As filed with the Securities and Exchange Commission on March 1, 1996.
File No. 33-52058
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 3 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: MINT Group 8
B. Name of depositors:
J. C. BRADFORD & CO.
GLICKENHAUS & CO.
RAYMOND JAMES & ASSOCIATES, INC.
C. Complete address of depositors' principal executive offices:
J.C. BRADFORD & CO. GLICKENHAUS & CO.
330 Commerce Street 6 East 43rd Street
Nashville, Tennessee 37201 New York, New York 10017
RAYMOND JAMES & ASSOCIATES, INC.
880 Carillon Parkway
P.O. Box 12749
St. Petersburg, Florida 33733-2749
D. Name and complete address of agents for service:
J. RONALD SCOTT SETH M. GLICKENHAUS
J.C. BRADFORD & CO. GLICKENHAUS & CO.
331 Commerce Street 6 East 43rd Street
Nashville, Tennessee 37201 New York, New York 10017
RICHARD K. JOHNSON Copies to:
RAYMOND JAMES & ASSOCIATES, INC. ERIC F. FESS
880 Carillon Parkway CHAPMAN AND CUTLER
P.O. Box 12749 111 West Monroe Street
St. Petersburg, Florida 33733-2749 Chicago, Illinois 60603
XXXCheck box if it is proposed that this filing will become effective
immediately upon filing pursuant to paragraph (b) of Rule 485.
<PAGE>
MINT
MUNICIPAL INSURED NATIONAL TRUST
Series 41 - 7,467 Units
Tennessee Series 5 - 1,997 Units
NOTE: Part I of this Prospectus may not be distributed unless accompanied by
Part II.
THE MUNICIPAL INSURED NATIONAL TRUST
Prospectus, Part I
Dated: February 29, 1996
This Prospectus consists of two parts. The first contains a Summary of
Essential Financial Information on the reverse hereof as of October 31, 1995
and a summary of additional specific information, including Special Factors
Concerning the Portfolios and audited financial statements of The Municipal
Insured National Trust Series 41 and Tennessee Series 5 (the "Trusts"),
including the related bond portfolios, as of October 31, 1995. The second
part of this Prospectus contains a general summary of the Trust and special
factors concerning the issuers of the Bonds.
In the opinion of counsel, under existing law interest income to the Trusts
and, with certain exceptions, to Unit Holders is exempt from all Federal
income taxes, but may be subject to state and local taxes. Capital gains, if
any, are subject to tax. See Part II, under "The Trusts - Tax Status."
The Trusts are unit investment trusts formed for the purposes of obtaining
interest income and conserving capital through investment in a fixed and
insured portfolio of long-term bonds issued on behalf of the states, counties
or municipalities of the United States or authorities or political
subdivisions thereof (the "Bonds" or the "Securities"). See Part II under
"The Trusts." The payment of interest and the preservation of principal are
dependent upon the continuing ability of the issuers of the Bonds to meet such
obligations thereunder.
Offering. The initial public offerings of Units in the Trusts have been
completed. The Units offered hereby are issued and outstanding Units which
have been acquired by the Sponsors either by purchase from the Trustee of
Units tendered for redemption or in the secondary market. See Part II under
"Rights of Unit Holders - Redemption-Purchase by the Sponsors of Units
Tendered for Redemption" and "Public Offering - Market for Units." The price
at which the Units offered hereby were acquired was not less than the
redemption price determined as provided herein. See Part II under "Rights of
Unit Holders - Redemption - Computation of Redemption Price per Unit."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<PAGE>
The Public Offering Price of the Units is based on the aggregate bid price of
the Securities, plus principal cash, in each Trust divided by the respective
number of Units outstanding, plus a sales charge calculated based upon years
to the pricing life date of the underlying portfolio as discussed in "Public
Offering - Offering Price" of Part II of the Prospectus. Neither the
evaluation of the Bonds or Units, except in situations in which the Bonds are
in default in payment of principal and/or interest or in significant risk of
such default, include value attributable to the insurance obtained by the
Trusts. See Part II under "Rights of Unit Holders - Redemption - Computation
of Redemption Price per Unit."
Market for Units. The Sponsors, although they are not obligated to do so,
intend to maintain a market for the Units at prices based on the aggregate bid
price of the Securities in the Trusts plus accrued interest to the date of
settlement, as more fully described in Part II under "Public Offering - Market
for Units." If such a market is not maintained, a Unit Holder may be able to
dispose of his Units only through redemption at prices based upon the
aggregate bid price of the underlying Securities. The purchase price of the
Securities in the Trusts, if they were available for direct purchase by
investors, would not include the sales charge included in the Public Offering
Price of the Units.
Investors should retain both Parts of this Prospectus for future reference.
<PAGE>
THE MUNICIPAL INSURED NATIONAL TRUST SERIES 41
SUMMARY OF ESSENTIAL FINANCIAL INFORMATION
At October 31, 1995
Sponsors: J.C. Bradford & Co.
Glickenhaus & Co.
Raymond James & Associates, Inc.
Agent for Sponsors: J.C. Bradford & Co.
Trustee: The Bank of New York
Evaluator: Muller Data Corporation
<TABLE>
<S> <C>
Face Amount of Securities in Trust: $7,505,000
Number of Units: 7,467
Fractional Undivided Interest in Trust Per Unit: 1/7,467
Total Value of Securities in Portfolio (Based on Bid Side
Evaluations of Securities), plus principal cash: $7,634,311
=============
Sponsor's Repurchase Price Per Unit: $1,022.41
Plus Sales Charge of 4.660% of Public Offering Price: 49.97
____________
Public Offering Price Per Unit: $1,072.38*
=============
Redemption Price Per Unit: $1,022.41**
Excess of Public Offering Price Over Redemption Price Per Unit: $49.97
Weighted Average Maturity of Bonds in the Trust: 16.30 years
</TABLE>
Evaluation Time: 2:00 P.M., New York Time,
on the next day following receipt
by the Sponsor of an order for a
Unit sale or purchase or by
the Trustee of a Unit tendered
for redemption.
Evaluator's Fee: $.55 per Bond for each valuation.
Annual Insurance Premium: $7,954
Trustee's Annual Fee: For each $1,000 principal amount
of Bonds in the Trust, $.91 under
the monthly and $.51 under the
semiannual distribution plan.
Sponsor's Annual Fee: $.25 per Unit outstanding maximum.
Date of Deposit: November 18, 1992
Date of Trust Agreement: November 18, 1992
Mandatory Termination Date: December 31, 2039
Minimum Principal Distribution: $1.00 per Unit
Minimum Value of the Trust under which Trust Agreement may be Terminated:
$1,600,000
[FN]
*Plus accrued interest to November 3, 1995, the expected date of settlement,
of $13.11 monthly and $33.13 semiannually.
**Based solely upon the bid side evaluations of the portfolio securities.
Upon tender for redemption, the price to be paid will include accrued interest
as described in Part II under "Rights of Unit Holders - Redemption -
Computation of Redemption Price Per Unit."
<PAGE>
THE MUNICIPAL INSURED NATIONAL TRUST SERIES 41
SUMMARY OF ESSENTIAL FINANCIAL INFORMATION (continued)
At October 31, 1995
<TABLE>
<CAPTION>
PER UNIT
Monthly Semiannual
<S> <C> <C>
Estimated Annual Interest Income: $62.15 $62.15
Less Annual Premium on Portfolio Insurance: 1.07 1.07
Less Estimated Annual Expenses: 1.77 1.26
__________________________
Estimated Net Annual Interest Income $59.31 $59.82
==========================
Interest Distribution: $4.94 $29.91
Estimated Current Return Based on
Public Offering Price: 5.53% 5.58%
Estimated Long-Term Return Based
on Public Offering Price: 4.78% 4.83%
Daily Rate of Net Interest Accrual: $.16473 $.16615
</TABLE>
Monthly Semiannual
Record Dates: 10th Day of Month 10th Day of June
and December
Payment Dates: 25th Day of Month 25th Day of June
and December
<PAGE>
Portfolio Information
On October 31, 1995, the bid side valuation of 6% of the aggregate principal
amount of Bonds in the Portfolio for this Trust was at a discount from par and
94% was at a premium over par. See "The Trust - Portfolio - General
Considerations" in Part II of this Prospectus and Note (2) to the Portfolio
for information concerning call and redemption features of the Bonds.
Special Factors Concerning the Portfolio
The portfolio consists of 10 issues of Bonds issued by entities located in
nine states. The Bonds may be divided by purpose of issue as follows: Health
Care: 3 (35%); Appropriations, 3 (27%); Higher Education, 1 (13%); Pollution
Control, 1 (7%), Water and Sewer, 1 (11%); and Other, 1 (7%). The Trust is
deemed "concentrated" in a particular category or state when the Bonds in that
category or the Bonds issued by entities in such state constitute 25% or more
of the aggregate principal amount of the Bonds in the Trust. On October 31,
1995, 8 issues were rated AAA and 1 issue was rated AA- by Standard & Poor's
Corporation.* One issue was rated Aaa by Moody's Investors Service, Inc.*
Subsequent to such date, such ratings may have changed. As a result of
insurance guaranteeing the payment of principal and interest to the Trust, the
units of the Trust have received an AAA rating by Standard & Poor's
Corporation and an Aaa rating by Moody's Investors Service.
[FN]
*For the meaning of the ratings, see "Description of Bond Ratings" in Part II
of this Prospectus.
<PAGE>
REPORT OF INDEPENDENT AUDITORS
THE UNIT HOLDERS, SPONSORS AND TRUSTEE
THE MUNICIPAL INSURED NATIONAL TRUST SERIES 41
We have audited the accompanying statement of financial condition and the
portfolio of The Municipal Insured National Trust Series 41 as of October 31,
1995, and the related statements of operations and changes in net assets for
each of the two years in the period then ended and for the period from
November 18, 1992 (date of deposit) to October 31, 1993. These financial
statements are the responsibility of the Sponsors. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of the securities owned as of October 31,
1995, by correspondence with the Trustee. An audit also includes assessing
the accounting principles used and the significant estimates made by the
Sponsors, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The Municipal Insured
National Trust Series 41 as of October 31, 1995, and the results of its
operations and the changes in its net assets for each of the two years in the
period then ended and for the period from November 18, 1992 (date of deposit)
to October 31, 1993, in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
Chicago, Illinois
January 5, 1996
<PAGE>
THE MUNICIPAL INSURED NATIONAL TRUST SERIES 41
STATEMENT OF FINANCIAL CONDITION
October 31, 1995
<TABLE>
<CAPTION>
TRUST PROPERTY
<S> <C>
Investments in municipal bonds at market
value (amortized cost $7,105,957)
(Note (a) and Notes to Portfolio (4) and (5)) $7,631,730
Accrued interest receivable 155,918
__________
7,787,648
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND NET ASSETS
<S> <C> <C>
Cash overdraft 26,070
Accrued liabilities 910
__________
26,980
__________
Net assets:
Balance applicable to 7,467 units of
fractional undivided interest
outstanding (Notes (c) and (d)):
Capital, plus net unrealized market
appreciation of $525,773 $7,631,730
Undistributed principal and net
investment income (Note (b)) 128,938
__________
Net assets $7,760,668
==========
</TABLE>
[FN]
See accompanying notes.
<PAGE>
THE MUNICIPAL INSURED NATIONAL TRUST SERIES 41
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the
period from
November 18,
1992, (date
For the year of deposit)
ended October 31, to October 31,
1995 1994 1993
<S> <C> <C> <C>
Investment income - interest $476,865 496,617 469,054
Less expenses:
Trustee's fees and expenses 6,574 7,460 7,501
Evaluator's fees 1,430 1,387 1,006
Sponsor's fees 1,917 2,000 933
Insurance premiums 7,964 8,024 7,629
Audit fees 1,500 1,500 -
_________________________________
Total expenses 19,385 20,371 17,069
_________________________________
Investment income - net 457,480 476,246 451,985
Net gain (loss) on investments:
Realized gain (loss) on securities
sold or redeemed 14,178 17,730 -
Increase (decrease) in net unrealized
appreciation/depreciation 470,370 (820,462) 875,865
_________________________________
Net gain (loss) on investments 484,548 (802,732) 875,865
_________________________________
Net increase (decrease) in net
assets resulting from operations $942,028 (326,486) 1,327,850
================================
</TABLE>
[FN]
See accompanying notes.
<PAGE>
THE MUNICIPAL INSURED NATIONAL TRUST SERIES 41
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the
period from
November 18,
1992, (date
For the year of deposit)
ended October 31, to October 31,
1995 1994 1993
<S> <C> <C> <C>
Operations:
Investment income - net $457,480 476,246 451,985
Realized gain (loss) on securities
sold or redeemed 14,178 17,730 -
Increase (decrease) in net unrealized
appreciation/depreciation 470,370 (820,462) 875,865
__________________________________
Net increase (decrease) in net
assets resulting from operations 942,028 (326,486) 1,327,850
Unit redemptions (242 and 291 in 1995 and
1994, respectively):
Principal portion (240,850) (292,177) -
Net interest accrued (3,759) (3,927) -
__________________________________
(244,609) (296,104) -
Less: Distributions to Unit Holders
Investment income - net (454,681) (479,384) (301,621)
__________________________________
Total distributions (454,681) (479,384) (301,621)
__________________________________
Net increase (decrease) in net assets 242,738 (1,101,974) 1,026,229
Net assets:
Beginning of period 7,517,930 8,619,904 7,593,675
__________________________________
End of period (including undistributed
principal and net investment
income of $128,938, $133,367 and
$145,533, respectively) $7,760,668 7,517,930 8,619,904
===================================
</TABLE>
[FN]
See accompanying notes.
<PAGE>
THE MUNICIPAL INSURED NATIONAL TRUST SERIES 41
NOTES TO FINANCIAL STATEMENTS
October 31, 1995
(a) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Trust is registered under the Investment Company Act of 1940 as a Unit
Investment Trust. The following is a summary of the significant accounting
policies of the Trust:
(1) Investments
Investments are stated at market value as determined by the Evaluator
based on the bid side evaluations on the last day of trading during the
period.
(2) Income Taxes
The Trust is not an association taxable as a corporation for Federal
income tax purposes; accordingly, no provision is required for such
taxes.
(b) DISTRIBUTIONS
Interest received by the Trust is distributed to the Unit Holders either
semiannually on the 25th day of June and December, or if elected by the Unit
Holder, on the 25th day of each month, after deducting applicable expenses.
Receipts other than interest are distributed as explained in "Rights of Unit
Holders - Distribution of Interest and Principal" in Part II of this
Prospectus.
(c) ORIGINAL COST TO INVESTORS
The original cost to investors represents the aggregate initial public
offering price as of the date of deposit (November 18, 1992) exclusive of
accrued interest, computed on the basis set forth under "Public Offering -
Offering Price" in Part II of this Prospectus.
A reconciliation of the original cost of units to investors to the net amount
applicable to investors as of October 31, 1995 follows:
<TABLE>
<S> <C>
Original cost to investors $7,984,875
Less: Gross underwriting commissions (sales charge) (391,200)
__________
Net amount invested 7,593,675
Cost of securities sold or redeemed (503,700)
Net unrealized market appreciation 525,773
Accumulated interest accretion 15,982
__________
Net amount applicable to investors $7,631,730
==========
</TABLE>
<PAGE>
(d) OTHER INFORMATION
Selected data for a unit of the Trust:
Net assets as of October 31, 1995 represented by:
<TABLE>
<CAPTION>
Monthly Semiannual
Distribu- Distribu-
tion Plan tion Plan Total
<S> <C> <C> <C>
Value of fractional
undivided interest $6,298,962 $1,332,768 $7,631,730
Undistributed principal
and net investment income 84,914 44,024 128,938
___________________________________
Total value $6,383,876 $1,376,792 $7,760,668
===================================
Units outstanding 6,163 1,304 7,467
===================================
Value per unit $1,035.84 $1,055.82
======================
</TABLE>
<TABLE>
<CAPTION>
For the period from
November 18, 1992
For the year (date of deposit)
ended October 31, to October 31,
1995 1994 1993
<S> <C> <C> <C>
Distributions per Unit:
Interest:
Monthly plan $59.36 60.93 41.28
Semiannual plan 61.43 59.95 21.65
</TABLE>
<PAGE>
THE MUNICIPAL INSURED NATIONAL TRUST SERIES 41
PORTFOLIO
October 31, 1995
<TABLE>
<CAPTION>
Optional
Portfolio Rating Face Coupon Maturity Sinking Fund Refunding Market
Number Title of Securities (1) Amount Rate Date Redemptions (3) Redemptions (2) Value (4)(5)
<C> <S> <C> <C> <C> <C> <C> <C> <C>
1. Rhode Island Convention Center
Authority Revenue Bonds, 1991
Series A (MBIA Insured) (7) AAA $ 45,000 6.700% 05/15/20 05/15/13 @ 100 S.F. 05/15/01 @ 102 $ 50,540
2. Clark County, Nevada Pollution
Control Refunding Revenue Bonds
(Nevada Power Company Project),
Series 1992B (FGIC Insured) AAA 500,000 6.600 06/01/19 None 06/01/02 @ 102 526,700
3. Northwest Missouri State
University Housing System
Refunding and Improvement
Revenue Bonds, Series 1992
(MBIA Insured) AAA 1,000,000 6.375 12/01/13 12/01/08 @ 100 S.F. 12/01/02 @ 101 1,049,080
4. City of Davenport, Iowa
Hospital Facility Bonds
(Mercy Hospital Project),
Series 1992 (MBIA Insured) AAA 1,000,000 6.250 07/01/22 07/01/15 @ 100 S.F. 07/01/02 @ 102 1,028,140
5. SSM Health Care Obligated
Group Health Facilities
Refunding Revenue Bonds,
Series 1992AA (Wisconsin
Health and Educational
Facilities Authority)
(MBIA Insured) AAA 1,000,000 6.250 06/01/20 06/01/13 @ 100 S.F. 06/01/02 @ 102 1,022,560
6. South Dakota Health and
Educational Facilities
Authority Revenue Bonds
1992 (Rapid City Regional
Hospital Issue) (MBIA Insured) AAA 650,000 6.150 09/01/18 09/01/13 @ 100 S.F. 09/01/02 @ 102 659,204
7. Colorado Health Facilities
Authority Retirement Housing
Revenue Bonds (Liberty Heights
Project), 1990 Subordinate
Series B (7) AAA 475,000 0.000 07/15/20 None None 92,140
8. Municipality of Metropolitan
Seattle (Seattle, Washington)
Sewer Revenue Bonds,
Series T (7) AA- 835,000 6.875 01/01/31 01/01/16 @ 100 S.F. 01/01/00 @ 102 926,866
</TABLE>
<PAGE>
THE MUNICIPAL INSURED NATIONAL TRUST SERIES 41
PORTFOLIO (continued)
October 31, 1995
<TABLE>
<CAPTION>
Optional
Portfolio Rating Face Coupon Maturity Sinking Fund Refunding Market
Number Title of Securities (1) Amount Rate Date Redemptions (3) Redemptions (2) Value (4)(5)
<C> <S> <C> <C> <C> <C> <C> <C> <C>
9. Rhode Island Depositors
Economic Protection Corporation
Special Obligation Bonds, 1992
Series A (7) AAA $1,000,000 6.950% 08/01/22 08/01/20 @ 100 S.F. 08/01/02 @ 102 $1,149,750
10. New York State Urban
Development Corporation
Correctional Facilities
Revenue Bonds, Series G (7) Aaa(6) 1,000,000 7.250 01/01/14 01/01/10 @ 100 S.F. 01/01/00 @ 102 1,126,750
__________ __________
$7,505,000 $7,631,730
========== ==========
</TABLE>
[FN]
See notes to portfolio.
