated by: (1) computing the yield
to maturity or to an earlier call date (whichever results in a lower yield) for
each Bond in the Trust's portfolio in accordance with accepted bond practices,
which practices take into account not only the interest payable on the Bond but
also the amortization of premiums or accretion of discounts, if any; (2)
calculating the average of the yields for the Bonds in the Trust's portfolio by
weighing each Bond's yield by the market value of the Bond and by the amount of
time remaining to the date to which the Bond is priced (thus creating an average
yield for the portfolio of the Trust); and (3) reducing the average yield for
the portfolio of the Trust in order to reflect estimated fees and expenses of
the Trust and the maximum sales charge paid by investors. The resulting
Estimated Long Term Return represents a measure of the return to investors
earned over the estimated life of the Trust. (For the Estimated Long Term Return
to Certificateholders under the monthly, semi-annual and annual distribution
plans, see "Summary of Essential Information".)
Estimated Current Return is a measure of the Trust's cash flow.
Estimated Current Return is computed by dividing the Estimated Net Annual
Interest Income per Unit by the Public Offering Price per Unit. In contrast to
the Estimated Long Term Return, the Estimated Current Return does not take into
account the amortization of premium or accretion of discount, if any, on the
Bonds in the portfolio of the Trust. Moreover, because interest rates on Bonds
purchased at a premium are generally higher than current interest rates on newly
issued bonds of a similar type with comparable rating, the Estimated Current
Return per Unit may be affected adversely if such Bonds are redeemed prior to
their maturity.
A-3
110242.1
<PAGE>
The Estimated Net Annual Interest Income per Unit of the Trust will
vary with changes in the fees and expenses of the Trustee and the Evaluator
applicable to the Trust and with the redemption, maturity, sale or other
disposition of the Bonds in the Trust. The Public Offering Price will vary with
changes in the bid prices of the Bonds. Therefore, there is no assurance that
the present Estimated Current Return or Estimated Long Term Return will be
realized in the future. (For the Estimated Current Return to Certificateholders
under the monthly, semi-annual and annual distribution plans, see "Summary of
Essential Information". See "Estimated Long Term Return and Estimated Current
Return" in Part B of this Prospectus.)
A schedule of cash flow projections is available from the Sponsor upon
request.
DISTRIBUTIONS. Distributions of interest income, less expenses, will
be made by the Trust either monthly, semi-annually or annually depending upon
the plan chosen by the Certificateholder. Certificateholders purchasing Units in
the secondary market will initially receive distributions in accordance with the
elections of the prior owner and may thereafter change the plan as provided
under "Interest and Principal Distributions" in Part B of this Prospectus.
Distributions of principal, if any, will be made semi- annually on June 15 and
December 15 of each year. (See "Rights of Certificateholders--Interest and
Principal Distributions" in Part B of this Prospectus. For estimated monthly,
semi-annual and annual interest distributions, see "Summary of Essential
Information.")
MARKET FOR UNITS. The Sponsor, although not obligated to do so,
intends to maintain a secondary market for the Units at a price based on the
aggregate bid price of the Bonds in the Trust portfolio. The reoffer price will
be based on the aggregate bid price of the Bonds plus a sales charge of 4.0% of
the Public Offering Price (4.167% of the net amount invested), plus net accrued
interest. If a market is not maintained a Certificateholder will be able to
redeem his or her Units with the Trustee at a price based on the aggregate bid
price of the Bonds. (See "Sponsor Repurchase" and "Public Offering--Offering
Price" in Part B of this Prospectus.)
A-4
110242.1
<PAGE>
INSURED MUNICIPAL SECURITIES TRUST
NEW JERSEY NAVIGATOR INSURED
SERIES 3
SUMMARY OF ESSENTIAL INFORMATION AS OF DECEMBER 31, 1999
--------------------------------------------------------
<TABLE>
<S> <C> <C>
Date of Deposit*: January 31, 1991 Minimum Principal Distribution:
Principal Amount of Bonds ... $2,545,000 $1.00 per Unit.
Number of Units ............. 2,887 Weighted Average Life to Maturity:
Fractional Undivided Inter- 12.2 Years.
est in Trust per Unit ..... 1/2887 Minimum Value of Trust:
Principal Amount of Trust may be terminated if value of
Bonds per Unit ............ $881.54 Trust is less than $2,000,000 in
Secondary Market Public principal amount of Bonds.
Offering Price** Mandatory Termination Date:
Aggregate Bid Price The earlier of December 31, 2040 or
of Bonds in Trust ....... $2,474,745+++ the disposition of the last Bond in
Divided by 2,887 Units .... $857.20 the Trust.
Plus Sales Charge of 4.0% Trustee***: The Chase Manhattan Bank.
of Public Offering Price. $35.70 Trustee's Annual Fee: Monthly
Public Offering Price plan $.96 per $1,000; semi-annual
per Unit ................ $892.90+ plan $.50 per $1,000; and annual
Redemption and Sponsor's plan is $.32 per $1,000.
Repurchase Price Evaluator: Kenny S&P Evaluation
per Unit .................. $857.20+ Services.
+++ Evaluator's Fee for Each
++++ Evaluation: Minimum of $8 plus $.25
Excess of Secondary Market per each issue of Bonds in excess of
Public Offering Price 50 issues (treating separate
over Redemption and maturities as separate issues).
Sponsor's Repurchase Sponsor: ING Funds Distributor,
Price per Unit ............ $35.70++++ Inc.
Difference between Public Sponsor's Annual Fee: Maximum of
Offering Price per Unit $.25 per $1,000 principal amount of
and Principal Amount per Bonds (see "Trust Expenses and
Unit Premium/(Discount) ... $11.36 Charges" in Part B of this
Evaluation Time: 4:00 p.m. Prospectus).
New York Time.
</TABLE>
PER UNIT INFORMATION BASED UPON INTEREST DISTRIBUTION PLAN ELECTED
------------------------------------------------------------------
<TABLE>
<CAPTION>
Monthly Semi-Annual Annual
Option Option Option
------ ----------- ------
<S> <C> <C> <C>
Gross annual interest income# ......... $44.28 $44.28 $44.28
Less estimated annual fees and
expenses ............................ 2.07 1.88 .90
Estimated net annual interest ______ ______ ______
income (cash)# ...................... $42.21 $42.40 $43.38
Estimated interest distribution# ...... 3.51 21.19 43.38
Estimated daily interest accrual# ..... .1172 .1177 .1205
Estimated current return#++ ........... 4.73% 4.75% 4.86%
Estimated long term return++ .......... 2.56% 2.59% 2.73%
Record dates .......................... 1st of Dec. 1 and Dec. 1
each month June 1
Interest distribution dates ........... 15th of Dec. 15 and Dec. 15
each month June 15
</TABLE>
A-5
110242.1
<PAGE>
Footnotes to Summary of Essential Information
* The Date of Deposit is the date on which the Trust Agreement was signed
and the deposit of the Bonds with the Trustee made.
** Certain amounts distributable as of December 31, 1999 may be reported
in the Summary of Essential Information as if they had been distributed
at year-end.
*** The Trustee maintains its principal executive office at 270 Park
Avenue, New York, New York 10017 and its unit investment trust office
at 4 New York Plaza, New York, New York 10004 (tel. no.:
1-800-882-9898). For information regarding redemption by the Trustee,
see "Trustee Redemption" in Part B of this Prospectus.
+ Plus accrued interest to the expected date of settlement (approximately
three business days after purchase) of $6.02 monthly, $10.55 semi-
annually and $10.64 annually.
++ The estimated current return and estimated long term return are
increased for transactions entitled to a discount (see "Employee
Discounts" in Part B of this Prospectus), and are higher under the
semi- annual and annual options due to lower Trustee's fees and
expenses.
+++ Based solely upon the bid side evaluation of the underlying Bonds
(including, where applicable, undistributed cash from the principal
account). Upon tender for redemption, the price to be paid will be
calculated as described under "Trustee Redemption" in Part B of this
Prospectus.
++++ See "Comparison of Public Offering Price, Sponsor's Repurchase Price
and Redemption Price" in Part B of this Prospectus.
# Does not include income accrual from original issue discount bonds, if
any.
FINANCIAL AND STATISTICAL INFORMATION
Selected data for each Unit outstanding for the periods listed below:
<TABLE>
<CAPTION>
Distribu-
Distributions of Interest tions of
During the Period (per Unit) Principal
---------------------------- During
Net Asset* Semi- the
Units Out- Value Monthly Annual Annual Period
Period Ended standing Per Unit Option Option Option (Per Unit)
- ------------ ---------- ---------- ------- ------ ------ ----------
<S> <C> <C> <C> <C> <C> <C>
December 31, 1997 3,092 $906.21 $54.54 $54.98 $55.34 $7.96
December 31, 1998 2,887 899.19 53.66 54.08 54.52 -0-
December 31, 1999 2,887 867.51 53.88 54.30 55.29 -0-
</TABLE>
- --------
* Net Asset Value per Unit is calculated by dividing net assets as
disclosed in the "Statement of Net Assets" by the number of Units
outstanding as of the date of the Statement of Net Assets. See Note 5
of Notes to Financial Statements for a description of the components of
Net Assets.
A-6
110242.1
<PAGE>
INFORMATION REGARDING THE TRUST
AS OF DECEMBER 31, 1999
DESCRIPTION OF PORTFOLIO*
- ------------------------
The portfolio of the Trust consists of 7 issues representing
obligations of 5 issuers located in the state of New Jersey and 2 in Puerto
Rico. The Sponsor has not participated as a sole underwriter or manager, co-
manager or member of an underwriting syndicate from which any of the initial
aggregate principal amount of the Bonds were acquired. None of the Bonds are
obligations of state and local housing authorities; approximately 39.1%** are
hospital revenue bonds; none were issued in connection with the financing of
nuclear generating facilities; and none are "mortgage subsidy" bonds. All of the
Bonds in the Trust are subject to redemption prior to their stated maturity
dates pursuant to sinking fund or optional call provisions. The Bonds may also
be subject to other calls, which may be permitted or required by events which
cannot be predicted (such as destruction, condemnation, termination of a
contract, or receipt of excess or unanticipated revenues). One issue
representing $170,000 of the principal amount of the Bonds is a general
obligation bond. All six of the remaining issues representing $2,375,000 of the
principal amount of the Bonds are payable from the income of a specific project
or authority and are not supported by the issuer's power to levy taxes. The
portfolio is divided for purpose of issue as follows: Building Authority 1,
Hospital 2, Port Facility 1, School District 1 and Utility Revenue 1. For an
explanation of the significance of these factors see "The Trust--Portfolio" in
Part B of this Prospectus.
As of December 31, 1999, $380,000 (approximately 14.9% of the
aggregate principal amount of the Bonds) were original issue discount bonds. Of
these original issue discount bonds, $200,000 (approximately 7.9% of the
aggregate principal amount of the Bonds) were Zero Coupon Bonds. Zero Coupon
Bonds do not provide for the payment of any current interest and provide for
payment at maturity at par value unless sooner sold or redeemed. The market
value of Zero Coupon Bonds is subject to greater fluctuations than coupon bonds
in response to changes in interest rates. Approximately 19.6% of the aggregate
principal amount of the Bonds in the Trust were purchased at a "market" discount
from par value at maturity, approximately 65.5% were purchased at a premium and
none were purchased at par. For an explanation of the significance of these
factors see "Discount and Zero Coupon Bonds" in Part B of this Prospectus.
None of the Bonds in the Trust are subject to the federal
individual alternative minimum tax under the Tax Reform Act of 1986. See "Tax
Status" in Part B of this Prospectus.
- --------
* Changes in the Trust Portfolio: From January 1, 2000 to March 15, 2000,
the entire principal amount of the Bond in portfolio no. 3 was called
and is no longer contained in the Trust. The entire principal amount
of the Bond in portfolio no. 5 was sold and is no longer contained in
the Trust. 265 Units were redeemed from the Trust.
** A trust is considered to be "concentrated" in a particular category or
industry when the securities in that category or industry constitute
25% or more of the aggregate face amount of the portfolio. See Part B
for disclosure, including risk factors, regarding this concentration.
A-7
110242.1
<PAGE>
Report of Independent Auditors
The Sponsor, Trustee and Certificateholders of Insured Municipal Securities
Trust, New Jersey Navigator Insured Series 3
We have audited the accompanying statement of net assets of Insured Municipal
Securities Trust, New Jersey Navigator Insured Series 3, including the
portfolio, as of December 31, 1999 and the related statements of operations, and
changes in net assets and financial highlights for the year then ended. These
financial statements and financial highlights are the responsibility of the
Trustee. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audit. The statement of
operations, statement of changes in net assets and financial highlights for each
of the two years in the period ended December 31, 1998 were audited by other
auditors whose report thereon dated March 19, 1999, expressed an unqualified
opinion on those financial statements and financial highlights.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of the securities
owned by correspondence with the Trustee. An audit also includes assessing the
accounting principles used and significant estimates made by the Trustee, as
well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the 1999 financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Insured Municipal Securities Trust, New Jersey Navigator Insured Series 3 at
December 31, 1999, the results of its operations, changes in its net assets and
financial highlights for the year then ended, in conformity with accounting
principles generally accepted in the United States.
/s/ERNST & YOUNG LLP
New York, New York
April 15, 2000
<PAGE>
Insured Municipal Securities Trust
New Jersey Navigator Insured Series 3
Portfolio
December 31, 1999
<TABLE>
<CAPTION>
Redemption
Aggregate Coupon Feature (2)(4)
Portfolio Principal Rate/Date(s) S.F.-Sinking Fund Market
No. Amount Name of Issuer and Title of Bonds Ratings(1) of Maturity(2) Ref.-Refunding Value (3)
- ------------ ------------ ------------------------------------------- ----------- -------------- -------------------- -------------
<S> <C> <C> <C> <C> <C> <C>
1 $ 500,000 N. J. Hlth. Care Facs. Fincg. Auth. Rev. AAA 6.750% 7/01/08 @ 100 S.F. $ 521,790
Bonds 7/01/2020 7/01/01 @ 102 Ref.
The Med. Cntr. of Ocean Cnty. Issue
Series C
(MBIA Corp.)
2 495,000 N. J. Hlth. Care Facs. Fincg. Auth. Rev. AAA 7.250 5/15/08 @ 100 S.F. 520,349
Bonds 2/15/2021 2/15/01 @ 102 Ref.
Cathedral Hlth. Servs. Inc. Issue (FHA
Insrd.
Mtg.) Series A (MBIA Corp.)
3 500,000 N. Y. & N. J. Port. Auth. Consldtd. Rev. AAA 6.875 7/01/12 @ 100 S.F. 505,000
Bonds 1/01/2025 1/01/01 @ 101 Ref.
Sixty-Seventh Series (MBIA Corp.)
4 500,000 N. J. Bd. of Ed. Certs. of Part. Rev. AAA 7.000 6/15/11 @ 100 S.F. 524,440
Bonds The 12/15/2015 6/15/01 @ 102 Ref.
Twnshp. of Hamilton N. J. Series B (MBIA
Corp.)
5 170,000 Cmmnwlth. of P. R. Imprvmt. Bonds of 1991 AAA 7.300 7/01/11 @ 100 S.F. 176,169
Gen. Oblig. Rev. Bonds (MBIA Corp.) 7/01/2020 7/01/00 @ 102 Ref.
6 180,000 P. R. Pub. Bldgs. Auth. Pub. Ed. & Hlth. AAA 6.000 7/01/07 @ 100 S.F. 181,123
Facs. Rev. Rfndg. Bonds Series I (MBIA 7/01/2012 7/01/00 @ 100 Ref.
Corp.)
7 200,000 Camden Cnty. N. J. Muti. Utils. Auth. AAA 0.000 No Sinking Fund 59,960
Cnty. 9/01/2019 None
Agreement Swr. Rev.Cap. Apprec. Bonds
Series 1990A (MBIA Corp.)
----------- -------------
$2,545,000 Total Investments (Cost $2,409,908) $2,488,831
=========== =============
</TABLE>
See accompanying footnotes to portfolio and notes to financial statements.
<PAGE>
Insured Municipal Securities Trust
New Jersey Navigator Insured Series 3
Footnotes to Portfolio
1. All ratings are by Kenny S&P Evaluation Services, a business unit of J.J.
Kenny Company, Inc., a subsidiary of The McGraw-Hill Companies, Inc. A
brief description of the ratings symbols and their meaning is set forth
under "Description of Bond Ratings" in Part B of the Prospectus.
2. See "The Trust--Portfolio" in Part B of the Prospectus for an explanation
of redemption features. See "Tax Status" in Part B of the Prospectus for a
statement of the Federal tax consequences to a Certificateholder upon the
sale, redemption or maturity of a bond.
3. At December 31, 1999, the net unrealized appreciation of all the bonds was
comprised of the following:
Gross unrealized appreciation $ 78,923
Gross unrealized depreciation -
-----------------
Net unrealized appreciation $ 78,923
=================
4. The Bonds may also be subject to other calls, which may be permitted or
required by events which cannot be predicted (such as destruction,
condemnation, termination of a contract, or receipt of excess of
unanticipated revenues).
The accompanying notes form an integral part of the financial statements.
<PAGE>
Insured Municipal Securities Trust
New Jersey Navigator Insured Series 3
Statement of Net Assets
December 31, 1999
Investments in Securities, at market value (cost $2,409,908) $ 2,488,831
Other assets
Accrued interest 60,781
-----------------
Total other assets 60,781
-----------------
Liabilities
Advance from Trustee 45,124
-----------------
Total liabilities 45,124
-----------------
Excess of other assets over total liabilities 15,657
-----------------
Net assets (2,887 units of fractional undivided
interest outstanding, $867.51 per unit) $ 2,504,488
=================
The accompanying notes form an integral part of the financial statements.
<PAGE>
Insured Municipal Securities Trust
New Jersey Navigator Insured Series 3
Statement of Operations
<TABLE>
<CAPTION>
Year ended December 31,
1999 1998 1997
------------------ ------------------ -----------------
<S> <C> <C> <C>
Investment income
Interest $ 166,419 $ 166,386 $ 187,948
Expenses
Trustee's fees 4,276 4,560 4,922
Evaluator's fee 2,249 2,431 2,009
Sponsor's advisory fee 636 675 741
------------------ ------------------ -----------------
Total expenses 7,161 7,666 7,672
------------------ ------------------ -----------------
Net investment income 159,258 158,720 180,276
------------------ ------------------ -----------------
Realized and unrealized gain (loss)
Realized gain on investments - 12,829 11,916
Unrealized (depreciation)
on investments (96,330) (35,814) (35,307)
------------------ ------------------ -----------------
Net gain (loss) on investments (96,330) (22,985) (23,391)
------------------ ------------------ -----------------
Net increase in net assets resulting
from operations $ 62,928 $ 135,735 $ 156,885
================== ================== =================
</TABLE>
The accompanying notes form an integral part of the financial statements.
<PAGE>
Insured Municipal Securities Trust
New Jersey Navigator Insured Series 3
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year ended December 31,
1999 1998 1997
------------------ ------------------- ------------------
<S> <C> <C> <C>
Operations
Net investment income $ 159,258 $ 158,720 $ 180,276
Realized gain on investments - 12,829 11,916
Unrealized (depreciation)
on investments (96,330) (35,814) (35,307)
------------------ ------------------- ------------------
Net increase in net assets resulting from
operations 62,928 135,735 156,885
------------------ ------------------- ------------------
Distributions to Certificateholders
Investment income 154,413 155,676 178,930
Principal - - 25,419
Redemptions
Interest - 2,362 2,458
Principal - 183,718 231,738
------------------ ------------------- ------------------
Total distributions and redemptions 154,413 341,756 438,545
------------------ ------------------- ------------------
Total (decrease) (91,485) (206,021) (281,660)
Net assets
Beginning of year 2,595,973 2,801,994 3,083,654
------------------ ------------------- ------------------
End of year (including undistributed net investment
income of $55,122, $50,277 and $49,595,
respectively) $ 2,504,488 $ 2,595,973 $ 2,801,994
================== =================== ==================
</TABLE>
The accompanying notes form an integral part of the financial statements.
<PAGE>
Insured Municipal Securities Trust
New Jersey Navigator Insured Series 3
Financial Highlights
Selected data for a unit of the Trust outstanding:*
<TABLE>
<CAPTION>
Year ended December 31,
1999 1998 1997
----------------- ----------------- -----------------
<S> <C> <C> <C>
Net asset value, beginning of year** $ 899.19 $ 906.21 $ 920.77
----------------- ----------------- -----------------
Interest income 57.64 55.65 58.35
Expenses (2.48) (2.56) (2.38)
----------------- ----------------- -----------------
Net investment income 55.16 53.09 55.97
----------------- ----------------- -----------------
Net gain or loss on investments (1) (33.35) (7.25) (6.33)
----------------- ----------------- -----------------
Total from investment operations 21.81 45.84 49.64
----------------- ----------------- -----------------
Less distributions:
to Certificateholders
Income 53.49 52.07 55.55
Principal - - 7.89
for Redemptions
Interest - .79 .76
----------------- ----------------- -----------------
Total distributions 53.49 52.86 64.20
----------------- ----------------- -----------------
Net asset value, end of year** $ 867.51 $ 899.19 $ 906.21
================= ================= =================
</TABLE>
(1) Net gain or loss on investments is a result of changes in outstanding units
since January 1, 1999, 1998 and 1997, respectively, and the dates of net gain
and loss on investments.
* Unless otherwise stated, based upon average units outstanding during the
year of 2,887 ([2,887 + 2,887]/2) for 1999, 2,990 ([2,887 + 3,092]/2) for
1998 and of 3,221 ([3,092 + 3,349]/2) for 1997.
** Based upon actual units outstanding.
The accompanying notes form an integral part of the financial statements.
<PAGE>
Insured Municipal Securities Trust
New Jersey Navigator Insured Series 3
Notes to Financial Statements
December 31, 1999
1. Organization
Insured Municipal Securities Trust, New Jersey Navigator Insured Series 3 (the
"Trust") was organized on January 31, 1991 by Bear, Stearns & Co. Inc. and
Gruntal & Co., Incorporated under the laws of the State of New York by a Trust
Indenture and Agreement, and is registered under the Investment Company Act of
1940. The Trust was formed to preserve capital and to provide interest income.
On September 28, 1995, Reich & Tang Distributors, Inc. ("Reich & Tang") had
become the successor sponsor to certain of the unit investment trusts previously
sponsored by Bear, Stearns & Co. Inc. As successor sponsor, Reich & Tang had
assumed all of the obligations and rights of Bear, Stearns & Co. Inc., the
previous sponsor.
Effective February 9, 2000, Gruntal & Co. resigned as a co-sponsor of certain
unit investment trusts previously co-sponsored with Reich & Tang. ING Funds
Distributor, Inc. ("ING") has become the successor sponsor to certain unit
investment trusts previously sponsored by Reich & Tang. As successor sponsor,
ING has assumed all of the obligations and rights of Reich & Tang, the previous
sponsor.
2. Summary of Significant Accounting Policies
The following is a summary of significant accounting policies consistently
followed by the Trust in preparation of its financial statements. The policies
are in conformity with generally accepted accounting principles ("GAAP"). The
preparation of financial statements in accordance with GAAP requires management
to make estimates and assumptions that affect the reported amounts and
disclosures in the financial statements. Actual amounts could differ from those
estimates.
Interest Income
Interest income is recorded on the accrual basis. The discount on the
zero-coupon bonds is accreted by the interest method over the respective lives
of the bonds. The accretion of such discount is included in interest income;
however, it is not distributed until realized in cash upon maturity or sale of
the respective bonds.
<PAGE>
Insured Municipal Securities Trust
New Jersey Navigator Insured Series 3
Notes to Financial Statements (continued)
2. Summary of Significant Accounting Policies (continued)
Security Valuation
Investments are carried at market value which is determined by Kenny S&P
Evaluation Services, a business unit of J.J. Kenny Company, Inc., a subsidiary
of the McGraw-Hill Companies, Inc. The market value of the portfolio is based
upon the bid prices for the bonds at the end of the year, which approximates the
fair value of the security at that date, except that the market value on the
date of deposit represents the cost to the Trust based on the offering prices
for investments at that date. The difference between cost (including accumulated
accretion of original issue discount on zero-coupon bonds) and market value is
reflected as unrealized appreciation (depreciation) of investments. Securities
transactions are recorded on the trade date. Realized gains (losses) from
securities transactions are determined on the basis of average cost of the
securities sold or redeemed.
3. Income Taxes
No provision for federal income taxes has been made in the accompanying
financial statements because the Trust intends to continue to qualify for the
tax treatment applicable to Grantor Trusts under the Internal Revenue Code.
Under existing law, if the Trust so qualifies, it will not be subject to federal
income tax on net income and capital gains that are distributed to unitholders.
4. Trust Administration
The Chase Manhattan Bank (the "Trustee") has custody of assets and
responsibility for the accounting records and financial statements of the Trust
and is responsible for establishing and maintaining a system of internal control
related thereto. The Trustee is also responsible for all estimates of expenses
and accruals reflected in the Trust's financial statements.
The Trust Indenture and Agreement provides for interest distributions as often
as monthly (depending upon the distribution plan elected by the
Certificateholders).
<PAGE>
Insured Municipal Securities Trust
New Jersey Navigator Insured Series 3
Notes to Financial Statements (continued)
4. Trust Administration (continued)
The Trust Indenture and Agreement further requires that principal received from
the disposition of bonds, other than those bonds sold in connection with the
redemption of units, be distributed to Certificateholders.
The Trust Indenture and Agreement also requires the Trust to redeem units
tendered. For the years ended December 31, 1999, 1998 and 1997, 0, 205 and 257
units were redeemed, respectively.
The Trust pays an annual fee for trustee services rendered by the Trustee that
ranges from $.32 to $.96 per $1,000 of outstanding investment principal. In
addition, a minimum fee of $8.00 is paid to a service bureau for each portfolio
valuation. A maximum fee of $.25 per $1,000 of outstanding investment principal
is paid to the Sponsor. For the years ended December 31, 1999, 1998 and 1997,
the "Trustee's Fees" are comprised of Trustee fees of $2,383, $2,576 and $2,669
and other expenses of $1,893, $1,984 and $2,253, respectively. The other
expenses include professional, printing and miscellaneous fees.
5. Net Assets
At December 31, 1999, the net assets of the Trust represented the interest of
Certificateholders as follows:
Original cost to Certificateholders $ 4,100,366
Less initial gross underwriting commission 200,918
-------------------
3,899,448
Accumulated cost of securities sold, matured or called (1,514,919)
Net unrealized appreciation 78,923
Undistributed net investment income 55,122
Distributions in excess of proceeds from investments (14,086)
-------------------
Total $ 2,504,488
===================
<PAGE>
Insured Municipal Securities Trust
New Jersey Navigator Insured Series 3
Notes to Financial Statements (continued)
5. Net Assets (continued)
The original cost to Certificateholders, less the initial gross underwriting
commission, represents the aggregate initial public offering price net of the
applicable sales charge on 4,000 units of fractional undivided interest of the
Trust as of the date of deposit.
Undistributed net investment income includes accumulated accretion of original
issue discount of $25,379.
6. Concentration of Credit Risk
Since the Trust invests a portion of its assets in municipal bonds, it may be
affected by economic and political developments in the municipalities. Certain
debt obligations held by the Trust may be entitled to the benefit of insurance,
standby letters of credit or other guarantees of banks or other financial
institutions.
<PAGE>
Prospectus Part A Dated April 30, 2000
INSURED MUNICIPAL SECURITIES TRUST
NEW YORK NAVIGATOR INSURED
SERIES 13
- ------------------------------------------------------------------------------
The Trust is a unit investment trust designated Series 13 ("New York
Navigator Trust") with an underlying portfolio of long-term insured tax- exempt
bonds and was formed to preserve capital and to provide interest income which,
in the opinions of bond counsel to the respective issuers, is, with certain
exceptions, currently exempt from regular federal income tax under existing law
and from New York State and City personal income tax. There can be no assurance
that the Trust's investment objectives will be achieved. Although the Supreme
Court has determined that Congress has the authority to subject the interest on
bonds such as the Bonds in the Trust to federal income taxation, existing law
excludes such interest from regular federal income tax. Such interest income
may, however, be a specific preference item for purposes of the federal
individual and corporate alternative minimum tax. (See "Description of
Portfolio" in this Part A for a list of those Bonds, if any, which pay interest
income subject to the federal individual alternative minimum tax.) In addition,
capital gains are subject to tax. (See "Tax Status" and "The Trust--Portfolio"
in Part B of this Prospectus.) The Sponsor is ING Funds Distributor, Inc.
(successor to Reich & Tang Distributors, Inc.). The value of the Units of the
Trust will fluctuate with the value of the underlying bonds. Minimum purchase: 1
Unit.
This Prospectus consists of two parts. Part A contains the Summary of
Essential Information as of December 31, 1999 (the "Evaluation Date"), a summary
of certain specific information regarding the Trust and audited financial
statements of the Trust, including the related portfolio, as of the Evaluation
Date. Part B of this Prospectus contains a general summary of the Trust. Part A
of this Prospectus may not be distributed unless accompanied by Part B.
Investors should retain both parts of this Prospectus for future reference. The
Securities and Exchange Commission ("SEC") maintains a website that contains
reports, proxy and information statements and other information regarding the
Trust which is filed electronically with the SEC. The SEC's Internet address is
http:www.sec.gov. Offering materials for the sale of these units available
through the Internet are not being offered directly or indirectly to residents
of a particular state nor is an offer of these units through the Internet
specifically directed to any person in a state by, or on behalf of, the issuer.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
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 TRUST. The Trust seeks to achieve its investment objectives through
investment in a fixed, diversified portfolio of long-term insured bonds (the
"Bonds") issued by or on behalf of states, municipalities and
176548.1
<PAGE>
public authorities which, because of irrevocable insurance, were rated "AAA" by
Standard & Poor's Rating Services, a division of The McGraw-Hill Companies. All
of the Bonds in the Trust were rated "AAA" by Standard & Poor's Corporation at
the time originally deposited in the Trust (see "Portfolio"). This rating
results from insurance relating only to the Bonds in the Trust and not to Units
of the Trust. The insurance does not remove market risk, as it does not
guarantee the market value of the Units. For a discussion of the significance of
such ratings, see "Description of Bond Ratings" in Part B of this Prospectus.
Some of the aggregate principal amount of the Bonds in the Trust may be
"Zero Coupon Bonds," which are original issue discount bonds that provide for
payment at maturity at par value, but do not provide for the payment of current
interest (for the amount of Zero Coupon Bonds in each Trust, and the cost of
such Bonds to that Trust, see "Description of Portfolio" in this Part A). The
payment of interest and preservation of capital are, of course, dependent upon
the continuing ability of the issuers of the Bonds or the insurer thereof to
meet their obligations.
Investment in the Trust should be made with an understanding of the risks
which an investment in long-term fixed rate debt obligations may entail,
including the risk that the value of the underlying portfolio will decline with
increases in interest rates, and that the value of Zero Coupon Bonds is subject
to greater fluctuation than coupon bonds in response to such changes in interest
rates. A Trust designated as a long-term trust must have a dollar-weighted
average portfolio maturity of more than ten years. (See "Portfolio" in Part B of
this Prospectus.)
Each Unit in the Trust represents a 1/2491st undivided interest in the
principal and net income of the Trust. The principal amount of Bonds deposited
in the Trust per Unit is reflected in the Summary of Essential Information. (See
"Organization" in Part B of this Prospectus.) The Units being offered hereby are
issued and outstanding Units which have been purchased by the Sponsor in the
secondary market.
INSURANCE. Each of the Bonds in the New York Navigator Trust is insured by
a municipal bond guaranty insurance policy obtained by the Sponsor (the
"Navigator Sponsor-Insured Bonds") from MBIA Insurance Corporation ("MBIA
Corp.") covering regularly scheduled payments of principal thereof and interest
thereon when such amounts become due for payment but shall not have been paid.
For discussion of the effect of an occurrence of non-payment of principal or
interest on any Bonds in the New York Navigator Trust see "Portfolio
Supervision" in Part B of this Prospectus. The premiums for the Navigator
Sponsor-Insured Bonds are obligations of the Sponsor. Additionally, some of the
Bonds in the New York Navigator Trust may be Pre-Insured Bonds (as described
below). The premium for the Pre-Insured Bonds is an obligation of the issuers,
underwriters or prior owners of those Bonds. The insurance policy or policies
relating to the Navigator Sponsor-Insured Bonds provides that, to the extent
that Bonds are both Pre-Insured Bonds and Navigator Sponsor-Insured Bonds,
coverage is effective after a claim has been made upon the insurer of the
Pre-Insured Bonds.
Some of the Bonds in the New York Navigator Trust may additionally be
insured by a municipal bond guaranty insurance policy obtained by issuers,
underwriters or prior owners of the Bonds ("Pre-Insured Bonds") and issued by
one of the insurance companies described under "Insurance on the Bonds" in Part
B of this Prospectus (the "Insurance Companies").
None of the insurance will cover accelerated payments of principal or
penalty interest or premiums unrelated to taxability of interest on the Bonds.
The insurance relates only to the prompt payment of principal of and
A-2
176548.1
<PAGE>
interest on the securities in the portfolios, and does not remove market risks
nor does it guarantee the market value of Units in the Trusts. The terms of the
insurance are more fully described herein. No representation is made herein as
to any Bond insurer's ability to meet its obligations under a policy of
insurance relating to any of the Pre-Insured Bonds. In addition, investors
should be aware that subsequent to the Date of Deposit the rating of the
claims-paying ability of the insurer of an underlying Pre-Insured Bond may be
downgraded.
All of the Bonds in the New York Navigator Trust are covered by insurance
obtained by the Sponsors from MBIA Corp. and 24.1% of the Bonds in the New York
Navigator Trust are Pre-Insured Bonds. The approximate percentage of the
aggregate principal amount of the Portfolio that is insured by each Insurance
Company with respect to Pre-Insured Bonds is as follows: Financial Security
Assurance Inc. ("Financial Security"), 21.6%; and Municipal Bond Insurance
Association ("MBIA"), 2.5%.
PUBLIC OFFERING PRICE. The secondary market Public Offering Price of each
Unit is equal to the aggregate offering price of the Bonds in such Trust divided
by the number of Units outstanding, plus a sales charge of 3.9% of the Public
Offering Price, or 4.058% of the net amount invested in Bonds per Unit. In
addition, accrued interest to the expected date of settlement is added to the
Public Offering Price. If Units had been purchased on the Evaluation Date, the
Public Offering Price per Unit would have been $989.75 plus accrued interest of
$6.94 under the monthly distribution plan, $11.59 under the semi-annual
distribution plan and $11.79 under the annual distribution plan, for a total of
$996.69, $1,001.34 and $1,001.54, respectively. The Public Offering Price per
Unit can vary on a daily basis in accordance with fluctuations in the aggregate
bid price of the Bonds. (See "Public Offering--Offering Price" in Part B of this
Prospectus.)
ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN. Units of each
Trust are offered to investors on a "dollar price" basis (using the computation
method described under "Public Offering--Offering Price" in Part B) as
distinguished from a "yield price" basis often used in offerings of tax exempt
bonds (involving the lesser of the yield as computed to maturity of bonds or to
an earlier redemption date). Since they are offered on a dollar price basis, the
rate of return on an investment in Units of each Trust is measured in terms of
"Estimated Current Return" and "Estimated Long Term Return".
Estimated Long Term Return is calculated by: (1) computing the yield to
maturity or to an earlier call date (whichever results in a lower yield) for
each Bond in the Trust's portfolio in accordance with accepted bond practices,
which practices take into account not only the interest payable on the Bond but
also the amortization of premiums or accretion of discounts, if any; (2)
calculating the average of the yields for the Bonds in the Trust's portfolio by
weighing each Bond's yield by the market value of the Bond and by the amount of
time remaining to the date to which the Bond is priced (thus creating an average
yield for the portfolio of the Trust); and (3) reducing the average yield for
the portfolio of the Trust in order to reflect estimated fees and expenses of
the Trust and the maximum sales charge paid by investors. The resulting
Estimated Long Term Return represents a measure of the return to investors
earned over the estimated life of the Trust. (For the Estimated Long Term Return
to Certificateholders under the monthly, semi-annual and annual distribution
plans, see "Summary of Essential Information".)
Estimated Current Return is a measure of the Trust's cash flow. Estimated
Current Return is computed by dividing the Estimated Net Annual Interest Income
per Unit by the Public Offering Price per Unit. In contrast
A-3
176548.1
<PAGE>
to the Estimated Long Term Return, the Estimated Current Return does not take
into account the amortization of premium or accretion of discount, if any, on
the Bonds in the portfolio of the Trust. Moreover, because interest rates on
Bonds purchased at a premium are generally higher than current interest rates on
newly issued bonds of a similar type with comparable rating, the Estimated
Current Return per Unit may be affected adversely if such Bonds are redeemed
prior to their maturity.
The Estimated Net Annual Interest Income per Unit of the Trust will vary
with changes in the fees and expenses of the Trustee and the Evaluator
applicable to the Trust and with the redemption, maturity, sale or other
disposition of the Bonds in the Trust. The Public Offering Price will vary with
changes in the bid prices of the Bonds. Therefore, there is no assurance that
the present Estimated Current Return or Estimated Long Term Return will be
realized in the future. (For the Estimated Current Return to Certificateholders
under the monthly, semi-annual and annual distribution plans, see "Summary of
Essential Information". See "Estimated Long Term Return and Estimated Current
Return" in Part B of this Prospectus.)
A schedule of cash flow projections is available from the Sponsors upon
request.
DISTRIBUTIONS. Distributions of interest income, less expenses, will be
made by the Trust either monthly, semi-annually or annually depending upon the
plan chosen by the Certificateholder. Certificateholders purchasing Units in the
secondary market will initially receive distributions in accordance with the
elections of the prior owner and may thereafter change the plan as provided
under "Interest and Principal Distributions" in Part B of this Prospectus.
Distributions of principal, if any, will be made semi-annually on June 15 and
December 15 of each year. (See "Rights of Certificateholders--Interest and
Principal Distributions" in Part B of this Prospectus. For estimated monthly,
semi-annual and annual interest distributions, see "Summary of Essential
Information.")
MARKET FOR UNITS. The Sponsor, although not obligated to do so, intends to
maintain a secondary market for the Units at a price based on the aggregate bid
price of the Bonds in the Trust portfolio. The reoffer price will be based on
the aggregate bid price of the Bonds plus a sales charge of 3.9% of the Public
Offering Price (4.058% of the net amount invested), plus net accrued interest.
If a market is not maintained a Certificateholder will be able to redeem his or
her Units with the Trustee at a price based on the aggregate bid price of the
Bonds. (See "Sponsor Repurchase" and "Public Offering--Offering Price" in Part B
of this Prospectus.)
A-4
176548.1
<PAGE>
INSURED MUNICIPAL SECURITIES TRUST
NEW YORK NAVIGATOR INSURED
SERIES 13
SUMMARY OF ESSENTIAL INFORMATION AS OF DECEMBER 31, 1999
--------------------------------------------------------
<TABLE>
<S> <C> <C>
Date of Deposit*: January 21, 1993 Weighted Average Life to
Principal Amount of Bonds ... $2,340,000 Maturity: 9.4 Years.
Number of Units ............. 2,491 Minimum Value of Trust:
Fractional Undivided Inter- Trust may be terminated if
est in Trust per Unit ..... 1/2491 value of Trust is less than
Principal Amount of $1,600,000 in principal
Bonds per Unit ............ $939.38 amount of Bonds.
Secondary Market Public Mandatory Termination Date:
Offering Price** The earlier of December 31,
Aggregate Bid Price 2041 or the disposition of
of Bonds in Trust ....... $2,370,229+++ the last Bond in the Trust.
Divided by 2,491 Units .... $951.52 Trustee***: The Chase
Plus Sales Charge of 3.9% Manhattan Bank.
of Public Offering Price $38.23 Trustee's Annual Fee: Monthly
Public Offering Price plan $1.14 per $1,000; semi-
per Unit ................ $989.75+ annual plan $.67 per $1,000;
Redemption and Sponsor's and annual plan is $.40 per
Repurchase Price $1,000.
per Unit .................. $951.52+ Evaluator: Kenny S&P
+++ Evaluation Services.
++++ Evaluator's Fee for Each
Excess of Secondary Market Evaluation: Minimum of $8
Public Offering Price plus $.25 per each issue of
over Redemption and Bonds in excess of 50 issues
Sponsor's Repurchase (treating separate maturities
Price per Unit ............ $38.23++++ as separate issues).
Difference between Public Sponsor: ING Funds
Offering Price per Unit Distributor, Inc.
and Principal Amount per Sponsor's Annual Fee: Maximum
Unit Premium/(Discount) ... $50.37 of $.25 per $1,000 principal
Evaluation Time: 4:00 p.m. amount of Bonds (see "Trust
New York Time. Expenses and Charges" in
Minimum Principal Distribution: Part B of this Prospectus).
$1.00 per Unit.
</TABLE>
PER UNIT INFORMATION BASED UPON INTEREST DISTRIBUTION PLAN ELECTED
------------------------------------------------------------------
<TABLE>
<CAPTION>
Monthly Semi-Annual Annual
Option Option Option
<S> <C> <C> <C>
Gross annual interest income# ......... $59.46 $59.46 $59.46
Less estimated annual fees and
expenses ............................ 2.48 2.09 --
Estimated net annual interest ------ ------ ------
income (cash)# ...................... $56.98 $57.37 $59.46
Estimated interest distribution# ...... 4.74 28.68 59.46
Estimated daily interest accrual# ..... .1582 .1593 .1652
Estimated current return#++ ........... 5.76% 5.80% 6.01%
Estimated long term return++ .......... 4.38% 4.42% 4.42%
Record dates ......................... . 1st of Dec. 1 and Dec. 1
each month June 1
Interest distribution dates ........... 15th of Dec. 15 and Dec. 15
each month June 15
</TABLE>
A-5
176548.1
<PAGE>
Footnotes to Summary of Essential Information
* The Date of Deposit is the date on which the Trust Agreement was signed and
the deposit of the Bonds with the Trustee made.
** Certain amounts distributable as of December 31, 1999, may be reported in
the Summary of Essential Information as if they had been distributed at
year-end.
*** The Trustee maintains its principal executive office at 270 Park Avenue,
New York, New York 10017 and its unit investment trust office at 4 New York
Plaza, New York, New York 10004 (tel. no.: 1-800-882-9898). For information
regarding redemption by the Trustee, see "Trustee Redemption" in Part B of
this Prospectus.
+ Plus accrued interest to the expected date of settlement (approximately
three business days after purchase) of $6.94 monthly, $11.59 semi-annually
and $11.79 annually.
++ The estimated current return and estimated long term return are increased
for transactions entitled to a discount (see "Employee Discounts" in Part B
of this Prospectus), and are higher under the semi-annual and annual
options due to lower Trustee's fees and expenses.
+++ Based solely upon the bid side evaluation of the underlying Bonds
(including, where applicable, undistributed cash from the principal
account). Upon tender for redemption, the price to be paid will be
calculated as described under "Trustee Redemption" in Part B of this
Prospectus.
++++ See "Comparison of Public Offering Price, Sponsor's Repurchase Price and
Redemption Price" in Part B of this Prospectus.
# Does not include income accrual from original issue discount bonds, if any.
FINANCIAL AND STATISTICAL INFORMATION
Selected data for each Unit outstanding for the periods listed below:
<TABLE>
<CAPTION>
Distribu-
tions of
Distributions of Interest Principal
During the Period (per Unit) During
Net Asset* Semi- the
Units Out- Value Monthly Annual Annual Period
Period Ended standing Per Unit Option Option Option (Per Unit)
- ------------ ---------- ---------- ------- ------ ------ ----------
<S> <C> <C> <C> <C> <C> <C>
December 31, 1997 3,449 $1,037.80 $57.74 $58.19 -0- $14.84
December 31, 1998 3,308 1,038.49 57.10 57.63 -0- 1.53
December 31, 1999 2,491 962.89 56.67 57.16 -0- 25.66
</TABLE>
- --------
* Net Asset Value per Unit is calculated by dividing net assets as
disclosed in the "Statement of Net Assets" by the number of Units
outstanding as of the date of the Statement of Net Assets. See Note 5
of Notes to Financial Statements for a description of the components of
Net Assets.
A-6
176548.1
<PAGE>
INFORMATION REGARDING THE TRUST
AS OF DECEMBER 31, 1999
DESCRIPTION OF PORTFOLIO*
The portfolio of the Trust consists of 6 issues representing obligations of
4 issuers located in the state of New York and one in Puerto Rico. The Sponsor
has not participated as a sole underwriter or manager, co- manager or member of
underwriting syndicates from which any of the initial aggregate principal amount
of the Bonds were acquired. None of the Bonds are obligations of state and local
housing authorities; none are hospital revenue bonds; none were issued in
connection with the financing of nuclear generating facilities; and none are
"mortgage subsidy" bonds. All of the Bonds in the Trust are subject to
redemption prior to their stated maturity dates pursuant to sinking fund or
optional call provisions. The Bonds may also be subject to other calls, which
may be permitted or required by events which cannot be predicted (such as
destruction, condemnation, termination of a contract, or receipt of excess or
unanticipated revenues). Four of the issues representing $1,380,000 of the
principal amount of the Bonds are general obligation bonds. All two of the
remaining issues representing $960,000 of the principal amount of the Bonds are
payable from the income of a specific project or authority and are not supported
by the issuer's power to levy taxes. The portfolio is divided for purpose of
issue as follows: Assistance Corporation 1 and Water 1. For an explanation of
the significance of these factors see "The Trust-- Portfolio" in Part B of this
Prospectus.
As of December 31, 1999, $900,000 (approximately 38.5% of the aggregate
principal amount of the Bonds) were original issue discount bonds. Of these
original issue discount bonds, none were Zero Coupon Bonds. Zero Coupon Bonds do
not provide for the payment of any current interest and provide for payment at
maturity at par value unless sooner sold or redeemed. The market value of Zero
Coupon Bonds is subject to greater fluctuations than coupon bonds in response to
changes in interest rates. None of the aggregate principal amount of the Bonds
in the Trust were purchased at a "market" discount from par value at maturity,
approximately 61.5% were purchased at a premium and none were purchased at par.
For an explanation of the significance of these factors see "Discount and Zero
Coupon Bonds" in Part B of this Prospectus.
None of the Bonds in the Trust are subject to the federal individual
alternative minimum tax under the Tax Reform Act of 1986. See "Tax Status" in
Part B of this Prospectus.
- --------
* Changes in the Trust Portfolio: From January 1, 2000 to March 15, 2000,
$70,000 of the principal amount of the Bond in portfolio no. 5 was sold and
is no longer contained in the Trust. 43 Units were redeemed from the Trust.
A-7
176548.1
<PAGE>
Report of Independent Auditors
The Sponsor, Trustee and Certificateholders of
Insured Municipal Securities Trust,
New York Navigator Insured Series 13
We have audited the accompanying statement of net assets of Insured Municipal
Securities Trust, New York Navigator Insured Series 13, including the portfolio,
as of December 31, 1999 and the related statements of operations, and changes in
net assets and financial highlights for the year then ended. These financial
statements and financial highlights are the responsibility of the Trustee. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit. The statement of operations, statement
of changes in net assets and financial highlights for each of the two years in
the period ended December 31, 1998 were audited by other auditors whose report
thereon dated March 19, 1999, expressed an unqualified opinion on those
financial statements and financial highlights.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of the securities
owned by correspondence with the Trustee. An audit also includes assessing the
accounting principles used and significant estimates made by the Trustee, as
well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the 1999 financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Insured Municipal Securities Trust, New York Navigator Insured Series 13 at
December 31, 1999, the results of its operations, changes in its net assets and
financial highlights for the year then ended, in conformity with accounting
principles generally accepted in the United States.
/s/ERNST & YOUNG LLP
New York, New York
April 15, 2000
<PAGE>
Insured Municipal Securities Trust
New York Navigator Insured Series 13
Portfolio
December 31, 1999
<TABLE>
<CAPTION>
Redemption
Aggregate Coupon Feature (2)(4)
Portfolio Principal Rate/Date(s) S.F.-Sinking Fund Market
No. Amount Name of Issuer and Title of Bonds Ratings(1) of Maturity(2) Ref.-Refunding Value (3)
- ------------ ----------- ------------------------------------------ ----------- -------------- -------------------- -------------
<S> <C> <C> <C> <C> <C> <C>
1 $450,000 N.Y. State Genl. Oblig. Serial Bonds AAA 6.800% No Sinking fund $ 475,506
(MBIA Corp.) 3/01/2011 3/01/02 @ 102 Ref.
2 455,000 N.Y. State Local Gov. Assis. Corp. (A Pub. AAA 6.250 4/01/13 @ 100 S.F. 479,151
Benefit Corp. of the State of N.Y.) Rev. 4/01/2018 4/01/02 @ 102 Ref.
Bonds Series 1992C (MBIA Corp.)
3 265,000 N.Y. City Genl. Oblig. Rev. Bonds Fiscal AAA 6.750 No Sinking Fund 282,972
1993 Series B (MBIA Corp.) 10/01/2015 10/01/02 @ 101.5
Ref.
4 505,000 N.Y. City Muni. Wtr. Finc. Auth. Wtr. & AAA 6.000 6/15/12 @ 100 S.F. 507,525
Swr. Sys. Rev. Bonds Fiscal 1993 6/15/2017 6/15/02 @ 101.5
Series A (MBIA Corp.) Ref.
5 270,000 Suffolk Cnty. N.Y. Pub. Imprvmnt. Gen. AAA 6.375 No Sinking Fund 287,248
Oblig. Rev. Serial Bonds 11/01/2014 11/01/02 @ 102 Ref.
Series 1992B (MBIA Corp.)
6 395,000 Cmmnwlth. of P.R. Pub. Imprvmnt. Genl. AAA 6.000 7/01/11 @ 100 S.F. 403,568
Oblig. Rev. Rfndg. Bonds 7/01/2014 7/01/02 @ 101.5
Series 1992A (MBIA Corp.) Ref.
----------- -------------
$2,340,000 Total Investments (Cost $2,381,163) $2,435,970
=========== =============
</TABLE>
See accompanying footnotes to portfolio and notes to financial statements.
<PAGE>
Insured Municipal Securities Trust
New York Navigator Insured Series 13
Footnotes to Portfolio
1 All ratings are by Kenny S&P Evaluation Services, a business unit of J.J.
Kenny Company, Inc., a subsidiary of The McGraw-Hill Companies, Inc. A
brief description of the ratings symbols and their meaning is set forth
under "Description of Bond Ratings" in Part B of the Prospectus.
2. See "The Trust--Portfolio" in Part B of the Prospectus for an explanation
of redemption features. See "Tax Status" in Part B of the Prospectus for a
statement of the Federal tax consequences to a Certificateholder upon the
sale, redemption or maturity of a bond.
3. At December 31, 1999, the net unrealized appreciation of all the bonds was
comprised of the following:
Gross unrealized appreciation $ 54,807
Gross unrealized depreciation -
---------------
Net unrealized appreciation $ 54,807
===============
4. The Bonds may also be subject to other calls, which may be permitted or
required by events which cannot be predicted (such as destruction,
condemnation, termination of a contract, or receipt of excess of
unanticipated revenues).
The accompanying notes form an integral part of the financial statements.
<PAGE>
Insured Municipal Securities Trust
New York Navigator Insured Series 13
Statement of Net Assets
December 31, 1999
Investments in securities, at market value (cost $2,381,163) $ 2,435,970
Other assets
Accrued interest 37,847
-----------------
Total other assets 37,847
-----------------
Liabilities
Advance from Trustee 75,264
-----------------
Total liabilities 75,264
-----------------
Excess of liabilities over total other assets (37,417)
-----------------
Net assets (2,491 units of fractional undivided
interest outstanding, $962.89 per unit) $ 2,398,553
=================
The accompanying notes form an integral part of the financial statements.
<PAGE>
Insured Municipal Securities Trust
New York Navigator Insured Series 13
Statement of Operations
<TABLE>
<CAPTION>
Year ended December 31,
1999 1998 1997
------------------ ------------------- ------------------
<S> <C> <C> <C>
Investment income
Interest $ 173,153 $ 198,689 $ 213,734
Expenses
Trustee's fees 4,577 5,091 5,341
Evaluator's fee 2,250 2,436 2,020
Sponsor's advisory fee 762 811 906
------------------ ------------------- ------------------
Total expenses 7,589 8,338 8,267
Net investment income 165,564 190,351 205,467
------------------ ------------------- ------------------
Realized and unrealized gain (loss)
Realized gain (loss) on investments 36,769 7,805 (4,159)
Unrealized appreciation (depreciation)
on investments (178,733) 1,011 85,898
------------------ ------------------- ------------------
Net gain (loss) on investments (141,964) 8,816 81,739
------------------ ------------------- ------------------
Net increase in net assets resulting
from operations $ 23,600 $ 199,167 $ 287,206
================== =================== ==================
</TABLE>
The accompanying notes form an integral part of the financial statements.
<PAGE>
Insured Municipal Securities Trust
New York Navigator Insured Series 13
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year ended December 31,
1999 1998 1997
------------------ ------------------- ------------------
<S> <C> <C> <C>
Operations
Net investment income $ 165,564 $ 190,351 $ 205,467
Realized gain (loss) on investments 36,769 7,805 (4,159)
Unrealized appreciation (depreciation)
on investments (178,733) 1,011 85,898
------------------ ------------------- ------------------
Net increase in net assets resulting
from operations 23,600 199,167 287,206
------------------ ------------------- ------------------
Distributions to Certificateholders
Investment income 169,483 191,575 214,659
Principal 82,074 5,061 40,799
Redemptions
Interest 9,126 1,594 2,889
Principal 799,686 144,993 177,470
------------------ ------------------- ------------------
Total distributions and redemptions 1,060,369 343,223 435,817
------------------ ------------------- ------------------
Total (decrease) (1,036,769) (144,056) (148,611)
Net assets
Beginning of year 3,435,322 3,579,378 3,727,989
------------------ ------------------- ------------------
End of year (including undistributed net investment
income of $28,324, $41,369 and $44,188
respectively) $ 2,398,553 $3,435,322 $3,579,378
================== =================== ==================
</TABLE>
The accompanying notes form an integral part of the financial statements.
<PAGE>
Insured Municipal Securities Trust
New York Navigator Insured Series 13
Financial Highlights
Selected data for a unit of the Trust outstanding:*
<TABLE>
<CAPTION>
Year ended December 31,
1999 1998 1997
------------------ ------------------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of year** $ 1,038.49 $ 1,037.80 $ 1,028.69
------------------ ------------------- ------------------
Interest income 59.72 58.80 60.43
Expenses (2.62) (2.47) (2.34)
------------------ ------------------- ------------------
Net investment income 57.10 56.33 58.09
------------------ ------------------- ------------------
Net gain or loss on investments (1) (42.79) 3.03 24.06
------------------ ------------------- ------------------
Total from investment operations 14.31 59.36 82.15
------------------ ------------------- ------------------
Less distributions
to Certificateholders
Income 58.45 56.70 60.69
Principal 28.31 1.50 11.53
for Redemptions
Interest 3.15 .47 .82
------------------ ------------------- ------------------
Total distributions 89.91 58.67 73.04
------------------ ------------------- ------------------
Net asset value, end of year** $ 962.89 $1,038.49 $1,037.80
================== =================== ==================
</TABLE>
(1) Net gain or loss on investments is a result of changes in outstanding units
since January 1, 1999, 1998 and 1997, respectively, and the dates of net gain
and loss on investments.
* Unless otherwise stated, based upon average units outstanding during the
year of 2,900 ([2,491 + 3,308]/2) for 1999, 3,379 ([3,308 + 3,449]/2) for
1998 and of 3,537 ([3,449 + 3,624]/2) for 1997.
** Based upon actual units outstanding.
The accompanying notes form an integral part of the financial statements.
<PAGE>
Insured Municipal Securities Trust
New York Navigator Insured Series 13
Notes to Financial Statements (continued)
1. Organization
Insured Municipal Securities Trust, New York Navigator Insured, Series 13 (the
"Trust") was organized on January 21, 1993 by Bear, Stearns & Co. Inc. and
Gruntal & Co., Incorporated under the laws of the State of New York by a Trust
Indenture and Agreement, and is registered under the Investment Company Act of
1940. The Trust was formed to preserve capital and to provide interest income.
On September 28, 1995, Reich & Tang Distributors, Inc. ("Reich & Tang") had
become the successor sponsor to certain of the unit investment trusts previously
sponsored by Bear, Stearns & Co. Inc. As successor sponsor, Reich & Tang had
assumed all of the obligations and rights of Bear, Stearns & Co. Inc., the
previous sponsor.
Effective February 9, 2000, Gruntal & Co. resigned as a co-sponsor of certain
unit investment trusts previously co-sponsored with Reich & Tang. ING Funds
Distributor, Inc. ("ING") has become the successor sponsor to certain unit
investment trusts previously sponsored by Reich & Tang. As successor sponsor,
ING has assumed all of the obligations and rights of Reich & Tang, the previous
sponsor.
2. Summary of Significant Accounting Policies
The following is a summary of significant accounting policies consistently
followed by the Trust in preparation of its financial statements. The policies
are in conformity with generally accepted accounting principles ("GAAP"). The
preparation of financial statements in accordance with GAAP requires management
to make estimates and assumptions that affect the reported amounts and
disclosures in the financial statements. Actual amounts could differ from those
estimates.
Interest Income
Interest income is recorded on the accrual basis. The discount on the
zero-coupon bonds is accreted by the interest method over the respective lives
of the bonds. The accretion of such discount is included in interest income;
however, it is not distributed until realized in cash upon maturity or sale of
the respective bonds.
<PAGE>
Insured Municipal Securities Trust
New York Navigator Insured Series 13
Notes to Financial Statements (continued)
2. Summary of Significant Accounting Policies (continued)
Security Valuation
Investments are carried at market value which is determined by Kenny S&P
Evaluation Services, a business unit of J.J. Kenny Company, Inc., a subsidiary
of the McGraw-Hill Companies, Inc. The market value of the portfolio is based
upon the bid prices for the bonds at the end of the year, which approximates the
fair value of the security at that date, except that the market value on the
date of deposit represents the cost to the Trust based on the offering prices
for investments at that date. The difference between cost (including accumulated
accretion of original issue discount on zero-coupon bonds) and market value is
reflected as unrealized appreciation (depreciation) of investments. Securities
transactions are recorded on the trade date. Realized gains (losses) from
securities transactions are determined on the basis of average cost of the
securities sold or redeemed.
3. Income Taxes
No provision for federal income taxes has been made in the accompanying
financial statements because the Trust intends to continue to qualify for the
tax treatment applicable to Grantor Trusts under the Internal Revenue Code.
Under existing law, if the Trust so qualifies, it will not be subject to federal
income tax on net income and capital gains that are distributed to unitholders.
4. Trust Administration
The Chase Manhattan Bank (the "Trustee") has custody of assets and
responsibility for the accounting records and financial statements of the Trust
and is responsible for establishing and maintaining a system of internal control
related thereto. The Trustee is also responsible for all estimates of expenses
and accruals reflected in the Trust's financial statements.
The Trust Indenture and Agreement provides for interest distributions as often
as monthly (depending upon the distribution plan elected by the
Certificateholders).
<PAGE>
Insured Municipal Securities Trust
New York Navigator Insured Series 13
Notes to Financial Statements (continued)
4. Trust Administration (continued)
The Trust Indenture and Agreement further requires that principal received from
the disposition of bonds, other than those bonds sold in connection with the
redemption of units, be distributed to Certificateholders.
The Trust Indenture and Agreement also requires the Trust to redeem units
tendered. For the years ended December 31, 1999, 1998 and 1997, 817, 141 and 175
units were redeemed, respectively.
The Trust pays an annual fee for trustee services rendered by the Trustee that
ranges from $.40 to $1.14 per $1,000 of outstanding investment principal. In
addition, a minimum fee of $8.00 is paid to a service bureau for each portfolio
valuation. A maximum fee of $.25 per $1,000 of outstanding investment principal
is paid to the Sponsor. For the years ended December 31, 1999, 1998 and 1997,
the "Trustee's Fees" are comprised of Trustee fees of $2,733, $3,149 and $3,273
and other expenses of $1,844, $1,942 and $2,068, respectively. The other
expenses include professional, printing and miscellaneous fees.
5. Net Assets
At December 31, 1999, the net assets of the Trust represented the interest of
Certificateholders as follows:
Original cost to Certificateholders $ 4,098,076
Less initial gross underwriting commission 200,806
-------------------
3,897,270
Accumulated cost of securities sold, matured or called (1,516,107)
Net unrealized appreciation 54,807
Undistributed net investment income 28,324
Distributions in excess of proceeds from investments (65,741)
-------------------
Total $ 2,398,553
===================
<PAGE>
Insured Municipal Securities Trust
New York Navigator Insured Series 13
Notes to Financial Statements (continued)
5. Net Assets (continued)
The original cost to Certificateholders, less the initial gross underwriting
commission, represents the aggregate initial public offering price net of the
applicable sales charge on 4,000 units of fractional undivided interest of the
Trust as of the date of deposit.
6. Concentration of Credit Risk
Since the Trust invests a portion of its assets in municipal bonds, it may be
affected by economic and political developments in the municipalities. Certain
debt obligations held by the Trust may be entitled to the benefit of insurance,
standby letters of credit or other guarantees of banks or other financial
institutions.
<PAGE>
Prospectus Part A Dated April 30, 2000
INSURED MUNICIPAL SECURITIES TRUST
NEW JERSEY NAVIGATOR INSURED
SERIES 9
- --------------------------------------------------------------------------------
The Trust is a unit investment trust designated Series 9 ("New Jersey
Navigator Trust") with an underlying portfolio of long-term insured tax-exempt
bonds and was formed to preserve capital and to provide interest income which,
in the opinions of bond counsel to the respective issuers, is, with certain
exceptions, currently exempt from regular federal income tax under existing law
and from New Jersey gross income tax. There can be no assurance that the Trust's
investment objectives will be achieved. Although the Supreme Court has
determined that Congress has the authority to subject the interest on bonds such
as the Bonds in the Trust to federal income taxation, existing law excludes such
interest from regular federal income tax. Such interest income may, however, be
a specific preference item for purposes of the federal individual and corporate
alternative minimum tax. (See "Description of Portfolio" in this Part A for a
list of those Bonds, if any, which pay interest income subject to the federal
individual alternative minimum tax.) In addition, capital gains are subject to
tax. (See "Tax Status" and "The Trust--Portfolio" in Part B of this Prospectus.)
The Sponsor is ING Funds Distributor, Inc. (successor to Reich & Tang
Distributors, Inc.). The value of the Units of the Trust will fluctuate with the
value of the underlying bonds. Minimum purchase: 1 Unit.
This Prospectus consists of two parts. Part A contains the Summary of
Essential Information as of December 31, 1999 (the "Evaluation Date"), a summary
of certain specific information regarding the Trust and audited financial
statements of the Trust, including the related portfolio, as of the Evaluation
Date. Part B of this Prospectus contains a general summary of the Trust. Part A
of this Prospectus may not be distributed unless accompanied by Part B.
Investors should retain both parts of this Prospectus for future reference. The
Securities and Exchange Commission ("SEC") maintains a website that contains
reports, proxy and information statements and other information regarding the
Trust which is filed electronically with the SEC. The SEC's Internet address is
http:www.sec.gov. Offering materials for the sale of these units available
through the Internet are not being offered directly or indirectly to residents
of a particular state nor is an offer of these units through the Internet
specifically directed to any person in a state by, or on behalf of, the issuer.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE 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 TRUST. The Trust seeks to achieve its investment objectives
through investment in a fixed, diversified portfolio of long-term insured bonds
(the "Bonds") issued by or on behalf of states, municipalities and public
authorities which, because of irrevocable insurance, were rated "AAA" by
Standard & Poor's Rating Services, a division of The McGraw-Hill Companies. All
of the Bonds in the Trust were rated "AAA" by Standard & Poor's
176205.1
<PAGE>
Corporation at the time originally deposited in the Trust (see "Portfolio").
This rating results from insurance relating only to the Bonds in the Trust and
not to Units of the Trust. The insurance does not remove market risk, as it does
not guarantee the market value of the Units. For a discussion of the
significance of such ratings, see "Description of Bond Ratings" in Part B of
this Prospectus. Some of the aggregate principal amount of the Bonds in the
Trust may be "Zero Coupon Bonds," which are original issue discount bonds that
provide for payment at maturity at par value, but do not provide for the payment
of current interest (for the amount of Zero Coupon Bonds in the Trust, and the
cost of such Bonds to the Trust, see "Description of Portfolio" in this Part A).
The payment of interest and preservation of capital are, of course, dependent
upon the continuing ability of the issuers of the Bonds or the insurer thereof
to meet their obligations.
Investment in the Trust should be made with an understanding of the
risks which an investment in long-term fixed rate debt obligations may entail,
including the risk that the value of the underlying portfolio will decline with
increases in interest rates, and that the value of Zero Coupon Bonds is subject
to greater fluctuation than coupon bonds in response to such changes in interest
rates. A Trust designated as a long-term trust must have a dollar-weighted
average portfolio maturity of more than ten years. (See "Portfolio" in Part B of
this Prospectus.)
Each Unit in the Trust represents a 1/2695th undivided interest in the
principal and net income of the Trust. The principal amount of Bonds deposited
in the Trust per Unit is reflected in the Summary of Essential Information. (See
"Organization" in Part B of this Prospectus.) The Units being offered hereby are
issued and outstanding Units which have been purchased by the Sponsor in the
secondary market.
INSURANCE. Each of the Bonds in the New Jersey Navigator Trust is
insured by a municipal bond guaranty insurance policy obtained by the Sponsor
(the "Navigator Sponsor-Insured Bonds") from MBIA Insurance Corporation ("MBIA
Corp.") covering regularly scheduled payments of principal thereof and interest
thereon when such amounts become due for payment but shall not have been paid.
For discussion of the effect of an occurrence of non-payment of principal or
interest on any Bonds in the New Jersey Navigator Trust see "Portfolio
Supervision" in Part B of this Prospectus. The premiums for the Navigator
Sponsor-Insured Bonds are obligations of the Sponsor. Additionally, some of the
Bonds in the New Jersey Navigator Trust may be Pre-Insured Bonds (as described
below). The premium for the Pre-Insured Bonds is an obligation of the issuers,
underwriters or prior owners of those Bonds. The insurance policy or policies
relating to the Navigator Sponsor-Insured Bonds provides that, to the extent
that Bonds are both Pre-Insured Bonds and Navigator Sponsor-Insured Bonds,
coverage is effective after a claim has been made upon the insurer of the
Pre-Insured Bonds.
Some of the Bonds in the New Jersey Navigator Trust may additionally
be insured by a municipal bond guaranty insurance policy obtained by issuers,
underwriters or prior owners of the Bonds ("Pre-Insured Bonds") and issued by
one of the insurance companies described under "Insurance on the Bonds" in Part
B of this Prospectus (the "Insurance Companies"). Such insurance covers the
scheduled payment of principal thereof and interest thereon when such amounts
shall become due for payment but shall not have been paid by the issuer or any
other insurer thereof.
None of the insurance will cover accelerated payments of principal or
penalty interest or premiums unrelated to taxability of interest on the Bonds.
The insurance relates only to the prompt payment of principal of and interest on
the securities in the portfolios, and does not remove market risks nor does it
guarantee the market value of Units in the Trusts. The terms of the insurance
are more fully described under "Insurance on the Bonds" in
A-2
176205.1
<PAGE>
Part B of this Prospectus. No representation is made herein as to any Bond
insurer's ability to meet its obligations under a policy of insurance relating
to any of the Pre-Insured Bonds. In addition, investors should be aware that
subsequent to the Date of Deposit the rating of the claims-paying ability of the
insurer of an underlying Pre-Insured Bond may be downgraded.
All of the Bonds in the New Jersey Navigator Trust are covered by
insurance obtained by the Sponsors from MBIA Corp. and 84.4% of the Bonds in the
New Jersey Navigator Trust are Pre-Insured Bonds. The approximate percentage of
the aggregate principal amount of the Trust that is insured by each Insurance
Company with respect to Pre-Insured Bonds is as follows: AMBAC Indemnity Corp.
("AMBAC"), 7.5%; Financial Guaranty Insurance Company ("Financial Guaranty"),
7.5%; and MBIA Corp., 69.4%.
PUBLIC OFFERING PRICE. The secondary market Public Offering Price of
each Unit is equal to the aggregate offering price of the Bonds in such Trust
divided by the number of Units outstanding, plus a sales charge of 5.2% of the
Public Offering Price, or 5.485% of the net amount invested in Bonds per Unit.
In addition, accrued interest to the expected date of settlement is added to the
Public Offering Price. If Units had been purchased on the Evaluation Date, the
Public Offering Price per Unit would have been $1,009.28 plus accrued interest
of $5.54 under the monthly distribution plan, $10.11 under the semi-annual
distribution plan and $10.24 under the annual distribution plan, for a total of
$1,014.82, $1,019.39 and $1,019.52, respectively. The Public Offering Price per
Unit can vary on a daily basis in accordance with fluctuations in the aggregate
bid price of the Bonds. (See "Public Offering--Offering Price" in Part B of this
Prospectus.)
ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN. Units of each
Trust are offered to investors on a "dollar price" basis (using the computation
method described under "Public Offering--Offering Price" in Part B) as
distinguished from a "yield price" basis often used in offerings of tax exempt
bonds (involving the lesser of the yield as computed to maturity of bonds or to
an earlier redemption date). Since they are offered on a dollar price basis, the
rate of return on an investment in Units of each Trust is measured in terms of
"Estimated Current Return" and "Estimated Long Term Return".
Estimated Long Term Return is calculated by: (1) computing the yield
to maturity or to an earlier call date (whichever results in a lower yield) for
each Bond in the Trust's portfolio in accordance with accepted bond practices,
which practices take into account not only the interest payable on the Bond but
also the amortization of premiums or accretion of discounts, if any; (2)
calculating the average of the yields for the Bonds in the Trust's portfolio by
weighing each Bond's yield by the market value of the Bond and by the amount of
time remaining to the date to which the Bond is priced (thus creating an average
yield for the portfolio of the Trust); and (3) reducing the average yield for
the portfolio of the Trust in order to reflect estimated fees and expenses of
the Trust and the maximum sales charge paid by investors. The resulting
Estimated Long Term Return represents a measure of the return to investors
earned over the estimated life of the Trust. (For the Estimated Long Term Return
to Certificateholders under the monthly, semi-annual and annual distribution
plans, see "Summary of Essential Information".)
Estimated Current Return is a measure of the Trust's cash flow.
Estimated Current Return is computed by dividing the Estimated Net Annual
Interest Income per Unit by the Public Offering Price per Unit. In contrast to
the Estimated Long Term Return, the Estimated Current Return does not take into
account the amortization of premium or accretion of discount, if any, on the
Bonds in the portfolio of the Trust. Moreover, because interest rates on Bonds
purchased at a premium are generally higher than current interest rates on newly
issued bonds of a similar type with comparable rating, the Estimated
A-3
176205.1
<PAGE>
Current Return per Unit may be affected adversely if such Bonds are redeemed
prior to their maturity.
The Estimated Net Annual Interest Income per Unit of the Trust will
vary with changes in the fees and expenses of the Trustee and the Evaluator
applicable to the Trust and with the redemption, maturity, sale or other
disposition of the Bonds in the Trust. The Public Offering Price will vary with
changes in the bid prices of the Bonds. Therefore, there is no assurance that
the present Estimated Current Return or Estimated Long Term Return will be
realized in the future. (For the Estimated Current Return to Certificateholders
under the monthly, semi-annual and annual distribution plans, see "Summary of
Essential Information". See "Estimated Long Term Return and Estimated Current
Return" in Part B of this Prospectus.)
A schedule of cash flow projections is available from the Sponsor upon
request.
DISTRIBUTIONS. Distributions of interest income, less expenses, will
be made by the Trust either monthly, semi-annually or annually depending upon
the plan chosen by the Certificateholder. Certificateholders purchasing Units in
the secondary market will initially receive distributions in accordance with the
elections of the prior owner and may thereafter change the plan as provided
under "Interest and Principal Distributions" in Part B of this Prospectus.
Distributions of principal, if any, will be made semi- annually on June 15 and
December 15 of each year. (See "Rights of Certificateholders--Interest and
Principal Distributions" in Part B of this Prospectus. For estimated monthly,
semi-annual and annual interest distributions, see "Summary of Essential
Information.")
MARKET FOR UNITS. The Sponsor, although not obligated to do so,
intends to maintain a secondary market for the Units at a price based on the
aggregate bid price of the Bonds in the Trust portfolio. The reoffer price will
be based on the aggregate bid price of the Bonds plus a sales charge of 5.2% of
the Public Offering Price (5.485% of the net amount invested), plus net accrued
interest. If a market is not maintained a Certificateholder will be able to
redeem his or her Units with the Trustee at a price based on the aggregate bid
price of the Bonds. (See "Sponsor Repurchase" and "Public Offering--Offering
Price" in Part B of this Prospectus.)
A-4
176205.1
<PAGE>
<TABLE>
INSURED MUNICIPAL SECURITIES TRUST
NEW JERSEY NAVIGATOR INSURED
SERIES 9
SUMMARY OF ESSENTIAL INFORMATION AS OF DECEMBER 31, 1999
--------------------------------------------------------
<S> <C> <C>
Date of Deposit*: January 21, 1993 Minimum Principal Distribution:
Principal Amount of Bonds ... $2,665,000 $1.00 per Unit.