<PAGE>
NOTES TO PORTFOLIO
(1) All ratings are by Standard & Poor's Corporation, unless otherwise
indicated. A brief description of applicable Security ratings is given
under "Description of Bond Ratings" in Part II of this Prospectus.
(2) There is shown under this heading the date on which each issue of
Securities is redeemable by the operation of optional call provisions
and the redemption price for that date; unless otherwise indicated, each
issue continues to be redeemable at declining prices thereafter but not
below par. Securities listed as noncallable, as well as Securities
listed as callable, may also be redeemable at par under certain
circumstances from special redemption payments.
(3) There is shown under this heading the date on which an issue of
Securities is subject to scheduled sinking fund redemption and the
redemption price at that date.
(4) The market value of the Securities as of October 31, 1995 was determined
by the Evaluator on the basis of bid side evaluations for the Securities
at that date.
(5) At October 31, 1995, the net unrealized market appreciation of all
Securities was comprised of the following:
<TABLE>
<S> <C>
Gross unrealized market appreciation $525,773
Gross unrealized market depreciation -
_________
Net unrealized market appreciation $525,773
=========
</TABLE>
The aggregate amortized cost of the Securities for Federal income tax
purposes was $7,105,957 at October 31, 1995.
(6) Moody's Investors Service, Inc. rating.
(7) The issuers of Portfolio Numbers 1, 7, 8, 9 and 10 have indicated that
they will refund these securities on their optional redemption dates.
The Bonds are secured by, and payable from, escrowed U.S. Government
securities.
<PAGE>
THE MUNICIPAL INSURED NATIONAL TRUST, TENNESSEE TRUST, SERIES 5
SUMMARY OF ESSENTIAL FINANCIAL INFORMATION
At October 31, 1995
Sponsors: J.C. Bradford & Co.
Glickenhaus & Co.
Raymond James & Associates, Inc.
Agent for Sponsors: J.C. Bradford & Co.
Trustee: The Bank of New York
Evaluator: Muller Data Corporation
<TABLE>
<S> <C>
Face Amount of Securities in Trust: $2,000,000
Number of Units: 1,997
Fractional Undivided Interest in Trust Per Unit: 1/1,997
Total Value of Securities in Portfolio (Based on Bid Side
Evaluations of Securities), less principal cash overdraft: $2,026,266
=============
Sponsor's Repurchase Price Per Unit: $1,014.65
Plus Sales Charge of 4.484% of Public Offering Price: 47.63
____________
Public Offering Price Per Unit: $1,062.28*
=============
Redemption Price Per Unit: $1,014.65**
Excess of Public Offering Price Over Redemption Price Per Unit: $47.63
Weighted Average Maturity of Bonds in the Trust: 16.49 years
</TABLE>
Evaluation Time: 2:00 P.M., New York Time,
on the next day following receipt
by the Sponsor of an order for a
Unit sale or purchase or by
the Trustee of a Unit tendered
for redemption.
Evaluator's Fee: $.55 per Bond for each valuation.
Annual Insurance Premium: $2,848
Trustee's Annual Fee: For each $1,000 principal amount
of Bonds in the Trust, $.91 under
the monthly and $.51 under the
semiannual distribution plan.
Sponsor's Annual Fee: $.25 per Unit outstanding maximum.
Date of Deposit: November 18, 1992
Date of Trust Agreement: November 18, 1992
Mandatory Termination Date: December 31, 2039
Minimum Principal Distribution: $1.00 per Unit
Minimum Value of the Trust under which Trust Agreement may be Terminated:
$400,000
[FN]
*Plus accrued interest to November 3, 1995, the expected date of settlement,
of $13.06 monthly and $32.55 semiannually.
**Based solely upon the bid side evaluations of the portfolio securities.
Upon tender for redemption, the price to be paid will include accrued interest
as described in Part II under "Rights of Unit Holders - Redemption -
Computation of Redemption Price Per Unit."
<PAGE>
THE MUNICIPAL INSURED NATIONAL TRUST, TENNESSEE TRUST, SERIES 5
SUMMARY OF ESSENTIAL FINANCIAL INFORMATION (continued)
At October 31, 1995
<TABLE>
<CAPTION>
PER UNIT
Monthly Semiannual
<S> <C> <C>
Estimated Annual Interest Income: $61.88 $61.88
Less Annual Premium on Portfolio Insurance: 1.43 1.43
Less Estimated Annual Expenses: 2.73 2.32
__________________________
Estimated Net Annual Interest Income $57.72 $58.13
==========================
Interest Distribution: $4.81 $29.06
Estimated Current Return Based on
Public Offering Price: 5.43% 5.47%
Estimated Long-Term Return Based
on Public Offering Price: 4.74% 4.78%
Daily Rate of Net Interest Accrual: $.16033 $.16144
</TABLE>
Monthly Semiannual
Record Dates: 10th Day of Month 10th Day of June
and December
Payment Dates: 25th Day of Month 25th Day of June
and December
<PAGE>
Portfolio Information
On October 31, 1995, the bid side valuation of 7% of the aggregate principal
amount of Bonds in the Portfolio for this Trust was at a discount from par and
93% was at a premium over par. See "The Trust - Portfolio - General
Considerations" in Part II of this Prospectus and Note (2) to the Portfolio
for information concerning call and redemption features of the Bonds.
Special Factors Concerning the Portfolio
The Portfolio consists of 7 issues of Bonds issued by 6 entities located in
the state of Tennessee and one entity located in the Commonwealth of Puerto
Rico. The Bonds may be divided by purpose of issue as follows: Health Care,
2 (30%); General Obligation, 2 (28%); Higher Education, 1 (17%); Multifamily
Housing, 1 (18%), and Other, 1 (7%). The Trust is deemed to be "concentrated"
in a particular category or state when the Bonds in that category or the Bonds
issued by entities in such state constitute 25% or more of the aggregate face
amount of the Portfolio. On October 31, 1995, 4 issues were rated AAA, 1
issue was rated AA, and 1 issue was rated A by Standard & Poor's Corporation
and one issue was rated Aaa by Moody's Investors Service, Inc.* Subsequent to
such date, such ratings may have changed. As a result of insurance
guaranteeing the payment of principal and interest to the Trust, the units of
the Trust have received a AAA rating by Standard & Poor's Corporation and a
Aaa rating by Moody's Investors Service.
[FN]
*For the meaning of the ratings, see "Description of Bond Ratings" in Part II
of this Prospectus.
<PAGE>
REPORT OF INDEPENDENT AUDITORS
THE UNIT HOLDERS, SPONSORS AND TRUSTEE
THE MUNICIPAL INSURED NATIONAL TRUST,
TENNESSEE TRUST, SERIES 5
We have audited the accompanying statement of financial condition and the
portfolio of The Municipal Insured National Trust Tennessee Trust, Series 5 as
of October 31, 1995, and the related statements of operations and changes in
net assets for each of the two years in the period then ended and for the
period from November 18, 1992 (date of deposit) to October 31, 1993. These
financial statements are the responsibility of the Sponsors. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of the securities owned as of October 31,
1995, by correspondence with the Trustee. An audit also includes assessing
the accounting principles used and the significant estimates made by the
Sponsors, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The Municipal Insured
National Trust Tennessee Trust, Series 5 as of October 31, 1995, and the
results of its operations and the changes in its net assets for each of the
two years in the period then ended and for the period from November 18, 1992
(date of deposit) to October 31, 1993, in conformity with generally accepted
accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
January 5, 1996
<PAGE>
THE MUNICIPAL INSURED NATIONAL TRUST, TENNESSEE TRUST, SERIES 5
STATEMENT OF FINANCIAL CONDITION
October 31, 1995
<TABLE>
<CAPTION>
TRUST PROPERTY
<S> <C>
Investments in municipal bonds at market
value (amortized cost $1,905,875)
(Note (a) and Notes to Portfolio (4) and (5)) $2,029,265
Accrued interest receivable 36,617
__________
2,065,882
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND NET ASSETS
<S> <C> <C>
Cash overdraft 10,553
Accrued liabilities 478
__________
11,031
__________
Net assets:
Balance applicable to 1,997 units of
fractional undivided interest
outstanding (Notes (c) and (d)):
Capital, plus net unrealized market
appreciation of $123,390 $2,029,265
Undistributed principal and net
investment income (Note (b)) 25,586
__________
Net assets $2,054,851
==========
</TABLE>
[FN]
See accompanying notes.
<PAGE>
THE MUNICIPAL INSURED NATIONAL TRUST, TENNESSEE TRUST, SERIES 5
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the
period from
November 18,
1992, (date
For the year of deposit)
ended October 31, to October 31,
1995 1994 1993
<S> <C> <C> <C>
Investment income - interest $126,094 125,897 117,420
Less: Expenses
Trustee's fees and expenses 2,189 2,320 2,038
Evaluator's fees 1,000 981 815
Sponsor's fees 500 500 467
Insurance premiums 2,848 2,848 2,713
Audit fees 1,500 1,500 -
________________________________
Total expenses 8,037 8,149 6,033
________________________________
Investment income - net 118,057 117,748 111,387
Net gain (loss) on investments:
Realized gain (loss) on securities
sold or redeemed - - -
Increase (decrease) in net unrealized
appreciation/depreciation 104,869 (170,129) 188,650
________________________________
Net gain (loss) on investments 104,869 (170,129) 188,650
________________________________
Net increase (decrease) in net
assets resulting from operations $222,926 (52,381) 300,037
=================================
</TABLE>
[FN]
See accompanying notes.
<PAGE>
THE MUNICIPAL INSURED NATIONAL TRUST, TENNESSEE TRUST, SERIES 5
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the
period from
November 18,
1992, (date
For the year of deposit)
ended October 31, to October 31,
1995 1994 1993
<S> <C> <C> <C>
Operations:
Investment income - net $ 118,057 117,748 111,387
Realized gain (loss) on securities
sold or redeemed - - -
Increase (decrease) in net unrealized
appreciation/depreciation 104,869 (170,129) 188,650
__________________________________
Net increase (decrease) in net assets
resulting from operations 222,926 (52,381) 300,037
Unit redemptions (3 in 1995):
Principal portion (3,000) - -
Net interest accrued (31) - -
__________________________________
(3,031) - -
Less: Distributions to Unit Holders:
Investment income - net (115,510) (118,322) (77,857)
__________________________________
Total distributions (115,510) (118,322) (77,857)
__________________________________
Net increase (decrease) in net assets 104,385 (170,703) 222,180
Net assets:
Beginning of period 1,950,466 2,121,169 1,898,989
__________________________________
End of period (including undistributed
net investment income of $25,586,
$28,576 and $31,459, respectively) $2,054,851 1,950,466 2,121,169
===================================
</TABLE>
[FN]
See accompanying notes.
<PAGE>
THE MUNICIPAL INSURED NATIONAL TRUST, TENNESSEE TRUST, SERIES 5
NOTES TO FINANCIAL STATEMENTS
October 31, 1995
(a) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Trust is registered under the Investment Company Act of 1940 as a Unit
Investment Trust. The following is a summary of the significant accounting
policies of the Trust:
(1) Investments
Investments are stated at market value, as determined by the Evaluator
based on the bid side evaluations on the last day of trading during the
period.
(2) Income Taxes
The Trust is not an association taxable as a corporation for Federal
income tax purposes; accordingly, no provision is required for such
taxes.
(b) DISTRIBUTIONS
Interest received by the Trust is distributed to the Unit Holders either
semiannually on the 25th day of June and December, or if elected by the Unit
Holder, on the 25th day of each month, after deducting applicable expenses.
Receipts other than interest are distributed as explained in "Rights of Unit
Holders - Distribution of Interest and Principal" in Part II of this
Prospectus.
(c) ORIGINAL COST TO INVESTORS
The original cost to investors represents the aggregate initial public
offering price as of the date of deposit (November 18, 1992) exclusive of
accrued interest, computed on the basis set forth under "Public Offering -
Offering Price" in Part II of this Prospectus.
A reconciliation of the original cost of units to investors to the net amount
applicable to investors as of October 31, 1995 follows:
<TABLE>
<S> <C>
Original cost to investors $1,996,829
Less: Gross underwriting commissions (sales charge) (97,840)
__________
Net amount invested 1,898,989
Cost of securities sold or redeemed -
Net unrealized market appreciation 123,390
Accumulated interest accretion 6,886
__________
Net amount applicable to investors $2,029,265
==========
</TABLE>
<PAGE>
(d) OTHER INFORMATION
Selected data for a unit of the Trust:
Net assets as of October 31, 1995 represented by:
<TABLE>
<CAPTION>
Monthly Semiannual
Distribu- Distribu-
tion Plan tion Plan Total
<S> <C> <C> <C>
Value of fractional undivided interest $1,947,972 $81,293 $2,029,265
Undistributed net investment income 23,070 2,516 25,586
___________________________________
Total value $1,971,042 $83,809 $2,054,851
===================================
Units outstanding 1,917 80 1,997
===================================
Value per unit $1,028.19 $1,047.61
======================
</TABLE>
<TABLE>
<CAPTION>
For the period from
November 18, 1992
For the year (date of deposit)
ended October 31, to October 31,
1995 1994 1993
<S> <C> <C> <C>
Distributions per Unit:
Interest:
Monthly plan $57.72 59.16 39.73
Seminannual plan 59.68 58.20 20.65
</TABLE>
<PAGE>
THE MUNICIPAL INSURED NATIONAL TRUST, TENNESSEE TRUST, SERIES 5
PORTFOLIO
October 31, 1995
<TABLE>
<CAPTION>
Optional
Portfolio Rating Face Coupon Maturity Sinking Fund Refunding Market
Number Title of Securities (1) Amount Rate Date Redemptions (3) Redemptions (2) Value (4)(5)
<C> <S> <C> <C> <C> <C> <C> <C> <C>
1. The Health and Educational
Facilities Board of The City
of Bristol, Tennessee, Hospital
Revenue Bonds, Series 1991
(Bristol Memorial Hospital)
(FGIC Insured) (7) AAA $ 300,000 7.000% 09/01/21 09/01/12 @ 100 S.F. 03/01/01 @ 102 $ 340,653
2. The Health, Educational and
Housing Facilities Board of
the County of Knox (Tennessee)
Fort Sanders Alliance
Obligated Group Taxable Notes,
Series 1990B (MBIA Insured) (7) AAA 300,000 7.000 01/01/15 01/01/09 @ 100 S.F. 01/01/00 @ 102 334,953
3. The Industrial Development
Board of the Metropolitan
Government of Nashville and
Davidson County (Tennessee)
Mortgage Revenue Refunding
Bonds, Pebble Creek Apartments,
Series 1992 (FHA Insured) AAA 350,000 6.750 07/01/27 07/01/03 @ 100 S.F. 07/01/02 @ 103 356,916
4. The Industrial Development
Board of the County of Knox
(Tennessee) Industrial
Development Refunding Revenue
Bonds (Station Eighty-Two #4,
Ltd. Project), Series 1991B (7) Aaa(6) 150,000 0.000 02/01/16 None None 40,685
5. Tennessee State School Bond
Authority Higher Educational
Facilities Bonds, 1992 Series A AA 350,000 6.250 05/01/22 05/01/18 @ 100 S.F. 05/01/02 @ 101.5 360,598
6. Puerto Rico Public Buildings
Authority Public Education
and Health Facilities Bonds,
Series L (7) AAA 250,000 6.875 07/01/21 07/01/13 @ 100 S.F. 07/01/02 @ 101.5 286,706
7. City of Cleveland, Tennessee,
General Public Improvement
Bonds, Series 1992 A 300,000 6.300 10/01/12 None 10/01/99 @ 102 308,754
__________ __________
$2,000,000 $2,029,265
========== ==========
</TABLE>
[FN]
See notes to portfolio.
<PAGE>
NOTES TO PORTFOLIO
(1) All ratings are by Standard & Poor's Corporation unless otherwise
indicated. A brief description of applicable Security ratings is given
under "Description of Bond Ratings" in Part II of this Prospectus.
(2) There is shown under this heading the date on which each issue of
Securities is redeemable by the operation of optional call provisions
and the redemption price for that date; unless otherwise indicated, each
issue continues to be redeemable at declining prices thereafter but not
below par. Securities listed as noncallable, as well as Securities
listed as callable, may also be redeemable at par under certain
circumstances from special redemption payments.
(3) There is shown under this heading the date on which an issue of
Securities is subject to scheduled sinking fund redemption and the
redemption price for that date.
(4) The market value of the Securities as of October 31, 1995 was determined
by the Evaluator on the basis of bid side evaluations for the Securities
at that date.
(5) At October 31, 1995, the net unrealized market appreciation of all
Securities was comprised of the following:
<TABLE>
<S> <C>
Gross unrealized market appreciation $123,390
Gross unrealized market depreciation -
_________
Net unrealized market appreciation $123,390
=========
</TABLE>
The aggregate amortized cost of the Securities for Federal income tax
purposes was $1,905,875 at October 31, 1995.
(6) Rating by Moody's Investors Service, Inc.
(7) The Issuers of Portfolio Numbers 1, 2, 4 and 6 have indicated that they
will refund these Securities on their optional redemption dates. The
Bonds are secured by, and payable from, escrowed U.S. Government
securities.
* For the meaning of the ratings, see "Description of Bond Ratings"
in Part II of this Prospectus.
The Municipal Insured National Trusts
PROSPECTUS, PART II
Dated July 31, 1995
Note: Part II of this Prospectus may not be distributed unless
accompanied by Part I.
THE TRUSTS
The Municipal Insured National Trusts and the various state trusts
are series of similar but separate unit investment trusts designated
as The Municipal Insured National Trust (the "M.I.N.T. Series"),
M.I.N.T. Discount Trust (the "Discount Series"), M.I.N.T. Short-Intermediate
Trust (the "Short-Intermediate Series"), M.I.N.T. Long-Intermediate
Trust (the "Long-Intermediate Series"), MINT Balanced Maturity
Trust, Florida Trust, Georgia Trust, New Jersey Trust and Tennessee
Trust (the Florida, Georgia, New Jersey and Tennessee Trusts,
collectively the "State Series"). Each individual series of the
M.I.N.T. Series, Discount Series, Short-Intermediate Series, Long-Intermediate
Series and the State Series, hereinafter referred to as a "Trust",
was created under the laws of the State of New York by a Trust
Indenture and Agreement (the "Agreement"), dated the Date of Deposit
as set forth in the "Summary of Essential Financial Information"
in Part I of the Prospectus relating to each Trust, among J. C.