Number of Units ............. 2,695 Weighted Average Life to Maturity:
Fractional Undivided Inter- 19.9 Years.
est in Trust per Unit ..... 1/2695 Minimum Value of Trust:
Principal Amount of Trust may be terminated if value of
Bonds per Unit ............ $988.87 Trust is less than $1,600,000 in
Secondary Market Public principal amount of Bonds.
Offering Price** Mandatory Termination Date:
Aggregate Bid Price The earlier of December 31, 2041 or
of Bonds in Trust ....... $2,577,569+++ the disposition of the last Bond in
Divided by 2,695 Units .... $956.42 the Trust.
Plus Sales Charge of 5.2% Trustee***: The Chase Manhattan
of Public Offering Price. $52.86 Bank.
Public Offering Price Trustee's Annual Fee: Monthly
per Unit ................ $1,009.28 plan $1.12 per $1,000; semi-annual
Redemption and Sponsor's plan $.65 per $1,000; and annual
Repurchase Price plan is $.38 per $1,000.
per Unit .................. $956.42+ Evaluator: Kenny S&P Evaluation
+++ Services.
++++ Evaluator's Fee for Each
Excess of Secondary Market Evaluation: Minimum of $8 plus
Public Offering Price $.25 per each issue of Bonds in
over Redemption and excess of 50 issues (treating
Sponsor's Repurchase separate maturities as separate
Price per Unit ............ $52.86++++ issues).
Difference between Public Sponsor: ING Funds Distributor,
Offering Price per Unit Inc.
and Principal Amount per Sponsor's Annual Fee: Maximum of
Unit Premium/(Discount) ... $20.41 $.25 per $1,000 principal amount of
Evaluation Time: 4:00 p.m. Bonds (see "Trust Expenses and
New York Time. Charges" in Part B of this
Prospectus).
</TABLE>
PER UNIT INFORMATION BASED UPON INTEREST DISTRIBUTION PLAN ELECTED
------------------------------------------------------------------
<TABLE>
<CAPTION>
Monthly Semi-Annual Annual
Option Option Option
------ ----------- -------
<S> <C> <C> <C>
Gross annual interest income# ......... $56.91 $56.91 $56.91
Less estimated annual fees and
expenses ............................ 2.66 2.17 .79
Estimated net annual interest _____ _____ _____
income (cash)# ...................... $54.25 $54.74 $56.12
Estimated interest distribution# ...... 4.52 27.37 56.12
Estimated daily interest accrual# ..... .1507 .1520 .1559
Estimated current return#++ ........... 5.38% 5.42% 5.56%
Estimated long term return++ .......... 4.94% 4.99% 5.13%
Record dates .......................... 1st of Dec. 1 and Dec. 1
each month June 1
Interest distribution dates ........... 15th of Dec. 15 and Dec. 15
each month June 15
</TABLE>
A-5
176205.1
<PAGE>
Footnotes to Summary of Essential Information
* The Date of Deposit is the date on which the Trust Agreement was signed
and the deposit of the Bonds with the Trustee made.
** Certain amounts distributable as of December 31, 1999, may be reported
in the Summary of Essential Information as if they had been distributed
at year-end.
*** The Trustee maintains its principal executive office at 270 Park
Avenue, New York, New York 10017 and its unit investment trust office
at 4 New York Plaza, New York, New York 10004 (tel. no.:
1-800-882-9898). For information regarding redemption by the Trustee,
see "Trustee Redemption" in Part B of this Prospectus.
+ Plus accrued interest to the expected date of settlement (approximately
three business days after purchase) of $5.54 monthly, $10.11 semi-
annually and $10.24 annually.
++ The estimated current return and estimated long term return are
increased for transactions entitled to a discount (see "Employee
Discounts" in Part B of this Prospectus), and are higher under the
semi- annual and annual options due to lower Trustee's fees and
expenses.
+++ Based solely upon the bid side evaluation of the underlying Bonds
(including, where applicable, undistributed cash from the principal
account). Upon tender for redemption, the price to be paid will be
calculated as described under "Trustee Redemption" in Part B of this
Prospectus.
++++ See "Comparison of Public Offering Price, Sponsor's Repurchase Price
and Redemption Price" in Part B of this Prospectus.
# Does not include income accrual from original issue discount bonds, if
any.
FINANCIAL AND STATISTICAL INFORMATION
Selected data for each Unit outstanding for the periods listed below:
<TABLE>
<CAPTION>
Distribu-
Distributions of Interest tions of
During the Period (per Unit) Principal
---------------------------- During
Net Asset* Semi- the
Units Out- Value Monthly Annual Annual Period
Period Ended standing Per Unit Option Option Option (Per Unit)
- ------------ ---------- ---------- ------- ------ ------ ----------
<S> <C> <C> <C> <C> <C> <C>
December 31, 1997 3,842 $1,040.34 $56.74 $57.33 $58.38 $ 4.30
December 31, 1998 3,408 1,036.21 56.35 56.97 58.04 7.21
December 31, 1999 2,695 966.39 55.69 56.21 57.51 12.91
- --------
* Net Asset Value per Unit is calculated by dividing net assets as
disclosed in the "Statement of Net Assets" by the number of Units
outstanding as of the date of the Statement of Net Assets. See Note 5
of Notes to Financial Statements for a description of the components of
Net Assets.
</TABLE>
A-6
176205.1
<PAGE>
INFORMATION REGARDING THE TRUST
AS OF DECEMBER 31, 1999
DESCRIPTION OF PORTFOLIO*
- ------------------------
The portfolio of the Trust consists of 9 issues representing
obligations of 8 issuers located in the state of New Jersey and one in Puerto
Rico. The Sponsor has not participated as a sole underwriter or manager, co-
manager or member of an underwriting syndicate from which any of the initial
aggregate principal amount of the Bonds were acquired. None of the Bonds are
obligations of state and local housing authorities; approximately 5.1% are
hospital revenue bonds; none were issued in connection with the financing of
nuclear generating facilities; and approximately 17.4% are "mortgage subsidy"
bonds. All of the Bonds in the Trust are subject to redemption prior to their
stated maturity dates pursuant to sinking fund or optional call provisions. The
Bonds may also be subject to other calls, which may be permitted or required by
events which cannot be predicted (such as destruction, condemnation, termination
of a contract, or receipt of excess or unanticipated revenues). One issue
representing $415,000 of the principal amount of the Bonds is a general
obligation bond. All eight of the remaining issues representing $2,250,000 of
the principal amount of the Bonds are payable from the income of a specific
project or authority and are not supported by the issuer's power to levy taxes.
The portfolio is divided for purpose of issue as follows: Correctional Facility
1, Educational Facility 2, Hospital 1, Single Family Mortgage Revenue 1, Utility
2 and Water 1. For an explanation of the significance of these factors see "The
Trust--Portfolio" in Part B of this Prospectus.
As of December 31, 1999, $615,000 (approximately 23.1% of the
aggregate principal amount of the Bonds) were original issue discount bonds. Of
these original issue discount bonds, $200,000 (approximately 7.5% of the
aggregate principal amount of the Bonds) were Zero Coupon Bonds. Zero Coupon
Bonds do not provide for the payment of any current interest and provide for
payment at maturity at par value unless sooner sold or redeemed. The market
value of Zero Coupon Bonds is subject to greater fluctuations than coupon bonds
in response to changes in interest rates. Approximately 43.7% of the aggregate
principal amount of the Bonds in the Trust were purchased at a "market" discount
from par value at maturity, approximately 33.2% were purchased at a premium and
none were purchased at par. For an explanation of the significance of these
factors see "Discount and Zero Coupon Bonds" in Part B of this Prospectus.
Portfolio No. 2 in the Trust may be subject to the federal individual
alternative minimum tax under the Tax Reform Act of 1986. See "Tax Status" in
Part B of this Prospectus.
- --------
* Changes in the Trust Portfolio: From January 1, 2000 to March 15, 2000,
10 Units were redeemed from the Trust.
A-7
176205.1
<PAGE>
Report of Independent Auditors
The Sponsor, Trustee and Certificateholders of
Insured Municipal Securities Trust,
New Jersey Navigator Insured Series 9
We have audited the accompanying statement of net assets of Insured Municipal
Securities Trust, New Jersey Navigator Insured Series 9, including the
portfolio, as of December 31, 1999 and the related statements of operations, and
changes in net assets and financial highlights for the year then ended. These
financial statements and financial highlights are the responsibility of the
Trustee. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audit. The statement of
operations, statement of changes in net assets and financial highlights for each
of the two years in the period ended December 31, 1998 were audited by other
auditors whose report thereon dated March 19, 1999, expressed an unqualified
opinion on those financial statements and financial highlights.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of the securities
owned by correspondence with the Trustee. An audit also includes assessing the
accounting principles used and significant estimates made by the Trustee, as
well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the 1999 financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Insured Municipal Securities Trust, New Jersey Navigator Insured Series 9 at
December 31, 1999, the results of its operations, changes in its net assets and
financial highlights for the year then ended, in conformity with accounting
principles generally accepted in the United States.
/s/ERNST & YOUNG LLP
New York, New York
April 15, 2000
<PAGE>
Insured Municipal Securities Trust
New Jersey Navigator Insured Series 9
Portfolio
December 31, 1999
<TABLE>
<CAPTION>
Redemption
Aggregate Coupon Feature (2)(4)
Portfolio Principal Rate/Date(s) S.F.-Sinking Fund Market
No. Amount Name of Issuer and Title of Bonds Ratings(1) of Maturity(2) Ref.-Refunding Value (3)
- ------------ ----------- -------------------------------------------- ----------- -------------- -------------------- -------------
<S> <C> <C> <C> <C> <C> <C>
1 $200,000 N. J. Ed. Facs. Auth. Rfndg. Rev. Bonds AAA 6.000% 7/01/13 @ 100 S.F. $ 200,936
Trenton State Cllg Issue Series 1992E 7/01/2019 7/01/02 @ 102 Ref.
(MBIA Corp.)
2 465,000 N. J. Hsg. & Mtg. Finc. Agncy. Home Buyer AAA 6.300 4/01/11 @ 100 S.F. 466,800
Rev. Bond Series 1990F-2 (AMT) (MBIA Corp.) 4/01/2025 10/01/00 @ 102 Ref.
3 135,000 N. J. Hlth. Care Facs. Fincg. Auth. Rev. AAA 6.625 7/01/04 @ 100 S.F. 140,435
Bonds 7/01/2016 7/01/01 @ 102 Ref.
Robert Wood Johnson Univ. Hosp. Series B
(MBIA Corp.)
4 500,000 Hudson Cnty. N. J. Correc. Fac. Certs. of AAA 6.600 6/01/12 @ 100 S.F. 524,980
Part. Rev. Rfndg. Bonds Series 1992 (MBIA 12/01/2021 6/01/02 @ 101.5 Ref.
Corp.)
5 250,000 Lumberton Twnshp. N. J. Bd. of Ed. Schl. AAA 6.100 4/01/07 @ 100 S.F. 257,402
Dstrct. Burlington N. J. Rev. Rfndg. Bonds 10/01/2013 4/01/03 @ 101 Ref.
Certs. of Part. (MBIA Corp.)
6 500,000 No. Jersey Dstrct. Wtr. Supl. Commsn. of AAA 6.000 7/01/13 @ 100 S.F. 501,390
the State of 7/01/2021 7/01/03 @ 102 Ref.
N. J. Wanaque So. Prjt. Rev. Rfndg. Bonds
Series1993 (MBIA Corp.)
7 415,000 Cmmnwlth. of P. R. Pub. Imprvment. Genl. AAA 6.000 7/01/11 @ 100 S.F. 424,001
Oblig. Rev. Rfndg. Bonds Series 1992A 7/01/2014 7/01/02 @ 101.5 Ref.
(MBIA Corp.)
8 90,000 Camden Cnty. N. J. Muni. Utils. Auth. AAA 0.000 No Sinking Fund 31,026
Cnty. Agreement Swr. Rev. Cap. Apprc. 9/01/2017 None
Bonds Series 1990B (MBIA Corp.)
9 110,000 West N. Y., N.J. Muni. Utils. Auth. AAA 0.000 No Sinking Fund 30,599
(Hudson Cnty, N.J.) Swr. Rev. Rfndg. Cap. 12/15/2020 None
Apprec. Bonds Series 1991 (MBIA Corp.)
----------- -------------
$2,665,000 Total Investments (Cost $2,543,269) $2,577,569
=========== =============
</TABLE>
The accompanying notes form an integral part of the financial statements.
<PAGE>
Insured Municipal Securities Trust
New Jersey Navigator Insured Series 9
Footnotes to Portfolio
1 All ratings are by Kenny S&P Evaluation Services, a business unit of J.J.
Kenny Company, Inc., a subsidiary of The McGraw-Hill Companies, Inc. A
brief description of the ratings symbols and their meaning is set forth
under "Description of Bond Ratings" in Part B of the Prospectus.
2. See "The Trust--Portfolio" in Part B of the Prospectus for an explanation
of redemption features. See "Tax Status" in Part B of the Prospectus for a
statement of the Federal tax consequences to a Certificateholder upon the
sale, redemption or maturity of a bond.
3. At December 31, 1999, the net unrealized appreciation of all the bonds was
comprised of the following:
Gross unrealized appreciation $ 34,300
Gross unrealized depreciation -
----------------
Net unrealized appreciation $ 34,300
================
4. The Bonds may also be subject to other calls, which may be permitted or
required by events which cannot be predicted (such as destruction,
condemnation, termination of a contract, or receipt of excess of
unanticipated revenues).
<PAGE>
Insured Municipal Securities Trust
New Jersey Navigator Insured Series 9
Statement of Net Assets
December 31, 1999
Investments in Securities, at market value (cost $2,543,269) $ 2,577,569
Other assets
Accrued interest 51,808
-----------------
Total other assets 51,808
-----------------
Liabilities
Advance from Trustee 24,961
-----------------
Total liabilities 24,961
-----------------
Excess of other assets over total liabilities 26,847
-----------------
Net assets (2,695 units of fractional undivided
interest outstanding, $966.39 per unit) $ 2,604,416
=================
The accompanying notes form an integral part of the financial statements.
<PAGE>
Insured Municipal Securities Trust
New Jersey Navigator Insured Series 9
Statement of Operations
<TABLE>
<CAPTION>
Year ended December 31,
1999 1998 1997
------------------ ------------------- ------------------
<S> <C> <C> <C>
Investment income
Interest $ 170,378 $ 215,452 $ 235,109
Expenses
Trustee's fees 4,789 5,607 5,872
Evaluator's fee 2,250 2,436 2,009
Sponsor's advisory fee 844 953 984
------------------ ------------------- ------------------
Total expenses 7,883 8,996 8,865
------------------ ------------------- ------------------
Net investment income 162,495 206,456 226,244
------------------ ------------------- ------------------
Realized and unrealized gain (loss)
Realized gain on investments 24,597 29,176 4,466
Unrealized appreciation (depreciation)
on investments (186,925) (17,785) 87,871
------------------ ------------------- ------------------
Net gain (loss) on investments (162,328) 11,391 92,337
------------------ ------------------- ------------------
Net increase in net assets resulting from operations
$ 167 $ 217,847 $ 318,581
================== =================== ==================
</TABLE>
The accompanying notes form an integral part of the financial statements.
<PAGE>
Insured Municipal Securities Trust
New Jersey Navigator Insured Series 9
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year ended December 31,
1999 1998 1997
------------------ ------------------- ------------------
<S> <C> <C> <C>
Operations
Net investment income $ 162,495 $ 206,456 $ 226,244
Realized gain on investments 24,597 29,176 4,466
Unrealized appreciation (depreciation)
on investments (186,925) (17,785) 87,871
------------------ ------------------- ------------------
Net increase in net assets resulting
from operations 167 217,847 318,581
------------------ ------------------- ------------------
Distributions to Certificateholders
Investment income 158,958 202,860 224,813
Principal 37,257 25,941 17,049
Redemptions
Interest 10,077 7,436 1,566
Principal 720,863 447,185 124,931
------------------ ------------------- ------------------
Total distributions and redemptions 927,155 683,422 368,359
------------------ ------------------- ------------------
Total (decrease) (926,988) (465,575) (49,778)
Net assets
Beginning of year 3,531,404 3,996,979 4,046,757
------------------ ------------------- ------------------
End of year (including undistributed net investment
income of $47,802, $54,342 and $58,182,
respectively) $ 2,604,416 $ 3,531,404 $ 3,996,979
================== =================== ==================
</TABLE>
The accompanying notes form an integral part of the financial statements.
<PAGE>
Insured Municipal Securities Trust
New Jersey Navigator Insured Series 9
Financial Highlights
Selected data for a unit of the Trust outstanding:*
<TABLE>
<CAPTION>
Year ended December 31,
1999 1998 1997
------------------ ------------------- -------------------
<S> <C> <C> <C>
Net asset value, beginning of year** $ 1,036.21 $ 1,040.34 $ 1,020.62
------------------ ------------------- -------------------
Interest income 55.83 59.44 60.22
Expenses (2.58) (2.48) (2.27)
------------------ ------------------- -------------------
Net investment income 53.25 56.96 57.95
------------------ ------------------- -------------------
Net gain or loss on investments (1) (55.47) 4.08 24.13
------------------ ------------------- -------------------
Total from investment operations (2.22) 61.04 82.08
------------------ ------------------- -------------------
Less distributions
to Certificateholders
Income 52.09 55.96 57.59
Principal 12.21 7.16 4.37
for Redemptions
Interest 3.30 2.05 .40
------------------ ------------------- -------------------
Total distributions 67.60 65.17 62.36
------------------ ------------------- -------------------
Net asset value, end of year** $ 966.39 $ 1,036.21 $ 1,040.34
================== =================== ===================
</TABLE>
(1) Net gain or loss on investments is a result of changes in outstanding units
since January 1, 1999, 1998 and 1997, respectively, and the dates of net gain
and loss on investments.
* Unless otherwise stated, based upon average units outstanding during the
year of 3,052 ([2,695 + 3,408]/2) for 1999, 3,625 ([3,408 + 3,842]/2) for
1998 and of 3,904 ([3,842 + 3,965]/2) for 1997.
** Based upon actual units outstanding.
The accompanying notes form an integral part of the financial statements.
<PAGE>
Insured Municipal Securities Trust
New Jersey Navigator Insured Series 9
Notes to Financial Statements
December 31, 1999
1. Organization
Insured Municipal Securities Trust, New Jersey Navigator Insured Series 9 (the
"Trust") was organized on January 21, 1993 by Bear, Stearns & Co. Inc. and
Gruntal & Co., Incorporated under the laws of the State of New York by a Trust
Indenture and Agreement, and is registered under the Investment Company Act of
1940. The Trust was formed to preserve capital and to provide interest income.
On September 28, 1995, Reich & Tang Distributors, Inc. ("Reich & Tang") had
become the successor sponsor to certain of the unit investment trusts previously
sponsored by Bear, Stearns & Co. Inc. As successor sponsor, Reich & Tang had
assumed all of the obligations and rights of Bear, Stearns & Co. Inc., the
previous sponsor.
Effective February 9, 2000, Gruntal & Co. resigned as a co-sponsor of certain
unit investment trusts previously co-sponsored with Reich & Tang. ING Funds
Distributor, Inc. ("ING") has become the successor sponsor to certain unit
investment trusts previously sponsored by Reich & Tang. As successor sponsor,
ING has assumed all of the obligations and rights of Reich & Tang, the previous
sponsor.
2. Summary of Significant Accounting Policies
The following is a summary of significant accounting policies consistently
followed by the Trust in preparation of its financial statements. The policies
are in conformity with generally accepted accounting principles ("GAAP"). The
preparation of financial statements in accordance with GAAP requires management
to make estimates and assumptions that affect the reported amounts and
disclosures in the financial statements. Actual amounts could differ from those
estimates.
Interest Income
Interest income is recorded on the accrual basis. The discount on the
zero-coupon bonds is accreted by the interest method over the respective lives
of the bonds. The accretion of such discount is included in interest income;
however, it is not distributed until realized in cash upon maturity or sale of
the respective bonds.
<PAGE>
Insured Municipal Securities Trust
New Jersey Navigator Insured Series 9
Notes to Financial Statements(continued)
2. Summary of Significant Accounting Policies (continued)
Security Valuation
Investments are carried at market value which is determined by Kenny S&P
Evaluation Services, a business unit of J.J. Kenny Company, Inc., a subsidiary
of the McGraw-Hill Companies, Inc. The market value of the portfolio is based
upon the bid prices for the bonds at the end of the year, which approximates the
fair value of the security at that date, except that the market value on the
date of deposit represents the cost to the Trust based on the offering prices
for investments at that date. The difference between cost (including accumulated
accretion of original issue discount on zero-coupon bonds) and market value is
reflected as unrealized appreciation (depreciation) of investments. Securities
transactions are recorded on the trade date. Realized gains (losses) from
securities transactions are determined on the basis of average cost of the
securities sold or redeemed.
3. Income Taxes
No provision for federal income taxes has been made in the accompanying
financial statements because the Trust intends to continue to qualify for the
tax treatment applicable to Grantor Trusts under the Internal Revenue Code.
Under existing law, if the Trust so qualifies, it will not be subject to federal
income tax on net income and capital gains that are distributed to unitholders.
4. Trust Administration
The Chase Manhattan Bank (the "Trustee") has custody of assets and
responsibility for the accounting records and financial statements of the Trust
and is responsible for establishing and maintaining a system of internal control
related thereto. The Trustee is also responsible for all estimates of expenses
and accruals reflected in the Trust's financial statements.
The Trust Indenture and Agreement provides for interest distributions as often
as monthly (depending upon the distribution plan elected by the
Certificateholders).
<PAGE>
Insured Municipal Securities Trust
New Jersey Navigator Insured Series 9
Notes to Financial Statements(continued)
4. Trust Administration (continued)
The Trust Indenture and Agreement further requires that principal received from
the disposition of bonds, other than those bonds sold in connection with the
redemption of units, be distributed to Certificateholders.
The Trust Indenture and Agreement also requires the Trust to redeem units
tendered. For the years ended December 31, 1999, 1998 and 1997, 713, 434 and 123
units were redeemed, respectively.
The Trust pays an annual fee for trustee services rendered by the Trustee that
ranges from $.38 to $1.12 per $1,000 of outstanding investment principal. In
addition, a minimum fee of $8.00 is paid to a service bureau for each portfolio
valuation. A maximum fee of $.25 per $1,000 of outstanding investment principal
is paid to the Sponsor. For the years ended December 31, 1999, 1998 and 1997,
the "Trustee's Fees" are comprised of Trustee fees of $2,729, $3,346 and $3,452
and other expenses of $2,060, $2,261 and $2,420, respectively. The other
expenses include professional, printing and miscellaneous fees.
5. Net Assets
At December 31, 1999, the net assets of the Trust represented the interest of
Certificateholders as follows:
Original cost to Certificateholders $ 4,088,142
Less initial gross underwriting commission 200,319
-------------------
3,887,823
Accumulated cost of securities sold, matured or called (1,365,498)
Net unrealized appreciation 34,300
Undistributed net investment income 47,802
Distributions in excess of proceeds from investments (11)
-------------------
Total $ 2,604,416
===================
<PAGE>
Insured Municipal Securities Trust
New Jersey Navigator Insured Series 9
Notes to Financial Statements(continued)
5. Net Assets (continued)
The original cost to Certificateholders, less the initial gross underwriting
commission, represents the aggregate initial public offering price net of the
applicable sales charge on 4,000 units of fractional undivided interest of the
Trust as of the date of deposit.
Undistributed net investment income includes accumulated accretion of original
issue discount of $20,944.
6. Concentration of Credit Risk
Since the Trust invests a portion of its assets in municipal bonds, it may be
affected by economic and political developments in the municipalities. Certain
debt obligations held by the Trust may be entitled to the benefit of insurance,
standby letters of credit or other guarantees of banks or other financial
institutions.
<PAGE>
Prospectus Part A Dated April 30, 2000
INSURED MUNICIPAL SECURITIES TRUST
SERIES 31
- -------------------------------------------------------------------------------
The Trust is a unit investment trust designated Series 31 ("Insured
Municipal Trust") with an underlying portfolio of long-term insured tax-exempt
bonds issued by or on behalf of states, municipalities and public authorities
and was formed to preserve capital and to provide interest income which, in the
opinions of bond counsel to the respective issuers, is, with certain exceptions,
currently exempt from regular federal income tax under existing law but may be
subject to state and local taxes. There can be no assurance that the Trust's
investment objectives will be achieved. Although the Supreme Court has
determined that Congress has the authority to subject interest on bonds such as
the Bonds in the Trust to federal income taxation, existing law excludes such
interest from regular federal income tax. Such interest income may, however, be
subject to the federal individual and corporate alternative minimum tax and to
state and local taxes. (See "Description of Portfolio" in this Part A for a
description of those Bonds, if any, which pay interest income subject to the
federal individual alternative minimum tax.) In addition, capital gains are
subject to tax. (See "Tax Status" and "The Trust--Portfolio" in Part B of this
Prospectus.) The Sponsor is ING Funds Distributor, Inc. (successor to Reich &
Tang Distributors, Inc.). The value of the Units of the Trust will fluctuate
with the value of the underlying bonds. Minimum purchase: 1 Unit.
This Prospectus consists of two parts. Part A contains the Summary of
Essential Information as of December 31, 1999 (the "Evaluation Date"), a summary
of certain specific information regarding the Trust and audited financial
statements of the Trust, including the related portfolio, as of the Evaluation
Date. Part B of this Prospectus contains a general summary of the Trust. Part A
of this Prospectus may not be distributed unless accompanied by Part B.
Investors should retain both parts of this Prospectus for future reference. The
Securities and Exchange Commission ("SEC") maintains a website that contains
reports, proxy and information statements and other information regarding the
Trust which is filed electronically with the SEC. The SEC's Internet address is
http:www.sec.gov. Offering materials for the sale of these units available
through the Internet are not being offered directly or indirectly to residents
of a particular state nor is an offer of these units through the Internet
specifically directed to any person in a state by, or on behalf of, the issuer.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE 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 TRUST. The Trust seeks to achieve its investment objectives
through investment in a fixed, diversified portfolio of long-term insured bonds
(the "Bonds") issued by or on behalf of states, municipalities and public
authorities which, because of irrevocable insurance, were rated "AAA" by
Standard & Poor's Rating Services, a division of The McGraw-Hill Companies, at
the time originally deposited in the Trust. The "AAA" rating results from
insurance relating only to the Bonds in the Trust and not to Units of the Trust.
The insurance does not remove market risk, as it does not guarantee the market
value of the Units. For a discussion of the significance of such ratings, see
"Description of Bond Ratings" in Part B of this Prospectus, and for a list of
ratings on the Evaluation Date see the "Portfolio."
Some of the Bonds may be "Zero Coupon Bonds", which are original issue
discount bonds that provide for payment at maturity at par value, but do not
provide for the payment of any current interest. Some of the Bonds in the Trust
have been issued with optional refunding or refinancing provisions
176163.1
<PAGE>
("Refunded Bonds") whereby the issuer of the Bond has the right to call such
Bond prior to its stated maturity date (and other than pursuant to sinking fund
provisions) and to issue new bonds ("Refunding Bonds") in order to finance the
redemption. Issuers typically utilize refunding calls in order to take advantage
of lower interest rates in the marketplace. Some of these Refunded Bonds may be
called for redemption pursuant to pre-refunding provisions ("Pre-Refunded
Bonds") whereby the proceeds from the issue of the Refunding Bonds are typically
invested in government securities in escrow for the benefit of the holders of
the Pre-Refunded Bonds until the refunding call date. Usually, Pre-Refunded
Bonds will bear a triple-A rating because of this escrow. The issuers of
Pre-Refunded Bonds must call such Bonds on their refunding call date. Therefore,
as of such date, the Trust will receive the call price for such bonds but will
cease receiving interest income with respect to them. For a list of those Bonds
which are Pre-Refunded Bonds, if any, as of the Evaluation Date, see "Notes to
Financial Statements" in this Part A. Some of the Bonds in the portfolio may
have been purchased at an aggregate premium over par. The payment of interest
and preservation of capital are, of course, dependent upon the continuing
ability of issuers of the Bonds or the insurers thereof to meet their
obligations.
Investment in the Trust should be made with an understanding of the
risks which an investment in long-term fixed rate debt obligations may entail,
including the risk that the value of the underlying portfolio will decline with
increases in interest rates, and that the value of Zero Coupon Bonds is subject
to greater fluctuation than coupon bonds in response to changes in interest
rates. A Trust designated as a long-term trust must have a dollar-weighted
average portfolio maturity of more than ten years.
Each Unit in the Trust represents a 1/3160th undivided interest in the
principal and net income of the Trust. The principal amount of Bonds deposited
in the Trust per Unit is reflected in the Summary of Essential Information. (See
"Organization" in Part B of this Prospectus.) The Units being offered hereby are
issued and outstanding Units which have been purchased by the Sponsor in the
secondary market.
INSURANCE. Each of the Bonds in the Trust is insured by a municipal
bond guaranty insurance policy obtained by either the Sponsor ("Sponsor-Insured
Bonds") or the issuers of the Bonds ("Pre-Insured Bonds") and issued by one of
the insurance companies (the "Insurance Companies"), described under "Insurance
on the Bonds" in Part B of this Prospectus, covering scheduled payment of
principal thereof and interest thereon when such amounts shall become due for
payment but shall not have been paid by the issuer or any other insurer thereof.
None of the insurance will cover accelerated payments of principal or penalty
interest or premiums unrelated to taxability of interest on the Bonds (although
the insurance, including insurance obtained by MBIA Corp., does guarantee
payment of principal and interest in such amounts and at such times as such
amounts would have been due absent such acceleration). The insurance relates
only to the prompt payment of principal of and interest on the securities in the
portfolio, and does not remove market risks or guarantee the market value of the
Units in the Trust. The terms of the insurance are more fully described under
"Insurance on the Bonds" in Part B of this Prospectus. For a discussion of the
effect of an occurrence of nonpayment of principal or interest on any Bonds in
the Trust, see "Portfolio Supervision" in Part B of this Prospectus. No
representation is made herein as to any Bond insurer's ability to meet its
obligations under a policy of insurance relating to any of the Bonds. In
addition, investors should be aware that, subsequent to the Date of Deposit, the
rating of the claims paying ability of the insurer of an underlying Bond may be
downgraded, which may result in a downgrading of the rating of the Units in the
Trust. The approximate percentage of the aggregate principal amount of the
portfolio that is insured by each insurance company is as follows: Connie Lee
Insurance Company ("Connie Lee"), 17.7%; Financial Guaranty Insurance Company
("Financial Guaranty"), 15.0; Financial Security Assurance Inc. ("Financial
Security"), 29.3%; and MBIA Corp., 38.0%.
PUBLIC OFFERING PRICE. The secondary market Public Offering Price of
each Unit is equal to the aggregate bid price of the Bonds in the Trust divided
by the number of Units outstanding, plus a sales charge of 4.5% of the Public
Offering Price, or 4.712% of the net amount invested in Bonds per Unit.
A-2
176163.1
<PAGE>
In addition, accrued interest to the expected date of settlement is added to the
Public Offering Price. If Units had been purchased on the Evaluation Date, the
Public Offering Price per Unit would have been $884.45 plus accrued interest of
$5.50 under the monthly distribution plan, $9.43 under the semi- annual
distribution plan and $9.51 under the annual distribution plan, for a total of
$889.95, $893.88 and $893.96, respectively. The Public Offering Price per Unit
can vary on a daily basis in accordance with fluctuations in the aggregate bid
price of the Bonds. (See "Public Offering--Offering Price" in Part B of this
Prospectus.)
ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN. Units of each
Trust are offered to investors on a "dollar price" basis (using the computation
method described under "Public Offering--Offering Price" in Part B) as
distinguished from a "yield price" basis often used in offerings of tax Price")
as distinguished from a "yield price" basis often used in offerings of tax
exempt bonds (involving the lesser of the yield as computed to maturity of bonds
or to an earlier redemption date). Since they are offered on a dollar price
basis, the rate of return on an investment in Units of each Trust is measured in
terms of "Estimated Current Return" and "Estimated Long Term Return".
Estimated Long Term Return is calculated by: (1) computing the yield
to maturity or to an earlier call date (whichever results in a lower yield) for
each Bond in the Trust's portfolio in accordance with accepted bond practices,
which practices take into account not only the interest payable on the Bond but
also the amortization of premiums or accretion of discounts, if any; (2)
calculating the average of the yields for the Bonds in the Trust's portfolio by
weighing each Bond's yield by the market value of the Bond and by the amount of
time remaining to the date to which the Bond is priced (thus creating an average
yield for the portfolio of the Trust); and (3) reducing the average yield for
the portfolio of the Trust in order to reflect estimated fees and expenses of
the Trust and the maximum sales charge paid by investors. The resulting
Estimated Long Term Return represents a measure of the return to investors
earned over the estimated life of the Trust. (For the Estimated Long Term Return
to Certificateholders under the monthly, semi-annual and annual distribution
plans, see "Summary of Essential Information".)
Estimated Current Return is a measure of the Trust's cash flow.
Estimated Current Return is computed by dividing the Estimated Net Annual
Interest Income per Unit by the Public Offering Price per Unit. In contrast to
the Estimated Long Term Return, the Estimated Current Return does not take into
account the amortization of premium or accretion of discount, if any, on the
Bonds in the portfolio of the Trust. Moreover, because interest rates on Bonds
purchased at a premium are generally higher than current interest rates on newly
issued bonds of a similar type with comparable rating, the Estimated Current
Return per Unit may be affected adversely if such Bonds are redeemed prior to
their maturity.
The Estimated Net Annual Interest Income per Unit of the Trust will
vary with changes in the fees and expenses of the Trustee and the Evaluator
applicable to the Trust and with the redemption, maturity, sale or other
disposition of the Bonds in the Trust. The Public Offering Price will vary with
the changes in the bid prices of the Bonds. Therefore, there is no assurance
that the present Estimated Current Return or Estimated Long Term Return will be
realized in the future. (For the Estimated Current Return to Certificateholders
under the monthly, semi-annual and annual distribution plans, see "Summary of
Essential Information". See "Estimated Long Term Return and Estimated Current
Return" in Part B of this Prospectus.)
A schedule of cash flow projections is available from the Sponsor upon
request.
DISTRIBUTIONS. Distributions of interest income, less expenses, will
be made by the Trust either monthly, semi-annually or annually depending upon
the plan of distribution applicable to the Unit purchased. A purchaser of a Unit
in the secondary market will initially receive distributions in accordance with
the distribution plan chosen by the prior owner of such Unit and may thereafter
change the plan as provided under "Interest and Principal Distributions" in Part
B of the Prospectus. Distributions of principal, if
A-3
176163.1
<PAGE>
any, will be made semi-annually on June 15 and December 15 of each year. (See
"Rights of Certificateholders--Interest and Principal Distributions" in Part B
of this Prospectus. For estimated monthly, semi-annual and annual interest
distributions, see "Summary of Essential Information".)
MARKET FOR UNITS. The Sponsor, although not obligated to do so,
intends to maintain a secondary market for the Units at prices based on the
aggregate bid price of the Bonds in the Trust portfolio. The reoffer price will
be based on the aggregate bid price of the Bonds plus a sales charge of 4.5% of
the Public Offering Price (4.712% of the net amount invested), plus net accrued
interest. If a market is not maintained a Certificateholder will be able to
redeem his or her Units with the Trustee at a price also based on the aggregate
bid price of the Bonds. (See "Liquidity--Sponsor Repurchase" and "Public
Offering--Offering Price" in Part B of this Prospectus.)
A-4
176163.1
<PAGE>
<TABLE>
<CAPTION>
INSURED MUNICIPAL SECURITIES TRUST
SERIES 31
SUMMARY OF ESSENTIAL INFORMATION AS OF DECEMBER 31, 1999
--------------------------------------------------------
<S> <C> <C>
Date of Deposit*: April 29, 1993 Minimum Principal Distribution:
- ---------------- ------------------------------
Principal Amount of Bonds.... $2,830,000 $1.00 per Unit.
- -------------------------
Number of Units ............. 3,160 Weighted Average Life to Maturity:
- --------------- ---------------------------------
Fractional Undivided Inter- 17.4 Years.
- --------------------------
est in Trust per Unit ..... 1/3160 Minimum Value of Trust:
--------------------- ----------------------
Principal Amount of Trust may be terminated if value of
- -------------------
Bonds per Unit ............ $895.57 Trust is less than $1,600,00 in
--------------
Secondary Market Public principal amount of Bonds.
- -----------------------
Offering Price** Mandatory Termination Date:
-------------- --------------------------
Aggregate Bid Price The earlier of December 31, 2042 or
of Bonds in Trust ....... $2,668,106++ the disposition of the last Bond in
Divided by 3,160 Units .... $844.34 the Trust.
Plus Sales Charge of 4.5% Trustee***: The Chase Manhattan
-------
of Public Offering Price. $40.11 Bank.
Public Offering Price Trustee's Annual Fee: Monthly
--------------------
per Unit ................ $884.45+ plan $1.10 per $1,000; semi-annual
Redemption and Sponsor's plan $.63 per $1,000; and annual plan
- ------------------------
Repurchase Price is $.36 per $1,000.
----------------
per Unit .................. $844.34+ Evaluator: Kenny S&P Evaluation
-------- ---------
+++ Services.
++++ Evaluator's Fee for Each
Excess of Secondary Market Evaluation: Minimum of $8 plus $.25
- -------------------------- ----------
Public Offering Price per each issue of Bonds in excess of
---------------------
over Redemption and 50 issues (treating separate
-------------------
Sponsor's Repurchase maturities as separate issues).
--------------------
Price per Unit ............ $40.11++++ Sponsor: ING Funds Distributor, Inc.
-------------- -------
Difference between Public Sponsor's Annual Fee: Maximum of
- ------------------------- --------------------
Offering Price per Unit $.25 per $1,000 principal amount of
-----------------------
and Principal Amount per Bonds (see "Trust Expenses and
------------------------
Unit Premium/(Discount) ... $(11.12) Charges" in Part B of this
-----------------------
Evaluation Time: 4:00 p.m. Prospectus).
- ---------------
New York Time.
</TABLE>
<TABLE>
<CAPTION>
PER UNIT INFORMATION BASED UPON INTEREST DISTRIBUTION PLAN ELECTED
------------------------------------------------------------------
Monthly Semi-Annual Annual
Option Option Option
<S> <C> <C> <C>
Gross annual interest income# ......... $49.49 $49.49 $49.49
Less estimated annual fees and
expenses ............................ 2.25 2.27 1.38
Estimated net annual interest _____ _____ _____
income (cash)# ...................... $47.24 $47.22 $48.11
Estimated interest distribution# ...... 3.93 23.60 48.11
Estimated daily interest accrual# ..... .1312 .1311 .1336
Estimated current return#++ ........... 5.34% 5.34% 5.44%
Estimated long term return++ .......... 5.41% 5.41% 5.52%
Record dates .......................... 1st of Dec. 1 and Dec. 1
each month June 1
Interest distribution dates ........... 15th of Dec. 15 and Dec. 15
each month June 15
</TABLE>
A-5
176163.1
<PAGE>
Footnotes to Summary of Essential Information
* The Date of Deposit is the date on which the Trust Agreement was signed
and the deposit of the Bonds with the Trustee made.
** Certain amounts distributable as of December 31, 1999 may be reported
in the Summary of Essential Information as if they had been distributed
at year-end.
*** The Trustee maintains its principal executive office at 270 Park
Avenue, New York, New York 10017 and its unit investment trust office
at 4 New York Plaza, New York, New York 10004 (tel. no.:
1-800-882-9898). For information regarding redemption by the Trustee,
see "Trustee Redemption" in Part B of this Prospectus.
+ Plus accrued interest to the expected date of settlement (approximately
three business days after purchase) of $5.50 monthly, $9.43 semi-
annually and $9.51 annually.
++ The estimated current return and estimated long term return are
increased for transactions entitled to a discount (see "Employee
Discounts" in Part B of this Prospectus), and are higher under the
semi- annual and annual options due to lower Trustee's fees and
expenses.
+++ Based solely upon the bid side evaluation of the underlying Bonds
(including, where applicable, undistributed cash from the principal
account). Upon tender for redemption, the price to be paid will be
calculated as described under "Trustee Redemption" in Part B of this
Prospectus.
++++ See "Comparison of Public Offering Price, Sponsor's Repurchase Price
and Redemption Price" in Part B of this Prospectus.
# Does not include income accrual from original issue discount bonds, if
any.
FINANCIAL AND STATISTICAL INFORMATION
Selected data for each Unit outstanding for the periods listed below:
<TABLE>
<CAPTION>
Distribu-
tions of
Distributions of Interest Principal
During the Period (per Unit) During
----------------------------
Net Asset* Semi- the
Units Out- Value Monthly Annual Annual Period
Period Ended standing Per Unit Option Option Option (Per Unit)
- ------------ ---------- ---------- ------- ------ ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
December 31, 1997 3,675 $1,038.12 $86.69 $54.85 $55.47 $ 3.94
December 31, 1998 3,372 929.02 52.90 52.98 53.56 122.39
December 31, 1999 3,160 853.81 47.09 47.01 47.76 -0-
- --------
</TABLE>
* Net Asset Value per Unit is calculated by dividing net assets as
disclosed in the "Statement of Net Assets" by the number of Units
outstanding as of the date of the Statement of Net Assets. See Note 5
of Notes to Financial Statements for a description of the components of
Net Assets.
A-6
176163.1
<PAGE>
INFORMATION REGARDING THE TRUST
AS OF DECEMBER 31, 1999
DESCRIPTION OF PORTFOLIO*
- ------------------------
The portfolio of the Trust consists of 8 issues representing
obligations of issuers located in 7 states. The Sponsor has not participated as
a sole underwriter or manager, co-manager or member of underwriting syndicates
from which any of the initial aggregate principal amount of the Bonds were
acquired. None of the Bonds are obligations of state and local housing
authorities; approximately 47.0%** are hospital revenue bonds; none were issued
in connection with the financing of nuclear generating facilities; and none are
"mortgage subsidy" bonds. All of the Bonds in the Trust are subject to
redemption prior to their stated maturity dates pursuant to sinking fund or
optional call provisions. The Bonds may also be subject to other calls, which
may be permitted or required by events which cannot be predicted (such as
destruction, condemnation, termination of a contract, or receipt of excess or
unanticipated revenues). None of the Bonds are general obligation bonds. All
eight issues representing $2,830,000 of the principal amount of the Bonds are
payable from the income of a specific project or authority and are not supported
by the issuer's power to levy taxes. The portfolio is divided for purpose of
issue as follows: Civic Center 1, Hospital 3, Power 1, Sewer 2 and Water 1. For
an explanation of the significance of these factors see "The Trust--Portfolio"
in Part B of this Prospectus.
As of December 31, 1999, $1,500,000 (approximately 53.0% of the
aggregate principal amount of the Bonds) were original issue discount bonds. Of
these original issue discount bonds, $200,000 (approximately 7.0% of the
aggregate principal amount of the Bonds) were Zero Coupon Bonds. Zero Coupon
Bonds do not provide for the payment of any current interest and provide for
payment at maturity at par value unless sooner sold or redeemed. The market
value of Zero Coupon Bonds is subject to greater fluctuations than coupon bonds
in response to changes in interest rates. None of the aggregate principal amount
of the Bonds in the Trust were purchased at a "market" discount from par value
at maturity, approximately 47.0% were purchased at a premium and none were
purchased at par. For an explanation of the significance of these factors see
"Discount and Zero Coupon Bonds" in Part B of this Prospectus.
None of the Bonds in the Trust are subject to the federal individual
alternative minimum tax under the Tax Reform Act of 1986. See "Tax Status" in
Part B of this Prospectus.
- --------
* Changes in the Trust Portfolio: From January 1, 2000 to March 15,
------------------------------
2000, $80,000 of the principal amount of the Bond in portfolio no. 3
was sold and is no longer contained in the Trust. 73 Units were
redeemed from the Trust.
** A trust is considered to be "concentrated" in a particular category or
industry when the securities in that category or industry constitute
25% or more of the aggregate face amount of the portfolio. See Part B
for disclosure, including risk factors, regarding this concentration.
A-7
176163.1
<PAGE>
Report of Independent Auditors
The Sponsor, Trustee and Certificateholders of
Insured Municipal Securities Trust, Series 31
We have audited the accompanying statement of net assets of Insured Municipal
Securities Trust, Series 31, including the portfolio, as of December 31, 1999
and the related statements of operations, and changes in net assets and
financial highlights for the year then ended. These financial statements and
financial highlights are the responsibility of the Trustee. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audit. The statement of operations, statement of changes in net
assets and financial highlights for each of the two years in the period ended
December 31, 1998 were audited by other auditors whose report thereon dated
March 19, 1999, expressed an unqualified opinion on those financial statements
and financial highlights.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of the securities
owned by correspondence with the Trustee. An audit also includes assessing the
accounting principles used and significant estimates made by the Trustee, as
well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the 1999 financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Insured Municipal Securities Trust, Series 31 at December 31, 1999, the results
of its operations, changes in its net assets and financial highlights for the
year then ended, in conformity with accounting principles generally accepted in
the United States.
/s/ERNST & YOUNG LLP
New York, New York
April 15, 2000
<PAGE>
Insured Municipal Securities Trust, Series 31
Portfolio
December 31, 1999
<TABLE>
<CAPTION>
Redemption
Aggregate Coupon Feature (2)(4)
Portfolio Principal Rate/Date(s) S.F.-Sinking Fund Market
No. Amount Name of Issuer and Title of Bonds Ratings(1) of Maturity(2) Ref.-Refunding Value (3)
- ------------ ------------ -------------------------------------------- ----------- -------------- -------------------- -------------
<S> <C> <C> <C> <C> <C> <C>
1 $ 500,000 St. Joseph Cnty. Ind. Hosp. Auth. Hosp. AAA 6.250% 8/15/13 @ 100 S.F. $ 530,205
Rev. Bonds (Mem. Hosp. of So. Bend Prjt.) 8/15/2022 2/15/03 @ 102 Ref.
Series 1992 (MBIA Corp.)
2 500,000 Mass St. Hlth. & Ed. Facs. Auth. Rev. AAA 6.000 7/01/13 @ 100 S.F. 488,315
Bonds (Mass. Med. Schl. Rsrch. Prjt.) 7/01/2023 7/01/02 @ 102 Ref.
Series A (Connie Lee)
3 330,000 Coastal Bend Tx. Hlth. Facs. Dev. Corp. AAA 6.000 11/15/14 @ 100 S.F. 347,338
Incarnate Word Hlth. Servs. Rev. Bonds 11/15/2022 11/15/02 @ 102 Ref.
Series A (Financial Security)
4 300,000 Seattle Wa. Muniplty. Of Metro. Seattle AAA 5.700 No Sinking Fund 296,019
Swr. Rfndg. Rev. Bonds Series Y (Financial 1/01/2015 1/01/03 @ 102 Ref.
Guaranty)
5 500,000 W.V. Wtr. Dev. Auth. Wtr. Dev. Rev. Rfndg. AAA 5.750 11/01/24 @ 100 S.F. 472,770
Bonds (Loan Prgm. II) 1993 Series A-II 11/01/2029 11/01/03 @ 102 Ref.
(Financial Security)
6 500,000 Marshall Cnty. W.V. Poll. Cntrl. Rev. AAA 5.900 No Sinking Fund 486,080
Bonds (Ohio Pwr. Co. Prjt.) Series D (MBIA 4/01/2022 4/01/03 @ 102 Ref.
Corp.)
7 75,000 Birmingham--Jefferson Ala. Civic Cntr. AAA 0.000 No Sinking Fund 17,403
Auth. (Jefferson Cnty. Ala.) Rev. Rfndg. 9/01/2022 None
Bonds (MBIA Corp.)
8 125,000 Pottstown Borough Auth. Montgomery Cnty. AAA 0.000 No Sinking Fund 34,276
Penn. Gtd. Swr. Rev. Bonds Series 1991 11/01/2020 None
(Financial Guaranty)
------------ -------------
$ 2,830,000 Total Investments (Cost $2,687,655) $ 2,672,406
============ =============
</TABLE>
See accompanying footnotes to portfolio and notes to financial statements.
<PAGE>
Insured Municipal Securities Trust, Series 31
Footnotes to Portfolio
1 All ratings are by Kenny S&P Evaluation Services, a business unit of J.J.
Kenny Company, Inc., a subsidiary of The McGraw-Hill Companies, Inc. A
brief description of the ratings symbols and their meaning is set forth
under "Description of Bond Ratings" in Part B of the Prospectus.
2. See "The Trust--Portfolio" in Part B of the Prospectus for an explanation
of redemption features. See "Tax Status" in Part B of the Prospectus for a
statement of the Federal tax consequences to a Certificateholder upon the
sale, redemption or maturity of a bond.
3. At December 31, 1999, the net unrealized depreciation of all the bonds was
comprised of the following:
Gross unrealized appreciation $ 31,692
Gross unrealized depreciation (46,941)
---------------
Net unrealized depreciation $ (15,249)
===============
4. The Bonds may also be subject to other calls, which may be permitted or
required by events which cannot be predicted (such as destruction,
condemnation, termination of a contract, or receipt of excess of
unanticipated revenues).
The accompanying notes form an integral part of the financial statements.
<PAGE>
Insured Municipal Securities Trust, Series 31
Statement of Net Assets
December 31, 1999
Investments in securities, at market value (cost $2,687,655) $2,672,406
Other assets
Accrued interest 50,053
---------------
Total other assets 50,053
---------------
Liabilities
Advance from Trustee 24,408
---------------
Total liabilities 24,408
---------------
Excess of other assets over total liabilities 25,645
---------------
Net assets (3,160 units of fractional undivided
interest outstanding, $853.81 per unit) $2,698,051
===============
The accompanying notes form an integral part of the financial statements.
<PAGE>
Insured Municipal Securities Trust, Series 31
Statement of Operations
<TABLE>
<CAPTION>
Year ended December 31,
1999 1998 1997
------------------ ------------------- ------------------
<S> <C> <C> <C>
Investment income
Interest $ 168,504 $ 190,868 $ 219,043
Expenses
Trustee's fees 6,095 7,022 7,557
Evaluator's fee 2,249 2,436 2,009
Sponsor's advisory fee 750 931 986
------------------ ------------------- ------------------
Total expenses 9,094 10,389 10,552
------------------ ------------------- ------------------
Net investment income 159,410 180,479 208,491
Realized and unrealized gain (loss)
Realized gain on investments 7,551 20,788 8,117
Unrealized appreciation (depreciation) on investments
(259,417) 31,212 127,387
------------------ ------------------- ------------------
Net gain (loss) on investments (251,866) 52,000 135,504
------------------ ------------------- ------------------
Net increase (decrease) in net assets resulting from
operations $ (92,456) $232,479 $343,995
================== =================== ==================
</TABLE>
The accompanying notes form an integral part of the financial statements.
<PAGE>
Insured Municipal Securities Trust, Series 31
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year ended December 31,
1999 1998 1997
------------------ ------------------- ------------------
<S> <C> <C> <C>
Operations
Net investment income $ 159,410 $ 180,479 $ 208,491
Realized gain on investments 7,551 20,788 8,117
Unrealized appreciation (depreciation)
on investments (259,417) 31,212 127,387
------------------ ------------------- ------------------
Net increase (decrease) in net assets resulting from
operations (92,456) 232,479 343,995
------------------ ------------------- ------------------
Distributions to Certificateholders
Investment income 156,112 185,636 207,834
Principal - 422,037 14,874
Redemptions
Interest 2,757 3,890 2,326
Principal 183,266 303,374 191,332
------------------ ------------------- ------------------
Total distributions and redemptions 342,135 914,937 416,366
------------------ ------------------- ------------------
Total (decrease) (434,591) (682,458) (72,371)
Net assets
Beginning of year 3,132,642 3,815,100 3,887,471
------------------ ------------------- ------------------
End of year (including undistributed net investment
income of $48,098, $47,557 and $56,604,
respectively) $2,698,051 $3,132,642 $3,815,100
================== =================== ==================
</TABLE>
The accompanying notes form an integral part of the financial statements.
<PAGE>
Insured Municipal Securities Trust, Series 31
Financial Highlights
Selected data for a unit of the Trust outstanding:*
<TABLE>
<CAPTION>
Year ended December 31,
1999 1998 1997
------------------ ------------------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of year** $ 929.02 $ 1,038.12 $ 1,004.77
------------------ ------------------- ------------------
Interest income 51.59 54.16 58.07
Expenses (2.78) (2.95) (2.80)
------------------ ------------------- ------------------
Net investment income 48.81 51.21 55.27
------------------ ------------------- ------------------
Net gain or loss on investments (1) (75.38) 13.23 37.74
------------------ ------------------- ------------------
Total from investment operations (26.57) 64.44 93.01
------------------ ------------------- ------------------
Less distributions
to Certificateholders
Income 47.80 52.68 55.10
Principal - 119.76 3.94
for Redemptions
Interest .84 1.10 .62
------------------ ------------------- ------------------
Total distributions 48.64 173.54 59.66
------------------ ------------------- ------------------
Net asset value, end of year** $ 853.81 $929.02 $1,038.12
================== =================== ==================
</TABLE>
(1) Net gain or loss on investments is a result of changes in outstanding units
since January 1, 1999, 1998 and 1997, respectively, and the dates of net gain
and loss on investments.
- ----------------
* Unless otherwise stated, based upon average units outstanding during the
year of 3,266 ([3,160 + 3,372]/2) for 1999, 3,524 ([3,372 + 3,675]/2) for
1998 and of 3,772 ([3,675 + 3,869]/2) for 1997.
** Based upon actual units outstanding.
The accompanying notes form an integral part of the financial statements.
<PAGE>
Insured Municipal Securities Trust, Series 31
Notes to Financial Statements
December 31, 1999
1. Organization
Insured Municipal Securities Trust, Series 31 (the "Trust") was organized on
April 29, 1993 by Bear, Stearns & Co. Inc. and Gruntal & Co., Incorporated under
the laws of the State of New York by a Trust Indenture and Agreement, and is
registered under the Investment Company Act of 1940. The Trust was formed to
preserve capital and to provide interest income.
On September 28, 1995, Reich & Tang Distributors, Inc. ("Reich & Tang") had
become the successor sponsor to certain of the unit investment trusts previously
sponsored by Bear, Stearns & Co. Inc. As successor sponsor, Reich & Tang had
assumed all of the obligations and rights of Bear, Stearns & Co. Inc., the
previous sponsor.
Effective February 9, 2000, Gruntal & Co. resigned as a co-sponsor of certain
unit investment trusts previously co-sponsored with Reich & Tang. ING Funds
Distributor, Inc. ("ING") has become the successor sponsor to certain unit
investment trusts previously sponsored by Reich & Tang. As successor sponsor,
ING has assumed all of the obligations and rights of Reich & Tang, the previous
sponsor.
2. Summary of Significant Accounting Policies
The following is a summary of significant accounting policies consistently
followed by the Trust in preparation of its financial statements. The policies
are in conformity with generally accepted accounting principles ("GAAP"). The
preparation of financial statements in accordance with GAAP requires management
to make estimates and assumptions that affect the reported amounts and
disclosures in the financial statements. Actual amounts could differ from those
estimates.
Interest Income
Interest income is recorded on the accrual basis. The discount on the
zero-coupon bonds is accreted by the interest method over the respective lives
of the bonds. The accretion of such discount is included in interest income;
however, it is not distributed until realized in cash upon maturity or sale of
the respective bonds.
<PAGE>
Insured Municipal Securities Trust, Series 31
Notes to Financial Statements (continued)
2. Summary of Significant Accounting Policies (continued)
Security Valuation
Investments are carried at market value which is determined by Kenny S&P
Evaluation Services, a business unit of J.J. Kenny Company, Inc., a subsidiary
of the McGraw-Hill Companies, Inc. The market value of the portfolio is based
upon the bid prices for the bonds at the end of the year, which approximates the
fair value of the security at that date, except that the market value on the
date of deposit represents the cost to the Trust based on the offering prices
for investments at that date. The difference between cost (including accumulated
accretion of original issue discount on zero-coupon bonds) and market value is
reflected as unrealized appreciation (depreciation) of investments. Securities
transactions are recorded on the trade date. Realized gains (losses) from
securities transactions are determined on the basis of average cost of the
securities sold or redeemed.
3. Income Taxes
No provision for federal income taxes has been made in the accompanying
financial statements because the Trust intends to continue to qualify for the
tax treatment applicable to Grantor Trusts under the Internal Revenue Code.
Under existing law, if the Trust so qualifies, it will not be subject to federal
income tax on net income and capital gains that are distributed to unitholders.
4. Trust Administration
The Chase Manhattan Bank (the "Trustee") has custody of assets and
responsibility for the accounting records and financial statements of the Trust
and is responsible for establishing and maintaining a system of internal control
related thereto. The Trustee is also responsible for all estimates of expenses
and accruals reflected in the Trust's financial statements.
The Trust Indenture and Agreement provides for interest distributions as often
as monthly (depending upon the distribution plan elected by the
Certificateholders).
The Trust Indenture and Agreement further requires that principal received from
the disposition of bonds, other than those bonds sold in connection with the
redemption of units, be distributed to Certificateholders.
<PAGE>
Insured Municipal Securities Trust, Series 31
Notes to Financial Statements (continued)
4. Trust Administration (continued)
The Trust Indenture and Agreement also requires the Trust to redeem units
tendered. For the years ended December 31, 1999, 1998 and 1997, 212, 303 and 194
units were redeemed, respectively.
The Trust pays an annual fee for trustee services rendered by the Trustee that
ranges from $.36 to $1.10 per $1,000 of outstanding investment principal. In
addition, a minimum fee of $8.00 is paid to a service bureau for each portfolio
valuation. A maximum fee of $.25 per $1,000 of outstanding investment principal
is paid to the Sponsor. For the years ended December 31, 1999, 1998 and 1997,
the "Trustee's Fees" are comprised of Trustee fees of $2,864, $3,541 and $3,676
and other expenses of $3,231, $3,481 and $3,881, respectively. The other
expenses include professional, printing and miscellaneous fees.
5. Net Assets
At December 31, 1999, the net assets of the Trust represented the interest of
Certificateholders as follows:
Original cost to Certificateholders $ 4,069,629
Less initial gross underwriting commission 199,412
-------------------
3,870,217
Accumulated cost of securities sold, matured or called (1,200,713)
Net unrealized depreciation (15,249)
Undistributed net investment income 48,098
Distributions in excess of proceeds from investments (4,302)
-------------------
Total $ 2,698,051
===================
The original cost to Certificateholders, less the initial gross underwriting
commission, represents the aggregate initial public offering price net of the
applicable sales charge on 4,000 units of fractional undivided interest of the
Trust as of the date of deposit.
Undistributed net investment income includes accumulated accretion of original
issue discount of $18,151.
<PAGE>
Insured Municipal Securities Trust, Series 31
Notes to Financial Statements (continued)
6. Concentration of Credit Risk
Since the Trust invests a portion of its assets in municipal bonds, it may be
affected by economic and political developments in the municipalities. Certain
debt obligations held by the Trust may be entitled to the benefit of insurance,
standby letters of credit or other guarantees of banks or other financial
institutions.
<PAGE>
Prospectus Part A Dated April 30, 2000
INSURED MUNICIPAL SECURITIES TRUST
NEW YORK NAVIGATOR INSURED
SERIES 14
The Trust is a unit investment trust designated Series 14 ("New York
Navigator Trust") with an underlying portfolio of long-term insured tax- exempt
bonds and was formed to preserve capital and to provide interest income which,
in the opinions of bond counsel to the respective issuers, is, with certain
exceptions, currently exempt from regular federal income tax under existing law
and from New York State and City personal income tax. There can be no assurance
that the Trust's investment objectives will be achieved. Although the Supreme
Court has determined that Congress has the authority to subject the interest on
bonds such as the Bonds in the Trust to federal income taxation, existing law
excludes such interest from regular federal income tax. Such interest income
may, however, be a specific preference item for purposes of the federal
individual and corporate alternative minimum tax. (See "Description of
Portfolio" in this Part A for a list of those Bonds, if any, which pay interest
income subject to the federal individual alternative minimum tax.) In addition,
capital gains are subject to tax. (See "Tax Status" and "The Trust--Portfolio"
in Part B of this Prospectus.) The Sponsor is ING Funds Distributor, Inc.
(successor to Reich & Tang Distributors, Inc.). The value of the Units of the
Trust will fluctuate with the value of the underlying bonds. Minimum purchase: 1
Unit.
This Prospectus consists of two parts. Part A contains the Summary of
Essential Information as of December 31, 1999 (the "Evaluation Date"), a summary
of certain specific information regarding the Trust and audited financial
statements of the Trust, including the related portfolio, as of the Evaluation
Date. Part B of this Prospectus contains a general summary of the Trust. Part A
of this Prospectus may not be distributed unless accompanied by Part B.
Investors should retain both parts of this Prospectus for future reference. The
Securities and Exchange Commission ("SEC") maintains a website that contains
reports, proxy and information statements and other information regarding the
Trust which is filed electronically with the SEC. The SEC's Internet address is
http:www.sec.gov. Offering materials for the sale of these units available
through the Internet are not being offered directly or indirectly to residents
of a particular state nor is an offer of these units through the Internet
specifically directed to any person in a state by, or on behalf of, the issuer.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE 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 TRUST. The Trust seeks to achieve its investment objectives
through investment in a fixed, diversified portfolio of long-term insured bonds
(the "Bonds") issued by or on behalf of states, municipalities and public
authorities which, because of irrevocable insurance, were rated "AAA"
176206.1
<PAGE>
by Standard & Poor's Rating Services, a division of The McGraw-Hill Companies.
All of the Bonds in the Trust were rated "AAA" by Standard & Poor's Corporation
at the time originally deposited in the Trust (see "Portfolio"). This rating
results from insurance relating only to the Bonds in the Trust and not to Units
of the Trust. The insurance does not remove market risk, as it does not
guarantee the market value of the Units. For a discussion of the significance of
such ratings, see "Description of Bond Ratings" in Part B of this Prospectus.
Some of the aggregate principal amount of the Bonds in the Trust may
be "Zero Coupon Bonds," which are original issue discount bonds that provide for
payment at maturity at par value, but do not provide for the payment of current
interest (for the amount of Zero Coupon Bonds in each Trust, and the cost of
such Bonds to that Trust, see "Description of Portfolio" in this Part A). The
payment of interest and preservation of capital are, of course, dependent upon
the continuing ability of the issuers of the Bonds or the insurer thereof to
meet their obligations.
Investment in the Trust should be made with an understanding of the
risks which an investment in long-term fixed rate debt obligations may entail,
including the risk that the value of the underlying portfolio will decline with
increases in interest rates, and that the value of Zero Coupon Bonds is subject
to greater fluctuation than coupon bonds in response to such changes in interest
rates. A Trust designated as a long-term trust must have a dollar-weighted
average portfolio maturity of more than ten years. (See "Portfolio" in Part B of
this Prospectus.)
Each Unit in the Trust represents a 1/5799th undivided interest in the
principal and net income of the Trust. The principal amount of Bonds deposited
in the Trust per Unit is reflected in the Summary of Essential Information. (See
"Organization" in Part B of this Prospectus.) The Units being offered hereby are
issued and outstanding Units which have been purchased by the Sponsor in the
secondary market.
INSURANCE. Each of the Bonds in the New York Navigator Trust is
insured by a municipal bond guaranty insurance policy obtained by the Sponsor
(the "Navigator Sponsor-Insured Bonds") from MBIA Insurance Corporation ("MBIA
Corp.") covering regularly scheduled payments of principal thereof and interest
thereon when such amounts become due for payment but shall not have been paid.
For discussion of the effect of an occurrence of non-payment of principal or
interest on any Bonds in the New York Navigator Trust see "Portfolio
Supervision" in Part B of this Prospectus. The premiums for the Navigator
Sponsor-Insured Bonds are obligations of the Sponsor. Additionally, some of the
Bonds in the New York Navigator Trust may be Pre- Insured Bonds (as described
below). The premium for the Pre-Insured Bonds is an obligation of the issuers,
underwriters or prior owners of those Bonds. The insurance policy or policies
relating to the Navigator Sponsor-Insured Bonds provides that, to the extent
that Bonds are both Pre-Insured Bonds and Navigator Sponsor-Insured Bonds,
coverage is effective after a claim has been made upon the insurer of the
Pre-Insured Bonds.
Some of the Bonds in the New York Navigator Trust may additionally be
insured by a municipal bond guaranty insurance policy obtained by issuers,
underwriters or prior owners of the Bonds ("Pre-Insured Bonds") and issued by
one of the insurance companies described under "Insurance on the Bonds" in Part
B of this Prospectus (the "Insurance Companies").
None of the insurance will cover accelerated payments of principal or
penalty interest or premiums unrelated to taxability of interest on the Bonds.
The insurance relates only to the prompt payment of principal of and interest on
the securities in the portfolios, and does not remove market risks
A-2
176206.1
<PAGE>
nor does it guarantee the market value of Units in the Trusts. The terms of the
insurance are more fully described herein. No representation is made herein as
to any Bond insurer's ability to meet its obligations under a policy of
insurance relating to any of the Pre-Insured Bonds. In addition, investors
should be aware that subsequent to the Date of Deposit the rating of the
claims-paying ability of the insurer of an underlying Pre-Insured Bond may be
downgraded.
All of the Bonds in the New York Navigator Trust are covered by
insurance obtained by the Sponsors from MBIA Corp. and 16.5% of the Bonds in the
New York Navigator Trust are Pre-Insured Bonds. The approximate percentage of
the aggregate principal amount of the Portfolio that is insured by each
Insurance Company with respect to Pre-Insured Bonds is as follows: Financial
Guaranty Insurance Company ("Financial Guaranty"), 16.5%.
PUBLIC OFFERING PRICE. The secondary market Public Offering Price of
each Unit is equal to the aggregate offering price of the Bonds in such Trust
divided by the number of Units outstanding, plus a sales charge of 3.8% of the
Public Offering Price, or 3.950% of the net amount invested in Bonds per Unit.
In addition, accrued interest to the expected date of settlement is added to the
Public Offering Price. If Units had been purchased on the Evaluation Date, the
Public Offering Price per Unit would have been $982.86 plus accrued interest of
$5.92 under the monthly distribution plan, $10.43 under the semi-annual
distribution plan and $10.57 under the annual distribution plan, for a total of
$988.78, $993.29 and $993.43, respectively. The Public Offering Price per Unit
can vary on a daily basis in accordance with fluctuations in the aggregate bid
price of the Bonds. (See "Public Offering--Offering Price" in Part B of this
Prospectus.)
ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN. Units of each
Trust are offered to investors on a "dollar price" basis (using the computation
method described under "Public Offering--Offering Price" in Part B) as
distinguished from a "yield price" basis often used in offerings of tax exempt
bonds (involving the lesser of the yield as computed to maturity of bonds or to
an earlier redemption date). Since they are offered on a dollar price basis, the
rate of return on an investment in Units of each Trust is measured in terms of
"Estimated Current Return" and "Estimated Long Term Return".
Estimated Long Term Return is calculated by: (1) computing the yield
to maturity or to an earlier call date (whichever results in a lower yield) for
each Bond in the Trust's portfolio in accordance with accepted bond practices,
which practices take into account not only the interest payable on the Bond but
also the amortization of premiums or accretion of discounts, if any; (2)
calculating the average of the yields for the Bonds in the Trust's portfolio by
weighing each Bond's yield by the market value of the Bond and by the amount of
time remaining to the date to which the Bond is priced (thus creating an average
yield for the portfolio of the Trust); and (3) reducing the average yield for
the portfolio of the Trust in order to reflect estimated fees and expenses of
the Trust and the maximum sales charge paid by investors. The resulting
Estimated Long Term Return represents a measure of the return to investors
earned over the estimated life of the Trust. (For the Estimated Long Term Return
to Certificateholders under the monthly, semi-annual and annual distribution
plans, see "Summary of Essential Information".)
Estimated Current Return is a measure of the Trust's cash flow.
Estimated Current Return is computed by dividing the Estimated Net Annual
A-3
176206.1
<PAGE>
Interest Income per Unit by the Public Offering Price per Unit. In contrast to
the Estimated Long Term Return, the Estimated Current Return does not take into
account the amortization of premium or accretion of discount, if any, on the
Bonds in the portfolio of the Trust. Moreover, because interest rates on Bonds
purchased at a premium are generally higher than current interest rates on newly
issued bonds of a similar type with comparable rating, the Estimated Current
Return per Unit may be affected adversely if such Bonds are redeemed prior to
their maturity.
The Estimated Net Annual Interest Income per Unit of the Trust will
vary with changes in the fees and expenses of the Trustee and the Evaluator
applicable to the Trust and with the redemption, maturity, sale or other
disposition of the Bonds in the Trust. The Public Offering Price will vary with
changes in the bid prices of the Bonds. Therefore, there is no assurance that
the present Estimated Current Return or Estimated Long Term Return will be
realized in the future. (For the Estimated Current Return to Certificateholders
under the monthly, semi-annual and annual distribution plans, see "Summary of
Essential Information". See "Estimated Long Term Return and Estimated Current
Return" in Part B of this Prospectus.)
A schedule of cash flow projections is available from the Sponsors
upon request.
DISTRIBUTIONS. Distributions of interest income, less expenses, will
be made by the Trust either monthly, semi-annually or annually depending upon
the plan chosen by the Certificateholder. Certificateholders purchasing Units in
the secondary market will initially receive distributions in accordance with the
elections of the prior owner and may thereafter change the plan as provided
under "Interest and Principal Distributions" in Part B of this Prospectus.
Distributions of principal, if any, will be made semi- annually on June 15 and
December 15 of each year. (See "Rights of Certificateholders--Interest and
Principal Distributions" in Part B of this Prospectus. For estimated monthly,
semi-annual and annual interest distributions, see "Summary of Essential
Information.")
MARKET FOR UNITS. The Sponsor, although not obligated to do so,
intends to maintain a secondary market for the Units at a price based on the
aggregate bid price of the Bonds in the Trust portfolio. The reoffer price will
be based on the aggregate bid price of the Bonds plus a sales charge of 3.8% of
the Public Offering Price (3.950% of the net amount invested), plus net accrued
interest. If a market is not maintained a Certificateholder will be able to
redeem his or her Units with the Trustee at a price based on the aggregate bid
price of the Bonds. (See "Sponsor Repurchase" and "Public Offering--Offering
Price" in Part B of this Prospectus.)
A-4
176206.1
<PAGE>
INSURED MUNICIPAL SECURITIES TRUST
NEW YORK NAVIGATOR INSURED
SERIES 14
<TABLE>
SUMMARY OF ESSENTIAL INFORMATION AS OF DECEMBER 31, 1999
--------------------------------------------------------
<S> <C> <C>
Date of Deposit*: April 29, 1993 Weighted Average Life to
Principal Amount of Bonds ... $5,860,000 Maturity: 12.4 Years.
Number of Units ............. 5,799 Minimum Value of Trust:
Fractional Undivided Inter- Trust may be terminated if
est in Trust per Unit ..... 1/5799 value of Trust is less than
Principal Amount of $2,800,000 in principal amount
Bonds per Unit ............ $1,010.52 of Bonds.
Secondary Market Public Mandatory Termination Date:
Offering Price** The earlier of December 31,
Aggregate Bid Price 2042 or the disposition of the
of Bonds in Trust ..... $5,484,664++ last Bond in the Trust.
Divided by 5,799 Units .... $945.79 Trustee***: The Chase Manhattan
Plus Sales Charge of 3.8% Bank.
of Public Offering Price $37.07 Trustee's Annual Fee: Monthly
Public Offering Price plan $1.04 per $1,000; semi-
per Unit ................ $982.86+ annual plan $.56 per $1,000;
Redemption and Sponsor's and annual plan is $.37 per
Repurchase Price $1,000.
per Unit .................. $945.79+ Evaluator: Kenny S&P Evaluation
+++ Services.
++++ Evaluator's Fee for Each
Excess of Secondary Market Evaluation: Minimum of $8 plus
Public Offering Price $.25 per each issue of Bonds in
over Redemption and excess of 50 issues (treating
Sponsor's Repurchase separate maturities as separate
Price per Unit ............ $37.07++++ issues).
Difference between Public Sponsor: ING Funds Distributor,
Offering Price per Unit Inc.
and Principal Amount per Sponsor's Annual Fee: Maximum
Unit Premium/(Discount) ... $(27.66) of $.25 per $1,000 principal
Evaluation Time: 4:00 p.m. amount of Bonds (see "Trust
New York Time. Expenses and Charges" in Part B
Minimum Principal Distribution: of this Prospectus).
$1.00 per Unit.
</TABLE>
<TABLE>
<CAPTION>
PER UNIT INFORMATION BASED UPON INTEREST DISTRIBUTION PLAN ELECTED
------------------------------------------------------------------
Monthly Semi-Annual Annual
Option Option Option
------ ----------- ------
<S> <C> <C> <C>
Gross annual interest income# ......... $55.74 $55.74 $55.74
Less estimated annual fees and
expenses ............................ 1.90 1.40 --
Estimated net annual interest ______ ______ ______
income (cash)# ...................... $53.84 $54.34 $55.74
Estimated interest distribution# ...... 4.48 27.17 55.74
Estimated daily interest accrual# ..... .1495 .1509 .1548
Estimated current return#++ ........... 5.48% 5.53% 5.67%
Estimated long term return++ .......... 5.30% 5.35% 5.33%
Record dates .......................... 1st of Dec. 1 and Dec. 1
each month June 1
Interest distribution dates ........... 15th of Dec. 15 and Dec. 15
each month June 15
A-5
</TABLE>
176206.1
<PAGE>
Footnotes to Summary of Essential Information
* The Date of Deposit is the date on which the Trust Agreement was signed
and the deposit of the Bonds with the Trustee made.