Bradford & Co., Glickenhaus & Co. and Raymond James & Associates,
Inc. as sponsors (the "Sponsors"), The Bank of New York, as trustee
(the "Trustee"), and Muller Data Corporation, as evaluator (the
"Evaluator"). The Bank of New York acts as successor trustee of
M.I.N.T. Series 1 through M.I.N.T. Series 10 and acts as Trustee
of M.I.N.T. Series 11 and subsequent M.I.N.T. Series and all Discount
Series, Short-Intermediate Series, Long-Intermediate Series and
the State Series. On the Date of Deposit for each Trust, the Sponsors
deposited with the Trustee delivery statements relating to contracts
for the purchase of obligations (the "Bonds" or "Securities")
which Bonds comprise the portfolio of each such Trust.
Portfolios
The objective of the Trusts is to obtain Federal tax-exempt interest
income and, in the case of State Trusts, where applicable, state
tax-exempt interest income through an investment in a fixed and
insured portfolio of municipal bonds, issued by or on behalf of
states, counties, territories, possessions or municipalities of
the United States or authorities or political subdivisions thereof.
The primary purpose of the Discount Series is to secure automatic
compounding of accrued income that deep discount bonds provide.
Each Trust in the Discount Series contains Bonds that were acquired
at prices which resulted in such Trust portfolio, as a whole,
being purchased at a significant discount from par value due to
original issue discount, market discount, or the inclusion of
zero coupon bonds. The Short-Intermediate Series contain Bonds
which mature within approximately 2 to 8 years from the Date of
Deposit (or Bonds which are subject to mandatory redemption by
or mandatory put to the issuers of such Bonds within such approximate
2 to 8 year period). The Long-Intermediate Series contain Bonds
which mature within 8 to 12 years from the Date of Deposit (or
Bonds which are subject to mandatory redemption by or mandatory
put to the issuers of such Bonds within such approximate 8 to
12 year period). No assurance can be given that the Trusts' objectives
will be achieved because they are each subject to the continuing
ability of the insurer for each Trust(1) and of the respective issuers
of the Bonds in each Trust to meet their obligations. In addition,
an investment in such portfolio can be affected by fluctuations
in interest rates. Insurance guaranteeing the payment of all principal
(either at the stated maturity or by any advancement of maturity
pursuant to a mandatory sinking fund payment) and interest on
each of the Bonds in a Trust as such payment shall become due
but shall not be paid has been obtained by each Trust from the
insurer. Certain Bonds in a Trust may also be insured by insurance
obtained by the issuers of such Bonds or by other parties ("Pre-insured
Bonds"). Insurance obtained by a Trust is effective only while
the bonds thus insured are held in such Trust; however, any insurance
previously obtained by the issuer or any other party, for which
a single premium has been paid, is effective so long as the Pre-insured
Bonds are outstanding. No representation is made as to any insurer's
ability to meet its commitments.
________________
(1) Municipal Bond Insurance Association is the insurer for M.I.N.T.
Series 1 through Series 15. Municipal Bond Investors Assurance
Corporation is the insurer for M.I.N.T. Series 16 and subsequent
Series, Long Intermediate Series 1 and subsequent Long Intermediate
Series, MINT Balanced Maturity Trust Series 1 and subsequent MINT
Balanced Maturity Series and the State Series. See "The Trusts-Insurance
on the Bonds".
Page 1
Neither the Public Offering Price nor any evaluation of Units
for purposes of repurchases or redemptions reflects any element
of value for the insurance obtained by a Trust unless Bonds are
in default in payment of principal or interest, or in the Sponsors'
opinion, in significant risk of such default. See "Public Offering-Offering
Price". On the other hand, the value, if any, of insurance obtained
by the issuer of the Bonds or other parties for which a single
premium has been paid is reflected and included in the market
value of such Bonds.
Insurance is not a substitute for the basic credit of an issuer,
but supplements the existing credit and provides additional security
therefor. If an issue is accepted for insurance, a non-callable
policy for the payment of interest and principal on the Bonds
is issued by the insurer for that Trust. A single premium is paid
by the issuer or other parties for insurance on Pre-insured Bonds,
and a monthly premium is paid by a Trust for the insurance it
obtains from the insurer for such Trust on the Bonds in such Trust
that are not pre-insured by either Municipal Bond Insurance Association
or Municipal Bond Investors Assurance Corporation. No premium
will be paid by a Trust on Bonds pre-insured by either Municipal
Bond Insurance Association or Municipal Bond Investors Assurance
Corporation. Pursuant to an irrevocable commitment of the insurer
for each Trust, upon the sale of a Bond from such Trust, the Trustee
has the right to obtain permanent insurance with respect to such
Bond upon the payment of a single predetermined insurance premium
from the proceeds of the sale of such Bond. It is expected that
the Trustee will exercise the right to obtain permanent insurance
for a Bond in a Trust upon instruction from the Sponsors whenever
the value of that Bond insured to its maturity less the applicable
permanent insurance premium and the related custodial fee exceeds
the value of the Bond without such insurance. See "The Trusts-Insurance
on the Bonds".
In view of the Trusts' objectives, the following factors, among
others, were considered in selecting the Bonds: (1) all of the
Bonds are obligations issued by or on behalf of states, counties,
territories, possessions or municipalities of the United States,
or authorities or political subdivisions thereof, so that the
interest on them will be excludable from gross income for Federal
income tax purposes under existing law, (2) the Bonds are diversified
as to purpose of issue, (3) in the opinion of the Sponsors, the
Bonds were fairly valued at the Date of Deposit relative to other
bonds of comparable quality and maturity, (4) insurance is available
for the payment of principal and interest on the Bonds, (5) the
existence of market discount or original issue discount as pertains
to the Discount Series, (6) in the case of the Short-Intermediate
Series, an average weighted portfolio maturity of 2 to 5 years
from the Date of Deposit of a Trust and, as to the Bonds therein,
a fixed maturity date within approximately 2 to 8 years from the
Date of Deposit (or, with respect to Bonds subject to mandatory
redemption by or mandatory redemption by or mandatory put to the
issuers of such Bonds, a mandatory redemption date or mandatory
put date within approximately 2 to 8 years from the Date of Deposit),
and (7) in the case of the Long-Intermediate Series, an average
weighted portfolio maturity of 10 to 15 years from the Date of
Deposit of a Trust and, as to the Bonds therein, a fixed maturity
date within approximately 8 to 12 years from the Date of Deposit
(or, with respect to Bonds subject to mandatory redemption by
or mandatory put to the issuers of such Bonds, a mandatory redemption
date or mandatory put date within approximately 8 to 12 years
from the Date of Deposit). Subsequent to the Date of Deposit of
a Trust, a Bond may cease to be rated or its rating may be reduced.
Neither event requires an elimination of such Bond from the portfolio,
but may be considered in the Sponsors' determination to direct
the Trustee to dispose of the Bonds. See "Sponsors-Responsibility".
An investment in Units of a Trust should be made with an understanding
of the risks entailed in investments in fixed-rate bonds, including
the risk that the value of such bonds (and, therefore of the Units)
will decline with increases in interest rates. Inflation and recession,
as well as measures implemented to address these and other economic
problems, contribute to fluctuations in interest rates and the
values of fixed-rate bonds generally. The Sponsors cannot predict
future economic policies or their consequences; nor, therefore,
can they predict the course or extent of such fluctuations in the future.
Considerations
Because certain of the Bonds may from time to time under certain
circumstances be sold or redeemed or will mature in accordance
with their terms and the proceeds from such events will be distributed
to Unit holders and will not be reinvested, no assurance can be
given that a Trust will retain for any length of time its
Page 2
present size and composition. Except as described in footnotes
to "Summary of Essential Financial Information", in Part I of
the Prospectus, interest accrues to the benefit of Unit holders
commencing with the expected date of settlement for purchase of
the Units. Neither the Sponsors nor the Trustee shall be liable
in any way for any default, failure or defect in any Bond.
An expected economic effect of investing in the Discount Series
is that the investor who purchases Units at the Public Offering
Price and holds such Units until maturity or redemption of the
underlying Bonds will receive the offering yield on his investment
as well as on all earned discount attributed to those Bonds for
the date of purchase through the life of the Discount Series.
The offering yield reflects current market conditions relating
to interest rates on comparable debt offerings. The assumed or
implicit automatic reinvestment of the portion of the yield represented
by earned discount of market discount and/or zero coupon bonds
differentiates the Discount Series from trusts comprised solely
of customary securities on which periodic interest is paid at
market rates existing at the time of issue. Accordingly, an investor
in the Units of the Discount Series, unlike an investor in a trust
comprised solely of customary securities, lessens his risk of
being unable to invest distributions at a rate as high as the
yield on the Discount Series, but may forego the ability to reinvest
fully at higher rates in the future. See "The Trusts-Estimated
Current and Long Term Return to Unit Holders".
Factors Affecting the Issuers of Bonds
If during the term of a Trust any agency or municipality experiences
financial difficulties, or if there should be a financial crisis
relating to a state, county, territory, possession or municipality
of the United States, or authorities or political subdivisions
thereof, the market price and marketability of outstanding Bonds
in such Trust, and therefore the value of Units of such Trust
could be adversely affected. If a Trust is required to sell Bonds
of issuers experiencing such financial difficulties in order to
meet redemption obligations, such Bonds may have to be sold at
a discount from the initial purchase price by such Trust. See
"Rights of Unit Holders-Redemption-Tender of Units" and "Sponsors-
Responsibility".
The Sponsors believe the information summarized below describes
some of the more significant considerations relating to the Bonds
in the Trusts. The sources of such information include official
statements of the issuers as well as other publicly available
documents. The Sponsors have not independently verified any of
the information contained in such official statements and other
publicly available documents and are not aware of any facts which
would render such information inaccurate. Certain circumstances
may adversely affect the ability of such issuers to make payment
of principal and interest on Bonds held in the portfolio of a
Trust or may adversely affect the ratings of such Bonds. Standard
& Poor's Corporation ("Standard & Poor's") has assigned a rating
of AAA to the Units of each Trust and a rating of AAA to the Units
and the Bonds in all Discount Series, Short-Intermediate Series,
Long-Intermediate Series and the State Series and in M.I.N.T.
Series 7 and subsequent M.I.N.T. Series, and Moody's Investors
Service ("Moody's") has assigned a rating of Aaa to the Bonds
in each Trust. Because of the insurance obtained by the Sponsors
or by the issuers, however, such changes should not adversely
affect a Trust's receipt of principal and interest, or the ratings
of the Bonds or the Units in a Trust. An investment in Units of
a Trust should be made with an understanding of the risks that
such an investment may entail, certain of which are described below.
General Obligation Bonds
General obligation bonds are secured by the issuer's pledge of
its faith, credit and taxing power for the payment of principal
and interest. The taxing power of any governmental entity may
be limited, however, by provisions of state constitutions or laws,
and an entity's credit will depend on many factors, including
potential erosion of the tax base due to population declines,
natural disasters, declines in the state's industrial base or
inability to attract new industries, economic limits on the ability
to tax without eroding the tax base, state legislative proposals
or voter initiatives to limit ad valorem real estate property
taxes and the extent to which the entity relies on Federal or
state aid, access to capital markets or other factors beyond the
state or entity's control.
Page 3
Appropriations Bonds
Many state or local governmental entities enter into lease purchase
obligations as a means of financing the acquisition of capital
projects (e.g. buildings or equipment among other things). Such
obligations are often made subject to annual appropriations. Certain
Bonds in a Trust may be Bonds that are, in whole or in part, subject
to and dependent upon (i) the governmental entity making appropriations
from time to time or (ii) the continued existence of special temporary
taxes which require legislative action for their reimposition.
The availability of any appropriation generally is subject to
the willingness of the governmental entity to continue to make
such special appropriations or to reimpose such special taxes.
The obligation to make lease payments generally exists only to
the extent of the monies available to the governmental entity
therefor, and no liability is incurred by the governmental entity
beyond the monies so appropriated. Subject to the foregoing, once
an annual appropriation is made, the governmental entity's obligation
to make lease rental payments generally is absolute and unconditional
without setoff or counterclaim, regardless of contingencies, whither
or not a given project is completed or used by the governmental
entity and notwithstanding any circumstances or occurrences which
might arise. In the event of non-appropriation, bond owners' sole
remedy (absent credit enhancement) generally is limited to repossession
of the collateral for resale or releasing, and the obligation
of the governmental lessee is not backed by a pledge of the general
credit of the governmental lessee. In the event of non-appropriation,
the Sponsors may instruct the Trustee to sell such Bonds.
Moral Obligation Bonds. Certain of the Bonds in a Trust may be
secured by pledged revenues and additionally by the so-called
"moral obligation" of the state or local governmental body. Should
the pledged revenues prove insufficient, provisions for the payment
of such Bonds is not a legal obligation of the state or local
government, and is subject to its willingness to appropriate funds
therefor.
Revenue Bonds
Single Family Housing Bonds and Multifamily Housing Bonds. Single
family housing bonds and multifamily housing bonds are obligations
of state and local housing authorities that have been issued in
connection with a variety of single and multifamily housing projects.
Economic developments, including fluctuations in interest rates,
increasing construction and operating costs, increasing real estate
taxes and declining occupancy rates, and investment risks may
have an adverse effect upon the revenues of such projects and
such housing authorities. Multifamily housing bonds may be subject
to mandatory redemption prior to maturity, including redemption
from non-completion of the project or upon receipt of FHA or certain
other insurance proceeds. Certain housing bonds used in the Trusts
may also be secured by GNMA certificates or be guaranteed by the
U. S. Government. Bonds issued by state or local units or authorities
and payable from revenues from single family residential mortgages
may be subject to mandatory redemption prior to maturity, including
redemption from mortgage loan prepayments and undisbursed bond
proceeds reserved for the purpose of purchasing mortgage loans.
Housing bonds may also be subject to changes in creditworthiness
due to potential weaknesses or mortgage insurance companies providing
various policies, fluctuations in the valuation of invested funds
and in the strengths of banks and other entities which may provide
investment agreements and smaller than expected mortgage portfolios
due to partial non-origination.
Single family housing bonds and multifamily housing bonds must
meet certain requirements in order to maintain their exemption
from Federal income taxation after the date of their issuance.
The Internal Revenue Code of 1986, as amended (the "Code"), provides,
in general, that interest on "mortgage revenue bonds" (generally
those obligations of which all or a significant portion of the
proceeds are to be used directly or indirectly for mortgages on
owner-occupied residences) issued after December 31, 1980 is not
exempt from Federal income taxation unless the bonds are part
of a "qualified mortgage issue" wherein certain requirements are
and will continue to be met with respect to the terms, amount
and purpose of the bonds, the use of the funds generated by the
issue, the nature of the residences and the mortgages, and the
eligibility of the borrower executing the mortgage. In addition,
interest on obligations issued to finance residential rental property
will be exempt from Federal income taxes when the proceeds are
used to finance multifamily rental property and a specified percentage
of the units are occupied by individuals of "low or moderate
Page 4
income". For such Bonds in a Trust, the issuer of the Bonds has
covenanted to comply with the applicable ongoing requirements
and bond counsel to such issuers has issued an opinion that the
interest on the Bonds is exempt from Federal income tax under
existing laws and regulations. There can be no assurances that
the ongoing requirements will be met. The failure to meet these
requirements could cause the interest on such Bonds to become
taxable, possibly retroactive from the date of issuance. The Code
provides relief from noncompliance in certain circumstances if
the issuer corrects any noncompliance occurring after the issuance
of the bonds within a reasonable period after such noncompliance
is first discovered or would have been discovered by the exercise
of reasonable diligence; however, the failure to meet certain
other requirements cannot be cured under the Code. If the interest
on any single family housing bonds or multifamily housing bonds
in a Trust should ultimately be deemed to be taxable, the Sponsors
may instruct the Trustee to sell such Bonds and, since they would
be sold as taxable securities, it is expected that such Bonds
would have to be sold at a substantial discount from current market
price.
Public Power Revenue Bonds.
General problems of the electric utility industry include difficulty
in financing large construction programs during an inflationary
period; restrictions on operations and increased costs and delays
attributable to environmental considerations; the difficulty of
the capital markets in absorbing utility debt and equity securities;
the availability of fuel for electric generation at reasonable
prices, including among other considerations the potential rise
in fuel costs and the costs associated with conversion to alternate
fuel sources such as coal; technical cost factors and other problems
associated with construction, licensing, regulation and operation
of nuclear facilities for electric generation, including among
other considerations the problems associated with the use of radioactive
materials and the disposal of radioactive waste; and the effects
of energy conservation. Certain of the issuers of the Bonds may
own or operate nuclear generating facilities. Federal, state and
municipal governmental authorities may from time to time review
and revise existing, and impose additional requirements governing
the licensing, construction and operation of nuclear power plants.
Each of the problems referred to above could adversely affect
the ability of the issuers of public power revenue bonds to make
payments of principal and/or interest on such bonds. Certain municipal
utilities or agencies may have entered into contractual arrangements
with investor-owned utilities and large industrial users and consequently
may be dependent in varying degrees on the performance of such
contracts of pay of bond debt service.
Health Care Revenue Bonds. Ratings of bonds issued for health
care facilities are sometimes based on feasibility studies that
contain projections of occupancy levels, revenues and expenses.
A facility's gross receipts and net income available for debt
service may be affected by future events and conditions including
among other things, demand for services, the ability of the facility
to provide the services required, physicians' confidence in the
facility, management capabilities, competition with other hospitals,
efforts by insurers and governmental agencies to limit rates,
legislation establishing state rate-setting agencies, expenses,
government regulation, the cost and possible unavailability of
malpractice insurance and the termination of restriction of governmental
financial assistance, including that associated with Medicare,
Medicaid and other similar third party payor programs. Pursuant
to recent Federal legislation, Medicare reimbursements are currently
calculated on a prospective basis utilizing a single nationwide
schedule of rates. Prior to such legislation Medicare reimbursements
were based on the actual costs incurred by the health facility.
The current legislation may adversely affect reimbursements to
hospitals and other facilities for services provided under the
Medicare program.
A number of additional legislative proposals concerning health
care have been introduced in Congress or have been reported to
be under consideration by the Clinton Administration. These proposals
span a wide range of topics, including cost controls, national
health insurance, incentives for competition in the provision
of health care services, tax incentives and penalties related
to health care insurance premiums, and promotion of prepaid health
care plans. The Sponsors are unable to predict the effect of any
of these proposals, if enacted, on any of the Securities.
Higher Education Revenue Bonds. Higher education revenue bonds
include debt of state and private colleges, universities and systems
and parental and student loan obligations. The ability of universities
and colleges
Page 5
to meet their obligations is dependent upon various factors, including
the revenues, costs and enrollment levels of the institutions.
In addition, their ability may be affected by declines in Federal,
state and alumni financial support, fluctuations in interest rates
and construction costs, increase maintenance and energy costs,
failure or inability to raise tuition or room charges and adverse
results of endowment fund investments.
Pollution Control Facility Revenue Bonds. Bonds in the pollution
control facilities category include securities issued on behalf
of a private corporation, including utilities, to provide facilities
for the treatment of air, water and solid waste pollution. Repayment
of these bonds is dependent upon income for the specific pollution
control facility and/or the financial condition of the project
corporation. See also "Industrial Development Bonds".
Other Utility Revenue Bonds. Bonds in this category include securities
issued to finance natural gas supply, distribution and transmission
facilities, public water supply, treatment and distribution facilities
and sewage collection, treatment and disposal facilities. Repayment
of these bonds is dependent primarily on revenues derived from
the billing of residential, commercial and industrial customers
for utility services, as well as, in some instances, connection
fees and hook-up charges. Such utility revenue bonds may be adversely
affected by the lack of availability of Federal and state grants
and by decisions of Federal and state regulatory bodies and courts.
Solid Waste and Resource Recovery Revenue Bonds. Bonds in this
category include securities issued to finance facilities for removal
and disposal of solid municipal waste. Repayment of these bonds
is dependent on factors which may include revenues from appropriations
from a governmental entity, the financial condition of the private
project corporation and revenues derived from the collection of
charges for disposal of solid waste. Repayment of resource recovery
bonds may also be dependent to various degrees on revenues from
the sale of electric energy or steam. Bonds in this category may
be subject to mandatory redemption in the event of project non-completion,
if the project is rendered uneconomical or if it is considered
an environmental hazard.
Transportation Revenue Bonds. Bonds in this category include bonds
issued for airport facilities, bridges, turnpikes, port authorities,
railroad systems or mass transit systems. Generally, airport facility
revenue bonds are payable from and secured by the revenues derived
from the ownership and operation of a particular airport. Payment
on other transportation bonds is often dependent primarily or
solely on revenues from financed facilities, including user fees,
charges, tolls and rents. Such revenues may be adversely affected
by increased construction and maintenance costs or taxes, decreased
use, competition from alternative facilities, scarcity of fuel,
reduction or loss of rents or the impact of environmental considerations.
Other transportation bonds may be dependent primarily or solely
on Federal, state or local assistance including motor fuel and
motor vehicle taxes, fees, and licenses and therefore may be subject
to fluctuations in such assistance.
Industrial Development Bonds ("IDBs"). IDBs are tax-exempt securities
issued by states, municipalities or public authorities and are
issued to provide funds, usually through a loan or lease arrangement,
to a private corporation, partnership or individual (i.e., a "beneficiary")
for the purpose of financing construction or improvement of a
facility to be used by the beneficiary. The issuer of an IDB is
not obligated to pay the principal of or premium, if any, or interest
on the Bonds or other costs incident thereto, except from the
revenues assigned and pledged by the beneficiary therefor. Such
bonds are secured primarily by revenues derived from loan repayments
or lease payments due from a beneficiary which may or may not
be guaranteed by a parent company or otherwise secured. In view
of this, an investor should be aware of the risks that such an
investment may entail. Continued ability of a beneficiary to generate
sufficient revenues for the payment of principal and interest
on such bonds will be affected by many factors including the size
of the beneficiary, capital structure, demand for products or
services, competition, general economic conditions, government
regulation and the beneficiary's dependence for revenues on the
operation of the particular facility being financed. In addition,
interest on IDBs is excludible from gross income for Federal income
tax purposes provided the issuer and beneficiary continue to meet
certain Code requirements. If the interest on these debt obligations
should ultimately be deemed to be taxable, the Sponsors may instruct
the Trustee
Page 6
to sell them and, since they would be sold as taxable securities,
it is expected that they would have to sold at a substantial discount
from current market prices. Debt of private beneficiaries may
be subject to deterioration in creditworthiness or redemption
in events of mergers, acquisitions, reorganizations or as a result
of adverse court decisions. Such bonds may also be subject to
mandatory redemption upon the determination that the project has
become uneconomical or in the event that the bonds are rendered taxable.
Special Tax Revenue Bonds. Bonds in this category are bonds secured
primarily or solely by receipt of certain state or local taxes,
including sales and use taxes or excise taxes. Consequently, such
bonds may be subject to fluctuations in the collection of such
taxes. Such bonds do not include tax increment bonds or special
assessment bonds.
Other Revenue Bonds. The Trusts may also contain revenue bonds
which are payable from and secured primarily or solely by revenues
from the ownership and operation of particular facilities, such
as correctional facilities, parking facilities, convention centers,
arenas, museums and other facilities owned or used by a charitable
entity. Payment on bonds related to such facilities is, therefore,
primarily or solely dependent on revenues from such projects,
including user fees, charges and rents. Such revenues may be affected
adversely by increased construction and maintenance costs or taxes,
decreased use, competition from alternative facilities, reduction
or loss of rents or the impact of environmental considerations.
Certain of the Bonds in the Trusts are secured by direct obligations
of the U. S. Government, or in some cases obligations guaranteed
by the U. S. Government, placed in an escrow account maintained
by an independent trustee until maturity or a predetermined redemption
date. In a few isolated instances to date, bonds which were thought
to be escrowed to maturity have been called for redemption prior
to maturity.
Puerto Rico Bonds
Certain of the Bonds in the Trusts may be general obligations
and/or revenue bonds of issuers in Puerto Rico which will be affected
by general economic conditions in Puerto Rico. Unemployment, although
at the lowest level since the late 1970's, is high by United States
standards, The average hourly manufacturing wage rate in Puerto
Rico is approximately 55% of the United States mainland rate.
The United States minimum wage laws apply to Puerto Rico. The
Puerto Rican economy, closely integrated with that of the United
States, is dominated by the manufacturing (pharmaceuticals, scientific
instruments, computers, microprocessors, medical products and
electrical products) and service sectors. The Puerto Rican economy
is affected by a number of Commonwealth and Federal investment
incentive programs. For example, Section 936 of the Code provides
a credit against Federal income earned within Puerto Rico by United
States companies operating on the island which qualified under
the rules of Section 936.
To qualify under section 936 in any given taxable year, a corporation
must derive for the three year period immediately preceding the
end of such taxable year (i) 80% or more of its gross income from
sources within Puerto Rico, and (ii) 75% or more of its gross
income must be from the active conduct of a trade or business
in Puerto Rico. Personal income in Puerto Rico includes transfer
payments under various Federal social programs, two-thirds of
which represents entitlements to individuals for services performed
on contributions made under such programs as Social Security.
Total Federal payments to Puerto Rico, including transfer payments,
are lower per capita in Puerto Rico than in any state.
Refunded Bonds
Certain of the Bonds in the Trusts may be bonds which have been
refunded and are secured by an escrow of securities issued, or
guaranteed as to principal and interest, by the United States
in accordance with the bond resolution or indenture. Bonds which
have been refunded are generally no longer entitled to their original
security, including any pledge of revenues or mortgage or security
interest in the facility financed. The escrow for the refunded
Bonds is structured in order to provide for the timely payment
of principal, any applicable redemption premium, and interest
on the refunded Bonds when due.
Page 7
Original Issue Discount and Zero Coupon Bonds
Certain of the Bonds in a Trust may be original issue discount
bonds. These Bonds were issued with nominal interest rates less
than the rates then offered by comparable securities and as a
consequence were originally sold at a discount from their face,
or par, values. This original issue discount, the difference between
the initial purchase price and face value, is deemed under current
law to accrue on a daily basis and the accrued portion is treated
as tax-exempt interest income for federal income tax purposes.
On sale or redemption, gain, if any, realized in excess of the
earned portion of original issue discount will be taxable as ordinary
income. See "Tax Status". The current value of original issue
discount bond reflects the present value of its face amount at
maturity. In a stable interest rate environment, the market value
of an original issue discount bond would tend to increase more
slowly in early years and in greater increments as the bond approached
maturity.
Certain of the original issue discount bonds in a Trust may be
zero coupon bonds. Zero coupon bonds do not provide for the payment
of any current interest; the buyer receives only the right to
receive a final payment of the face amount of the bond at its
maturity. The effect of owning a zero coupon bond is that a fixed
yield is earned not only the original investment but also, in
effect, on all discount earned during the life of the obligation.
This implicit reinvestment of earnings at the same rate eliminates
the risk of being unable to reinvest the income on such obligation
at a rate as high as the implicit yield, but at the same time
also eliminates the holder's ability to reinvest at higher rates
in the future. For this reason, zero coupon bonds are subject
to substantially greater price fluctuations during periods of
changing market interest rates than are securities of comparable
quality that pay interest currently.
Original issue discount bonds, including zero coupon bonds, may
be subject to redemption at prices based on the issue price plus
the amount of original discount accreted to redemption plus, if
applicable, some premium. Pursuant to such call provisions an
original issue discount bond may be called prior to its maturity
date at a price less than its face value.
There can be no assurance that additional Federal legislation
will not be enacted or that existing legislation will not be amended
hereafter with the effect that interest on bonds becomes subject
to Federal income taxation. If the interest on the Bonds should
ultimately be deemed to be taxable, the Trustee may sell them
and, since they would be sold as taxable securities, it is expected
that they would have to be sold at a substantial discount from
current market price.
Investors should be aware that many of the Bonds in the Trusts
are subject to continuing requirements such as the actual use
of Bond proceeds or manner of operation of the project financed
from Bond proceeds that may affect the exemption of interest on
such bonds from Federal income taxation. Although at the time
of issuance of each of the Bonds in the Trusts an opinion of bond
counsel was rendered as to the exemption of interest on such obligations
from Federal income taxation, there can be no assurance that the
respective issuers or other obligors on such obligations will
fulfill the various continuing requirements established upon issuance
of the Bonds. A failure to comply with such requirements may cause
a determination that interest on such obligations is subject to
Federal income taxation, perhaps even retroactively from the date
of issuance of such Bonds, thereby reducing the value of the Bonds
and subjecting Unit holders to unanticipated tax liabilities.
Because certain of the Bonds may from time to time under certain
circumstances be sold or redeemed or will mature in accordance
with their terms and because the proceeds from such events will
be distributed to Unit holders and will not be reinvested, no
assurance can be given that the Trusts will retain for any length
of time their present size and composition. Neither the Sponsors
nor the Trustee shall be liable in any way for any default, failure
or defect in any Bond. Certain of the Bonds in a Trust may be
subject to redemption prior to their stated maturity dates pursuant
to sinking fund or call provisions. A sinking fund is a reserve
fund accumulated over a period of time for retirement of debt.
Such a provision is designed to redeem a significant portion of
an issue gradually over the life of the issue; obligations to
be redeemed are generally chosen by lot. A callable debt obligation
is one which is subject to redemption prior to maturity at the
option of the issuer. To the extent that such obligations were
deposited in a Trust at a price higher than their par value, such
redemption at par would result in a loss of capital to a purchaser
of Units. The estimated current
Page 8
return of the Units of a Trust might also be adversely affected
if the return on the retired Bonds is greater than the average
return on the Bonds in such Trust. Certain of the Bonds in a Trust
may be subject to sinking fund or call provisions early in the
life of such Trust. In general, call provisions are more likely
to be exercised when the offering side valuation is at a premium
over par than when it is at a discount from par. Certain Bonds
in Trusts of the Short-Intermediate Series are subject to mandatory
redemption by or mandatory put to the issuers of such Bonds within
approximately 2 to 8 years from the Date of Deposit. Certain of
the Bonds in Trusts of the Long-Intermediate Series are subject
to mandatory redemption by or mandatory put to the issuers of
such Bonds within approximately 8 to 12 years from the Date of
Deposit. In the case of an obligation subject to mandatory redemption
the obligation is satisfied and no longer extant upon such redemption.
In the case of an obligation subject to mandatory put, however,
the current holder of the obligation is required to sell the obligation
back to its issuer but that obligation is not satisfied, remains
extant and can be resold by the issuer. The portfolio in Part
I of the Prospectus contains a listing of the sinking fund and
call provisions, if any, with respect to each of the Bonds.
An amendment to the Federal Bankruptcy Act relating to the adjustment
of indebtedness owed by any political subdivision or public agency
or instrumentality of any state, including municipalities, became
effective in 1979. Among other things, this amendment facilitates
the use of proceedings under the Federal Bankruptcy Act by any
such entity to restructure or otherwise alter the terms of its
obligations, including those of the type comprising the Trusts'
portfolios. The Sponsors are unable to predict what effect, if
any, this legislation will have on the Trusts.
To the best knowledge of the Sponsors, there is no litigation
pending as of the date of Part I of the Prospectus relating to
each trust in respect of any Bonds in such Trust which might reasonably
be expected to have a material adverse effect upon such Trust.
At any time after the Date of Deposit, litigation may be initiated
on a variety of grounds with respect to Bonds in the Trusts. Such
litigation, as for example, suits challenging the issuance of
pollution control revenue bonds under environmental protection
statutes, may affect the validity of such Bonds or the tax-free
nature of the interest thereon. While the outcome of any such
litigation can never be predicted with certainty, bond counsel
have given opinions to the issuing authorities of each Bond on
the date of issuance to the effect that such Bonds have been validly
issued and that the interest thereon is excludible from gross
income for Federal income tax purposes. In addition, other litigation
or other factors may arise from time to time which potentially
may impair the ability of issuers to meet obligations undertaken
with respect to Bonds.
The Units
Each Unit of a Trust represents the fractional undivided interest
in such Trust set forth in Part I of the Prospectus relating to
such Trust under "Summary of Essential Financial Information"
as of the date of such "Summary of Essential Financial Information".
Thereafter, if any Units of a Trust are redeemed by the Trustee,
the fractional undivided interest in such Trust represented by
each unredeemed Unit will increase, although the actual interest
in such Trust represented by each such Unit will remain essentially
the same. Units of a Trust will remain outstanding until redeemed
upon tender to the Trustee by any Unit holder, which may include
the Sponsors, or until the termination of the Trust Agreement
for such Trust. See "Rights of Unit Holders-Redemption".
Estimated Current and Long Term Return to Unit Holders
Estimated Current Return is computed by dividing the Estimated
Net Annual Interest Income per Unit by the Public Offering Price.
Any change in either the Estimated Net Annual Interest Income
per Unit or the Public Offering Price will result in a change
in the Estimated Current Return. For each Trust, the Public Offering
Price will vary in accordance with fluctuations in the prices
of the underlying Bonds and the Net Annual Interest Income per
Unit will change as Bonds are redeemed, paid, sold or exchanged
in certain refundings or as the expenses of each Trust change.
Therefore, there is no assurance that the Estimated Current Return
indicated in the "Special Trust Information" in Part I for each
Trust will be realized in the future. Estimated Long-Term Return
is calculated using a formula which (1) takes into consideration,
and determines and factors in the relative weightings of, the
market values, yields (which take into account the amortization
of premiums and the accretion of discounts) and estimated retirements
of all of the Bonds in a Trust;
Page 9
(2) takes into account the expenses and sales charge associated
with each Unit of a Trust; and (3) takes into effect the tax-adjusted
yield from potential capital gains at the Date of Deposit. Since
the market values and estimated retirements of the bonds and the
expenses of each Trust will change, there is no assurance that
the Estimated Long-Term Return indicated in the "Special Trust
Information" in Part I for the Trusts will be realized in the
future. The Estimated Long-Term Return assumes that each Bond
is retired on its pricing life date (i.e., that date which produces
the lowest dollar price when yield price calculations are done
for each optional call date and the maturity date of a callable
security). If the Bond is retired on any optional call or maturity
date other than the pricing life date, the yield to the holder
of that Bond will differ from the initial quoted yield. Estimated
Current Return and Estimated Long-Term Return are expected to
differ because the calculation of Estimated Current Return calculations
include only Net Annual Interest Income per Unit and Public Offering
Price. Neither rate reflects the true return to Unit holders which
is lower because neither includes the effect of the delay in the
first payment to Unit holders. The Estimated Long-Term Return
is based on the estimated per Unit cash flow. Estimated cash flows
will vary with changes in fees and expenses, with changes in current
interest rates, and with the principal prepayment, redemption,
maturity, call, exchange or sale of the underlying Bonds. The
Sponsors will provide cash flow information relating to each Trust
without charge to each potential investor in the Trust who receives
this Prospectus and makes an oral or written request to the Sponsors
for such information.
Insurance on the Bonds
For M.I.N.T. Series 1 through M.I.N.T. Series 15.
Insurance guaranteeing the timely payment, when due, of all principal
and interest on the Bonds in the Trusts listed above has been
obtained from Municipal Bond Insurance Association (the "Association")
by such Trusts. The Association has issued a separate policy of
insurance to each of M.I.N.T. Series 1 through 15 covering each
of the Bonds in such Trusts (the "Association Policy"), including
Bonds which may previously have been insured. The insurance obtained
by such Trusts from the Association is only effective as to Bonds
owned by and held in such Trusts. Each Association Policy shall
continue in force only with respect to Bonds held in and owned
by the insured Trust and the Association shall not have any liability
under the policy with respect to any Bonds which do not constitute
part of such insured Trust. In determining to insure the Bonds,
the Association has applied its own standards which correspond
generally to the standards it has established for determining
the insurability of new issues of municipal bonds. By the terms
of its policy, the Association will unconditionally guarantee
to a Trust the payment, when due, required of the issuer of the
Bonds of an amount equal to the principal of and interest on the
Bonds as such payments shall become due but not paid, except that
in the event of any acceleration of the due date of principal
by reason of mandatory or optional redemption (other than in mandatory
sinking fund redemption), default or otherwise, the payments guaranteed
will be made in such amounts and at such times as would have been
due had there not been such acceleration by reason of mandatory
or optional redemption (other than a mandatory sinking fund redemption).
The Association will be responsible for such payments less any
amounts received by a Trust from any trustee for the Bond issuers
or from any other source. The Association Policy does not guarantee
payment on an accelerated basis, the payment of any redemption
premium or the value of the Units. The Association Policy also
does not insure against nonpayment of principal of or interest
on the Bonds resulting from the insolvency, negligence or any
other act or omission of the Trustee or other paying agent for
the Bonds. However, with respect to small issue industrial development
Bonds and pollution control revenue Bonds covered by the Association
Policy, the Association guarantees the full and complete payments
required to be made by or on behalf of an issuer of such Bonds
if there occurs pursuant to the terms of the Bonds an event which
results in the loss of the tax-exempt status of interest on such
Bonds, including principal, interest or premium payments payable
thereon, if any, as and when required to be made by or on behalf
of the issuer pursuant to the terms of such Bonds. No assurance
can be given that the Association Policy would insure the payment
of principal or interest on Bonds which is not required to be
paid by the issuer thereof because the Bonds were not validly
issued. At the respective times of issuance of the Bonds, opinions
relating to the validity thereof were rendered by bond counsel
to the respective issuing authorities. The Association Policy
is non-cancellable and will continue in force so long as a Trust
is in existence and the Bonds described in the policy continue
to be held in and owned by such Trust. Failure to pay premiums
on the Association Policy will not result in the cancellation
Page 10
of insurance but will force the Association to take action against
the Trustee to recover premium payments due it. The Trustee in
turn will be entitled to recover such payments from such Trust.