** Certain amounts distributable as of December 31, 1999, may be reported
in the Summary of Essential Information as if they had been distributed
at year-end.
*** The Trustee maintains its principal executive office at 270 Park
Avenue, New York, New York 10017 and its unit investment trust office
at 4 New York Plaza, New York, New York 10004 (tel. no.:
1-800-882-9898). For information regarding redemption by the Trustee,
see "Trustee Redemption" in Part B of this Prospectus.
+ Plus accrued interest to the expected date of settlement (approximately
three business days after purchase) of $5.92 monthly, $10.43 semi-
annually and $10.57 annually.
++ The estimated current return and estimated long term return are
increased for transactions entitled to a discount (see "Employee
Discounts" in Part B of this Prospectus), and are higher under the
semi-annual and annual options due to lower Trustee's fees and
expenses.
+++ Based solely upon the bid side evaluation of the underlying Bonds
(including, where applicable, undistributed cash from the principal
account). Upon tender for redemption, the price to be paid will be
calculated as described under "Trustee Redemption" in Part B of this
Prospectus.
++++ See "Comparison of Public Offering Price, Sponsor's Repurchase Price
and Redemption Price" in Part B of this Prospectus.
# Does not include income accrual from original issue discount bonds, if
any.
FINANCIAL AND STATISTICAL INFORMATION
Selected data for each Unit outstanding for the periods listed below:
<TABLE>
<CAPTION>
Distribu-
Distributions of Interest tions of
During the Period (per Unit) Principal
---------------------------- During
Net Asset* Semi- the
Units Out- Value Monthly Annual Annual Period
Period Ended standing Per Unit Option Option Option (Per Unit)
- ------------ ---------- ---------- ------- ------ ------ ----------
<S> <C> <C> <C> <C> <C> <C>
December 31, 1997 6,740 $1,020.08 $54.50 $55.07 - $2.81
December 31, 1998 6,133 1,023.40 54.11 54.66 - 4.48
December 31, 1999 5,799 955.92 54.23 54.78 - 2.63
</TABLE>
- -------------
* Net Asset Value per Unit is calculated by dividing net assets as
disclosed in the "Statement of Net Assets" by the number of Units
outstanding as of the date of the Statement of Net Assets. See Note 5
of Notes to Financial Statements for a description of the components of
Net Assets.
A-6
176206.1
<PAGE>
INFORMATION REGARDING THE TRUST
AS OF DECEMBER 31, 1999
DESCRIPTION OF PORTFOLIO*
- ------------------------
The portfolio of the Trust consists of 9 issues representing
obligations of 8 issuers located in the state of New York and one in Puerto
Rico. The Sponsor has participated as a sole underwriter or manager, co- manager
or member of underwriting syndicates from which any of the initial aggregate
principal amount of the Bonds were acquired. None of the Bonds are obligations
of state and local housing authorities; approximately 30.0%** are hospital
revenue bonds; none were issued in connection with the financing of nuclear
generating facilities; and none are "mortgage subsidy" bonds. All of the Bonds
in the Trust are subject to redemption prior to their stated maturity dates
pursuant to sinking fund or optional call provisions. The Bonds may also be
subject to other calls, which may be permitted or required by events which
cannot be predicted (such as destruction, condemnation, termination of a
contract, or receipt of excess or unanticipated revenues). Two of the issues
representing $695,000 of the principal amount of the Bonds are general
obligation bonds. All seven of the remaining issues representing $5,165,000 of
the principal amount of the Bonds are payable from the income of a specific
project or authority and are not supported by the issuer's power to levy taxes.
The portfolio is divided for purpose of issue as follows: Civic Facility 1,
Commuter Facility 1, Hospital 3, Local Government Assistance 1 and Water 1. For
an explanation of the significance of these factors see "The Trust--Portfolio"
in Part B of this Prospectus.
As of December 31, 1999 $2,520,000 (approximately 43.0% of the
aggregate principal amount of the Bonds) were original issue discount bonds. Of
these original issue discount bonds, $470,000 (approximately 8.0% of the
aggregate principal amount of the Bonds) were Zero Coupon Bonds. Zero Coupon
Bonds do not provide for the payment of any current interest and provide for
payment at maturity at par value unless sooner sold or redeemed. The market
value of Zero Coupon Bonds is subject to greater fluctuations than coupon bonds
in response to changes in interest rates. None of the aggregate principal amount
of the Bonds in the Trust were purchased at a "market" discount from par value
at maturity, approximately 57.0% were purchased at a premium and none were
purchased at par. For an explanation of the significance of these factors see
"Discount and Zero Coupon Bonds" in Part B of this Prospectus.
None of the Bonds in the Trust are subject to the federal individual
alternative minimum tax under the Tax Reform Act of 1986. See "Tax Status" in
Part B of this Prospectus.
_________________
* Changes in the Trust Portfolio: From January 1, 2000 to March 15, 2000,
$85,000 of the principal amount of the Bond in portfolio no. 5 was sold
and is no longer contained in the Trust. 60 Units were redeemed from the
Trust.
** A trust is considered to be "concentrated" in a particular category or
industry when the securities in that category or industry consitute 25%
or more of the aggregate face amount of the portfolio. See Part B for
disclosure, including risk factors, regarding this concentration.
A-7
176206.1
<PAGE>
Report of Independent Auditors
The Sponsor, Trustee and Certificateholders of
Insured Municipal Securities Trust, New York Navigator Insured Series 14
We have audited the accompanying statement of net assets of Insured Municipal
Securities Trust, New York Navigator Insured Series 14, including the portfolio,
as of December 31, 1999 and the related statements of operations, and changes in
net assets and financial highlights for the year then ended. These financial
statements and financial highlights are the responsibility of the Trustee. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit. The statement of operations, statement
of changes in net assets and financial highlights for each of the two years in
the period ended December 31, 1998 were audited by other auditors whose report
thereon dated March 19, 1999, expressed an unqualified opinion on those
financial statements and financial highlights.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of the securities
owned by correspondence with the Trustee. An audit also includes assessing the
accounting principles used and significant estimates made by the Trustee, as
well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the 1999 financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Insured Municipal Securities Trust, New York Navigator Insured Series 14 at
December 31, 1999, the results of its operations, changes in its net assets and
financial highlights for the year then ended, in conformity with accounting
principles generally accepted in the United States.
/s/ERNST & YOUNG LLP
New York, New York
April 15, 2000
<PAGE>
<TABLE>
<CAPTION>
Insured Municipal Securities Trust
New York Navigator Insured Series 14
Portfolio
December 31, 1999
Redemption
Aggregate Coupon Feature (2)(4)
Portfolio Principal Rate/Date(s) S.F.-Sinking Fund Market
No. Amount Name of Issuer and Title of Bonds Ratings of Maturity Ref.-Refunding Value (3)
(1) (2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 $1,050,000 N.Y. Local Gov. Asstnce Corp. (A Pub. AAA 5.500% 4/01/17 @ 100 S.F. $ 977,781
Benefit Corp. of the State of N.Y.) Rev. 4/01/2021 4/01/03 @ 102 Ref.
Rfndg. Bonds Series 1993B (MBIA Corp.)
2 955,000 N.Y. State Med. Care Facs. Finc. Agncy. AAA 6.375 2/15/11 @ 100 S.F. 1,006,580
Rev. Bonds Mental Hlth. Servs. Fac. 8/15/2017 2/15/02 @ 102 Ref.
Series A (MBIA Corp.)
2A 10,000 N.Y. State Med. Care Facs. Finc. Agncy. AAA 6.375 2/15/11 @ 100 S.F. 10,315
Rev. Bonds Mental Hlth. Servs. Fac. 8/15/2017 2/15/02 @ 102 Ref.
Series A (MBIA Corp.) (Unrefunded Balance)
3 225,000 N.Y. State Med. Care Facs. Finc. Agncy. AAA 6.375 No Sinking Fund 225,727
Hosp. & Nrsg. Home FHA-Insrd. Mtg. 8/15/2029 8/15/02 @ 102 Ref.
Rev. Bonds Series 1992C (MBIA Corp.)
4 555,000 N.Y. State Med. Care Facs. Finc. Agncy. AAA 6.450 No Sinking Fund 592,379
Rev. Bonds Hosp. & Nrsg. Home 2/15/2032 2/15/03 @ 102 Ref.
FHA-Insrd. Mtg. Loan Series D (MBIA Corp.)
5 900,000 Metro. Trans. Auth. Commtr. Facs. 1987 AAA 6.000 7/01/17 @ 100 S.F. 908,865
Serv. Cntrct. Rev. Bonds Series 3 7/01/2019 7/01/00 @ 100 Ref.
(MBIA Corp.)
6 40,000 N.Y. City Genl. Oblig. Rev. Bonds Series A AAA 6.500 No Sinking Fund 42,353
1993 (MBIA Corp.) 8/01/2014 8/01/02 @ 101.5 Ref.
6A 595,000 N.Y. City Genl. Oblig. Rev. Bonds Series A AAA 6.500 No Sinking Fund 625,238
1993 (MBIA Corp.) (Unrefunded Balance) 8/01/2014 8/01/02 @ 101.5 Ref.
7 1,000,000 N.Y. City Muni. Wtr. Finc. Auth. Wtr. & AAA 5.500 6/15/18 @ 100 S.F. 934,810
Swr. Sys. Rev. Bonds Fiscal 1993 6/15/2020 6/15/02 @ 100 Ref.
Series A (MBIA Corp.)
8 60,000 Cmmnwlth. of P.R. Pub. Imprvmnt. Rfndg. AAA 6.000 7/01/11 @ 100 S.F. 61,301
Rev. Genl. Oblig. Rev. Bonds 7/01/2014 7/01/02 @ 101.5 Ref.
Series 1992 (MBIA Corp.)
9 470,000 Glencove N.Y. Ind. Dev. Agncy. Civic Fac. AAA 0.000 No Sinking Fund 127,807
Rev. Bonds (Regency at Glencove) 10/15/2019 None
Series B (MBIA Corp.)
----------- -------------
$5,860,000 Total Investments (Cost $5,640,398) $5,513,156
=========== =============
</TABLE>
See accompanying footnotes to portfolio and notes to financial statements.
<PAGE>
Insured Municipal Securities Trust
New York Navigator Insured Series 14
Footnotes to Portfolio
1 All ratings are by Kenny S&P Evaluation Services, a business unit of J.J.
Kenny Company, Inc., a subsidiary of The McGraw-Hill Companies, Inc. A brief
description of the ratings symbols and their meaning is set forth under
"Description of Bond Ratings" in Part B of the Prospectus.
2. See "The Trust--Portfolio" in Part B of the Prospectus for an explanation of
redemption features. See "Tax Status" in Part B of the Prospectus for a
statement of the Federal tax consequences to a Certificateholder upon the
sale, redemption or maturity of a bond.
3. At December 31, 1999, the net unrealized depreciation of all the bonds was
comprised of the following:
Gross unrealized appreciation $ 2,286
Gross unrealized depreciation (129,528)
------------------
Net unrealized depreciation $ (127,242)
==================
4. The Bonds may also be subject to other calls, which may be permitted or
required by events which cannot be predicted (such as destruction,
condemnation, termination of a contract, or receipt of excess of
unanticipated revenues).
The accompanying notes form an integral part of the financial statements.
<PAGE>
Insured Municipal Securities Trust
New York Navigator Insured Series 14
Statement of Net Assets
December 31, 1999
Investments in securities, at market value (cost $5,640,398) $ 5,513,156
Other assets
Accrued interest 105,062
------------------
Total other assets 105,062
------------------
Liabilities
Advance from Trustee 74,821
------------------
Total liabilities 74,821
------------------
Excess of other assets over total liabilities 30,241
------------------
Net assets (5,799 units of fractional undivided
interest outstanding, $955.92 per unit) $ 5,543,397
==================
The accompanying notes form an integral part of the financial statements.
<PAGE>
<TABLE>
<CAPTION>
Insured Municipal Securities Trust
New York Navigator Insured Series 14
Statement of Operations
Year ended December 31,
1999 1998 1997
-------------------------------------------------------
Investment income
<S> <C> <C> <C>
Interest $ 355,353 $ 354,363 $ 387,236
Expenses
Trustee's fees 8,362 9,274 9,662
Evaluator's fee 2,250 2,435 2,009
Sponsor's advisory fee 1,540 1,685 1,723
-------------------------------------------------------
Total expenses 12,152 13,394 13,394
-------------------------------------------------------
Net investment income 343,201 340,969 373,842
-------------------------------------------------------
Realized and unrealized gain (loss)
Realized gain on investments 3,268 26,656 (1,141)
Unrealized appreciation (depreciation)
on investments (408,190) 23,107 239,172
-------------------------------------------------------
Net gain (loss) on investments (404,922) 49,763 238,031
-------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations $ (61,721) $ 390,732 $ 611,873
=======================================================
</TABLE>
The accompanying notes form an integral part of the financial statements.
<PAGE>
<TABLE>
<CAPTION>
Insured Municipal Securities Trust
New York Navigator Insured Series 14
Statement of Changes in Net Assets
Year ended December 31,
1999 1998 1997
---------------------------------------------------------
Operations
<S> <C> <C> <C>
Net investment income $ 343,201 $ 340,969 $ 373,842
Realized gain on investments 3,268 26,656 (1,141)
Unrealized appreciation (depreciation)
on investments (408,190) 23,107 239,172
---------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations (61,721) 390,732 611,873
---------------------------------------------------------
Distributions to certificateholders
Investment income 324,101 339,098 371,940
Principal 15,885 27,624 19,054
Redemptions
Interest 3,002 6,751 570
Principal 328,395 616,094 71,111
---------------------------------------------------------
Total distributions and redemptions 671,383 989,567 462,675
---------------------------------------------------------
Total increase (decrease) (733,104) (598,835) 149,198
Net assets
Beginning of year 6,276,501 6,875,336 6,726,138
---------------------------------------------------------
End of year (including undistributed net investment
income of $106,242, $90,144 and $95,024,
respectively) $ 5,543,397 $ 6,276,501 $ 6,875,336
=========================================================
</TABLE>
The accompanying notes form an integral part of the financial statements.
<PAGE>
<TABLE>
<CAPTION>
Insured Municipal Securities Trust
New York Navigator Insured Series 14
Financial Highlights
Selected data for a unit of the Trust outstanding:*
Year ended December 31,
1999 1998 1997
---------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of year** $ 1,023.40 $ 1,020.08 $ 987.54
---------------------------------------------------------
Interest income 59.56 55.05 57.15
Expenses (2.04) (2.08) (1.98)
---------------------------------------------------------
Net investment income 57.52 52.97 55.17
---------------------------------------------------------
Net gain or loss on investments (1) (67.52) 8.37 35.15
---------------------------------------------------------
Total from investment operations (10.00) 61.34 90.32
---------------------------------------------------------
Less distributions
to Certificateholders
Income 54.32 52.68 54.89
Principal 2.66 4.29 2.81
for Redemptions
Interest .50 1.05 .08
---------------------------------------------------------
Total distributions 57.48 58.02 57.78
---------------------------------------------------------
Net asset value, end of year** $ 955.92 $ 1,023.40 $ 1,020.08
=========================================================
</TABLE>
(1) Net gain or loss on investments is a result of changes in outstanding units
since January 1, 1999, 1998 and 1997, respectively, and the dates of net gain
and loss on investments.
* Unless otherwise stated, based upon average units outstanding during the
year of 5,966 ([5,799 + 6,133]/2) for 1999, 6,437 ([6,133 + 6,740]/2) for
1998 and of 6,776 ([6,740 + 6,811]/2) for 1997.
** Based upon actual units outstanding.
The accompanying notes form an integral part of the financial statements.
<PAGE>
Insured Municipal Securities Trust
New York Navigator Insured Series 14
Notes to Financial Statements
December 31, 1999
1. Organization
Insured Municipal Securities Trust, New York Navigator Insured Series 14 (the
"Trust") was organized on April 29, 1993 by Bear, Stearns & Co. Inc. and Gruntal
& Co., Incorporated under the laws of the State of New York by a Trust Indenture
and Agreement, and is registered under the Investment Company Act of 1940. The
Trust was formed to preserve capital and to provide interest income.
On September 28, 1995, Reich & Tang Distributors, Inc. ("Reich & Tang") had
become the successor sponsor to certain of the unit investment trusts previously
sponsored by Bear, Stearns & Co. Inc. As successor sponsor, Reich & Tang had
assumed all of the obligations and rights of Bear, Stearns & Co. Inc., the
previous sponsor.
Effective February 9, 2000, Gruntal & Co. resigned as a co-sponsor of certain
unit investment trusts previously co-sponsored with Reich & Tang. ING Funds
Distributor, Inc. ("ING") has become the successor sponsor to certain unit
investment trusts previously sponsored by Reich & Tang. As successor sponsor,
ING has assumed all of the obligations and rights of Reich & Tang, the previous
sponsor.
2. Summary of Significant Accounting Policies
The following is a summary of significant accounting policies consistently
followed by the Trust in preparation of its financial statements. The policies
are in conformity with generally accepted accounting principles ("GAAP"). The
preparation of financial statements in accordance with GAAP requires management
to make estimates and assumptions that affect the reported amounts and
disclosures in the financial statements. Actual amounts could differ from those
estimates.
Interest Income
Interest income is recorded on the accrual basis. The discount on the
zero-coupon bonds is accreted by the interest method over the respective lives
of the bonds. The accretion of such discount is included in interest income;
however, it is not distributed until realized in cash upon maturity or sale of
the respective bonds.
<PAGE>
Insured Municipal Securities Trust
New York Navigator Insured Series 14
Notes to Financial Statements (continued)
2. Summary of Significant Accounting Policies (continued)
Security Valuation
Investments are carried at market value which is determined by Kenny S&P
Evaluation Services, a business unit of J.J. Kenny Company, Inc., a subsidiary
of the McGraw-Hill Companies, Inc. The market value of the portfolio is based
upon the bid prices for the bonds at the end of the year, which approximates the
fair value of the security at that date, except that the market value on the
date of deposit represents the cost to the Trust based on the offering prices
for investments at that date. The difference between cost (including accumulated
accretion of original issue discount on zero-coupon bonds) and market value is
reflected as unrealized appreciation (depreciation) of investments. Securities
transactions are recorded on the trade date. Realized gains (losses) from
securities transactions are determined on the basis of average cost of the
securities sold or redeemed.
3. Income Taxes
No provision for federal income taxes has been made in the accompanying
financial statements because the Trust intends to continue to qualify for the
tax treatment applicable to Grantor Trusts under the Internal Revenue Code.
Under existing law, if the Trust so qualifies, it will not be subject to federal
income tax on net income and capital gains that are distributed to unitholders.
4. Trust Administration
The Chase Manhattan Bank (the "Trustee") has custody of assets and
responsibility for the accounting records and financial statements of the Trust
and is responsible for establishing and maintaining a system of internal control
related thereto. The Trustee is also responsible for all estimates of expenses
and accruals reflected in the Trust's financial statements.
The Trust Indenture and Agreement provides for interest distributions as often
as monthly (depending upon the distribution plan elected by the
Certificateholders).
<PAGE>
Insured Municipal Securities Trust
New York Navigator Insured Series 14
Notes to Financial Statements (continued)
4. Trust Administration (continued)
The Trust Indenture and Agreement further requires that principal received from
the disposition of bonds, other than those bonds sold in connection with the
redemption of units, be distributed to Certificateholders.
The Trust Indenture and Agreement also requires the Trust to redeem units
tendered. For the years ended December 31, 1999, 1998 and 1997, 334, 607 and 71
units were redeemed, respectively.
The Trust pays an annual fee for trustee services rendered by the Trustee that
ranges from $.37 to $1.04 per $1,000 of outstanding investment principal. In
addition, a minimum fee of $8.00 is paid to a service bureau for each portfolio
valuation. A maximum fee of $.25 per $1,000 of outstanding investment principal
is paid to the Sponsor. For the years ended December 31, 1999, 1998 and 1997,
the "Trustee's Fees" are comprised of Trustee fees of $4,186, $5,190 and $5,379
and other expenses of $4,176, $4,084 and $4,283, respectively. The other
expenses include professional, printing and miscellaneous fees.
5. Net Assets
At December 31, 1999, the net assets of the Trust represented the interest of
Certificateholders as follows:
Original cost to Certificateholders $ 7,148,916
Less initial gross underwriting commission 350,297
-------------------
6,798,619
Accumulated cost of securities sold, matured or called (1,205,730)
Net unrealized depreciation (127,242)
Undistributed net investment income 106,242
Distributions in excess of proceeds from investments (28,492)
-------------------
Total $ 5,543,397
===================
<PAGE>
Insured Municipal Securities Trust
New York Navigator Insured Series 14
Notes to Financial Statements (continued)
5. Net Assets (continued)
The original cost to Certificateholders, less the initial gross underwriting
commission, represents the aggregate initial public offering price net of the
applicable sales charge on 7,000 units of fractional undivided interest of the
Trust as of the date of deposit.
Undistributed net investment income includes accumulated accretion of original
issue discount of $47,509.
6. Concentration of Credit Risk
Since the Trust invests a portion of its assets in municipal bonds, it may be
affected by economic and political developments in the municipalities. Certain
debt obligations held by the Trust may be entitled to the benefit of insurance,
standby letters of credit or other guarantees of banks or other financial
institutions.
<PAGE>
Prospectus Part A Dated April 30, 2000
INSURED MUNICIPAL SECURITIES TRUST
NEW JERSEY NAVIGATOR INSURED
SERIES 10
The Trust is a unit investment trust designated Series 10 ("New Jersey
Navigator Trust") with an underlying portfolio of long-term insured tax-exempt
bonds and was formed to preserve capital and to provide interest income which,
in the opinions of bond counsel to the respective issuers, is, with certain
exceptions, currently exempt from regular federal income tax under existing law
and from New Jersey gross income tax. There can be no assurance that the Trust's
investment objectives will be achieved. Although the Supreme Court has
determined that Congress has the authority to subject the interest on bonds such
as the Bonds in the Trust to federal income taxation, existing law excludes such
interest from regular federal income tax. Such interest income may, however, be
a specific preference item for purposes of the federal individual and corporate
alternative minimum tax. (See "Description of Portfolio" in this Part A for a
list of those Bonds, if any, which pay interest income subject to the federal
individual alternative minimum tax.) In addition, capital gains are subject to
tax. (See "Tax Status" and "The Trust--Portfolio" in Part B of this Prospectus.)
The Sponsor is ING Funds Distributor, Inc. (successor to Reich & Tang
Distributors, Inc.). The value of the Units of the Trust will fluctuate with the
value of the underlying bonds. Minimum purchase: 1 Unit.
This Prospectus consists of two parts. Part A contains the Summary of
Essential Information as of December 31, 1999 (the "Evaluation Date"), a summary
of certain specific information regarding the Trust and audited financial
statements of the Trust, including the related portfolio, as of the Evaluation
Date. Part B of this Prospectus contains a general summary of the Trust. Part A
of this Prospectus may not be distributed unless accompanied by Part B .
Investors should retain both parts of this Prospectus for future reference. The
Securities and Exchange Commission ("SEC") maintains a website that contains
reports, proxy and information statements and other information regarding the
Trust which is filed electronically with the SEC. The SEC's Internet address is
http:www.sec.gov. Offering materials for the sale of these units available
through the Internet are not being offered directly or indirectly to residents
of a particular state nor is an offer of these units through the Internet
specifically directed to any person in a state by, or on behalf of, the issuer.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE 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 TRUST. The Trust seeks to achieve its investment objectives
through investment in a fixed, diversified portfolio of long-term insured bonds
(the "Bonds") issued by or on behalf of states, municipalities and public
authorities which, because of irrevocable insurance, were rated "AAA" by
Standard & Poor's Rating Services, a division of The McGraw-Hill Companies. All
of the Bonds in the Trust were rated "AAA" by Standard & Poor's
177333.1
A-1
<PAGE>
Corporation at the time originally deposited in the Trust (see "Portfolio").
This rating results from insurance relating only to the Bonds in the Trust and
not to Units of the Trust. The insurance does not remove market risk, as it does
not guarantee the market value of the Units. For a discussion of the
significance of such ratings, see "Description of Bond Ratings" in Part B of
this Prospectus. Some of the aggregate principal amount of the Bonds in the
Trust may be "Zero Coupon Bonds," which are original issue discount bonds that
provide for payment at maturity at par value, but do not provide for the payment
of current interest (for the amount of Zero Coupon Bonds in the Trust, and the
cost of such Bonds to the Trust, see "Description of Portfolio" in this Part A).
The payment of interest and preservation of capital are, of course, dependent
upon the continuing ability of the issuers of the Bonds or the insurer thereof
to meet their obligations.
Investment in the Trust should be made with an understanding of the
risks which an investment in long-term fixed rate debt obligations may entail,
including the risk that the value of the underlying portfolio will decline with
increases in interest rates, and that the value of Zero Coupon Bonds is subject
to greater fluctuation than coupon bonds in response to such changes in interest
rates. A Trust designated as a long-term trust must have a dollar-weighted
average portfolio maturity of more than ten years. (See "Portfolio" in Part B of
this Prospectus.)
Each Unit in the Trust represents a 1/4027th undivided interest in the
principal and net income of the Trust. The principal amount of Bonds deposited
in the Trust per Unit is reflected in the Summary of Essential Information. (See
"Organization" in Part B of this Prospectus.) The Units being offered hereby are
issued and outstanding Units which have been purchased by the Sponsor in the
secondary market.
INSURANCE. Each of the Bonds in the New Jersey Navigator Trust is
insured by a municipal bond guaranty insurance policy obtained by the Sponsor
(the "Navigator Sponsor-Insured Bonds") from MBIA Insurance Corporation ("MBIA
Corp.") covering regularly scheduled payments of principal thereof and interest
thereon when such amounts become due for payment but shall not have been paid.
For discussion of the effect of an occurrence of non-payment of principal or
interest on any Bonds in the New Jersey Navigator Trust see "Portfolio
Supervision" in Part B of this Prospectus. The premiums for the Navigator
Sponsor-Insured Bonds are obligations of the Sponsors. Additionally, some of the
Bonds in the New Jersey Navigator Trust may be Pre- Insured Bonds (as described
below). The premium for the Pre-Insured Bonds is an obligation of the issuers,
underwriters or prior owners of those Bonds. The insurance policy or policies
relating to the Navigator Sponsor-Insured Bonds provides that, to the extent
that Bonds are both Pre-Insured Bonds and Navigator Sponsor-Insured Bonds,
coverage is effective after a claim has been made upon the insurer of the
Pre-Insured Bonds.
Some of the Bonds in the New Jersey Navigator Trust may additionally
be insured by a municipal bond guaranty insurance policy obtained by issuers,
underwriters or prior owners of the Bonds ("Pre-Insured Bonds") and issued by
one of the insurance companies described under "Insurance on the Bonds" in Part
B of this Prospectus (the "Insurance Companies"). Such insurance covers the
scheduled payment of principal thereof and interest thereon when such amounts
shall become due for payment but shall not have been paid by the issuer or any
other insurer thereof.
None of the insurance will cover accelerated payments of principal or
penalty interest or premiums unrelated to taxability of interest on the Bonds.
The insurance relates only to the prompt payment of principal of and interest on
the securities in the portfolios, and does not remove market risks nor does it
guarantee the market value of Units in the Trusts. The terms of the insurance
are more fully described under "Insurance on the Bonds" in
177333.1
A-2
<PAGE>
Part B of this Prospectus. No representation is made herein as to any Bond
insurer's ability to meet its obligations under a policy of insurance relating
to any of the Pre-Insured Bonds. In addition, investors should be aware that
subsequent to the Date of Deposit the rating of the claims-paying ability of the
insurer of an underlying Pre-Insured Bond may be downgraded.
All of the Bonds in the New Jersey Navigator Trust are covered by
insurance obtained by the Sponsors from MBIA Corp. and 98.4% of the Bonds in the
New Jersey Navigator Trust are Pre-Insured Bonds. The approximate percentage of
the aggregate principal amount of the Trust that is insured by each Insurance
Company with respect to Pre-Insured Bonds is as follows: Financial Guaranty
Insurance Company ("Financial Guaranty"), 9.0%; Financial Security Assurance
Inc. ("Financial Security"), 30.2%; and MBIA Corp., 59.2%.
PUBLIC OFFERING PRICE. The secondary market Public Offering Price of
each Unit is equal to the aggregate offering price of the Bonds in such Trust
divided by the number of Units outstanding, plus a sales charge of 4.8% of the
Public Offering Price, or 5.042% of the net amount invested in Bonds per Unit.
In addition, accrued interest to the expected date of settlement is added to the
Public Offering Price. If Units had been purchased on the Evaluation Date, the
Public Offering Price per Unit would have been $1,005.34 plus accrued interest
of $5.16 under the monthly distribution plan, $9.53 under the semi-annual
distribution plan and $9.53 under the annual distribution plan, for a total of
$1,010.50, $1,014.87 and $1,014.87, respectively. The Public Offering Price per
Unit can vary on a daily basis in accordance with fluctuations in the aggregate
bid price of the Bonds. (See "Public Offering--Offering Price" in Part B of this
Prospectus.)
ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN. Units of each
Trust are offered to investors on a "dollar price" basis (using the computation
method described under "Public Offering--Offering Price" in Part B) as
distinguished from a "yield price" basis often used in offerings of tax exempt
bonds (involving the lesser of the yield as computed to maturity of bonds or to
an earlier redemption date). Since they are offered on a dollar price basis, the
rate of return on an investment in Units of each Trust is measured in terms of
"Estimated Current Return" and "Estimated Long Term Return".
Estimated Long Term Return is calculated by: (1) computing the yield
to maturity or to an earlier call date (whichever results in a lower yield) for
each Bond in the Trust's portfolio in accordance with accepted bond practices,
which practices take into account not only the interest payable on the Bond but
also the amortization of premiums or accretion of discounts, if any; (2)
calculating the average of the yields for the Bonds in the Trust's portfolio by
weighing each Bond's yield by the market value of the Bond and by the amount of
time remaining to the date to which the Bond is priced (thus creating an average
yield for the portfolio of the Trust); and (3) reducing the average yield for
the portfolio of the Trust in order to reflect estimated fees and expenses of
the Trust and the maximum sales charge paid by investors. The resulting
Estimated Long Term Return represents a measure of the return to investors
earned over the estimated life of the Trust. (For the Estimated Long Term Return
to Certificateholders under the monthly, semi-annual and annual distribution
plans, see "Summary of Essential Information".)
Estimated Current Return is a measure of the Trust's cash flow.
Estimated Current Return is computed by dividing the Estimated Net Annual
Interest Income per Unit by the Public Offering Price per Unit. In contrast to
the Estimated Long Term Return, the Estimated Current Return does not take into
account the amortization of premium or accretion of discount, if any, on the
Bonds in the portfolio of the Trust. Moreover, because interest rates on Bonds
purchased at a premium are generally higher than current interest rates on newly
issued bonds of a similar type with comparable rating, the Estimated
177333.1
A-3
<PAGE>
Current Return per Unit may be affected adversely if such Bonds are redeemed
prior to their maturity.
The Estimated Net Annual Interest Income per Unit of the Trust will
vary with changes in the fees and expenses of the Trustee and the Evaluator
applicable to the Trust and with the redemption, maturity, sale or other
disposition of the Bonds in the Trust. The Public Offering Price will vary with
changes in the bid prices of the Bonds. Therefore, there is no assurance that
the present Estimated Current Return or Estimated Long Term Return will be
realized in the future. (For the Estimated Current Return to Certificateholders
under the monthly, semi-annual and annual distribution plans, see "Summary of
Essential Information". See "Estimated Long Term Return and Estimated Current
Return" in Part B of this Prospectus.)
A schedule of cash flow projections is available from the Sponsor upon
request.
DISTRIBUTIONS. Distributions of interest income, less
expenses, will be made by the Trust either monthly, semi-annually or annually
depending upon the plan chosen by the Certificateholder. Certificateholders
purchasing Units in the secondary market will initially receive distributions in
accordance with the elections of the prior owner and may thereafter change the
plan as provided under "Interest and Principal Distributions" in Part B of this
Prospectus. Distributions of principal, if any, will be made semi- annually on
June 15 and December 15 of each year. (See "Rights of
Certificateholders--Interest and Principal Distributions" in Part B of this
Prospectus. For estimated monthly, semi-annual and annual interest
distributions, see "Summary of Essential Information.")
MARKET FOR UNITS. The Sponsor, although not obligated to do so,
intends to maintain a secondary market for the Units at a price based on the
aggregate bid price of the Bonds in the Trust portfolio. The reoffer price will
be based on the aggregate bid price of the Bonds plus a sales charge of 4.8% of
the Public Offering Price (5.042% of the net amount invested), plus net accrued
interest. If a market is not maintained a Certificateholder will be able to
redeem his or her Units with the Trustee at a price based on the aggregate bid
price of the Bonds. (See "Sponsor Repurchase" and "Public Offering--Offering
Price" in Part B of this Prospectus.)
177333.1
A-4
<PAGE>
<TABLE>
INSURED MUNICIPAL SECURITIES TRUST
NEW JERSEY NAVIGATOR INSURED
SERIES 10
SUMMARY OF ESSENTIAL INFORMATION AS OF DECEMBER 31, 1999
--------------------------------------------------------
<S> <C> <C>
Date of Deposit*: April 29, 1993 Minimum Principal Distribution:
Principal Amount of Bonds ... $4,125,000 $1.00 per Unit.
Number of Units ............. 4,027 Weighted Average Life to Maturity:
Fractional Undivided Inter- 15.8 Years.
est in Trust per Unit ..... 1/4027 Minimum Value of Trust:
Principal Amount of Trust may be terminated if value of
Bonds per Unit ............ $1,024.34 Trust is less than $2,400,000 in
Secondary Market Public principal amount of Bonds.
Offering Price** Mandatory Termination Date:
Aggregate Bid Price The earlier of December 31, 2042 or
of Bonds in Trust ....... $3,853,222+++ the disposition of the last Bond in
Divided by 4,027 Units .... $956.85 the Trust.
Plus Sales Charge of 4.8% Trustee***: The Chase Manhattan
of Public Offering Price $48.49 Bank.
Public Offering Price Trustee's Annual Fee: Monthly
per Unit ................ $1,005.34+ plan $1.02 per $1,000; semi-annual
Redemption and Sponsor's plan $.54 per $1,000; and annual
Repurchase Price plan is $.35 per $1,000.
per Unit .................. $956.85+ Evaluator: Kenny S&P Evaluation
++ Services.
+++ Evaluator's Fee for Each
Excess of Secondary Market Evaluation: Minimum of $8 plus $.25
Public Offering Price per each issue of Bonds in excess of
over Redemption and 50 issues (treating separate
Sponsor's Repurchase maturities as separate issues).
Price per Unit ............ $48.49++++ Sponsor: ING Funds Distributor,
Difference between Public Inc.
Offering Price per Unit Sponsor's Annual Fee: Maximum of
and Principal Amount per $.25 per $1,000 principal amount of
Unit Premium/(Discount) ... $(19.00) Bonds (see "Trust Expenses and
Evaluation Time: 4:00 p.m. Charges" in Part B of this
New York Time. Prospectus).
</TABLE>
PER UNIT INFORMATION BASED UPON INTEREST DISTRIBUTION PLAN ELECTED
------------------------------------------------------------------
<TABLE>
<CAPTION>
Monthly Semi-Annual Annual
Option Option Option
------ ----------- ------
<S> <C> <C> <C>
Gross annual interest income# ......... $54.25 $54.25 $54.25
Less estimated annual fees and
expenses ............................ 2.16 1.56 1.61
Estimated net annual interest ______ ______ ______
income (cash)# ...................... $52.09 $52.69 $52.64
Estimated interest distribution# ...... 4.34 26.34 52.65
Estimated daily interest accrual# ..... .1446 .1463 .1462
Estimated current return#++ ........... 5.18% 5.24% 5.24%
Estimated long term return++ .......... 5.10% 5.17% 5.16%
Record dates .......................... 1st of Dec. 1 and Dec. 1
each month June 1
Interest distribution dates ........... 15th of Dec. 15 and Dec. 15
each month June 15
</TABLE>
177333.1
A-5
<PAGE>
Footnotes to Summary of Essential Information
* The Date of Deposit is the date on which the Trust Agreement was signed
and the deposit of the Bonds with the Trustee made.
** Certain amounts distributable as of December 31, 1999, may be reported
in the Summary of Essential Information as if they had been distributed
at year-end.
*** The Trustee maintains its principal executive office at 270 Park
Avenue, New York, New York 10017 and its unit investment trust office
at 4 New York Plaza, New York, New York 10004 (tel. no.:
1-800-882-9898). For information regarding redemption by the Trustee,
see "Trustee Redemption" in Part B of this Prospectus.
+ Plus accrued interest to the expected date of settlement (approximately
three business days after purchase) of $5.16 monthly, $9.53 semi-
annually and $9.53 annually.
++ The estimated current return and estimated long term return are
increased for transactions entitled to a discount (see "Employee
Discounts" in Part B of this Prospectus), and are higher under the
semi- annual and annual options due to lower Trustee's fees and
expenses.
+++ Based solely upon the bid side evaluation of the underlying Bonds
(including, where applicable, undistributed cash from the principal
account). Upon tender for redemption, the price to be paid will be
calculated as described under "Trustee Redemption" in Part B of this
Prospectus.
++++ See "Comparison of Public Offering Price, Sponsor's Repurchase Price
and Redemption Price" in Part B of this Prospectus.
# Does not include income accrual from original issue discount bonds, if
any.
FINANCIAL AND STATISTICAL INFORMATION
Selected data for each Unit outstanding for the periods listed below:
<TABLE>
<CAPTION>
Distribu-
Distributions of Interest tions of
During the Period (per Unit) Principal
---------------------------- During
Net Asset* Semi- the
Units Out- Value Monthly Annual Annual Period
Period Ended standing Per Unit Option Option Option (Per Unit)
- ------------ ---------- ---------- ------- ------ ------ ----------
<S> <C> <C> <C> <C> <C> <C>
December 31, 1997 5,865 $1,033.47 $53.19 $53.80 $53.88 $2.00
December 31, 1998 4,912 1,040.54 52.70 53.32 53.45 5.79
December 31, 1999 4,027 965.66 52.54 53.08 53.24 -0-
</TABLE>
- --------
* Net Asset Value per Unit is calculated by dividing net assets as
disclosed in the "Statement of Net Assets" by the number of Units
outstanding as of the date of the Statement of Net Assets. See Note 5
of Notes to Financial Statements for a description of the components of
Net Assets.
177333.1
A-6
<PAGE>
INFORMATION REGARDING THE TRUST
AS OF DECEMBER 31, 1999
DESCRIPTION OF PORTFOLIO*
- ------------------------
The portfolio of the Trust consists of 10 issues representing
obligations of 9 issuers located in the state of New Jersey. The Sponsor has not
participated as a sole underwriter or manager, co-manager or member of an
underwriting syndicate from which any of the initial aggregate principal amount
of the Bonds were acquired. None of the Bonds are obligations of state and local
housing authorities; none are hospital revenue bonds; none were issued in
connection with the financing of nuclear generating facilities; and none are
"mortgage revenue" bonds. All of the Bonds in the Trust are subject to
redemption prior to their stated maturity dates pursuant to sinking fund or
optional call provisions. The Bonds may also be subject to other calls, which
may be permitted or required by events which cannot be predicted (such as
destruction, condemnation, termination of a contract, or receipt of excess or
unanticipated revenues). One issue representing $65,000 of the principal amount
of the Bonds is a general obligation bond. All nine of the remaining issues
representing $4,060,000 of the principal amount of the Bonds are payable from
the income of a specific project or authority and are not supported by the
issuer's power to levy taxes. The portfolio is divided for purpose of issue as
follows: Capital Improvement 1, Public Facility 1, School 1, Sewer 3, Utility 2
and Water 1. For an explanation of the significance of these factors see "The
Trust--Portfolio" in Part B of this Prospectus.
As of December 31, 1999, $1,835,000 (approximately 44.5% of the
aggregate principal amount of the Bonds) were original issue discount bonds. Of
these original issue discount bonds, $340,000 (approximately 8.2% of the
aggregate principal amount of the Bonds) were Zero Coupon Bonds. Zero Coupon
Bonds do not provide for the payment of any current interest and provide for
payment at maturity at par value unless sooner sold or redeemed. The market
value of Zero Coupon Bonds is subject to greater fluctuations than coupon bonds
in response to changes in interest rates. None of the aggregate principal amount
of the Bonds in the Trust were purchased at a "market" discount from par value
at maturity, approximately 43.4% were purchased at a premium and approximately
12.1% were purchased at par. For an explanation of the significance of these
factors see "Discount and Zero Coupon Bonds" in Part B of this Prospectus.
None of the Bonds in the Trust are subject to the federal
individual alternative minimum tax under the Tax Reform Act of 1986. See "Tax
Status" in Part B of this Prospectus.
- --------
* Changes in the Trust Portfolio: From January 1, 2000 to March 15, 2000,
the entire principal amount of the Bond in portfolio no. 3 was sold and
is no longer contained in the Trust. 26 Units were redeemed from the
Trust.
177333.1
A-7
<PAGE>
Report of Independent Auditors
The Sponsor, Trustee and Certificateholders of
Insured Municipal Securities Trust, New Jersey Navigator Insured Series 10
We have audited the accompanying statement of net assets of Insured Municipal
Securities Trust, New Jersey Navigator Insured Series 10, including the
portfolio, as of December 31, 1999 and the related statements of operations, and
changes in net assets and financial highlights for the year then ended. These
financial statements and financial highlights are the responsibility of the
Trustee. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audit. The statement of
operations, statement of changes in net assets and financial highlights for each
of the two years in the period ended December 31, 1998 were audited by other
auditors whose report thereon dated March 19, 1999, expressed an unqualified
opinion on those financial statements and financial highlights.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of the securities
owned by correspondence with the Trustee. An audit also includes assessing the
accounting principles used and significant estimates made by the Trustee, as
well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the 1999 financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Insured Municipal Securities Trust, New Jersey Navigator Insured Series 10 at
December 31, 1999, the results of its operations, changes in its net assets and
financial highlights for the year then ended, in conformity with accounting
principles generally accepted in the United States.
/s/ERNST & YOUNG LLP
New York, New York
April 15, 2000
<PAGE>
Insured Municipal Securities Trust
New Jersey Navigator Insured Series 10
Portfolio
December 31, 1999
<TABLE>
<CAPTION>
Redemption
Aggregate Coupon Feature (2)(4)
Portfolio Principal Ratings Rate/Date(s) S.F.-Sinking Fund Market
No. Amount Name of Issuer and Title of Bonds (1) of Maturity Ref.-Refunding Value (3)
(2)
- ------------ ----------- -------------------------------------------- ----------- -------------- -------------------- -------------
<S> <C> <C> <C> <C> <C> <C>
1 $750,000 Burlington Cnty. N.J. Evesham Muni. AAA 5.550% 7/01/17 @ 100 S.F. $ 721,012
Utils. Auth. Rev. Bonds Series 1993B 7/01/2018 7/01/03 @ 102 Ref.
(MBIA Corp.)
2 625,000 Hoboken-Union City-Weehawken N.J. Swrge. AAA 6.000 No Sinking Fund 640,012
Auth. Swr. Rev. Rfndg. Bond Series 1992 8/01/2012 8/01/02 @ 102 Ref.
(MBIA Corp.)
3 30,000 Hudson Cnty. N.J. Improvement. Auth. Fac. AAA 6.000 12/01/13 @ 100 S.F. 31,641
Lease Rev. Bonds (Hudson Cnty. Lease 12/01/2025 12/01/02 @ 102 Ref.
Prjt.) Series 1992 (MBIA Corp.)
4 500,000 Monmouth Cnty. N.J. Improvement Auth. AAA 5.700 7/01/09 @ 100 S.F. 504,035
Governmental Loan Rev. Bonds Series 4/15/2013 4/15/03 @ 102 Ref.
1993 (MBIA Corp.)
5 500,000 No. Jersey Dstrct. Wtr. Supl. Commsn. of AAA 6.000 7/01/13 @ 100 S.F. 501,390
the State of N.J. Wanaque So. Prjt. 7/01/2021 7/01/03 @ 102 Ref.
Rev. Rfndg. Bonds Series 1993 (MBIA
Corp.)
6 570,000 N.W. Bergen Cnty. N.J. Utils. Auth. Util. AAA 6.000 7/15/10 @ 100 S.F. 584,256
Sys. Rev. Bonds (MBIA Corp.) 7/15/2013 7/15/03 @ 102 Ref.
7 745,000 Bd. of Ed. Twnshp. of Plumsted Schl. AAA 5.500 No Sinking Fund 745,492
Dstrct. Ocean Cnty. N.J. Schl. Dstrct. 4/15/2013 4/15/04 @ 100 Ref.
Rev. Bonds Series 1993 (MBIA Corp.)
8 65,000 Cmmnwlth. of P.R. Pub. Imprvmnt. Rfndg. AAA 6.000 7/01/11 @ 100 S.F. 66,410
Rev. Genl. Oblig. Rev. Bonds Series 7/01/2014 7/01/02 @ 101.5 Ref.
1992A (MBIA Corp.)
9 140,000 West N.Y., N.J. Muni. Utils. Auth. (Hudson AAA 0.000 No Sinking Fund 38,944
Cnty. N.J.) Swr. Rev. Rfndg. Cap. 12/15/2020 None
Apprec. Bonds Series 1991 (MBIA Corp.)
10 200,000 West N.Y., N.J. Muni. Utils. Auth. (Hudson AAA 0.000 No Sinking Fund 49,020
Cnty. N.J.) Swr. Rev. Rfndg. Cap. 12/15/2022 None
Apprec. Bonds Series 1991 (MBIA Corp.)
----------- -------------
$4,125,000 Total Investments (Cost $3,919,064) $3,882,212
=========== =============
</TABLE>
See accompanying footnotes to portfolio and notes to financial statements.
<PAGE>
Insured Municipal Securities Trust
New Jersey Navigator Insured Series 10
Footnotes to Portfolio
December 31, 1999
1. All ratings are by Kenny S&P Evaluation Services, a business unit of J.J.
Kenny Company, Inc., a subsidiary of The McGraw-Hill Companies, Inc. A
brief description of the ratings symbols and their meaning is set forth
under "Description of Bond Ratings" in Part B of the Prospectus.
2. See "The Trust--Portfolio" in Part B of the Prospectus for an explanation
of redemption features. See "Tax Status" in Part B of the Prospectus for a
statement of the Federal tax consequences to a Certificateholder upon the
sale, redemption or maturity of the bond.
3. At December 31, 1999, the net unrealized depreciation of all the bonds was
comprised of the following:
Gross unrealized appreciation $ 18,584
Gross unrealized depreciation (55,436)
------------------
Net unrealized depreciation $ (36,852)
==================
4. The Bonds may also be subject to other calls, which may be permitted or
required by events which cannot be predicted (such as destruction,
condemnation, termination of a contract, or receipt of excess or
unanticipated revenues.
The accompanying notes form an integral part of the financial statements.
<PAGE>
Insured Municipal Securities Trust
New Jersey Navigator Insured Series 10
Statements of Net Assets
December 31, 1999
Investments in securities,
at market value (cost $3,919,064) $ 3,882,212
Other assets
Accrued interest 83,975
---------
Total other assets 83,975
---------
Liabilities
Advance from Trustee 77,485
---------
Total liabilities 77,485
---------
Excess of other assets over total liabilities 6,490
---------
Net assets (4,027 units of fractional undivided
interest outstanding, $965.66 per unit) $ 3,888,702
=========
- ---------------------------------------------------------====================
The accompanying notes form an integral part of the financial statements.
<PAGE>
Insured Municipal Securities Trust
New Jersey Navigator Insured Series 10
Statement of Operations
<TABLE>
<CAPTION>
Year ended December 31,
1999 1998 1997
------------------------------------------------------
<S> <C> <C> <C>
Investment income
Interest $ 242,156 $288,542 $331,042
Expenses
Trustee's fees 6,395 7,623 7,947
Evaluator's fee 2,250 2,436 2,009
Sponsor's advisory fee 1,236 1,469 1,484
------------------------------------------------------
Total expenses 9,881 11,528 11,440
------------------------------------------------------
Net investment income 232,275 277,014 319,602
------------------------------------------------------
Realized and unrealized gain (loss)
Realized gain on investments 21,021 56,379 730
Unrealized appreciation (depreciation)
on investments (342,480) 7,238 250,111
------------------------------------------------------
Net gain (loss) on investments (321,459) 63,617 250,841
------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations $ (89,184) $340,631 $570,443
======================================================
</TABLE>
The accompanying notes form an integral part of the financial statements.
<PAGE>
Insured Municipal Securities Trust
New Jersey Navigator Insured Series 10
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year ended December 31,
1999 1998 1997
------------------------------------------------------
<S> <C> <C> <C>
Operations
Net investment income $ 232,275 $ 277,014 $ 319,602
Realized gain on investments 21,021 56,379 730
Unrealized appreciation (depreciation)
on investments (342,480) 7,238 250,111
------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations (89,184) 340,631 570,443
------------------------------------------------------
Distributions to Certificateholders
Investment income 220,851 274,162 317,323
Principal - 29,650 11,888
Redemptions
Interest 18,348 9,474 570
Principal 894,049 977,524 78,293
------------------------------------------------------
Total distributions and redemptions 1,133,248 1,290,810 408,074
------------------------------------------------------
Total increase (decrease) (1,222,432) (950,179) 162,369
Net assets
Beginning of year 5,111,134 6,061,313 5,898,944
------------------------------------------------------
End of year (including undistributed net
investment income of $66,057, $72,981 and
$79,603, respectively) $ 3,888,702 $5,111,134 $6,061,313
======================================================
</TABLE>
The accompanying notes form an integral part of the financial statements.
<PAGE>
Insured Municipal Securities Trust
New Jersey Navigator Insured Series 10
Financial Highlights
Selected data for a unit of the Trust outstanding:*
<TABLE>
<CAPTION>
Year ended December 31,
1999 1998 1997
------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of year** $ 1,040.54 $1,033.47 $ 992.42
------------------------------------------------------
Interest income 54.18 53.54 56.06
Expenses (2.21) (2.14) (1.94)
------------------------------------------------------
Net investment income 51.97 51.40 54.12
------------------------------------------------------
Net gain or loss on investments(1) (73.33) 13.80 42.78
------------------------------------------------------
Total from investment operations (21.36) 65.20 96.90
------------------------------------------------------
Less distributions
to Certificateholders
Income 49.41 50.87 53.74
Principal - 5.50 2.01
for Redemptions
Interest 4.11 1.76 .10
------------------------------------------------------
Total distributions 53.52 58.13 55.85
------------------------------------------------------
Net assets value, end of year** $ 965.66 $1,040.54 $1,033.47
======================================================
</TABLE>
(1) Net gain or loss on investments is a result of changes in outstanding units
since January 1, 1999, 1998 and 1997, respectively, and the dates of net gain
and loss on investments.
* Unless otherwise stated, based upon average units outstanding during the
year of 4,470 ([4,027 + 4,912]/2) for 1999, 5,389 ([4,912 + 5,865]/2) for
1998 and of 5,905 ([5,865 + 5,944]/2) for 1997.
** Based upon actual units outstanding.
The accompanying notes form an integral part of the financial statements.
<PAGE>
Insured Municipal Securities Trust
New Jersey Navigator Insured Series 10
Notes to Financial Statements
December 31, 1999
1. Organization
Insured Municipal Securities Trust, New Jersey Navigator Insured Series 10 (the
"Trust") was organized on April 29, 1993 by Bear, Stearns & Co. Inc. and Gruntal
& Co., Incorporated under the laws of the State of New York by a Trust Indenture
and Agreement, and is registered under the Investment Company Act of 1940. The
Trust was formed to preserve capital and to provide interest income.
On September 28, 1995, Reich & Tang Distributors, Inc. ("Reich & Tang") had
become the successor sponsor to certain of the unit investment trusts previously
sponsored by Bear, Stearns & Co. Inc. As successor sponsor, Reich & Tang had
assumed all of the obligations and rights of Bear, Stearns & Co. Inc., the
previous sponsor.
Effective February 9, 2000, Gruntal & Co. resigned as a co-sponsor of certain
unit investment trusts previously co-sponsored with Reich & Tang. ING Funds
Distributor, Inc. ("ING") has become the successor sponsor to certain unit
investment trusts previously sponsored by Reich & Tang. As successor sponsor,
ING has assumed all of the obligations and rights of Reich & Tang, the previous
sponsor.
2. Summary of Significant Accounting Policies
The following is a summary of significant accounting policies consistently
followed by the Trust in preparation of its financial statements. The policies
are in conformity with generally accepted accounting principles ("GAAP"). The
preparation of financial statements in accordance with GAAP requires management
to make estimates and assumptions that affect the reported amounts and
disclosures in the financial statements. Actual amounts could differ from those
estimates.
<PAGE>
Insured Municipal Securities Trust
New Jersey Navigator Insured Series 10
Notes to Financial Statements (continued)
2. Summary of Significant Accounting Policies (continued)
Interest Income
Interest income is recorded on the accrual basis. The discount on the
zero-coupon bonds is accreted by the interest method over the respective lives
of the bonds. The accretion of such discount is included in interest income;
however, it is not distributed until realized in cash upon maturity or sale of
the respective bonds.
Security Valuation
Investments are carried at market value which is determined by Kenny S&P
Evaluation Services, a business unit of J.J. Kenny Company, Inc., a subsidiary
of The McGraw-Hill Companies, Inc. The market value of the portfolio is based
upon the bid prices for the bonds at the end of the year, which approximates the
fair value of the security at that date, except that the market value on the
date of deposit represents the cost to the Trust based on the offering prices
for investments at that date. The difference between cost (including accumulated
accretion of original issued discount on zero-coupon bonds) and market value is
reflected as unrealized appreciation (depreciation) of investments. Securities
transactions are recorded on the trade date. Realized gains (losses) from
securities transactions are determined on the basis of average cost of the
securities sold or redeemed.
3. Income Taxes
No provision for federal income taxes has been made in the accompanying
financial statements because the Trust intends to continue to qualify for the
tax treatment applicable to Grantor Trusts under the Internal Revenue Code.
Under existing law, if the Trust so qualifies, it will not be subject to federal
income tax on net income and capital gains that are distributed to unitholders.
<PAGE>
Insured Municipal Securities Trust
New Jersey Navigator Insured Series 10
Notes to Financial Statements (continued)
4. Trust Administration
The Chase Manhattan Bank (the "Trustee") has custody of assets and
responsibility for the accounting records and financial statements of the Trust
and is responsible for establishing and maintaining a system of internal control
related thereto. The Trustee is also responsible for all estimates of expenses
and accruals reflected in the Trust's financial statements.
The Trust Indenture and Agreement provides for interest distributions as often
as monthly (depending upon the distribution plan elected by the
Certificateholders).
The Trust Indenture and Agreement further requires that principal received from
the disposition of bonds, other that those bonds sold in connection with
redemption of units, be distributed to Certificateholders.
The Trust Indenture and Agreement also requires the Trust to redeem units
tendered. For the years ended December 31, 1999, 1998 and 1997, 885, 953 and 79
units were redeemed, respectively.
The Trust pays an annual fee for trustee services rendered by the Trustee that
ranges from $.35 to $1.02 per $1,000 of outstanding investment principal. In
addition, a minimum fee of $8.00 is paid to a service bureau for each portfolio
valuation. A maximum fee of $.25 per $1,000 of outstanding investment principal
is paid to the Sponsor. For the years ended December 31, 1999, 1998 and 1997,
the "Trustee's Fees" are comprised of Trustee fees of $3,487, $4,236 and $4,399
and other expenses of $2,908, $3,387 and $3,548, respectively. The other
expenses include professional, printing and miscellaneous fees.
<PAGE>
Insured Municipal Securities Trust
New Jersey Navigator Insured Series 10
Notes to Financial Statements (continued)
5. Net Assets
At December 31, 1999 the net assets of the Trust represented the interest of
Certificateholders as follows:
Original cost to Certificateholders $ 6,128,286
Less initial gross underwriting commission 300,286
--------------------
5,828,000
Accumulated cost of securities sold, matured or called (1,939,503)
Net unrealized depreciation (36,852)
Undistributed net investment income 66,057
Distributions in excess of proceeds from investments (29,000)
--------------------
Total $ 3,888,702
====================
The original cost to Certificateholders, less the initial gross underwriting
commission, represents the aggregate initial public offering price net of the
applicable sales charge on 6,000 units of fractional undivided interest of the
Trust as of the date of deposit.
Undistributed net investment income includes accumulated accretion of original
issue discount of $30,567.
6. Concentration of Credit Risk
Since the Trust invests a portion of its assets in municipal bonds, it may be
affected by economic and political developments in the municipalities. Certain
debt obligations held by the Trust may be entitled to the benefit of insurance,
standby letters of credit or other guarantees of banks or other financial
institutions.
<PAGE>
Prospectus Part A Dated April 30, 2000
INSURED MUNICIPAL SECURITIES TRUST
SERIES 32
- --------------------------------------------------------------------------------
The Trust is a unit investment trust designated Series 32 ("Insured
Municipal Trust") with an underlying portfolio of long-term insured tax-exempt
bonds issued by or on behalf of states, municipalities and public authorities
and was formed to preserve capital and to provide interest income which, in the
opinions of bond counsel to the respective issuers, is, with certain exceptions,
currently exempt from regular federal income tax under existing law but may be
subject to state and local taxes. There can be no assurance that the Trust's
investment objectives will be achieved. Although the Supreme Court has
determined that Congress has the authority to subject interest on bonds such as
the Bonds in the Trust to federal income taxation, existing law excludes such
interest from regular federal income tax. Such interest income may, however, be
subject to the federal individual and corporate alternative minimum tax and to
state and local taxes. (See "Description of Portfolio" in this Part A for a
description of those Bonds, if any, which pay interest income subject to the
federal individual alternative minimum tax.) In addition, capital gains are
subject to tax. (See "Tax Status" and "The Trust--Portfolio" in Part B of this
Prospectus.) The Sponsor is ING Funds Distributor, Inc. (successor to Reich &
Tang Distributors, Inc.). The value of the Units of the Trust will fluctuate
with the value of the underlying bonds. Minimum purchase: 1 Unit.
This Prospectus consists of two parts. Part A contains the Summary of
Essential Information as of December 31, 1999 (the "Evaluation Date"), a summary
of certain specific information regarding the Trust and audited financial
statements of the Trust, including the related portfolio, as of the Evaluation
Date. Part B of this Prospectus contains a general summary of the Trust. Part A
of this Prospectus may not be distributed unless accompanied by Part B.
Investors should retain both parts of this Prospectus for future reference. The
Securities and Exchange Commission ("SEC") maintains a website that contains
reports, proxy and information statements and other information regarding the
Trust which is filed electronically with the SEC. The SEC's Internet address is
http:www.sec.gov. Offering materials for the sale of these units available
through the Internet are not being offered directly or indirectly to residents
of a particular state nor is an offer of these units through the Internet
specifically directed to any person in a state by, or on behalf of, the issuer.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
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 TRUST. The Trust seeks to achieve its investment objectives through
investment in a fixed, diversified portfolio of long-term insured bonds (the
"Bonds") issued by or on behalf of states, municipalities and public authorities
which, because of irrevocable insurance, were rated "AAA" by Standard & Poor's
Rating Services, a division of The McGraw-Hill Companies, at the time originally
deposited in the Trust. The "AAA" rating results from insurance relating only to
the Bonds in the Trust and not to Units of the Trust. The insurance does not
remove market risk, as it does not guarantee the market value of the Units. For
a discussion of the significance of such ratings, see "Description of Bond
Ratings" in Part B of this Prospectus, and for a list of ratings on the
Evaluation Date see the "Portfolio."
Some of the Bonds may be "Zero Coupon Bonds", which are original issue
discount bonds that provide for payment at maturity at par value, but do not
provide for the payment of any current interest. Some of the Bonds in the Trust
have been issued with optional refunding or refinancing provisions
260501.1
<PAGE>
("Refunded Bonds") whereby the issuer of the Bond has the right to call such
Bond prior to its stated maturity date (and other than pursuant to sinking fund
provisions) and to issue new bonds ("Refunding Bonds") in order to finance the
redemption. Issuers typically utilize refunding calls in order to take advantage
of lower interest rates in the marketplace. Some of these Refunded Bonds may be
called for redemption pursuant to pre-refunding provisions ("Pre-Refunded
Bonds") whereby the proceeds from the issue of the Refunding Bonds are typically
invested in government securities in escrow for the benefit of the holders of
the Pre-Refunded Bonds until the refunding call date. Usually, Pre-Refunded
Bonds will bear a triple-A rating because of this escrow. The issuers of
Pre-Refunded Bonds must call such Bonds on their refunding call date. Therefore,
as of such date, the Trust will receive the call price for such bonds but will
cease receiving interest income with respect to them. For a list of those Bonds
which are Pre-Refunded Bonds, if any, as of the Evaluation Date, see "Notes to
Financial Statements" in this Part A. Some of the Bonds in the portfolio may
have been purchased at an aggregate premium over par. The payment of interest
and preservation of capital are, of course, dependent upon the continuing
ability of issuers of the Bonds or the insurers thereof to meet their
obligations.
Investment in the Trust should be made with an understanding of the risks
which an investment in long-term fixed rate debt obligations may entail,
including the risk that the value of the underlying portfolio will decline with
increases in interest rates, and that the value of Zero Coupon Bonds is subject
to greater fluctuation than coupon bonds in response to changes in interest
rates. A Trust designated as a long-term trust must have a dollar-weighted
average portfolio maturity of more than ten years.
Each Unit in the Trust represents a 1/2101st undivided interest in the
principal and net income of the Trust. The principal amount of Bonds deposited
in the Trust per Unit is reflected in the Summary of Essential Information. (See
"Organization" in Part B of this Prospectus.) The Units being offered hereby are
issued and outstanding Units which have been purchased by the Sponsor in the
secondary market.
INSURANCE. Each of the Bonds in the Trust is insured by a municipal bond
guaranty insurance policy obtained by either the Sponsor ("Sponsor-Insured
Bonds") or the issuers of the Bonds ("Pre-Insured Bonds") and issued by one of
the insurance companies (the "Insurance Companies"), described under "Insurance
on the Bonds" in Part B of this Prospectus, covering scheduled payment of
principal thereof and interest thereon when such amounts shall become due for
payment but shall not have been paid by the issuer or any other insurer thereof.
None of the insurance will cover accelerated payments of principal or penalty
interest or premiums unrelated to taxability of interest on the Bonds (although
the insurance, including insurance obtained by MBIA Corp., does guarantee
payment of principal and interest in such amounts and at such times as such
amounts would have been due absent such acceleration). The insurance relates
only to the prompt payment of principal of and interest on the securities in the
portfolio, and does not remove market risks or guarantee the market value of the
Units in the Trust. The terms of the insurance are more fully described under
"Insurance on the Bonds" in Part B of this Prospectus. For a discussion of the
effect of an occurrence of nonpayment of principal or interest on any Bonds in
the Trust, see "Portfolio Supervision" in Part B of this Prospectus. No
representation is made herein as to any Bond insurer's ability to meet its
obligations under a policy of insurance relating to any of the Bonds. In
addition, investors should be aware that, subsequent to the Date of Deposit, the
rating of the claims paying ability of the insurer of an underlying Bond may be
downgraded, which may result in a downgrading of the rating of the Units in the
Trust. The approximate percentage of the aggregate principal amount of the
portfolio that is insured by each insurance company is as follows: AMBAC
Indemnity Corp. ("AMBAC"), 19.0%; Financial Guaranty Insurance Company
("Financial Guaranty"), 19.0%; and MBIA Corp., 62.2%.
PUBLIC OFFERING PRICE. The secondary market Public Offering Price of each
Unit is equal to the aggregate bid price of the Bonds in the Trust divided by
the number of Units outstanding, plus a sales charge of 3.7% of the Public
Offering Price, or 3.842% of the net amount invested in Bonds per Unit.
A-2
260501.1
<PAGE>
In addition, accrued interest to the expected date of settlement is added to the
Public Offering Price. If Units had been purchased on the Evaluation Date, the
Public Offering Price per Unit would have been $1,023.39 plus accrued interest
of $.64 under the monthly distribution plan and $5.29 under the semi-annual
distribution plan, for a total of $1,024.03 and $1,028.68, respectively. The
Public Offering Price per Unit can vary on a daily basis in accordance with
fluctuations in the aggregate bid price of the Bonds. (See "Public
Offering--Offering Price" in Part B of this Prospectus.)
ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN. Units of each
Trust are offered to investors on a "dollar price" basis (using the computation
method described under "Public Offering--Offering Price" in Part B) as
distinguished from a "yield price" basis often used in offerings of tax exempt
bonds (involving the lesser of the yield as computed to maturity of bonds or to
an earlier redemption date). Since they are offered on a dollar price basis, the
rate of return on an investment in Units of each Trust is measured in terms of
"Estimated Current Return" and "Estimated Long Term Return".
Estimated Long Term Return is calculated by: (1) computing the yield to
maturity or to an earlier call date (whichever results in a lower yield) for
each Bond in the Trust's portfolio in accordance with accepted bond practices,
which practices take into account not only the interest payable on the Bond but
also the amortization of premiums or accretion of discounts, if any; (2)
calculating the average of the yields for the Bonds in the Trust's portfolio by
weighing each Bond's yield by the market value of the Bond and by the amount of
time remaining to the date to which the Bond is priced (thus creating an average
yield for the portfolio of the Trust); and (3) reducing the average yield for
the portfolio of the Trust in order to reflect estimated fees and expenses of
the Trust and the maximum sales charge paid by investors. The resulting
Estimated Long Term Return represents a measure of the return to investors
earned over the estimated life of the Trust. (For the Estimated Long Term Return
to Certificateholders under the monthly and semi-annual distribution plans, see
"Summary of Essential Information".)
Estimated Current Return is a measure of the Trust's cash flow. Estimated
Current Return is computed by dividing the Estimated Net Annual Interest Income
per Unit by the Public Offering Price per Unit. In contrast to the Estimated
Long Term Return, the Estimated Current Return does not take into account the
amortization of premium or accretion of discount, if any, on the Bonds in the
portfolio of the Trust. Moreover, because interest rates on Bonds purchased at a
premium are generally higher than current interest rates on newly issued bonds
of a similar type with comparable rating, the Estimated Current Return per Unit
may be affected adversely if such Bonds are redeemed prior to their maturity.
The Estimated Net Annual Interest Income per Unit of the Trust will vary
with changes in the fees and expenses of the Trustee and the Evaluator
applicable to the Trust and with the redemption, maturity, sale or other
disposition of the Bonds in the Trust. The Public Offering Price will vary with
the changes in the bid prices of the Bonds. Therefore, there is no assurance
that the present Estimated Current Return or Estimated Long Term Return will be
realized in the future. (For the Estimated Current Return to Certificateholders
under the monthly and semi-annual distribution plans, see "Summary of Essential
Information". See "Estimated Long Term Return and Estimated Current Return" in
Part B of this Prospectus.)
A schedule of cash flow projections is available from the Sponsor upon
request.
DISTRIBUTIONS. Distributions of interest income, less expenses, will be
made by the Trust either monthly or semi-annually depending upon the plan of
distribution applicable to the Unit purchased. A purchaser of a Unit in the
secondary market will initially receive distributions in accordance with the
distribution plan chosen by the prior owner of such Unit and may thereafter
change the plan as provided under "Interest and Principal Distributions" in Part
B of the Prospectus. Distributions of principal, if any, will be made
semi-annually on June 15 and December 15 of each year. (See
A-3
260501.1
<PAGE>
"Rights of Certificateholders--Interest and Principal Distributions" in Part B
of this Prospectus. For estimated monthly and semi-annual interest
distributions, see "Summary of Essential Information".)
MARKET FOR UNITS. The Sponsor, although not obligated to do so, intends to
maintain a secondary market for the Units at prices based on the aggregate bid
price of the Bonds in the Trust portfolio. The reoffer price will be based on
the aggregate bid price of the Bonds plus a sales charge of 3.7% of the Public
Offering Price (3.842% of the net amount invested), plus net accrued interest.
If a market is not maintained a Certificateholder will be able to redeem his or
her Units with the Trustee at a price also based on the aggregate bid price of
the Bonds. (See "Liquidity--Sponsor Repurchase" and "Public Offering--Offering
Price" in Part B of this Prospectus.)
A-4
260501.1
<PAGE>
INSURED MUNICIPAL SECURITIES TRUST
SERIES 32
SUMMARY OF ESSENTIAL INFORMATION AS OF DECEMBER 31, 1999
--------------------------------------------------------
<TABLE>
<S> <C> <C>
Date of Deposit*: April 14, 1994 Minimum Principal Distribution:
Principal Amount of Bonds ... $2,115,000 $1.00 per Unit.
Number of Units ............. 2,101 Weighted Average Life to
Fractional Undivided Inter- Maturity: 10.8 Years.
est in Trust per Unit ..... 1/2101 Minimum Value of Trust: Trust
Principal Amount of may be terminated if value of
Bonds per Unit ............ $1,006.66 Trust is less than $1,200,000
Secondary Market Public in principal amount of Bonds.
Offering Price** Mandatory Termination Date:
Aggregate Bid Price The earlier of December 31,
of Bonds in Trust ....... $2,070,800++ 2044 or the disposition of the
Divided by 2,101 Units .... $985.63 last Bond in the Trust.
Plus Sales Charge of 3.7% Trustee***: The Chase Manhattan
of Public Offering Price $37.76 Bank.
Public Offering Price Trustee's Annual Fee: Monthly
per Unit ............... $1,023.39+ plan $1.39 per $1,000; and
Redemption and Sponsor's semi-annual plan $.94 per
Repurchase Price $1,000.
per Unit................... $985.63+ Evaluator: Kenny S&P Evaluation
+++ Services.
++++ Evaluator's Fee for Each
Excess of Secondary Market Evaluation: Minimum of $3
Public Offering Price plus $.25 per each issue of
over Redemption and Bonds in excess of 50 issues
Sponsor's Repurchase (treating separate maturities
Price per Unit ............ $37.76++++ as separate issues).
Difference between Public Sponsor: ING Funds
Offering Price per Unit Distributor, Inc.
and Principal Amount per Sponsor's Annual Fee: Maximum
Unit Premium/(Discount) ... $16.73 of $.25 per $1,000 principal
Evaluation Time: 4:00 p.m. amount of Bonds (see "Trust
New York Time. Expenses and Charges" in
Part B of this Prospectus).
</TABLE>
PER UNIT INFORMATION BASED UPON INTEREST DISTRIBUTION PLAN ELECTED
------------------------------------------------------------------
<TABLE>
<CAPTION>
Monthly Semi-Annual
Option Option
<S> <C> <C>
Gross annual interest income# ......... $60.13 $60.13
Less estimated annual fees and
expenses ............................ 2.45 2.88
Estimated net annual interest _____ ______
income (cash)# ...................... $57.68 $57.25
Estimated interest distribution# ...... 4.80 28.62
Estimated daily interest accrual# ..... .1602 .1590
Estimated current return#++ ........... 5.64% 5.59%
Estimated long term return++ .......... 5.24% 5.20%
Record dates .......................... 1st of Dec. 1 and
each month June 1
Interest distribution dates ........... 15th of Dec. 15 and
each month June 15
</TABLE>
A-5
260501.1
<PAGE>
Footnotes to Summary of Essential Information
* The Date of Deposit is the date on which the Trust Agreement was signed and
the deposit of the Bonds with the Trustee made.
** Certain amounts distributable as of December 31, 1999, may be reported in
the Summary of Essential Information as if they had been distributed at
year-end.
*** The Trustee maintains its principal executive office at 270 Park Avenue,
New York, New York 10017 and its unit investment trust office at 4 New York
Plaza, New York, New York 10004 (tel. no.: 1-800-882-9898). For information
regarding redemption by the Trustee, see "Trustee Redemption" in Part B of
this Prospectus.
+ Plus accrued interest to the expected date of settlement (approximately
three business days after purchase) of $.64 monthly and $5.29 semi-
annually.
++ The estimated current return and estimated long term return are increased
for transactions entitled to a discount (see "Employee Discounts" in Part B
of this Prospectus), and are higher under the semi-annual option due to
lower Trustee's fees and expenses.
+++ Based solely upon the bid side evaluation of the underlying Bonds
(including, where applicable, undistributed cash from the principal
account). Upon tender for redemption, the price to be paid will be
calculated as described under "Trustee Redemption" in Part B of this
Prospectus.
++++ See "Comparison of Public Offering Price, Sponsor's Repurchase Price and
Redemption Price" in Part B of this Prospectus.
# Does not include income accrual from original issue discount bonds, if any.
FINANCIAL AND STATISTICAL INFORMATION
Selected data for each Unit outstanding for the periods listed below:
<TABLE>
<CAPTION>
Distribu-
tions of
Distributions of Interest Principal
During the Period (per Unit) During
Net Asset* Semi- the
Units Out- Value Monthly Annual Period
Period Ended standing Per Unit Option Option (Per Unit)
- ------------ ---------- ---------- ------- ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
December 31, 1997 2,369 $1,050.83 $58.57 $58.06 $25.65
December 31, 1998 2,220 1,063.62 56.48 56.13 -0-
December 31, 1999 2,101 988.95 56.50 56.04 -0-
</TABLE>
- --------
* Net Asset Value per Unit is calculated by dividing net assets as disclosed
in the "Statement of Net Assets" by the number of Units outstanding as of
the date of the Statement of Net Assets. See Note 5 of Notes to Financial
Statements for a description of the components of Net Assets.