The Association Policy shall terminate as to any Bond in a Trust
which has been redeemed from or sold by the Trustee or such Trust
on the date of such redemption or on the settlement date of such
sale, and the Association shall not have any liability under the
policy as to any such Bond thereafter. If the date of such redemption
or the settlement date of such sale occurs between a record date
and a date of payment of any such Bond, the Association Policy
will terminate as to such Bond on the business day next succeeding
such date of payment. The Association Policy will terminate as
to all Bonds in a Trust on the date on which the last of the Bonds
in such Trust mature, are redeemed or are sold by such Trust.
Pursuant to an irrevocable commitment of the Association, the
Trustee upon sale of a Bond in a Trust has the right to obtain
permanent insurance with respect to such Bond (i.e., insurance
to maturity of the Bonds) (the "Permanent Insurance") upon the
payment of a single predetermined insurance premium from the proceeds
of the sale of such Bond. Accordingly, any Bond in a Trust is
eligible to be sold on an insured basis. It is expected that the
Trustee will exercise the right to obtain Permanent Insurance
for a Bond in a Trust upon instruction from the Sponsors only
if upon such exercise such Trust would receive net proceeds (sale
of Bond proceeds less the insurance premium attributable to the
Permanent Insurance and the related custodial fee) from such sale
in excess of the sale proceeds if such Bond was sold on an uninsured
basis. The Permanent Insurance premium with respect to each Bond
is determined based upon the insurability of each Bond as of the
Date of Deposit and will not be increased or decreased for any
change in the creditworthiness of such Bond unless such Bond is
in default as to payment of principal and/or interest. In such
event, the Permanent Insurance Premium shall be subject to an
increase predetermined at the Date of Deposit and payable from
the proceeds of the sale of such Bond.
Except as indicated below, insurance obtained by a Trust has no
effect on the price or redemption value of Units thereof. It is
the present intention of the Evaluator to attribute a value to
the insurance obtained by a Trust (including the right to obtain
Permanent Insurance) for the purpose of computing the price or
redemption value of Units thereof only if the Bonds covered by
such insurance are in default in payment of principal or interest
or, in the Sponsors' opinion, in significant risk of such default
("Defaulted Bonds"). The value of the insurance will be equal
to the difference between (i) the market value of a Defaulted
Bond assuming the exercise of the right to obtain Permanent Insurance
(less the insurance premium attributable to the purchase of Permanent
Insurance and the related custodial fee) and (ii) the market value
of such Defaulted Bonds not covered by Permanent Insurance. See
"Public Offering-Offering Price" for a more complete description
of the Evaluator's method of valuing Defaulted Bonds. Insurance
obtained by the issuer of a Bond or by other parties is effective
so long as such Pre-insured Bond is outstanding and the issuer
of such Pre-insured Bond continues to fulfill its obligations.
Regardless of whether the insurer of a Pre-insured Bond continues
to fulfill its obligations, however, such Bond will continue to
be insured under the Association Policy as long as the Bond is
held in a Trust. Insurance obtained by the issuer of a Bond or
by other parties may be considered to represent an element of
market value in regard to the Bonds thus insured, but the exact
effect, if any, of this insurance on such market value cannot
be quantified.
In the event that interest on or principal of a Bond in a Trust
is due for payment but is unpaid by reason of nonpayment by the
issuer thereof, the Association will make payments to its fiscal
agent, Citibank, N.A., New York, New York (the "Fiscal Agent"),
equal to such unpaid amounts or principal and interest not later
than one business day after the Association has been notified
by the Trustee that such nonpayment has occurred (but not earlier
than the date such payment is due). The Fiscal Agent will disburse
to the Trustee the amount of principal and interest which is then
due for payment but is unpaid upon receipt by the Fiscal Agent
of (i) evidence of the Trust's right to receive payment of such
principal and interest and (ii) evidence, including any appropriate
instruments of assignment, that all of the rights to payment of
such principal or interest then due for payment shall thereupon
vest in the Association. Upon payment by the Association of any
principal or interest payments with respect to any Bonds, the
Association shall succeed to the rights of the owner of such Bonds
with respect to such payment.
Page 11
Each insurance company comprising the Association will be severally
and not jointly obligated under the Association Policy in the
following respective percentages: The AEtna Casualty and Surety
Company, 33%; Fireman's Fund Insurance Company, 30%; the Travelers
Indemnity Company, 15%; Cigna Property and Casualty Company (formerly
AEtna Insurance Company), 12%; and The Continental Insurance Company,
10%. As a several obligor, each such insurance company will be
obligated only to the extent of its percentage of any claim under
the Association Policy and will not be obligated to pay any unpaid
obligations of any other member of the Association. Each insurance
company is a multiline insurer involved in several lines of insurance
other than municipal bond insurance, and the assets of each insurance
company also secure all of its other insurance policy and surety
bond obligations.
The following table sets forth unaudited financial information
with respect to the five insurance companies comprising the Association.
The statistics, which have been furnished by the Association,
are as reported by the insurance companies to the New York State
Insurance Department and are determined in accordance with statutory
accounting principles. 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 date thereof. In addition, these numbers are subject to revision
by the New York State Insurance Department which, if revised,
could either increase or decrease the amounts. The Sponsors are
not aware that the information herein is inaccurate or incomplete
as of the date hereof.
<TABLE>
<CAPTION>
MUNICIPAL BOND INSURANCE ASSOCIATION FIVE INSURANCE COMPANIES
ASSETS, LIABILITIES AND POLICY HOLDERS' SURPLUS AS OF
SEPTEMBER 30, 1994 (000's omitted)
New York New York New York
Statutory Statutory Policyholders'
Assets Liabilities Surplus
_________ ___________ _____________
<S> <C> <C> <C>
The Aetna Casualty & Surety Co. $10,030,200 $ 8,275,300 $ 1,754,900
Fireman's Fund Insurance Company 6,815,775 4,904,534 1,911,241
The Travelers Indemnity Co. 10,295,359 8,515,392 1,779,967
Cigna Property and Casualty Co.
(Formerly Aetna Insurance Co.) 5,112,251 4,842,235 270,016
The Continental Insurance Company 2,794,536 2,449,805 344,731
----------- ----------- -----------
Total $35,048,121 $28,987,266 $ 6,060,855
=========== =========== ===========
</TABLE>
Standard & Poor's has assigned to the Units in each Trust a rating
of AAA and has assigned to the Bonds in each Discount Series,
Short-Intermediate Series and Long-Intermediate Series and in
M.I.N.T. Series 7 and subsequent M.I.N.T. Series a rating of AAA,
and Moody's has assigned a rating of "Aaa" to the Bonds in each
Trust, as insured, only while such Bonds are held in such Trust.
Also for Trusts for which Association Policies have been obtained
these ratings reflect Standard & Poor's and Moody's current assessment
of the creditworthiness of the Association and its ability to
pay claims on its policies of insurance. The Association's principal
offices are located at 113 King Street, Armonk, New York 10504.
Some of the shareholders of MBIA Inc. are among the members of
the Association. MBIA Inc. is the parent of the Municipal Bond
Investors Assurance Corporation (the "Corporation"). The Corporation
commenced municipal bond insurance operations on January 5, 1987.
The Corporation is a separate and distinct entity from the Association.
THE CORPORATION HAS NO LIABILITY TO THE BONDHOLDERS FOR THE OBLIGATIONS
OF THE ASSOCIATION UNDER ANY ASSOCIATION POLICY.
The contract of insurance relating to each Trust, certain agreements
relating to the Permanent Insurance and the negotiations in respect
thereof represent the only significant relationship between the
Association and each Trust. Otherwise, neither the Association
nor any associate thereof has any material business relationship,
direct or indirect, with any Trust or the Sponsors, except that
the Sponsors may from time to time in the future, in the normal
course of their business, participate as underwriters or as managers
or as members
Page 12
of underwriters or as managers or as member of underwriting syndicates
in the distribution of new issues of municipal bonds for which
a policy of insurance guaranteeing the payment of interest and
principal has been obtained from the Association. Although all
issues contained in the Trusts are individually insured, neither
the Trusts nor the Units are insured directly by the Association.
A purpose of the insurance on the Bonds obtained by the Trusts
is to obtain a higher degree of safety on each Trust's portfolio
than would be available if all the Bonds in such portfolio had
Standard & Poor's AAA rating and/or Moody's Aaa rating but were
uninsured and yet, at the same time, to have the protection of
insurance of payment of interest and principal on the Bonds. There
is, of course, no certainty that this result will be achieved.
Any Pre-insured Bonds in a Trust (all of which are rated AAA by
Standard & Poor's and/or Moody's), may or may not have a higher
yield than uninsured bonds rated AAA by Standard & Poor's and/or
Aaa by Moody's.
Because the Bonds are insured by the Association as to the payment
of principal and interest, Standard & Poor's has assigned a AAA
investment rating to the Units of each Trust and a rating of AAA
to the Units and the Bonds in each Discount Series, Short-Intermediate
Series and Long-Intermediate Series and in M.I.N.T. Series 7 and
subsequent M.I.N.T. Series, and Moody's has assigned a rating
of Aaa to the Bonds in every Trust. The obtaining of these should
not be construed as an approval of the offering of the Units by
Standard & Poor's or Moody's or as a guarantee of the market value
of the Trusts or of the Units. These ratings are not a recommendation
to buy, hold or sell and do not take into account the extent to
which a Trust's expenses or sales of portfolio assets for less
than the Trust's acquisition price will reduce payment to the
Unit holders of the interest or principal.
For M.I.N.T. Series 16 and subsequent M.I.N.T. Series, Long-Intermediate
1 and subsequent Long-Intermediate Series, MINT Balanced Maturity
Series 1 and subsequent MINT Balanced Maturity Series and the State Series.
Insurance guaranteeing the timely payment, when due, of all principal
and interest on the Bonds in the Trust listed above has been obtained
from Municipal Bond Investors Assurance Corporation (the "Corporation")
by such Trusts. The Corporation has issued a separate policy of
insurance to each trust beginning with M.I.N.T. Series 16, Discount
Series 5, Short-Intermediate Series 3, Long-Intermediate Series
1, and the State Series covering each of the Bonds in such Trust
(the "Corporation Policy"), including Bonds which may previously
have been insured. The insurance obtained by each Trust from the
Corporation is only effective as to Bonds owned by and held in
such Trust and, consequently, does not cover Bonds for which the
contract for purchase fails. The Corporation Policy shall continue
in force only with respect to Bonds held in and owned by a Trust,
and the Corporation shall not have any liability under the policy
with respect to any Bonds which do not constitute part of such
Trust. In determining to insure the Bonds, the Corporation has
applied its own standards which correspond generally to the standards
it has established for determining the insurability of new issues
of municipal bonds.
By the terms of its policy, the Corporation will unconditionally
guarantee to each Trust the payment when due, required of the
issuer of the Bonds held in such Trust of an amount equal to the
principal of and interest on such Bonds as such payments shall
become due but are not paid, except that in the event of any acceleration
of the due date of principal by reason of mandatory or optional
redemption (other than in mandatory sinking fund redemption),
default or otherwise, the payments guaranteed will be made to
the related Trust in such amounts and at such times as would have
been had there not been such acceleration by reason of mandatory
or optional redemption (other than a mandatory sinking fund redemption).
The Corporation will be responsible for such payments less any
amounts received by a Trust from any Trustee for the Bond issuers
or from any other source. The Corporation Policy also does not
insure against nonpayment of principal of or interest on the Bonds
resulting from the insolvency, negligence or any other act or
omission of the Trustee or other paying agent from the Bonds.
However, with respect to small issue industrial development Bonds
and pollution control revenue Bonds covered by the Corporation
Policy obtained by a Trust, the Corporation guarantees the full
and complete payments required to be made to such Trust by or
on behalf of an issuer of such Bonds if there occurs pursuant
to the terms of the Bonds an event which results in the loss of
the tax-exempt status of interest on such, including principal,
interest or premium
Page 13
payments payable thereon, if any, as and when required to be made
by or on behalf of the issuer pursuant to the terms of such Bonds.
No assurance can be given that the Corporation Policy would insure
the payment of principal or interest on Bonds which is not required
to be paid by the issuer thereof because the Bonds were not validly
issued. At the respective times of issuance of the bonds, opinions
relating to the validity thereof were rendered by bond counsel
to the respective issuing authorities. The Corporation Policy
is non-cancellable and will continue in force so long as the related
Trust is in existence and the Bonds described in the Corporation
Policy continue to be held in and owned by such Trust. Failure
to pay premiums on the Corporation Policy obtained by a Trust
will not result in the cancellation of insurance but will force
the Corporation to take action against the Trustee to recover
premium payments due it. The Trustee in turn will be entitled
to recover such payments from related Trust.
The Corporation Policy obtained by a Trust shall terminate as
to any Bonds which have been redeemed from or sold by the Trustee
or such Trust on the date of such redemption or on the settlement
date of such sale, and the Corporation shall not have any liability
under such policy as to any such Bonds thereafter. If the date
of such redemption or the settlement date of such sale occurs
between a record and a date of payment of any such bond, the Corporation
Policy will terminate as to such Bonds on the business day next
succeeding such date of payment. The termination of the Corporation
Policy as to any Bond shall not affect the Corporation's obligations
regarding any other Bond in such Trust or any other Trust which
has obtained a Corporation Policy. The Corporation Policy obtained
by a Trust will terminate as to all Bonds therein on the date
on which the last of such Bonds mature, are redeemed or are sold
by such Trust. Pursuant to an irrevocable commitment of the Corporation,
the Trustee upon the sale of a Bond in a Trust has the right to
obtain permanent insurance with respect to such Bond (i.e., insurance
to maturity of the Bonds) (the "Permanent Insurance") upon the
payment of a single predetermined insurance premium from the proceeds
of the sale of such Bonds. Accordingly, any Bond in a Trust is
eligible to be sold on an insured basis. It is expected that the
Trustee will exercise the right to obtain Permanent Insurance
for a Bond in a Trust upon instruction from the Sponsors only
if upon such exercise such Trust would receive net proceeds (sale
of Bond proceeds less the insurance premium attributable to the
Permanent Insurance and the related custodial fee) from such sale
in excess of the sale proceeds if such Bond were sold on an uninsured
basis. The Permanent Insurance premium with respect to each Bond
is determined based upon the insurability of each Bond as of the
Date of Deposit for such and will not be increased or decreased
for any change in the creditworthiness of such Bond unless such
Bond is in default as to payment of principal and/or interest.
In such event, the Permanent Insurance Premium shall be subject
to an increase predetermined at the Date of Deposit and payable
from the proceeds of the sale of such Bond.
Except as indicated below, insurance obtained by a Trust has no
effect on the price or redemption value of Units thereof. It is
the present intention of the Evaluator to attribute a value to
the insurance obtained by a Trust (including the right to obtain
Permanent Insurance) for the purpose of computing the price or
redemption value of Units thereof only if the Bonds covered by
such insurance are in default in payment of principal or interest
or, in the Sponsors' opinion, in significant risk of such default
("Defaulted Bonds"). The value of the insurance will be equal
to the difference between (i) the market value of a Bond which
is in default assuming the exercise of the right to obtain Permanent
Insurance (less the insurance premium attributable to the purchase
of Permanent Insurance and the related custodial fee) and (ii)
the market value of such Defaulted Bond not covered by Permanent
Insurance. See "Public Offering-Offering Price" for a more complete
description of the Evaluator's method of valuing Defaulted Bonds.
Insurance obtained by the issuer of a Bond or by other parties
is effective so long as such Pre-insured Bond is outstanding and
the insurer of such Pre-insured Bond continues to fulfill its obligations.
Regardless of whether the insurer of a Pre-insured Bond continues
to fulfill its obligations, however, such Bond will continue to
be insured under the policy obtained by a Trust from the Corporation
as long as the Bond is held in such Trust. Insurance obtained
by the issuer of a Bond or by other parties may be considered
to represent an element of market value in regard to the Bonds
thus insured, but the exact effect, if any, of this insurance
on such market value cannot be predicted.
In the event that interest on or principal of a Bond held in a
Trust is due for payment but is unpaid by reason of nonpayment
by the issuer thereof, the Corporation will make payments to its
fiscal agent, Citibank,
Page 14
N.A., New York, New York, (the "Fiscal Agent"), equal to such
unpaid amounts or principal and interest not later than one business
day after the Corporation has been notified by the Trustee for
such Trust that such nonpayment has occurred (but not earlier
than the date such payment is due). The Fiscal Agent will disburse
to the Trustee the amount of principal and interest which is then
due for payment but is unpaid upon receipt by the Fiscal Agent
of (i) evidence of such Trust's right to receive payment of such
principal and interest and (ii) evidence, including any appropriate
instruments of assignment, that all of the rights to payment of
such principal or interest then due for payment shall thereupon
vest in the Corporation. Upon payment by the Corporation of any
principal or interest payments with respect to any Bonds, the
Corporation shall succeed to the rights of the owner of such Bonds
with respect to such payment.
The Corporation is the principal operating subsidiary of MBIA
Inc., a New York Stock Exchange listed company. MBIA Inc. is not
obligated to pay the debts of or claims against the Corporation.
The Corporation is a limited liability corporation rather than
a several liability association. The Corporation is domiciled
in the State of New York and licensed to do business in all 50
states, the District of Columbia and the Commonwealth of Puerto
Rico. As of March 31, 1995 the Insurer had admitted assets of
$3.5 billion (unaudited), total liabilities of $2.4 billion (unaudited),
and total capital and surplus of $1.1 billion (unaudited) determined
in accordance with statutory accounting practices prescribed or
permitted by insurance regulatory authorities. As of December
31, 1994, the Insurer had admitted assets of $3.4 billion (audited),
total liabilities of $2.3 billion (audited), and total capital
and surplus of $1.1 billion (audited) determined in accordance
with statutory accounting practices prescribed or permitted by
insurance regulatory authorities. Copies of the Corporation's
financial statements prepared in accordance with statutory accounting
practices are available from the Corporation. The address of the
Corporation is 113 King Street, Armonk, New York 10504.
Effective December 31, 1989, MBIA Inc. acquired Bond Investors
Group, Inc. On January 5, 1990, MBIA acquired all of the outstanding
stock of Bond Investors Group, Inc., the parent of Bond Investors
Guaranty Insurance Company (BIG), now known as MBIA Insurance
Corp. of Illinois. Through a reinsurance agreement, BIG has ceded
all of its net insured risks, as well as its unearned premium
and contingency reserves, to MBIA and MBIA has reinsured BIG's
net outstanding exposure.
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 date thereof. The Sponsors
are not aware that the information herein is inaccurate or incomplete
as of the date hereof.
Standard & Poor's has assigned to the Units in each Trust a rating
of AAA and has assigned to the Bonds in each Discount Series,
Short-Intermediate Series, Long-Intermediate Series and the State
Series and in M.I.N.T. Series 7 and subsequent M.I.N.T. Series
a rating of AAA, and Moody's has assigned a rating of "Aaa" to
the Bonds in each Trust , as insured, only while such Bonds are
held in such Trust. Also for each Trust for which a Corporation
Policy has been obtained these ratings reflect Standard & Poor's
and Moody's current assessment of the creditworthiness of the
Corporation and its ability to pay claims on its policies of insurance.
The contract of insurance relating to each Trust, certain agreements
relating to the Permanent Insurance and the negotiations in respect
thereof represent the only significant relationship between the
Corporation and each Trust. Otherwise, neither the corporation
nor any associate thereof has any material business relationship,
direct or indirect with each Trust or the sponsors, except that
Sponsors may from time to time in the future, in the normal course
of their business, participate as underwriters or as managers
or as members of underwriting syndicates in the distribution of
new issues of municipal bonds for which a policy of insurance
guaranteeing the payment of interest and principal has been obtained
from the Corporation. Although all issues contained in the respective
Trusts are individually insured, neither the respective Trusts
nor the Units are insured directly by the Corporation.
A purpose of the insurance obtained by each Trust on the underlying
Bonds is to obtain a higher yield on such underlying Bonds than
would be available if all such Bonds had Standard & Poor's AAA
rating and/or Moody's Aaa rating but were uninsured and yet, at
the same time, to have the protection of insurance of payment
of interest and principal of such Bonds. There is, of course,
no certainty that this result will be achieved.
Page 15
Any Pre-insured Bonds in a Trust (all of which are rated AAA by
Standard & Poor's and/or Moody's) may or may not have a higher
yield than uninsured bonds rated AAA by Standard & Poor's and/or
Aaa by Moody's.
Because the Bonds in each Trust are insured by the Corporation
as to the payment of principal and interest, Standard & Poor's
has assigned its AAA investment rating to the Units and to the
Bonds while in the Trusts, and Moody's has assigned a rating of
Aaa to all of the Bonds in the Trusts, as insured. The obtaining
of these ratings by the Trusts should not be construed as an approval
of the offering of the Units by Standard & Poor's or Moody's or
as a guarantee of the market value of the Trusts or of the Units.
These ratings are not a recommendation to buy, hold or sell and
do not take into account the extent to which a Trust's expenses
or sales or portfolio assets for less than such Trust's acquisition
price will reduce payment to the Unit holders of the interest
or principal.
TAX STATUS
Interest income on the Bonds contained in each Trust's portfolio
is, in the opinion of bond counsel to the issuing governmental
authorities, which opinion was rendered at the time of original
issuance of the Bonds, excludible from Federal gross income under
the Internal Revenue Code of 1986, as amended (the "Code"). See
"The Trusts-Portfolios".
Gain (or loss) realized on sale, maturity, or redemption of the
Bonds or on sale or redemption of a Unit is, however, includible
in gross income as capital gain (or loss) for Federal, state and
local income tax purposes assuming that the Unit is held as a
capital asset. Such gain (or loss) does not include any amount
received in respect of accrued interest. In addition, such gain
(or loss) may be long or short-term depending on the holding period
of the Units. Bonds selling at a market discount tend to increase
in market value as they approach maturity when the principal amount
is payable, thus increasing the potential for taxable gain (or
reducing the potential for loss) on their redemption, maturity
or sale. It should be noted that under recently proposed legislation
that would subject accretion of market discount on tax-exempt
bonds to taxation as ordinary income, gain realized on the sale
or redemption of Bonds by the Trustee or of Units by a Unit holder
that would otherwise be treated as capital gain may be recharacterized
as ordinary income to the extent it is attributable to accretion
of market discount. Market discount can arise based on the price
the Trust pays for the Bonds or the price a Unit holder pays for
his Units. Since the proceeds from sales of Bonds, under certain
circumstances, may not be distributed pro rata, Unit holders taxable
income for any year may exceed their actual cash distributions
in that year.
On the Date of Deposit corresponding to each Trust, Brown & Wood,
as special counsel for the Sponsors for Series 1 through 29 and
all Discount Series, Short-Intermediate Series and Long-Intermediate
Series issued an opinion as to the tax status of each Trust as
of such Date of Deposit. In summary, the opinion stated:
(A) The Trust is not an association taxable as a corporation
for Federal income tax purposes, and interest on the Bonds and
payments in lieu thereof which are excludible from Federal gross
income under the Code, when received by a Trust, will be excludible
from the Federal gross income of each Unit holder of the Trust;
(B) Each Unit holder will be considered the owner of a pro rata
portion of the Bonds and other assets held in the related Trust
under the grantor trust rules of Code Sections 671-679. Each Unit
holder will be considered to have received his pro rata share
of income from Bonds held in the related Trust on receipt (or
earlier accrual, depending on the Unit holder's method of accounting)
by such Trust, and each Unit holder will have a taxable event
when an underlying Bond is disposed of (whether by sale, redemption,
or payment at maturity) or when the Unit holder redeems or sells
his Units;
(C) For Federal income tax purposes, when a Bond is sold, a Unit
holder may exclude from his share of the amount received any amount
that represents accrued interest but may not exclude amounts attributable
to market discount. As indicated above, under proposed legislation,
accretion of market discount would be taxable as ordinary income
rather than capital gain. However, no prediction can be made regarding
whether
Page 16
this provision or a similar provision will be enacted into law
or the effective date of any such provision. A Unit holder may
also realize taxable gain or loss when a Unit is sold or redeemed;
(D) If a Trust purchases any Units of a previously issued Trust
then, based on the opinion of counsel with respect to the previously
issued Trust, such purchasing Trust's pro rata ownership interest
in the bonds of the previously issued Trust (or any previously
issued Trust) will be treated as though it were owned directly
by such purchasing Trust. A Unit holder, however, will be considered
to have received income or gain with respect to bonds in such
previously issued Trust on receipt (or earlier accrual, depending
on the Unit holder's method of accounting) by the previously issued
series; and
On the Date of Deposit corresponding to each Trust, Chapman and
Cutler, Counsel for the Sponsors for Series 30 and subsequent
Series, rendered an opinion substantially to the effect that:
(A) the Trust is not an association taxable as a corporation
for Federal income tax purposes. Tax-exempt interest received
by the Trust on Bonds deposited therein will retain its status
as tax-exempt interest, for Federal income tax purposes, when
distributed to a Unit holder except that the alternative minimum
tax and the environmental tax (the "Superfund Tax") applicable
to corporate Unit holders may, in certain circumstances, include
in the amount on which such tax is calculated, 75% of the interest
income received by the Trust;
(B) exemption of interest and accrued original issue discount
on any Bonds for Federal income tax purposes does not necessarily
result in tax exemption under the laws of the several states as
such laws vary with respect to the taxation of such Bonds and
in many states all or a part of such interest and accrued original
issue discount may be subject to tax;
(C) each Unit holder is considered to be the owner of a pro rata
portion of the Trust under subpart E, subchapter J of chapter
1 of the Code and will have a taxable event when the Trust disposes
of a Bond, or when the Unit holder redeems or sells his Units.
Unit holders must reduce the tax basis of their Units for their
share of accrued interest received by the Trust, if any, on Bonds
delivered after the Unit holders pay for their Units to the extent
that such interest accrued on such Bonds during the period from
the Unit holder's settlement date to the date such Bonds are delivered
to the Trust and, consequently, such Unit holders may have an
increase in taxable gain or reduction in capital loss upon the
disposition of such Units. Gain or loss upon the sale or redemption
of Units is measured by comparing the proceeds of such sale or
redemption with the adjusted basis of the Units. If the Trustee
disposes of Bonds (whether by sale, payment on maturity, redemption
or otherwise), gain or loss is recognized to the Unit holder.
The amount of any such gain or loss is measured by comparing the
Unit holder's pro rata share from such disposition with the Unit
holder's basis for his or her fractional interest in the asset
disposed of. In the case of a Unit holder who purchases Units,
such basis is determined by apportioning the cost of the Units
among each of the Trust assets ratably according to value as of
the date of acquisition of the Units. The basis of each Unit and
of each Bond which was issued with original issue discount must
be increased by the amount of accrued original issue discount
and the basis of each Unit and of each Bond which was purchased
by such Trust at a premium must be reduced by the annual amortization
of bond premium. The tax cost reduction requirements of said Code
relating to amortization of bond premium may, under some circumstances,
result in the Unit holder realizing a taxable gain when his Units
are sold or redeemed for an amount equal to or less than his original
cost; and
(D) any insurance proceeds which represent maturing interest
on defaulted obligations held by the Trustee will be excludible
from Federal gross income if, and to the same extent as, such
interest would have been so excludible if paid by the issuer of
the defaulted obligations provided that, at the time such policies
are purchased, the amounts paid for such policies are reasonable,
customary and consistent with the reasonable expectation that
the issuer of the obligations, rather than the insurer, will pay
debt service on the obligations.
In the case of any Series, Unit holders should consider the following
Federal income tax matters. Because the tax matters discussed
below are of general applicability, Unit holders should consult
their tax adviser regarding the tax consequences relating to an
investment in any Trust.
Page 17
Sections 1288 and 1272 of the Code provide a complex set of rules
governing the accrual of original issue discount. These rules
provide that original issued discount accrues either on the basis
of a constant compound interest rate or ratably over the term
of the Bond, depending on the date the Bond was issued. In addition,
special rules apply if the purchase price of a Bond exceed the
original issue price plus the amount of original issue discount
which would have accrued to prior owners. The application of these
rules will also vary depending on the value of the Bond on the
date a Unit holder acquires his Units, and the price the Unit
holder pays for his Units. Because of the complexity of these
rules relating to the accrual of original issue discount, Unit
holders should consult their tax advisers as to how these rules apply.
"The Revenue Reconciliation Act of 1993" (the "Tax Act") subjects
tax-exempt bonds to the market discount rules of the Code effective
for bonds purchased after April 30, 1993. In general, market discount
is the amount (if any) by which the stated redemption price at
maturity exceeds an investor's purchase price (except to the extent
that such difference, if any, is attributable to original issue
discount not yet accrued). Under the Tax Act, accretion of market
discount is taxable as ordinary income; under prior law the accretion
had been treated as capital gain. Market discount that accrues
while the Trust holds a Bond would be recognized as ordinary income
by the Unit holder when principal payments are received on the
Bond, upon sale or at redemption (including early redemption)
or upon the sale or redemption of his Units, unless a Unit holder
elects to include market discount in taxable income as it accrues.
The market discount rules are complex and Unit holders should
consult their tax advisers regarding these rules and their application.
For purposes of computing the alternative minimum tax for individuals
and corporations and the Superfund tax for corporations, interest
on certain private activity bonds (which includes most industrial
and housing bonds) issued on or after August 8, 1986 is included
as a preference item. The Trusts do not include any such bonds.
Present Federal income tax law also provides for an alternative
minimum tax for corporations levied at a rate of 20% of alternative
minimum taxable income. The alternative minimum tax and the Superfund
Tax depend upon the corporation's alternative minimum taxable
income, which is the corporation's taxable income with certain
adjustments. One of the adjustment items used in computing the
alternative minimum taxable income and the Superfund Tax of a
corporation (other than an S Corporation, Regulated Investment
Company, Real Estate Investment Trust, or REMIC) is an amount
equal to 75% of the excess of such corporation's "adjusted current
earnings" over an amount equal to its alternative minimum taxable
income (before such adjustment item and the alternative tax net
operating loss deduction). Although tax-exempt interest received
by each Trust on Bonds deposited therein will not be included
in the gross income of corporations for Federal income tax purposes
and "adjusted current earnings" include all tax-exempt interest,
including interest on all of the Bonds in the Trusts. Corporate
unit holders are urged to consult their tax advisers with respect
to the particular tax consequences to them resulting from purchasing
Units of a Trust, including the corporate alternative minimum
tax, the Superfund Tax and the branch profits tax imposed by Section
884 of the Code.
Counsel for the Sponsors has also advised that under Section 265
of the Code, interest on indebtedness incurred or continued to
purchase or carry Units of a Trust is not deductible for Federal
income tax purposes. The Internal Revenue Service has taken the
position that such indebtedness need not be directly traceable
to the purchase or carrying of Units. (however, these rules do
not apply to interest paid on indebtedness incurred to purchase
or improve a personal residence). Under Section 265 of the Code,
certain financial institutions that acquire Units would generally
not be able to deduct any of the interest expense attributable
to ownership of such Units. Investors with questions regarding
this issue should consult with their tax advisers.
In the case of certain of the Bonds in a Trust, the opinions of
bond counsel indicate that interest on such securities received
by a "substantial user" of the facilities being financed with
the proceeds of these securities, or persons related thereto,
for periods while such securities are held by such a user or related
person, will not be excludable from Federal gross income, although
interest on such securities received by others would be exempt
from Federal gross income. "Substantial user" and "related person"
are defined under U.S. Treasury Regulations. Any person who believes
he or she may be a substantial user or related person as so defined
should contact his or her tax adviser.
Page 18
At the time of closing Brown & Wood, special counsel to the Trust
for New York tax matters for Series 1-29 and all Discount Series,
Short-Intermediate Series and Long-Intermediate Series, Siller
Wilk Mencher & Simkin, special counsel to the Trust for New York
tax matters for Series 30-32 and Tanner, Propp, & Farber, special
counsel to the Trust for New York tax matters for Series 33 and
subsequent Series rendered an opinion substantially to the effect
that the Trust is not an association taxable as a corporation
and the income of the Trust will be treated as the income of the
Unit holders under the then existing income tax laws of the State
and City of New York.
All statements in the Prospectus concerning exclusion from gross
income for Federal, state or other taxes are the opinions of counsel
and are to be so construed.
At the respective times of issuance of the Bonds, opinions relating
to the validity thereof and to the exclusion of interest thereon
from Federal gross income are rendered by bond counsel to the
respective issuing authorities. Neither the Sponsor, Chapman and
Cutler nor Brown & Wood made any special review for any Trust
of the proceedings relating to the issuance of the Bonds or of
the basis of such opinions. It should be noted that the tax-exempt
status of certain Bonds may be based upon compliance with certain
requirements after the Bonds were issued.
In general, section 86 of the Internal Revenue Code provides,
that Social Security benefits are includible in gross income in
an amount equal to the lesser of (1) 50% of the Social Security
benefits received or (2) 50% of the excess of "modified adjusted
gross income" plus 50% of the Social Security benefits received
over the appropriate "base amount". The base amount is $25,000
for unmarried taxpayers, $32,000 for married taxpayers filing
a joint return and zero for married taxpayers who do not live
apart at all times during the taxable year and who file separate
returns. Modified adjusted gross income is adjusted gross income
determined without regard to certain otherwise allowable deductions
and exclusions from gross income and by including tax exempt interest.
To the extent that Social Security benefits are includible in
gross income, they will be treated as any other item of gross income.
In addition, under the Tax Act, for taxable years beginning after
December 31, 1993, up to 85% of Social Security benefits are includible
in gross income to the extent that the sum of "modified adjusted
gross income" plus 50% of Social Security benefits received exceeds
an "adjusted base amount." The adjusted base amount is $34,000
for unmarried taxpayers, $44,000 for married taxpayers filing
a joint return, and zero for married taxpayers who do not live
apart at all times during the taxable year and who file separate returns.
Although tax-exempt interest is included in modified adjusted
gross income solely for the purpose of determining what portion,
if any, of Social Security benefits will be included in gross
income, no tax-exempt interest, including that received from a
Trust, will be subject to tax. A taxpayer whose adjusted gross
income already exceeds the base amount or the adjusted base amount
must include 50% or 85%, respectively of his Social Security benefits
in gross income whether or not he receives any tax-exempt interest.
A taxpayer whose modified adjusted gross income (after inclusion
of tax-exempt interest) does not exceed the base amount need not
include any Social Security benefits in gross income.
For taxpayers other than corporations, net capital gains are subject
to a maximum marginal tax rate of 28 percent. However, it should
be noted that legislative proposals are introduced from time to
time that affect tax rates and could affect relative differences
at which ordinary income and capital gains are taxed.
All taxpayers are presently required to disclose to the Internal
Revenue Service the amount of tax-exempt interest earned during
the year. Each Unit holder is also advised to consult his own
tax adviser regarding the proposed legislation discussed above
concerning market discount, inclusion in taxable income of Social
Security benefits, and changes in tax rates.
Florida Tax Status. At the time of the closing for each Florida
Trust, Chapman and Cutler, Special Counsel to the Trust for Florida
tax matters, rendered an opinion under then existing Florida law
applicable to taxpayers who are subject to certain Florida income
taxes substantially to the effect that:
Page 19
Neither the Florida Trust nor Non-Corporate Unit holders will
be subject to the Florida income tax imposed by Chapter 220, Florida
Statutes. Any amounts paid to the Florida Trust or Non-Corporate
Unit Holders under an insurance policy issued to the Florida Trust,
the issuers, the underwriters, or the Sponsor thereof, or others,
which represent maturing interest on defaulted obligations held
by the Trustee will not be subject to the Florida income tax imposed
by Chapter 220, Florida Statutes provided that such amounts paid
are not subject to federal income tax.
Corporate Unit holders will be subject to Florida income or franchise
taxation under Chapter 220, Florida Statutes (a) on interest received
by the Trust, (b) on payments of interest pursuant to any insurance
policy, (c) on gain realized when Bonds are sold, redeemed or
paid at maturity or when insurance payments with respect to principal
are received by the Trust and (d) on gain on the sale or redemption
of Units, to the extent allocable to Florida as "adjusted federal
income." Corporate Unit holders that have a commercial domicile
in Florida will also be subject to Florida income or franchise
taxation on 100 percent of the items of income described in clauses
(a) through (d) of the immediately preceding sentence to the extent
that such income constitutes "nonbusiness income."
Even if interest on indebtedness incurred or continued by a Unit
holder to purchase Units in the Trust is not deductible for Federal
income tax purposes, it will reduce interest income on the Bonds
which is reportable by Corporate Unit holders for Florida income tax purposes.
Trust Units held by a Florida resident will be includible in the
resident's estate for Florida estate tax purposes, but if such
estate is not subject to the Federal estate tax, the estate will
not be subject to the Florida estate tax. The Florida estate tax
is limited to the amount of the credit for state death taxes provided
for in section 2011 of the Code, less estate taxes paid to states
other than Florida.
Neither the Bonds nor the Units will be subject to the Florida
ad valorem tax, the Florida intangible personal property tax or
Florida sales or use tax.
Georgia Tax Status. At the time of the closing for each Georgia
Trust, Chapman and Cutler, Special Counsel to the Trust for Georgia
tax matters, rendered an opinion under then existing Georgia income
tax law applicable to taxpayers whose income is subject to Georgia
income taxation substantially to the effect that:
For Georgia income tax purposes, the Georgia Trust is not an association
taxable as a corporation, and the income of the Georgia Trust
will be treated as the income of the Unit holders. Interest on
the Georgia Bonds which is exempt from Georgia income tax when
received by the Georgia Trust, and which would be exempt if received
directly by a Unit holder, will retain its status as tax-exempt
interest when distributed by the Georgia Trust and received by
the Unit holders.