A-6
260501.1
<PAGE>
INFORMATION REGARDING THE TRUST
AS OF DECEMBER 31, 1999
DESCRIPTION OF PORTFOLIO*
The portfolio of the Trust consists of 6 issues representing obligations of
issuers located in 4 states. The Sponsor has not participated as a sole
underwriter or manager, co-manager or member of underwriting syndicates from
which any of the initial aggregate principal amount of the Bonds were acquired.
None of the Bonds are obligations of state and local housing authorities;
approximately 14.2% are hospital revenue bonds; none were issued in connection
with the financing of nuclear generating facilities; and none are "mortgage
subsidy" bonds. All of the Bonds in the Trust are subject to redemption prior to
their stated maturity dates pursuant to sinking fund or optional call
provisions. The Bonds may also be subject to other calls, which may be permitted
or required by events which cannot be predicted (such as destruction,
condemnation, termination of a contract, or receipt of excess or unanticipated
revenues). Two of the Bonds representing $800,000 of the aggregate principal
amount of the Bonds are general obligation bonds. Four issues representing
$1,315,000 of the principal amount of the Bonds are payable from the income of a
specific project or authority and are not supported by the issuer's power to
levy taxes. The portfolio is divided for purpose of issue as follows: Electric
1, Hospital 1, Jails 1 and Sewer 1. For an explanation of the significance of
these factors see "The Trust-- Portfolio" in Part B of this Prospectus.
As of December 31, 1999, $1,000,000 (approximately 47.3% of the aggregate
principal amount of the Bonds) were original issue discount bonds. Of these
original issue discount bonds, none were Zero Coupon Bonds. None of the
aggregate principal amount of the Bonds in the Trust were purchased at a
"market" discount from par value at maturity, approximately 18.9% were purchased
at a premium and 33.8% were purchased at par. For an explanation of the
significance of these factors see "Discount and Zero Coupon Bonds" in Part B of
this Prospectus.
None of the Bonds in the Trust are subject to the federal individual
alternative minimum tax under the Tax Reform Act of 1986. See "Tax Status" in
Part B of this Prospectus.
- --------
* Changes in the Trust Portfolio: From January 1, 2000 to March 15, 2000,
$100,000 of the principal amount of the Bond in portfolio no. 2 was sold
and is no longer contained in the Trust. 59 Units have been redeemed from
the Trust.
A-7
260501.1
<PAGE>
Report of Independent Auditors
The Sponsor, Trustee and Certificateholders of
Insured Municipal Securities Trust, Series 32
We have audited the accompanying statement of net assets of Insured Municipal
Securities Trust, Series 32, including the portfolio, as of December 31, 1999
and the related statement of operations, statement of changes in net assets and
financial highlights for the year then ended. These financial statements and
financial highlights are the responsibility of the Trustee. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audit. The statement of operations, statement of changes in net
assets and financial highlights for the two year period ended December 31, 1998
were audited by other auditors whose report thereon dated March 19, 1999,
expressed an unqualified opinion on those financial statements and financial
highlights.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of the securities
owned by correspondence with the trustee. An audit also includes assessing the
accounting principles used and significant estimates made by the Trustee, as
well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the 1999 financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Insured Municipal Securities Trust, Series 32at December 31, 1999, the results
of its operations, changes in its net assets and financial highlights for the
year then ended, in conformity with accounting principles generally accepted in
the United States.
/s/ERNST & YOUNG LLP
New York, New York
April 15, 2000
<PAGE>
Insured Municipal Securities Trust, Series 32
Portfolio
December 31, 1999
<TABLE>
<CAPTION>
Redemption
Aggregate Coupon Feature (2)(4)
Portfolio Principal Rate/Date(s) S.F.-Sinking Fund Market
No. Amount Name of Issuer and Title of Bonds Ratings(1) of Maturity(2) Ref.-Refunding Value (3)
- ------------ ----------- -------------------------------------------- ----------- -------------- -------------------- -------------
<S> <C> <C> <C> <C> <C> <C>
1 $ 300,000 Ill. Hlth. Fac. Auth. Rev. Bds., Series AAA 5.000 8/15/05 @ 100 S.F. $ 249,198
1993 8/15/2022 8/15/03 @ 102 Ref.
(The Children's Memorial Hosp.) (MBIA
Corp.)
2 400,000 Rgnl. Trans. Auth. III. Cook, DuPage, Kane, AAA 6.500 6/01/04 @ 100 S.F. 423,936
Lake, McHenry and Will Counties Gen. Oblig. 6/01/2015 6/01/02 @ 102 Ref.
Series 1992 A (AMBAC)
3 400,000 City of Chicago Genl. Oblig. Bds. Pjct. AAA 5.500 1/01/19 @ 100 S.F. 366,200
Series 1993 1/01/2024 1/01/04 @ 102 Ref.
(Financial Guaranty)
4 315,000 Piedmont Muni. Pwr. Agncy. (S.C.) Elec. AAA 6.300 1/01/05 @ 100 S.F. 334,977
Rev. 1/01/2022 1/01/03 @ 102 Ref.
Bds., 1992 Rfndg. Series (MBIA Corp.)
5 300,000 Charleston Cnty. S.C. Charleston Pub. AAA 6.100 6/01/06 @ 100 S.F. 313,062
Facs. Corp. 6/01/2011 6/01/04 @ 102 Ref.
Rfndg. Certs. of Part. Series 1994 (MBIA
Corp.)
6 400,000 Muncplty of Metro. Seattle (Seattle, WA) AAA 6.300 1/01/05 @ 100 S.F. 424,788
Swr. Rev. 1/01/2033 1/01/03 @ 102 Ref.
Bds., Series W (MBIA Corp.)
----------- -------------
$2,115,000 Total Investments (Cost $2,027,685) $2,112,161
=========== =============
</TABLE>
See accompanying footnotes to portfolio and notes to financial statements.
<PAGE>
Insured Municipal Securities Trust, Series 32
Footnotes to Portfolio
1 All ratings are by Kenny S&P Evaluation Services, a business unit of J.J.
Kenny Company, Inc., a subsidiary of The McGraw-Hill Companies, Inc. A
brief description of the ratings symbols and their meaning is set forth
under "Description of Bond Ratings" in Part B of the Prospectus.
2. See "The Trust--Portfolio" in Part B of the Prospectus for an explanation
of redemption features. See "Tax Status" in Part B of the Prospectus for a
statement of the Federal tax consequences to a Certificateholder upon the
sale, redemption or maturity of a bond.
3. At December 31, 1999, the net unrealized appreciation of all the bonds was
comprised of the following:
Gross unrealized appreciation $ 84,476
Gross unrealized depreciation -
------------------
Net unrealized appreciation $ 84,476
==================
4. The Bonds may also be subject to other calls, which may be permitted or
required by events which cannot be predicted (such as destruction,
condemnation, termination of a contract, or receipt of excess of
unanticipated revenues).
The accompanying notes form an integral part of the financial statements.
<PAGE>
Insured Municipal Securities Trust, Series 32
Statement of Net Assets
December 31, 1999
Investments in securities, at market value (cost $2,027,685) $ 2,112,161
Other assets:
Accrued interest 42,881
-----------------
Total other assets 42,881
-----------------
Liabilities:
Advance from Trustee 77,252
-----------------
Total liabilities 77,252
-----------------
Excess of liabilities over total other assets (34,371)
-----------------
Net assets (2,101 units of fractional undivided
interest outstanding, $988.95 per unit) $ 2,077,790
=================
The accompanying notes form an integral part of the financial statements.
<PAGE>
Insured Municipal Securities Trust, Series 32
Statement of Operations
<TABLE>
<CAPTION>
Year ended December 31,
1999 1998 1997
------------------ ------------------- ------------------
<S> <C> <C> <C>
Investment income
Interest $ 129,695 $ 134,737 $ 161,784
Expenses
Trustee's fees 5,367 4,687 6,810
Evaluator's fee 880 953 753
Sponsor's advisory fee 548 584 729
------------------ ------------------- ------------------
Total expenses 6,795 6,224 8,292
Net investment income 122,900 128,513 153,492
Realized and unrealized gain (loss)
Realized gain on investments 4,102 11,104 37,857
Unrealized appreciation (depreciation)
on investments (166,594) 19,426 38,788
------------------ ------------------- ------------------
Net gain (loss) on investments (162,492) 30,530 76,645
------------------ ------------------- ------------------
Net increase (decrease) in net assets resulting from
operations $ (39,592) $ 159,043 $ 230,137
================== =================== ==================
</TABLE>
The accompanying notes form an integral part of the financial statements.
<PAGE>
Insured Municipal Securities Trust, Series 32
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year ended December 31,
1999 1998 1997
------------------ ------------------- ------------------
<S> <C> <C> <C>
Operations
Net investment income $ 122,900 $ 128,513 $ 153,492
Realized gain on investments 4,102 11,104 37,857
Unrealized appreciation (depreciation)
on investments (166,594) 19,426 38,788
------------------ ------------------- ------------------
Net increase (decrease) in net assets resulting from
operations (39,592) 159,043 230,137
------------------ ------------------- ------------------
Distributions to certificateholders
Investment income 124,070 128,439 157,138
Principal - 62,168
Redemptions
Interest 465 894 1,020
Principal 119,322 157,887 572,672
------------------ ------------------- ------------------
Total distributions and redemptions 243,857 287,220 792,998
------------------ ------------------- ------------------
Total (decrease) (283,449) (128,177) (562,861)
Net assets
Beginning of year 2,361,239 2,489,416 3,052,277
------------------ ------------------- ------------------
End of year (including undistributed net investment
income of $6,991, $8,626 and $9,446, respectively)
$ 2,077,790 $ 2,361,239 $ 2,489,416
================== =================== ==================
</TABLE>
The accompanying notes form an integral part of the financial statements.
<PAGE>
Insured Municipal Securities Trust, Series 32
Financial Highlights
Selected data for a unit of the Trust outstanding:*
<TABLE>
<CAPTION>
Year ended December 31,
1999 1998 1997
------------------ ------------------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of year** $ 1,063.62 $ 1,050.83 $ 1,046.38
------------------ ------------------- ------------------
Interest income 60.03 58.71 61.21
Expenses (3.15) (2.71) (3.14)
------------------ ------------------- ------------------
Net investment income 56.88 56.00 58.07
------------------ ------------------- ------------------
Net gain or loss on investments (1) (73.91) 13.14 29.74
------------------ ------------------- ------------------
Total from investment operations (17.03) 69.14 87.81
------------------ ------------------- ------------------
Less distributions:
To Certificateholders
Income 57.42 55.96 59.45
Principal
For redemptions - - 23.52
Interest .22 .39 .39
------------------ ------------------- ------------------
Total distributions 57.64 56.35 83.36
------------------ ------------------- ------------------
Net asset value, end of year** $ 988.95 $ 1,063.62 $ 1,050.83
================== =================== ==================
</TABLE>
(1) Net gain or loss on investments is a result of changes in outstanding units
since January 1, 1999, 1998 and 1997, respectively, and the dates of net gain
and loss on investments.
- ----------------
* Unless otherwise stated, based upon average units outstanding during the
year of 2,161 ([2,101 + 2,220]/2) for 1999, 2,295 ([2,220 +2,369]/2) for
1998 and of 2,643 ([2,369 + 2,917]/2) for 1997.
** Based upon actual units outstanding.
The accompanying notes form an integral part of the financial statements.
<PAGE>
Insured Municipal Securities Trust, Series 32
Notes to Financial Statements
December 31, 1999
1. Organization
Insured Municipal Securities Trust, Series 32 (the "Trust") was organized on
April 14, 1994 by Bear, Stearns & Co. Inc. and Gruntal & Co., Incorporated under
the laws of the State of New York by a Trust Indenture and Agreement, and is
registered under the Investment Company Act of 1940. The Trust was formed to
preserve capital and to provide interest income.
Effective September 28, 1995, Reich & Tang Distributors, Inc. ("Reich & Tang")
has become the successor sponsor (the "Sponsor") to certain of the unit
investment trusts previously sponsored by Bear, Stearns & Co. Inc. As successor
Sponsor, Reich & Tang has assumed all of the obligations and rights of Bear,
Stearns & Co. Inc., the previous sponsor.
Effective February 9, 2000, Gruntal & Co. resigned as a co-sponsor of certain
unit investment trusts previously co-sponsored with Reich & Tang. ING Funds
Distributor, Inc. ("ING") has become the successor sponsor to certain unit
investment trusts previously sponsored by Reich & Tang. As successor sponsor,
ING has assumed all of the obligations and rights of Reich & Tang, the previous
sponsor.
2. Summary of Significant Accounting Policies
The following is a summary of significant accounting policies consistently
followed by the Trust in preparation of its financial statements. The policies
are in conformity with generally accepted accounting principles ("GAAP"). The
preparation of financial statements in accordance with GAAP requires management
to make estimates and assumptions that affect the reported amounts and
disclosures in the financial statements. Actual amounts could differ from those
estimates.
Interest Income
Interest income is recorded on the accrual basis. The discount on the
zero-coupon bonds is accreted by the interest method over the respective lives
of the bonds. The accretion of such discount is included in interest income;
however, it is not distributed until realized in cash upon maturity or sale of
the respective bonds.
<PAGE>
Insured Municipal Securities Trust, Series 32
Notes to Financial Statements (continued)
2. Summary of Significant Accounting Policies (continued)
Security Valuation
Investments are carried at market value which is determined by Kenny S&P
Evaluation Services, a business unit of J.J. Kenny Company, Inc., a subsidiary
of the McGraw-Hill Companies, Inc. The market value of the portfolio is based
upon the bid prices for the bonds at the end of the year, which approximates the
fair value of the security at that date, except that the market value on the
date of deposit represents the cost to the Trust based on the offering prices
for investments at that date. The difference between cost (including accumulated
accretion of original issue discount on zero-coupon bonds) and market value is
reflected as unrealized appreciation (depreciation) of investments. Securities
transactions are recorded on the trade date. Realized gains (losses) from
securities transactions are determined on the basis of average cost of the
securities sold or redeemed.
3. Income Taxes
No provision for federal income taxes has been made in the accompanying
financial statements because the Trust intends to continue to qualify for the
tax treatment applicable to Grantor Trusts under the Internal Revenue Code.
Under existing law, if the Trust so qualifies, it will not be subject to federal
income tax on net income and capital gains that are distributed to unitholders.
4. Trust Administration
The Chase Manhattan Bank (the "Trustee") has custody of assets and
responsibility for the accounting records and financial statements of the Trust
and is responsible for establishing and maintaining a system of internal control
related thereto. The Trustee is also responsible for all estimates of expenses
and accruals reflected in the Trust's financial statements.
The Trust Indenture and Agreement provides for interest distributions as often
as monthly (depending upon the distribution plan elected by the
Certificateholders).
<PAGE>
Insured Municipal Securities Trust, Series 32
Notes to Financial Statements (continued)
4. Trust Administration (continued)
The Trust Indenture and Agreement further requires that principal received from
the disposition of bonds, other than those bonds sold in connection with the
redemption of units, be distributed to Certificateholders.
The Trust Indenture and Agreement also requires the Trust to redeem units
tendered. For the years ended December 31, 1999, 1998 and 1997, 119, 149 and 548
units were redeemed, respectively.
The Trust pays an annual fee for trustee services rendered by the Trustee that
ranges from $.94 to $1.39 per $1,000 of outstanding investment principal. In
addition, a minimum fee of $3.00 is paid to a service bureau for each portfolio
valuation. A maximum fee of $.25 per $1,000 of outstanding investment principal
is paid to the Sponsor. For the years ended December 31, 1999, 1998 and 1997,
the "Trustee's Fees" are comprised of Trustee fees of $2,800, $3,128 and $3,556
and other expenses of $2,567, $1,559 and $3,254 respectively. The other expenses
include professional, printing and miscellaneous fees.
5. Net Assets
At December 31, 1999, the net assets of the Trust represented the interest of
Certificateholders as follows:
Original cost to Certificateholders $ 3,073,400
Less initial gross underwriting commission 150,597
-------------------
2,922,803
Accumulated cost of securities sold, matured or called (895,118)
Net unrealized appreciation 84,476
Undistributed net investment income 6,991
Distributions in excess of proceeds from investments (41,362)
-------------------
Total $ 2,077,790
===================
<PAGE>
Insured Municipal Securities Trust, Series 32
Notes to Financial Statements (continued)
5. Net Assets (continued)
The original cost to Certificateholders, less the initial gross underwriting
commission, represents the aggregate initial public offering price net of the
applicable sales charge on 3,000 units of fractional undivided interest of the
Trust as of the date of deposit.
6. Concentration of Credit Risk
Since the Trust invests a portion of its assets in municipal bonds, it may be
affected by economic and political developments in the municipalities. Certain
debt obligations held by the Trust may be entitled to the benefit of insurance,
standby letters of credit or other guarantees of banks or other financial
institutions.
<PAGE>
Prospectus Part A Dated April 30, 2000
INSURED MUNICIPAL SECURITIES TRUST
NEW YORK NAVIGATOR INSURED
SERIES 16
________________________________________________________________________________
The Trust is a unit investment trust designated Series 16 ("New York
Navigator Trust") with an underlying portfolio of long-term insured tax- exempt
bonds and was formed to preserve capital and to provide interest income which,
in the opinions of bond counsel to the respective issuers, is, with certain
exceptions, currently exempt from regular federal income tax under existing law
and from New York State and City personal income tax. There can be no assurance
that the Trust's investment objectives will be achieved. Although the Supreme
Court has determined that Congress has the authority to subject the interest on
bonds such as the Bonds in the Trust to federal income taxation, existing law
excludes such interest from regular federal income tax. Such interest income
may, however, be a specific preference item for purposes of the federal
individual and corporate alternative minimum tax. (See "Description of
Portfolio" in this Part A for a list of those Bonds, if any, which pay interest
income subject to the federal individual alternative minimum tax.) In addition,
capital gains are subject to tax. (See "Tax Status" and "The Trust--Portfolio"
in Part B of this Prospectus.) The Sponsor is ING Funds Distributor, Inc.
(successor to Reich & Tang Distributors, Inc.). The value of the Units of the
Trust will fluctuate with the value of the underlying bonds. Minimum purchase: 1
Unit.
This Prospectus consists of two parts. Part A contains the Summary of
Essential Information as of December 31, 1999 (the "Evaluation Date"), a summary
of certain specific information regarding the Trust and audited financial
statements of the Trust, including the related portfolio, as of the Evaluation
Date. Part B of this Prospectus contains a general summary of the Trust. Part A
of this Prospectus may not be distributed unless accompanied by Part B.
Investors should retain both parts of this Prospectus for future reference. The
Securities and Exchange Commission ("SEC") maintains a website that contains
reports, proxy and information statements and other information regarding the
Trust which is filed electronically with the SEC. The SEC's Internet address is
http:www.sec.gov. Offering materials for the sale of these units available
through the Internet are not being offered directly or indirectly to residents
of a particular state nor is an offer of these units through the Internet
specifically directed to any person in a state by, or on behalf of, the issuer.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE 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 TRUST. The Trust seeks to achieve its investment objectives
through investment in a fixed, diversified portfolio of long-term insured bonds
(the "Bonds") issued by or on behalf of states, municipalities and public
authorities which, because of irrevocable insurance, were rated "AAA" by
Standard & Poor's Rating Services, a division of McGraw-Hill Companies.
260503.1
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<PAGE>
All of the Bonds in the Trust were rated "AAA" by Standard & Poor's Corporation
at the time originally deposited in the Trust (see "Portfolio"). This rating
results from insurance relating only to the Bonds in the Trust and not to Units
of the Trust. The insurance does not remove market risk, as it does not
guarantee the market value of the Units. For a discussion of the significance of
such ratings, see "Description of Bond Ratings" in Part B of this Prospectus.
Some of the aggregate principal amount of the Bonds in the Trust may
be "Zero Coupon Bonds," which are original issue discount bonds that provide for
payment at maturity at par value, but do not provide for the payment of current
interest (for the amount of Zero Coupon Bonds in each Trust, and the cost of
such Bonds to that Trust, see "Description of Portfolio" in this Part A). The
payment of interest and preservation of capital are, of course, dependent upon
the continuing ability of the issuers of the Bonds or the insurer thereof to
meet their obligations.
Investment in the Trust should be made with an understanding of the
risks which an investment in long-term fixed rate debt obligations may entail,
including the risk that the value of the underlying portfolio will decline with
increases in interest rates, and that the value of Zero Coupon Bonds is subject
to greater fluctuation than coupon bonds in response to such changes in interest
rates. A Trust designated as a long-term trust must have a dollar-weighted
average portfolio maturity of more than ten years. (See "Portfolio" in Part B of
this Prospectus.)
Each Unit in the Trust represents a 1/2520th undivided interest in the
principal and net income of the Trust. The principal amount of Bonds deposited
in the Trust per Unit is reflected in the Summary of Essential Information. (See
"Organization" in Part B of this Prospectus.) The Units being offered hereby are
issued and outstanding Units which have been purchased by the Sponsor in the
secondary market.
INSURANCE. Each of the Bonds in the New York Navigator Trust is
insured by a municipal bond guaranty insurance policy obtained by the Sponsor
(the "Navigator Sponsor-Insured Bonds") from MBIA Insurance Corporation ("MBIA
Corp.") covering regularly scheduled payments of principal thereof and interest
thereon when such amounts become due for payment but shall not have been paid.
For discussion of the effect of an occurrence of non-payment of principal or
interest on any Bonds in the New York Navigator Trust see "Portfolio
Supervision" in Part B of this Prospectus. The premiums for the Navigator
Sponsor-Insured Bonds are obligations of the Sponsor. Additionally, some of the
Bonds in the New York Navigator Trust may be Pre- Insured Bonds (as described
below). The premium for the Pre-Insured Bonds is an obligation of the issuers,
underwriters or prior owners of those Bonds. The insurance policy or policies
relating to the Navigator Sponsor-Insured Bonds provides that, to the extent
that Bonds are both Pre-Insured Bonds and Navigator Sponsor-Insured Bonds,
coverage is effective after a claim has been made upon the insurer of the
Pre-Insured Bonds.
Some of the Bonds in the New York Navigator Trust may additionally be
insured by a municipal bond guaranty insurance policy obtained by issuers,
underwriters or prior owners of the Bonds ("Pre-Insured Bonds") and issued by
one of the insurance companies described under "Insurance on the Bonds" in Part
B of this Prospectus (the "Insurance Companies").
None of the insurance will cover accelerated payments of principal or
penalty interest or premiums unrelated to taxability of interest on the Bonds.
The insurance relates only to the prompt payment of principal of and interest on
the securities in the portfolios, and does not remove market risks nor does it
guarantee the market value of Units in the Trusts. The terms of the insurance
are more fully described herein. No representation is made
260503.1
A-2
<PAGE>
herein as to any Bond insurer's ability to meet its obligations under a policy
of insurance relating to any of the Pre-Insured Bonds. In addition, investors
should be aware that subsequent to the Date of Deposit the rating of the
claims-paying ability of the insurer of an underlying Pre-Insured Bond may be
downgraded.
All of the Bonds in the New York Navigator Trust are covered by
insurance obtained by the Sponsors from MBIA Corp. and 54.0% of the Bonds in the
New York Navigator Trust are Pre-Insured Bonds. The approximate percentage of
the aggregate principal amount of the Portfolio that is insured by each
Insurance Company with respect to Pre-Insured Bonds is as follows: AMBAC
Indemnity Corp. ("AMBAC"), 17.7%; and MBIA Corp., 36.3%.
PUBLIC OFFERING PRICE. The secondary market Public Offering Price of
each Unit is equal to the aggregate offering price of the Bonds in such Trust
divided by the number of Units outstanding, plus a sales charge of 4.9% of the
Public Offering Price, or 5.152% of the net amount invested in Bonds per Unit.
In addition, accrued interest to the expected date of settlement is added to the
Public Offering Price. If Units had been purchased on the Evaluation Date, the
Public Offering Price per Unit would have been $992.27 plus accrued interest of
$.58 under the monthly distribution plan and $5.03 under the semi-annual
distribution plan, for a total of $992.85 and $997.30, respectively. The Public
Offering Price per Unit can vary on a daily basis in accordance with
fluctuations in the aggregate bid price of the Bonds. (See "Public
Offering--Offering Price" in Part B of this Prospectus.)
ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN. Units of each
Trust are offered to investors on a "dollar price" basis (using the computation
method described under "Public Offering--Offering Price" in Part B) as
distinguished from a "yield price" basis often used in offerings of tax exempt
bonds (involving the lesser of the yield as computed to maturity of bonds or to
an earlier redemption date). Since they are offered on a dollar price basis, the
rate of return on an investment in Units of each Trust is measured in terms of
"Estimated Current Return" and "Estimated Long Term Return".
Estimated Long Term Return is calculated by: (1) computing the yield
to maturity or to an earlier call date (whichever results in a lower yield) for
each Bond in the Trust's portfolio in accordance with accepted bond practices,
which practices take into account not only the interest payable on the Bond but
also the amortization of premiums or accretion of discounts, if any; (2)
calculating the average of the yields for the Bonds in the Trust's portfolio by
weighing each Bond's yield by the market value of the Bond and by the amount of
time remaining to the date to which the Bond is priced (thus creating an average
yield for the portfolio of the Trust); and (3) reducing the average yield for
the portfolio of the Trust in order to reflect estimated fees and expenses of
the Trust and the maximum sales charge paid by investors. The resulting
Estimated Long Term Return represents a measure of the return to investors
earned over the estimated life of the Trust. (For the Estimated Long Term Return
to Certificateholders under the monthly or semi-annual distribution plans, see
"Summary of Essential Information".)
Estimated Current Return is a measure of the Trust's cash flow.
Estimated Current Return is computed by dividing the Estimated Net Annual
Interest Income per Unit by the Public Offering Price per Unit. In contrast to
the Estimated Long Term Return, the Estimated Current Return does not take into
account the amortization of premium or accretion of discount, if any, on the
Bonds in the portfolio of the Trust. Moreover, because interest rates on
260503.1
A-3
<PAGE>
Bonds purchased at a premium are generally higher than current interest rates
on newly issued bonds of a similar type with comparable rating, the Estimated
Current Return per Unit may be affected adversely if such Bonds are redeemed
prior to their maturity.
The Estimated Net Annual Interest Income per Unit of the Trust will
vary with changes in the fees and expenses of the Trustee and the Evaluator
applicable to the Trust and with the redemption, maturity, sale or other
disposition of the Bonds in the Trust. The Public Offering Price will vary with
changes in the bid prices of the Bonds. Therefore, there is no assurance that
the present Estimated Current Return or Estimated Long Term Return will be
realized in the future. (For the Estimated Current Return to Certificateholders
under the monthly or semi-annual distribution plans, see "Summary of Essential
Information". See "Estimated Long Term Return and Estimated Current Return" in
Part B of this Prospectus.)
A schedule of cash flow projections is available from the Sponsors
upon request.
DISTRIBUTIONS. Distributions of interest income, less expenses, will
be made by the Trust either monthly or semi-annually depending upon the plan
chosen by the Certificateholder. Certificateholders purchasing Units in the
secondary market will initially receive distributions in accordance with the
elections of the prior owner and may thereafter change the plan as provided
under "Interest and Principal Distributions" in Part B of this Prospectus.
Distributions of principal, if any, will be made semi-annually on June 15 and
December 15 of each year. (See "Rights of Certificateholders-- Interest and
Principal Distributions" in Part B of this Prospectus. For estimated monthly and
semi-annual interest distributions, see "Summary of Essential Information.")
MARKET FOR UNITS. The Sponsor, although not obligated to do so,
intends to maintain a secondary market for the Units at a price based on the
aggregate bid price of the Bonds in the Trust portfolio. The reoffer price will
be based on the aggregate bid price of the Bonds plus a sales charge of 4.9% of
the Public Offering Price (5.152% of the net amount invested), plus net accrued
interest. If a market is not maintained a Certificateholder will be able to
redeem his or her Units with the Trustee at a price based on the aggregate bid
price of the Bonds. (See "Sponsor Repurchase" and "Public Offering--Offering
Price" in Part B of this Prospectus.)
260503.1
A-4
<PAGE>
<TABLE>
<CAPTION>
INSURED MUNICIPAL SECURITIES TRUST
NEW YORK NAVIGATOR INSURED
SERIES 16
SUMMARY OF ESSENTIAL INFORMATION AS OF DECEMBER 31, 1999
--------------------------------------------------------
<S> <C> <C>
Date of Deposit*: April 14, 1994 Weighted Average Life to
Principal Amount of Bonds ... $2,480,000 Maturity: 16.2 Years.
Number of Units ............. 2,520 Minimum Value of Trust:
Fractional Undivided Inter- Trust may be terminated if
est in Trust per Unit ..... 1/2520 value of Trust is less than
Principal Amount of $1,200,000 in principal amount
Bonds per Unit ............ $984.13 of Bonds.
Secondary Market Public Mandatory Termination Date:
Offering Price** The earlier of December 31,
Aggregate Bid Price 2044 or the disposition of the
of Bonds in Trust ....... $2,379,244+++ last Bond in the Trust.
Divided by 2,520 Units .... $944.14 Trustee***: The Chase Manhattan
Plus Sales Charge of 4.9% Bank.
of Public Offering Price. $48.13 Trustee's Annual Fee: Monthly
Public Offering Price plan $1.40 per $1,000; and
per Unit ................ $992.27 semi-annual plan $.95 per
Redemption and Sponsor's $1,000.
Repurchase Price Evaluator: Kenny S&P Evaluation
per Unit .................. $944.14+ Services.
+++ Evaluator's Fee for Each
++++ Evaluation: Minimum of $3 plus
Excess of Secondary Market $.25 per each issue of Bonds in
Public Offering Price excess of 50 issues (treating
over Redemption and separate maturities as separate
Sponsor's Repurchase issues).
Price per Unit ............ $48.13+++ Sponsor: ING Funds Distributor,
Difference between Public Inc.
Offering Price per Unit Sponsor's Annual Fee: Maximum of
and Principal Amount per $.25 per $1,000 principal
Unit Premium/(Discount) ... $8.14 amount of Bonds (see "Trust
Evaluation Time: 4:00 p.m. Expenses and Charges" in Part B
New York Time. of this Prospectus).
Minimum Principal Distribution:
$1.00 per Unit.
</TABLE>
<TABLE>
<CAPTION>
PER UNIT INFORMATION BASED UPON INTEREST DISTRIBUTION PLAN ELECTED
------------------------------------------------------------------
<S> <C> <C>
Monthly Semi-Annual
Option Option
------ -----------
Gross annual interest income# ......... $54.80 $54.80
Less estimated annual fees and
expenses ............................ (2.05) (1.62)
Estimated net annual interest ______ ______
income (cash)# ...................... $52.75 $53.18
Estimated interest distribution# ...... 4.40 26.59
Estimated daily interest accrual# ..... .1465 .1477
Estimated current return#++ ........... 5.32% 5.36%
Estimated long term return++ .......... 5.31% 5.36%
Record dates .......................... 1st of Dec. 1 and
each month June 1
Interest distribution dates ........... 15th of Dec. 15 and
each month June 15
</TABLE>
260503.1
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<PAGE>
Footnotes to Summary of Essential Information
* The Date of Deposit is the date on which the Trust Agreement was signed
and the deposit of the Bonds with the Trustee made.
** Certain amounts distributable as of December 31, 1999, may be reported
in the Summary of Essential Information as if they had been distributed
at year-end.
*** The Trustee maintains its principal executive office at 270 Park
Avenue, New York, New York 10017 and its unit investment trust office
at 4 New York Plaza, New York, New York 10004 (tel. no.:
1-800-882-9898). For information regarding redemption by the Trustee,
see "Trustee Redemption" in Part B of this Prospectus.
+ Plus accrued interest to the expected date of settlement (approximately
three business days after purchase) of $.58 monthly and $5.03 semi-
annually.
++ The estimated current return and estimated long term return are
increased for transactions entitled to a discount (see "Employee
Discounts" in Part B of this Prospectus), and are higher under the
semi- annual option due to lower Trustee's fees and expenses.
+++ Based solely upon the bid side evaluation of the underlying Bonds
(including, where applicable, undistributed cash from the principal
account). Upon tender for redemption, the price to be paid will be
calculated as described under "Trustee Redemption" in Part B of this
Prospectus.
++++ See "Comparison of Public Offering Price, Sponsor's Repurchase Price
and Redemption Price" in Part B of this Prospectus.
# Does not include income accrual from original issue discount bonds, if
any.
<TABLE>
<CAPTION>
FINANCIAL AND STATISTICAL INFORMATION
Selected data for each Unit outstanding for the periods listed below:
Distribu-
Distributions of Interest tions of
During the Period (per Unit) Principal
---------------------------- During
Net Asset* Semi- the
Units Out- Value Monthly Annual Period
Period Ended standing Per Unit Option Option (Per Unit)
- ------------ ---------- ---------- ------- ------ ----------
<S> <C> <C> <C> <C> <C>
December 31, 1997 2,986 $1,044.10 $55.44 $55.90 -0-
December 31, 1998 2,755 1,051.57 54.39 54.93 $ 5.15
December 31, 1999 2,520 947.87 53.71 54.08 15.88
</TABLE>
- --------
* Net Asset Value per Unit is calculated by dividing net assets as
disclosed in the "Statement of Net Assets" by the number of Units
outstanding as of the date of the Statement of Net Assets. See Note 5
of Notes to Financial Statements for a description of the components of
Net Assets.
260503.1
A-6
<PAGE>
INFORMATION REGARDING THE TRUST
AS OF DECEMBER 31, 1999
DESCRIPTION OF PORTFOLIO
- ------------------------
The portfolio of the Trust consists of 8 issues representing
obligations of 8 issuers located in the state of New York and one in Puerto
Rico. The Sponsor has participated as a sole underwriter or manager, co- manager
or member of underwriting syndicates from which any of the initial aggregate
principal amount of the Bonds were acquired. None of the Bonds are obligations
of state and local housing authorities; approximately 4.0% are hospital revenue
bonds; none were issued in connection with the financing of nuclear generating
facilities; and none are "mortgage subsidy" bonds. All of the Bonds in the Trust
are subject to redemption prior to their stated maturity dates pursuant to
sinking fund or optional call provisions. The Bonds may also be subject to other
calls, which may be permitted or required by events which cannot be predicted
(such as destruction, condemnation, termination of a contract, or receipt of
excess or unanticipated revenues). Two of the issues representing $290,000 of
the principal amount of the Bonds are general obligation bonds. All six of the
remaining issues representing $2,190,000 of the principal amount of the Bonds
are payable from the income of a specific project or authority and are not
supported by the issuer's power to levy taxes. The portfolio is divided for
purpose of issue as follows: Bridge & Tunnel 1, Hospital 1, Local Government
Assistance 1, University 1, Urban Development Corp. 1 and Water 1. For an
explanation of the significance of these factors see "The Trust--Portfolio" in
Part B of this Prospectus.
As of December 31, 1999, $2,190,000 (approximately 88.3% of the
aggregate principal amount of the Bonds) were original issue discount bonds. Of
these original issue discount bonds, none were Zero Coupon Bonds. None of the
aggregate principal amount of the Bonds in the Trust were purchased at a
"market" discount from par value at maturity, approximately 11.7% were purchased
at a premium and none were purchased at par. For an explanation of the
significance of these factors see "Discount and Zero Coupon Bonds" in Part B of
this Prospectus.
None of the Bonds in the Trust are subject to the federal individual
alternative minimum tax under the Tax Reform Act of 1986. See "Tax Status" in
Part B of this Prospectus.
260503.1
A-7
<PAGE>
Report of Independent Auditors
The Sponsor, Trustee and Certificateholders of
Insured Municipal Securities Trust, New York Navigator Insured Series 16
We have audited the accompanying statement of net assets of Insured Municipal
Securities Trust, New York Navigator Insured Series 16, including the portfolio,
as of December 31, 1999 and the related statements of operations, and changes in
net assets and financial highlights for the year then ended. These financial
statements and financial highlights are the responsibility of the Trustee. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit. The statement of operations, statement
of changes in net assets and financial highlights for each of the two years in
the period ended December 31, 1998 were audited by other auditors whose report
thereon dated March 19, 1999, expressed an unqualified opinion on those
financial statements and financial highlights.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of the securities
owned by correspondence with the Trustee. An audit also includes assessing the
accounting principles used and significant estimates made by the Trustee, as
well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the 1999 financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Insured Municipal Securities Trust, New York Navigator Insured Series 16 at
December 31, 1999, the results of its operations, changes in its net assets and
financial highlights for the year then ended, in conformity with accounting
principles generally accepted in the United States.
/s/ERNST & YOUNG LLP
New York, New York
April 15, 2000
<PAGE>
Insured Municipal Securities Trust,
New York Navigator Insured Series 16
Portfolio
December 31, 1999
<TABLE>
<CAPTION>
Redemption
Aggregate Coupon Feature (2)(4)
Portfolio Principal Rate/Date(s) S.F.-Sinking Fund Market
No. Amount Name of Issuer and Title of Bonds Ratings of Maturity Ref.-Refunding Value (3)
(1) (2)
- ------------ ----------- -------------------------------------------- ----------- -------------- -------------------- -------------
<S> <C> <C> <C> <C> <C> <C>
1 $ 500,000 N.Y. St. Dorm. Auth. Rev. Mt. Sinai Sch. AAA 5.000% No Sinking fund $ 442,815
of Med. (MBIA Corp.) 7/01/2016 7/01/04 @ 102 Ref.
2 100,000 N.Y. St. Dorm. Auth. Revs. Univ. AAA 5.500 7/01/18 @ 100 S.F. 92,866
Rochester - Strong Mem. Hosp. (MBIA Corp.) 7/01/2021 7/01/04 @ 102 Ref.
3 500,000 N.Y. St. Loc. Govt. Asst. Corp. Rfndg. Rev. AAA 5.500 4/01/20 @ 100 S.F. 462,930
Series A (MBIA Corp.) 4/01/2023 4/01/04 @ 101.5 Ref.
4 400,000 N.Y. St. U.D.C. Youth Fac. (MBIA Corp.) AAA 5.700 4/01/10 @ 100 S.F. 400,084
4/01/2014 4/01/04 @ 102 Ref.
5 40,000 The City of N.Y. Genl. Oblig. Bonds Fiscal AAA 7.000 No Sinking Fund 42,872
1993 Series B (MBIA Corp.) 10/01/2009 10/01/02 @ 101.5 Ref.
6 250,000 N.Y. City Genl. Oblig. Rev. Bonds 1994 AAA 5.375 No Sinking Fund 226,127
Series C (MBIA Corp.) 10/01/2022 10/01/03 @ 101.5 Ref.
7 250,000 N.Y. City Muni. Wtr. Finc. Auth. Wtr. & AAA 6.750 No Sinking Fund 258,663
Swr. Sys. Rev. Rfndg. Bonds (MBIA Corp.) 6/15/2017 6/15/01 @ 101 Ref.
8 340,000 Trib Brdg. & Tnnl. Auth. Rev. Rfndg. Spec. AAA 5.500 1/01/16 @ 100 S.F. 346,045
Oblig. Series 1992 (MBIA Corp.) 1/01/2017 1/01/02 @ 100 Ref.
8A 100,000 Trib Brdg. & Tnnl. Auth. Rev. Rfndg. Spec. AAA 6.500 1/01/16 @ 100 S.F. 95,023
Oblig. Series 1992 (MBIA Corp.) Unrefunded Balance 1/01/2017 1/01/02 @ 100 Ref.
----------- -------------
$2,480,000 Total Investments (Cost $2,282,927) $2,367,425
=========== =============
</TABLE>
See accompanying footnotes to portfolio and notes to financial statements.
<PAGE>
Insured Municipal Securities Trust,
New York Navigator Insured Series 16
Footnotes to Portfolio
1. All ratings are by Kenny S&P Evaluation Services, a business unit of J.J.
Kenny Company, Inc., a subsidiary of The McGraw-Hill Companies, Inc. A
brief description of the ratings symbols and their meaning is set forth
under "Description of Bond Ratings" in Part B of the Prospectus.
2. See "The Trust--Portfolio" in Part B of the Prospectus for an explanation
of redemption features. See "Tax Status" in Part B of the Prospectus for a
statement of the Federal tax consequences to a Certificateholder upon the
sale, redemption or maturity of a bond.
3. At December 31, 1999, the net unrealized appreciation of all the bonds was
comprised of the following:
Gross unrealized appreciation $ 84,517
Gross unrealized depreciation (19)
----------------
Net unrealized appreciation $ 84,498
================
4. The Bonds may also be subject to other calls, which may be permitted or
required by events which cannot be predicted (such as destruction,
condemnation, termination of a contract, or receipt of excess of
unanticipated revenues).
The accompanying notes form an integral part of the financial statements.
<PAGE>
Insured Municipal Securities Trust,
New York Navigator Insured Series 16
Statement of Net Assets
December 31, 1999
Investments in securities, at market value (cost $2,282,927) $ 2,367,425
Other assets
Accrued interest 45,234
------------------
Total other assets 45,234
------------------
Liabilities
Advance from Trustee 24,025
------------------
Total liabilities 24,025
------------------
Excess of other assets over total liabilities 21,209
------------------
Net assets (2,520 units of fractional undivided
interest outstanding, $947.87 per unit) $ 2,388,634
==================
The accompanying notes form an integral part of the financial statements.
<PAGE>
Insured Municipal Securities Trust,
New York Navigator Insured Series 16
Statement of Operations
<TABLE>
<CAPTION>
Year ended December 31,
1999 1998 1997
------------------ ------------------- ------------------
<S> <C> <C> <C>
Investment income
Interest $ 148,208 $ 158,328 $ 172,987
------------------ ------------------- ------------------
Expenses
Trustee's fees 4,654 5,477 5,615
Evaluator's fee 879 951 751
Sponsor's advisory fee 689 750 750
------------------ ------------------- ------------------
Total expenses 6,222 7,178 7,116
------------------ ------------------- ------------------
Net investment income 141,986 151,150 165,871
Realized and unrealized gain (loss)
Realized gain on investments 10,399 10,964 -
Unrealized appreciation (depreciation) on investments (239,319) 27,056 111,104
------------------ ------------------- ------------------
Net gain (loss) on investments (228,920) 38,020 111,104
------------------ ------------------- ------------------
Net increase (decrease) in net assets resulting from
operations $ (86,934) $ 189,170 $ 276,975
================== =================== ==================
</TABLE>
The accompanying notes form an integral part of the financial statements.
<PAGE>
Insured Municipal Securities Trust,
New York Navigator Insured Series 16
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year ended December 31,
1999 1998 1997
------------------ ------------------- ------------------
<S> <C> <C> <C>
Operations
Net investment income $ 141,986 $ 151,150 $ 165,871
Realized gain on investments 10,399 10,964 -
Unrealized appreciation (depreciation) on investments (239,319) 27,056 111,104
------------------ ------------------- ------------------
Net increase (decrease) in net assets resulting from
operations (86,934) 189,170 276,975
------------------ ------------------- ------------------
Distributions to certificateholders
Investment income 142,911 151,853 166,309
Principal 41,503 14,188 -
Redemptions
Interest 1,276 1,537 -
Principal 235,818 242,201 -
------------------ ------------------- ------------------
Total distributions and redemptions 421,508 409,779 166,309
------------------ ------------------- ------------------
Total increase (decrease) (508,442) (220,609) 110,666
Net assets
Beginning of year 2,897,076 3,117,685 3,007,019
------------------ ------------------- ------------------
End of year (including undistributed net investment
income of $9,390, $11,591 and $13,831,
respectively) $2,388,634 $ 2,897,076 $ 3,117,685
================== =================== ==================
</TABLE>
The accompanying notes form an integral part of the financial statements.
<PAGE>
Insured Municipal Securities Trust,
New York Navigator Insured Series 16
Financial Highlights
Selected data for a unit of the Trust outstanding:*
<TABLE>
<CAPTION>
Year ended December 31,
1999 1998 1997
------------------ ------------------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of year** $ 1,051.57 $ 1,044.10 $ 1,007.04
------------------ ------------------- ------------------
Interest income 56.18 55.15 57.93
Expenses (2.36) (2.50) (2.38)
------------------ ------------------- ------------------
Net investment income 53.82 52.65 55.55
------------------ ------------------- ------------------
Net gain or loss on investments(1) (87.14) 13.19 37.21
------------------ ------------------- ------------------
Total from investment operations (33.32) 65.84 92.76
------------------ ------------------- ------------------
Less distributions
to Certificateholders
Income 54.17 52.89 55.70
Principal 15.73 4.94 -
for Redemptions
Interest .48 .54 -
------------------ ------------------- ------------------
Total distributions 70.38 58.37 55.70
------------------ ------------------- ------------------
Net asset value, end of year** $ 947.87 $ 1,051.57 $ 1,044.10
================== =================== ==================
</TABLE>
(1) Net gain or loss on investments is a result of changes in outstanding units
since January 1, 1999, 1998 and 1997, respectively, and the dates of net
gain and loss on investments.
* Unless otherwise stated, based upon average units outstanding during the
year of 2,638 ([2,520 + 2,755]/2) for 1999, 2,871 ([2,755 + 2,986]/2) for
1998 and of 2,986 ([2,986 + 2,986]/2) for 1997.
** Based upon actual units outstanding.
The accompanying notes form an integral part of the financial statements.
<PAGE>
Insured Municipal Securities Trust,
New York Navigator Insured Series 16
Notes to Financial Statements
December 31, 1999
1. Organization
Insured Municipal Securities Trust, New York Navigator Insured Series 16 (the
"Trust") was organized on April 14, 1994 by Bear, Stearns & Co. Inc. and Gruntal
& Co., Incorporated under the laws of the State of New York by a Trust Indenture
and Agreement, and is registered under the Investment Company Act of 1940. The
Trust was formed to preserve capital and to provide interest income.
On September 28, 1995, Reich & Tang Distributors, Inc. ("Reich & Tang") had
become the successor sponsor to certain of the unit investment trusts previously
sponsored by Bear, Stearns & Co. Inc. As successor sponsor, Reich & Tang had
assumed all of the obligations and rights of Bear, Stearns & Co. Inc., the
previous sponsor.
Effective February 9, 2000, Gruntal & Co. resigned as a co-sponsor of certain
unit investment trusts previously co-sponsored with Reich & Tang. ING Funds
Distributor, Inc. ("ING") has become the successor sponsor to certain unit
investment trusts previously sponsored by Reich & Tang. As successor sponsor,
ING has assumed all of the obligations and rights of Reich & Tang, the previous
sponsor.
2. Summary of Significant Accounting Policies
The following is a summary of significant accounting policies consistently
followed by the Trust in preparation of its financial statements. The policies
are in conformity with generally accepted accounting principles ("GAAP"). The
preparation of financial statements in accordance with GAAP requires management
to make estimates and assumptions that affect the reported amounts and
disclosures in the financial statements. Actual amounts could differ from those
estimates. Interest income is recorded on the accrual basis.
<PAGE>
Insured Municipal Securities Trust,
New York Navigator Insured Series 16
Notes to Financial Statements (continued)
2. Summary of Significant Accounting Policies (continued)
Security Valuation
Investments are carried at market value which is determined by Kenny S&P
Evaluation Services, a business unit of J.J. Kenny Company, Inc., a subsidiary
of The McGraw-Hill Companies, Inc. The market value of the portfolio is based
upon the bid prices for the bonds at the end of the year, which approximates the
fair value of the security at that date, except that the market value on the
date of deposit represents the cost to the Trust based on the offering prices
for investments at that date. The difference between cost and market value is
reflected as unrealized appreciation (depreciation) of investments. Securities
transactions are recorded on the trade date. Realized gains (losses) from
securities transactions are determined on the basis of average cost of the
securities sold or redeemed.
3. Income Taxes
No provision for federal income taxes has been made in the accompanying
financial statements because the Trust intends to continue to qualify for the
tax treatment applicable to Grantor Trusts under the Internal Revenue Code.
Under existing law, if the Trust so qualifies, it will not be subject to federal
income tax on net income and capital gains that are distributed to unitholders.
4. Trust Administration
The Chase Manhattan Bank (the "Trustee") has custody of assets and
responsibility for the accounting records and financial statements of the Trust
and is responsible for establishing and maintaining a system of internal control
related thereto. The Trustee is also responsible for all estimates of expenses
and accruals reflected in the Trust's financial statements.
The Trust Indenture and Agreement provides for interest distributions as often
as monthly (depending upon the distribution plan elected by the
Certificateholders).
The Trust Indenture and Agreement further requires that principal received from
the disposition of bonds, other than those bonds sold in connection with the
redemption of units, be distributed to Certificateholders.
<PAGE>
Insured Municipal Securities Trust,
New York Navigator Insured Series 16
Notes to Financial Statements (continued)
4. Trust Administration (continued)
The Trust Indenture and Agreement also requires the Trust to redeem units
tendered. For the years ended December 31, 1999, 1998 and 1997, 235, 231 and 0
units were redeemed, respectively.
The Trust pays an annual fee for trustee services rendered by the Trustee that
ranges from $.95 to $1.40 per $1,000 of outstanding investment principal. In
addition, a minimum fee of $3.00 is paid to a service bureau for each portfolio
valuation. A maximum fee of $.25 per $1,000 of outstanding investment principal
is paid to the Sponsor. For the years ended December 31, 1999, 1998 and 1997,
the "Trustee's Fees" are comprised of Trustee fees of $2,713, $3,411 and $3,425
and other expenses of $1,941, $2,066 and $2,190, respectively. The other
expenses include professional, printing and miscellaneous fees.
5. Net Assets
At December 31, 1999, the net assets of the Trust represented the interest of
Certificateholders as follows:
Original cost to Certificateholders $ 2,966,462
Less initial gross underwriting commission 145,357
--------------------
2,821,105
Accumulated cost of securities sold, matured or called (538,178)
Net unrealized appreciation 84,498
Undistributed net investment income 9,390
Undistributed proceeds from investments 11,819
--------------------
Total $ 2,388,634
====================
The original cost to Certificateholders, less the initial gross underwriting
commission, represents the aggregate initial public offering price net of the
applicable sales charge on 4,000 units of fractional undivided interest of the
Trust as of the date of deposit.
<PAGE>
Insured Municipal Securities Trust,
New York Navigator Insured Series 16
Notes to Financial Statements (continued)
6. Concentration of Credit Risk
Since the Trust invests a portion of its assets in municipal bonds, it may be
affected by economic and political developments in the municipalities. Certain
debt obligations held by the Trust may be entitled to the benefit of insurance,
standby letters of credit or other guarantees of banks or other financial
institutions.
<PAGE>
Prospectus Part A Dated April 30, 2000
INSURED MUNICIPAL SECURITIES TRUST
NEW JERSEY NAVIGATOR INSURED
SERIES 12
- --------------------------------------------------------------------------------
The Trust is a unit investment trust designated Series 12 ("New Jersey
Navigator Trust") with an underlying portfolio of long-term insured tax-exempt
bonds and was formed to preserve capital and to provide interest income which,
in the opinions of bond counsel to the respective issuers, is, with certain
exceptions, currently exempt from regular federal income tax under existing law
and from New Jersey gross income tax. There can be no assurance that the Trust's
investment objectives will be achieved. Although the Supreme Court has
determined that Congress has the authority to subject the interest on bonds such
as the Bonds in the Trust to federal income taxation, existing law excludes such
interest from regular federal income tax. Such interest income may, however, be
a specific preference item for purposes of the federal individual and corporate
alternative minimum tax. (See "Description of Portfolio" in this Part A for a
list of those Bonds, if any, which pay interest income subject to the federal
individual alternative minimum tax.) In addition, capital gains are subject to
tax. (See "Tax Status" and "The Trust--Portfolio" in Part B of this Prospectus.)
The Sponsor is ING Funds Distributor, Inc. (successor to Reich & Tang
Distributors, Inc.). The value of the Units of the Trust will fluctuate with the
value of the underlying bonds. Minimum purchase: 1 Unit.
This Prospectus consists of two parts. Part A contains the Summary of
Essential Information as of December 31, 1999 (the "Evaluation Date"), a summary
of certain specific information regarding the Trust and audited financial
statements of the Trust, including the related portfolio, as of the Evaluation
Date. Part B of this Prospectus contains a general summary of the Trust. Part A
of this Prospectus may not be distributed unless accompanied by Part B.
Investors should retain both parts of this Prospectus for future reference. The
Securities and Exchange Commission ("SEC") maintains a website that contains
reports, proxy and information statements and other information regarding the
Trust which is filed electronically with the SEC. The SEC's Internet address is
http:www.sec.gov. Offering materials for the sale of these units available
through the Internet are not being offered directly or indirectly to residents
of a particular state nor is an offer of these units through the Internet
specifically directed to any person in a state by, or on behalf of, the issuer.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
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 TRUST. The Trust seeks to achieve its investment objectives through
investment in a fixed, diversified portfolio of long-term insured bonds (the
"Bonds") issued by or on behalf of states, municipalities and public authorities
which, because of irrevocable insurance, were rated "AAA" by Standard & Poor's
Rating Services, a division of The McGraw-Hill Companies. All of the Bonds in
the Trust were rated "AAA" by Standard & Poor's Corporation at the time
originally deposited in the Trust (see "Portfolio"). This rating results from
insurance relating only to the Bonds in the Trust and
260504.1
<PAGE>
not to Units of the Trust. The insurance does not remove market risk, as it does
not guarantee the market value of the Units. For a discussion of the
significance of such ratings, see "Description of Bond Ratings" in Part B of
this Prospectus. Some of the aggregate principal amount of the Bonds in the
Trust may be "Zero Coupon Bonds," which are original issue discount bonds that
provide for payment at maturity at par value, but do not provide for the payment
of current interest (for the amount of Zero Coupon Bonds in the Trust, and the
cost of such Bonds to the Trust, see "Description of Portfolio" in this Part A).
The payment of interest and preservation of capital are, of course, dependent
upon the continuing ability of the issuers of the Bonds or the insurer thereof
to meet their obligations.
Investment in the Trust should be made with an understanding of the risks
which an investment in long-term fixed rate debt obligations may entail,
including the risk that the value of the underlying portfolio will decline with
increases in interest rates, and that the value of Zero Coupon Bonds is subject
to greater fluctuation than coupon bonds in response to such changes in interest
rates. A Trust designated as a long-term trust must have a dollar-weighted
average portfolio maturity of more than ten years. (See "Portfolio" in Part B of
this Prospectus.)
Each Unit in the Trust represents a 1/1901st undivided interest in the
principal and net income of the Trust. The principal amount of Bonds deposited
in the Trust per Unit is reflected in the Summary of Essential Information. (See
"Organization" in Part B of this Prospectus.) The Units being offered hereby are
issued and outstanding Units which have been purchased by the Sponsor in the
secondary market.
INSURANCE. Each of the Bonds in the New Jersey Navigator Trust is insured
by a municipal bond guaranty insurance policy obtained by the Sponsor (the
"Navigator Sponsor-Insured Bonds") from MBIA Insurance Corporation ("MBIA
Corp.") covering regularly scheduled payments of principal thereof and interest
thereon when such amounts become due for payment but shall not have been paid.
For discussion of the effect of an occurrence of non-payment of principal or
interest on any Bonds in the New Jersey Navigator Trust see "Portfolio
Supervision" in Part B of this Prospectus. The premiums for the Navigator
Sponsor-Insured Bonds are obligations of the Sponsors. Additionally, some of the
Bonds in the New Jersey Navigator Trust may be Pre- Insured Bonds (as described
below). The premium for the Pre-Insured Bonds is an obligation of the issuers,
underwriters or prior owners of those Bonds. The insurance policy or policies
relating to the Navigator Sponsor-Insured Bonds provides that, to the extent
that Bonds are both Pre-Insured Bonds and Navigator Sponsor-Insured Bonds,
coverage is effective after a claim has been made upon the insurer of the
Pre-Insured Bonds.
Some of the Bonds in the New Jersey Navigator Trust may additionally be
insured by a municipal bond guaranty insurance policy obtained by issuers,
underwriters or prior owners of the Bonds ("Pre-Insured Bonds") and issued by
one of the insurance companies described under "Insurance on the Bonds" in Part
B of this Prospectus (the "Insurance Companies"). Such insurance covers the
scheduled payment of principal thereof and interest thereon when such amounts
shall become due for payment but shall not have been paid by the issuer or any
other insurer thereof.
None of the insurance will cover accelerated payments of principal or
penalty interest or premiums unrelated to taxability of interest on the Bonds.
The insurance relates only to the prompt payment of principal of and interest on
the securities in the portfolios, and does not remove market risks nor does it
guarantee the market value of Units in the Trusts. The terms of the insurance
are more fully described under "Insurance on the Bonds" in Part B of this
Prospectus. No representation is made herein as to any Bond insurer's ability to
meet its obligations under a policy of insurance relating to any of the
Pre-Insured Bonds. In addition, investors should be aware that
A-2
260504.1
<PAGE>
subsequent to the Date of Deposit the rating of the claims-paying ability of the
insurer of an underlying Pre-Insured Bond may be downgraded.
All of the Bonds in the New Jersey Navigator Trust are covered by insurance
obtained by the Sponsors from MBIA Corp. and 56.9% of the Bonds in the New
Jersey Navigator Trust are Pre-Insured Bonds. The approximate percentage of the
aggregate principal amount of the Trust that is insured by each Insurance
Company with respect to Pre-Insured Bonds is as follows: AMBAC Indemnity Corp.
("AMBAC"), 29.0%; and MBIA Corp., 27.9%.
PUBLIC OFFERING PRICE. The secondary market Public Offering Price of each
Unit is equal to the aggregate offering price of the Bonds in such Trust divided
by the number of Units outstanding, plus a sales charge of 5.5% of the Public
Offering Price, or 5.820% of the net amount invested in Bonds per Unit. In
addition, accrued interest to the expected date of settlement is added to the
Public Offering Price. If Units had been purchased on the Evaluation Date, the
Public Offering Price per Unit would have been $1,008.06 plus accrued interest
of $.59 under the monthly distribution plan and $5.10 under the semi-annual
distribution plan, for a total of $1,008.65 and $1,013.16, respectively. The
Public Offering Price per Unit can vary on a daily basis in accordance with
fluctuations in the aggregate bid price of the Bonds. (See "Public
Offering--Offering Price" in Part B of this Prospectus.)
ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN. Units of each
Trust are offered to investors on a "dollar price" basis (using the computation
method described under "Public Offering--Offering Price" in Part B) as
distinguished from a "yield price" basis often used in offerings of tax exempt
bonds (involving the lesser of the yield as computed to maturity of bonds or to
an earlier redemption date). Since they are offered on a dollar price basis, the
rate of return on an investment in Units of each Trust is measured in terms of
"Estimated Current Return" and "Estimated Long Term Return".
Estimated Long Term Return is calculated by: (1) computing the yield to
maturity or to an earlier call date (whichever results in a lower yield) for
each Bond in the Trust's portfolio in accordance with accepted bond practices,
which practices take into account not only the interest payable on the Bond but
also the amortization of premiums or accretion of discounts, if any; (2)
calculating the average of the yields for the Bonds in the Trust's portfolio by
weighing each Bond's yield by the market value of the Bond and by the amount of
time remaining to the date to which the Bond is priced (thus creating an average
yield for the portfolio of the Trust); and (3) reducing the average yield for
the portfolio of the Trust in order to reflect estimated fees and expenses of
the Trust and the maximum sales charge paid by investors. The resulting
Estimated Long Term Return represents a measure of the return to investors
earned over the estimated life of the Trust. (For the Estimated Long Term Return
to Certificateholders under the monthly, semi-annual and annual distribution
plans, see "Summary of Essential Information".)
Estimated Current Return is a measure of the Trust's cash flow. Estimated
Current Return is computed by dividing the Estimated Net Annual Interest Income
per Unit by the Public Offering Price per Unit. In contrast to the Estimated
Long Term Return, the Estimated Current Return does not take into account the
amortization of premium or accretion of discount, if any, on the Bonds in the
portfolio of the Trust. Moreover, because interest rates on Bonds purchased at a
premium are generally higher than current interest rates on newly issued bonds
of a similar type with comparable rating, the Estimated Current Return per Unit
may be affected adversely if such Bonds are redeemed prior to their maturity.
The Estimated Net Annual Interest Income per Unit of the Trust will vary
with changes in the fees and expenses of the Trustee and the Evaluator
applicable to the Trust and with the redemption, maturity, sale or other
disposition of the Bonds in the Trust. The Public Offering Price will
A-3
260504.1
<PAGE>
vary with changes in the bid prices of the Bonds. Therefore, there is no
assurance that the present Estimated Current Return or Estimated Long Term
Return will be realized in the future. (For the Estimated Current Return to
Certificateholders under the monthly, semi-annual and annual distribution plans,
see "Summary of Essential Information". See "Estimated Long Term Return and
Estimated Current Return" in Part B of this Prospectus.)
A schedule of cash flow projections is available from the Sponsors upon
request.
DISTRIBUTIONS. Distributions of interest income, less expenses, will be
made by the Trust either monthly, semi-annually or annually depending upon the
plan chosen by the Certificateholder. Certificateholders purchasing Units in the
secondary market will initially receive distributions in accordance with the
elections of the prior owner and may thereafter change the plan as provided
under "Interest and Principal Distributions" in Part B of this Prospectus.
Distributions of principal, if any, will be made semi-annually on June 15 and
December 15 of each year. (See "Rights of Certificateholders--Interest and
Principal Distributions" in Part B of this Prospectus. For estimated monthly,
semi-annual and annual interest distributions, see "Summary of Essential
Information.")
MARKET FOR UNITS. The Sponsor, although not obligated to do so, intends to
maintain a secondary market for the Units at a price based on the aggregate bid
price of the Bonds in the Trust portfolio. The reoffer price will be based on
the aggregate bid price of the Bonds plus a sales charge of 5.5% of the Public
Offering Price (5.820% of the net amount invested), plus net accrued interest.
If a market is not maintained a Certificateholder will be able to redeem his or
her Units with the Trustee at a price based on the aggregate bid price of the
Bonds. (See "Sponsor Repurchase" and "Public Offering--Offering Price" in Part B
of this Prospectus.)
A-4
260504.1
<PAGE>
INSURED MUNICIPAL SECURITIES TRUST
NEW JERSEY NAVIGATOR INSURED
SERIES 12
SUMMARY OF ESSENTIAL INFORMATION AS OF DECEMBER 31, 1999
--------------------------------------------------------
<TABLE>
<S> <C> <C>
Date of Deposit*: April 14, 1994 Minimum Principal Distribution:
Principal Amount of Bonds ... $1,830,000 $1.00 per Unit.
Number of Units ............. 1,901 Weighted Average Life to Maturity:
Fractional Undivided Inter- 21.2 Years.
est in Trust per Unit ..... 1/1901 Minimum Value of Trust:
Principal Amount of Trust may be terminated if value of
Bonds per Unit ............ $962.65 Trust is less than $1,200,000 in
Secondary Market Public principal amount of Bonds.
Offering Price** Mandatory Termination Date:
Aggregate Bid Price The earlier of December 31, 2044 or
of Bonds in Trust ....... $1,810,922+++ the disposition of the last Bond in
Divided by 1,901 Units .... $952.62 the Trust.
Plus Sales Charge of 5.5% Trustee***: The Chase Manhattan
of Public Offering Price $55.44 Bank.
Public Offering Price Trustee's Annual Fee: Monthly
per Unit ................ $1,008.06+ plan $1.41 per $1,000 and semi-
Redemption and Sponsors' annual plan $.96 per $1,000.
Repurchase Price Evaluator: Kenny S&P Evaluation
per Unit .................. $952.62+ Services.
+++ Evaluator's Fee for Each
++++ Evaluation: Minimum of $3 plus $.25
Excess of Secondary Market per each issue of Bonds in excess of
Public Offering Price 50 issues (treating separate
over Redemption and maturities as separate issues).
Sponsors' Repurchase Sponsor: ING Funds Distributor,
Price per Unit ............ $55.44++++ Inc.
Difference between Public Sponsors' Annual Fee: Maximum of
Offering Price per Unit $.25 per $1,000 principal amount of
and Principal Amount per Bonds (see "Trust Expenses and
Unit Premium/(Discount) ... $45.41 Charges" in Part B of this
Evaluation Time: 4:00 p.m. Prospectus).
New York Time.
</TABLE>
PER UNIT INFORMATION BASED UPON INTEREST DISTRIBUTION PLAN ELECTED
------------------------------------------------------------------
<TABLE>
<CAPTION>
Monthly Semi-Annual
Option Option
<S> <C> <C>
Gross annual interest income# ......... $56.24 $56.24
Less estimated annual fees and
expenses ............................ 2.74 2.21
Estimated net annual interest ______ ______
income (cash)# ...................... $53.50 $54.03
Estimated interest distribution# ...... 4.45 27.01
Estimated daily interest accrual# ..... .1486 .1500
Estimated current return#++ ........... 5.31% 5.36%
Estimated long term return++ .......... 5.22% 5.27%
Record dates .......................... 1st of Dec. 1 and
each month June 1
Interest distribution dates ........... 15th of Dec. 15 and
each month June 15
</TABLE>
A-5
260504.1
<PAGE>
Footnotes to Summary of Essential Information
* The Date of Deposit is the date on which the Trust Agreement was
signed and the deposit of the Bonds with the Trustee made.
** Certain amounts distributable as of December 31, 1999, may be reported
in the Summary of Essential Information as if they had been
distributed at year-end.
*** The Trustee maintains its principal executive office at 270 Park
Avenue, New York, New York 10017 and its unit investment trust office
at 4 New York Plaza, New York, New York 10004 (tel. no.:
1-800-882-9898). For information regarding redemption by the Trustee,
see "Trustee Redemption" in Part B of this Prospectus.
+ Plus accrued interest to the expected date of settlement
(approximately three business days after purchase) of $.59 monthly and
$5.10 semi-annually.
++ The estimated current return and estimated long term return are
increased for transactions entitled to a discount (see "Employee
Discounts" in Part B of this Prospectus), and are higher under the
semi-annual and annual options due to lower Trustee's fees and
expenses.
+++ Based solely upon the bid side evaluation of the underlying Bonds
(including, where applicable, undistributed cash from the principal
account). Upon tender for redemption, the price to be paid will be
calculated as described under "Trustee Redemption" in Part B of this
Prospectus.
++++ See "Comparison of Public Offering Price, Sponsor's Repurchase Price
and Redemption Price" in Part B of this Prospectus.
# Does not include income accrual from original issue discount bonds, if
any.
FINANCIAL AND STATISTICAL INFORMATION
Selected data for each Unit outstanding for the periods listed below:
<TABLE>
<CAPTION>
Distribu-
Distributions of InterestPrincipal tions of
During the Period (per Unit) During
Net Asset* Semi- the
Units Out- Value Monthly Annual Period
Period Ended standing Per Unit Option Option (Per Unit)
---------- ---------- ------- ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
December 31, 1997 2,819 $1,052.74 $56.49 $57.00 $ 7.66
December 31, 1998 2,643 1,051.94 55.72 56.23 14.44
December 31, 1999 1,901 957.06 54.57 55.00 15.74
</TABLE>
- --------
* Net Asset Value per Unit is calculated by dividing net assets as disclosed
in the "Statement of Net Assets" by the number of Units outstanding as of
the date of the Statement of Net Assets. See Note 5 of Notes to Financial
Statements for a description of the components of Net Assets.
A-6
260504.1
<PAGE>
INFORMATION REGARDING THE TRUST
AS OF DECEMBER 31, 1999
DESCRIPTION OF PORTFOLIO*
- ------------------------
The portfolio of the Trust consists of 9 issues representing obligations of
7 issuers located in the state of New Jersey and one in Puerto Rico. The Sponsor
has not participated as a sole underwriter or manager, co- manager or member of
an underwriting syndicate from which any of the initial aggregate principal
amount of the Bonds were acquired. None of the Bonds are obligations of state
and local housing authorities; two are hospital revenue bonds; none were issued
in connection with the financing of nuclear generating facilities; and none are
"mortgage revenue" bonds. All of the Bonds in the Trust are subject to
redemption prior to their stated maturity dates pursuant to sinking fund or
optional call provisions. The Bonds may also be subject to other calls, which
may be permitted or required by events which cannot be predicted (such as
destruction, condemnation, termination of a contract, or receipt of excess or
unanticipated revenues). None of the Bonds are general obligation bonds. All
nine issues representing $1,830,000 of the principal amount of the Bonds are
payable from the income of a specific project or authority and are not supported
by the issuer's power to levy taxes. The portfolio is divided for purpose of
issue as follows: Electric and Gas 1, Hospital 2, Port Authority 1, Public
Building 2, School 1, Turnpike 1 and Water 1. For an explanation of the
significance of these factors see "The Trust--Portfolio" in Part B of this
Prospectus.
As of December 31, 1999, $975,000 (approximately 53.3% of the aggregate
principal amount of the Bonds) were original issue discount bonds. 35.0% of the
Bonds in the Trust were purchased at a "market" discount from par value at
maturity, approximately 11.7% were purchased at a premium and none was purchased
at par. For an explanation of the significance of these factors see "Discount
and Zero Coupon Bonds" in Part B of this Prospectus.
Portfolio No. 5 in the Trust may be subject to the federal individual
alternative minimum tax under the Tax Reform Act of 1986. See "Tax Status" in
Part B of this Prospectus.
- --------
* Changes in the Trust Portfolio: From January 1, 2000 to March 15, 2000,
$65,000 of the principal amount of the Bond in portfolio no. 4 was sold and
is no longer contained in the Trust. 55 Units were redeemed from the Trust.
A-7
260504.1
<PAGE>
Report of Independent Auditors
The Sponsor, Trustee and Certificateholders of Insured Municipal Securities
Trust, New Jersey Navigator Insured Series 12
We have audited the accompanying statement of net assets of Insured Municipal
Securities Trust New Jersey Navigator Insured Series 12, including the
portfolio, as of December 31, 1999 and the related statements of operations, and
changes in net assets and financial highlights for the year then ended. These
financial statements and financial highlights are the responsibility of the
Trustee. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audit. The statement of
operations, statement of changes in net assets and financial highlights for each
of the two years in the period ended December 31, 1998 were audited by other
auditors whose report thereon dated March 19, 1999, expressed an unqualified
opinion on those financial statements and financial highlights.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of the securities
owned by correspondence with the Trustee. An audit also includes assessing the
accounting principles used and significant estimates made by the Trustee, as
well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the 1999 financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Insured Municipal Securities Trust, New Jersey Navigator Insured Series 12 at
December 31, 1999, the results of its operations, changes in its net assets and
financial highlights for the year then ended, in conformity with accounting
principles generally accepted in the United States.
/s/ ERNST & YOUNG LLP
New York, New York
April 15, 2000
<PAGE>
Insured Municipal Securities Trust
New Jersey Navigator Insured Series 12
Portfolio
December 31, 1999
<TABLE>
<CAPTION>
Redemption
Aggregate Coupon Feature (2)(4)
Portfolio Principal Rate/Date(s) S.F.-Sinking Fund Market
No. Amount Name of Issuer and Title of Bonds Ratings of Maturity Ref.-Refunding Value (3)
(1) (2)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> > <C>
1 $ 395,000 N. J. Hlth. Care Facs. Fincg. Auth. Rev. AAA 6.000% 7/01/05 @ 100 S.F. $ 395,056
Bonds Centrastate Med. Cntr. Issue Series 7/01/2021 7/01/01 @ 100 Ref.
A (MBIA Corp.)
2 135,000 N. J. Hlth. Care Facs. Rev. Riverview AAA 5.500 7/01/17 @ 100 S.F. 128,241
Hosp. 1994 Series (MBIA Corp.) 7/01/2018 7/01/04 @ 102 Ref.
3 55,000 N. Y. & N. J. Port Auth. Cnsldtd. Rev. AAA 6.500 11/01/13 @ 100 S.F. 56,690
Bonds Seventy-Sixth Series 1993 (MBIA 11/01/2026 11/01/01 @ 101 Ref.
Corp.)
4 160,000 N. J. Trnpke. Auth. Rev. Bonds Series AAA 6.500 1/01/12 @ 100 S.F. 174,005
1991C 1/01/2016 None
(MBIA Corp.)
5 175,000 Monmouth Co. Imprvmt. Auth. (Monmouth Co., AAA 5.550 2/15/14 @ 100 S. F. 169,244
N. J.) Rev. Bonds Series 1993 (Millstone 2/15/2018 2/15/03 @ 102 Ref.
Twnshp. Brd. of Ed. Pjct.) (MBIA Corp.)
6 110,000 No. Jersey Dstrct. Wtr. Supl. Commsn. of AAA 6.000 7/01/13 @ 100 S. F. 110,305
the State of N.J. Wanaque So. Prjt. Rev. 7/01/2021 7/01/03 @ 102 Ref.
Rfndg. Bonds Series 1993 (MBIA Corp.)
7 400,000 Poll. Cntrl. Fncg. Auth of Salem Cnty. (N. AAA 5.700 5/01/06 @ 100 S. F. 383,656
J.) Poll. Cntrl. Rev. Rfndg. Bonds 1993A 5/01/2028 5/01/03 @ 102 Ref.
(Pub. Serv. Elec. & Gas Co. Prjt.) (MBIA
Corp.)