If the Trustee disposes of a Georgia Bond (whether by sale, exchange,
payment on maturity, retirement or otherwise) or if a Unit holder
redeems or sells his Unit, the Unit holder will recognize gain
or loss for Georgia income tax purposes to the same extent that
gain or loss would be recognized for federal income tax purposes
(except in the case of Georgia Bonds issued before March 11, 1987
issued with original issue discount owned by the Georgia Trust
in which case gain or loss for Georgia income tax purposes would
be determined by accruing said original issue discount on a ratable
basis). Due to the amortization of bond premium and other basis
adjustments required by the Internal Revenue Code, a Unit holder,
under some circumstances, may realize taxable gain when his or
her Units are sold or redeemed for an amount equal to their original cost.
Because obligations or evidences of debt of Georgia, its political
subdivisions and public institutions and the bonds issued by the
Government of Puerto Rico are exempt from the Georgia intangible
personal property tax, the Georgia Trust will not be subject to
such tax as the result of holding such obligations, evidences
of debt or bonds. Although there currently is no published administrative
interpretation or opinion of the Attorney General of Georgia dealing
with the status of bonds issued by a political subdivision of
Puerto Rico, we have in the past been advised orally by representatives
of the Georgia Department of Revenue that such bonds would also
be considered exempt from such tax. Based on that advice, and
in the absence of a
Page 20
published administrative interpretation to the contrary, we are
of the opinion that a Georgia Trust would not be subject to such
tax as the result of holding bonds issued by a political subdivision
of Puerto Rico.
Amounts paid under an insurance policy or policies issued to a
Georgia Trust, if any, with respect to the Georgia Bonds in a
Georgia Trust which represent maturing interest on defaulted obligations
held by the Trustee will be exempt from State income taxes if,
and to the extent as, such interest would have been so exempt
if paid by the issuer of the defaulted obligations, provided that,
at the time such policies are purchased, the amounts paid for
such policies are reasonable, customary and consistent with the
reasonable expectation that the issuer of the Bonds, rather than
the insurer, will pay debt service on the Bonds.
We express no opinion regarding whether a Unit holder's ownership
of an interest in the Georgia Trust is subject to the Georgia
intangible personal property tax. Although the application of
the Georgia intangible property tax to the ownership of the Units
by the Unit holders is not clear, representatives of the Georgia
Department of Revenue have in the past advised us orally that,
for purposes of the intangible property tax, the Department considers
a Unit holder's ownership of an interest in the Georgia Trust
as a whole to be taxable intangible property separate from any
ownership interest in the underlying tax-exempt Georgia Bonds.
Neither the Georgia Bonds nor the Units will be subject to Georgia
Sales or use tax.
New Jersey Tax Status. At the time of the closing for each New
Jersey Trust, Special Counsel to the Trust for New Jersey tax
matters, rendered an opinion under then existing New Jersey income
tax law applicable to taxpayers whose income is subject to New
Jersey income taxation substantially to the effect that:
Each New Jersey Trust will be recognized as a trust and not an
association taxable as a corporation. The New Jersey Trusts will
not be subject to the New Jersey Corporation Business Tax or the
New Jersey Corporation Income Tax.
With respect to the non-corporate Unit holders who are residents
of New Jersey, the income of a New Jersey Trust which is allocable
to each such Unit holder will be treated as the income of such
Unit holder under the New Jersey Gross Income Tax. Interest on
the underlying Bonds which would be exempt from New Jersey Gross
Income Tax if directly received by such Unit holder will retain
its status as tax-exempt interest when received by a New Jersey
Trust and distributed to such Unit holder. Any proceeds paid under
the insurance policy issued to the Trustee of a New Jersey Trust
with respect to the Bonds or under individual policies obtained
by issuers of bonds which represent maturing interest on defaulted
obligations held by the Trustee will be exempt from New Jersey
Gross Income Tax if, and to the same extent as, such interest
would have been so exempt if paid by the issuer of the defaulted
obligations.
A non-corporate Unit holder will not be subject to the New Jersey
Gross Income Tax on any gain realized either when a New Jersey
Trust disposes of a Bond (whether by sale, exchange, redemption,
or payment at maturity), when the Unit holder redeems or sells
his Units, or upon payment of any proceeds under the insurance
policy issued to the Trustee of the fund with respect to the Bonds
or under individual policies obtained by issuers of Bonds, the
Sponsor, the underwriters or others which represent maturing principal
on defaulted obligations held by the Trustee. Any loss realized
in such disposition may not be utilized to offset gains realized
by such Unit holder on the disposition of assets the gain on which
is subject to the New Jersey Gross Income Tax.
Units of a New Jersey Trust may be taxable on the death of a Unit
holder under the New Jersey Transfer Inheritance Tax Law or the
New Jersey Estate Tax Law.
If a Unit holder is a corporation subject the New Jersey Corporation
Business Tax or New Jersey Corporation Income Tax, interest from
the Bonds in the New Jersey Trust which is allocable to such corporation
will be includible in its entire net income for purposes of the
New Jersey Corporation Business Tax or New Jersey's 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 of the New Jersey Trust or on
the disposition of its
Page 21
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 a New Jersey 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 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.
Tennessee Tax Status. In the opinion of Chapman and Cutler, Counsel
to the Sponsor, under existing Tennessee State law as of the date
of this prospectus:
For purposes of the Hall Income Tax, the Tennessee Excise Tax
imposed by Section 67-4-806 (the "State Corporate Income Tax"),
and the Tennessee Franchise Tax imposed by Section 67-4-903, the
Tennessee Trusts will not be subject to such taxes.
For Hall Income Tax purposes, a proportionate share of distributions
from the Tennessee Trusts to Unit holders, to the extent attributable
to interest on the Tennessee Bonds (based upon the relative proportion
of interest income received or accrued attributable to such bonds)
will be exempt from the Hall Income Tax when distributed to such
Unit holders. Based on the Commissioner's Letter, distributions
from the Trust to Unit holders, to the extent attributable to
interest on the Puerto Rico Bonds (based on the relative proportion
of interest received or accrued attributable to the Puerto Rico
Bonds) will be exempt from the Hall Income Tax when distributed
to such Unit holders. A proportionate share of distributions from
the Tennessee Trusts attributable to interest on assets other
than the Bonds would not, under current law, be exempt from the
Hall Income Tax when distributed to Unit holders. (See the Tennessee
Trust Portfolio for a listing of these Bonds).
For Tennessee State Corporate Income Tax Purposes, Tennessee law
does not provide an exemption for interest on the Tennessee Bonds
and requires that all interest excludable from Federal gross income
must be included in calculating "net earnings" subject to the
State Corporate Income Tax. No opinion is expressed regarding
whether such tax would be imposed on the earnings or distributions
of the Tennessee Trusts (including interest on the Bonds or gain
realized upon the disposition of the Bonds by the Tennessee Trusts)
attributable to Unit holders subject to the State Corporate Income
Tax. However, based upon prior written advice from the Tennessee
Department of Revenue, earnings and distributions from the Tennessee
Trusts (including interest on the Tennessee Bonds or gain realized
upon the disposition of the Tennessee Bonds by the Tennessee Trusts)
attributable to the Unit holders subject to the State Corporate
Income Tax should be exempt from the State Corporate Income Tax.
The position of the Tennessee Department of Revenue is not binding,
and is subject to change, even on a retroactive basis.
Each Unit holder will realize taxable gain or loss for State Corporate
Income Tax purposes when the Unit holder redeems or sells his
Units, at a price that differs from original cost as adjusted
for accretion or any discount or amortization of any premium and
other basis adjustments, including any basis reduction that may
be required to reflect a Unit holder's share of interest, if any,
accruing on Bonds during the interval between the Unit holder's
settlement date and the date such Bonds are delivered to the Trust,
if later. Tax basis reduction requirements relating to amortization
of bond premium may, under some circumstances, result in Unit
holders realizing taxable gain when the Units are sold or redeemed
for an amount equal to or less than their original cost. For purposes
of the Tennessee Property Tax, the Tennessee Trusts will be exempt
from taxation with respect to the Bonds it holds. Tennessee Bonds
consist of bonds issued by the State of Tennessee, or any county
or any municipality or political subdivision thereof, including
any agency, bond, authority, or commission, the interest on which
is exempt from the Hall Income Tax. As for the taxation of the
Units held by the Unit holders, although intangible personal property
is not presently subject to Tennessee taxation, no opinion is
expressed with regard to potential property taxation of the Unit
holders with respect to the Units because the determination of
whether property is exempt from such tax is made on a county by
county basis.
The Bonds and the Units held by the Unit holders will not be subject
to Tennessee sales and use taxes.
Page 22
The Sponsors cannot predict whether new legislation will be enacted
into law affecting the tax status of Tennessee Trusts. The occurrence
of such an event could cause distributions of interest income
from the Tennessee Trusts to be subject to the Hall Income Tax.
In addition, Tennessee is currently considering the adoption of
a state income tax. Additional information regarding such proposals
is currently unavailable. Investors should consult their own tax
advisors in this regard.
CERTAIN CONSIDERATIONS
The Florida Trusts.
In 1980, Florida was the seventh most populous state in the U.S.
The State has grown dramatically since then and as of April 1,
1993, ranks fourth with an estimated population of 13.4 million.
Florida's attraction, as both a growth and retirement state, has
kept net migration fairly steady with an average of 292,988 new
residents a year from 1983 through 1993. The U.S. average population
increase since 1982 is about 1% annually, while Florida's average
annual rate of increase is about 2.5%. Florida continues to be
the fastest growing of the ten largest states. This strong population
growth is one reason the State's economy is performing better
than the nation as a whole. In addition to attracting senior citizens
to Florida as a place for retirement, the State is also recognized
as attracting a significant number of working age individuals.
Since 1983, the prime working age population (18-44) has grown
at an average annual rate of 2.6%. The share of Florida's total
working age population (18-59) to total State population is approximately
54%. This share is not expected to change appreciably into the
twenty-first century. Florida's economy has in the past been highly
dependent on the construction industry and construction related
manufacturing. This dependency has declined in recent years and
continues to do so as a result of continued diversification of
the State's economy. For example, in 1980 total contract construction
employment as a share of total non-farm employment was just over
7% and in 1993 the share had edged downward to 5%. This trend
is expected to continue as Florida's economy continues to diversify.
Florida, nevertheless, has a dynamic construction industry with
single and multi-family housing starts accounting from 8.5% of
total U.S. housing starts in 1993 while the State's population
is 5.3% of the U.S. total population. Florida's housing starts
since 1980 have represented an average of 11% of the U.S.'s annual
starts, and since 1980, total housing starts have averaged 156,450.
A driving force behind the State's construction industry has been
the State's rapid rate of population growth. Although Florida
currently is the fourth most populous state, its annual population
growth is now projected to decline as the number of people moving
into the State is expected to hover near the mid 250,000 range
annually throughout the 1990s. This population trend should provide
fuel for business and home builders to keep construction activity
lively in Florida for some time to come. However, other factors
do influence the level of construction in the State. For example,
federal tax reform in 1986 and other changes to the Federal income
tax code that have eliminated tax deductions for owners of two
or more residential real estate properties and the lengthening
of depreciation schedules on investment and commercial properties.
Economic growth and existing supplies of commercial buildings
and homes also contribute to the level of construction activity
in the State.
Hurricane Andrew left some parts of south Florida devastated.
Post-Hurricane Andrew clean up and rebuilding have changed the
outlook for the State's economy. Single and multi-family housing
starts in 1993-94 are projected to reach a combined level of 118,000,
and to increase to 134,300 next year. Lingering recessionary effects
on consumers and tight credit are two of the reasons for relatively
slow core construction activity, as well as lingering effects
from the 1986 tax reform legislation discussed above. However,
construction is one of the sectors most severely affected by Hurricane
Andrew. Low interest rates and pent-up demand combined with improved
consumer confidence should lead to improved housing starts. The
construction figures above include additional housing starts as
a result of destruction by Hurricane Andrew. Total construction
expenditures are forecasted to increase 15.6% this year and increase
13.3% next year.
Since 1980, the State's job creation rate is almost twice the
rate for the nation as a whole, and its growth rate in new non-agricultural
jobs is the fastest of the 11 most populous states and second
only to California in the absolute number of new jobs created.
Contributing to the State's rapid rate of growth in employment and
Page 23
income is international trade. Since 1980, the State's unemployment
rate has generally been below that of the U.S. In recent years,
however, as the State's economic growth has slowed from its previous
highs the State's unemployment rate has tracked above the national
average. The average rate in Florida since 1980 has been 6.5%
while the national average is 7.1%. According to the U. S. Department
of Commerce, the Florida Department of Labor and Employment Security,
and the Florida Consensus Economic Estimating Conference (together,
the "Organization"), the State's unemployment rate was 8.2% during
1992. As of January 1994, the Organization estimates that the
unemployment rate will be 6.7% for 1993-94, and 6.1% for 1994-95.
The rate of job creation in Florida's manufacturing sector has
exceeded that of the U.S. From the beginning of 1980 through 1993,
the State added over 50,000 new manufacturing jobs, a 11.7% increase.
During the same period, national manufacturing employment declined
ten out of the fourteen years, for a loss of 2,977,000 jobs.
Total non-farm employment in Florida is expected to increase 2.7%
in 1993-94 and rise 3.8% in 1994-95. Trade and services, the two
largest sources of employment in the State, account for more than
half of the total non-farm employment. Employment in the service
sector should experience an increase of 3.9% in 1993-94, and 4.9%
in 1994-95. The service sector is now the State's largest employment
category.
Tourism is one of Florida's most important industries. Approximately
41.1 million tourists visited the State in 1993, as reported by
the Florida Department of Commerce. In terms of business activities
and state tax revenues, tourists in Florida in 1993 represented
an estimated 4.5 million additional residents. Visitors to the
State tend to arrive both by air and car. The State's tourism
industry over the years has become more sophisticated, attracting
visitors year-round and, to a degree, reducing its seasonality.
The dollar's depreciation has enhanced the State's tourism industry.
Tourist arrivals are expected to decline by almost 2% this year,
but are expected to recover next year with 5% growth. Tourist
arrivals to Florida by air and car are expected to diverge from
each other, air decreasing 5.6% and auto increasing 1.6%. By the
end of the State's current fiscal year, 41.0 million domestic
and international tourists will have visited the State. In 1994-95,
tourist arrivals should approximate 43 million.
The State's personal income has been growing strongly the last
several years and has generally outperformed both the United States
as a whole and the southeast in particular, according to the U.S.
Department of Commerce and the Florida Consensus Economic Estimating
Conference. This is due to the fact that Florida's population
has been growing at a very strong pace and, since the early 1970s,
the State's economy has diversified so as to provide greater insulation
from national economic downturns. As a result, Florida's real
per capita personal income has tracked closely with the national
average and has tracked above the southeast. From 1984 through
1993, the State's real per capita personal income rose at an average
of 5.4% per year, while the national real per capita income increased
at an average of 5.5% per year.
Because Florida has a proportionately greater retirement age population,
property income (dividends, interest and rent) and transfer payments
(Social Security and pension benefits, among other sources of
income) are relatively more important sources of income. For example,
Florida's total wages and salaries and other labor income in 1993
was 62% of total personal income, while a similar figure for the
nation for 1990 was 72%. Transfer payments are typically less
sensitive to the business cycle than employment income and, therefore,
act as stabilizing forces in weak economic periods.
The State's per capita personal income in 1992 of $19,711 was
slightly below the national average of $20,105 and significantly
ahead of that for the southeast United States, which was $17,296.
Real personal income in the State is estimated to have increased
5.5% in 1993-94 and 4.7% in 1994-95. By the end of 1994-95, real
personal income per capita in the State is expected to average
6.7% higher than its 1992-93 level.
In fiscal year 1992-93, approximately 62% of the State's total
direct revenue to its three operating funds will be derived from
state taxes, with Federal grants and other special revenue accounting
for the balance. State sales and use tax, corporate income tax,
intangible personal property tax and beverage tax amounted to
68%, 7%, 4% and 4% respectively, of total General Revenue Funds
available during fiscal 1992-1993. In that same year, expenditures
for education, health and welfare, and public safety amounted
to 49%, 30% and 11%, respectively, of total expenditures from
the General Revenue Fund.
Page 24
Estimated fiscal year 1993-94 General Revenue plus Working Capital
Funds available total $13,582.7 million, an 8.4% increase over
1992-1993. This reflects a transfer of $190 million, out of an
estimated $220 million in non-recurring revenue due to Hurricane
Andrew, to a hurricane relief trust fund. Of the total General
Revenue plus Working Capital funds available to the State, $12,943.5
million of that is Estimated Revenues (excluding the Hurricane
Andrew impact) which represents an increase of 7.3% over the previous
year's Estimated Revenues. With effective General Revenues plus
Working Capital Fund appropriations at $13,276.9 million, unencumbered
reserves at the end of 1993-1994 are estimated at $302.8 million.
Estimated fiscal year 1994-95 General Revenue plus Working Capital
and Budget Stabilization Funds available total $14,573.7 million,
a 7.3% increase over 1993-94. This amount reflects a transfer
of $159.0 million in non-recurring revenue due to Hurricane Andrew,
to a hurricane relief trust fund. The $13,860.8 million in Estimated
Revenues (excluding the Hurricane Andrew impact) represents an
increase of 7.1% over the previous year's Estimated Revenues.
The massive effort to rebuild and replace destroyed or damaged
property in the wake of Hurricane Andrew is responsible for the
substantial positive revenue impacts shown here. Most of the impact
is in the increase in the State's sales tax.
The State Constitution and statutes mandate that the State budget,
as a whole, and each separate fund within the State budget, be
kept in balance from currently available revenues each fiscal
year. If the Governor or Comptroller believes a deficit will occur
in any State fund, by statute, he must certify his opinion to
the Administrative Commission, which then is authorized to reduce
all State agency budgets and releases by a sufficient amount to
prevent a deficit in any fund. Additionally, the State Constitution
prohibits issuance of State obligations to fund State operations.
The State's sales and use tax (6%) currently accounts for the
State's single largest source of tax receipts. Slightly less than
10% of the State's sales and use tax is designated for local governments
and is distributed to the respective counties in which collected
for such use by such counties and municipalities. In addition
to this distribution, local governments may (by referendum) assess
a 0.5% or a 1.0% discretionary sales tax within their county.
Proceeds from this local option sales tax are earmarked for funding
local infrastructure programs and acquiring land for public recreation
or conservation or protection of natural resources as provided
under Florida law. Certain charter counties have other taxing
powers in addition, and non-consolidated counties with a population
in excess of 800,000 may levy a local option sales tax to fund
indigent health care. It alone cannot exceed 0.5% and when combined
with the infrastructure surtax cannot exceed 1.0%. For the fiscal
year ended June 30, 1993, sales and use tax receipts (exclusive
of the tax on gasoline and special fuels) totaled $9,426 million,
an increase of 12.5% over fiscal year 1991-92. The second largest
source of state tax receipts is the tax on motor fuels. However
these revenues are almost entirely dedicated trust funds for specific
purposes and are not included in the State's General Revenue Fund.