8 280,000 P.R. Pub. Bldgs. Auth. Pub Ed. & Hlth. AAA 5.750 7/01/11 @ 100 S. F. 281,307
Facs. Rev. Rfndg. Bonds Gtd. By the 7/01/2015 7/01/03 @ 101.5 Ref.
Commonwlth. of P. R. Series L (MBIA Corp.)
9 120,000 P. R. Pub. Bldgs. Auth. Pub. Ed. & Hlth AAA 5.500 7/01/17 @ 100 S. F. 113,358
Facs. Rev. Rfndg. Bonds Gtd. By the 7/01/2021 701/03 @ 101.5 Ref.
Commonwlth. of P. R. Series M (MBIA Corp.)
----------- -------------
$1,830,000 Total Investments (Cost $1,763,053) $1,811,862
=========== =============
</TABLE>
See accompanying footnotes to portfolio and notes to financial statements.
<PAGE>
Insured Municipal Securities Trust
New Jersey Navigator Insured Series 12
Footnotes to Portfolio
1 All ratings are by Kenny S&P Evaluation Services, a business unit of J.J.
Kenny Company, Inc., a subsidiary of The McGraw-Hill Companies, Inc. A
brief description of the ratings symbols and their meaning is set forth
under "Description of Bond Ratings" in Part B of the Prospectus.
2. See "The Trust--Portfolio" in Part B of the Prospectus for an explanation
of redemption features. See "Tax Status" in Part B of the Prospectus for a
statement of the Federal tax consequences to a Certificateholder upon the
sale, redemption or maturity of a bond.
3. At December 31, 1999, the net unrealized appreciation of all the bonds was
comprised of the following:
Gross unrealized appreciation $ 48,809
Gross unrealized depreciation -
-----------------
Net unrealized appreciation $ 48,809
=================
4. The Bonds may also be subject to other calls, which may be permitted or
required by events which cannot be predicted (such as destruction,
condemnation, termination of a contract, or receipt of excess of
unanticipated revenues).
The accompanying notes form an integral part of the financial statements.
<PAGE>
Insured Municipal Securities Trust
New Jersey Navigator Insured Series 12
Statement of Net Assets
December 31, 1999
Investments in Securities, at market value (cost $1,763,053) $ 1,811,862
Other assets
Accrued interest 43,477
------------------
Total other assets 43,477
------------------
Liabilities
Advance from Trustee 35,968
------------------
Total liabilities 35,968
------------------
Excess of other assets over total liabilities 7,509
------------------
Net assets (1,901 units of fractional undivided
interest outstanding, $957.06 per unit) $ 1,819,371
==================
The accompanying notes form an integral part of the financial statements.
<PAGE>
Insured Municipal Securities Trust
New Jersey Navigator Insured Series 12
Statement of Operations
<TABLE>
<CAPTION>
Year ended December 31,
1999 1998 1997
------------------ ------------------- ------------------
<S> <C> <C> <C>
Investment income
Interest $ 119,136 $ 160,382 $ 168,696
Expenses
Trustee's fees 4,404 5,243 5,349
Evaluator's fee 881 954 753
Sponsor's advisory fee 650 701 726
------------------ ------------------- ------------------
Total expenses 5,935 6,898 6,828
------------------ ------------------- ------------------
Net investment income 113,201 153,484 161,868
------------------ ------------------- ------------------
Realized and unrealized gain (loss)
Realized gain on investments 56,397 12,126 2,626
Unrealized appreciation (depreciation)
on investments (216,522) 25,550 96,867
------------------ ------------------- ------------------
Net gain (loss) on investments (160,125) 37,676 99,493
------------------ ------------------- ------------------
Net increase (decrease) in net assets resulting from
operations $ (46,924) $ 191,160 $ 261,361
================== =================== ==================
</TABLE>
The accompanying notes form an integral part of the financial statements.
<PAGE>
Insured Municipal Securities Trust
New Jersey Navigator Insured Series 12
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year ended December 31,
1999 1998 1997
------------------ ------------------- ------------------
<S> <C> <C> <C>
Operations
Net investment income $ 113,201 $ 153,484 $ 161,868
Realized gain on investments 56,397 12,126 2,626
Unrealized appreciation (depreciation)
on investments (216,522) 25,550 96,867
------------------ ------------------- ------------------
Net increase (decrease) in net assets resulting from
operations (46,924) 191,160 261,361
------------------ ------------------- ------------------
Distributions to Certificateholders
Investment income 113,456 154,626 162,684
Principal 31,170 39,039 21,805
Redemptions
Interest 4,261 470 116
Principal 765,104 184,417 86,748
------------------ ------------------- ------------------
Total distributions and redemptions 913,991 378,552 271,353
------------------ ------------------- ------------------
Total (decrease) (960,915) (187,392) (9,992)
Net assets
Beginning of year 2,780,286 2,967,678 2,977,670
------------------ ------------------- ------------------
End of year (including undistributed net investment
income of $8,448, $12,964 and $14,576,
respectively) $ 1,819,371 $ 2,780,286 $ 2,967,678
================== =================== ==================
</TABLE>
The accompanying notes form an integral part of the financial statements.
<PAGE>
Insured Municipal Securities Trust
New Jersey Navigator Insured Series 12
Financial Highlights
Selected data for a unit of the Trust outstanding:*
<TABLE>
<CAPTION>
Year ended December 31,
1999 1998 1997
------------------ ------------------- -------------------
<S> <C> <C> <C>
Net asset value, beginning of year** $ 1,051.94 $ 1,052.74 $ 1,025.37
------------------ ------------------- -------------------
Interest income 52.44 58.73 58.94
Expenses (2.61) (2.53) (2.39)
------------------ ------------------- -------------------
Net investment income 49.83 56.20 56.55
------------------ ------------------- -------------------
Net gain or loss on investments (1) (79.17) 14.08 35.32
------------------ ------------------- -------------------
Total from investment operations (29.34) 70.28 91.87
------------------ ------------------- -------------------
Less distributions
to Certificateholders
Income 49.94 56.62 56.84
Principal 13.72 14.29 7.62
for Redemptions
Interest 1.88 .17 .04
------------------ ------------------- -------------------
Total distributions 65.54 71.08 64.50
------------------ ------------------- -------------------
Net asset value, end of year** $ 957.06 $ 1,051.94 $ 1,052.74
================== =================== ===================
</TABLE>
(1) Net gain or loss on investments is a result of changes in outstanding units
since January 1, 1999, 1998 and 1997, respectively, and the dates of net gain
and loss on investments.
* Unless otherwise stated, based upon average units outstanding during the
year of 2,272 ([1,901 + 2,643]/2) for 1999, 2,731 ([2,643 + 2,819]/2) for
1998 and of 2,862 ([2,819 + 2,904]/2) for 1997.
** Based upon actual units outstanding.
The accompanying notes form an integral part of the financial statements.
<PAGE>
Insured Municipal Securities Trust
New Jersey Navigator Insured Series 12
Notes to Financial Statements
December 31, 1999
1. Organization
Insured Municipal Securities Trust, New Jersey Navigator Insured Series 12 (the
"Trust") was organized on April 14, 1994 by Bear, Stearns & Co. Inc. and Gruntal
& Co., Incorporated under the laws of the State of New York by a Trust Indenture
and Agreement, and is registered under the Investment Company Act of 1940. The
Trust was formed to preserve capital and to provide interest income.
On September 28, 1995, Reich & Tang Distributors, Inc. ("Reich & Tang") had
become the successor sponsor to certain of the unit investment trusts previously
sponsored by Bear, Stearns & Co. Inc. As successor sponsor, Reich & Tang had
assumed all of the obligations and rights of Bear, Stearns & Co. Inc., the
previous sponsor.
Effective February 9, 2000, Gruntal & Co. resigned as a co-sponsor of certain
unit investment trusts previously co-sponsored with Reich & Tang. ING Funds
Distributor, Inc. ("ING") has become the successor sponsor to certain unit
investment trusts previously sponsored by Reich & Tang. As successor sponsor,
ING has assumed all of the obligations and rights of Reich & Tang, the previous
sponsor.
2. Summary of Significant Accounting Policies
The following is a summary of significant accounting policies consistently
followed by the Trust in preparation of its financial statements. The policies
are in conformity with generally accepted accounting principles ("GAAP"). The
preparation of financial statements in accordance with GAAP requires management
to make estimates and assumptions that affect the reported amounts and
disclosures in the financial statements. Actual amounts could differ from those
estimates. Interest income is recorded on the accrual basis.
<PAGE>
Insured Municipal Securities Trust
New Jersey Navigator Insured Series 12
Notes to Financial Statements (continued)
2. Summary of Significant Accounting Policies (continued)
Security Valuation
Investments are carried at market value which is determined by Kenny S&P
Evaluation Services, a business unit of J.J. Kenny Company, Inc., a subsidiary
of the McGraw-Hill Companies, Inc. The market value of the portfolio is based
upon the bid prices for the bonds at the end of the year, which approximates the
fair value of the security at that date, except that the market value on the
date of deposit represents the cost to the Trust based on the offering prices
for investments at that date. The difference between cost and market value is
reflected as unrealized appreciation (depreciation) of investments. Securities
transactions are recorded on the trade date. Realized gains (losses) from
securities transactions are determined on the basis of average cost of the
securities sold or redeemed.
3. Income Taxes
No provision for federal income taxes has been made in the accompanying
financial statements because the Trust intends to continue to qualify for the
tax treatment applicable to Grantor Trusts under the Internal Revenue Code.
Under existing law, if the Trust so qualifies, it will not be subject to federal
income tax on net income and capital gains that are distributed to unitholders.
4. Trust Administration
The Chase Manhattan Bank (the "Trustee") has custody of assets and
responsibility for the accounting records and financial statements of the Trust
and is responsible for establishing and maintaining a system of internal control
related thereto. The Trustee is also responsible for all estimates of expenses
and accruals reflected in the Trust's financial statements.
The Trust Indenture and Agreement provides for interest distributions as often
as monthly (depending upon the distribution plan elected by the
Certificateholders).
The Trust Indenture and Agreement further requires that principal received from
the disposition of bonds, other than those bonds sold in connection with the
redemption of units, be distributed to Certificateholders.
<PAGE>
Insured Municipal Securities Trust
New Jersey Navigator Insured Series 12
Notes to Financial Statements (continued)
4. Trust Administration (continued)
The Trust Indenture and Agreement also requires the Trust to redeem units
tendered. For the years ended December 31, 1999, 1998 and 1997, 742, 176 and 85
units were redeemed, respectively.
The Trust pays an annual fee for trustee services rendered by the Trustee that
ranges from $.96 to $1.41 per $1,000 of outstanding investment principal. In
addition, a minimum fee of $3.00 is paid to a service bureau for each portfolio
valuation. A maximum fee of $.25 per $1,000 of outstanding investment principal
is paid to the Sponsor. For the years ended December 31, 1999, 1998 and 1997,
the "Trustee's Fees" are comprised of Trustee fees of $2,724, $3,506, and $3,542
and other expenses of $1,680, $1,737 and $1,807, respectively. The other
expenses include professional, printing and miscellaneous fees.
5. Net Assets
At December 31, 1999, the net assets of the Trust represented the interest of
Certificateholders as follows:
Original cost to Certificateholders $ 3,062,179
Less initial gross underwriting commission 150,047
-----------------
2,912,132
Accumulated cost of securities sold, matured or called (1,149,079)
Net unrealized appreciation 48,809
Undistributed net investment income 8,448
Distributions in excess of proceeds from investments (939)
-----------------
Total $ 1,819,371
=================
The original cost to Certificateholders, less the initial gross underwriting
commission, represents the aggregate initial public offering price net of the
applicable sales charge on 3,000 units of fractional undivided interest of the
Trust as of the date of deposit.
<PAGE>
Insured Municipal Securities Trust
New Jersey Navigator Insured Series 12
Notes to Financial Statements (continued)
6. Concentration of Credit Risk
Since the Trust invests a portion of its assets in municipal bonds, it may be
affected by economic and political developments in the municipalities. Certain
debt obligations held by the Trust may be entitled to the benefit of insurance,
standby letters of credit or other guarantees of banks or other financial
institutions.
<PAGE>
Prospectus Part A Dated April 30, 2000
INSURED MUNICIPAL SECURITIES TRUST
SERIES 33
The Trust is a unit investment trust designated Series 33 ("Insured
Municipal Trust") with an underlying portfolio of long-term insured tax-exempt
bonds issued by or on behalf of states, municipalities and public authorities
and was formed to preserve capital and to provide interest income which, in the
opinions of bond counsel to the respective issuers, is, with certain exceptions,
currently exempt from regular federal income tax under existing law but may be
subject to state and local taxes. There can be no assurance that the Trust's
investment objectives will be achieved. Although the Supreme Court has
determined that Congress has the authority to subject interest on bonds such as
the Bonds in the Trust to federal income taxation, existing law excludes such
interest from regular federal income tax. Such interest income may, however, be
subject to the federal individual and corporate alternative minimum tax and to
state and local taxes. (See "Description of Portfolio" in this Part A for a
description of those Bonds, if any, which pay interest income subject to the
federal individual alternative minimum tax.) In addition, capital gains are
subject to tax. (See "Tax Status" and "The Trust--Portfolio" in Part B of this
Prospectus.) The Sponsor is ING Funds Distributor, Inc. (successor to Reich &
Tang Distributors, Inc.). The value of the Units of the Trust will fluctuate
with the value of the underlying bonds. Minimum purchase: 1 Unit.
This Prospectus consists of two parts. Part A contains the Summary of
Essential Information as of December 31, 1999 (the "Evaluation Date"), a summary
of certain specific information regarding the Trust and audited financial
statements of the Trust, including the related portfolio, as of the Evaluation
Date. Part B of this Prospectus contains a general summary of the Trust. Part A
of this Prospectus may not be distributed unless accompanied by Part B.
Investors should retain both parts of this Prospectus for future reference. The
Securities and Exchange Commission ("SEC") maintains a website that contains
reports, proxy and information statements and other information regarding the
Trust which is filed electronically with the SEC. The SEC's Internet address is
http:www.sec.gov. Offering materials for the sale of these units available
through the Internet are not being offered directly or indirectly to residents
of a particular state nor is an offer of these units through the Internet
specifically directed to any person in a state by, or on behalf of, the issuer.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE 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 TRUST. The Trust seeks to achieve its investment objectives through
investment in a fixed, diversified portfolio of long-term insured bonds (the
"Bonds") issued by or on behalf of states, municipalities and public authorities
which, because of irrevocable insurance, were rated "AAA" by Standard & Poor's
Rating Services, a division of The McGraw-Hill Companies, at the time originally
deposited in the Trust. The "AAA" rating results from insurance relating only to
the Bonds in the Trust and not to Units of the Trust. The insurance does not
remove market risk, as it does not guarantee the market value of the Units. For
a discussion of the significance of such ratings, see "Description of Bond
Ratings" in Part B of this Prospectus, and for a list of ratings on the
Evaluation Date see the "Portfolio."
Some of the Bonds may be "Zero Coupon Bonds", which are original issue
discount bonds that provide for payment at maturity at par value, but do not
provide for the payment of any current interest. Some of the Bonds in the Trust
have been issued with optional refunding or refinancing provisions ("Refunded
Bonds") whereby the issuer of the Bond has the right to call such Bond prior to
its stated maturity date (and other than pursuant to sinking
352459.1
<PAGE>
fund provisions) and to issue new bonds ("Refunding Bonds") in order to finance
the redemption. Issuers typically utilize refunding calls in order to take
advantage of lower interest rates in the marketplace. Some of these Refunded
Bonds may be called for redemption pursuant to pre-refunding provisions
("Pre-Refunded Bonds") whereby the proceeds from the issue of the Refunding
Bonds are typically invested in government securities in escrow for the benefit
of the holders of the Pre-Refunded Bonds until the refunding call date. Usually,
Pre-Refunded Bonds will bear a triple-A rating because of this escrow. The
issuers of Pre-Refunded Bonds must call such Bonds on their refunding call date.
Therefore, as of such date, the Trust will receive the call price for such bonds
but will cease receiving interest income with respect to them. For a list of
those Bonds which are Pre-Refunded Bonds, if any, as of the Evaluation Date, see
"Notes to Financial Statements" in this Part A. Some of the Bonds in the
portfolio may have been purchased at an aggregate premium over par. The payment
of interest and preservation of capital are, of course, dependent upon the
continuing ability of issuers of the Bonds or the insurers thereof to meet their
obligations.
Investment in the Trust should be made with an understanding of the
risks which an investment in long-term fixed rate debt obligations may entail,
including the risk that the value of the underlying portfolio will decline with
increases in interest rates, and that the value of Zero Coupon Bonds is subject
to greater fluctuation than coupon bonds in response to changes in interest
rates. A Trust designated as a long-term trust must have a dollar-weighted
average portfolio maturity of more than ten years.
Each Unit in the Trust represents a 1/1423rd undivided interest in the
principal and net income of the Trust. The principal amount of Bonds deposited
in the Trust per Unit is reflected in the Summary of Essential Information. (See
"Organization" in Part B of this Prospectus.) The Units being offered hereby are
issued and outstanding Units which have been purchased by the Sponsor in the
secondary market.
INSURANCE. Each of the Bonds in the Trust is insured by a municipal
bond guaranty insurance policy obtained by either the Sponsor ("Sponsor-Insured
Bonds") or the issuers of the Bonds ("Pre-Insured Bonds") and issued by one of
the insurance companies (the "Insurance Companies"), described under "Insurance
on the Bonds" in Part B of this Prospectus, covering scheduled payment of
principal thereof and interest thereon when such amounts shall become due for
payment but shall not have been paid by the issuer or any other insurer thereof.
None of the insurance will cover accelerated payments of principal or penalty
interest or premiums unrelated to taxability of interest on the Bonds (although
the insurance, including insurance obtained by MBIA Corp., does guarantee
payment of principal and interest in such amounts and at such times as such
amounts would have been due absent such acceleration). The insurance relates
only to the prompt payment of principal of and interest on the securities in the
portfolio, and does not remove market risks or guarantee the market value of the
Units in the Trust. The terms of the insurance are more fully described under
"Insurance on the Bonds" in Part B of this Prospectus. For a discussion of the
effect of an occurrence of nonpayment of principal or interest on any Bonds in
the Trust, see "Portfolio Supervision" in Part B of this Prospectus. No
representation is made herein as to any Bond insurer's ability to meet its
obligations under a policy of insurance relating to any of the Bonds. In
addition, investors should be aware that, subsequent to the Date of Deposit, the
rating of the claims paying ability of the insurer of an underlying Bond may be
downgraded, which may result in a downgrading of the rating of the Units in the
Trust. The approximate percentage of the aggregate principal amount of the
portfolio that is insured by each insurance company is as follows: AMBAC
Indemnity Corp. ("AMBAC"), 46.0%; Connie Lee Insurance Company ("Connie Lee"),
2.9%; Financial Guaranty Insurance Company ("Financial Guaranty"), 22.9%; and
MBIA Corp., 28.2%.
PUBLIC OFFERING PRICE. The secondary market Public Offering Price of
each Unit is equal to the aggregate bid price of the Bonds in the Trust divided
by the number of Units outstanding, plus a sales charge of 4.0% of the Public
Offering Price, or 4.167% of the net amount invested in Bonds per Unit. In
addition, accrued interest to the expected date of settlement is added to the
Public Offering Price. If Units had been purchased on the Evaluation
A-2
352459.1
<PAGE>
Date, the Public Offering Price per Unit would have been $1,000.05 plus accrued
interest of $.59 under the monthly distribution plan and $5.16 under the
semi-annual distribution plan, for a total of $1,000.64 and $1,005.21,
respectively. The Public Offering Price per Unit can vary on a daily basis in
accordance with fluctuations in the aggregate bid price of the Bonds. (See
"Public Offering--Offering Price" in Part B of this Prospectus.)
ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN. Units of each
Trust are offered to investors on a "dollar price" basis (using the computation
method described under "Public Offering--Offering Price" in Part B) as
distinguished from a "yield price" basis often used in offerings of tax exempt
bonds (involving the lesser of the yield as computed to maturity of bonds or to
an earlier redemption date). Since they are offered on a dollar price basis, the
rate of return on an investment in Units of each Trust is measured in terms of
"Estimated Current Return" and "Estimated Long Term Return".
Estimated Long Term Return is calculated by: (1) computing the yield to
maturity or to an earlier call date (whichever results in a lower yield) for
each Bond in the Trust's portfolio in accordance with accepted bond practices,
which practices take into account not only the interest payable on the Bond but
also the amortization of premiums or accretion of discounts, if any; (2)
calculating the average of the yields for the Bonds in the Trust's portfolio by
weighing each Bond's yield by the market value of the Bond and by the amount of
time remaining to the date to which the Bond is priced (thus creating an average
yield for the portfolio of the Trust); and (3) reducing the average yield for
the portfolio of the Trust in order to reflect estimated fees and expenses of
the Trust and the maximum sales charge paid by investors. The resulting
Estimated Long Term Return represents a measure of the return to investors
earned over the estimated life of the Trust. (For the Estimated Long Term Return
to Certificateholders under the monthly, semi-annual and annual distribution
plans, see "Summary of Essential Information".)
Estimated Current Return is a measure of the Trust's cash flow.
Estimated Current Return is computed by dividing the Estimated Net Annual
Interest Income per Unit by the Public Offering Price per Unit. In contrast to
the Estimated Long Term Return, the Estimated Current Return does not take into
account the amortization of premium or accretion of discount, if any, on the
Bonds in the portfolio of the Trust. Moreover, because interest rates on Bonds
purchased at a premium are generally higher than current interest rates on newly
issued bonds of a similar type with comparable rating, the Estimated Current
Return per Unit may be affected adversely if such Bonds are redeemed prior to
their maturity.
The Estimated Net Annual Interest Income per Unit of the Trust will
vary with changes in the fees and expenses of the Trustee and the Evaluator
applicable to the Trust and with the redemption, maturity, sale or other
disposition of the Bonds in the Trust. The Public Offering Price will vary with
the changes in the bid prices of the Bonds. Therefore, there is no assurance
that the present Estimated Current Return or Estimated Long Term Return will be
realized in the future. (For the Estimated Current Return to Certificateholders
under the monthly, semi-annual and annual distribution plans, see "Summary of
Essential Information". See "Estimated Long Term Return and Estimated Current
Return" in Part B of this Prospectus.)
A schedule of cash flow projections is available from the Sponsor upon
request.
DISTRIBUTIONS. Distributions of interest income, less expenses, will be
made by the Trust either monthly, semi-annually or annually depending upon the
plan of distribution applicable to the Unit purchased. A purchaser of a Unit in
the secondary market will initially receive distributions in accordance with the
distribution plan chosen by the prior owner of such Unit and may thereafter
change the plan as provided under "Interest and Principal Distributions" in Part
B of the Prospectus. Distributions of principal, if any, will be made
semi-annually on June 15 and December 15 of each year. (See "Rights of
Certificateholders--Interest and Principal Distributions" in Part B of this
Prospectus. For estimated monthly, semi-annual and annual interest
distributions, see "Summary of Essential Information".)
A-3
352459.1
<PAGE>
MARKET FOR UNITS. The Sponsor, although not obligated to do so, intends
to maintain a secondary market for the Units at prices based on the aggregate
bid price of the Bonds in the Trust portfolio. The reoffer price will be based
on the aggregate bid price of the Bonds plus a sales charge of 4.0% of the
Public Offering Price (4.167% of the net amount invested), plus net accrued
interest. If a market is not maintained a Certificateholder will be able to
redeem his or her Units with the Trustee at a price also based on the aggregate
bid price of the Bonds. (See "Liquidity--Sponsor Repurchase" and "Public
Offering--Offering Price" in Part B of this Prospectus.)
A-4
352459.1
<PAGE>
INSURED MUNICIPAL SECURITIES TRUST
SERIES 33
SUMMARY OF ESSENTIAL INFORMATION AS OF DECEMBER 31, 1999
Date of Deposit*: April 6, 1995 Minimum Principal Distribution:
Principal Amount of Bonds ... $1,400,000 $1.00 per Unit.
Number of Units ............. 1,423 Weighted Average Life to
Fractional Undivided Inter- Maturity: 11.4 Years.
est in Trust per Unit ..... 1/1423 Minimum Value of Trust:
Principal Amount of Trust may be terminated if
Bonds per Unit ............ $983.84 value of Trust is less than
Secondary Market Public $800,000 in principal amount
Offering Price** of Bonds.
Aggregate Bid Price Mandatory Termination Date:
of Bonds in Trust........ $1,365,775+++ The earlier of December 31,
Divided by 1,423 Units .... $959.79 2044 or the disposition of
Plus Sales Charge of 4.0% the last Bond in the Trust.
of Public Offering Price $40.30 Trustee***: The Chase
Public Offering Price Manhattan Bank.
per Unit ................ $1,000.05+ Trustee's Annual Fee: Monthly
Redemption and Sponsor's plan $1.46 per $1,000; and
Repurchase Price semi-annual plan $1.01 per
per Unit .................. $959.79+ $1,000.
+++ Evaluator: Kenny S&P
++++ Evaluation Services.
Excess of Secondary Market Evaluator's Fee for Each
Public Offering Price Evaluation: Minimum of $2.83
over Redemption and plus $.25 per each issue of
Sponsor's Repurchase Bonds in excess of 50 issues
Price per Unit ............ $40.30++++ (treating separate maturities
Difference between Public as separate issues).
Offering Price per Unit Sponsor: ING Funds
and Principal Amount per Distributor, Inc.
Unit Premium/(Discount) ... $16.21 Sponsor's Annual Fee: Maximum
Evaluation Time: 4:00 p.m. of $.25 per $1,000 principal
New York Time. amount of Bonds (see "Trust
Expenses and Charges" in Part
B of this Prospectus).
PER UNIT INFORMATION BASED UPON INTEREST DISTRIBUTION PLAN ELECTED
Monthly Semi-Annual
Option Option
Gross annual interest income# ......... $56.77 $56.77
Less estimated annual fees and
expenses ............................ 2.85 2.33
Estimated net annual interest _____ _____
income (cash)# ...................... $53.92 $54.44
Estimated interest distribution# ...... 4.49 27.22
Estimated daily interest accrual# ..... .1497 .1512
Estimated current return#++ ........... 5.39% 5.44%
Estimated long term return++ .......... 5.11% 5.16%
Record dates .......................... 1st of Dec. 1 and
each month June 1
Interest distribution dates ........... 15th of Dec. 15 and
each month June 15
A-5
352459.1
<PAGE>
Footnotes to Summary of Essential Information
* The Date of Deposit is the date on which the Trust Agreement was signed
and the deposit of the Bonds with the Trustee made.
** Certain amounts distributable as of December 31, 1999, may be reported
in the Summary of Essential Information as if they had been distributed
at year-end.
*** The Trustee maintains its principal executive office at 270 Park
Avenue, New York, New York 10017 and its unit investment trust office
at 4 New York Plaza, New York, New York 10004 (tel. no.:
1-800-882-9898). For information regarding redemption by the Trustee,
see "Trustee Redemption" in Part B of this Prospectus.
+ Plus accrued interest to the expected date of settlement (approximately
three business days after purchase) of $.59 monthly and $5.16 semi-
annually.
++ The estimated current return and estimated long term return are
increased for transactions entitled to a discount (see "Employee
Discounts" in Part B of this Prospectus), and are higher under the
semi-annual and annual options due to lower Trustee's fees and
expenses.
+++ Based solely upon the bid side evaluation of the underlying Bonds
(including, where applicable, undistributed cash from the principal
account). Upon tender for redemption, the price to be paid will be
calculated as described under "Trustee Redemption" in Part B of this
Prospectus.
++++ See "Comparison of Public Offering Price, Sponsor's Repurchase Price
and Redemption Price" in Part B of this Prospectus.
# Does not include income accrual from original issue discount bonds, if
any.
FINANCIAL AND STATISTICAL INFORMATION
Selected data for each Unit outstanding for the periods listed below:
<TABLE>
<CAPTION>
Distribu-
tions of
Distributions of Interest Principal
During the Period (per Unit) During
Net Asset* Semi- the
Units Out- Value Monthly Annual Period
Period Ended standing Per Unit Option Option (Per Unit)
<S> <C> <C> <C> <C> <C> <C> <C>
December 31, 1997 1,525 $1,034.83 $55.89 $56.12 $ 6.79
December 31, 1998 1,525 1,030.54 55.85 56.27 22.87
December 31, 1999 1,423 964.64 53.96 54.43 10.75
</TABLE>
- --------
* Net Asset Value per Unit is calculated by dividing net assets as
disclosed in the "Statement of Net Assets" by the number of Units
outstanding as of the date of the Statement of Net Assets. See Note 5
of Notes to Financial Statements for a description of the components of
Net Assets.
A-6
352459.1
<PAGE>
INFORMATION REGARDING THE TRUST
AS OF DECEMBER 31, 1999
DESCRIPTION OF PORTFOLIO
The portfolio of the Trust consists of 10 issues representing
obligations of issuers located in 6 states and the District of Columbia. The
Sponsor has not participated as a sole underwriter or manager, co-manager or
member of an underwriting syndicate from which any of the Bonds were acquired.
Approximately 31.8%* of the Bonds are obligations of state and local housing
authorities; approximately 21.1% are hospital revenue bonds; approximately 12.1%
were issued in connection with the financing of nuclear generating facilities;
and none are "mortgage subsidy" bonds. All of the Bonds in the Trust are subject
to redemption prior to their stated maturity dates pursuant to sinking fund or
optional call provisions. The Bonds may also be subject to other calls, which
may be permitted or required by events which cannot be predicted (such as
destruction, condemnation, termination of a contract, or receipt of excess or
unanticipated revenues). One of the issues representing $200,000 of the
principal amount of the Bonds is a general obligation bond. All 9 of the
remaining issues representing $1,200,000 of the principal amount of the Bonds
are payable from the income of a specific project or authority and are not
supported by the issuer's power to levy taxes. The portfolio is divided for
purpose of issue as follows: College 1, Electric 1, Exposition Center 1,
Hospital 1, Multi-Family Housing 2, Nuclear 1, Sewer Revenue 1 and
Transportation 1. For an explanation of the significance of these factors see
"The Trust--Portfolio" in Part B of this Prospectus.
As of December 31, 1999, $370,000 (approximately 26.4% of the aggregate
principal amount of the Bonds) were original issue discount bonds. Of these
original issue discount bonds, $65,000 (approximately 4.6% of the aggregate
principal amount of the Bonds) were Zero Coupon Bonds. Zero Coupon Bonds do not
provide for the payment of any current interest and provide for payment at
maturity at par value unless sooner sold or redeemed. The market value of Zero
Coupon Bonds is subject to greater fluctuations than coupon bonds in response to
changes in interest rates. Approximately 13.9% of the aggregate principal amount
of the Bonds in the Trust were purchased at a "market" discount from par value
at maturity, approximately 27.5% were purchased at a premium and approximately
32.2% were purchased at par. For an explanation of the significance of these
factors see "Discount and Zero Coupon Bonds" in Part B of this Prospectus.
None of the Bonds in the Trust are subject to the federal individual
alternative minimum tax under the Tax Reform Act of 1986. See "Tax Status" in
Part B of this Prospectus.
- --------
* A trust is considered to be "concentrated" in a particular category or
industry when the securities in that category or industry constitute
25% or more of the aggregate face amount of the portfolio. See Part B
for disclosure, including risk factors, regarding this concentration.
A-7
352459.1
<PAGE>
Report of Independent Auditors
The Sponsor, Trustee and Certificateholders of
Insured Municipal Securities Trust, Series 33
We have audited the accompanying statement of net assets of Insured Municipal
Securities Trust, Series 33, including the portfolio, as of December 31, 1999
and the related statements of operations, and changes in net assets and
financial highlights for the year then ended. These financial statements and
financial highlights are the responsibility of the Trustee. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audit. The statement of operations, statement of changes in net
assets and financial highlights for each of the two years in the period ended
December 31, 1998 were audited by other auditors whose report thereon dated
March 19, 1999, expressed an unqualified opinion on those financial statements
and financial highlights.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of the securities
owned by correspondence with the Trustee. An audit also includes assessing the
accounting principles used and significant estimates made by the Trustee, as
well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the 1999 financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Insured Municipal Securities Trust, Series 33 at December 31, 1999, the results
of its operations, changes in its net assets and financial highlights for the
year then ended, in conformity with accounting principles generally accepted in
the United States.
/s/ERNST & YOUNG LLP
New York, New York
April 15, 2000
<PAGE>
Insured Municipal Securities Trust, Series 33
Portfolio
December 31, 1999
<TABLE>
<CAPTION>
Redemption
Aggregate Coupon Feature (2)(4)
Portfolio Principal Rate/Date(s) S.F.-Sinking Fund Market
No. Amount Name of Issuer and Title of Bonds Ratings(1) of Maturity(2) Ref.-Refunding Value (3)
- ------------ ---------- -------------------------------------------- ----------- --------------- --------------------- -------------
<S> <C> <C> <C> <C> <C> <C>
1 $200,000 Reg. Trans. Auth. Cook, DuPage, Kane, AAA 6.125% 6/01/02 @ 100 Opt $ 206,692
Lake, McHenry and Will Cntys. II. Gen. Obg. 6/01/2022 6/01/16 @ 100 S.F.
Bonds Series 1992B (AMBAC)
2 250,000 Ma. Hsg. Finc. Agcy. Hsg. Proj. Rev. Bonds AAA 6.150 4/01/03 @ 102 Opt 253,773
1993 Series A Bonds (AMBAC) 10/01/2015 4/01/05 @ 100 S.F.
3 5,000 Ma. Bay Trans. Auth. Gen. Trans. System AAA 5.500 3/01/03 @ 100 Opt 5,116
Bonds 1992 Series B Ref. (MBIA Corp.) 3/1/2021 3/01/17 @ 100 S.F.
3A 45,000 Ma. Bay Trans. Auth. Gen. Trans. System AAA 5.500 3/01/03 @ 100 Opt 41,660
Bonds 1992 Series B Ref. (MBIA Corp.) 3/1/2021 3/01/17 @ 100 S.F.
(Unrefunded)
4 195,000 Mi. St. Hsg. Dev. Auth. Rntl. Hsg. Rev. AAA 5.900 4/01/03 @ 102 Opt 186,899
Bonds, 1993 Series A (AMBAC) 4/1/2023 4/01/18 @ 100 S.F.
5 25,000 R.I. Hlth. And Ed. Bldg. Corp. Hgr. Fac. AAA 6.500 11/15/02 @ 102 Opt 26,653
Rev. Bonds (Connie Lee) 11/15/2024 11/15/12 @ 100 S.F.
5A 15,000 R.I. Hlth. And Ed. Bldg. Corp. Hgr. Fac. AAA 6.500 11/15/02 @ 102 Opt 15,343
Rev. Bonds (Connie Lee) (Unrefunded) 11/15/2024 11/15/12 @ 100 S.F.
6 90,000 Piedmont Muni. Pwr. Agcy. (S.C.) Elec. AAA 6.300 1/01/03 @ 102 Opt 95,708
Rev. Bonds, 1992 Ref. Series (MBIA Corp.) 1/01/2014 1/01/12 @ 100 S.F.
6A 35,000 Piedmont Muni. Pwr. Agcy. (S.C.) Elec. AAA 6.300 1/01/03 @ 102 Opt 36,256
Rev. Bonds, 1992 Ref. Series (MBIA Corp.) 1/01/2014 1/01/12 @ 100 S.F.
(Unrefunded)
7 255,000 Wa. Hlth. Care Facs. Auth. Rev. Bonds, AAA 5.750 8/15/02 @ 102 Opt 266,098
Series 1992 (Multicare Med. Cntr., Tacoma) 8/15/2022 8/15/09 @ 100 S.F.
(Financial Guaranty)
8 20,000 Wa. Pub. Pwr. Spply. Systm. Nuc. Proj. No. 1 AAA 6.250 7/01/02 @ 102 Opt 21,080
Ref. Rev. Bonds, Series 1992 A (MBIA Corp.) 7/01/2017 7/01/02 @ 100 S.F.
8A 150,000 Wa. Pub. Pwr. Spply. Systm. Nuc. Proj. No. 1 AAA 6.250 7/01/02 @ 102 Opt 151,115
Ref. Rev. Bonds, Series 1992 A (MBIA 7/01/2017 7/01/02 @ 100 S.F.
Corp.) (Unrefunded)
9 50,000 Muni. Of Met. Seattle (Seattle, Wa.) Swr. AAA 6.300 1/01/03 @ 102 Opt 53,098
Rev. Bonds., Series W (MBIA Corp.) 1/01/2033 1/01/24 @ 100 S.F.
10 65,000 Metro. Pier. And Expo. Auth. (11) McCormick AAA 0.000 None 16,998
Place Expansion Prjt. Bonds Series 1992 A 6/15/2021 No Sinking Fund
(Financial Guaranty)
----------- -------------
$1,400,000 Total Investments (Cost $1,330,777) $1,376,489
=========== =============
</TABLE>
See accompanying footnotes to portfolio and notes to financial statements.
<PAGE>
Insured Municipal Securities Trust, Series 33
Footnotes to Portfolio
1 All ratings are by Kenny S&P Evaluation Services, a business unit of J.J.
Kenny Company, Inc., a subsidiary of The McGraw-Hill Companies, Inc. A
brief description of the ratings symbols and their meaning is set forth
under "Description of Bond Ratings" in Part B of the Prospectus.
2. See "The Trust--Portfolio" in Part B of the Prospectus for an explanation
of redemption features. See "Tax Status" in Part B of the Prospectus for a
statement of the Federal tax consequences to a Certificateholder upon the
sale, redemption or maturity of a bond.
3. At December 31, 1999, the net unrealized appreciation of all the bonds was
comprised of the following:
Gross unrealized appreciation $ 47,470
Gross unrealized depreciation (1,758)
-----------------
Net unrealized appreciation $ 45,712
=================
4. The Bonds may also be subject to other calls, which may be permitted or
required by events which cannot be predicted (such as destruction,
condemnation, termination of a contract, or receipt of excess of
unanticipated revenues).
The accompanying notes form an integral part of the financial statements.
<PAGE>
Insured Municipal Securities Trust, Series 33
Statement of Net Assets
December 31, 1999
Investments in securities, at market value (cost $1,330,777) $ 1,376,489
Other assets
Accrued interest 25,211
------------------
Total other assets 25,211
------------------
Liabilities
Advance from Trustee 29,021
------------------
Total liabilities 29,021
Excess of liabilities over total other assets (3,810)
------------------
Net assets (1,423 units of fractional undivided
interest outstanding, $964.64 per unit) $ 1,372,679
==================
The accompanying notes form an integral part of the financial statements.
<PAGE>
Insured Municipal Securities Trust, Series 33
Statement of Operations
<TABLE>
<CAPTION>
Year ended December 31,
1999 1998 1997
------------------ ------------------- ------------------
<S> <C> <C> <C>
Investment income
Interest $ 87,220 $ 89,895 $ 90,069
Expenses
Trustee's fees 2,972 3,147 3,061
Evaluator's fee 834 898 711
Sponsor's advisory fee 375 386 386
------------------ ------------------- ------------------
Total expenses 4,181 4,431 4,158
------------------ ------------------- ------------------
Net investment income 83,039 85,464 85,911
------------------ ------------------- ------------------
Realized and unrealized gain (loss)
Realized gain on investments 7,071 1,494 -
Unrealized appreciation (depreciation)
on investments (91,249) 26,660 55,467
------------------ ------------------- ------------------
Net gain (loss) on investments (84,178) 28,154 55,467
------------------ ------------------- ------------------
Net increase (decrease) in net assets resulting from
operations $ (1,139) $ 113,618 $ 141,378
================== =================== ==================
</TABLE>
The accompanying notes form an integral part of the financial statements.
<PAGE>
Insured Municipal Securities Trust, Series 33
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year ended December 31,
1999 1998 1997
------------------ ------------------- ------------------
<S> <C> <C> <C>
Operations
Net investment income $ 83,039 $ 85,464 $ 85,911
Realized gain on investments 7,071 1,494 -
Unrealized appreciation (depreciation)
on investments (91,249) 26,660 55,467
------------------ ------------------- ------------------
Net increase (decrease) in net assets resulting from
operations (1,139) 113,618 141,378
------------------ ------------------- ------------------
Distributions to certificateholders
Investment income 81,721 85,284 85,580
Principal 16,061 34,877 10,422
Redemptions
Interest 98 - 124
Principal 99,871 - 10,116
------------------ ------------------- ------------------
Total distributions and redemptions 197,751 120,161 106,242
------------------ ------------------- ------------------
Total (decrease) (198,890) (6,543) 35,136
Net assets
Beginning of year 1,571,569 1,578,112 1,542,976
------------------ ------------------- ------------------
End of year (including undistributed net investment
income of $11,234, $10,014 and $9,834,
respectively) $ 1,372,679 $ 1,571,569 $ 1,578,112
================== =================== ==================
</TABLE>
The accompanying notes form an integral part of the financial statements.
<PAGE>
Insured Municipal Securities Trust, Series 33
Financial Highlights
Selected data for a unit of the Trust outstanding:*
<TABLE>
<CAPTION>
Year ended December 31,
1999 1998 1997
------------------ ------------------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of year** $ 1,030.54 $ 1,034.83 $ 1,005.20
------------------ ------------------- ------------------
Interest income 59.18 58.95 58.87
Expenses (2.84) (2.91) (2.72)
------------------ ------------------- ------------------
Net investment income 56.34 56.04 56.15
------------------ ------------------- ------------------
Net gain or loss on investments (1) (55.83) 18.46 36.30
------------------ ------------------- ------------------
Total from investment operations .51 74.50 92.45
------------------ ------------------- ------------------
Less distributions
to Certificateholders
Income 55.44 55.92 55.93
Principal 10.90 22.87 6.81
for Redemptions
Interest .07 - .08
------------------ ------------------- ------------------
Total distributions 66.41 78.79 62.82
------------------ ------------------- ------------------
Net asset value, end of year** $ 964.64 $ 1,030.54 $ 1,034.83
================== =================== ==================
</TABLE>
(1) Net gain or loss on investments is a result of changes in outstanding units
since January 1, 1999, 1998 and 1997, respectively, and the dates of net gain
and loss on investments.
* Unless otherwise stated, based upon average units outstanding during the
year of 1,474
([1,423 + 1,525]/2) for 1999, 1,525 ([1,525 +1,525]/2) for 1998 and of
1,530 ([1,525+ 1,535]/2) for 1997.
** Based upon actual units outstanding.
The accompanying notes form an integral part of the financial statements.
<PAGE>
Insured Municipal Securities Trust, Series 33
Notes to Financial Statements
December 31, 1999
1. Organization
Insured Municipal Securities Trust, Series 33 (the "Trust") was organized on
April 6, 1995 by Bear, Stearns & Co. Inc. and Gruntal & Co., Incorporated under
the laws of the State of New York by a Trust Indenture and Agreement, and is
registered under the Investment Company Act of 1940. The Trust was formed to
preserve capital and to provide interest income.
On September 28, 1995, Reich & Tang Distributors, Inc. ("Reich & Tang") had
become the successor sponsor to certain of the unit investment trusts previously
sponsored by Bear, Stearns & Co. Inc. As successor sponsor, Reich & Tang had
assumed all of the obligations and rights of Bear, Stearns & Co. Inc., the
previous sponsor.
Effective February 9, 2000, Gruntal & Co. resigned as a co-sponsor of certain
unit investment trusts previously co-sponsored with Reich & Tang. ING Funds
Distributor, Inc. ("ING") has become the successor sponsor to certain unit
investment trusts previously sponsored by Reich & Tang. As successor sponsor,
ING has assumed all of the obligations and rights of Reich & Tang, the previous
sponsor.
2. Summary of Significant Accounting Policies
The following is a summary of significant accounting policies consistently
followed by the Trust in preparation of its financial statements. The policies
are in conformity with generally accepted accounting principles ("GAAP"). The
preparation of financial statements in accordance with GAAP requires management
to make estimates and assumptions that affect the reported amounts and
disclosures in the financial statements. Actual amounts could differ from those
estimates.
Interest Income
Interest income is recorded on the accrual basis. The discount on the
zero-coupon bonds is accreted by the interest method over the respective lives
of the bonds. The accretion of such discount is included in interest income;
however, it is not distributed until realized in cash upon maturity or sale of
the respective bonds.
<PAGE>
Insured Municipal Securities Trust, Series 33
Notes to Financial Statements (continued)
2. Summary of Significant Accounting Policies (continued)
Security Valuation
Investments are carried at market value which is determined by Kenny S&P
Evaluation Services, a business unit of J.J. Kenny Company, Inc., a subsidiary
of the McGraw-Hill Companies, Inc. The market value of the portfolio is based
upon the bid prices for the bonds at the end of the year, which approximates the
fair value of the security at that date, except that the market value on the
date of deposit represents the cost to the Trust based on the offering prices
for investments at that date. The difference between cost (including accumulated
accretion of original issue discount on zero-coupon bonds) and market value is
reflected as unrealized appreciation (depreciation) of investments. Securities
transactions are recorded on the trade date. Realized gains (losses) from
securities transactions are determined on the basis of average cost of the
securities sold or redeemed.
3. Income Taxes
No provision for federal income taxes has been made in the accompanying
financial statements because the Trust intends to continue to qualify for the
tax treatment applicable to Grantor Trusts under the Internal Revenue Code.
Under existing law, if the Trust so qualifies, it will not be subject to federal
income tax on net income and capital gains that are distributed to unitholders.
4. Trust Administration
The Chase Manhattan Bank (the "Trustee") has custody of assets and
responsibility for the accounting records and financial statements of the Trust
and is responsible for establishing and maintaining a system of internal control
related thereto. The Trustee is also responsible for all estimates of expenses
and accruals reflected in the Trust's financial statements.
The Trust Indenture and Agreement provides for interest distributions as often
as monthly (depending upon the distribution plan elected by the
Certificateholders).
<PAGE>
Insured Municipal Securities Trust, Series 33
Notes to Financial Statements (continued)
4. Trust Administration (continued)
The Trust Indenture and Agreement further requires that principal received from
the disposition of bonds, other than those bonds sold in connection with the
redemption of units, be distributed to Certificateholders.
The Trust Indenture and Agreement also requires the Trust to redeem units
tendered. For the years ended December 31, 1999, 1998 and 1997, 102, 0 and 10
units were redeemed, respectively.
The Trust pays an annual fee for trustee services rendered by the Trustee that
ranges from $1.01 to $1.46 per $1,000 of outstanding investment principal. In
addition, a minimum fee of $2.83 is paid to a service bureau for each portfolio
valuation. A maximum fee of $.25 per $1,000 of outstanding investment principal
is paid to the Sponsor. For the years ended December 31, 1999, 1998 and 1997,
the "Trustee's Fees" are comprised of Trustee fees of $2,051, $2,290 and $2,183
and other expenses of $921, $857 and $878, respectively. The other expenses
include professional, printing and miscellaneous fees.
5. Net Assets
At December 31, 1999, the net assets of the Trust represented the interest of
Certificateholders as follows:
Original cost to Certificateholders $ 2,031,712
Less initial gross underwriting commission 99,554
------------------
1,932,158
Accumulated cost of securities sold, matured or called (605,711)
Net unrealized appreciation 45,712
Undistributed net investment income 11,234
Distributions in excess of proceeds from investments (10,714)
------------------
Total $ 1,372,679
==================
<PAGE>
Insured Municipal Securities Trust, Series 33
Notes to Financial Statements (continued)
5. Net Assets (continued)
The original cost to Certificateholders, less the initial gross underwriting
commission, represents the aggregate initial public offering price net of the
applicable sales charge on 2,000 units of fractional undivided interest of the
Trust as of the date of deposit.
Undistributed net investment income includes accumulated accretion of original
issue discount of $4,330.
6. Concentration of Credit Risk
Since the Trust invests a portion of its assets in municipal bonds, it may be
affected by economic and political developments in the municipalities. Certain
debt obligations held by the Trust may be entitled to the benefit of insurance,
standby letters of credit or other guarantees of banks or other financial
institutions.
<PAGE>
Prospectus Part A Dated April 30, 2000
INSURED MUNICIPAL SECURITIES TRUST
NEW YORK NAVIGATOR INSURED
SERIES 17
The Trust is a unit investment trust designated Series 17 ("New York
Navigator Trust") with an underlying portfolio of long-term insured tax-exempt
bonds and was formed to preserve capital and to provide interest income which,
in the opinions of bond counsel to the respective issuers, is, with certain
exceptions, currently exempt from regular federal income tax under existing law
and from New York State and City personal income tax. There can be no assurance
that the Trust's investment objectives will be achieved. Although the Supreme
Court has determined that Congress has the authority to subject the interest on
bonds such as the Bonds in the Trust to federal income taxation, existing law
excludes such interest from regular federal income tax. Such interest income
may, however, be a specific preference item for purposes of the federal
individual and corporate alternative minimum tax. (See "Description of
Portfolio" in this Part A for a list of those Bonds, if any, which pay interest
income subject to the federal individual alternative minimum tax.) In addition,
capital gains are subject to tax. (See "Tax Status" and "The Trust--Portfolio"
in Part B of this Prospectus.) The Sponsor is ING Funds Distributor, Inc.
(successor to Reich & Tang Distributors, Inc.). The value of the Units of the
Trust will fluctuate with the value of the underlying bonds. Minimum purchase: 1
Unit.
This Prospectus consists of two parts. Part A contains the Summary of
Essential Information as of December 31, 1999 (the "Evaluation Date"), a summary
of certain specific information regarding the Trust and audited financial
statements of the Trust, including the related portfolio, as of the Evaluation
Date. Part B of this Prospectus contains a general summary of the Trust. Part A
of this Prospectus may not be distributed unless accompanied by Part B.
Investors should retain both parts of this Prospectus for future reference. The
Securities and Exchange Commission ("SEC") maintains a website that contains
reports, proxy and information statements and other information regarding the
Trust which is filed electronically with the SEC. The SEC's Internet address is
http:www.sec.gov. Offering materials for the sale of these units available
through the Internet are not being offered directly or indirectly to residents
of a particular state nor is an offer of these units through the Internet
specifically directed to any person in a state by, or on behalf of, the issuer.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
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 TRUST. The Trust seeks to achieve its investment objectives through
investment in a fixed, diversified portfolio of long-term insured bonds (the
"Bonds") issued by or on behalf of states, municipalities and public authorities
which, because of irrevocable insurance, were rated "AAA" by Standard & Poor's
Rating Services, a division of The McGraw-Hill Companies. All of the Bonds in
the Trust were rated "AAA" by Standard & Poor's
352467.1
<PAGE>
Corporation at the time originally deposited in the Trust (see "Portfolio").
This rating results from insurance relating only to the Bonds in the Trust and
not to Units of the Trust. The insurance does not remove market risk, as it does
not guarantee the market value of the Units. For a discussion of the
significance of such ratings, see "Description of Bond Ratings" in Part B of
this Prospectus.
Some of the aggregate principal amount of the Bonds in the Trust may be
"Zero Coupon Bonds," which are original issue discount bonds that provide for
payment at maturity at par value, but do not provide for the payment of current
interest (for the amount of Zero Coupon Bonds in each Trust, and the cost of
such Bonds to that Trust, see "Description of Portfolio" in this Part A). The
payment of interest and preservation of capital are, of course, dependent upon
the continuing ability of the issuers of the Bonds or the insurer thereof to
meet their obligations.
Investment in the Trust should be made with an understanding of the
risks which an investment in long-term fixed rate debt obligations may entail,
including the risk that the value of the underlying portfolio will decline with
increases in interest rates, and that the value of Zero Coupon Bonds is subject
to greater fluctuation than coupon bonds in response to such changes in interest
rates. A Trust designated as a long-term trust must have a dollar-weighted
average portfolio maturity of more than ten years. (See "Portfolio" in Part B of
this Prospectus.)
Each Unit in the Trust represents a 1/2862nd undivided interest in the
principal and net income of the Trust. The principal amount of Bonds deposited
in the Trust per Unit is reflected in the Summary of Essential Information. (See
"Organization" in Part B of this Prospectus.) The Units being offered hereby are
issued and outstanding Units which have been purchased by the Sponsor in the
secondary market.
INSURANCE. Each of the Bonds in the New York Navigator Trust is insured
by a municipal bond guaranty insurance policy obtained by the Sponsor (the
"Navigator Sponsor-Insured Bonds") from MBIA Insurance Corporation ("MBIA
Corp.") covering regularly scheduled payments of principal thereof and interest
thereon when such amounts become due for payment but shall not have been paid.
For discussion of the effect of an occurrence of non-payment of principal or
interest on any Bonds in the New York Navigator Trust see "Portfolio
Supervision" in Part B of this Prospectus. The premiums for the Navigator
Sponsor-Insured Bonds are obligations of the Sponsor. Additionally, some of the
Bonds in the New York Navigator Trust may be Pre-Insured Bonds (as described
below). The premium for the Pre-Insured Bonds is an obligation of the issuers,
underwriters or prior owners of those Bonds. The insurance policy or policies
relating to the Navigator Sponsor-Insured Bonds provides that, to the extent
that Bonds are both Pre-Insured Bonds and Navigator Sponsor-Insured Bonds,
coverage is effective after a claim has been made upon the insurer of the
Pre-Insured Bonds.
Some of the Bonds in the New York Navigator Trust may additionally be
insured by a municipal bond guaranty insurance policy obtained by issuers,
underwriters or prior owners of the Bonds ("Pre-Insured Bonds") and issued by
one of the insurance companies described under "Insurance on the Bonds" in Part
B of this Prospectus (the "Insurance Companies").
None of the insurance will cover accelerated payments of principal or
penalty interest or premiums unrelated to taxability of interest on the Bonds.
The insurance relates only to the prompt payment of principal of and interest on
the securities in the portfolios, and does not remove market risks nor does it
guarantee the market value of Units in the Trusts. The terms of the insurance
are more fully described herein. No representation is made herein as to any Bond
insurer's ability to meet its obligations under a policy
352467.1
A-2
<PAGE>
of insurance relating to any of the Pre-Insured Bonds. In addition, investors
should be aware that subsequent to the Date of Deposit the rating of the
claims-paying ability of the insurer of an underlying Pre-Insured Bond may be
downgraded.
All of the Bonds in the New York Navigator Trust are covered by
insurance obtained by the Sponsors from MBIA Corp. and 32.8% of the Bonds in the
New York Navigator Trust are Pre-Insured Bonds. The approximate percentage of
the aggregate principal amount of the Portfolio that is insured by each
Insurance Company with respect to Pre-Insured Bonds is as follows: AMBAC
Indemnity Corp. ("AMBAC"), 8.6%; Financial Security Assurance Inc. ("Financial
Security"), 5.4%; and MBIA Corp., 18.8%.
PUBLIC OFFERING PRICE. The secondary market Public Offering Price of
each Unit is equal to the aggregate offering price of the Bonds in such Trust
divided by the number of Units outstanding, plus a sales charge of 4.0% of the
Public Offering Price, or 4.167% of the net amount invested in Bonds per Unit.
In addition, accrued interest to the expected date of settlement is added to the
Public Offering Price. If Units had been purchased on the Evaluation Date, the
Public Offering Price per Unit would have been $1,027.63 plus accrued interest
of $.62 under the monthly distribution plan and $5.32 under the semi-annual
distribution plan, for a total of $1,028.25 and $1,032.95, respectively. The
Public Offering Price per Unit can vary on a daily basis in accordance with
fluctuations in the aggregate bid price of the Bonds. (See "Public
Offering--Offering Price" in Part B of this Prospectus.)
ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN. Units of each
Trust are offered to investors on a "dollar price" basis (using the computation
method described under "Public Offering--Offering Price" in Part B) as
distinguished from a "yield price" basis often used in offerings of tax exempt
bonds (involving the lesser of the yield as computed to maturity of bonds or to
an earlier redemption date). Since they are offered on a dollar price basis, the
rate of return on an investment in Units of each Trust is measured in terms of
"Estimated Current Return" and "Estimated Long Term Return".
Estimated Long Term Return is calculated by: (1) computing the yield to
maturity or to an earlier call date (whichever results in a lower yield) for
each Bond in the Trust's portfolio in accordance with accepted bond practices,
which practices take into account not only the interest payable on the Bond but
also the amortization of premiums or accretion of discounts, if any; (2)
calculating the average of the yields for the Bonds in the Trust's portfolio by
weighing each Bond's yield by the market value of the Bond and by the amount of
time remaining to the date to which the Bond is priced (thus creating an average
yield for the portfolio of the Trust); and (3) reducing the average yield for
the portfolio of the Trust in order to reflect estimated fees and expenses of
the Trust and the maximum sales charge paid by investors. The resulting
Estimated Long Term Return represents a measure of the return to investors
earned over the estimated life of the Trust. (For the Estimated Long Term Return
to Certificateholders under the monthly, semi-annual and annual distribution
plans, see "Summary of Essential Information".)
Estimated Current Return is a measure of the Trust's cash flow.
Estimated Current Return is computed by dividing the Estimated Net Annual
Interest Income per Unit by the Public Offering Price per Unit. In contrast to
the Estimated Long Term Return, the Estimated Current Return does not take into
account the amortization of premium or accretion of discount, if any, on
352467.1
A-3
<PAGE>
the Bonds in the portfolio of the Trust. Moreover, because interest rates on
Bonds purchased at a premium are generally higher than current interest rates on
newly issued bonds of a similar type with comparable rating, the Estimated
Current Return per Unit may be affected adversely if such Bonds are redeemed
prior to their maturity.
The Estimated Net Annual Interest Income per Unit of the Trust will
vary with changes in the fees and expenses of the Trustee and the Evaluator
applicable to the Trust and with the redemption, maturity, sale or other
disposition of the Bonds in the Trust. The Public Offering Price will vary with
changes in the bid prices of the Bonds. Therefore, there is no assurance that
the present Estimated Current Return or Estimated Long Term Return will be
realized in the future. (For the Estimated Current Return to Certificateholders
under the monthly, semi-annual and annual distribution plans, see "Summary of
Essential Information". See "Estimated Long Term Return and Estimated Current
Return" in Part B of this Prospectus.)
A schedule of cash flow projections is available from the Sponsor upon
request.
DISTRIBUTIONS. Distributions of interest income, less expenses, will be
made by the Trust either monthly, semi-annually or annually depending upon the
plan chosen by the Certificateholder. Certificateholders purchasing Units in the
secondary market will initially receive distributions in accordance with the
elections of the prior owner and may thereafter change the plan as provided
under "Interest and Principal Distributions" in Part B of this Prospectus.
Distributions of principal, if any, will be made semi-annually on June 15 and
December 15 of each year. (See "Rights of Certificateholders--Interest and
Principal Distributions" in Part B of this Prospectus. For estimated monthly,
semi-annual and annual interest distributions, see "Summary of Essential
Information.")
MARKET FOR UNITS. The Sponsor, although not obligated to do so, intends
to maintain a secondary market for the Units at a price based on the aggregate
bid price of the Bonds in the Trust portfolio. The reoffer price will be based
on the aggregate bid price of the Bonds plus a sales charge of 4.0% of the
Public Offering Price (4.167% of the net amount invested), plus net accrued
interest. If a market is not maintained a Certificateholder will be able to
redeem his or her Units with the Trustee at a price based on the aggregate bid
price of the Bonds. (See "Sponsor Repurchase" and "Public Offering--Offering
Price" in Part B of this Prospectus.)
352467.1
A-4
<PAGE>
INSURED MUNICIPAL SECURITIES TRUST
NEW YORK NAVIGATOR INSURED
SERIES 17
SUMMARY OF ESSENTIAL INFORMATION AS OF DECEMBER 31, 1999
Date of Deposit*: April 6, 1995 Weighted Average Life to
Principal Amount of Bonds ... $2,845,000 Maturity: 10.8 Years.
Number of Units ............. 2,862 Minimum Value of Trust:
Fractional Undivided Inter- Trust may be terminated if
est in Trust per Unit ..... 1/2862 value of Trust is less than
Principal Amount of $1,200,000 in principal
Bonds per Unit ............ $994.06 amount of Bonds.
Secondary Market Public Mandatory Termination Date:
Offering Price** The earlier of December 31,
Aggregate Bid Price 2044 or the disposition of
of Bonds in Trust ....... $2,822,294+++ the last Bond in the Trust.
Divided by 2,862 Units .... $986.13 Trustee***: The Chase
Plus Sales Charge of 4.0% Manhattan Bank.
of Public Offering Price $41.50 Trustee's Annual Fee: Monthly
Public Offering Price plan $1.49 per $1,000; and
per Unit ................ $1,027.63+ semi-annual plan $1.04 per
Redemption and Sponsor's $1,000.
Repurchase Price Evaluator: Kenny S&P
per Unit .................. $986.13+ Evaluation Services.
+++ Evaluator's Fee for Each
++++ Evaluation: Minimum of $2.83
Excess of Secondary Market plus $.25 per each issue of
Public Offering Price Bonds in excess of 50 issues
over Redemption and (treating separate maturities
Sponsor's Repurchase as separate issues).
Price per Unit ............ $41.50++++ Sponsor: ING Funds
Difference between Public Distributor, Inc.
Offering Price per Unit Sponsor's Annual Fee: Maximum
and Principal Amount per of $.25 per $1,000 principal
Unit Premium/(Discount) ... $33.57 amount of Bonds (see "Trust
Evaluation Time: 4:00 p.m. Expenses and Charges" in
New York Time. Part B of this Prospectus).
Minimum Principal Distribution:
$1.00 per Unit.
PER UNIT INFORMATION BASED UPON INTEREST DISTRIBUTION PLAN ELECTED
Monthly Semi-Annual
Option Option
Gross annual interest income# ......... $58.26 $58.26
Less estimated annual fees and
expenses ............................ 2.37 2.02
Estimated net annual interest ______ ______
income (cash)# ...................... $55.89 $56.24
Estimated interest distribution# ...... 4.65 28.12
Estimated daily interest accrual# ..... .1552 .1562
Estimated current return#++ ........... 5.44% 5.47%
Estimated long term return++ .......... 4.80% 4.83%
Record dates .......................... 1st of Dec. 1 and
each month June 1
Interest distribution dates ........... 15th of Dec. 15 and
each month June 15
352467.1
A-5
<PAGE>
Footnotes to Summary of Essential Information
* The Date of Deposit is the date on which the Trust Agreement was signed
and the deposit of the Bonds with the Trustee made.
** Certain amounts distributable as of December 31, 1999, may be reported
in the Summary of Essential Information as if they had been distributed
at year-end.
*** The Trustee maintains its principal executive office at 270 Park
Avenue, New York, New York 10017 and its unit investment trust office
at 4 New York Plaza, New York, New York 10004 (tel. no.:
1-800-882-9898). For information regarding redemption by the Trustee,
see "Trustee Redemption" in Part B of this Prospectus.
+ Plus accrued interest to the expected date of settlement (approximately
three business days after purchase) of $.62 monthly and $5.32 semi-
annually.
++ The estimated current return and estimated long term return are
increased for transactions entitled to a discount (see "Employee
Discounts" in Part B of this Prospectus), and are higher under the
semi-annual and annual options due to lower Trustee's fees and
expenses.
+++ Based solely upon the bid side evaluation of the underlying Bonds
(including, where applicable, undistributed cash from the principal
account). Upon tender for redemption, the price to be paid will be
calculated as described under "Trustee Redemption" in Part B of this
Prospectus.
++++ See "Comparison of Public Offering Price, Sponsor's Repurchase Price
and Redemption Price" in Part B of this Prospectus.
# Does not include income accrual from original issue discount bonds, if
any.
FINANCIAL AND STATISTICAL INFORMATION
Selected data for each Unit outstanding for the periods listed below:
<TABLE>
<CAPTION>
Distribu-
tions of
Distributions of Interest Principal
During the Period (per Unit) During
Net Asset* Semi- the
Units Out- Value Monthly Annual Period
Period Ended standing Per Unit Option Option (Per Unit)
<S> <C> <C> <C> <C> <C> <C> <C>
December 31, 1997 2,994 $1,041.48 $56.63 $56.95 -0-
December 31, 1998 2,993 1,054.02 56.64 56.96 -0-
December 31, 1999 2,862 990.11 56.32 56.73 $4.89
</TABLE>
- --------
* Net Asset Value per Unit is calculated by dividing net assets as
disclosed in the "Statement of Net Assets" by the number of Units
outstanding as of the date of the Statement of Net Assets. See Note 5
of Notes to Financial Statements for a description of the components of
Net Assets.
352467.1
A-6
<PAGE>
INFORMATION REGARDING THE TRUST
AS OF DECEMBER 31, 1999
DESCRIPTION OF PORTFOLIO
The portfolio of the Trust consists of 11 issues representing
obligations of 8 issuers located in the state of New York and 2 in Puerto Rico.
The Sponsor has not participated as a sole underwriter or manager, co-manager
or member of an underwriting syndicate from which any principal amount of the
Bonds were acquired. Approximately 22.7% of the Bonds are obligations of state
and local housing authorities; approximately 8.8% are hospital revenue bonds;
none were issued in connection with the financing of nuclear generating
facilities; and none are "mortgage subsidy" bonds. All of the Bonds in the Trust
are subject to redemption prior to their stated maturity dates pursuant to
sinking fund or optional call provisions. The Bonds may also be subject to other
calls, which may be permitted or required by events which cannot be predicted
(such as destruction, condemnation, termination of a contract, or receipt of
excess or unanticipated revenues). Three of the issues representing $705,000 of
the principal amount of the Bonds are general obligation bonds. All 8 of the
remaining issues representing $2,140,000 of the principal amount of the Bonds
are payable from the income of a specific project or authority and are not
supported by the issuer's power to levy taxes. The portfolio is divided for
purpose of issue as follows: Correctional Facility 1, Hospital 2, Multi-Family
Housing 2, Public Building 1, Transit Facility 1, and Water 1. For an
explanation of the significance of these factors see "The Trust--Portfolio" in
Part B of this Prospectus.
As of December 31, 1999, $1,040,000 (approximately 36.6% of the
aggregate principal amount of the Bonds) were original issue discount bonds. Of
these original issue discount bonds, $155,000 (approximately 5.4% of the
aggregate principal amount of the Bonds) were Zero Coupon Bonds. Zero Coupon
Bonds do not provide for the payment of any current interest and provide for
payment at maturity at par value unless sooner sold or redeemed. The market
value of Zero Coupon Bonds is subject to greater fluctuations than coupon bonds
in response to changes in interest rates. Approximately 8.7% of the aggregate
principal amount of the Bonds in the Trust were purchased at a "market" discount
from par value at maturity, approximately 54.7% were purchased at a premium and
none were purchased at par. For an explanation of the significance of these
factors see "Discount and Zero Coupon Bonds" in Part B of this Prospectus.
None of the Bonds in the Trust are subject to the federal individual
alternative minimum tax under the Tax Reform Act of 1986. See "Tax Status" in
Part B of this Prospectus.
352467.1
A-7
<PAGE>
Report of Independent Auditors
The Sponsor, Trustee and Certificateholders of Insured Municipal Securities
Trust, New York Navigator Insured Series 17
We have audited the accompanying statement of net assets of Insured Municipal
Securities Trust, New York Navigator Insured Series 17, including the portfolio,
as of December 31, 1999 and the related statements of operations, and changes in
net assets and financial highlights for the year then ended. These financial
statements and financial highlights are the responsibility of the Trustee. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit. The statement of operations, statement
of changes in net assets and financial highlights for each of the two years in
the period ended December 31, 1998 were audited by other auditors whose report
thereon dated March 19, 1999, expressed an unqualified opinion on those
financial statements and financial highlights.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of the securities
owned by correspondence with the trustee. An audit also includes assessing the
accounting principles used and significant estimates made by the Trustee, as
well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the 1999 financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Insured Municipal Securities Trust, New York Navigator Insured Series 17 at
December 31, 1999, the results of its operations, changes in its net assets and
financial highlights for the year then ended, in conformity with accounting
principles generally accepted in the United States.
/s/ERNST & YOUNG LLP
New York, New York
April 15, 2000
<PAGE>
Insured Municipal Securities Trust,
New York Navigator Insured Series 17
Portfolio
December 31, 1999
<TABLE>
<CAPTION>
Redemption
Coupon Rate/ Feature(2)(4)
Portfolio Aggregate Name of Issuer and Date(s) of S.F.-Sinking
No. Principal Title of Bonds Ratings(1) Maturity(2) Fund Ref. Market
Amount Refunding Value(3)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 $ 245,000 N.Y. State Hsg. Finc. Agcy. Ins. AAA 6.250% 8/15/07 @ 100 $ 253,009
Multi-Fam. Mtg. Hsg. Rev. Bonds 1994 8/15/2014 S.F.
Series B (MBIA Corp.) 8/15/04 @ 102
Ref.
2 110,000 N.Y. State Med. Care Facs. Finc. Agcy. AAA 6.375 8/15/10 @ 100 118,818
Mental Hlth. Servs. Facs. Imprvmnt. Rev. 8/15/2014 S.F.
Bonds, 1994 Series E (MBIA Corp.) 8/15/04 @ 102
Ref.
2A 5,000 N.Y. State Med. Care Facs. Fing. Agcy. AAA 6.375 8/15/10 @ 100 5,305
Mental Hlth. Servs. Facs. Imprvmt. Rev. 8/15/2014 S.F.
Bonds, 1994 Series E (MBIA Corp.) 8/15/04 @ 102
(Unrefunded Balance) Ref.
3 135,000 N.Y. State Med. Care Facs. Finc. Agcy. AAA 6.000 No Sinking Fund 143,438
Mental Hlth. Servs. Facs. Imprvmnt. Rev. 8/15/2020 2/1/05 @ 102
Bonds, 1995 Series C (MBIA Corp.) Ref.
4 200,000 N.Y. State U.D.C. Correc. Cap. Facs. Rev. AAA 5.375 1/1/14 @ 100 181,054
Bonds, Series 4 (MBIA Corp.) 1/1/2023 S.F.
1/1/04 @ 102
Ref.
5 400,000 N.Y. City Hsg. Dev. Corp. Multi-Fam. Hsg. AAA 6.550 4/1/16 @ 100 415,380
Rev. (FHA Ins. Mtg. Loans) Series 1993A 4/1/2018 S.F.
(MBIA Corp.) 4/1/03 @ 102
Ref.
6 400,000 The City of N.Y. Genl. Oblig. Bonds, AAA 7.000 No Sinking Fund 424,324
Fiscal 1992 Series H (MBIA Corp.) 2/1/2020 2/1/02 @ 101.5
Ref.
7 395,000 N.Y. City Muni.Wtr. Finc. Auth. Wtr. & AAA 6.375 6/15/21 @ 100 414,568
Swr. Sys. Rev. Bonds Fiscal 1993 Series B 6/15/2022 S.F.
(MBIA Corp.) 6/15/02 @ 101
Ref.
8 400,000 Metro. Trans. Auth. Facs. Trans. Rev. AAA 6.000 7/1/21 @ 100 424,568
Bonds, Series O (MBIA Corp.) 7/1/2024 S.F.
7/1/04 @ 101.5
Ref.
9 150,000 Commnwlth. of P.R. Pub. Imprvmnt. Ref. AAA 5.000 7/1/19 @ 100 130,868
Bonds, Series 1993 (Gen Obg. Bonds) (MBIA 7/1/2021 S.F.
Corp.) 7/1/03 @ 100
Ref.
10 250,000 P.R. Pub. Bldgs. Auth. Pub. Ed. & Hlth. AAA 5.750 7/1/11 @ 100 251,168
Facs. Rev. Rfndg. Bonds Gtd. By the 7/1/2015 S.F.
Commonwealth of P.R. Series L (MBIA Corp.) 7/1/03 @ 101.5
Ref.
11 155,000 The City of N.Y. Genl. Oblig. Bonds, AAA 0.000 No Sinking 44,559
Fiscal 1991 N.Y. City Savers Series B 6/1/2020 Fund
(MBIA Corp.) None
------------- --------------
$2,845,000 Total Investments (Cost $2,732,892) $2,807,059
============= ==============
</TABLE>
See accompanying footnotes to portfolio and notes to financial statements.
<PAGE>
Insured Municipal Securities Trust,
New York Navigator Insured Series 17
Footnotes to Portfolio
1. All ratings are by Kenny S&P Evaluation Services, a business unit of J.J.
Kenny Company, Inc., a subsidiary of The McGraw-Hill Companies, Inc. A
brief description of the ratings symbols and their meaning is set forth
under "Description of Bond Ratings" in Part B of the Prospectus.
2. See "The Trust--Portfolio" in Part B of the Prospectus for an explanation
of redemption features. See "Tax Status" in Part B of the Prospectus for a
statement of the Federal tax consequences to a Certificateholder upon the
sale, redemption or maturity of a bond.
3. At December 31, 1999, the net unrealized appreciation of all the bonds was
comprised of the following:
Gross unrealized appreciation $ 75,743
Gross unrealized depreciation (1,576)
--------------
Net unrealized appreciation $ 74,167
==============
4. The Bonds may also be subject to other calls, which may be permitted or
required by events which cannot be predicted (such as destruction,
condemnation, termination of a contract, or receipt of excess or
unanticipated revenues).
The accompanying notes form an integral part of the financial statements.
<PAGE>
Insured Municipal Securities Trust,
New York Navigator Insured Series 17
Statement of Net Assets
December 31, 1999
Investments in securities, at market value (Cost $2,732,892) $ 2,807,059
-----------------
Other assets
Accrued interest 59,263
-----------------
Total other assets 59,263
-----------------
Liabilities
Advance from trustee 32,634
-----------------
Total liabilities 32,634
-----------------
Excess of other assets over total liabilities 26,629
-----------------
Net assets (2,862 units of fractional undivided
interest outstanding, $990.11 per Unit) $ 2,833,688
=================
The accompanying notes form an integral part of the financial statements.
<PAGE>
Insured Municipal Securities Trust,
New York Navigator Insured Series 17
Statement of Operations
<TABLE>
<CAPTION>
Year ended December 31,
1999 1998 1997
-----------------------------------------------------
<S> <C> <C> <C>
Investment income
Interest $ 176,203 $ 178,392 $ 178,255
-----------------------------------------------------
Expenses
Trustee's fees 5,948 6,273 5,876
Evaluator's fee 834 904 647
Sponsor's advisory fee 750 750 750
-----------------------------------------------------
Total expenses 7,532 7,927 7,273
-----------------------------------------------------
Net investment income 168,671 170,465 170,982
Realized and unrealized gain (loss)
Realized gain on investments 12,258 - -
Unrealized appreciation (depreciation)
on investments (187,093) 36,902 105,875
-----------------------------------------------------
Net gain (loss) on investments (174,835) 36,902 105,875
-----------------------------------------------------
Net increase (decrease) in net assets resulting from
operations $ (6,164) $ 207,367 $ 276,857
=====================================================
</TABLE>
The accompanying notes form an integral part of the financial statements.
<PAGE>
Insured Municipal Securities Trust,
New York Navigator Insured Series 17
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year ended December 31,
1999 1998 1997
-----------------------------------------------------
<S> <C> <C> <C>
Operations
Net investment income $ 168,671 $ 170,465 $ 170,982
Realized gain on investments 12,258 - -
Unrealized appreciation (depreciation)
on investments (187,093) 36,902 105,875
-----------------------------------------------------
Net increase (decrease) in net assets resulting from
operations (6,164) 207,367 276,857
-----------------------------------------------------
Distributions to Certificateholders
Investment income 164,440 169,833 169,858
Principal 14,186 - -
Redemptions
Interest 1,116 22 -
Principal 135,083 1,037 -
-----------------------------------------------------
Total distributions and redemptions 314,825 170,892 169,858
-----------------------------------------------------
Total increase (decrease) (320,989) 36,475 106,999
Net assets
Beginning of year 3,154,677 3,118,202 3,011,203
-----------------------------------------------------
End of year (including undistributed net investment
income of $22,496, $19,381 and $18,771,
respectively) $ 2,833,688 $ 3,154,677 $ 3,118,202
=====================================================
</TABLE>
The accompanying notes form an integral part of the financial statements.
<PAGE>
Insured Municipal Securities Trust,
New York Navigator Insured Series 17
Financial Highlights
Selected data for a unit of the Trust outstanding:*
<TABLE>
<CAPTION>
Year ended December 31,
1999 1998 1997
----------------- ---------------- -----------------
<S> <C> <C> <C>
Net asset value, beginning of year** $ 1,054.02 $ 1,041.48 $ 1,005.75
Interest income 60.18 59.58 59.54
Expenses (2.57) (2.65) (2.43)
----------------- ---------------- -----------------
Net investment income 57.61 56.93 57.11
----------------- ---------------- -----------------
Net gain or loss on investments (1) (60.13) 12.34 35.35
----------------- ---------------- -----------------
Total from investment operations (2.52) 69.27 92.46
----------------- ---------------- -----------------
Less distributions
to Certificateholders
Income 56.16 56.72 56.73
Principal 4.85 - -
for Redemptions
Interest .38 .01 -
----------------- ---------------- -----------------
Total distributions 61.39 56.73 56.73
----------------- ---------------- -----------------
Net asset value, end of year** $ 990.11 $ 1,054.02 $ 1,041.48
================= ================ =================
</TABLE>
(1) Net gain or loss on investments is a result of changes in outstanding units
since January 1, 1999, 1998 and 1997, respectively, and the dates of net gain
and loss on investments.
* Unless otherwise stated, based upon average units outstanding during the
year of 2,928 ([2,862 + 2,993]/2) for 1999, 2,994 ([2,993 + 2,994}/2) for
1998 and of 2,994 ([2,944 + 2,994]/2) for 1997.
** Based upon actual units outstanding.
The accompanying notes form an integral part of the financial statements.
<PAGE>
Insured Municipal Securities Trust,
New York Navigator Insured Series 17
Notes to Financial Statements
December 31, 1999
1. Organization
Insured Municipal Securities Trust, New York Navigator Insured, Series 17 (the
"Trust") was organized on April 6, 1995 by Bear, Stearns & Co. Inc. and Gruntal
& Co., incorporated under the laws of the State of New York by a Trust Indenture
and Agreement, and is registered under the Investment Company Act of 1940. The
Trust was formed to preserve capital and to provide interest income.
On September 28, 1995, Reich & Tang Distributors, Inc. ("Reich & Tang") had
become the successor sponsor to certain of the unit investment trusts previously
sponsored by Bear, Stearns & Co. Inc. As successor sponsor, Reich & Tang had
assumed all of the obligations and rights of Bear, Stearns & Co. Inc., the
previous sponsor.
Effective February 9, 2000, Gruntal & Co. resigned as a co-sponsor of certain
unit investment trusts previously co-sponsored with Reich & Tang. ING Funds
Distributor, Inc. ("ING") has become the successor sponsor to certain unit
investment trusts previously sponsored by Reich & Tang. As successor sponsor,
ING has assumed all of the obligations and rights of Reich & Tang, the previous
sponsor.
2. Summary of Significant Accounting Policies
The following is a summary of significant accounting policies consistently
followed by the Trust in preparation of its financial statements. The policies
are in conformity with generally accepted accounting principles ("GAAP"). The
preparation of financial statements in accordance with GAAP requires management
to make estimates and assumptions that affect the reported amounts and
disclosures in the financial statements. Actual amounts could differ from those
estimates.
Interest Income
Interest income is recorded on the accrual basis. The discount on the
zero-coupon bonds is accreted by the interest method over the respective lives
of the bonds. The accretion of such discount is included in interest income;
however, it is not distributed until realized in cash upon maturity or sale of
the respective bonds.
<PAGE>
Insured Municipal Securities Trust,
New York Navigator Insured Series 17
Notes to Financial Statements (continued)
2. Summary of Significant Accounting Policies (continued)
Security Valuation
Investments are carried at market value which is determined by Kenny S&P
Evaluation Services, a business unit of J.J. Kenny Company, Inc., a subsidiary
of The McGraw-Hill Companies, Inc. The market value of the portfolio is based
upon the bid prices for the bonds at the end of the year, which approximates the
fair value of the security at that date, except that the market value on the
date of deposit represents the cost to the Trust based on the offering prices
for investments at that date. The difference between cost (including accumulated
accretion of original issue discount on zero-coupon bonds) and market value is
reflected as unrealized appreciation (depreciation) of investments. Securities
transactions are recorded on the trade date. Realized gains (losses) from
securities transactions are determined on the basis of average cost of the
securities sold or redeemed.
3. Income Taxes
No provision for federal income taxes has been made in the accompanying
financial statements because the Trust intends to continue to qualify for the
tax treatment applicable to Grantor Trusts under the Internal Revenue Code.
Under existing law, if the Trust so qualifies, it will not be subject to federal
income tax on net income and capital gains that are distributed to unitholders.
4. Trust Administration
The Chase Manhattan Bank (the "Trustee") has custody of assets and
responsibility for the accounting records and financial statements of the Trust
and is responsible for establishing and maintaining a system of internal control
related thereto. The Trustee is also responsible for all estimates of expenses
and accruals reflected in the Trust's financial statements.
The Trust Indenture and Agreement provides for interest distributions as often
as monthly (depending upon the distribution plan elected by the
Certificateholders).
<PAGE>
Insured Municipal Securities Trust,
New York Navigator Insured Series 17
Notes to Financial Statements (continued)
4. Trust Administration (continued)
The Trust Indenture and Agreement further requires that principal received from
the disposition of bonds, other than those bonds sold in connection with the
redemption of units, be distributed to Certificateholders.
The Trust Indenture and Agreement also requires the Trust to redeem units
tendered. For the years ended December 31, 1999, 1998 and 1997, 131, 1, and 0
units were redeemed, respectively.
The Trust pays an annual fee for trustee services rendered by the Trustee that
ranges from $1.04 to $1.49 per $1,000 of outstanding investment principal. In
addition, a minimum fee of $2.83 is paid to a service bureau for each portfolio
valuation. A maximum fee of $.25 per $1,000 of outstanding investment principal
is paid to the Sponsor. For the years ended December 31, 1999, 1998 and 1997,
the "Trustee's Fees" are comprised of Trustee fees of $3,942, $4,281 and $4,039
and other expenses of $2,006, $1,992 and $1,837, respectively. The other
expenses include professional, printing and miscellaneous fees.
5. Net Assets
At December 31, 1999, the net assets of the Trust represented the interest of
Certificate-holders as follows:
Original cost to Certificateholders $ 3,029,512
Less initial gross underwriting commission 148,446
------------------
2,881,066
Accumulated cost of securities sold, matured or called (159,277)
Net unrealized appreciation 74,167
Undistributed net investment income 22,496
Undistributed proceeds from investments 15,236
------------------
Total $ 2,833,688
==================
<PAGE>
Insured Municipal Securities Trust,
New York Navigator Insured Series 17
Notes to Financial Statements (continued)
5. Net Assets (continued)
The original cost to Certificateholders, less the initial gross underwriting
commission, represents the aggregate initial public offering price net of the
applicable sales charge on 3,000 units of fractional undivided interest of the
Trust as of the date of deposit.
Undistributed net investment income includes accumulated accretion of original
issue discount of $11,103.
6. Concentration of Credit Risk
Since the Trust invests a portion of its assets in municipal bonds, it may be
affected by economic and political developments in the municipalities. Certain
debt obligations held by the Trust may be entitled to the benefit of insurance,
standby letters of credit or other guarantees of banks or other financial
institutions.
<PAGE>
Prospectus Part A Dated April 30, 2000
INSURED MUNICIPAL SECURITIES TRUST
NEW JERSEY NAVIGATOR INSURED
SERIES 13
The Trust is a unit investment trust designated Series 13 ("New Jersey
Navigator Trust") with an underlying portfolio of long-term insured tax-exempt
bonds and was formed to preserve capital and to provide interest income which,
in the opinions of bond counsel to the respective issuers, is, with certain
exceptions, currently exempt from regular federal income tax under existing law
and from New Jersey gross income tax. There can be no assurance that the Trust's
investment objectives will be achieved. Although the Supreme Court has
determined that Congress has the authority to subject the interest on bonds such
as the Bonds in the Trust to federal income taxation, existing law excludes such
interest from regular federal income tax. Such interest income may, however, be
a specific preference item for purposes of the federal individual and corporate
alternative minimum tax. (See "Description of Portfolio" in this Part A for a
list of those Bonds, if any, which pay interest income subject to the federal
individual alternative minimum tax.) In addition, capital gains are subject to
tax. (See "Tax Status" and "The Trust--Portfolio" in Part B of this Prospectus.)
The Sponsor is ING Funds Distributor, Inc. (successor to Reich & Tang
Distributors, Inc.). The value of the Units of the Trust will fluctuate with the
value of the underlying bonds. Minimum purchase: 1 Unit.
This Prospectus consists of two parts. Part A contains the Summary of
Essential Information as of December 31, 1999 (the "Evaluation Date"), a summary
of certain specific information regarding the Trust and audited financial
statements of the Trust, including the related portfolio, as of the Evaluation
Date. Part B of this Prospectus contains a general summary of the Trust. Part A
of this Prospectus may not be distributed unless accompanied by Part B.
Investors should retain both parts of this Prospectus for future reference. The
Securities and Exchange Commission ("SEC") maintains a website that contains
reports, proxy and information statements and other information regarding the
Trust which is filed electronically with the SEC. The SEC's Internet address is
http:www.sec.gov. Offering materials for the sale of these units available
through the Internet are not being offered directly or indirectly to residents
of a particular state nor is an offer of these units through the Internet
specifically directed to any person in a state by, or on behalf of, the issuer.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
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 TRUST. The Trust seeks to achieve its investment objectives through
investment in a fixed, diversified portfolio of long-term insured bonds (the
"Bonds") issued by or on behalf of states, municipalities and public authorities
which, because of irrevocable insurance, were rated "AAA" by Standard & Poor's
Rating Services, a division of The McGraw-Hill Companies. All of the Bonds in
the Trust were rated "AAA" by Standard & Poor's
352472.1
<PAGE>
Corporation at the time originally deposited in the Trust (see "Portfolio").
This rating results from insurance relating only to the Bonds in the Trust and
not to Units of the Trust. The insurance does not remove market risk, as it does
not guarantee the market value of the Units. For a discussion of the
significance of such ratings, see "Description of Bond Ratings" in Part B of
this Prospectus. Some of the aggregate principal amount of the Bonds in the
Trust may be "Zero Coupon Bonds," which are original issue discount bonds that
provide for payment at maturity at par value, but do not provide for the payment
of current interest (for the amount of Zero Coupon Bonds in the Trust, and the
cost of such Bonds to the Trust, see "Description of Portfolio" in this Part A).
The payment of interest and preservation of capital are, of course, dependent
upon the continuing ability of the issuers of the Bonds or the insurer thereof
to meet their obligations.
Investment in the Trust should be made with an understanding of the
risks which an investment in long-term fixed rate debt obligations may entail,
including the risk that the value of the underlying portfolio will decline with
increases in interest rates, and that the value of Zero Coupon Bonds is subject
to greater fluctuation than coupon bonds in response to such changes in interest
rates. A Trust designated as a long-term trust must have a dollar-weighted
average portfolio maturity of more than ten years. (See "Portfolio" in Part B of
this Prospectus.)
Each Unit in the Trust represents a 1/1429th undivided interest in the
principal and net income of the Trust. The principal amount of Bonds deposited
in the Trust per Unit is reflected in the Summary of Essential Information. (See
"Organization" in Part B of this Prospectus.) The Units being offered hereby are
issued and outstanding Units which have been purchased by the Sponsor in the
secondary market.
INSURANCE. Each of the Bonds in the New Jersey Navigator Trust is
insured by a municipal bond guaranty insurance policy obtained by the Sponsor
(the "Navigator Sponsor-Insured Bonds") from MBIA Insurance Corporation ("MBIA
Corp.") covering regularly scheduled payments of principal thereof and interest
thereon when such amounts become due for payment but shall not have been paid.
For discussion of the effect of an occurrence of non-payment of principal or
interest on any Bonds in the New Jersey Navigator Trust see "Portfolio
Supervision" in Part B of this Prospectus. The premiums for the Navigator
Sponsor-Insured Bonds are obligations of the Sponsor. Additionally, some of the
Bonds in the New Jersey Navigator Trust may be Pre-Insured Bonds (as described
below). The premium for the Pre-Insured Bonds is an obligation of the issuers,
underwriters or prior owners of those Bonds. The insurance policy or policies
relating to the Navigator Sponsor-Insured Bonds provides that, to the extent
that Bonds are both Pre-Insured Bonds and Navigator Sponsor-Insured Bonds,
coverage is effective after a claim has been made upon the insurer of the
Pre-Insured Bonds.
Some of the Bonds in the New Jersey Navigator Trust may additionally be
insured by a municipal bond guaranty insurance policy obtained by issuers,
underwriters or prior owners of the Bonds ("Pre-Insured Bonds") and issued by
one of the insurance companies described under "Insurance on the Bonds" in Part
B of this Prospectus (the "Insurance Companies"). Such insurance covers the
scheduled payment of principal thereof and interest thereon when such amounts
shall become due for payment but shall not have been paid by the issuer or any
other insurer thereof.
None of the insurance will cover accelerated payments of principal or
penalty interest or premiums unrelated to taxability of interest on the Bonds.
The insurance relates only to the prompt payment of principal of and interest on
the securities in the portfolios, and does not remove market risks nor does it
guarantee the market value of Units in the Trusts. The terms of the insurance
are more fully described under "Insurance on the Bonds" in
A-2
352472.1
<PAGE>
Part B of this Prospectus. No representation is made herein as to any Bond
insurer's ability to meet its obligations under a policy of insurance relating
to any of the Pre-Insured Bonds. In addition, investors should be aware that
subsequent to the Date of Deposit the rating of the claims-paying ability of the
insurer of an underlying Pre-Insured Bond may be downgraded.
All of the Bonds in the New Jersey Navigator Trust are covered by
insurance obtained by the Sponsors from MBIA Corp. and 77.4% of the Bonds in the
New Jersey Navigator Trust are Pre-Insured Bonds. The approximate percentage of
the aggregate principal amount of the Trust that is insured by each Insurance
Company with respect to Pre-Insured Bonds is as follows: AMBAC Indemnity Corp.
("AMBAC"), 15.0%; Financial Guaranty Insurance Company ("Financial Guaranty"),
7.5%; Financial Security Assurance, Inc. ("FSA"), 22.6%; and MBIA Corp., 32.3%.
PUBLIC OFFERING PRICE. The secondary market Public Offering Price of
each Unit is equal to the aggregate offering price of the Bonds in such Trust
divided by the number of Units outstanding, plus a sales charge of 5.3% of the
Public Offering Price, or 5.597% of the net amount invested in Bonds per Unit.
In addition, accrued interest to the expected date of settlement is added to the
Public Offering Price. If Units had been purchased on the Evaluation Date, the
Public Offering Price per Unit would have been $921.05 plus accrued interest of
$.54 under the monthly distribution plan and $4.64 under the semi-annual
distribution plan, for a total of $921.59 and $925.69, respectively. The Public
Offering Price per Unit can vary on a daily basis in accordance with
fluctuations in the aggregate bid price of the Bonds. (See "Public
Offering--Offering Price" in Part B of this Prospectus.)
ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN. Units of each
Trust are offered to investors on a "dollar price" basis (using the computation
method described under "Public Offering--Offering Price" in Part B) as
distinguished from a "yield price" basis often used in offerings of tax exempt
bonds (involving the lesser of the yield as computed to maturity of bonds or to
an earlier redemption date). Since they are offered on a dollar price basis, the
rate of return on an investment in Units of each Trust is measured in terms of
"Estimated Current Return" and "Estimated Long Term Return".
Estimated Long Term Return is calculated by: (1) computing the yield to
maturity or to an earlier call date (whichever results in a lower yield) for
each Bond in the Trust's portfolio in accordance with accepted bond practices,
which practices take into account not only the interest payable on the Bond but
also the amortization of premiums or accretion of discounts, if any; (2)
calculating the average of the yields for the Bonds in the Trust's portfolio by
weighing each Bond's yield by the market value of the Bond and by the amount of
time remaining to the date to which the Bond is priced (thus creating an average
yield for the portfolio of the Trust); and (3) reducing the average yield for
the portfolio of the Trust in order to reflect estimated fees and expenses of
the Trust and the maximum sales charge paid by investors. The resulting
Estimated Long Term Return represents a measure of the return to investors
earned over the estimated life of the Trust. (For the Estimated Long Term Return
to Certificateholders under the monthly, semi-annual and annual distribution
plans, see "Summary of Essential Information".)
Estimated Current Return is a measure of the Trust's cash flow.
Estimated Current Return is computed by dividing the Estimated Net Annual
Interest Income per Unit by the Public Offering Price per Unit. In contrast to
the Estimated Long Term Return, the Estimated Current Return does not take into
account the amortization of premium or accretion of discount, if any, on the
Bonds in the portfolio of the Trust. Moreover, because interest rates on Bonds
purchased at a premium are generally higher than current interest rates on newly
issued bonds of a similar type with comparable rating, the Estimated
A-3
352472.1
<PAGE>
Current Return per Unit may be affected adversely if such Bonds are redeemed
prior to their maturity.
The Estimated Net Annual Interest Income per Unit of the Trust will
vary with changes in the fees and expenses of the Trustee and the Evaluator
applicable to the Trust and with the redemption, maturity, sale or other
disposition of the Bonds in the Trust. The Public Offering Price will vary with
changes in the bid prices of the Bonds. Therefore, there is no assurance that
the present Estimated Current Return or Estimated Long Term Return will be
realized in the future. (For the Estimated Current Return to Certificateholders
under the monthly, semi-annual and annual distribution plans, see "Summary of
Essential Information". See "Estimated Long Term Return and Estimated Current
Return" in Part B of this Prospectus.)
A schedule of cash flow projections is available from the Sponsor upon
request.
DISTRIBUTIONS. Distributions of interest income, less expenses, will be
made by the Trust either monthly, semi-annually or annually depending upon the
plan chosen by the Certificateholder. Certificateholders purchasing Units in the
secondary market will initially receive distributions in accordance with the
elections of the prior owner and may thereafter change the plan as provided
under "Interest and Principal Distributions" in Part B of this Prospectus.
Distributions of principal, if any, will be made semi-annually on June 15 and
December 15 of each year. (See "Rights of Certificateholders--Interest and
Principal Distributions" in Part B of this Prospectus. For estimated monthly,
semi-annual and annual interest distributions, see "Summary of Essential
Information.")
MARKET FOR UNITS. The Sponsor, although not obligated to do so, intends
to maintain a secondary market for the Units at a price based on the aggregate
bid price of the Bonds in the Trust portfolio. The reoffer price will be based
on the aggregate bid price of the Bonds plus a sales charge of 5.3% of the
Public Offering Price (5.597% of the net amount invested), plus net accrued
interest. If a market is not maintained a Certificateholder will be able to
redeem his or her Units with the Trustee at a price based on the aggregate bid
price of the Bonds. (See "Sponsor Repurchase" and "Public Offering--Offering
Price" in Part B of this Prospectus.)
A-4
352472.1
<PAGE>
INSURED MUNICIPAL SECURITIES TRUST
NEW JERSEY NAVIGATOR INSURED
SERIES 13
SUMMARY OF ESSENTIAL INFORMATION AS OF DECEMBER 31, 1999
Date of Deposit*: April 6, 1995 Minimum Principal Distribution:
Principal Amount of Bonds .. $1,330,000 $1.00 per Unit.
Number of Units ............ 1,429 Weighted Average Life to Maturity:
Fractional Undivided Inter- 21.6 Years.
est in Trust per Unit .... 1/1429 Minimum Value of Trust:
Principal Amount of Trust may be terminated if value of
Bonds per Unit ........... $930.72 Trust is less than $880,000 in
Secondary Market Public principal amount of Bonds.
Offering Price** Mandatory Termination Date:
Aggregate Bid Price The earlier of December 31, 2044 or
of Bonds in Trust ...... $1,246,788+++ the disposition of the last Bond in
Divided by 1,429 Units ... $872.49 the Trust.
Plus Sales Charge of 5.3% Trustee***: The Chase Manhattan
of Public Offering Price $48.54 Bank.
Public Offering Price Trustee's Annual Fee: Monthly
per Unit ............... $921.05+ plan $1.49 per $1,000; and semi-
Redemption and Sponsor's annual plan $1.04 per $1,000.
Repurchase Price Evaluator: Kenny S&P Evaluation
per Unit ................. $872.49+ Services.
+++ Evaluator's Fee for Each
++++ Evaluation: Minimum of $2.83 plus
Excess of Secondary Market $.25 per each issue of Bonds in
Public Offering Price excess of 50 issues (treating
over Redemption and separate maturities as separate
Sponsor's Repurchase issues).
Price per Unit ........... $48.54++++ Sponsor: ING Funds Distributor,
Difference between Public Inc.
Offering Price per Unit Sponsor's Annual Fee: Maximum of
and Principal Amount per $.25 per $1,000 principal amount of
Unit Premium/(Discount) .. $(9.69) Bonds (see "Trust Expenses and
Evaluation Time: 4:00 p.m. Charges" in Part B of this
New York Time. Prospectus).
PER UNIT INFORMATION BASED UPON INTEREST DISTRIBUTION PLAN ELECTED
Monthly Semi-Annual
Option Option
Gross annual interest income# ......... $51.65 $51.65
Less estimated annual fees and
expenses ............................ 2.76 2.43
Estimated net annual interest ______ ______
income (cash)# ...................... $48.89 $49.22
Estimated interest distribution# ...... 4.07 24.61
Estimated daily interest accrual# ..... .1358 .1367
Estimated current return#++ ........... 5.31% 5.34%
Estimated long term return++ .......... 5.41% 5.44%
Record dates .......................... 1st of Dec. 1
each month June 1
Interest distribution dates ........... 15th of Dec. 15
each month June 15
A-5
352472.1
<PAGE>
Footnotes to Summary of Essential Information
* The Date of Deposit is the date on which the Trust Agreement was signed
and the deposit of the Bonds with the Trustee made.
** Certain amounts distributable as of December 31, 1999, may be reported
in the Summary of Essential Information as if they had been distributed
at year-end.
*** The Trustee maintains its principal executive office at 270 Park
Avenue, New York, New York 10017 and its unit investment trust office
at 4 New York Plaza, New York, New York 10004 (tel. no.:
1-800-882-9898). For information regarding redemption by the Trustee,
see "Trustee Redemption" in Part B of this Prospectus.
+ Plus accrued interest to the expected date of settlement (approximately
three business days after purchase) of $.54 monthly and $4.64 semi-
annually.
++ The estimated current return and estimated long term return are
increased for transactions entitled to a discount (see "Employee
Discounts" in Part B of this Prospectus), and are higher under the
semi-annual and annual options due to lower Trustee's fees and
expenses.
+++ Based solely upon the bid side evaluation of the underlying Bonds
(including, where applicable, undistributed cash from the principal
account). Upon tender for redemption, the price to be paid will be
calculated as described under "Trustee Redemption" in Part B of this
Prospectus.
++++ See "Comparison of Public Offering Price, Sponsor's Repurchase Price
and Redemption Price" in Part B of this Prospectus.
# Does not include income accrual from original issue discount bonds, if
any.
FINANCIAL AND STATISTICAL INFORMATION
Selected data for each Unit outstanding for the periods listed below:
<TABLE>
<CAPTION>
Distribu-
tions of
Distributions of Interest Principal
During the Period (per Unit) During
Net Asset* Semi- the
Units Out- Value Monthly Annual Period
Period Ended standing Per Unit Option Option (Per Unit)
<S> <C> <C> <C> <C> <C> <C> <C>
December 31, 1997 2,058 $1,004.96 $54.06 $54.41 $42.84
December 31, 1998 1,664 988.18 52.38 57.28 25.36
December 31, 1999 1,429 876.55 50.19 50.59 26.87
</TABLE>
- --------
* Net Asset Value per Unit is calculated by dividing net assets as
disclosed in the "Statement of Net Assets" by the number of Units
outstanding as of the date of the Statement of Net Assets. See Note 5
of Notes to Financial Statements for a description of the components of
Net Assets.
A-6
352472.1
<PAGE>
INFORMATION REGARDING THE TRUST
AS OF DECEMBER 31, 1999
DESCRIPTION OF PORTFOLIO*
The portfolio of the Trust consists of 7 issues representing
obligations of 7 issuers located in the state of New Jersey. The Sponsor has not
participated as a sole underwriter or manager, co-manager or member of an
underwriting syndicate from which any principal amount of the Bonds were
acquired. None of the Bonds are obligations of state and local housing
authorities; approximately 37.6%** are hospital revenue bonds; none were issued
in connection with the financing of nuclear generating facilities; and
approximately 18.8% are "mortgage subsidy" bonds. All of the Bonds in the Trust
are subject to redemption prior to their stated maturity dates pursuant to
sinking fund or optional call provisions. The Bonds may also be subject to other
calls, which may be permitted or required by events which cannot be predicted
(such as destruction, condemnation, termination of a contract, or receipt of
excess or unanticipated revenues). All seven of the issues representing
$1,330,000 of the principal amount of the Bonds are payable from the income of a
specific project or authority and are not supported by the issuer's power to
levy taxes. The portfolio is divided for purpose of issue as follows: Electric
and Gas 1, Hospital 2, Port Authority 1, Sewer Revenue 1, Single Family Mortgage
Revenue 1 and Solid Waste 1. For an explanation of the significance of these
factors see "The Trust--Portfolio" in Part B of this Prospectus.
As of December 31, 1999, $350,000 (approximately 26.3% of the aggregate
principal amount of the Bonds) were original issue discount bonds. Of these
original issue discount bonds, $100,000 (approximately 7.5% of the aggregate
principal amount of the Bonds) were Zero Coupon Bonds. Zero Coupon Bonds do not
provide for the payment of any current interest and provide for payment at
maturity at par value unless sooner sold or redeemed. The market value of Zero
Coupon Bonds is subject to greater fluctuations than coupon bonds in response to
changes in interest rates. None of the aggregate principal amount of the Bonds
in the Trust were purchased at a "market" discount from par value at maturity,
approximately 73.7% were purchased at a premium and none were purchased at par.
For an explanation of the significance of these factors see "Discount and Zero
Coupon Bonds" in Part B of this Prospectus.
Portfolio Nos. 3 and 4 in the Trust may be subject to the federal
individual alternative minimum tax under the Tax Reform Act of 1986. See "Tax
Status" in Part B of this Prospectus.
- --------
* Changes in the Trust Portfolio: From January 1, 2000 to March 15, 2000, 10
Units were redeemed from the Trust.
** A trust is considered to be "concentrated" in a particular category or
industry when the securities in that category or industry constitute 25% or
more of the aggregate face amount of the portfolio. See Part B for
disclosure, including risk factors, regarding this concentration.
A-7
352472.1
<PAGE>
Report of Independent Auditors
The Sponsor, Trustee and Certificateholders of
Insured Municipal Securities Trust, New Jersey Navigator Insured Series 13
We have audited the accompanying statement of net assets of Insured Municipal
Securities Trust, New Jersey Navigator Insured Series 13, including the
portfolio, as of December 31, 1999 and the related statements of operations, and
changes in net assets and financial highlights for the year then ended. These
financial statements and financial highlights are the responsibility of the
Trustee. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audit. The statement of
operations, statement of changes in net assets and financial highlights for each
of the two years in the period ended December 31, 1998 were audited by other
auditors whose report thereon dated March 19, 1999, expressed an unqualified
opinion on those financial statements and financial highlights.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of the securities
owned by correspondence with the Trustee. An audit also includes assessing the
accounting principles used and significant estimates made by the Trustee, as
well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the 1999 financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Insured Municipal Securities Trust, New Jersey Navigator Insured Series 13 at
December 31, 1999, the results of its operations, changes in its net assets and
financial highlights for the year then ended, in conformity with accounting
principles generally accepted in the United States.
/s/ERNST & YOUNG LLP
New York, New York
April 15, 2000
<PAGE>
Insured Municipal Securities Trust
New Jersey Navigator Insured Series 13
Portfolio
December 31, 1999
<TABLE>
<CAPTION>
Redemption
Aggregate Coupon Feature (2)(4)
Portfolio Principal Rate/Date(s) S.F.-Sinking Fund Market
No. Amount Name of Issuer and Title of Bonds Ratings of Maturity Ref.-Refunding Value (3)
(1) (2)
- ------------ ----------- -------------------------------------------- ----------- -------------- -------------------- -------------
<S> <C> <C> <C> <C> <C> <C>
1 $ 300,000 N.J. Hlth. Care Fac. Fincg. Auth. Rev. AAA 6.000% 7/01/17 @ 100 S.F. $ 300,480
Bonds Newark Beth Israel Med. Cntr. Issue 7/01/2024 7/01/04 @ 102 Ref.
Series 1994 (FSA Insrd.) (MBIA Corp.)
2 135,000 N.J. Hlth. Care Fac. Fincg. Auth. Rev. AAA 6.250 7/01/15 @ 100 S.F. 144,678
Bonds Jersey Shore Med. Cntr. Ob. Grp. Issue, 7/01/2016 7/01/04 @ 102 Ref.
Series 1994 (MBIA Corp.)
2A 65,000 N.J. Hlth. Care Fac. Fincg. Auth. Rev. AAA 6.250 7/01/15 @ 100 S.F. 67,634
Bonds Jersey Shore Med. Cntr. Ob. Grp. Issue, 7/01/2016 7/01/04 @ 102 Ref.
Series 1994 (MBIA Corp.) (Unrefunded)
3 250,000 N.J. Hsg. & Mtg. Finc. Agncy. Home Buyer AAA 5.500 4/01/19 @ 100 S.F. 223,383
Rev. Bonds 1993 Series H (AMT) (MBIA Corp.) 10/01/2026 10/01/03 @ 102 Ref.
4 300,000 The Port. Auth. Of N.Y. and N.J. Consld. AAA 6.125 7/15/17 @100 S.F. 300,390
Ninety-Fifth Series (AMT) (MBIA Corp.) 7/15/2022 7/15/04 @ 101 Ref.
5 120,000 The Hoboken-Union City-Weehawken Swrg. AAA 6.200 8/01/16 @100 S.F. 121,626
Auth. (N.J.) Swr. Rev. Bonds (Ref. Series 8/01/2019 8/01/02 @ 102 Ref.
1992) (MBIA Corp.)
6 60,000 The Poll. Cntrl. Fincg. Auth. Of Salem AAA 6.250 No Sinking Fund 60,773
Ctny. (N.J.)Poll. Cntrl. Rev. Rfndg. Bonds 6/01/2031 6/01/04 @ 102 Ref.
1994 Series B (Pub. Serv. Elec. & Gas Co.
Prjt.) (MBIA Corp.)
7 100,000 West N.Y., N.J. Muni. Utils. Auth. (Hudson AAA 0.000 No Sinking Fund 27,817
Ctny. N.J.) Swr. Rev. Rfndg. Cap. Apprec. 12/15/2020 None
Bonds Series 1991 (MBIA Corp.)
----------- --------------
$1,330,000 Total Investments (Cost $1,249,725) $1,246,781
=========== ==============
</TABLE>
See accompanying footnotes to portfolio and notes to financial statements.
<PAGE>
Insured Municipal Securities Trust
New Jersey Navigator Insured Series 13
Footnotes to Portfolio
1 All ratings are by Kenny S&P Evaluation Services, a business unit of J.J.
Kenny Company, Inc., a subsidiary of The McGraw-Hill Companies, Inc. A brief
description of the ratings symbols and their meaning is set forth under
"Description of Bond Ratings" in Part B of the Prospectus.
2. See "The Trust--Portfolio" in Part B of the Prospectus for an explanation
of redemption features. See "Tax Status" in Part B of the Prospectus for a
statement of the Federal tax consequences to a Certificateholder upon the
sale, redemption or maturity of a bond.
3. At December 31, 1999, the net unrealized depreciation of all the bonds was
comprised of the following:
Gross unrealized appreciation $ 7,471
Gross unrealized depreciation (10,415)
------------------
Net unrealized depreciation $ (2,944)
==================
4. The Bonds may also be subject to other calls, which may be permitted or
required by events which cannot be predicted (such as destruction,
condemnation, termination of a contract, or receipt of excess of
unanticipated revenues).
The accompanying notes form an integral part of the financial statements.
<PAGE>
Insured Municipal Securities Trust,
New Jersey Navigator Insured Series 13
Statement of Net Assets
December 31, 1999
<TABLE>
<CAPTION>
<S> <C>
Investments in securities, at market value (cost $1,249,725) $ 1,246,781
Other assets
Accrued interest 30,576
--------------------
Total other assets 30,576
--------------------
Liabilities
Advance from Trustee 24,761
--------------------
Total liabilities 24,761
Excess of other assets over total liabilities 5,815
--------------------
Net assets (1,429 units of fractional undivided
interest outstanding, $876.55 per unit) $ 1,252,596
====================
</TABLE>
The accompanying notes form an integral part of the financial statements.
<PAGE>
Insured Municipal Securities Trust
New Jersey Navigator Insured Series 13
Statement of Operations
<TABLE>
<CAPTION>
Year ended December 31,
1999 1998 1997
------------------ ------------------- ------------------
<S> <C> <C> <C>
Investment income
Interest $ 83,815 $ 99,841 $117,193
Expenses
Trustee's fees 3,156 3,871 4,169
Evaluator's fee 833 901 711
Sponsor's advisory fee 395 495 513
------------------ ------------------- ------------------
Total expenses 4,384 5,267 5,393
------------------ ------------------- ------------------
Net investment income 79,431 94,574 111,800
------------------ ------------------- ------------------
Realized and unrealized gain (loss)
Realized gain (loss) on investments 12,231 28,612 (2,050)
Unrealized appreciation (depreciation)
on investments (141,068) (13,086) 83,981
------------------ ------------------- ------------------
Net gain (loss) on investments (128,837) 15,526 81,931
------------------ ------------------- ------------------
Net increase (decrease) in net assets resulting from
operations $ (49,406) $110,100 $193,731
================== =================== ==================
</TABLE>
The accompanying notes form an integral part of the financial statements.
<PAGE>
Insured Municipal Securities Trust
New Jersey Navigator Insured Series 13
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year ended December 31,
1999 1998 1997
------------------ ------------------- ------------------
<S> <C> <C> <C>
Operations
Net investment income $ 79,431 $ 94,574 $ 111,800
Realized gain (loss) on investments 12,231 28,612 (2,050)
Unrealized appreciation (depreciation)
on investments (141,068) (13,086) 83,981
------------------ ------------------- ------------------
Net increase (decrease) in net assets resulting from
operations (49,406) 110,100 193,731
------------------ ------------------- ------------------
Distributions to Certificateholders
Investment income 75,306 93,163 111,449
Principal 39,273 42,755 88,165
Redemptions
Interest 2,463 2,871 -
Principal 225,295 395,178 -
------------------ ------------------- ------------------
Total distributions and redemptions 342,337 533,967 199,614
------------------ ------------------- ------------------
Total (decrease) (391,743) (423,867) (5,883)
Net assets
Beginning of year 1,644,339 2,068,206 2,074,089
------------------ ------------------- ------------------
End of year (including undistributed net investment
income of $12,857, $11,195 and $12,655,
respectively) $ 1,252,596 $1,644,339 $2,068,206
================== =================== ==================
</TABLE>
The accompanying notes form an integral part of the financial statements.
<PAGE>
Insured Municipal Securities Trust
New Jersey Navigator Insured Series 13
Financial Highlights
<TABLE>
<CAPTION>
Selected data for a unit of the Trust outstanding:*
Year ended December 31,
1999 1998 1997
------------------ ------------------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of year** $ 988.18 $1,004.96 $1,007.82
------------------ ------------------- ------------------
Interest income 54.20 53.65 56.95
Expenses (2.83) (2.83) (2.62)
------------------ ------------------- ------------------
Net investment income 51.37 50.82 54.33
------------------ ------------------- ------------------
Net gain or loss on investments(1) (87.32) 6.97 39.80
------------------ ------------------- ------------------
Total from investment operations (35.95) 57.79 94.13
------------------ ------------------- ------------------
Less distributions
to Certificateholders
Income 48.69 50.06 54.15
Principal 25.40 22.97 42.84
for Redemptions
Interest 1.59 1.54 -
------------------ ------------------- ------------------
Total distributions 75.68 74.57 96.99
------------------ ------------------- ------------------
Net asset value, end of year** $ 876.55 $ 988.18 $1,004.96
================== =================== ==================
(1) Net gain or loss on investments is a result of changes in outstanding units
since January 1, 1999, 1998 and 1997, respectively, and the dates of net gain
and loss on investments.
* Unless otherwise stated, based upon average units outstanding during the
year of 1,547, ([1,429 + 1,664]/2) for 1999, 1,861 ([1,664 + 2,058]/2) for
1998 and of 2,058 ([2,058 + 2,058]/2) for 1997.
** Based upon actual units outstanding.
The accompanying notes form an integral part of the financial statements.
</TABLE>
<PAGE>
Insured Municipal Securities Trust
New Jersey Navigator Insured Series 13
Notes to Financial Statements
December 31, 1999
1. Organization
Insured Municipal Securities Trust, New Jersey Navigator Insured Series 13 (the
"Trust") was organized on April 6, 1995 by Bear, Stearns & Co. Inc. and Gruntal
& Co., Incorporated under the laws of the State of New York by a Trust Indenture
and Agreement, and is registered under the Investment Company Act of 1940. The
Trust was formed to preserve capital and to provide interest income.
On September 28, 1995, Reich & Tang Distributors, Inc. ("Reich & Tang") had
become the successor sponsor to certain of the unit investment trusts previously
sponsored by Bear, Stearns & Co. Inc. As successor sponsor, Reich & Tang had
assumed all of the obligations and rights of Bear, Stearns & Co. Inc., the
previous sponsor.
Effective February 9, 2000, Gruntal & Co. resigned as a co-sponsor of certain
unit investment trusts previously co-sponsored with Reich & Tang. ING Funds
Distributor, Inc. ("ING") has become the successor sponsor to certain unit
investment trusts previously sponsored by Reich & Tang. As successor sponsor,
ING has assumed all of the obligations and rights of Reich & Tang, the previous
sponsor.
2. Summary of Significant Accounting Policies
The following is a summary of significant accounting policies consistently
followed by the Trust in preparation of its financial statements. The policies
are in conformity with generally accepted accounting principles ("GAAP"). The
preparation of financial statements in accordance with GAAP requires management
to make estimates and assumptions that affect the reported amounts and
disclosures in the financial statements. Actual amounts could differ from those
estimates.
Interest Income
Interest income is recorded on the accrual basis. The discount on the
zero-coupon bonds is accreted by the interest method over the respective lives
of the bonds. The accretion of such discount is included in interest income;
however, it is not distributed until realized in cash upon maturity or sale of
the respective bonds.
<PAGE>
Insured Municipal Securities Trust
New Jersey Navigator Insured Series 13
Notes to Financial Statements (continued)
2. Summary of Significant Accounting Policies (continued)
Security Valuation
Investments are carried at market value which is determined by Kenny S&P
Evaluation Services, a business unit of J.J. Kenny Company, Inc., a subsidiary
of the McGraw-Hill Companies, Inc. The market value of the portfolio is based
upon the bid prices for the bonds at the end of the year, which approximates the
fair value of the security at that date, except that the market value on the
date of deposit represents the cost to the Trust based on the offering prices
for investments at that date. The difference between cost (including accumulated
accretion of original issue discount on zero-coupon bonds) and market value is
reflected as unrealized appreciation (depreciation) of investments. Securities
transactions are recorded on the trade date. Realized gains (losses) from
securities transactions are determined on the basis of average cost of the
securities sold or redeemed.
3. Income Taxes
No provision for federal income taxes has been made in the accompanying
financial statements because the Trust intends to continue to qualify for the
tax treatment applicable to Grantor Trusts under the Internal Revenue Code.
Under existing law, if the Trust so qualifies, it will not be subject to federal
income tax on net income and capital gains that are distributed to unitholders.
4. Trust Administration
The Chase Manhattan Bank (the "Trustee") has custody of assets and
responsibility for the accounting records and financial statements of the Trust
and is responsible for establishing and maintaining a system of internal control
related thereto. The Trustee is also responsible for all estimates of expenses
and accruals reflected in the Trust's financial statements.
<PAGE>
Insured Municipal Securities Trust
New Jersey Navigator Insured Series 13
Notes to Financial Statements (continued)
4. Trust Administration (continued)
The Trust Indenture and Agreement provides for interest distributions as often
as monthly (depending upon the distribution plan elected by the
Certificateholders).
The Trust Indenture and Agreement further requires that principal received from
the disposition of bonds, other than those bonds sold in connection with the
redemption of units, be distributed to Certificateholders.
The Trust Indenture and Agreement also requires the Trust to redeem units
tendered. For the years ended December 31, 1999, 1998 and 1997, 235, 394, and 0
units were redeemed, respectively.
The Trust pays an annual fee for trustee services rendered by the Trustee that
ranges from $1.04 to $1.49 per $1,000 of outstanding investment principal. In
addition, a minimum fee of $2.83 is paid to a service bureau for each portfolio
valuation. A maximum fee of $.25 per $1,000 of outstanding investment principal
is paid to the Sponsor. For the years ended December 31, 1999, 1998 and 1997,
the "Trustee's Fees" are comprised of Trustee fees of $2,036, $2,592 and $2,834
and other expenses of $1,120, $1,279 and $1,335, respectively. The other
expenses include professional, printing and miscellaneous fees.
5. Net Assets
At December 31, 1999, the net assets of the Trust represented the interest of
Certificateholders as follows:
Original cost to Certificateholders $ 2,242,294
Less initial gross underwriting commission 109,872
--------------------
2,132,422
Accumulated cost of securities sold, matured or called (889,745)
Net unrealized depreciation (2,944)
Undistributed net investment income 12,857
Undistributed proceeds from investments 6
--------------------
Total $ 1,252,596
====================
<PAGE>
Insured Municipal Securities Trust
New Jersey Navigator Insured Series 13
Notes to Financial Statements (continued)
5. Net Assets (continued)
The original cost to Certificateholders, less the initial gross underwriting
commission, represents the aggregate initial public offering price net of the
applicable sales charge on 4,000 units of fractional undivided interest of the
Trust as of the date of deposit.
Undistributed net investment income includes accumulated accretion of original
issue discount of $7,048.
6. Concentration of Credit Risk
Since the Trust invests a portion of its assets in municipal bonds, it may be
affected by economic and political developments in the municipalities. Certain
debt obligations held by the Trust may be entitled to the benefit of insurance,
standby letters of credit or other guarantees of banks or other financial
institutions.
<PAGE>
Note: Part B of This Prospectus May Not Be Distributed
Unless Accompanied by Part A.
Please Read and Retain Both Parts
---------------------------------
of This Prospectus For Future Reference.
---------------------------------------
INSURED MUNICIPAL SECURITIES TRUST
Prospectus Part B
Dated: April 30, 2000
THE TRUST
---------
Organization. "Insured Municipal Securities Trust" (the
"Trust") consists of a "unit investment trust" designated as set forth in Part
A.* The Trust was created under the laws of the State of New York pursuant to
the Trust Indenture and Agreement** (collectively, the "Trust Agreement"), dated
the Date of Deposit, among Reich & Tang Distributors, Inc. the predecessor to
ING Funds Distributor, Inc., as Sponsor or, depending on the particular Trust,
Reich & Tang Distributors, Inc. and Gruntal & Co., L.L.C., as co-sponsors
(Gruntal & Co., L.L.C. has resigned as co-sponsor), Kenny S&P Evaluation
Services, a business unit of J.J. Kenny Company, Inc., a subsidiary of The
McGraw-Hill Companies, as Evaluator and The Chase Manhattan Bank, as Trustee.
On the Date of Deposit, the Sponsor deposited with the Trustee
long-term insured bonds, and/or delivery statements relating to contracts for
the purchase of certain such bonds (the "Bonds") and cash or an irrevocable
letter of credit issued by a major commercial bank in the amount required for
such purchases. Thereafter, the Trustee, in exchange for the Bonds so deposited,
delivered to the Sponsor the Certificates evidencing the ownership of all Units
of the Trust. The Trust consists of the Bonds described under "The Trust" in
Part A, the interest (including, where applicable, earned original issue
discount) on which, in the opinions of bond counsel to the respective issuers
given at the time of original delivery of the Bonds, is exempt from regular
federal income tax under existing law.
Each "Unit" outstanding on the Evaluation Date represented an
undivided interest or pro rata share in the principal and interest of the Trust
in the ratio of one Unit to the principal amount of Bonds in the Trust on such
date as specified in Part A of this Prospectus. To the extent that any Units are
redeemed by the Trustee, the fractional undivided interest or pro rata share in
the Trust represented by each unredeemed Unit will increase, although the actual
interest in the Trust represented by such fraction will
- --------
* This Part B relates to the outstanding series of Insured Municipal Securities
Trust, Insured Municipal Securities Discount Trust, Insured Municipal Securities
New York Navigator Insured Trust and/or Insured Municipal Securities New Jersey
Navigator Insured Trust, as reflected in Part A attached hereto.
** References in this Prospectus to the Trust Agreement are qualified in their
entirety by the Trust Indenture and Agreement which is incorporated herein.
112677.11
<PAGE>
remain unchanged. Units will remain outstanding until redeemed upon tender to
the Trustee by Certificateholders, which may include the Sponsor or the
Underwriters, or until the termination of the Trust Agreement.
Objectives. The Trust, one of a series of similar but separate
unit investment trusts formed by the Sponsor, offers investors the opportunity
to participate in a portfolio of long-term insured tax-exempt bonds with a
greater diversification than they might be able to acquire themselves. The
objectives of the Trust are to preserve capital and to provide interest income
(including, where applicable, earned original issue discount) which, in the
opinions of bond counsel given at the time of original delivery of the Bonds, is
exempt from regular Federal income tax under existing law and exempt from state
and local income tax to the extent indicated herein when received by persons
subject to state and local taxation in a state in which the issuers of the Bonds
are located. Such interest income may, however, be subject to the corporate
alternative minimum taxes and to state and local taxes. (See "Description of
Portfolio" in Part A for a list of those Bonds which pay interest income subject
to federal individual alternative minimum tax. See also "Tax Status".)
Consistent with such objectives, the Sponsor has obtained bond insurance
guaranteeing the scheduled payment of principal and interest on certain of the
Bonds and has purchased, as to the remainder of each Trust Portfolio, Bonds
which are already covered by insurance. (See "Insurance on the Bonds".) An
investor will realize taxable income upon maturity or early redemption of the
market discount bonds in a Trust portfolio and will realize, where applicable,
tax-exempt income to the extent of the earned portion of interest, including
original issue discount earned on the Bonds in a Trust portfolio. Investors
should be aware that there is no assurance the Trust's objectives will be
achieved as these objectives are dependent on the continuing ability of the
issuers of the Bonds to meet their interest and principal payment requirements,
on the abilities of the Insurance Companies to meet their obligations under the
policies of insurance issued on the Bonds, on the continuing satisfaction of the
conditions required for the exemption of interest thereon from regular federal
income tax and on the market value of the Bonds, which can be affected by
fluctuations in interest rates and other factors.
Since disposition of Units prior to final liquidation of each
Trust may result in an investor receiving less than the amount paid for such
Units (see "Comparison of Public Offering Price, Sponsor's Repurchase Price and
Redemption Price"), the purchase of a Unit should be looked upon as a long-term
investment. Neither the Trust nor the Total Reinvestment Plan are designed to be
complete investment programs.
Portfolio. All of the Bonds in the Trust were rated "AAA" by
Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies
("Standard & Poor's") at the time originally deposited in the Trust. (See
"Insurance on the Bonds.") The "AAA" rating was assigned to the Bonds by
Standard & Poor's because each Bond was insured by a municipal bond guaranty
insurance policy issued by a company whose claims-paying ability was rated "AAA"
by Standard & Poor's at that time. In the event of a downgrading of the
claims-paying ability of one of the insurers, as of the Evaluation Date, the
Bonds in the Trust which are insured by that company would no longer be rated
"AAA" by Standard & Poor's. The Units of Trusts containing the downgraded bonds
are no longer rated "AAA."
For information regarding (i) the number of issues in the
Trust, (ii) the range of fixed maturities of the Bonds, (iii) the number of
issues payable from the income of a specific project or authority and (iv) the
number
112677.11
-2-
<PAGE>
of issues constituting general obligations of a government entity, see
"Information Regarding the Trust" and "Portfolio" in Part A of this Prospectus.
When selecting Bonds for a Trust, the following factors, among
others, were considered by the Sponsor: (i) the quality of the Bonds and whether
such Bonds, whether Sponsor-Insured or Pre-Insured, were rated "AAA" by Standard
& Poor's, (ii) the yield and price of the Bonds relative to other tax-exempt
securities of comparable quality and maturity, (iii) income to the
Certificateholders of the Trust, (iv) whether a bond was insured, or insurance
was available for the Bonds at a reasonable cost, (v) in connection with Bonds
for which bond insurance was obtained by the Sponsor, the quality of the Bonds
and whether they were rated, without regard to such bond insurance, "A" or
better by either Standard & Poor's or Moody's Investors Service, Inc.
("Moody's"), and (vi) the diversification of the Trust portfolio, as to purpose
of issue and location of issuer, taking into account the availability in the
market of issues which meet the Trust's quality, rating, yield and price
criteria. Subsequent to the Date of Deposit, a Bond may cease to be rated or its
rating may be reduced below that specified above. Neither event requires an
elimination of such Bond from a Trust but may be considered in the Sponsor's
determination to direct the Trustee to dispose of the Bond. (See "Portfolio
Supervision".) For an interpretation of the bond ratings see "Description of
Bond Ratings".
Housing Bonds. Some of the aggregate principal amount of the
Bonds may consist of obligations of state and local housing authorities whose
revenues are primarily derived from mortgage loans to rental housing projects
for low to moderate income families. Since such obligations are usually not
general obligations of a particular state or municipality and are generally
payable primarily or solely from rents and other fees, adverse economic
developments including failure or inability to increase rentals, fluctuations of
interest rates, and increasing construction and operating costs may reduce
revenues available to pay existing obligations. See "Description of Portfolio"
in Part A for the amount of rental housing bonds contained therein.
Hospital Revenue Bonds. Some of the aggregate principal amount
of the Bonds may consist of hospital revenue bonds. Ratings of hospital bonds
are often initially based on feasibility studies which contain projections of
occupancy levels, revenues and expenses. Actual experience may vary considerably
from such projections. A hospital's gross receipts and net income will be
affected by future events and conditions including, among other things, demand
for hospital services and the ability of the hospital to provide them,
physicians' confidence in hospital management capability, economic developments
in the service area, competition, actions by insurers and governmental agencies
and the increased cost and possible unavailability of malpractice insurance.
Additionally, a major portion of hospital revenue typically is derived from
third-party payors and government programs such as Medicare and Medicaid. Both
private third-party payors and government programs have undertaken cost
containment measures designed to limit payments. Furthermore, government
programs are subject to statutory and regulatory changes, retroactive rate
adjustments, administrative rulings and government funding restrictions, all of
which may materially decrease the rate of program payments for health care
facilities. There can be no assurance that payments under governmental programs
will remain at levels comparable to present levels or will, in the future, be
sufficient to cover the costs allocable to patients participating in such
programs. In addition, there can be no assurance that a particular hospital or
other health care facility will continue to meet the requirements for
participation in such programs.
112677.11
-3-
<PAGE>
The health care delivery system is undergoing considerable
alteration and consolidation. Consistent with that trend, the ownership or
management of a hospital or health care facility may change, which could result
in (i) an early redemption of bonds, (ii) alteration of the facilities financed
by the Bonds or which secure the Bonds, (iii) a change in the tax exempt status
of the Bonds or (iv) an inability to produce revenues sufficient to make timely
payment of debt service on the Bonds. Future legislation or changes in the areas
noted above, among other things, would affect all hospitals to varying degrees
and, accordingly, any adverse change in these areas may affect the ability of
such issuers to make payment of principal and interest on such bonds. See
"Description of Portfolio" in Part A for the amount of hospital revenue bonds
contained therein.
Nuclear Power Facility Bonds. Certain Bonds may have been
issued in connection with the financing of nuclear generating facilities.
Electric utilities which own or operate nuclear power plants are exposed to
risks inherent in the nuclear industry. These risks include exposure to new
requirements resulting from extensive federal and state regulatory oversight,
public controversy, decommissioning costs, and spent fuel and radioactive waste
disposal issues. While nuclear power construction risks are no longer of
paramount concern, the emerging issue is radioactive waste disposal. In
addition, nuclear plants typically require substantial capital additions and
modifications throughout their operating lives to meet safety, environmental,
operational and regulatory requirements and to replace and upgrade various plant
systems. The high degree of regulatory monitoring and controls imposed on
nuclear plants could cause a plant to be out of service or on limited service
for long periods. When a nuclear facility owned by an investor-owned utility or
a state or local municipality is out of service or operating on a limited
service basis, the utility operator or its owners may be liable for the recovery
of replacement power costs. Risks of substantial liability also arise from the
operation of nuclear facilities and from the use, handling, and possible
radioactive emissions associated with nuclear fuel. Insurance may not cover all
types or amounts of loss which may be experienced in connection with the
ownership and operation of a nuclear plant and severe financial consequences
could result from a significant accident or occurrence. The Nuclear Regulatory
Commission has promulgated regulations mandating the establishment of funded
reserves to assure financial capability for the eventual decommissioning of
licensed nuclear facilities. These funds are to be accrued from revenues in
amounts currently estimated to be sufficient to pay for decommissioning costs.
The Sponsor is unable to predict whether any such actions or whether any such
proposals or litigation, if enacted or instituted, will have an adverse impact
on the revenues available to pay the debt service on the Bonds in the portfolio
issued to finance such nuclear projects. See "Description of Portfolio" in Part
A for the amount of bonds issued to finance nuclear generating facilities
contained therein.
Mortgage Subsidy Bonds. Certain Bonds may be "mortgage subsidy
bonds" which are obligations of which all or a significant portion of the
proceeds are to be used directly or indirectly for mortgages on owner-occupied
residences. Section 103A of the Internal Revenue Code of 1954 provided as a
general rule that interest on "mortgage subsidy bonds" will not be exempt from
Federal income tax. An exception is provided for certain "qualified mortgage
bonds." Qualified mortgage bonds are bonds that are used to finance owner-
occupied residences and that meet numerous statutory requirements. These
requirements include certain residency, ownership, purchase price and target
area requirements, ceiling amounts for state and local issuers, arbitrage
restrictions and (for bonds issued after December 31, 1984) certain information
reporting, certification, public hearing and policy statement
112677.11
-4-
<PAGE>
requirements. In the opinions of bond counsel to the issuing governmental
authorities, interest on all the Bonds in a Trust that might be deemed "mortgage
subsidy bonds" will be exempt from Federal income tax when issued. See
"Description of Portfolio" in Part A for the amount of mortgage subsidy Bonds
contained therein.
Mortgage Revenue Bonds. Certain Bonds may be "mortgage revenue
bonds." Under the Internal Revenue Code of 1986, as amended (the "Code") (and
under similar provisions of the prior tax law) "mortgage revenue bonds" are
obligations the proceeds of which are used to finance owner-occupied residences
under programs which meet numerous statutory requirements relating to residency,
ownership, purchase price and target area requirements, ceiling amounts for
state and local issuers, arbitrage restrictions, and certain information
reporting certification, and public hearing requirements. There can be no
assurance that additional federal legislation will not be introduced or that
existing legislation will not be further amended, revised, or enacted after
delivery of these Bonds or that certain required future actions will be taken by
the issuing governmental authorities, which action or failure to act could cause
interest on the Bonds to be subject to Federal income tax. If any portion of the
Bond proceeds are not committed for the purpose of the issue, Bonds in such
amount could be subject to earlier mandatory redemption at par, including issues
of Zero Coupon Bonds (see "Discount and Zero Coupon Bonds"). See "Description of
Portfolio" in Part A for the amount of mortgage revenue bonds contained therein.
Private Activity Bonds. The portfolio of the Trust may contain
other Bonds which are "private activity bonds" (often called Industrial Revenue
Bonds if issued prior to 1987) which would be primarily of two types: (i) Bonds
for a publicly owned facility which a private entity may have a right to use or
manage to some degree, such as an airport, seaport facility or water system and
(ii) facilities deemed owned or beneficially owned by a private entity but which
were financed with tax-exempt bonds of a public issuer, such as a manufacturing
facility or a pollution control facility. In the case of the first type, bonds
are generally payable from a designated source of revenues derived from the
facility and may further receive the benefit of the legal or moral obligation of
one or more political subdivisions or taxing jurisdictions. In most cases of
project financing of the first type, receipts or revenues of the issuer are
derived from the project or the operator or from the unexpended proceeds of the
bonds. Such revenues include user fees, service charges, rental and lease
payments, and mortgage and other loan payments.
The second type of issue will generally finance projects which
are owned by or for the benefit of, and are operated by, corporate entities.
Ordinarily, such private activity bonds are not general obligations of
governmental entities and are not backed by the taxing power of such entities,
and are solely dependent upon the creditworthiness of the corporate user of the
project or corporate guarantor.
The private activity bonds in the Trust have generally been
issued under bond resolutions, agreements or trust indentures pursuant to which
the revenues and receipts payable under the issuer's arrangements with the users
or the corporate operator of a particular project have been assigned and pledged
to the holders of the private activity bonds. In certain cases, a mortgage on
the underlying project has been assigned to the holders of the private activity
bonds or a trustee as additional security. In addition, private activity bonds
are frequently directly guaranteed by the corporate operator of the project or
by another affiliated company. See "Description of
112677.11
-5-
<PAGE>
Portfolio" in Part A for the amount of private activity bonds contained therein.
Litigation. Litigation challenging the validity under state
constitutions of present systems of financing public education has been
initiated in a number of states. Decisions in some states have been reached
holding such school financing in violation of state constitutions. In addition,
legislation to effect changes in public school financing has been introduced in
a number of states. The Sponsor is unable to predict the outcome of the pending
litigation and legislation in this area and what effect, if any, resulting
changes in the sources of funds, including proceeds from property taxes applied
to the support of public schools, may have on the school bonds in a Trust.
To the Sponsor's knowledge, there was no litigation pending as
of the initial Date of Deposit with respect to any Bonds which might reasonably
be expected to have a material adverse effect on a Trust. Subsequent to the Date
of Deposit, litigation may be initiated on a variety of grounds with respect to
Bonds in a Trust. Such litigation, as, for example, suits challenging the
issuance of pollution control revenue bonds under recently-enacted environmental
protection statutes, may affect the validity of such Bonds or the tax-free
nature of the interest thereon. The Sponsor is unable to predict whether any
such litigation may be instituted or, if instituted, whether it might have a
material adverse effect on a Trust.
Other Factors. The Bonds in the Trust, despite their optional
redemption provisions which generally do not take effect until 10 years after
the original issuance dates of such bonds (often referred to as "ten year call
protection"), do contain provisions which require the issuer to redeem such
obligations at par from unused proceeds of the issue within a stated period. In
recent periods of declining interest rates there have been increased redemptions
of bonds, particularly housing bonds, pursuant to such redemption provisions. In
addition, the Bonds in the Trusts are also subject to mandatory redemption in
whole or in part at par at any time that voluntary or involuntary prepayments of
principal on the underlying collateral are made to the trustee for such bonds or
that the collateral is sold by the bond issuer. Prepayments of principal tend to
be greater in periods of declining interest rates; it is possible that such
prepayments could be sufficient to cause a bond to be redeemed substantially
prior to its stated maturity date, earliest call date or sinking fund redemption
date.
The Bonds may also be subject to other calls, which may be
permitted or required by events which cannot be predicted (such as destruction,
condemnation, or termination of a contract).
In 1976 the federal bankruptcy laws were amended so that an
authorized municipal debtor could more easily seek federal court protection to
assist in reorganizing its debts so long as certain requirements were met.
Historically, very few financially troubled municipalities have sought court
assistance for reorganizing their debts; notwithstanding, the Sponsor is unable
to predict to what extent financially troubled municipalities may seek court
assistance in reorganizing their debts in the future and, therefore, what
effect, if any, the applicable federal bankruptcy law provisions will have on
the Trusts.
The Trust may also include "moral obligation" bonds. Under
statutes applicable to such bonds, if any issuer is unable to meet its
obligations, the repayment of such bonds becomes a moral commitment but not a
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legal obligation of the state or municipality in question. See "Description of
Portfolio" in Part A of this Prospectus for the amount of moral obligation bonds
contained therein.
Certain of the Bonds in the Trust are subject to redemption
prior to their stated maturity dates pursuant to sinking fund or call
provisions. A sinking fund is a reserve fund appropriated specifically toward
the retirement of a debt. A callable bond is one which is subject to redemption
or refunding prior to maturity at the option of the issuer. A refunding is a
method by which a bond is redeemed at or before maturity from the proceeds of a
new issue of bonds. In general, call provisions are more likely to be exercised
when the offering side evaluation of a bond is at a premium over par than when
it is at a discount from par. A listing of the sinking fund and call provisions,
if any, with respect to each of the Bonds is contained under "Portfolio".
Certificateholders will realize a gain or loss on the early redemption of such
Bonds, depending upon whether the price of such Bonds is at a discount from or
at a premium over par at the time Certificateholders purchase their Units.
Neither the Sponsor nor the Trustee shall be liable in any way
for any default, failure or defect in any of the Bonds. Because certain of the
Bonds from time to time may be redeemed or will mature in accordance with their
terms or may be sold under certain circumstances, no assurance can be given that
a Trust will retain its present size and composition for any length of time. The
proceeds from the sale of a Bond or the exercise of any redemption or call
provision will be distributed to Certificateholders on the next distribution
date, except to the extent such proceeds are applied to meet redemptions of
Units. (See "Trustee Redemption".)
Puerto Rico Bonds. Certain of the Bonds in the Trust may be
general obligations and/or revenue bonds of issuers located in Puerto Rico. Such
bonds will be affected by general economic conditions in Puerto Rico. The
economy of Puerto Rico is fully integrated with that of the mainland United
States. During fiscal year 1998, approximately 90% of Puerto Rico's exports were
to the United States mainland, which was also the source of 61% of Puerto Rico's
imports. In fiscal 1998, Puerto Rico experienced an $8.5 billion positive
adjusted merchandise trade balance. The dominant sectors of the Puerto Rico
economy are manufacturing and services. Gross product in fiscal 1995 was $28.4
billion ($25.9 billion in 1992 prices) and gross product in fiscal 1999 was
$38.1 billion ($29.7 billion in 1992 prices). This represents an increase in
gross product of 34.5% from fiscal 1995 to 1999 (14.5% in 1992 prices).
According to the Labor Department's Household Employment Survey, average
employment increased from 1,051,000 in fiscal 1995 to 1,147,000 in fiscal 1999.
Average unemployment decreased from 13.8% in fiscal 1995 to 12.5% in fiscal
1999. The Planning Board's gross product forecast for fiscal 2000, made in
October 1999, projected an increase of 2.7% over fiscal 1999.
Discount And Zero Coupon Bonds. Some of the Bonds in a Trust
may be original issue discount bonds. The original issue discount, which is the
difference between the initial purchase price of the Bonds and the face value,
is deemed to accrue on a daily basis and the accrued portion will be treated as
tax-exempt interest income for regular federal income tax purposes. Upon sale or
redemption, any gain realized that is in excess of the earned portion of
original issue discount will be taxable as capital gain. (See "Tax Status".) The
current value of an original issue discount bond reflects the present value of
its face amount at maturity. The market value tends to increase more slowly in
early years and in greater increments as the Bonds
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approach maturity. Of these original issue discount bonds, some of the aggregate
principal amount of the Bonds in the Trust may be Zero Coupon Bonds. (See
"Description of Portfolio" in Part A.) Zero Coupon Bonds do not provide for the
payment of any current interest and provide for payment at maturity at face
value unless sooner sold or redeemed. The market value of Zero Coupon Bonds is
subject to greater fluctuations than coupon bonds in response to changes in
interest rates. Zero Coupon Bonds generally are subject to redemption at
compound accredit value based on par value at maturity. Because the issuer is
not obligated to make current interest payments, Zero Coupon Bonds may be less
likely to be redeemed than coupon bonds issued at a similar interest rate,
although certain zero coupon housing bonds may be subject to mandatory call
provisions.
Some of the Bonds in the Trust may have been purchased at a
"market" discount from par value at maturity. This is because the coupon
interest rates on the discount bonds at the time they were purchased and
deposited in each Trust were lower than the current market interest rates for
newly issued bonds of comparable rating and type. At the time of issuance, the
discount Bonds were for the most part issued at then current coupon interest
rates. The current yields (coupon interest income as a percentage of market
price) of discount bonds will be lower than the current yields of comparably
rated bonds of similar type newly issued at current interest rates because
discount bonds tend to increase in market value as they approach maturity and
the full principal amount becomes payable. Gain on the disposition of a Bond
purchased at a market discount generally will be treated as ordinary income,
rather than capital gain, to the extent of accrued market discount. A discount
bond held to maturity will have a larger portion of its total return in the form
of capital gain and less in the form of tax-exempt interest income than a
comparable bond newly issued at current market rates. Under the provisions of
the Internal Revenue Code in effect on the date of this Prospectus, any income
attributable to market discount will be taxable but will not be realized until
maturity, redemption or sale of the Bonds or Units. However, the
Administration's fiscal year 2000 Budget proposals would require accrual basis
taxpayers to accrue market discount income with respect to obligations acquired
after the date that the proposal is enacted. Discount Bonds with a large term to
maturity tend to have a higher current yield and a lower current market value
than otherwise comparable bonds with a shorter term to maturity. If interest
rates rise, the value of discount bonds will decrease; and if interest rates
decline, the value of discount bonds will increase. The discount does not
necessarily indicate a lack of market confidence in the issuer.
Insurance On The Bonds. Each of the Bonds in the Trust is
insured by a municipal bond guaranty insurance policy obtained by either the
Sponsor with respect to Bonds which were not insured prior to their deposit in
the Trust ("Sponsor-Insured Bonds") or the issuer, underwriter or prior owner of
the Bonds ("Pre-Insured Bonds"), and issued by one of the insurance companies
described under "Insurance on the Bonds" in Part B (the "Insurance Companies").
The insurance policies are non-cancellable and will continue in force so long as
the Bonds are outstanding and the insurers remain in business. The insurance
policies guarantee the timely payment of principal and interest on the Bonds but
do not guarantee the market value of the Bonds or the value of the Units. No
representation is made herein as to any Bond insurer's ability to meet its
obligations under a policy of insurance relating to any of the Bonds. An
insurance company that is required to pay interest and/or principal in respect
of any Bond will succeed and be subrogated to the Trustee's right to collect
such interest and/or principal from the issuer and to other related rights of
the Trustee with respect to any such Bond.
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Such insurance covers the scheduled payment of principal
thereof and interest thereon when such amounts shall become due for payment but
shall not have been paid by the issuer or any other insurer thereof. The
insurance, unless obtained by MBIA Insurance Corporation ("MBIA Corp."), will
also cover any accelerated payments of principal and any increase in interest
payments or premiums, if any, payable upon mandatory redemption of the Bonds if
interest on any Bonds is ultimately deemed to be subject to regular federal
income tax. Insurance obtained from MBIA Corp. only guarantees the full and
complete payments required to be made by or on behalf of an issuer of small
industrial revenue bonds and pollution control revenue bonds if there occurs an
event which results in the loss of tax-exempt status of the interest on such
Bonds, including principal, interest or premiums payments, if any, as and when
required. To the extent, therefore, that Bonds are only covered by insurance
obtained from MBIA Corp., such Bonds will not be covered for the full and
complete payments required to be made by or on behalf of an issuer of other than
small industrial revenue bonds or pollution control revenue bonds if there
occurs an event which results in the loss of tax-exempt status of the interest
on such Bonds. None of the insurance will cover accelerated payments of
principal or penalty interest or premiums unrelated to taxability of interest on
the Bonds. The insurance relates only to the prompt payment of principal of and
interest on the securities in the portfolios, and does not remove market risks
nor does it guarantee the market value of Units in the Trusts. The terms of the
insurance are more fully described herein. No representation is made herein as
to any Bond insurer's ability to meet its obligations under a policy of
insurance relating to any of the Pre-Insured Bonds. In addition, investors
should be aware that subsequent to the Date of Deposit the rating of the
claims-paying ability of the insurer of an underlying Pre-Insured Bond may be
down-graded.
Navigator Insured Trusts
Sponsor-Insured Bonds. Each of the Bonds in the Navigator
Trusts is insured by a financial guaranty insurance policy obtained by the
Sponsor (the "Navigator Sponsor-Insured Bonds") from MBIA Corp. covering
regularly scheduled payments of principal thereof and interest thereon when such
amounts become due for payment but have not been paid. Such amounts shall be
reduced by any amounts received by the holders or the owners of the Bonds from
any trustee for the Bond issuers, any other Bond insurers or any other source
other than MBIA Corp. MBIA Corp. has issued such policy or policies covering
each of the Bonds in the Navigator Trusts and each such policy will remain in
force until the payment in full of such Bonds, whether or not such Bonds
continue to be held in the Navigator Trusts. The insurer's policies relating to
small industrial development bonds and pollution control revenue bonds also
guarantee any accelerated payments required to be made by or on behalf of an
issuer of Bonds pursuant to the terms of the Bonds if there occurs an event
which results in the loss of the tax-exempt status of the interest on such
Bonds, including principal, interest or premium payments, if any, as and when
required. Such insurance does not cover for any accelerated payments required to
be made by or on behalf of an issuer of other than small industrial revenue
bonds or pollution control revenue bonds if there occurs an event which results
in the loss of the tax exempt status of the interest on such Bonds nor will the
insurance cover accelerated payments of principal or penalty interest or
premiums unrelated to taxability of interest on any of the Bonds, including
pollution control revenue bonds or small industrial development bonds. In the
event of such an acceleration, the payments guaranteed by MBIA Corp. shall be
made in such amounts and at such times as such payments would have been made
absent any such acceleration. The insurance relates only to the prompt payment
of principal of and interest on the securities in the Navigator
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Portfolios and does not remove market risk nor does it guarantee the market
value of Units in the Navigator Trusts. The terms of the insurance are more
fully described herein. For discussion of the effect of an occurrence of non-
payment of principal or interest on any Bonds in the Navigator Trusts see
"Portfolio Supervision" in Part B. No representation is made herein as to any
bond insurer's ability to meet its obligations under a policy of insurance
relating to any of the Bonds in the Navigator Trusts. In addition, investors
should be aware that subsequent to the Date of Deposit the rating of the
claims-paying ability of MBIA Corp. may be downgraded, which may result in a
downgrading of the rating of the Units in the Navigator Trusts. The premiums for
the Navigator Sponsor-Insured Bonds are obligations of the Sponsor.
Additionally, some of the Bonds in the Navigator Trusts may be Pre-Insured Bonds
(as described below). The premium for the Pre-Insured Bonds is an obligation of
the issuers, underwriters or prior owners of those Bonds. The insurance policy
or policies relating to the Navigator Sponsor-Insured Bonds provides that, to
the extent that Bonds are both Pre-Insured Bonds and Navigator Sponsor-Insured
Bonds, coverage is effective after a claim has been made upon the insurer of the
Pre-Insured Bonds.
Upon notification from the trustee for any bond issuer or any
holder or owner of the Bonds that such trustee or paying agent has insufficient
funds to pay any principal or interest in full when due, MBIA Corp. will be
obligated to deposit funds promptly with Citibank, N.A., New York, New York, as
fiscal agent for MBIA Corp., sufficient to fully cover the deficit. If notice of
nonpayment is received on or after the due date, MBIA Corp. will provide for
payment within one business day following receipt of the notice. Upon payment by
MBIA Corp. of any Bonds, coupons, or interest payments, MBIA Corp. shall succeed
to the rights of the owner of such Bonds, coupons or interest payments with
respect thereto.
Pre-Insured Bonds. Some of the Bonds in the Trusts which are
insured under policies obtained by the Bond issuers, underwriters or prior
owners of the Bonds ("Pre-Insured Bonds") are insured either by Ambac Assurance
Corporation ("Ambac"), Capital Guaranty Insurance Company ("Capital Guaranty"),
Connie Lee Insurance Company ("Connie Lee"), Financial Guaranty Insurance
Company ("Financial Guaranty"), Financial Security Assurance, Inc. ("Financial
Security") or Municipal Bond Insurance Association ("MBIA"), MBIA
Corp.(collectively the "Insurance Companies"). The cost of this insurance is
borne by the respective issuers, underwriters or prior owners of the Pre-
Insured Bonds. The percentage of each Portfolio insured by each insurance
company, if any, is set forth under "Insurance" in Part A of this Prospectus.
Ambac is a Wisconsin-domiciled stock insurance corporation,
regulated by the Office of the Commissioner of Insurance of the State of
Wisconsin and licensed to do business in 50 states, the District of Columbia,
the Territory of Guam and the Commonwealth of Puerto Rico, with admitted assets
of approximately $4,013,000,000 (unaudited), and statutory capital of
approximately $2,402,000,000 (unaudited) as of December 31, 1999. Statutory
capital consists of Ambac's policyholders' surplus and statutory contingency
reserve. Standard & Poor's Ratings Service, a Division of The McGraw-Hill
Companies, Moody's and Fitch IBCA, Inc. have each assigned a triple-A financial
strength rating to Ambac.
Ambac has obtained a ruling from the Internal Revenue Service
to the effect that the insuring of an obligation by Ambac will not affect the
treatment for federal income tax purposes of interest on such obligation and
that insurance proceeds representing maturing interest paid by Ambac under
policy provisions substantially identical to those contained in its municipal
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bond insurance policy shall be treated for federal income tax purposes in the
same manner as if such payments were made by the issuer of the Bonds.
Connie Lee Insurance Company ("Connie Lee"), a Wisconsin stock
insurance corporation, is a wholly-owned subsidiary of Connie Lee Holdings, Inc.
(formerly Construction Loan Insurance Corporation, and herein, "Holdings"). On
December 18, 1997, Ambac acquired all of the outstanding capital stock of
Holdings. Holdings and Connie Lee are now wholly-owned subsidiaries of Ambac.
Connie Lee, which guaranteed bonds issued primarily for college and hospital
infrastructure projects, is not expected to write any new business. Ambac and
Connie Lee have arrangements in place to assure that Connie Lee maintains a
level of capital sufficient to support Connie Lee's outstanding obligations and
for Connie Lee insured bonds to retain their triple-A rating.
As of December 31, 1999, the qualified statutory capital of
Connie Lee was $161,167,765 (unaudited) and total admitted assets were
$242,755,126, as reported to the Commissioner of Insurance of the State of
Wisconsin.
As of the Evaluation Date, the claims-paying ability of Connie
Lee has been rated "AAA" by Standard & Poor's.
Financial Guaranty is a wholly-owned subsidiary of FGIC
Corporation (the "Corporation"), a Delaware holding company. The Corporation is
a subsidiary of General Electric Capital Corporation ("GE Capital"). Neither the
Corporation nor GE Capital is obligated to pay the debts of or the claims
against Financial Guaranty. Financial Guaranty is a monoline financial guaranty
insurer domiciled in the State of New York and subject to regulation by the
State of New York Insurance Department. As of December 31, 1999, the total
capital and surplus of Financial Guaranty was $1,271,707,045. Financial Guaranty
prepares financial statements on the basis of both statutory accounting
principles and generally accepted accounting principles. Copies of such
financial statements may be obtained by writing to Financial Guaranty at 115
Broadway, New York, New York 10006, Attention: Communications Department
(telephone number: 212-312-3000) or to the New York State Insurance Department
at 25 Beaver Street, New York, New York 10004-2319, Attention: Financial
Condition Property/Casualty Bureau (telephone number: 212-480-5187.
In addition, Financial Guaranty is currently licensed to write
insurance in all 50 states and the District of Columbia.
Financial Security is a wholly owned subsidiary of Financial
Security Assurance Holdings Ltd. ("Holdings"), a New York Stock Exchange listed
company. Major shareholders of Holdings include White Mountains Insurance Group,
Ltd. The Tokio Marine and Fire Insurance Co., Ltd. and XL Capital Ltd. On March
14, 2000, Holdings announced that it had entered into a merger agreement
pursuant to which Holdings would become a wholly owned subsidiary of Dexia S.A.,
a publicly held Belgian corporation, subject to receipt of shareholder and
regulatory approvals and satisfaction of other closing conditions. Dexia S.A.
through its bank subsidiaries, is primarily engaged in the business of public
finance in France, Belgium and other European countries. No shareholder of
Holdings is obligated to pay any debt of Financial Security or any claim under
any insurance policy issued by Financial Security or to make any additional
contribution to the capital of Financial Security.
Under an intercompany agreement, liabilities on financial
guaranty insurance written or reinsured from third parties by Financial Security
or its
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domestic or Bermuda operating insurance company subsidiaries are generally
reinsured among such companies on an agreed-upon percentage substantially
proportional to their respective capital, surplus and reserves, subject to
applicable statutory risk limitations. In addition, Financial Security reinsures
a portion of its liabilities under certain of its financial guaranty insurance
policies with other reinsurers under various treaties and on a
transaction-by-transaction basis. This reinsurance is used by Financial Security
as a risk management device and to comply with statutory and rating agency
requirements; it does not alter or limit Financial Security's obligations under
any financial guaranty insurance policy. As of December 31, 1999, total
shareholders equity of Financial Security and its wholly-owned subsidiaries was
(audited) $1,294,946,000 and total unearned premium reserves was (audited)
$559,041,000.
As of the Evaluation Date, Financial Security's claims-paying
ability has been rated "AAA" by Standard & Poor's, Fitch IBCA, Inc., Japan
Rating and Investment Information, Inc. and Standard & Poor's (Australia) Pty.
Ltd. and "Aaa" by Moody's Investors Service.
MBIA Corp. is domiciled in the State of New York and licensed
to do business in and subject to regulation under the laws of all 50 states, the
District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the
Northern Mariana Islands, the Virgin Islands of the United States and the
Territory of Guam. MBIA Corp. has two European branches, one in the Republic of
France and the other in the Kingdom of Spain.
As of December 31, 1998 the Insurer had admitted assets of
$6.5 billion (audited) total liabilities of $4.2 billion (audited), and total
capital surplus of $2.3 billion (audited) determined in accordance with
statutory accounting practices prescribed or permitted by insurance regulatory
authorities. As of December 31, 1999, MBIA Corp. had admitted assets of $7.0
billion (unaudited), total liabilities of $4.6 billion (unaudited), and total
capital and surplus of $2.4 billion (unaudited) determined in accordance with
statutory accounting practices prescribed or permitted by insurance regulatory
authorities.
As of the Evaluation Date, the claims-paying ability of MBIA
Corp. has been rated "AAA" by Standard & Poor's and Fitch, and Aaa by Moody's.
Insured Municipal Securities Trust
Sponsor-Insured Bonds. For those Bonds which are not covered
by an insurance policy obtained by the issuers of such Bonds, the Sponsor has
obtained bond insurance from either BIG, Financial Guaranty, MBIA or MBIA Corp.
in an effort to protect Certificateholders against nonpayment of principal and
interest in respect of such Bonds (the "Sponsor-Insured Bonds"). The bond
insurance on the Sponsor-Insured Bonds covers the Sponsor-Insured Bonds
deposited in a Trust at the time that they are physically delivered to the
Trustee (in the case of bearer bonds) or registered in the name of the Trustee
or its nominee or delivered along with an assignment (in the case of registered
bonds) or registered in the name of the Trustee or its nominee (in the case of
bonds held in book-entry form). Accordingly, although contracts to purchase
Sponsor-Insured Bonds are not covered by the bond insurance obtained by the
Sponsor, such Bonds will be insured when they are deposited in the Trust. When
selecting Bonds for a Trust prior to obtaining insurance thereon, the Sponsor
considers the factors listed under "Portfolio", among others. The insurers of
the Sponsor-Insured Bonds apply their own standards in determining whether to
insure the Sponsor-Insured Bonds. To the extent
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that the standards of such insurers are more restrictive than those of the
Sponsor, the Sponsor's investment criteria have been limited to the more
restrictive standards.
Pre-Insured Bonds. The Bonds which are insured under policies
obtained by the Bond issuers are insured by Ambac, Financial Guaranty, Financial
Security, or MBIA Corp. (collectively, the "Insurance Companies") on the date
the Bonds were originally deposited in the Trust. The cost of this insurance is
borne by the respective issuers of the Pre-Insured Bonds. The percentage of the
Portfolio insured by each Insurance Company, if any, is set forth under
"Insurance" in Part A.
Ratings. As of the Date of Deposit for each of the respective
Trusts, Standard & Poor's had rated the claims-paying ability of each of the
above insurance companies "AAA" and had rated each of the Bonds in the Portfolio
"AAA" because the insurance companies had insured the Bonds. The assignment of
such "AAA" ratings was due to Standard & Poor's assessment of the
creditworthiness of the insurance companies and their ability to pay claims on
their policies of insurance. Subsequently, the rating of the claims-paying
ability of the insurer of an underlying Bond may cease to be rated or may be
downgraded which may result in a downgrading of the rating of the Units in the
Trust. For a discussion of the rating of the claims-paying ability of each of
the Bond insurers see "Insurance On The Bonds". For a list of Bond Ratings as of
the Evaluation Date see the "Portfolio" in Part A of this Prospectus. For a
discussion of the rating assigned to the Units of the Trusts, see "the Trust" in
Part A of this Prospectus. The percentage of each Trust portfolio insured by
each Insurance Company, if any, is set forth under "Insurance" in Part A.
The foregoing information relating to the above insurance
companies is from published documents and other public sources and/or
information provided by such insurance companies. No representation is made
herein as to the accuracy or adequacy of such information or as to the absence
of material adverse changes in such information subsequent to the dates thereof,
but the Sponsor is not aware that the information herein is inaccurate or
incomplete.
RISK CONSIDERATIONS
-------------------
Special Factors Affecting the Navigator Trusts. The Sponsor
believes the information summarized below describes some of the more significant
events relating to the Navigator Trusts. Sources of such information are the
official statements of issuers located in the states of the Navigator Trusts
which have been issued in connection with the debt offerings of such states, as
well as other publicly available documents and information. While the Sponsor
has not independently verified such information, it has no reason to believe it
is not correct in all material respects.
New York Navigator Trust
Special Factors Affecting New York.
----------------------------------
The information set forth below is derived from the official
statements and/or preliminary drafts of official statements prepared in
connection with the issuance of New York State and New York City municipal
bonds. The Sponsors have not independently verified this information.
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Economic Trends. Over the long term, the State of New York (the
"State") and the City of New York (the "City") face serious potential economic
problems. The City accounts for approximately 41% of the State's population and
personal income, and the City's financial health affects the State in numerous
ways. The State historically has been one of the wealthiest states in the
nation. For decades, however, the State has grown more slowly than the nation as
a whole, gradually eroding its relative economic affluence. Statewide, urban
centers have experienced significant changes involving migration of the more
affluent to the suburbs and an influx of generally less affluent residents.
Regionally, the older Northeast cities have suffered because of the relative
success that the South and the West have had in attracting people and business.
The City has also had to face greater competition as other major cities have
developed financial and business capabilities which make them less dependent on
the specialized services traditionally available almost exclusively in the City.
The State has for many years had a very high State and local tax burden
relative to other states. The State and its localities have used these taxes to
develop and maintain their transportation networks, public schools and colleges,
public health systems, other social services and recreational facilities.
Despite these benefits, the burden of State and local taxation, in combination
with the many other causes of regional economic dislocation, has contributed to
the decisions of some businesses and individuals to relocate outside, or not
locate within, the State.
Notwithstanding the numerous initiatives that the State and its
localities may take to encourage economic growth and achieve balanced budgets,
reductions in Federal spending could materially and adversely affect the
financial condition and budget projections of the State and its localities.
New York City. The City, with a population of approximately 7.4
million, is an international center of business and culture. Its non-
manufacturing economy is broadly based, with the banking and securities, life
insurance, communications, publishing, fashion design, retailing and
construction industries accounting for a significant portion of the City's total
employment earnings. Additionally, the City is the nation's leading tourist
destination. Manufacturing activity in the City is conducted primarily in
apparel and printing.
For each of the 1981 through 1999 fiscal years, the City had an
operating surplus, before discretionary transfers, and achieved balanced
operating results as reported in accordance with then applicable generally
accepted accounting principles ("GAAP"), after discretionary transfers. The City
has been required to close substantial gaps between forecast revenues and
forecast expenditures in order to maintain balanced operating results. There can
be no assurance that the City will continue to maintain balanced operating
results as required by State law without tax or other revenue increases or
reductions in City services or entitlement programs, which could adversely
affect the City's economic base.
As required by law, the City prepares a four-year annual financial
plan, which is reviewed and revised on a quarterly basis and which includes the
City's capital, revenue and expense projections and outlines proposed gap-
closing programs for years with projected budget gaps. The City's current
financial plan projects a surplus in the 2000 fiscal year, before discretionary
transfers, and budget gaps for each of the 2001, 2002 and 2003 fiscal years.
This pattern of current year surplus operating results and projected subsequent
year budget gaps has been consistent through the entire
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period since 1982, during which the City has achieved surplus operating results,
before discretionary transfers, for each fiscal year.
The City depends on aid from the State both to enable the City to
balance its budget and to meet its cash requirements. There can be no assurance
that there will not be reductions in State aid to the City from amounts
currently projected; that, in future years, State budgets will be adopted by the
April 1 statutory deadline, or interim appropriations will be enacted; or that
any such reductions or delays will not have adverse effects on the City's cash
flow or expenditures. In addition, the Federal budget negotiation process could
result in a reduction in or a delay in the receipt of Federal grants which could
have additional adverse effects on the City's cash flow or revenues.
The Mayor is responsible for preparing the City's financial plan,
including the City's current financial plan for the 2000 through 2003 fiscal
years (the "2000-2003 Financial Plan" or "Financial Plan"). The City's
projections set forth in the Financial Plan are based on various assumptions and
contingencies which are uncertain and which may not materialize. Such
assumptions and contingencies include the condition of the regional and local
economies, the provision of State and Federal aid and the impact on City
revenues and expenditures of any future Federal or State policies affecting the
City.
Implementation of the Financial Plan is dependent upon the City's
ability to market its securities successfully. The City's program for financing
capital projects for fiscal years 2000 through 2003 contemplates the issuance of
$7.449 billion of general obligation bonds and $3.35 billion of bonds to be
issued by the New York City Transitional Finance Authority (the "Finance
Authority"). In addition, the Financial Plan anticipates access to approximately
$2.4 billion in financing capacity of Tobacco Settlement Asset Securitization
Corporation, Inc. ("TSASC"), which will issue debt secured by revenues derived
from the settlement of litigation with tobacco companies selling cigarettes in
the United States. The Finance Authority and TSASC were created to assist the
City in financing its capital program while keeping the City's indebtedness
within the forecast level of the constitutional restrictions on the amount of
debt the City is authorized to incur. In addition, the City issues revenue and
tax anticipation notes to finance its seasonal working capital requirements. The
success of projected public sales of City, New York City Municipal Water Finance
Authority ("Water Authority"), Finance Authority, TSASC and other bonds and
notes will be subject to prevailing market conditions. The City's planned
capital and operating expenditures are dependent upon the sale of its general
obligation debt, as well as debt of the Water Authority, Finance Authority and
TSASC. Future developments concerning the City and public discussion of such
developments, as well as prevailing market conditions, may affect the market for
outstanding City general obligation bonds and notes.
The City Comptroller and other agencies and public officials, from time
to time, issue reports and make public statements which, among other things,
state that projected revenues and expenditures may be different from those
forecast in the City's financial plans.
For the 1999 fiscal year, the City had a operating surplus, before
discretionary and other transfers, and achieved balanced operating results,
after discretionary and other transfers, in accordance with GAAP. The 1999
fiscal year is the nineteenth year that the City has achieved an operating
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surplus, before discretionary and other transfers, and balanced operating
results, after discretionary and other transfers.
Changes since adoption of the City's Expense Budget for the 1999 fiscal
year in June 1998, prior to the financial plan submitted to the Control Board on
June 26, 1998 include: (i) an increase in projected tax revenues of $762
million, $558 million, $417 million and $1.4 billion in fiscal years 2000
through 2003, respectively; (ii) $300 million, $250 million, $300 million and
$300 million of projected resources in fiscal years 2000 through 2003,
respectively, from the receipt by the City of funds from the settlement of
litigation with the leading cigarette companies; (iii) a reduction in the
assumed collection of $350 million of projected rent payments for the City's
airports to $210 million and a delay in the receipt of such payments from fiscal
year 2000 to fiscal year 2001; (iv) anticipated proceeds from the proposed sale
of the Coliseum in fiscal year 2001 totaling $345 million; and (v) net increases
in spending of $817 million, $739 million, $713 million and $1.05 billion in
fiscal years 2000 through 2003, including spending for Medicaid, education
initiatives, anti-smoking programs, employee fringe benefit costs, and other
agency programs. The Financial Plan includes a discretionary transfer in the
1999 fiscal year of $2.6 billion primarily to pay debt service due in fiscal
year 2000, for budget stabilization purposes, a discretionary transfer in fiscal
year 2000 to pay debt service due in fiscal year 2001 totaling $429 million, and
a proposed discretionary transfer in fiscal year 2001 to pay debt service due in
fiscal year 2002 totaling $345 million.
On June 14, 1999, the City released the Financial Plan for the 2000
through 2003 fiscal years, which relates to the City and certain entities which
receive funds from the City. The Financial Plan reflects changes as a result of
the City's expense and capital budgets for fiscal year 2000, which were adopted
on June 7, 1999. The Financial Plan projects revenues and expenditures for the
2000 fiscal year balanced in accordance with GAAP and projects gaps of $1.8
billion, $1.9 billion and $1.8 billion for fiscal years 2001 through 2003,
respectively.
In addition, the Financial Plan sets forth gap-closing actions to
eliminate a previously projected gap for the 2000 fiscal year and to reduce
projected gaps for fiscal years 2001 through 2003. The gap-closing actions for
the 2000 through 2003 fiscal years include: (i) additional agency actions
totaling $502 million, $371 million, $293 million and $283 million for fiscal
years 2000 through 2003, respectively; (ii) additional Federal aid of $75
million in each of fiscal years 2000 through 2003, which include the proposed
restoration of $25 million of Federal revenue sharing and $50 million of
increased Federal Medicaid aid; and (iii) additional State actions totaling
approximately $125 million in each of fiscal years 2000 through 2003. The
Financial Plan also reflects a tax reduction program, which includes the
elimination of the City's non-residents earning tax, the proposed extension of
current tax reductions for owners of cooperative and condominium apartments and
a proposed income tax credit for low income wage earners.
The Financial Plan is based on numerous assumptions, including the
condition of the City's and the region's economies and modest employment growth
and the concomitant receipt of economically sensitive tax revenues in the
amounts projected. The Financial Plan is subject to various other uncertainties
and contingencies relating to, among other factors, the extent, if any, to which
wage increases for City employees exceed the annual wage costs assumed for the
2000 through 2003 fiscal years; continuation of projected interest earnings
assumptions for pension fund assets and current
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assumptions with respect to wages for City employees affecting the City's
required pension fund contributions; the willingness and ability of the State to
provide the aid contemplated by the Financial Plan and to take various other
actions to assist the City; the ability of City agencies to maintain balanced
budgets; the willingness of the Federal government to provide the amount of
Federal aid contemplated in the Financial Plan; the impact on City revenues and
expenditures of Federal and State welfare reform and any future legislation
affecting Medicare or other entitlement programs; adoption of the City's budgets
by the City Council in substantially the forms submitted by the Mayor; the
ability of the City to implement cost reduction initiatives, and the success
with which the City controls expenditures; the impact of conditions in the real
estate market on real estate tax revenues; the City's ability to market its
securities successfully in the public credit markets; and unanticipated
expenditures that may be incurred as a result of the need to maintain the City's
infrastructure. The Financial Plan provides no additional wage increases for
City employees after their contracts expire in fiscal years 2000 and 2001. In
addition, the economic and financial condition of the City may be affected by
various financial, social, economic and political factors which could have a
material effect on the City.
On June 7, 1999, the City Council adopted a budget for fiscal year
2000. The adopted budget includes lower estimated debt service expenditures in
fiscal year 2000 resulting from a $456 million increase, from $2.1 billion to
$2.6 billion, in the proposed discretionary transfer in the 1999 fiscal year to
pay debt service due in fiscal year 2000. The $456 million increase in the
discretionary transfer reflects increased tax revenues and decreased
expenditures in the 1999 fiscal year. The adopted budget also includes $220
million of spending initiatives proposed by the City Council, other increased
spending and the net cost of revised tax reduction proposals, which reflect the
repeal of all of the City non-resident earnings tax and the elimination of
certain of the previously proposed tax reduction initiatives.
On July 16, 1998, Standard & Poor's revised its rating of City bonds
upward from BBB+ to A-. Moody's rating of City bonds was revised in February
1998 to A3 from Baa1. On March 8, 1999, Fitch revised its rating of City bonds
upward to A. Moody's, Standard & Poor's and Fitch currently rate the City's
outstanding general obligation bonds A3, A- and A, respectively.
New York State and its Authorities. The State ended the 1998-1999
fiscal year in balance on a cash basis for the 1998-1999 fiscal year, with a
reported closing balance in the General Fund of $892 million, after reserving a
projected $1.8 billion surplus for use in future years. The State ended the
1998-1999 fiscal year in balance on a cash basis, with a reported closing
balance in the General Fund of $892 million, after reserving a projected $1.8
billion surplus for use in future years. The State Financial Plan for the
1999-2000 fiscal year, which was released on August 20, 1999, projects balance
on a cash basis for the 1999-2000 fiscal year, with a closing balance in the
General Fund of $2.85 billion, including a projected tax reduction reserve of
$1.82 billion for use in future fiscal years. The State Division of the Budget
("DOB") has projected a potential imbalance in the 2000-2001 fiscal year of
approximately $1.9 billion. DOB's estimate includes an assumption for the
projected costs of new collective bargaining agreements, $500 million in assumed
unspecified operating efficiencies and the planned application of approximately
$615 million of the $1.82 billion tax reduction reserve in fiscal year
2000-2001. DOB has noted that, despite recent budgetary surpluses recorded by
the State, actions affecting the level of receipts and disbursements, the
relative strength of the State and regional economy and
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actions by the Federal government could impact projected budget gaps of the
State.
The State revised the cash-basis 1999-2000 State Financial Plan on
January 11, 2000, with the release of the 2000-01 Executive Budget. The State
updated the Financial Plan on January 31, 2000 to reflect the Governor's
amendments to his Executive Budget. After these changes, the DOB now expects the
State to close the 1999-2000 fiscal year with an available cash surplus of $758
million in the General Fund, an increase of $733 million over the surplus
estimate in the Mid-Year Update. The larger projected surplus derives from $499
million in net higher projected receipts and $259 million in net lower estimated
disbursements. DOB revised both its projected receipts and disbursements based
on a review of actual operating results through December 1999, as well as an
analysis of underlying economic and programmatic trends it believes may affect
the Financial Plan for the balance of the year.
The State plans to use the entire $758 million surplus to make
additional deposits to reserve funds. At the close of the current fiscal year,
the State expects to deposit $75 million from the surplus into the State's Tax
Stabilization Reserve Fund -- the fifth consecutive annual deposit. In the
2000-01 Executive budget, as amended, the Governor is proposing to use the
remaining $683 million from the 1999-2000 surplus to fully finance the estimated
2001-02 and 2002-03 costs of his proposed tax reduction package ($433 million)
and to increase the Debt Reduction Reserve Fund ($250 million).
Through the first nine months of 1999-2000, General Fund receipts,
including transfers from other funds, have totaled $30.07 billion. General fund
disbursements, including transfers to other funds, totaled $25.19 billion over
the same period. The updated Financial Plan projections incorporate these
results to date.
Standard & Poor's rates the State's general obligation bonds A+, and
Moody's rates the State's general obligation bonds A2. On November 9, 1999,
Standard & Poor's revised its rating on the State's general obligation bonds
from A to A+.
Litigation. A number of court actions have been brought involving State
finances. The court actions in which the State is a defendant generally involve
State programs and miscellaneous tort, real property, and contract claims. While
the ultimate outcome and fiscal impact, if any, on the State of those
proceedings and claims are not currently predictable, adverse determinations in
certain of them might have a material adverse effect upon the State's ability to
carry out the 1999 Modification and 2000-2003 Financial Plan.
The City has estimated that its potential future liability on account
of outstanding claims against it as of June 30, 1999 amounted to approximately
$3.5 billion.
New Jersey Navigator Trust
New Jersey Risk Factors
-----------------------
State Finance. New Jersey is the ninth largest state in
population and the fifth smallest in land area. With an average of 1,094 people
per square mile, it is the most densely populated of all the states. The State's
economic base is diversified, consisting of a variety of manufacturing,
construction and service industries, supplemented by rural
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areas with selective commercial agriculture. Historically, New Jersey's average
per capita income has been well above the national average, and in 1998 the
State ranked second among the states in per capital personal income ($32,779).
The Trust is susceptible to political, economic or regulatory
factors affecting issuers of the New Jersey securities. The following
information provides only a brief summary of some of the complex factors
affecting the financial situation in New Jersey (the "State") and is derived
from sources that are generally available to investors and is believed to be
accurate. It is based in part on information obtained from various State and
local agencies in New Jersey. No independent verification has been made of any
of the following information.
The New Jersey Economic Policy Council, a statutory arm of the
New Jersey Department of Commerce and Economic Development, has reported in New
Jersey Economic Indicators, a monthly publication of the New Jersey Department
of Labor, Division of Labor Market and Demographic Research, that in 1988 and
1989 employment in New Jersey's manufacturing sector failed to benefit from the
export boom experienced by many Midwest states and the State's service sectors,
which had fueled the State's prosperity since 1982, lost momentum. In the
meantime, the prolonged fast growth in the State in the mid 1980s resulted in a
tight labor market situation, which has led to relatively high wages and housing
prices. This means that, while the incomes of New Jersey residents are
relatively high, the State's business sector has become more vulnerable to
competitive pressures.
The onset of the national recession (which officially began in
July 1990 according to the National Bureau of Economic Research) caused an
acceleration of New Jersey's job losses in construction and manufacturing. In
addition, the national recession caused an employment downturn in such
previously growing sectors as wholesale trade, retail trade, finance, utilities
and trucking and warehousing. Reflecting the downturn, the rate of unemployment
in the State rose from a low of 3.6% during the first quarter of 1989 to an
estimated 4.8% in July 1999, which is above the national average of 4.3% in July
1999. Economic recovery is likely to be slow and uneven in New Jersey, with
unemployment receding at a correspondingly slow pace, due to the fact that some
sectors may lag as a result of continued excess capacity. In addition, employers
even in rebounding sectors can be expected to remain cautious about hiring until
they become convinced that improved business will be sustained. Also, certain
firms will continue to merge or downsize to increase profitability.
Debt Service. The primary method for State financing of
capital projects is through the sale of the general obligation bonds of the
State. These bonds are backed by the full faith and credit of the State tax
revenues and certain other fees are pledged to meet the principal and interest
payments and, if provided, redemption premium payments, if any, required to
repay the bonds. As of June 30, 1999, there was a total authorized bond
indebtedness of approximately $10.31 billion, of which $3.65 billion was issued
and outstanding, $5.58 billion was retired (including bonds for which provisions
for payment have been made through the sale and issuance of refunding bonds) and
$1.08 billion was unissued. For Fiscal Year 2000, the appropriation for the debt
service obligation on outstanding projected indebtedness is $518.7 million. The
state issued an additional $428.39 million of its general obligation bonds
pursuant to the Refunding Bond Act of 1985 to refund the various general
obligation bonds of the State. Further on August 13, 1999, the State enacted the
Statewide Transportation and Local Bridge Bond Act of
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1999, which authorizes the issuance of $500.0 million of the State's general
obligation bonds. The Statewide Transportation and Local Bridge Act of 1999 was
approved by voters on November 2, 1999.
On June 25, 1997, the New Jersey Economic Development
Authority (EDA) issued State Pension Funding Bonds (PFB) in the amount of $2.803
billion to finance a portion of the unfunded accrued liability of the State
administered retirement systems. Under the authorizing legislation the bonds are
limited obligations of the EDA and are not a legal debt or liability of the
State. The following section, New Jersey Budget and Appropriation System,
contains a full description of the PFB.
New Jersey Budget and Appropriation System. The State operates
on a fiscal year beginning July 1 and ending June 30. At the end of Fiscal Year
1993 there was a surplus of $937.4 million. In 1994, New Jersey closed its
fiscal year with a surplus of $926.0 million, in 1995 New Jersey closed its
fiscal year with a surplus of $569.2, in 1996 New Jersey closed its fiscal year
with a surplus of $442.0 million, in 1997 New Jersey closed its fiscal year with
a surplus of $276.2 million, in 1998 New Jersey closed its fiscal year with a
surplus of $1.25 billion and in 1999 New Jersey closed its fiscal year with an
estimated surplus of $1.26 billion. It is estimated that New Jersey will close
its fiscal year 2000 with a surplus of $943.6 million.
In order to provide additional revenues to balance future
budgets, to redistribute school aid and to contain real property taxes, on June
27, 1990, and July 12, 1990, former Governor Florio signed into law legislation
which was estimated to raise approximately $2.8 billion in additional taxes
(consisting of $1.5 billion in sales and use taxes and $1.3 billion in income
taxes), the biggest tax hike in New Jersey history. There can be no assurance
that receipts and collections of such taxes will meet such estimates.
The first part of the tax hike took effect on July 1, 1990,
with the increase in the State's sales and use tax rate from 6% to 7% and the
elimination of exemptions for certain products and services not previously
subject to the tax, such as telephone calls, paper products (which has since
been reinstated), soaps and detergents, janitorial services, alcoholic beverages
and cigarettes. At the time of enactment, it was projected that these taxes
would raise approximately $1.5 billion in additional revenue. Projections and
estimates and receipts from sales and use taxes, however, have been subject to
variance in recent fiscal years.
The second part of the tax hike took effect on January 1,
1991, in the form of an increased state income tax on individuals. At the time
of enactment, it was projected that this increase would raise approximately $1.3
billion in additional income taxes to fund a new school aid formula, a new
homestead rebate program and state assumption of welfare and social services
costs. Projections and estimates of receipts from income taxes, however, have
also been subject to variance in recent fiscal years. Under the legislation,
income tax rates increased from their previous range of 2% to 3.5% to a new
range of 2% to 7%, with the higher rates applying to married couples with
incomes exceeding $70,000 who file joint returns, and to individuals filing
single returns with incomes of more than $35,000.
The Florio administration had contended that the income tax
package would help reduce local property tax increases by providing more state
aid to municipalities. Under the income tax legislation, the State would
assume approximately $289 million in social services costs that previously
were paid by counties and municipalities and funded by property taxes. In
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addition, under the new formula for funding school aid, an extra $1.1 billion
was proposed to be sent by the State to school districts beginning in 1991, thus
reducing the need for property tax increases to support education programs.
Effective July 1, 1992, the State's sales and use tax rate
decreased from 7% to 6%. Effective January 1, 1994, an across-the-board 5%
reduction in the income tax rates was enacted and effective January 1, 1995,
further reductions ranging from 1% to 10% in income tax rates took effect.
Governor Whitman recently signed into law further reductions up to 15% for some
taxpayers effective January 1, 1996, thus reducing income taxes by up to 30% for
most taxpayers within three years.
On or about June 30, 1999, Governor Whitman signed the New
Jersey Legislature's $19.515 billion budget for Fiscal Year 2000. The balanced
budget, which includes anticipated revenue of $20.297 billion, will thereby
result in an anticipated surplus of $2.782 billion. Whether the State can
achieve a balanced budget depends on its ability to enact and implement
expenditure reductions and to collect the estimated tax revenues. Projections
and estimates of receipts from taxes have been subject to variance in recent
years as a result of several factors, most recently a significant slowdown in
the national, regional and State economies, sluggish employment and
uncertainties in taxpayer behavior as a result of actual and proposed changes in
Federal tax laws.
On June 25, 1997, the New Jersey Economic Development
Authority (EDA) issued State Pension Funding Bonds (PFB) in the amount of $2.803
billion to finance a portion of the unfunded accrued liability of the State-
administered retirement systems. Under the authorizing legislation, the bonds
are limited obligations of the EDA and contain a statement that they are not a
legal debt or liability of the State. This is true even though the principal and
interest on the bonds will be paid through annual State appropriations from the
General Fund. Because the pension bonds are issued by an authority, they are not
General Obligation (G.O.) Bonds which are backed by the "full faith and credit"
of the State. G.O. bonds would require voter approval.
The PFB sold at an average interest rate of 7.64% after the
State purchased insurance against default. In concept, the proceeds of the PFB
are invested with the anticipation that the interest rate on investment earnings
will at least equal and, hopefully, exceed the interest rate cost of the bonds,
thereby lowering future State costs to fund the retirement systems. However,
there is always a risk of uncertainty in investing funds.
The unfunded accrued liability of the several
State-administered retirement systems is $3.2 billion, according to the
actuarial valuations prepared by Fiscal Year 1998. Of that amount, $2.75 billion
is funded from the sale of the Pension Bonds. The balance, an estimated $450
million, was made available through the passage of companion legislation. That
law authorized a one-time accounting change in the value of the assets of the
retirement systems to full-market value as of the valuation reports applicable
to Fiscal Year 1998. This one-time revaluation from the current market- related
value of assets (which recognizes 20% of full-market) to full-market value,
immediately recognizes all capital gains up to the validation date, resulting in
an increased value of the accumulated assets of the retirement systems. The
assets of the retirement systems at full-market value are approximately $2.4
billion greater than they are when measured at their market-related value.
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Debt Ratings. For many years, both Moody's Investors Service,
Inc., and Standard & Poor's Corporation have rated New Jersey general obligation
bonds "Aaa" and "AAA", respectively. Currently, however, Moody's Investors
Service, Inc. rates New Jersey general obligation bonds Aa1 and Standard &
Poor's Ratings Group rates such bonds AA+. On July 3, 1991, however, Standard &
Poor's Corporation downgraded New Jersey general obligation bonds to "AA+." On
June 4, 1992 Standard & Poor's Corporation placed New Jersey general obligation
bonds on Credit Watch with negative implications, citing as its principal reason
for its caution the unexpected denial by the Federal Government of New Jersey's
request for $450 million in retroactive Medicaid payments for psychiatric
hospitals. These funds were critical to closing a $1 billion gap in the State's
$15 billion budget for fiscal year 1992 which ended on June 30, 1992. Under New
Jersey state law, the gap in the current budget must be closed before the new
budget year begins on July 1, 1992. Standard & Poor's Corporation suggested the
State could close fiscal 1992's budget gap and help fill fiscal 1993's hole by a
reversion of $700 million of pension contributions to its general fund under a
proposal to change the way the State calculates its pension liability. On July
6, 1992, Standard & Poor's Corporation reaffirmed its "AA+" rating for New
Jersey general obligation bonds and removed the debt from its Credit Watch list,
although it stated that New Jersey's long-term financial outlook is negative.
Standard & Poor's Corporation was concerned that the State was entering the 1993
fiscal year that began July 1, 1992 with a slim $26 million surplus and remained
concerned about whether the sagging State economy would recover quickly enough
to meet lawmakers' revenue projections. It also remained concerned about the
recent federal ruling leaving in doubt how much the State was due in retroactive
Medicaid reimbursements and a ruling by a federal judge, now on appeal, of the
State's method for paying for uninsured hospital patients. However, on July 27,
1994, Standard & Poor's announced that it was changing the State's outlook from
negative to stable due to a brightening of the State's prospects as a result of
Governor Whitman's effort to trim spending and cut taxes, coupled with an
improving economy. Standard & Poor's reaffirmed its "AA+" rating at the same
time. There can be no assurance that these ratings will continue or that
particular bond issues may not be adversely affected by changes in the State or
local economic and political conditions.
On August 24, 1992, Moody's Investors Service, Inc. downgraded
New Jersey general obligation bonds to "Aa1", stating that the reduction
reflected a developing pattern of reliance on nonrecurring measures to achieve
budgetary balance, four years of financial operations marked by revenue
shortfalls and operating deficits, and the likelihood that serious financial
pressures would persist. On August 5, 1994, Moody's reaffirmed its "Aa1" rating,
citing on the positive side New Jersey's broad-based economy, high income
levels, history of maintaining a positive financial position and moderate
(although rising) debt ratios, and, on the negative side, a continued reliance
on one-time revenue and a dependence on pension-related savings to achieve
budgetary balance.
Year 2000 Initiative. As of September 30, 1999, the testing,
validation and implementation of 92.8 percent of all centrally maintained state
systems was complete. Department systems are in varying stages of
implementation.
The total estimated cost to the State to achieve Year 2000
compliance is $120 million of which approximately $92.8 million of expenditures
were incurred as of September 30, 1999.
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College and universities, authorities, municipal, county and
local sub-divisions will address Year 2000 issues separately.
Capital Construction. In addition to payment from bond
proceeds, capital construction can also be funded by appropriation of current
revenues on a pay-as-you go basis. The amount appropriated for the Fiscal Year
2000 for capital construction is $860.2 million.
All appropriations for capital projects and all proposals for
State bond authorizations are subject to the review and recommendation of the
New Jersey Commission on Capital Budgeting and Planning. This permanent
commission was established in November 1975, and is charged with the preparation
of the State Capital Improvement Plan, which contains proposals for State
spending for capital projects.
Lease Financing. The State has entered into a number of leases
relating to the financing of certain real property and equipment. The State
leases the State Tax Processing Building and the Richard J. Hughes Justice
Complex in Trenton, both from the Mercer County Improvement Authority (the
"Authority"). On August 8, 1991 the Authority defeased outstanding bonds
originally issued to finance construction of the Richard J. Hughes Justice
Complex through the issuance of custody receipts (the "Custody Receipts") in the
aggregate principal amount of $95,760,000. The rental is sufficient to cover the
debt service on the Authority's Custody Receipts. Maximum annual rental payments
on these leases, including debt service, maintenance and payments in lieu of
taxes, will be approximately $11 million. The State's obligation to pay the
rentals is subject to appropriations being made by the State Legislature. The
Custody Receipts will mature in the years 1992 through 2018.
The State has also entered into a lease agreement, as lessee,
with the New Jersey Economic Development Authority, as lessor (the "EDA") to
lease (i) office buildings that are presently under construction and, when
finished, are expected to house the New Jersey Division of Motor Vehicles, New
Jersey Network (the State's public television station) and a branch of the
United States Postal Service and (ii) a parking facility that is also under
construction, all of which were financed by the EDA's $114,391,434.70 initial
aggregate principal amount of Trenton Office Complex Revenue Bonds, 1980 Series
dated December 1, 1989. The State has also entered into a lease agreement, as
lessee, with the EDA to lease approximately 13 acres of real property and
certain infrastructure improvements thereon located in the City of Newark. This
property is in a geographical area generally bounded by McCarter Highway,
Mulberry Street and Saybrook Place and its purchase was financed by $21,510,000
aggregate principal amount of New Jersey Economic Development Authority Revenue
Bonds, New Jersey Performing Arts Center Site Acquisition Project, 1991 Series,
issued on August 20, 1991. The rental payments required to be made by the State
under such lease agreements are sufficient to cover debt service on such bonds
and other amounts payable to the EDA, including certain administrative expenses
of the EDA, and such rental payments are subject to annual appropriation by the
State Legislature. Maximum annual debt service on such bonds is approximately
$12,200,000. All of such bonds are still outstanding and mature in the years
1992 through 2012.
The State has also entered into a sublease with the EDA to
lease two parking lots, certain infrastructure improvements and related elements
located at Liberty State Park in the City of Jersey City. These parking lots and
improvements have been financed by a $13,683,767.50 aggregate principal amount
of New Jersey Economic Development Authority Lease Rental Bonds, 1992
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Series (Liberty State Park Project) dated March 15, 1992. The rental payments
that will be required to be made by the State under such sublease agreement will
be sufficient to cover debt service on such bonds and other amounts payable to
the EDA, and such rental payments will be subject to appropriation by the State
Legislature.
In 1981, the Governor signed into law a bill creating the New
Jersey Building Authority (the "Building Authority") having the power to
construct facilities for leasing to the State (P.L. 1981, c. 120). The law
provides for leasing to the State on a basis similar to that described above.
The Building Authority is authorized to have not more than $250 million of its
notes and bonds outstanding exclusive of refunded bonds and notes, provided that
if the Building Authority issues bonds or notes to finance the total cost of a
project based on estimates prepared by an independent consultant and the
consultant determines later that the costs of the project as initially approved
have increased, the Building Authority may issue additional bonds or notes to
finance the increased cost notwithstanding the $250 million limitation. In 1985
the Building Authority issued $129,635,000 of 1985 Series Bonds for five office
building projects in the Trenton area. During April 1987 the Building Authority
issued $103,760,000 of the 1987 Series Bonds to refund the outstanding term
bonds of the 1985 issue. On April 6, 1989 the Building Authority issued
$49,752,390.30 of 1989 Series Bonds for the renovation and historical
restoration of portions of the State Capital Complex in Trenton. On October 9,
1991 the Building Authority issued $74,999,815.75 of State Building Revenue
Bonds, 1991 Series (Garden State Savings Bonds, 1991A), as capital appreciation
bonds, under the Garden State Savings Act of 1991, for the continued renovation
and historical restoration of portions of the State Capital Complex in Trenton
and for the construction of a structured parking facility. As of December 31,
1991 the total amount of Building Authority Bonds outstanding was
$238,687,206.05. Outstanding Building Authority Bonds are secured by annual
rentals from the State which are subject to annual appropriations by the State
Legislature. The State's combined annual rental payment for all leases with the
Building Authority will be (i) approximately $17.5 million per year for the
years ending June 15, 1992 through 1998, 2012 and 2013 and (ii) approximately
$31.0 million per year for the years ending June 15, 1999 through 2011.
Beginning in April 1984, the State, acting through the
Director of the Division of Purchase and Property, entered into a series of
lease purchase agreements which provide for the acquisition of equipment and
real property to be used by various departments and agencies of the State. To
date, the State has completed nine lease purchase agreements which have resulted
in issuance of Certificates of Participation totaling $541,085,000. A
Certificate of Participation evidences a proportionate interest of the owner
thereof in the lease payments to be made by the State under the terms of the
agreement. As of December 31, 1991, $305,400,000 Certificates of Participation
remain outstanding. The agreements relating to these transactions provide for
semiannual rental payments. The State's obligation to pay rentals due under
these leases is subject to annual appropriations being made by the State
Legislature. The final maturity of the outstanding Certificates of Participation
is December 15, 2013. The majority of proceeds from these transactions have been
or will be used to acquire equipment for the State and its agencies. The rentals
payable by the State will be made from monies appropriated by the State
Legislature. The State intends to continue to use this financing technique for a
substantial portion of its future equipment requirements.
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"Moral Obligation" Financing. Aside from its general
obligation bonds, the State's "moral obligation" backs certain obligations
issued by the New Jersey Housing and Mortgage Finance Agency, the South Jersey
Port Corporation and the Higher Education Assistance Authority.
New Jersey Housing and Mortgage Finance Agency. Neither the
New Jersey Housing and Mortgage Finance Agency nor its predecessors, the New
Jersey Housing Finance Agency and the New Jersey Mortgage Finance Agency, have
had a deficiency in a debt service reserve fund which required the State to
appropriate funds to meet its "moral obligation". It is anticipated that this
agency's revenues will continue to be sufficient to cover debt service on its
bonds.
South Jersey Port Corporation. The State provides the South
Jersey Port Corporation (the "Corporation") with funds to cover all debt service
and property tax requirements, when earned revenues are anticipated to be
insufficient to cover these obligations.
Higher Education Assistance Authority. The Higher Education
Student Assistance Authority (HESAA) enacted in March 1999, the successor to the
Higher Education Assistance Authority has not had a revenue deficiency which
required the state to appropriate funds to meet its "moral obligation". It is
anticipated the revenues generated from HESAA will continue to be sufficient to
pay debt service on its bonds.
South Jersey Port Corporation. The State provides the South
Jersey Port Corporation (the "Corporation") with funds to cover all debt service
and property tax requirements, when earned revenues are anticipated to be
insufficient to cover these obligations.
Below are listed State appropriations made since 1990, which
covered deficiencies in revenues of the Port Corporation, for debt service and
property tax payments.
<TABLE>
<CAPTION>
Appropriation for Appropriation for
Calendar Year Debt Service Property Tax
------------- ------------ -------------
<S> <C> <C>
1990......................................... $1,281,793.58 $2,259,000.00
1991......................................... 2,362,850.67 1,850,000.00
1992......................................... 2,770,851.00 1,850,000.00
1993......................................... 3,644,095.00 4,875,000.00
1994......................................... 3,634,229.00 3,900,000.00
1995......................................... 3,647,700.00 - 0 -
1996......................................... 5,482,208.00 - 0 -
1997......................................... 5,507,242.00 - 0 -
1998......................................... 4,720,879.00 - 0 -
1999......................................... 5,250,412.89 - 0 -
</TABLE>
On April 2, 1987, the Corporation issued $31,580,000 aggregate principal
amount of Revenue Bonds, 1987 Series C (the "Series C Bonds"), a portion of the
proceeds of which will be used (i) on January 1, 1995, to refund all of
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the Corporation's Marine Terminal Revenue Bonds, 1985 Refunding Series and (ii)
to pay interest on the Series C Bonds until January 1, 1995. Because of the
funded escrow, it is expected that there will not be any need for the State to
provide funds to pay debt service on the Series C Bonds through January 1, 1995.
Also, in addition to the bonded indebtedness of the Corporation set forth above,
on April 2, 1987, the Corporation issued $10,295,000 Marine Terminal Revenue
Bonds, 1987 Series D, to provide funds for financing a portion of the costs of
various capital improvements. On February 10, 1989, the Corporation issued
$4,085,000 Marine Terminal Revenue Bonds, 1989 Series E, to provide funds for
financing a portion of the costs of various capital improvements and additions
to the Corporation's marine terminal facilities. On November 21, 1989, the
Corporation issued $3,655,000 Marine Terminal Revenue Bonds, 1989 Series F, to
provide for the costs of acquiring land in the City of Camden, for the purpose
of expanding the Corporation's marine terminal facilities.
Municipal Finance. New Jersey's local finance system is
regulated by various statutes designed to assure that all local governments and
their issuing authorities remain on a sound financial basis. Regulatory and
remedial statutes are enforced by the Division of Local Government Services (the
"Division") in the State Department of Community Affairs.
Counties and Municipalities. The Local Budget Law (N.J.S.A.
40A:4-1 et seq.) imposes specific budgetary procedures upon counties and
municipalities ("local units"). Every local unit must adopt an operating budget
which is balanced on a cash basis, and items of revenue and appropriation must
be examined by the Director of the Division (the "Director"). The accounts of
each local unit must be independently audited by a registered municipal
accountant. State law provides that budgets must be submitted in a form
promulgated by the Division and further provides for limitations on estimates of
tax collection and for reserves in the event of any shortfalls in collections by
the local unit. The Division reviews all municipal and county annual budgets
prior to adoption for compliance with the Local Budget Law. The Director is
empowered to require changes for compliance with law as a condition of approval;
to disapprove budgets not in accordance with law; and to prepare the budget of a
local unit, within the limits of the adopted budget of the previous year with
suitable adjustments for legal compliance, if the local unit is unwilling to
prepare a budget in accordance with law. This process insures that every
municipality and county annually adopts a budget balanced on a cash basis,
within limitations on appropriations or tax levies, respectively, and making
adequate provision for principal of and interest on indebtedness falling due in
the fiscal year, deferred charges and other statutory expenditure requirements.
The Director also oversees changes to local budgets after adoption as permitted
by law, and enforces regulations pertaining to execution of adopted budgets and
financial administration. In addition to the exercise of regulatory and
oversight functions, the Division offers expert technical assistance to local
units in all aspects of financial administration, including revenue collection
and cash management procedures, contracting procedures, debt management and
administrative analysis.
The local Government Cap Law (N.J.S.A. 40A:4-45.1 et seq.)
(the "Cap Law") generally limits the year-to-year increase of the total
appropriations of any municipality and the tax levy of any county to either 5%
or an index rate determined annually by the Director, whichever is less.
However, where the index percentage rate exceeds 5%, the Cap law permits the
governing body of any municipality or county to approve the use of a higher
percentage rate up to the index rate. Further, where the index percentage
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rate is less than 5%, the Cap Law also permits the governing body of any
municipality or county to approve the use of a higher percentage rate up to 5%.
Regardless of the rate utilized, certain exceptions exist to the Cap Law's
limitation on increases in appropriations. The principal exceptions to these
limitations are municipal and county appropriations to pay debt service
requirements; to comply with certain other State or federal mandates; amounts
approved by referendum; and, in the case of municipalities only, to fund the
preceding year's cash deficit or to reserve for shortfalls in tax collections.
The Cap Law, scheduled to expire on December 31, 1990, was re-enacted with
amendments and made a permanent part of the Municipal Finance System.
State law also regulates the issuance of debt by local units.
The Local Budget Law limits the amount of tax anticipation notes that may be
issued by local units and requires the repayment of such notes within three
months of the end of the fiscal year (six months in the case of the counties) in
which issued. The local Bond Law (N.J.S.A. 40A:2-1 et seq.) governs the issuance
of bonds and notes by the local units. No local unit is permitted to issue bonds
for the payment of current expenses (other than Fiscal Year Adjustment Bonds
described more fully below). Local units may not issue bonds to pay outstanding
bonds, except for reflecting purposes, and then only with the approval of the
Local Finance Board. Local units may issue bond anticipation notes for temporary
periods not exceeding in the aggregate approximately ten years from the date of
first issue. The debt that any local unit may authorize is limited to a
percentage of its equalized valuation basis, which is the average of the
equalized value of all taxable real property and improvements within the
geographic boundaries of the local unit, as annually determined by the Director
of the Division of Taxation, for each of the three most recent years. In the
calculation of debt capacity, the local Bond Law and certain other statutes
permit the deduction of certain classes of debt ("statutory deductions") from
all authorized debt of the local unit ("gross capital debt") in computing
whether a local unit has exceeded its statutory debt limit. Statutory deductions
from gross capital debt consist of bonds or notes (i) authorized for school
purposes by a regional school district or by a municipality or a school district
with boundaries coextensive with such municipality to the extent permitted under
certain percentage limitations set forth in the School Bond Law (as hereinafter
defined); (ii) authorized for purposes which are self-liquidating, but only to
the extent permitted by the Local Bond Law; (iii) authorized by a public body
other than local unit the principal of and interest on which is guaranteed by
the local unit, but only to the extent permitted by law; (iv) that are bond
anticipation notes; (v) for which provision for payment has been made; or (vi)
authorized for any other purpose for which a deduction is permitted by law.
Authorized net capital debt (gross capital debt minus statutory deductions) is
limited to 3.5% of the equalized valuation basis in the case of municipalities
and 2% of the equalized valuation basis in the case of counties. The debt limit
of a county or municipality, with certain exemptions, may be exceeded only with
the approval of the Local Finance Board.
Chapter 75 of the Pamphlet Laws of 1991 signed into law on
March 28, 1991 requires certain municipalities and permits all other
municipalities to adopt the State fiscal year in place of the existing calendar
fiscal year. Municipalities that change fiscal years must adopt a six month
transition budget for January to June. Since expenditures would be expected to
exceed revenues primarily because state aid for the calendar year would not be
received by the municipality until after the end of the transition year budget,
the act authorizes the issuance of Fiscal Year Adjustment Bonds to fund the one
time deficit for the six month transition budget. The act provides that the
deficit in the six month transition budget
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may be funded initially with bond anticipation notes based on the estimated
deficit in the six month transition budget. Notes issued in anticipation of
Fiscal Year Adjustment Bonds, including renewals, can only be issued for up to
one year unless the Local Finance Board permits the municipality to renew them
for a further period of time. The Local Finance Board must confirm the actual
deficit experienced by the municipality. The municipality then may issue Fiscal
Year Adjustment Bonds to finance the deficit on a permanent basis. The purpose
of the Act is to assist municipalities that are heavily dependent on state aid
and that have had to issue tax anticipation notes to fund operating cash flow
deficits each year. While the act does not authorize counties to change their
fiscal years, it does provide that counties with cash flow deficits may issue
Fiscal Year Adjustment Bonds as well.
State law authorizes State officials to supervise fiscal
administration in any municipality which is in default on its obligations; which
experiences severe tax collection problems for two successive years; which has a
deficit greater than 4% of its tax levy for two successive years; which has
failed to make payments due and owing to the State, county, school district or
special district for two consecutive years; which has an appropriation in its
annual budget for the liquidation of debt which exceeds 25% of its total
operating appropriations (except dedicated revenue appropriations) for the
previous budget year; or which has been subject to a judicial determination of
gross failure to comply with the Local Bond Law, the Local Budget Law or the
Local Fiscal Affairs Law which substantially jeopardizes its fiscal integrity.
State officials are authorized to continue such supervision for as long as any
of the conditions exist and until the municipality operates for a fiscal year
without incurring a cash deficit.
There are 567 municipalities and 21 counties in New Jersey.
During 1987, 1988, and 1989 no county exceeded its statutory debt limitations or
incurred a cash deficit in excess of 4% of its tax levy. The number of
municipalities which have a cash deficit greater than 4% of their tax levies was
five for 1987, zero for 1988, and six for 1989. The number of municipalities
which exceeded statutory debt limits was six, five, and one as of December 31,
1987, 1988, and 1989, respectively. No New Jersey municipality or county has
defaulted on the payment of interest or principal on any outstanding debt
obligation since the 1930's.
School Districts. All New Jersey school districts are
coterminous with the boundaries of one or more municipalities. They are
characterized by the manner in which the board of education, the governing body
of the school district, takes office. Type I school districts, most commonly
found in cities, have a board of education appointed by the mayor or the chief
executive officer of the municipality constituting the school district. In a
Type II school district, the board of education is elected by the voters of the
district. Nearly all regional and consolidated school districts are Type II
school districts.
School Budgets. In every school district having a board of
school estimate, the board of school estimate examines the budget request and
fixes the appropriation amounts for the next year's operating budget after a
public hearing at which the taxpayers and other interested persons shall have an
opportunity to raise objections and to be heard with respect to the budget. This
board, whose composition is fixed by statute, certifies the budget to the
municipal governing bodies and to the local board of education. If either
disagrees, they must appeal to the State Commissioner of Education (the
"Commissioner") to request changes.
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The Quality Education Act of 1990 (N.J.S.A. 18A:7D-1 et seq.)
limits the annual increase of a school district's net current expense budget.
The Commissioner certifies the allowable amount of increase for each school
district but may grant a higher level of increase in certain limited instances.
A school district may also submit a proposal to the voters to raise amounts
above the allowable amount of increase. If defeated, such a proposal is subject
to further review or appeal only if the Commissioner determines that additional
funds are required to provide a thorough and efficient education.
The Quality Education Act has been declared unconstitutional
by the New Jersey Supreme Court in 1994. The Supreme Court, while retaining
jurisdiction over this issue, has stated that the State was required to address
the "special education needs" of 30 special needs districts for which funding
was required in addition to that necessary to achieve parity for richer
districts. The Supreme Court stated that it will not immediately intervene if
substantial equivalence of the special needs districts and wealthier districts
is achieved by the State for the 1997-1998 school year. The Court further
ordered the State to adopt a law assuring such substantial equivalence by
September 1996.
In May, 1997, in its further review of school funding, the
Supreme Court in Abbott by Abbott v. Burke, 149 N.J. 145 (1997), held that the
Comprehensive Educational Improvement and Financing Act ("Act") which was
enacted by the legislature in response to previous state Supreme Court orders
was unconstitutional as it applied to special needs districts.
The Court held that the Act's funding levels were insufficient
and failed to address problems of dilapidated, unsafe and overcrowded
facilities. As interim relief pending legislative solution, the Court ordered
increased funding on parity with per-pupil expenditures for regular education,
required the State Commissioner of Education to ensure that increased funding be
put to optimal educational use, required the State, commencing September 1997,
to provide special needs districts with money to enable such districts with
sufficient money to spend at the level of average budgeted per-pupil
expenditures in successful districts and remanded the case for a determination
of immediate implementation of programs to meet the needs of at-risk children.
As a result of this decision, the State's 1998 fiscal year
budget provided for an additional $246 million to special needs districts. Much
of this funding is attributable to the State Pension Fund Bonds sale.
In Type I or Type II school districts which have failed
monitoring over a period of time by the State because of continued educational
deficiencies, and are implementing an approved corrective action plan, the
Commissioner is required to determine the cost to the school district of the
implementation of those portions of the corrective action plan which are
directly responsive to the district's deficiencies as identified in the
monitoring process. Where appropriate, the Commissioner is required to
reallocate funds within the district's budget to support the corrective action
plan. The Commissioner is also required to determine the amount of additional
revenue needed to implement the corrective action plan, and to recertify the
budget for the district.
In State operated school districts the State District
Superintendent has the responsibility for the development of the budget subject
to appeal by the governing body of the municipality to the Commissioner and the
Director of the Division of Local Government Services in
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the State Department of Community Affairs. Based upon his review, the Director
is required to certify the amount of revenues which can be raised locally to
support the budget of the State operated district. Any difference between the
amount which the Director certifies, and the total amount of local revenues
required by the budget approved by the Commissioner, is to be paid by the State
in the fiscal year in which the expenditures are made subject to the
availability of appropriations.
School District Bonds. School district bonds and temporary
notes are issued in conformity with N.J.S.A 18A:24-1 et seq. (the "School Bond
Law"), which closely parallels the Local Bond Law. Although school districts are
exempted from the 5% down payment provision generally applied to bonds issued by
municipalities and counties, they are subject to debt limits (which vary
depending on the type of school system provided) and to State regulation of
their borrowing. The debt limitation on school district bonds depends upon the
classification of the school district but may be as high as 4% of the average
equalized valuation basis of the constituent municipality. In certain cases
involving school districts in cities with populations exceeding 100,000 the debt
limit is 8% of the average equalized valuation basis of the constituent
municipality, and in cities with populations in excess of 80,000 the debt limit
is 6% of the aforesaid average equalized valuation.
School bonds are authorized by (i) an ordinance adopted by the
governing body of a municipality within a Type I school district; (ii) adoption
of a proposal by resolution by the board of education of a Type II school
district having a board of school estimate; or (iii) adoption of a proposal by
resolution by the board of education and approval of the proposal by the legal
voters of any other Type II school district. If school bonds will exceed the
school district borrowing capacity, a school district (other than a regional
school district) may use the balance of the municipal borrowing capacity. If the
total amount of debt exceeds the school district's borrowing capacity and any
available remaining municipal borrowing capacity, the Commissioner and the Local
Finance Board must approve the proposed authorization before it is submitted to
the voters. All authorizations of debt in a Type II school district without a
board of school estimate require an approving referendum, except where, after
hearing, the Commissioner and the State Board of Education determine that the
issuance of such debt is necessary to meet the constitutional obligation to
provide a thorough and efficient system of public schools. When such obligations
are issued, they are issued by, and in the name of, the school district.
In Type I and II school districts with a board of school
estimate, that board examines the capital proposal of the board of education and
certifies the amount of bonds to be authorized. When it is necessary to exceed
the borrowing capacity of the municipality, the approval of a majority of the
legally qualified voters of the municipality is required, together with the
approval of the Commissioner and the Local Finance Board. When such bonds are
issued for a Type I school district, they are issued by the municipality and
identified as school bonds. When bonds are issued by a Type II school district
having a board of school estimate, they are issued by, and in the name of, the
school district.
All authorizations of debt must be reported to the Division of
Local Government Services by a supplemental debt statement prior to final
approval.
School District Lease Purchase Financings. In 1982, school
districts were given an alterative to the traditional method of bond financing
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capital improvements pursuant to N.J.S.A. 18A:20-4.2(f) (the "Lease Purchase
Law"). The Lease Purchase Law permits school districts to acquire a site and
school building through a lease purchase agreement with a private lessor
corporation. For Type II school districts, the lease purchase agreement does not
require voter approval. The rent payments attributable to the lease purchase
agreement are subject to annual appropriation by the school district and are
required, pursuant to N.J.A.C. 6:22-A-1.2(h), to be included in the annual
current expense budget of the school district. Furthermore, the rent payments
attributable to the lease purchase agreement do not constitute debt of the
school district and therefore do not impact on the school district's debt
limitation. Lease purchase agreements in excess of five years require the
approval of the Commissioner and the Local Finance Board.
Qualified Bonds. In 1976, legislation was enacted (P.L. 1976,
c. 38 and c. 39) which provides for the issuance by municipalities and school
districts of "qualified bonds." Whenever a local board of education or the
governing body of a municipality determines to issue bonds, it may file an
application with the Local Finance Board, and, in the case of a local board of
education, the Commissioner, to qualify bonds pursuant to P.L. 1976, c. 38 or c.
39. Upon approval of such an application and after receipt of a certificate
stating the name and address of the paying agent for such bonds, the maturity
schedule, interest rates and payment dates, the State Treasurer shall, in the
case of qualified bonds for school districts, withhold from the school aid
payable to such municipality or school district and in the case of qualified
bonds for municipalities, withhold from the amount of business personal property
tax replacement revenues, gross receipts, tax revenues, municipal purposes tax
assistance fund distributions, State urban aid, State revenue sharing, and any
other funds appropriated as State aid and not otherwise dedicated to specific
municipal programs, payable to such municipalities, an amount sufficient to
cover debt service on such bonds. These "qualified bonds" are not direct,
guaranteed or moral obligations of the State, and debt service on such bonds
will be provided by the State only if the above mentioned appropriations are
made by the State. Total outstanding indebtedness for "qualified bonds"
consisted of $103,720,500 by various school districts as of June 30, 1992 and
$830,037,105 by various municipalities as of June 30, 1992.
New Jersey School Bond Reserve Act. The New Jersey School Bond
Reserve Act (N.J.S.A. 18A:56-17 et seq.) establishes a school bond reserve
within the constitutionally dedicated Fund for the Support of Free Public
Schools. Under this law the reserve is maintained at an amount equal to 1.5% of
the aggregate outstanding bonded indebtedness of counties, municipalities or
school districts for school purposes (exclusive of bonds whose debt service is
provided by State appropriations), but not in excess of monies available in such
Fund. If a municipality, county or school district is unable to meet payment of
the principal of or interest on any of its school bonds, the trustee of the
school bond reserve will purchase such bonds at the face amount thereof or pay
the holders thereof the interest due or to become due. On June 30, 1991, the
book value of the Fund's assets aggregated $59,352,429 and the reserve, computed
as of June 30, 1991, amounted to $19,668,349. There has never been an occasion
to call upon this Fund.
Local Financing Authorities. The Local Authorities Fiscal
Control Law (N.J.S.A. 40A:5A-l et seq.) provides for State supervision of the
fiscal operations and debt issuance practices of independent local authorities
and special taxing districts by the State Department of Community Affairs. The
Local Authorities Fiscal Control Law applies to all autonomous public bodies
created by counties or municipalities, which are empowered to issue bonds, to
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impose facility or service charges, or to levy taxes in their districts. This
encompasses most autonomous local authorities (sewerage, municipal utilities,
parking, pollution control, improvement, etc.) and special taxing districts
(fire, water, etc.). Authorities which are subject to differing State or federal
financial restrictions are exempted, but only to the extent of that difference.
Financial control responsibilities over local authorities and
special districts are assigned to the Local Finance Board and the Director of
the Division of Local Government Services. The Local Finance Board exercises
approval power over the creation of new authorities and special districts as
well as their dissolution. The Local Finance Board also reviews, conducts public
hearings and issues findings and recommendations on any proposed project
financing of an authority or district, and on any proposed financing agreement
between a municipality or county and an authority or special district. The Local
Finance Board prescribes minimum audit requirements to be followed by
authorities and special districts in the conduct of their annual audits. The
Director reviews and approves annual budgets of authorities and special
districts.
Litigation. The State is a party in numerous legal proceedings
pertaining to matters incidental to the performance of routine governmental
operations. Such litigation includes, but is not limited to, claims asserted
against the State arising from alleged torts, alleged breaches of contracts,
condemnation proceedings and other alleged violations of State and Federal laws.
Included in the State's outstanding litigation are cases which challenge the
following: the funding of teacher's pension funds; the hospital assessment
authorized by the Health Care Reform Act of 1992; the State's role in a consent
order concerning the construction of a resource facility in Passaic County; the
State's actions regarding alleged chromium contamination of State-owned property
in Hudson County; the constitutionality of annual A- 901 hazardous and solid
waste licensure renewal fees collected by the Department of Environmental
Protection and Energy; the State's funding formula that attempts to close the
spending gap between poor urban school districts and wealthy suburban districts;
the use by the State assessments on certain insurances to retire debt of the
Market Transition Fund; the manner in which mental health services are provided
to inmates with serious mental disorders who are confined within the facilities
of the Department of Corrections; the spousal impoverishment provisions of the
Medicare Catastrophic Coverage Act; Medicaid hospital reimbursements since
February 1995; and the efforts to revitalize Atlantic City through the design
and construction of a highway and tunnel. Adverse judgments in these and other
matters could have the potential for either a significant loss of revenue or a
significant unanticipated expenditure by the State.
At any given time, there are various numbers of claims and
cases pending against the State, State agencies and employees seeking recovery
of monetary damages that are primarily paid out of the fund created pursuant to
the New Jersey Tort Claims Act. In addition at any given time, there are various
numbers of contract claims against the State and State agencies seeking recovery
of monetary damages. The state is unable to estimate its exposure for these
claims.
PUBLIC OFFERING
---------------
Offering Price. The secondary market Public Offering Price per
Unit is computed by adding to the aggregate bid price of the Bonds in the Trust
divided by the number of Units outstanding, an amount based on the
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applicable sales charge times the aggregate offering price of the Bonds (see
"Public Offering Price" in Part A for the applicable sales charge for the
Trust). A proportionate share of accrued interest on the Bonds to the expected
date of settlement for the Units is added to the Public Offering Price. Accrued
interest is the accumulated and unpaid interest on a Bond from the last day on
which interest was paid and is accounted for daily by the Trust at the initial
daily rate set forth under "Summary of Essential Information" in Part A of this
Prospectus. This daily rate is net of estimated fees and expenses. The Public
Offering Price can vary on a daily basis from the amount stated in Part A in
accordance with fluctuations in the prices of the Bonds and the price to be paid
by each investor will be computed as of the date the Units are purchased. The
aggregate bid price evaluation of the Bonds is determined in the manner set
forth under "Trustee Redemption."
The Evaluator may obtain current bid or offering prices for
the Bonds from investment dealers or brokers (including the Sponsor) that
customarily deal in tax-exempt obligations or from any other reporting service
or source of information which the Evaluator deems appropriate.
The sales charge computed by the Evaluator is based upon the
number of years remaining to maturity of each Bond. Bonds will be deemed to
mature on their stated maturity dates unless bonds have been called for
redemption, funds have been placed in escrow to redeem them on an earlier call
date or are subject to a "mandatory put," in which case the maturity will be
deemed to be such other date.
The table below sets forth the various sales charges based on
the length of maturity of each Bond:
As Percent of Public
Time to Maturity Offering Price
- ---------------- --------------
less than 6 months 0%
6 mos. to 1 year 1%
over 1 yr. to 2 yrs. 1 1/2%
over 2 yrs. to 4 yrs. 2 1/2%
over 4 yrs. to 8 yrs. 3 1/2%
over 8 yrs. to 15 yrs. 4 1/2%
over 15 years 5 1/2%
Accrued Interest. An amount of accrued interest which
represents accumulated unpaid or uncollected interest on a Bond from the last
day on which interest was paid thereon will be added to the Public Offering
Price and paid by the Certificateholder at the time Units are purchased. Since
the Trust normally receives the interest on Bonds twice a year and the interest
on the Bonds in the Trust is accrued on a daily basis (net of estimated fees and
expenses), the Trust will always have an amount of interest accrued but not
actually received and distributed to Certificateholders. A Certificateholder
will not recover his proportionate share of accrued interest until the Units are
sold or redeemed, or the Trust is terminated. At that time, the
Certificateholder will receive his proportionate share of the accrued interest
computed to the settlement date in the case of a sale or termination and to the
date of tender in the case of redemption.
Employee Discounts. Employees (and their immediate families)
of ING Funds Distributor, Inc. and its affiliates, and of any underwriter of a
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Trust, pursuant to employee benefit arrangements, may purchase Units of a Trust
at a price equal to the offering side evaluation of the underlying securities in
a Trust during the initial offering period and at the bid side thereafter,
divided by the number of Units outstanding plus a reduced charge. Such
arrangements result in less selling effort and selling expenses than sales to
employee groups of other companies. Resales or transfers of Units purchased
under the employee benefit arrangements may only be made through the Sponsor's
secondary market, so long as it is being maintained.
Distribution Of Units. Certain banks and thrifts will make
Units of the Trust available to their customers on an agency basis. A portion of
the sales charge paid by their customers is retained by or remitted to the
banks. Under the Glass-Steagall Act, banks are prohibited from underwriting
Units; however, the Glass-Steagall Act does permit certain agency transactions
and the banking regulators have indicated that these particular agency
transactions are permitted under such Act. In addition, state securities laws on
this issue may differ from the interpretations of federal law expressed herein
and banks and financial institutions may be required to register as dealers
pursuant to state law.
The Sponsor intends to qualify the Units for sale in
substantially all States through the Underwriters and through dealers who are
members of the National Association of Securities Dealers, Inc. Units may be
sold to dealers at prices which represent a concession of up to (a) 4% of the
Public Offering Price for the Insured Municipal Securities Trust Series, (b)
$25.00 per Unit for the Insured Municipal Securities Trust Discount Series or
(c) $33.00 per Unit, for the Insured Municipal Securities Navigator Trust,
subject to the Sponsor's right to change the dealers' concession from time to
time. In addition, for transactions of 1,000,000 Units or more, the Sponsor
intends to negotiate the applicable sales charge and such charge will be
disclosed to any such purchaser. Such Units may then be distributed to the
public by the dealers at the Public Offering Price then in effect. The Sponsor
reserves the right to reject, in whole or in part, any order for the purchase of
Units. The Sponsor reserves the right to change the discounts from time to time.
Sponsor's Profits. The Sponsor will receive a gross commission
on all Units sold in the secondary market equal to the applicable sales charge
on each transaction. (See "Offering Price".) In addition, in maintaining a
market for the Units (see "Sponsor Repurchase") the Sponsor will realize profits
or sustain losses in the amount of any difference between the price at which
they buy Units and the price at which they resell such Units.
Comparison of Public Offering Price, Sponsor's Repurchase
Price And Redemption Price. The secondary market Public Offering Price of Units
will be determined on the basis of the current bid prices of the Bonds in the
Trust, plus the applicable sales charge. The value at which Units may be resold
in the Secondary Market or redeemed will be determined on the basis of the
current bid prices of the Bonds without any sales charge. On the Evaluation
Date, the Public Offering Price and the Sponsor's initial Repurchase Price per
Unit (each based on the bid side evaluation of the Bonds in the Trust) each
exceeded the Redemption Price and the Sponsor's secondary market Repurchase
Price per Unit (based upon the current bid side evaluation of the Bonds in the
Trust) by the amounts shown under "Summary of Essential Information" in Part A
of this Prospectus. For this reason, among others (including fluctuations in the
market prices of such Bonds and the fact that the Public Offering Price includes
the applicable sales charge), the amount realized by a Certificateholder upon
any redemption of Sponsor repurchase of Units may be less than the price paid
for such Units.
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ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN
-------------------------------------------------------
The rate of return on an investment in Units of the Trust is
measured in terms of "Estimated Current Return" and "Estimated Long Term
Return".
Estimated Long Term Return is calculated by: (i) computing the
yield to maturity or to an earlier call date (whichever results in a lower
yield) for each Bond in a Trust's portfolio in accordance with accepted bond
practices, which practices take into account not only the interest payable on
the Bond but also the amortization of premiums or accretion of discounts, if
any; (ii) calculating the average of the yields for the Bonds in each Trust's
portfolio by weighing each Bond's yield by the market value of the Bond and by
the amount of time remaining to the date to which the Bond is priced (thus
creating an average yield for the portfolio of each Trust); and (iii) reducing
the average yield for the portfolio of each Trust in order to reflect estimated
fees and expenses of that Trust and the maximum sales charge paid by
Unitholders. The resulting Estimated Long Term Return represents a measure of
the return to Unitholders earned over the estimated life of each Trust. The
Estimated Long Term Return as of the day prior to the Evaluation Date is stated
for the Trust under "Summary of Essential Information" in Part A.
Estimated Current Return is computed by dividing the Estimated
Net Annual Interest Income per Unit by the Public Offering Price per Unit. In
contrast to the Estimated Long Term Return, the Estimated Current Return does
not take into account the amortization of premium or accretion of discount, if
any, on the Bonds in the portfolios of the Trust. Moreover, because interest
rates on Bonds purchased at a premium are generally higher than current interest
rates on newly issued bonds of a similar type with comparable rating, the
Estimated Current Return per Unit may be affected adversely if such Bonds are
redeemed prior to their maturity. On the day prior to the Evaluation Date, the
Estimated Net Annual Interest Income per Unit divided by the Public Offering
Price resulted in the Estimated Current Return stated for the Trust under
"Summary of Essential Information" in Part A.
The Estimated Net Annual Interest Income per Unit of the Trust
will vary with changes in the fees and expenses of the Trustee and the Evaluator
applicable to the Trust and with the redemption, maturity, sale or other
disposition of the Bonds in the Trust. The Public Offering Price will vary with
changes in the bid prices of the Bonds. Therefore, there is no assurance that
the present Estimated Current Return or Estimated Long Term Return will be
realized in the future.
A schedule of cash flow projections is available from the
Sponsor upon request.
RIGHTS OF CERTIFICATEHOLDERS
----------------------------
Certificates. Ownership of Units of the Trust is evidenced by
registered Certificates executed by the Trustee and the Sponsor. Certificates
may be issued in denominations of one or more Units and will bear appropriate
notations on their faces indicating which plan of distribution has been selected
by the Certificateholder. Certificates are transferable by presentation and
surrender to the Trustee properly endorsed and/or accompanied by a written
instrument or instruments of transfer. Although no such charge is presently made
or contemplated, the Trustee may require a Certificateholder
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to pay $2.00 for each Certificate reissued or transferred and any governmental
charge that may be imposed in connection with each such transfer or interchange.
Mutilated, destroyed, stolen or lost Certificates will be replaced upon delivery
of satisfactory indemnity and payment of expenses incurred.
Interest And Principal Distributions. Interest received by the
Trust is credited by the Trustee to an Interest Account and a deduction is made
to reimburse the Trustee without interest for any amounts previously advanced.
Proceeds representing principal received from the maturity, redemption, sale or
other disposition of the Bonds are credited to a Principal Account.
Distributions to each Certificateholder from the Interest
Account are computed as of the close of business on each Record Date for the
following Payment Date and consist of an amount substantially equal to
one-twelfth, one- half or all of such Certificateholder's pro rata share of the
Estimated Net Annual Interest Income in the Interest Account, depending upon the
applicable plan of distribution. Distributions from the Principal Account (other
than amounts representing failed contracts, as previously discussed) will be
computed as of each semi-annual Record Date, and will be made to the
Certificateholders on or shortly after the next semi-annual Payment Date.
Proceeds representing principal received from the disposition of any of the
Bonds between a Record Date and a Payment Date which are not used for
redemptions of Units will be held in the Principal Account and not distributed
until the second succeeding semi-annual Payment Date. No distributions will be
made to Certificateholders electing to participate in the Total Reinvestment
Plan. Persons who purchase Units between a Record Date and a Payment Date will
receive their first distribution on the second Payment Date after such purchase.
Because interest payments are not received by the Trust at a
constant rate throughout the year, interest distributions may be more or less
than the amount credited to the Interest Account as of a given Record Date. For
the purpose of minimizing fluctuations in the distributions from the Interest
Account, the Trustee will advance sufficient funds, without interest, as may be
necessary to provide interest distributions of approximately equal amounts. All
funds in respect of the Bonds received and held by the Trustee prior to
distribution to Certificateholders may be of benefit to the Trustee and do not
bear interest to Certificateholders.
As of the first day of each month, the Trustee will deduct
from the Interest Account, and, to the extent funds are not sufficient therein,
from the Principal Account, amounts necessary to pay the expenses of the Trust
(as determined on the basis set forth under "Trust 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 applicable taxes or other governmental
charges that may be payable out of the Trust. Amounts so withdrawn shall not be
considered a part of the Trust's assets until such time as the Trustee shall
return all or any part of such amounts to the appropriate accounts. In addition,
the Trustee may withdraw from the Interest and Principal Accounts such amounts
as may be necessary to cover purchases of Replacement Bonds and redemptions of
Units by the Trustee.
The estimated monthly, semi-annual or annual interest
distribution per Unit will initially be in the amount shown under Summary of
Essential Information and will change and may be reduced as Bonds mature or are
redeemed, exchanged or sold, or as expenses of the Trust fluctuate. No
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distribution need be made from the Principal Account until the balance therein
is an amount sufficient to distribute $1.00 per Unit.
Distribution Elections. Interest is distributed monthly, semi-
annually or annually, depending upon the distribution plan applicable to the
Unit purchased. Record Dates are the first day of each month for monthly
distributions, the first day of each June and December for semi-annual
distributions and the first day of each December for annual distributions.
Payment Dates will be the fifteenth day of each month following the respective
Record Dates.
Certificateholders purchasing Units in the secondary market
will initially receive distributions in accordance with the election of the
prior owner. Every October each Certificateholder may change his distribution
election by notifying the Trustee in writing of such change between October 1
and November 1 of each year. (Certificateholders deciding to change their
election should contact the Trustee by calling the number listed on the back
cover hereof for information regarding the procedures that must be followed in
connection with this written notification of the change of election.) Failure to
notify the Trustee on or before November 1 of each year will result in a
continuation of the plan for the following 12 months.
Records. The Trustee shall furnish Certificateholders, in
connection with each distribution, 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 Certificateholder of record, a
statement showing (i) as to the Interest Account: interest received (including
amounts representing interest received upon any disposition of Bonds and earned
original issue discount, if any), amounts paid for purchases of Replacement
Bonds and redemptions of Units, if any, deductions for applicable taxes and fees
and expenses of the Trust, 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; (ii) as to the Principal Account: the dates of
disposition of any Bonds and the net proceeds received therefrom (including any
unearned original issue discount but excluding any portion representing accrued
interest), deductions for payments of applicable taxes and fees and expenses of
the Trust, amounts paid for purchases of Replacement Bonds and redemptions of
Units, if any, and the balance remaining after such distributions and
deductions, expressed both as a total dollar amount and as a dollar amount
representing the pro rata share of each Unit outstanding on the last business
day of such calendar year; (iii) a list of the Bonds held and the number of
Units outstanding on the last business day of such calendar year; (iv) the
Redemption Price per Unit based upon the last computation thereof made such
calendar year; and (v) amounts actually distributed to Certificateholders during
such calendar year from the Interest and Principal Accounts, separately stated,
expressed both as total dollar amounts representing the pro rata share of each
Unit outstanding on the last business day of such calendar year.
The Trustee shall keep available for inspection by
Certificateholders at all reasonable times during usual business hours, books of
record and account of its transactions as Trustee, including records of the
names and addresses of Certificateholders, Certificates issued or held, a
current list of Bonds in the portfolio and a copy of the Trust Agreement.
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TAX STATUS
----------
All Bonds acquired by each Trust were accompanied by copies of
opinions of bond counsel to the issuing governmental authorities given at the
time of original delivery of the Bonds to the effect that the interest thereon
is exempt from regular Federal income tax. Such interest may, however, be
subject to the federal alternative minimum tax and to state and local taxes.
Neither the Sponsor nor the Trustee nor their respective counsel have made any
review of the proceedings relating to the issuance of the Bonds or the bases for
such opinion and express no opinion as to these matters, and neither the Trustee
nor the Sponsor nor their respective counsel has made an independent examination
or verification that the federal income tax status of the Bonds has not been
altered since the time of the original delivery of those opinions.
In rendering the opinion set forth below, counsel has examined
the Agreement, the final form of Prospectus dated the date hereof (the
"Prospectus") and the documents referred to therein, among others, and has
relied on the validity of said documents and the accuracy and completeness of
the facts set forth therein.
In the opinion of Battle Fowler LLP, counsel for the Sponsor,
under existing law:
The Trusts will be classified as grantor trusts and not as
associations taxable as corporations for federal income tax purposes
under the Internal Revenue Code, and income received by the Trusts
that consists of interest excludable from federal gross income under
the Code will be excludable from the federal gross income of the
Certificateholders of such Trusts.
Each Certificateholder will be considered the owner of a pro
rata portion of the assets of the Trust. Thus, each Certificateholder
will be considered to have received its pro rata share of Bond
interest when it is received by that Trust, and the net income
distributable to Certificateholders that is exempt from regular
federal income tax when received by that Trust will constitute
tax-exempt income when received by the Certificateholders.
Gain realized on a sale or redemption of the Bonds or on a
sale of a Unit is, however, includable in gross income for federal income tax
purposes, generally as capital gain. Such gain does not include any amount
received in respect to accrued interest, earned original issue discount and
accrued market discount. Gain on the disposition of a Bond or a Unit purchased
at a market discount generally will be treated as ordinary income, rather than
capital gain, to the extent of accrued market discount. Such gain may be long-
or short-term depending on the holding period of the Bond or the Unit, assuming
that the Bond or the Unit is held as a capital asset. Capital losses are
deductible to the extent of capital gains; in addition, up to $3,000 of capital
losses of non-corporate Certificateholders ($1,500 for married persons filing
separately) may be deducted against ordinary income. Capital assets held by
non-corporate certificate holders will qualify for long-term capital gain
treatment if held for more than one year and more than 18 months, respectively,
and will be subject to a reduced tax rate of 20% rather than the regular maximum
tax rate of 39.6%.
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Each Certificateholder will realize taxable gain or loss when
the Trust disposes of a Bond (whether by sale, exchange, redemption or payment
at maturity), as if the Certificateholder had directly disposed of its pro rata
share of such Bond. The gain or loss is measured by the difference between (i)
the tax cost of such pro rata share and (ii) the amount received therefor. For
this purpose, a Certificateholder's per Unit tax cost for each Bond is
determined by allocating the total tax cost of each Unit among all the Bonds
held in the Trust (in accordance with the portion of the Trust comprised by each
Bond). In order to determine the amount of taxable gain or loss, the
Certificateholder's amount received is similarly allocated at that time. The
Certificateholder may exclude from the amount received any amounts that
represent accrued interest or the earned portion of any original issue discount
but may not exclude amounts attributable to market discount. Thus, when a Bond
is disposed of by a Trust at a gain, taxable gain will equal the difference
between (i) the amount received and (ii) the amount paid plus any accrued
original issue discount. No deduction is allowed for the amortization of bond
premium on tax-exempt bonds, such as the Bonds, in computing regular federal
income tax.
Original Issue discount generally accrues based on the
principle of compounding of accrued interest, not on a straight-line or ratable
method, with the result that the amount of earned original issue discount is
less in the earlier years and more in the later years of a bond term. The tax
basis of an original issue discount bond is increased by the amount of accrued,
tax- exempt original issue discount thus determined. This method of calculation
will produce higher capital gains (or lower losses) to a Certificateholder, as
compared to the results produced by the straight-line method of accounting for
original issue discount, upon an early disposition of a Bond by the Trust or of
a Unit by a Certificateholder.
A Certificateholder may also realize taxable gain or loss when
a Unit is sold or redeemed. The amount received is allocated among all the Bonds
in a particular Trust in the same manner as when that Trust disposes of Bonds,
and the Certificateholder may exclude accrued interest and the earned portion of
any original issue discount (but not amounts attributable to market discount).
The return of a Certificateholder's tax cost is otherwise a tax- free return of
capital.
A portion of Social Security benefits is includable in gross
income for taxpayers whose modified adjusted gross income combined with a
portion of their Social Security benefits exceeds a base amount. The base amount
is $32,000 for a married couple filing a joint return, zero for married persons
filing separate returns and not living apart at all times during the taxable
year and $25,000 for all others. Interest on tax-exempt bonds is to be added to
adjusted gross income for purposes of computing the amount of Social Security
benefits that are includable in gross income and determining whether an
individual's income exceeds the base amount above which a portion of the
benefits would be subject to tax.
Corporate Certificateholders are required to include in
federal corporate alternative minimum taxable income 75% of the amount by which
the adjusted current earnings (which will include tax-exempt interest) of the
corporation exceeds alternative minimum taxable income (determined without
regard to this item). In addition, in certain cases, Subchapter S corporations
with accumulated earnings and profits from Subchapter C years will be subject to
a tax on tax-exempt interest.
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Any proceeds received pursuant to the terms of the insurance
on the Bonds that represent maturing interest on defaulted obligations will be
excludable from federal gross income if, and to the same extent that, such
interest would have been so excludable if paid by the issuers of such defaulted
obligations.
Under federal law, interest on Navigator Trust-held Bonds
issued by authority of the Government of Puerto Rico is exempt from regular
federal income tax, and state and local income tax in the United States and
Puerto Rico.
The New York Navigator Insured Trust is not subject to the New
York State Franchise Tax on Business Corporations or the New York City General
Corporation Tax. Under the personal income tax laws of the State and City of New
York, the income of the New York Navigator Insured Trust will be treated as the
income of the Certificateholders. Interest on the Bonds of the New York
Navigator Insured Trust that is exempt from tax under the laws of the State and
City of New York when received by the Trust will retain its status as tax-exempt
interest to its Certificateholders. In addition, non-residents of New York City
will not be subject to the New York City personal income tax on gains derived
with respect to their Units of the New York Navigator Insured Trust.
Non-residents of New York State will not be subject to New York State personal
income tax on such gains unless the Units are employed in a business, trade or
occupation carried on in New York State. A New York State or New York City
resident should determine its basis and holding periods for its Units in the
same manner for New York State and New York City tax purposes as for federal tax
purposes. For corporations doing business in New York State, interest earned on
state and municipal obligations that are exempt from federal income tax,
including obligations of New York State, its political subdivisions and
instrumentalities, must be included in calculating New York State and New York
City entire net income for purposes of calculating New York State and New York
City franchise (income) tax.
The Insured Municipal Securities Trust is not subject to the
New York State Franchise Tax on Business Corporations or the New York City
General Corporation Tax. For a Certificateholder who is a New York resident,
however, a pro rata portion of all or part of the income of the Trust will be
treated as the income of the Certificateholder under the income tax laws of the
State and City of New York. Similar treatment may apply in other states.
The exemption of interest on municipal obligations for federal
income tax purposes does not necessarily result in exemption under the income
tax laws of any state or political subdivision. In general, municipal bond
interest exempt from federal income tax is taxable income to residents of the
State or City of New York under the tax laws of those jurisdictions unless the
bonds are issued by the State of New York or one of its political subdivisions
or by the Commonwealth of Puerto Rico or one of its political subdivisions. For
corporations doing business in New York State, interest earned on state and
municipal obligations that are exempt from federal income tax, including
obligations of New York State, its political subdivisions and instrumentalities,
must be included in calculating New York State and New York City entire net
income for purposes of calculating New York State and New York City franchise
(income) tax. The laws of the several states and local taxing authorities vary
with respect to the taxation of such obligations and each Certificateholder is
advised to consult his own tax advisor as to the tax consequences of his
Certificates under state and local tax laws.
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In the opinion of Zeller and Bryant, special counsel to the
Sponsor on New Jersey tax matters, which opinion is made in reliance upon
certain information and based on certain assumptions respecting the New Jersey
Navigator Trust, under existing New Jersey law applicable to individuals who are
New Jersey residents and New Jersey estates and trusts:
(1) The New Jersey Navigator Trust will be recognized
as a trust and not as an association taxable as a corporation.
The New Jersey Navigator Trust will not be subject to the New
Jersey Corporation Business Tax or the New Jersey Corporation
Income Tax.
(2) The income of the New Jersey Navigator Trust will
be treated as income of the Certificateholders who are
individuals, estates or trusts under the New Jersey Gross
Income Tax Act, N.J.S.A. 54A: 1-1 et seq. (the "Act").
Interest on the Bonds that is exempt from tax under the Act
when received by the New Jersey Navigator Trust will retain
its status as tax-exempt interest under the Act when
distributed to Certificateholders who are individuals, estates
or trusts.
(3) Certificateholders, who are individuals, estates,
or trusts will not be subject to the Act on any gain realized
when the New Jersey Navigator Trust disposes of a Bond
(whether by sale, exchange, redemption, or payment at
maturity). Any loss realized on such disposition may not be
utilized to offset gains realized by such Certificateholder on
the disposition of assets the gain on which is subject to the
New Jersey Gross Income Tax.
(4) The sale, exchange or redemption of a Unit by a
Certificateholder shall be treated as a sale or exchange of a
Certificateholder's pro rata interest in the assets in the New
Jersey Navigator Trust at the time of the transaction and any
gain will be exempt from tax under the Act to the extent that
the price received by the selling Certificateholder who is an
individual, estate or trust does not exceed the Redemption
Price. To the extent that the amount received by the
Certificateholder exceeds the Redemption Price, any such gain
will not be exempt from tax under the Act.
(5) All proceeds representing interest on defaulted
obligations derived by Certificateholders who are individuals,
estates or trusts from an insurance policy, either paid
directly to the Certificateholder or through the New Jersey
Navigator Trust, are exempt from tax under the Act.
(6) The Units of the New Jersey Navigator Trust may
be taxable in the estates of New Jersey residents under the
New Jersey Transfer Inheritance Tax Law or the New Jersey
Estate Tax Laws.
(7) If a Certificateholder is a corporation subject
to the New Jersey Corporation Business Tax or New Jersey
Corporation Income Tax, interest from the Bonds in the New
Jersey Navigator Trust which is allocable to such corporation
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will be includable in its entire net income for purposes of
the New Jersey Corporation Business Tax or New Jersey
Corporation Income Tax, less any interest expense incurred to
carry such investment to the extent such interest expense has
not been deducted in computing Federal taxable income. Net
gains derived by such corporation on the disposition of the
Bonds by the New Jersey Navigator Trust or on the disposition
of its Units will be included in its entire net income for
purposes of the New Jersey Corporation Business Tax or New
Jersey Corporation Income Tax. Any proceeds paid under the
insurance policy issued to the Trustee of the New Jersey
Navigator Trust with respect to the Bonds or under individual
policies obtained by issuers of Bonds which represent maturing
interest or maturing principal on defaulted obligations held
by the Trustee will be included in its entire net income for
purposes of the New Jersey Corporation Business Tax or New
Jersey Corporation Income Tax if, and to the same extent as,
such interest or proceeds would have been so included if paid
by the issuer of the defaulted obligations.
(8) The Internal Revenue Service Restructuring and
Reform Act of 1998 (the "1998 Tax Act") provides that for
taxpayers other than corporations, net capital gain (which is
defined as net long-term capital gain over net short- term
capital loss for the taxable year) realized from property
(with certain exclusions) is subject to a maximum marginal
stated tax rate of 20% (10% in the case of certain taxpayers
in the lowest tax bracket). Capital gain or loss is long-term
if the holding period for the asset is more than one year, and
is short-term if the holding period of the asset is one year
or less. The date on which a Unit is acquired (i.e., the
"trade date") is excluded for purposes of determining the
holding period of the Unit. The legislation is generally
effective retroactively for amounts properly taken into
account on or after January 1, 1998. Capital gains realized
from assets held for one year or less are taxed at the same
rates as original income. See Part A for a discussion of the
Federal Tax status of income earned on New Jersey Navigator
Trust.
In the case of Bonds that are Industrial Revenue Bonds
("IRBs") or certain types of private activity bonds, the opinions of bond
counsel to the respective issuing authorities indicate that interest on such
Bonds is exempt from regular federal income tax. However, interest on such Bonds
will not be exempt from regular federal income tax for any period during which
such Bonds are held by a substantial user of the facilities financed by the
proceeds of such Bonds or by a related person thereof within the meaning of the
Code. Therefore, interest on any such Bonds allocable to a Certificateholder who
is such a substantial user or related person thereof will not be tax-exempt.
Furthermore, in the case of IRBs that qualify for the small issue exemption, the
small issue exemption will not be available or will be lost if, at any time
during the three-year period beginning on the later of the date the facilities
are placed in service or the date of issue, all outstanding tax- exempt IRBs,
together with a proportionate share of any present issue, of an owner or
principal user (or related person) of the facilities exceeds $40,000,000. In the
case of IRBs issued under the $10,000,000 small issue
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exemption, interest on such IRBs will become taxable if the face amount of the
IRBs plus certain capital expenditures exceeds $10,000,000.
In addition, a Bond can lose its tax-exempt status as a result
of other subsequent but unforeseeable events such as prohibited arbitrage
activities by the issuer of the Bond or the failure of the Bond to continue to
satisfy the conditions required for the exemption of interest thereon from
regular federal income tax. No investigation has been made as to the current or
future owners or users of the facilities financed by the Bonds, the amount of
such persons' outstanding tax-exempt IRBs, or the facilities themselves, and no
assurance can be given that future events will not affect the tax- exempt status
of the Bonds. Investors should consult their tax advisors for advice with
respect to the effect of these provisions on their particular tax situation.
Interest on indebtedness incurred or continued to purchase or
carry the Units is not deductible for regular federal income tax purposes.
However, such interest is deductible for New York State and New York City income
tax purposes by corporations that are required to include interest on the Bonds
in New York State and New York City entire net income for purposes of
calculating New York State and City franchise (income) taxes. In addition, under
rules used by the Internal Revenue Service for determining when borrowed funds
are considered used for the purpose of purchasing or carrying particular assets,
the purchase of Units may be considered to have been made with borrowed funds
even though the borrowed funds are not directly traceable to the purchase of
Units. Also, in the case of certain financial institutions that acquire Units,
in general no deduction is allowed for interest expense allocable to the Units.
From time to time, proposals have been introduced before
Congress to restrict or eliminate the federal income tax exemption for interest
on debt obligations similar to the Bonds in the Trust, and it can be expected
that similar proposals may be introduced in the future. In particular, Congress
may consider the adoption of some form of flat tax, which could have an adverse
impact on the value of tax-exempt bonds.
The U.S. Supreme Court has held that there is no
constitutional prohibition against the federal government's taxing the interest
earned on state or other municipal bonds. The decision does not, however, affect
the current exemption from taxation of the interest earned on the Bonds in the
Trust in accordance with Section 103 of the Code.
The opinions of bond counsel or special tax counsel to the
issuing governmental authorities to the effect that interest on the Bonds is
exempt from regular federal income tax may be limited to law existing at the
time the Bonds were issued, and may not apply to the extent that future changes
in law, regulations or interpretations affect such Bonds. Investors are advised
to consult their own tax advisors for advice with respect to the effect of any
legislative changes.
LIQUIDITY
---------
Sponsor Repurchase. The Sponsor, although not obligated to do
so, intends to maintain a secondary market for the Units and continuously to
offer to repurchase the Units. The Sponsor's secondary market repurchase price,
after the initial public offering is completed, will be based on the aggregate
bid price of the Bonds in the Trust portfolio, determined by the Evaluator on
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a daily basis, and will be the same as the redemption price. The aggregated bid
price, determined by the Evaluator on a daily basis, is computed on the basis
set forth under "Trustee Redemption". Certificateholders who wish to dispose of
their Units should inquire of the Sponsor as to current market prices prior to
making a tender for redemption. The Sponsor may discontinue repurchase of Units
if the supply of Units exceeds demand, or for other business reasons. The date
of repurchase is deemed to be the date on which Certificates representing Units
are physically received in proper form by ING Funds Distributor, Inc. 1475
Dunwoody Drive, West Chester, Pennsylvania, 19380 on behalf of the Sponsor.
Units received after 4 P.M., New York Time, will be deemed to have been
repurchased on the next business day. In the event a market is not maintained
for the Units, a Certificateholder may be able to dispose of Units only by
tendering them to the Trustee for redemption.
Prospectuses relating to certain other bond trusts indicate an
intention by the respective Sponsor, subject to change, to repurchase units on
the basis of a price higher than the bid prices of the bonds in the trusts.
Consequently, depending on the prices actually paid, the secondary market
repurchase price of other trusts may be computed on a somewhat more favorable
basis than the repurchase price offered by the Sponsor for units of this Trust,
although in all bond trusts, the purchase price of a unit depends primarily on
the value of the bonds in the trust portfolio.
Units purchased by the Sponsor in the secondary market may be
re-offered for sale by the Sponsor at a price based on the aggregate bid price
of the Bonds in the Trust plus the applicable sales charge (see "Public Offering
Price" in Part A) plus net accrued interest. Any Units that are purchased by the
Sponsor in the secondary market also may be redeemed by the Sponsor if it
determines such redemption to be in its best interest.
The Sponsor may, under certain circumstances, as a service to
Certificateholders, elect to purchase any Units tendered to the Trustee for
redemption (see "Trustee Redemption"). Factors which the Sponsor will consider
in making a determination will include the number of Units of all Trusts which
it has in inventory, its estimate of the salability and the time required to
sell such Units and general market conditions. For example, if in order to meet
redemptions of Units the Trustee must dispose of Bonds, and if such disposition
cannot be made by the redemption date (seven calendar days after tender), the
Sponsor may elect to purchase such Units. Such purchase shall be made by payment
to the Certificateholder not later than the close of business on the redemption
date of an amount equal to the Redemption Price on the date of tender.
Trustee Redemption. Units may also be tendered to the Trustee
for redemption at its corporate trust office as set forth in Part A of this
Prospectus, upon proper delivery of Certificates representing such Units and
payment of any relevant tax. At the present time there are no specific taxes
related to the redemption of Units. No redemption fee will be charged by the
Sponsor or the Trustee. Units redeemed by the Trustee will be canceled.
Certificates representing Units to be redeemed must be
delivered to the Trustee and must be properly endorsed or accompanied by proper
instruments of transfer with signature guaranteed (or by providing satisfactory
indemnity, as in the case of lost, stolen or mutilated Certificates). Thus,
redemptions of Units cannot be effected until Certificates representing such
Units have been delivered by the person seeking redemption. (See
"Certificates".) Certificateholders must sign exactly as their names appear on
the faces of their Certificates. In certain instances
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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.
Within three business days following a tender for redemption,
the Certificateholder 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 under "Summary of Essential Information" in Part A on
the date of tender. The "date of tender" is deemed to be the date on which Units
are received by the Trustee, except that with respect to Units received after
the close of trading on the New York Stock Exchange, the date of tender is the
next day on which such Exchange is open for trading, and such Units will be
deemed to have been tendered to the Trustee on such day for redemption at the
Redemption Price computed on that day.
Accrued interest paid on redemption shall be withdrawn from
the Interest Account, or, if the balance therein is insufficient, from the
Principal Account. All other amounts paid on redemption shall be withdrawn from
the Principal Account. The Trustee is empowered to sell Bonds in order to make
funds available for redemptions. Such sales, if required, could result in a sale
of Bonds by the Trustee at a loss. To the extent Bonds are sold, the size and
diversity of the Trust will be reduced.
The Redemption Price per Unit is the pro rata share of each
Unit in the Trust determined by the Trustee on the basis of (i) the cash on hand
in the Trust or moneys in the process of being collected, (ii) the value of the
Bonds in the Trust based on the bid prices of such Bonds and (iii) interest
accrued thereon, less (a) amounts representing taxes or other governmental
charges payable out of the Trust, (b) the accrued expenses of the Trust and (c)
cash allocated for the distribution to Certificateholders of record as of the
business day prior to the evaluation being made. The Evaluator may determine the
value of the Bonds in the Trust (i) on the basis of current bid prices of the
Bonds obtained from dealers or brokers who customarily deal in bonds comparable
to those held by the Trust, (ii) on the basis of bid prices for bonds comparable
to any Bonds for which bid prices are not available, (iii) by determining the
value of the Bonds by appraisal, or (iv) by any combination of the above. The
Evaluator will determine the aggregate current bid price evaluation of the Bonds
in the Trust, taking into account the market value of the Bonds insured under
the Bond Insurance Policy, in the manner described as set forth under "Public
Offering--Offering Price". Insurance does not guarantee the market value of the
Bonds or the Units, and while Bond insurance represents an element of market
value in regard to insured Bonds, its exact effect, if any, on market value
cannot be predicted.
The Trustee is irrevocably authorized in its discretion, if
the Sponsor does not elect to purchase a Unit tendered for redemption or if the
Sponsor tenders a Unit for redemption, in lieu of redeeming such Unit, to sell
such Unit in the over-the-counter market for the account of the tendering
Certificateholder at prices which will return to the Certificateholder an amount
in cash, net after deducting brokerage commissions, transfer taxes and other
charges, equal to or in excess of the Redemption Price for such Unit. The
Trustee will pay the net proceeds of any such sale to the Certificateholder on
the day he would otherwise be entitled to receive payment of the Redemption
Price.
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
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customary weekend and holiday closings, or trading on that Exchange is
restricted or during which (as determined by the Securities and Exchange
Commission) an emergency exists as a result of which disposal or evaluation of
the Bonds is not reasonably practicable, or for such other periods as the
Securities and Exchange Commission may by order permit. The Trustee and the
Sponsor are not liable to any person or in any way for any loss or damage which
may result from any such suspension or postponement.
A Certificateholder who wishes to dispose of his Units should
inquire of his bank or broker in order to determine if there is a current
secondary market price in excess of the Redemption Price.
TRUST ADMINISTRATION
--------------------
Portfolio Supervision. Except for the purchase of Replacement
Bonds or as discussed herein, the acquisition of any Bonds for the Trust other
than Bonds initially deposited by the Sponsor is prohibited. Although it is the
Sponsor's and Trustee's intention not to dispose of Bonds insured pursuant to
the Bond Insurance in the event of default, nevertheless, the Sponsor may direct
the Trustee to dispose of Bonds upon (i) default in payment of principal or
interest on such Bonds, (ii) institution of certain legal proceedings with
respect to the issuers of such Bonds, (iii) default under other documents
adversely affecting debt service on such Bonds, (iv) default in payment of
principal or interest on other obligations of the same issuer or guarantor, (v)
with respect to revenue Bonds, decline in revenues and income of any facility or
project below the estimated levels calculated by proper officials charged with
the construction or operation of such facility or project or (vi) decline in
price or the occurrence of other market or credit factors that in the opinion of
the Sponsor would make the retention of such Bonds in the Trust detrimental to
the interests of the Certificateholders. If a default in the payment of
principal or interest on any of the Bonds occurs and if the Sponsor fails to
instruct the Trustee to sell or hold such Bonds, the Trust Agreement provides
that the Trustee may sell such Bonds. The Trustee shall not be liable for any
depreciation or loss by reason of any sale of bonds or by reason of the failure
of the Sponsor to give directions to the Trustee.
The Sponsor is authorized by the Trust Agreement to direct the
Trustee to accept or reject certain plans for the refunding or refinancing of
any of the Bonds. Any bonds received in exchange or substitution will be held by
the Trustee subject to the terms and conditions of the Agreement to the same
extent as the Bonds originally deposited. Within five days after such deposit,
notice of such exchange and deposit shall be given by the Trustee to each
Certificateholder registered on the books of the Trustee, including an
identification of the Bonds eliminated and the Bonds substituted therefor.
In determining whether to accept or reject certain plans for
the refunding or refinancing of any of the Bonds, the Sponsor may be advised by
the Portfolio Supervisor.
Trust Agreement, Amendment And Termination. The Trust
Agreement may be amended by the Trustee, the Sponsor and the Evaluator without
the consent of any of the Certificateholders: (i) to cure any ambiguity or to
correct or supplement any provision which may be defective or inconsistent; (ii)
to change any provision thereof as may be required by the Securities and
Exchange Commission or any successor governmental agency; or (iii) to make
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such other provisions in regard to matters arising thereunder as shall not
adversely affect the interests of the Certificateholders.
The Trust Agreement may also be amended in any respect, or
performance of any of the provisions thereof may be waived, with the consent of
the holders of Certificates evidencing 66-2/3% of the Units then outstanding for
the purpose of modifying the rights of Certificateholders; provided that no such
amendment or waiver shall reduce any Certificateholder's interest in the Trust
without his consent or reduce the percentage of Units required to consent to any
such amendment or waiver without the consent of the holders of all Certificates.
The Trust Agreement may not be amended, without the consent of the holders of
all Certificates then outstanding, to increase the number of Units issuable or
to permit the acquisition of any bonds in addition to or in substitution for
those initially deposited in the Trust, except in accordance with the provisions
of the Trust Agreement. The Trustee shall promptly notify Certificateholders, in
writing, of the substance of any such amendment.
The Trust Agreement provides that the Trust shall terminate
upon the maturity, redemption or other disposition, as the case may be, of the
last of the Bonds held in the Trust but in no event is it to continue beyond the
end of the calendar year preceding the fiftieth anniversary of the execution of
the Trust Agreement. If the value of the Trust shall be less than the minimum
amount set forth under "Summary of Essential Information" in Part A, the Trustee
may, in its discretion, and shall when so directed by the Sponsor, terminate the
Trust. The Trust may also be terminated at any time with the consent of the
holders of Certificates representing 100% of the Units then outstanding. In the
event of termination, written notice thereof will be sent by the Trustee to all
Certificateholders. Within a reasonable period after termination, the Trustee
must sell any Bond remaining in the Trust, and, after paying all expenses and
charges incurred by the Trust, distribute to each Certificateholder, upon
surrender for cancellation of his Certificate for Units, his pro rata share of
the Interest and Principal Accounts.
The Sponsor. Effective February 9, 2000, ING Funds
Distributor,Inc. has become the successor to Reich & Tang Distributors, Inc. as
Sponsor to the Trusts. In addition, Gruntal & Co., L.L.C. has resigned as
co-sponsor for those particular Trusts for which it acted in that capacity.
ING Funds Distributor, Inc., an Iowa corporation, a wholly
owned subsidiary of ING Group. ING Group among the leading financial services
organizations, is engaged in asset management, banking and insurance activities
in 60 countries worldwide with over 82,000 employees. The Sponsor is a member of
the National Association of securities Dealers, Inc.
The information included herein is only for the purpose of
informing investors as to the financial responsibility of the Sponsor and its
ability to carry out its contractual obligations. The Sponsor will be under no
liability to Unitholders for taking any action, or refraining from taking any
action, in good faith pursuant to the Trust Agreement, or of errors in judgment
except in cases of its own willful misfeasance, bad faith, gross negligence or
reckless disregard of its obligations and duties.
Unless the Sponsor otherwise directs, the accounts of the
Trust shall be audited not less than annually by independent public accountants
selected by the Sponsor. The expenses of the audit shall be an expense of the
Trust. So long as the Sponsor maintains a secondary market, the Sponsor will
bear any audit expense which exceeds $.50 per 1,000 Units. Certificateholders
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covered by the audit during the year may receive a copy of the audited
financials upon request.
The Sponsor may resign at any time by delivering to the
Trustee an instrument of resignation executed by the Sponsor.
If at any time the Sponsor shall resign or fail to perform any
of its duties under the Trust Agreement or becomes incapable of acting or
becomes bankrupt or its affairs are taken over by public authorities, then the
Trustee may either (i) appoint a successor Sponsor; (ii) terminate the Trust
Agreement and liquidate the Trust; or (iii) continue to act as Trustee without
terminating the Trust Agreement. Any successor Sponsor appointed by the Trustee
shall be satisfactory to the Trustee and, at the time of appointment, shall have
a net worth of at least $1,000,000.
The Trustee. For certain of the Trusts, as set forth in the
"Summary of Essential Information" in Part A, the Trustee is The Chase Manhattan
Bank with its principal executive office located at 270 Park Avenue, New York,
New York 10017 (800) 428-8890 and its unit investment trust office at 4 New York
Plaza, New York, New York 10004. The Trustee is subject to supervision by the
Superintendent of Banks of the State of New York, the Federal Deposit Insurance
Corporation and the Board of Governors of the Federal Reserve System.
The Trustee must be a banking corporation organized under the
laws of the United States or any state which is authorized under such laws to
exercise corporate trust powers and must have at all times an aggregate capital,
surplus and undivided profits of not less than $5,000,000. The duties of the
Trustee are primarily ministerial in nature. The Trustee did not participate in
the selection of Securities for the portfolio of the Trust.
The Trustee shall not be liable or responsible in any way for
taking any action, or for refraining from taking any action, in good faith
pursuant to the Trust Agreement, or for errors in judgment; or for any
disposition of any moneys, bonds or Certificates in accordance with the Trust
Agreement, except in cases of its own willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations and duties; provided,
however, that the Trustee shall not in any event be liable or responsible for
any evaluation made by the Evaluator. In addition, the Trustee shall not be
liable for any taxes or other governmental charges imposed upon or in respect of
the Bonds or the Trust which it may be required to pay under current or future
law of the United States or any other taxing authority having jurisdiction. The
Trustee shall not be liable for depreciation or loss incurred by reason of the
sale by the Trustee of any of the Bonds pursuant to the Trust Agreement.
For further information relating to the responsibilities of
the Trustee under the Trust Agreement, reference is made to the material set
forth under "Rights of Certificateholders".
The Trustee may resign by executing an instrument in writing
and filing the same with the Sponsor, and mailing a copy of a notice of
resignation to all Certificateholders. In such an event, the Sponsor is
obligated to appoint a successor Trustee as soon as possible. In addition, 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 Agreement. Notice of such removal and
appointment shall be mailed to each Certificateholder by the
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Sponsor. If upon resignation of the Trustee no successor has been appointed and
has accepted the appointment within thirty 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 the Trustee becomes effective only when
the successor Trustee accepts its appointment as such or when a court of
competent jurisdiction appoints a successor Trustee. Upon execution of a written
acceptance of such appointment by such successor Trustee, all the rights,
powers, duties and obligations of the original Trustee shall vest in the
successor.
Any corporation into which the Trustee may be merged or with
which it may be consolidated, or any corporation resulting from any merger or
consolidation to which the Trustee shall be a party, shall be the successor
Trustee. The Trustee must always be a banking corporation organized under the
laws of the United States or any State and have at all times an aggregate
capital, surplus and undivided profits of not less than $2,500,000.
The Evaluator. The Evaluator is Kenny S&P Evaluation Services,
a division of a business unit of J.J. Kenny Company, Inc., a subsidiary of The
McGraw-Hill Companies, with main offices located at 65 Broadway, New York, New
York 10006. The Evaluator is a wholly-owned subsidiary of McGraw Hill, Inc. The
Evaluator is a registered investment advisor and also provides financial
information services.
The Trustee, the Sponsor and the Certificateholders may rely
on any evaluation furnished by the Evaluator and shall have no responsibility
for the accuracy thereof. Determinations by the Evaluator under the Trust
Agreement shall be made in good faith upon the basis of the best information
available to it, provided, however, that the Evaluator shall be under no
liability to the Trustee, the Sponsor or Certificateholders for errors in
judgment, except in cases of its own willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations and duties.
The Evaluator may resign or may be removed by the Sponsor and
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 thirty
days after notice of resignation, the Evaluator may apply to a court of
competent jurisdiction for the appointment of a successor.
TRUST EXPENSES AND CHARGES
--------------------------
At no cost to the Trust, the Sponsor has borne the expenses of
creating and establishing the Trust, including the cost of initial preparation
and execution of the Trust Agreement, registration of the Trust and the Units
under the Investment Company Act of 1940 and the Securities Act of 1933, the
premiums on the Sponsor-Insured Bonds, initial preparation and printing of the
Certificates, legal expenses, advertising and selling expenses, expenses of the
Trustee including, but not limited to, an amount equal to interest accrued on
certain "when issued" bonds since the date of settlement for the Units, initial
fees and other out-of-pocket expenses. The fees of the Evaluator, however,
incurred during the initial public offering, are paid directly by the Trust.
The Sponsor will not charge the Trust a fee for its services
as such. (See "Sponsor's Profits".)
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ING Mutual Funds Management Co. LLC, an affiliate of ING Funds
Distributor, Inc., will receive, for portfolio supervisory services to the
Trust, an annual fee in the amount set forth under "Summary of Essential
Information" in Part A. This fee may exceed the actual cost of providing
portfolio supervisory services for the Trust, but at no time will the total
amount received for portfolio supervisory services rendered to all series of the
Insured Municipal Securities Trust in any calendar year exceed the aggregate
costs to ING Mutual Funds Management Co. LLC of supplying such services in such
year. (See "Trust Administration -- Portfolio Supervision.")
The Trustee will receive for its ordinary recurring services
to the Trust an annual fee in the amount set forth under "Summary of Essential
Information" in Part A of this Prospectus. For a discussion of the services
performed by the Trustee pursuant to its obligations under the Trust Agreement,
see "Trust Administration" and "Rights of Certificateholders".
The Evaluator will receive, for each daily evaluation of the
Bonds in the Trust after the initial public offering is completed, a fee in the
amount set forth under "Summary of Essential Information" in Part A of this
Prospectus.
The Trustee's and Evaluator's fees are payable monthly as of
the Record Date from the Interest Account to the extent funds are available and
then from the Principal Account. The Trustee's fees, the Evaluator's fees and
the Portfolio Supervisor's fees may be increased without approval of the
Certificateholders 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".
The following additional charges are or may be incurred by the
Trust: (i) all expenses (including counsel fees) of the Trustee incurred and
advances made 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 Certificateholders; (ii)
fees of the Trustee for any extraordinary services performed under the Trust
Agreement; (iii) 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; (iv) indemnification of the Sponsor for any losses, liabilities and
expenses incurred in acting as Sponsor of the Trust without gross negligence,
bad faith or willful misconduct on its part; and (v) 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). The above expenses, including the Trustee's fees, when paid by or
owing to the Trustee, are secured by a first lien on the Trust. In addition, the
Trustee is empowered to sell Bonds in order to make funds available to pay all
expenses.
The accounts of the Trust shall be audited not less than
annually by independent public accountants selected by the Sponsor. So long as
the Sponsor maintains a secondary market, the Sponsor will bear any audit
expense which exceeds 50 cents per Unit. Certificateholders covered by the audit
during the year may receive a copy of the audited financial statements upon
request.
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EXCHANGE PRIVILEGE AND CONVERSION OFFER
---------------------------------------
Certificateholders will be able to elect to exchange any or
all of their Units of this Trust for Units of one or more of any available
series of Equity Securities Trust, Insured Municipal Securities Trust, Municipal
Securities Trust, New York Municipal Trust or Mortgage Securities Trust (the
"Exchange Trusts") subject to a reduced sales charge as set forth in the
prospectus of the Exchange Trust (the "Exchange Privilege"). Unit owners of any
registered unit investment trust for which there is no active secondary market
in the units of such trust (a "Redemption Trust") will be able to elect to
redeem such units and apply the proceeds of the redemption to the purchase of
available Units of one or more series of an Exchange Trust (the "Conversion
Trusts") at the Public Offering Price for units of the Conversion Trust subject
to a reduced sales charge as set forth in the prospectus of the Conversion Trust
(the "Conversion Offer"). Under the Exchange Privilege, the Sponsor's repurchase
price during the initial offering period of the Units being surrendered will be
based on the market value of the Securities in the Trust portfolio or on the
aggregate offer price of the Bonds in the other Trust Portfolios; and, after the
initial offering period has been completed, will be based on the aggregate bid
price of the securities in the particular Trust portfolio. Under the Conversion
Offer, units of the Redemption Trust must be tendered to the trustee of such
trust for redemption at the redemption price determined as set forth in the
relevant Redemption Trust's prospectus. Units in an Exchange or Conversion Trust
will be sold to the Certificateholder at a price based on the aggregate offer
price of the securities in the Exchange or Conversion trust portfolio (or for
units of Equity Securities Trust, based on the market value of the underlying
securities in the trust portfolio) during the initial public offering period of
the Exchange or Conversion Trust; and after the initial public offering period
has been completed, based on the aggregate bid price of the securities in the
Exchange or Conversion Trust Portfolio if its initial offering has been
completed plus accrued interest (or for units of Equity Securities Trust, based
on the market value of the underlying securities in the trust portfolio) and a
reduced sales charge.
Except for Certificateholders who wish to exercise the
Exchange Privilege or Conversion Offer within the first five months of their
purchase of Units of the Exchange or Redemption Trust, any purchaser who
purchases Units under the Exchange Privilege or Conversion Offer will pay a
lower sales charge than that which would be paid for the Units by a new
investor. For Certificateholders who wish to exercise the Exchange Privilege or
Conversion Offer within the first five months of their purchase of Units of the
Exchange or Redemption Trust, the sales charge applicable to the purchase of
units of an Exchange or Conversion Trust shall be the greater of (i) the reduced
sales charge or (ii) an amount which when coupled with the sales charge paid by
the Certificateholder upon his original purchase of Units of the Exchange or
Redemption Trust would equal the sales charge applicable in the direct purchase
of units of an Exchange Trust.
In order to exercise the Exchange Privilege the Sponsor must
be maintaining a secondary market in the units of the available Exchange Trust.
The Conversion Offer is limited only to unit owners of any Redemption Trust.
Exercise of the Exchange Privilege and the Conversion Offer by
Certificateholders is subject to the following additional conditions: (i) at the
time of the Certificateholder's election to participate in the Exchange
Privilege or Conversion Offer, there must be units of the Exchange or Conversion
Trust available for sale, either under the initial primary distribution or in
the Sponsor's secondary market, (ii) exchanges will be
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effected in whole units only, (iii) Units of the Mortgage Securities Trust may
only be acquired in blocks of 1,000 Units and (iv) Units of the Equity
Securities Trust may only be acquired in blocks of 100 Units. Certificateholders
will not be permitted to advance any funds in excess of their redemption in
order to complete the exchange. Any excess proceeds received from a
Certificateholder for exchange or from units being redeemed per conversion will
be remitted to such Certificateholder.
The Sponsor reserves the right to suspend, modify or terminate
the Exchange Privilege and/or the Conversion Offer. The Sponsor will provide
Certificateholders of the Trust with 60 days' prior written notice of any
termination or material amendment to the Exchange Privilege and/or the
Conversion Offer, provided that no notice need be given if (i) the only material
effect of an amendment is to reduce or eliminate the sales charge payable at the
time of the exchange, to add one or more series of the Trust eligible for the
Exchange Privilege or the Conversion Offer, to add any new unit investment trust
sponsored by ING or a sponsor controlled by or under common control with ING or
to delete a series which has been terminated from eligibility for the Exchange
Privilege and/or the Conversion Offer, (ii) there is a suspension of the
redemption of units of an Exchange or Conversion Trust under Section 22(e) of
the Investment Company Act of 1940, or (iii) an Exchange Trust temporarily
delays or ceases the sale of its units because it is unable to invest amounts
effectively in accordance with its investment objectives, policies and
restrictions. During the 60-day notice period prior to the termination or
material amendment of the Exchange Privilege described above, the Sponsor will
continue to maintain a secondary market in the units of all Exchange Trusts that
could be acquired by the affected Certificateholders. Certificateholders may,
during this 60-day period, exercise the Exchange Privilege in accordance with
its terms then in effect.
To exercise the Exchange Privilege, a Certificateholder should
notify the Sponsor of his desire to exercise his Exchange Privilege. To exercise
the Conversion Offer, a unit owner of a Redemption Trust should notify his
retail broker of his desire to redeem his Redemption Trust Units and use the
proceeds from the redemption to purchase Units of one or more of the Conversion
Trusts. If Units of a designated, outstanding series of an Exchange or
Conversion Trust are at the time available for sale and such Units may lawfully
be sold in the state in which the Certificateholder is a resident, the
Certificateholder will be provided with a current prospectus or prospectuses
relating to each Exchange or Conversion Trust in which he indicates an interest.
He may then select the Trust or Trusts into which he desires to invest the
proceeds from his sale of Units. The exchange transaction will operate in a
manner essentially identical to a secondary market transaction except that units
may be purchased at a reduced sales charge. The conversion transaction will be
handled entirely through the unit owner's retail broker. The retail broker must
tender the units to the trustee of the Redemption Trust for redemption and then
apply the proceeds to the redemption toward the purchase of units of a
Conversion Trust at a price based on the aggregate offer or bid side evaluation
per Unit of the Conversion Trust, depending on which price is applicable, plus
accrued interest and the applicable sales charge. The certificates must be
surrendered to the broker at the time the redemption order is placed and the
broker must specify to the Sponsor that the purchase of Conversion Trust Units
is being made pursuant to the Conversion Offer. The unit owner's broker will be
entitled to retail a portion of the sales charge.
Tax Consequences of the Exchange Privilege and the Conversion
Offer. A surrender of Units pursuant to the Exchange Privilege or the
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Conversion Offer will constitute a "taxable event" to the Certificateholder
under the Internal Revenue Code. The Certificateholder will realize a tax gain
or loss that will be of a long- or short-term capital or ordinary income nature
dependent on the length of time the Units have been held and other factors. (See
"Tax Status".) A Certificateholder's tax basis in the Units acquired pursuant to
the Exchange Privilege or Conversion Offer will be equal to the purchase price
of such Units. Investors should consult their own tax advisors as to the tax
consequences to them of exchanging or redeeming units and participating in the
Exchange Privilege or Conversion Offer.
OTHER MATTERS
-------------
Legal Opinions. The legality of the Units offered hereby and
certain matters relating to federal tax law have been passed upon by Battle
Fowler LLP, 75 East 55th Street, New York, New York 10022, as counsel for the
Sponsor. Carter, Ledyard & Milburn, Two Wall Street, New York, New York 10005
have acted as counsel for The Chase Manhattan Bank. Certain matters relating to
New Jersey tax law have been passed upon by Zeller and Bryant, as special New
Jersey counsel to the Sponsor.
Independent Accountants/Auditors. The financial statements of
the Trusts for the years ended December 31, 1999 included in Part A of this
Prospectus have been examined by Ernst & Young LLP, independent auditors. The
financial statements have been so included in reliance on their report given
upon the authority of said firm as experts in accounting and auditing.
PricewaterhouseCoopers LLP has consented to the incorporation by reference of
their report on the statements of operations, changes in net assets and
financial highlights for the Trusts included in Part A of this Prospectus for
the periods ended December 31, 1997 and December 31, 1998, respectively.
Portfolio Supervisor. ING Mutual Funds Management Co. LLC, a
Delaware limited liability company, is a wholly-owned indirect subsidiary of
ING Group and is an affiliate of the Sponsor.
Performance Information. Total returns, average annualized
returns or cumulative returns for various periods of this Trust may be included
from time to time in advertisements, sales literature and reports to current or
prospective investors. Total return shows changes in Unit price during the
period plus reinvestment of dividends and capital gains, divided by the original
public offering price as of the date of calculation. Average annualized returns
show the average return for stated periods of longer than a year. Sales material
may also include an illustration of the cumulative results of like annual
investments during an accumulation period and like annual withdrawals during a
distribution period. Figures for actual portfolios will reflect all applicable
expenses and, unless otherwise stated, the maximum sales charge. No provision is
made for any income taxes payable. Returns may also be shown on a combined
basis. Trust performance may be compared to performance on a total return basis
of the Dow Jones Industrial Average, the S&P 500 Composite Price Stock Index, or
performance data from Lipper Analytical Services, Inc. and Morningstar
Publications, Inc. or from publications such as Money, The New York Times, U.S.
News and World Report, Business Week, Forbes or Fortune. As with other
performance data, performance comparisons should not be considered
representative of a Trust's relative performance for any future period.
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DESCRIPTION OF BOND RATINGS*
----------------------------
Standard & Poor's Ratings Services. A brief description of the
applicable Standard & Poor's rating symbols and their meanings is as follows:
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 on current information furnished to
Standard & Poor's by the issuer and obtained by Standard & Poor's from other
sources it considers reliable. The ratings may be changed, suspended or
withdrawn as a result of changes in, or unavailability of, such information.
The ratings are based, in varying degrees, on the following
considerations:
(i) 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.
(ii) Nature of and provisions of the obligation.
(iii) 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 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 principal and interest. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay principal and interest for
bonds in this category than for bonds in the A category.
Plus (+) or Minus (-): To provide more detailed indications of
credit quality, the ratings from "AA" to "BB" may be modified by the addition of
a plus or minus sign to show relative standing within the major rating
categories.
- --------
* As described by Standard & Poor's.
112677.11
-54-
<PAGE>
NR: Indicates that no rating has been requested, that there is
insufficient information on which to base a rating or that S&P does not rate a
particular type of obligation as a matter of policy.
Provisional Ratings (Prov.) following a rating indicates the
rating is provisional, which assumes the successful completion of the project
being financed by the issuance of the bonds being rated and indicates that
payment of debt service requirements is largely or entirely dependent upon the
successful and timely completion of the project. This rating, however, while
addressing credit quality subsequent to completion, makes no comment on the
likelihood of, or the risk of default upon failure of, such completion.
Accordingly, the investor should exercise his own judgment with respect to such
likelihood and risk.
DESCRIPTION OF RATING ON THE UNITS*
----------------------------------
A Standard & Poor's rating on the units of an investment trust
(hereinafter referred to collectively as "units" and "fund") is a current
assessment of creditworthiness with respect to the investments held by such
fund. This assessment takes into consideration the financial capacity of the
issuers and of any guarantors, insurers, lessees, or mortgagors with respect to
such investments. The assessment, however, does not take into account the extent
to which fund expenses or portfolio asset sales for less than the fund's
purchase price will reduce payment to the unit holder of the interest and
principal required to be paid on the portfolio assets. In addition, the rating
is not a recommendation to purchase, sell, or hold units, inasmuch as the rating
does not comment as to market price of the units or suitability for a particular
investor.
Funds rated "AAA" are composed exclusively of assets that are
rated "AAA" by Standard & Poor's or have, in the opinion of Standard & Poor's,
credit characteristics comparable to assets that are rated "AAA", or certain
short-term investments. Standard & Poor's defines its AAA rating for such assets
as the highest rating assigned by Standard & Poor's to a debt obligation.
Capacity to pay interest and repay principal is very strong.
- --------
* As described by Standard & Poor's Corporation.
112677.11
-55-
<PAGE>
<TABLE>
<CAPTION>
INDEX
-----
Title Page
- ----- ----
<S> <C> <C>
Summary of Essential Information..................................A-5 INSURED
Financial and Statistical Information.............................A-6 MUNICIPAL SECURITIES TRUST
Information Regarding the Trust...................................A-7 (Unit Investment Trust)
Audit and Financial Information...................................F-1
Prospectus
The Trust........................................................ 1
Risk Considerations............................................... 13 Dated: April 30, 2000
Public Offering................................................... 32
Estimated Long Term Return and
Estimated Current Return........................................ 35 Sponsor:
Rights of Certificateholders...................................... 35 ING Funds Distributor, Inc.
Tax Status........................................................ 38 1475 Dunwoody Drive
Liquidity......................................................... 43 West Chester, PA 19380
Trust Administration.............................................. 46 1-877-463-6464
Trust Expenses and Charges........................................ 49
Exchange Privilege and Conversion
Offer........................................................... 51 Trustee:
Other Matters..................................................... 53
Description of Bond Ratings....................................... 54 The Chase Manhattan Bank
Description of Rating on the Units................................ 55 4 New York Plaza
New York, New York 10004
Parts A and B of this Prospectus do not Evaluation Services contain all of the 800-882-9898
information set forth in 65 Broadway the registration statement and exhibits New
York, New York 10006 relating thereto, filed with the Securities and Exchange Evaluator:
Commission, Washington, D.C., under the Securities Act of 1933, and to which
reference is made. Kenny S&P
</TABLE>
* * *
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.
* * *
No person is authorized to give any information or to make any
representations not contained in Parts A and B of this Prospectus; and any
information or representation not contained herein must not be relied upon as
having been authorized by the Trust, the Trustee, the Evaluator, or the Sponsor.
The Trust is registered as a unit investment trust under the Investment Company
Act of 1940. Such registration does not imply that the Trust or any of its Units
have been guaranteed, sponsored, recommended or approved by the United States or
any state or any agency or officer thereof.
112677.11
PART II
ADDITIONAL INFORMATION NOT REQUIRED
IN PROSPECTUS
CONTENTS OF REGISTRATION STATEMENT
This Post-Effective Amendment to the Registration Statement on Form S-6
comprises the following papers and documents:
The facing sheet on Form S-6.
The Cross-Reference Sheet (incorporated by reference to the Post-Effective
Amendment to Form S-6 Registration Statement Nos. 33-37849 and
33-56918, filed on April 25, 1996).
The Prospectus consisting of pages.
Signatures.
Consent of Independent Accountants/Auditors.
Consent of Counsel (included in Exhibit 99.3.1).
Consent of Special New Jersey Counsel (included in Exhibit 99.3.2)
Consent of the Evaluator (included in Exhibit 99.5.1).
The following exhibits:
99.1.1 -- Form of Reference Trust Agreement (filed as Exhibit 99.1.1
to Post-Effective Amendment No. 8 to Form S-6 Registration
Statement No. 33-26426 on April 25, 1997; and as Exhibit
1.1 to Amendment No. 1 to Form S-6 Registration Statement
Nos. 33-52397 and 33-58167 of Insured Municipal Securities
Trust Series 32, New York Navigator Insured Series 16 & New
Jersey Navigator Insured Series 12; and Series 33, New York
Navigator Insured Series 17 & New Jersey Navigator Insured
Series 13, on April 14, 1994 and April 6, 1995,
respectively, and incorporated herein by reference).
99.1.1.1 -- Trust Indenture and Agreement for Insured Municipal
Securities Trust, 47th Discount Series and Series 20 (and
Subsequent Series) (filed as Exhibit 99.1.1.1 to
Post-Effective Amendment No. 7 to Form S-6 Registration
Statement No. 33-28384 of Insured Municipal Securities
Trust, Series 20 on April 25, 1996 and incorporated herein
by reference).
99.1.3.4 -- Articles of Incorporation and Articles of Amendment of ING
Funds Distributor, Inc. (filed as Exhibit 99.1.3.5 to
Amendment No. 2 to Form S-6 Registration Statement No. 333-
31048 on March 28, 2000 and incorporated herein by
reference).
99.1.3.5 -- By-Laws of ING Funds Distributor, Inc. (filed as Exhibit
99.1.3.6 to Amendment No. 2 to Form S-6 Registration
Statement No. 333-31048 on March 28, 2000 and incorporated
herein by reference).
175582.1
II-1
<PAGE>
99.1.5 -- Form of Insurance Policy of Financial Guaranty Insurance
Company for Sponsor-Insured Bonds (filed as Exhibit 99.1.5
to Post-Effective Amendment No. 7 to Form S-6 Registration
Statement No. 33-26426 of Insured Municipal Securities
Trust, Series 15 on April 25, 1996 and incorporated herein
by reference).
99.1.5.1 -- Form of Insurance Policy of Bond Investors Guaranty for
Sponsor-Insured Bonds (filed as Exhibit 99.1.5.1 to Post-
Effective Amendment No. 7 to Form S-6 Registration
Statement No. 33-26426 of Insured Municipal Securities
Trust, Series 15 on April 25, 1996 and incorporated herein
by reference).
99.1.5.2 -- Form of Insurance Policy of Municipal Bond Investors
Assurance Corporation (filed as Exhibit 99.1.5.2 to
Post-Effective Amendment No. 7 to Form S-6 Registration
Statement No. 33-26426 of Insured Municipal Securities
Trust, Series 15 on April 25, 1996 and incorporated herein
by reference).
99.2.1 -- Form of Certificate dated June 16, 1989 (filed as
Exhibit 99.2.1 to Post-Effective Amendment No. 7 to
Registration Statement Nos. 33-29313 and 33-30144 of
Municipal Securities Trust, Series 45 and Series 46 on
October 25, 1996 and incorporated herein by reference).
99.3.1 -- Form of Opinion of Battle Fowler LLP as to the legality of
the securities being registered, including their consent to
the delivery thereof and to the use of their name under the
headings "Tax Status" and "Legal Opinions" in the
Prospectus, and to the filing of their opinion regarding
the tax status (filed as Exhibit 99.3.1 to Post-Effective
Amendment No. 8 to Form S-6 Registration Statement No.
33-26426 on April 25, 1997; and as Exhibit 3.1 to Amendment
No.1 to Form S-6 Registration Statement Nos. 33-52397 and
33-58167 of Insured Municipal Securities Trust, Series 32,
New York Navigator Insured Series 16 & New Jersey Navigator
Insured Series 12; and Series 33, New York Navigator
Insured Series 17 & New Jersey Navigator Insured Series 13,
on April 14, 1994 and April 6, 1995, respectively, and
incorporated herein by reference).
99.3.2 -- Form of Opinion of Freeman, Zeller & Bryant, Special New
Jersey Counsel (filed as Exhibit 99.3.2 to Post-Effective
Amendment No. 7 to Form S-6 Registration Statement No.
33-31426 on April 25, 1997; and as Exhibit 3.2 to Amendment
No. 1 to Form S-6 Registration Statement Nos. 33-52397 and
33-58167 of Insured Municipal Securities Trust, Series 32,
New York Navigator Insured Series 16 & New Jersey Navigator
Insured Series 12 and Series 33, New York Navigator Insured
Series 17 & New Jersey Navigator Insured Series 13, on
April 14, 1994 and April 6, 1995, respectively, and
incorporated herein by reference).
175582.1
II-2
<PAGE>
99.4.1 -- Form of Custody Agreement, dated January 18, 1990 (filed
as Exhibit 99.4.1 to Post-Effective Amendment No. 7 to Form
S-6 Registration Statement No. 33-31426 on April 25, 1997
and incorporated herein by reference).
99.4.2 -- Form of First Amendment to Custody Agreement, dated
July 20, 1990 (filed as Exhibit 99.4.2 to Post-Effective
Amendment No. 7 to Form S-6 Registration Statement No.
33-31426 on April 25, 1997 and incorporated herein by
reference).
*99.5.1 -- Consent of the Evaluator.
99.6.0 -- Powers of Attorney of ING Funds Distributor, Inc., the
Depositor, by its officers and a majority of its Directors
(filed as Exhibit 99.6.0 to Form S-6 Registration Statement
No. 333-31048 on February 24, 2000 and incorporated herein
by reference).
- --------
* Being filed by this Amendment.
175582.1
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the registrants, Insured Municipal Securities Trust, New Jersey Navigator
Insured Series 3, New York Navigator Insured Series 13 & New Jersey Navigator
Insured Series 9; Series 31, New York Navigator Insured Series 14 & New Jersey
Navigator Insured Series 10; Series 32, New York Navigator Insured Series 16 &
New Jersey Navigator Insured Series 12 and Series 33, New York Navigator Insured
Series 17 & New Jersey Navigator Insured Series 13 certifies that they have met
all of the requirements for effectiveness of this Post-Effective Amendment to
the Registration Statement pursuant to Rule 485(b) under the Securities Act of
1933. The registrants have duly caused this Post-Effective Amendment to the
Registration Statements to be signed on their behalf by the undersigned,
thereunto duly authorized, in the City of New York and State of New York on the
19th day of April, 2000.
INSURED MUNICIPAL SECURITIES TRUST, NEW JERSEY NAVIGATOR
INSURED SERIES 3, NEW YORK NAVIGATOR INSURED SERIES 13 & NEW
JERSEY NAVIGATOR INSURED SERIES 9; SERIES 31, NEW YORK
NAVIGATOR INSURED SERIES 14 & NEW JERSEY NAVIGATOR INSURED
SERIES 10; SERIES 32, NEW YORK NAVIGATOR INSURED SERIES 16 &
NEW JERSEY NAVIGATOR INSURED SERIES 12 AND SERIES 33, NEW YORK
NAVIGATOR INSURED SERIES 17 & NEW JERSEY NAVIGATOR INSURED
SERIES 13
(Registrants)
ING FUNDS DISTRIBUTOR, INC.
(Depositor)
By: /s/ PETER J. DeMARCO
---------------------------
Peter J. DeMarco
(Senior Vice President)
Pursuant to the requirements of the Securities Act of 1933,
this Post- Effective Amendment to the Registration Statements has been signed
below by the following persons, who constitute the principal officers and a
majority of the directors of ING Funds Distributor, Inc., the Depositor, in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Name Title Date
<S> <C> <C>
JOHN J. PILEGGI Chief Executive Officer and Director )
MITCHELL J. MELLEN President and Director ) April 19, 2000
DONALD E. BROSTROM Chief Financial Officer, Treasurer )
and Director
ERIC M. RUBIN Director ) By:/s/ PETER J. DEMARCO
--------------------
Peter J. DeMarco
as Senior Vice
President and
Attorney-in-Fact*
</TABLE>
- -------------
* Executed copies of Powers of Attorney were filed as Exhibit 99.6.0 to
Form S-6 Registration Statement No. 333-31048 on February 24, 2000.
175582.1
II-4
<PAGE>
INDEPENDENT AUDITORS' CONSENT
We consent to the reference to our firm under the caption "Independent Auditors"
and to the use of our report dated April 15, 2000, in the Registration Statement
and related Prospectus of Insured Municipal Securities Trust, New Jersey
Navigator Insured Series 3; Insured Municipal Securities Trust, New Jersey
Navigator Insured Series 9; Insured Municipal Securities Trust, New Jersey
Navigator Insured Series 10; Insured Municipal Securities Trust, New Jersey
Navigator Insured Series 12; Insured Municipal Securities Trust, New Jersey
Navigator Insured Series 13; Insured Municipal Securities Trust, New York
Navigator Insured Series 13; Insured Municipal Securities Trust, New York
Navigator Insured Series 14; Insured Municipal Securities Trust, New York
Navigator Insured Series 16; Insured Municipal Securities Trust, New York
Navigator Insured Series 17; Insured Municipal Securities Trust, Series 31;
Insured Municipal Securities Trust, Series 32; and Insured Municipal Securities
Trust, Series 33.
ERNST & YOUNG LLP
New York, New York
April 25, 2000
<PAGE>
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Post-Effective Amendment to the registration statement
on Form S-6 of our report dated March 19, 1999, relating to the financial
statements and financial highlights for the two years ended December 31, 1998 of
the Insured Municipal Securities Trust, New Jersey Navigator Insured Series 3;
Insured Municipal Securities Trust, New York Navigator Insured Series 13;
Insured Municipal Securities Trust, New Jersey Navigator Insured Series 9;
Insured Municipal Securities Trust, Series 31; Insured Municipal Securities
Trust, New York Navigator Insured Series 14; Insured Municipal Securities Trust,
New Jersey Navigator Insured Series 10; Insured Municipal Securities Trust,
Series 32; Insured Municipal Securities Trust, New York Navigator Insured Series
16; Insured Municipal Securities Trust, New Jersey Navigator Insured Series 12;
Insured Municipal Securities Trust, Series 33; Insured Municipal Securities
Trust, New York Navigator Insured Series 17; and Insured Municipal Securities
Trust, New Jersey Navigator Series 13 which appear in such Prospectus. We also
consent to the reference to us under the heading "Independent Accountants" in
the Prospectus.
PricewaterhouseCoopers LLP
Boston, MA
April 24, 2000
948964.1
II-5
<PAGE>
Standard & Poor's J.J. Kenny Frank A. Ciccotto, Jr.
55 Water Street, 45th Floor Senior Vice President and
New York, NY 10041 General Manager
Tel 212 438 4417/Office Evaluation Department
212 438 4422/Desk
Fax 212 438 7747
[email protected] Standard & Poor's
A Division of The McGraw Hill Companies
April 28,2000
ING Funds Distributors, Inc.
230 Park Avenue
New York, NY 10169
Re: Insured Municipal Securities Trust,
New Jersey Navigator Insured Series 3
Gentlemen:
We have examined the post-effective Amendment to the Registration Statement
File No. 33-37849 for the above-captioned trust. We hereby acknowledge that
Kenny S&P Evaluation Services, a division of J.J. Kenny Co., Inc. is currently
acting as the evaluator for the trust. We hereby consent to the use in the
Amendment of the reference to Kenny S&P Evaluation Services, a division of J.J.
Kenny Co., Inc. as evaluator.
In addition, we hereby confirm that the ratings indicated in the
above-referenced Amendment to the Registration Statement for the respective
bonds comprising the trust portfolio are the ratings indicated in our KENNYBASE
database.
You are hereby authorized to file a copy of this letter with the Securities
and Exchange Commission.
Sincerely,
Frank A. Ciccotto
FAC/trh
<PAGE>
Standard & Poor's J.J. Kenny Frank A. Ciccotto, Jr.
55 Water Street, 45th Floor Senior Vice President and
New York, NY 10041 General Manager
Tel 212 438 4417/Office Evaluation Department
212 438 4422/Desk
Fax 212 438 7747
[email protected] Standard & Poor's
A Division of The McGraw Hill Companies
April 28, 2000
ING Funds Distributors, Inc.
230 Park Avenue
New York, NY 10169
Re: Insured Municipal Securities Trust
New York Navigator Insured Series 13
and New Jersey Navigator Insured Series 9
Gentlemen:
We have examined the post-effective Amendment to the Registration Statement
File No. 33-56918 for the above-captioned trust. We hereby acknowledge that
Kenny S&P Evaluation Services, a division of J.J. Kenny Co., Inc. is currently
acting as the evaluator for the trust. We hereby consent to the use in the
Amendment of the reference to Kenny S&P Evaluation Services, a division of J.J.
Kenny Co., Inc. as evaluator.
In addition, we hereby confirm that the ratings indicated in the
above-referenced Amendment to the Registration Statement for the respective
bonds comprising the trust portfolio are the ratings indicated in our KENNYBASE
database.
You are hereby authorized to file a copy of this letter with the Securities
and Exchange Commission.
Sincerely,
Frank A. Ciccotto
FAC/trh
<PAGE>
Standard & Poor's J.J. Kenny Frank A. Ciccotto, Jr.
55 Water Street, 45th Floor Senior Vice President and
New York, NY 10041 General Manager
Tel 212 438 4417/Office Evaluation Department
212 438 4422/Desk
Fax 212 438 7747
[email protected] Standard & Poor's
A Division of The McGraw Hill Companies
April 28, 2000
ING Funds Distributors, Inc.
230 Park Avenue
New York, NY 10169
Re: Insured Municipal Securities Trust
Series 31, New York Navigator Insured Series 14
and New Jersey Navigator Insured Series 10
Gentlemen:
We have examined the post-effective Amendment to the Registration Statement
File No. 33-60604 for the above-captioned trust. We hereby acknowledge that
Kenny S&P Evaluation Services, a division of J.J. Kenny Co., Inc. is currently
acting as the evaluator for the trust. We hereby consent to the use in the
Amendment of the reference to Kenny S&P Evaluation Services, a division of J.J.
Kenny Co., Inc. as evaluator.
In addition, we hereby confirm that the ratings indicated in the
above-referenced Amendment to the Registration Statement for the respective
bonds comprising the trust portfolio are the ratings indicated in our KENNYBASE
database.
You are hereby authorized to file a copy of this letter with the Securities
and Exchange Commission.
Sincerely,
Frank A. Ciccotto
FAC/trh
<PAGE>
Standard & Poor's J.J. Kenny Frank A. Ciccotto, Jr.
55 Water Street, 45th Floor Senior Vice President and
New York, NY 10041 General Manager
Tel 212 438 4417/Office Evaluation Department
212 438 4422/Desk
Fax 212 438 7747
[email protected] Standard & Poor's
A Division of The McGraw Hill Companies
April 28, 2000
ING Funds Distributors, Inc.
230 Park Avenue
New York, NY 10169
Re: Insured Municipal Securities Trust,
Series 32, New York Navigator Insured Series 16
and New Jersey Navigator Insured Series 12
Gentlemen:
We have examined the post-effective Amendment to the Registration Statement
File No. 33-52397 for the above-captioned trust. We hereby acknowledge that
Kenny S&P Evaluation Services, a division of J.J. Kenny Co., Inc. is currently
acting as the evaluator for the trust. We hereby consent to the use in the
Amendment of the reference to Kenny S&P Evaluation Services, a division of J.J.
Kenny Co., Inc. as evaluator.
In addition, we hereby confirm that the ratings indicated in the
above-referenced Amendment to the Registration Statement for the respective
bonds comprising the trust portfolio are the ratings indicated in our KENNYBASE
database.
You are hereby authorized to file a copy of this letter with the Securities
and Exchange Commission.
Sincerely,
Frank A. Ciccotto
FAC/trh
<PAGE>
Standard & Poor's J.J. Kenny Frank A. Ciccotto, Jr.
55 Water Street, 45th Floor Senior Vice President and
New York, NY 10041 General Manager
Tel 212 438 4417/Office Evaluation Department
212 438 4422/Desk
Fax 212 438 7747
[email protected] Standard & Poor's
A Division of The McGraw Hill Companies
April 28, 2000
ING Funds Distributors, Inc.
230 Park Avenue
New York, NY 10169
Re: Insured Municipal Securities Trust,
Series 33, New York Navigator Insured Series 17
and New Jersey Navigator Insured Series 13
Gentlemen:
We have examined the post-effective Amendment to the Registration Statement
File No. 33-58167 for the above-captioned trust. We hereby acknowledge that
Kenny S&P Evaluation Services, a division of J.J. Kenny Co., Inc. is currently
acting as the evaluator for the trust. We hereby consent to the use in the
Amendment of the reference to Kenny S&P Evaluation Services, a division of J.J.
Kenny Co., Inc. as evaluator.
In addition, we hereby confirm that the ratings indicated in the
above-referenced Amendment to the Registration Statement for the respective
bonds comprising the trust portfolio are the ratings indicated in our KENNYBASE
database.
You are hereby authorized to file a copy of this letter with the Securities
and Exchange Commission.
Sincerely,
Frank A. Ciccotto
FAC/trh