The State imposes an alcoholic beverage wholesale tax (excise
tax) on beer, wine and liquor. This tax is one of the State's
major tax sources, with revenues totaling $442.2 million in fiscal
year ending June 30, 1993. Alcoholic beverage tax receipts increased
1.6% from the previous year. The revenues collected from this
tax are deposited into State's General Revenue Fund.
The State imposes a corporate income tax. All receipts of the
corporate income tax are credited to the General Revenue Fund.
For the fiscal year ended June 30, 1993, receipts from this source
were $846.6 million, an increase of 5.6% from fiscal year 1991-92.
The State imposes a documentary stamp tax on deeds and other documents
relating to realty, corporate shares, bonds, certificates of indebtedness,
promissory notes, wage assignments, and retail charge accounts.
The documentary stamp tax collections totaled $639 million during
fiscal year 1992-93 a 27% increase from the previous year. Beginning
in fiscal year 1992-93, 71.29% of these taxes are to be deposited
to the General Revenue Fund.
The State imposes a gross receipts tax on electric, natural gas,
and telecommunications services. All gross receipts utilities
tax collections are credited to the State's Public Education Capital
Outlay and Debt Service Trust Fund. In fiscal year 1992-93, this
amounted to $447.9 million.
The State imposes an intangible personal property tax on stocks,
bonds, including bonds secured by liens in Florida real property,
notes, governmental leaseholds and certain other intangibles not
secured by a lien on Florida
Page 25
real property. The annual rate of tax is 2 mils. Second, the State
imposes a non-recurring 2 mil tax on mortgages and other obligations
secured by liens on Florida real property. In fiscal year 1992-93,
total intangible personal property tax collections were $783.4
million, a 33% increase over the prior year. Of the tax proceeds,
66.5% are distributed to the General Revenue Fund.
The State's severance tax applies to oil, gas, and sulphur production,
as well as the severance of phosphate rock and other solid minerals.
Total collections from severance taxes total $64.5 million during
fiscal year 1992-93, down 4.0% from the previous year. Currently,
60.0% of this amount was transferred to the General Revenue Fund.
The State began its own lottery in 1988. State law requires that
lottery revenues be distributed 50% to the public in prizes, 38.0%
for use in enhancing education and the balance, 12.0%, for costs
of administering the lottery. Fiscal year 1992-93 lottery ticket
sales totaled $2.13 billion, providing education with $810.4 million.
The State has continuously been dependent on the highly cyclical
construction and construction related manufacturing industries.
While that dependency has decreased, the State is still somewhat
at the mercy of the construction and construction related manufacturing
industries. The construction industry is driven to a great extent
by the State's rapid growth in population. There can be assurance
that population growth will in fact continue throughout the 1990's
in which case there could be an adverse impact on the State's
economy through the loss of construction and construction related
manufacturing jobs. Also, while interest rates remain low currently,
an increase in interest rates could significantly adversely impact
the financing of new construction within the State, thereby adversely
impacting unemployment and other economic factors within the State.
In addition, available commercial office space has tended to remain
high over the past few years. So long as this glut of commercial
rental space continues, construction of this type of space will
likely continue to remain slow.
At the end of fiscal 1993, approximately $5.61 billion in principal
amount of debt secured by the full faith and credit of the State
was outstanding. In addition, since July 1, 1993, the State issued
about $1.13 billion in principal amount of full faith and credit bonds.
Currently under litigation are several issues relating to State
actions or State taxes that put at risk substantial amounts of
General Revenue Fund monies. Accordingly, there is no assurance
that any of such matters, individually or in the aggregate, will
not have a material adverse effect on Florida's financial position.
Florida law provides preferential tax treatment to insurers who
maintain a home office in the State. Certain insurers challenged
the constitutionality of this tax preference and sought a refund
of taxes paid. Recently, the Florida Supreme Court ruled in favor
of the State. This case and others, along with pending refund
claims, total about $150 million.
The State imposes a $295 fee on the issuance of certificates of
title for motor vehicles previously titled outside the State.
The State has been sued by plaintiffs alleging that this fee violates
the Commerce Clause of the U.S. Constitution. The Circuit Court
in which the case was filed has granted summary judgment for the
plaintiffs and has enjoined further collection of the impact fee
and has ordered refunds to all those who have paid the fee since
the collection of the fee went into effect. The State has appealed
the lower Court's decision and an automatic stay has been granted
to the State allowing it to continue to collect the fee. The potential
refund exposure to the State if it should lose the case may be
in excess of $100 million.
Florida maintains a bond rating of Aa and AA from Moody's Service
and Standard & Poor's, respectively, on the majority of its general
obligation bonds, although the rating of a particular series of
revenue bonds relates primarily to the project, facility, or other
revenue sources from which such series derives funds for repayment.
While these ratings and some of the information presented above
indicate that the State is in satisfactory economic health, there
can be no assurance that there will not be a decline in economic
conditions or that particular Florida Bonds purchased by the fund
will not be adversely affected by any such changes.
Page 26
The sources for the information presented above include official
statements and financial statements of the State of Florida. While
the Sponsor has not independently verified this information, it
has no reason to believe that the information is not correct in
all material respects.
The foregoing information constitutes only a brief summary of
some of the financial difficulties which may impact certain issuers
of Bonds and does not purport to be a complete or exhaustive description
of all adverse conditions to which the issuers in the Florida
Trusts are subject. Additionally, many factors including national
economic, social and environmental policies and conditions, which
are not within the control of the issuers of Bonds, could affect
or could have an adverse impact on the financial conditions of
the State and various agencies and political subdivisions located
in the State. The Sponsor is unable to predict whether or to what
extent such factors or other factors may affect the issuers of
Bonds, the market value or marketability of the bonds or the ability
of the respective issuers of Bonds acquired by the Florida Trusts
to pay interest on or principal of the Bonds.
The Georgia Trusts.
The following brief summary regarding the economy of Georgia is
based upon information drawn from publicly available sources and
is included for the purpose of providing information about general
economic conditions that may or may not affect issuers of the
Georgia obligations. The Sponsors have not independently verified
any of the information contained in such publicly available documents.
Constitutional Considerations. The Georgia Constitution permits
the issuance by the State of general obligation debt and of certain
guaranteed revenue debt. The State may incur guaranteed revenue
debt by guaranteeing the payment of certain revenue obligations
issued by an instrumentality of the State. The Georgia Constitution
prohibits the incurring of any general obligation debt or guaranteed
revenue debt if the highest aggregate annual debt service requirement
for the then current year or any subsequent fiscal year for outstanding
general obligation debt and guaranteed revenue debt, including
the proposed debt, exceed 10 percent of the total revenue receipts,
less refunds, of the State treasury in the fiscal year immediately
preceding the year in which any such debt is to be incurred.
The Georgia Constitution also permits the State to incur public
debt to supply a temporary deficit in the State treasury in any
fiscal year created by a delay in collecting the taxes of that
year. Such debt must not exceed, in the aggregate, 5% of the total
revenue receipts, less refunds, of the State treasury in the fiscal
year immediately preceding the year in which such debt is incurred.
The debt incurred must be repaid on or before the last day of
the fiscal year in which it is to be incurred out of the taxes
levied for that fiscal year. No such debt may be incurred in any
fiscal year if there is then outstanding unpaid debt from any
previous fiscal year which was incurred to supply a temporary
deficit in the State treasury. No such short-term debt has been
incurred under this provision since the inception of the constitutional
authority referred to in this paragraph.
Virtually all of the issues of long-term debt obligations issued
by or on behalf of the State of Georgia and counties, municipalities
and other political subdivisions and public authorities thereof
are required by law to be validated and confirmed in a judicial
proceeding prior to issuance. The legal effect of an approved
validation in Georgia is to render incontestable the validity
of the pertinent bond issue and the security therefor.
The State and Its Economy. The State operates on a fiscal year
beginning July 1 and ending June 30. Thus, the 1994 fiscal year
ended June 30, 1994. Based on data of the Georgia Department of
Revenue for the 1992 fiscal year, receipts of the State from income
tax and sales tax for the 1992 fiscal year comprised approximately
48.8% and 37.5%, respectively, of the total State tax revenues.
Such data shows that total estimated State tax revenue collections
for the 1992 fiscal year increased by approximately 2.16% over
such collections in the 1991 fiscal year. The estimated 1993 fiscal
year figures indicate that receipts of the State from income tax
and sales tax for the 1993 fiscal year figures will comprise approximately
48.1% and 38%, respectively, of the total State tax revenues.
Total estimated State Tax revenue collections for the 1993 fiscal
year indicate an increase of approximately 9.89% over such collections
in the 1992 fiscal year. The estimated 1994 fiscal year figures
indicate that receipts of the State from income tax and sales
tax for the 1994
Page 27
fiscal year will comprise approximately 48.8% and 37.9%, respectively,
of the total State tax revenues. Total estimated State tax revenue
collections for the 1994 fiscal year indicate an increase of approximately
9.56% over such collections in the 1993 fiscal year.
Georgia experienced an economic slowdown in the late 1980s that
continued into 1992. The 1991 fiscal year ended with a balanced
budget, but only because the State had borrowed approximately
$90 million from surpluses maintained for special uses. In light
of weaker than expected monthly revenue collections in May and
June of 1991, Georgia lawmakers, in a special legislative session,
cut budgeted expenditures for the 1992 fiscal year by $415 million.
Georgia ended its 1992 fiscal year, however, with strong monthly
revenue collections. For the last four months of fiscal year 1992,
Georgia's revenues were more than 6% higher than revenues reported
one year earlier for the same time period. By year-end, revenue
collections fell on 0.1% short of that expected to cover 1992
expenditures. This shortfall was made up from funds allocated
to but not used by state agencies. The authorized 1993 fiscal
year budget consists of an $8.3 billion spending plan and approximately
$750 million in new general obligation debt. On March 23, 1993,
the Georgia General Assembly approved an $8.9 billion budget for
the 1994 fiscal year which includes authorization for $792 million
of general obligation borrowing.
The Georgia economy has performed relatively well during recent
years and generally has expanded at a rate greater than he national
average during that period. However, growth in 1988 through 1992
has slowed somewhat and was modest compared to the pace of the
early 1980's. Georgia's economy, however, has made a robust recovery
through the 1993 and 1994 fiscal years. The 1992 annual average
unemployment rate in Georgia was 6.9%, as compared to the 1992
national annual average unemployment rate of 7.4%. The 1993 annual
average unemployment rate for Georgia was 5.7% as compared to
the 1993 national annual average unemployment rate of 6.7%. Throughout
1994, the monthly unemployment rate for Georgia (not seasonally
adjusted) has remained below the national average monthly unemployment
rate (not seasonally adjusted). In April and May 1994, Georgia's
unemployment rate was 5.4% and 4.9%, respectively, as compared
to the national average unemployment rate of 6.2% and 5.9%.
In July, 1994, widespread flooding in central and southern Georgia
caused extensive damage and destruction of farmland, private residences,
businesses and local and state government facilities. As of July
12, 1994, Governor Zell Miller refused to estimate the dollar
value of the damage, but other sources estimate the damage could
exceed $300 million. Thirty-one counties have been declared federal
disaster areas. Moody's Investors Service, Inc. and Standard and
Poor's Corporation are observing the situation in Georgia, but
neither rating agency has expressed any immediate credit concerns.
Bond Ratings. Currently, Moody's rates Georgia general obligation
bonds Aaa and Standard and Poor's rates such bonds AA+.
Legal Proceedings. Georgia is involved in certain legal proceedings
that, if decided against the State, may require the State to make
significant future expenditures or may substantially impair revenues.
Several lawsuits have been filed against Georgia asserting that
the decision in Davis v. Michigan Department of Treasury, 489
U.S. 803 (1989), invalidating Michigan's practice of taxing retirement
benefits paid by the federal government while exempting state
retirement benefits, also invalidates Georgia's tax treatment
of Federal Retirement Benefits for years prior to 1989. Under
Georgia's applicable 3 year statute of limitation the maximum
potential liability under these suits calculated to April 1, 1992
would appear to be no greater than 128 million dollars. The plaintiffs
in these suits, however, have requested refunds for a period from
1980 which could result in a maximum potential liability in the
range of 591 million dollars. Any such liability would be predicated
on a holding by a Georgia court or the United States Supreme Court
that the Davis decision is applicable to Georgia's prior method
of taxing Federal Retirement Benefits, that the Davis decision
is to be given a retroactive effect, i.e., that the decision affects
prior tax years and that a refund remedy is appropriate.
In Georgia's "test case", the Georgia Supreme Court held that
no refunds are due. On June 28, 1993, however, the U.S. Supreme
Court vacated that holding and remanded the case for further consideration
in light of the U.S. Supreme Court decision in Harper v. Virginia
Department of Taxation (Decided June 18, 1993). In Harper, the Court
held that its decision in Davis applied retroactively to federal
retirees who were denied Virginia personal income tax refunds.
Page 28
Another suit filed against Georgia seeks a $31 million refund
plus interest of liquor taxes imposed under a Georgia statute
found retroactively invalid by the U.S. Supreme Court. The trial
court's decision that no refunds are due is currently being reviewed
by the Georgia Supreme Court.
Two additional suits have been filed with the State of Georgia
by foreign producers of alcoholic beverages seeking $96 million
in refunds of alcohol import taxes imposed under another statute.
These claims constitute 99% of all such taxes paid during the
preceding 3 years.
In Board of Public Education for Savannah/Chatham County v. State
of Georgia, the local school board claimed that the State should
finance the major portion of the costs of its desegregation program.
The Savannah Board originally requested restitution in the amount
of $30 million, but the Federal District Court set forth a formula
which would require a State payment in the amount of approximately
$6 million. Both sides have moved for reconsideration. In a similar
complaint, DeKalb County has requested restitution in the amount
of $90 million, and there are approximately five other school
districts which potentially might attempt to file similar claims.
However, it is not possible to quantify such potential claims
at this time.
The foregoing information constitutes only a brief summary of
some of the financial difficulties which may impact certain issuers
of Bonds and does not purport to be a complete or exhaustive description
of all conditions to which the issuers of Bonds in the Georgia
Trust are subject. Many factors including national economic, social
and environmental policies and conditions, which are not within
the control of the issuers of Bonds could affect or could have
an adverse impact on the financial condition of the State and
various agencies and political subdivisions located in the State.
Since Georgia Bonds in the Georgia Trust (other than general obligation
bonds issued by the State) are payable from revenue derived from
a specific source or authority, the impact of a pronounced decline
in the national economy or difficulties in significant industries
within the State could result in a decrease in the amount of revenues
realized from such source or by such authority and thus adversely
affect the ability of the respective issuers of the Georgia Bonds
in the Georgia Insured Trust to pay the debt service requirements
on the Georgia Bonds. Similarly, such adverse economic developments
could result in a decrease in tax revenues realized by the State
and thus could adversely affect the ability of the State to pay
the debt service requirements of any Georgia general obligation
bonds in the Georgia Trust. The Sponsor is unable to predict whether
or to what extent such factors or other factors may affect the
issuers of Bonds, the market value or marketability of the Bonds
or the ability of the respective issuers of the Bonds acquired
by a Georgia Trust to pay interest on or principal of the Bonds.
The New Jersey Trusts. New Jersey is the ninth largest state in
population and the fifth smallest in land area. With an average
of 1,062 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 areas with selective commercial agriculture.
Historically, New Jersey's average per capita income has been
well above the national average, and in 1993 the State ranked
second among the states in per capita personal income ($26,967).
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 States 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
Page 29
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
6.5% in May 1995, which is higher than the national average of
5.7% in May 1995. 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 due to continued
excess capacity. In addition, employers even in rebounding sectors
can be expected to remain cautious about hiring until they become
convinced that improve 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, 1993, there was a total authorized bond indebtedness of approximately
$9.0 billion, of which $3.6 billion was issued an outstanding,
$4.0 billion was retired (including bonds for which provision
for payment has been made through the sales and issuance of refunding
bonds) and $1.4 billion was unissued. The debt service obligation
for such outstanding indebtedness is $103.5 million for Fiscal Year 1995.
New Jersey's Budget and Appropriation System. The State operates
on a fiscal year beginning July 1 and ending June 30. At the end
of Fiscal Year 1989, there was a surplus in the State's general
fund (the fund into which all State revenues not otherwise restricted
by statute are deposited and from which appropriations are made)
of $411.2 million. At the end of Fiscal Year 1990, there was a
surplus in the general fund of $1 million. At the end of fiscal
year 1991, there was a surplus in the general fund of $1.4 million.
New Jersey closed its fiscal year 1992 with a surplus of $760.8
million. It is estimated that New Jersey will close its Fiscal
Year 1993 with a surplus of $937.4 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, 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 from 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 of 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 service 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 for individuals filing single returns with incomes
of more than $35,000.
The Florio administration has contended that the income tax package
will help reduce local property tax increases by providing more
state aid to municipalities. Under the new legislation the State
will assume some $289 million in social services costs that previously
were paid by counties and municipalities and funded by property
taxes. In addition, under the new formula for funding school aid,
and extra $1.1 billion will be sent by the State to school districts
beginning in 1991, thus reducing the need for property tax increases
to support education programs.
Page 30
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% up to 10%
in income tax rates took effect.
On June 30, 1994 Governor Whitman signed the New Jersey Legislature's
$15.7 billion budget for Fiscal Year 1995. The balanced budget,
which includes $455 million in surplus, is $141 million less than
the 1994 budget. 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. The Fiscal Year 1995
Appropriations Act forecasts sales and use tax collections of
$3.98 billion, a 5.3% increase from receipts estimated in the
Revised Revenue Estimates for Fiscal Year 1994. It also forecasts
gross income tax collections of $4.582 billion, a 1.2% increase
from receipts estimated for Fiscal Year 1994. However, 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.
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 challenging the
following: the formula relating to State aid to public schools,
the method by which the State shares with its counties maintenance
recoveries and costs for residents in State institutions, unreasonable
low Medicaid payment rates for long-term facilities in New Jersey,
the obligation of counties to maintain Medicaid or Medicare eligible
residents of institutions and facilities for the developmentally
disabled, taxes paid into the Spill Compensation Fund (a fund
established to provide money for use by the State to remediate
hazardous waste sites and to compensate other persons for damages
incurred as a result of hazardous waste discharge) based on Federal
preemption, various provision, and the constitutionality, of the
Fair Automobile Insurance Reform Act of 1990, the State's role
in a consent order concerning the construction of a resource facility
in Passaic County, actions taken by the New Jersey Bureau of Securities
against an individual, the State's actions regarding alleged chromium
contamination of State-owned property in Hudson County, the issuance
of emergency redirection orders and a draft permit by the Department
of Environmental Protection and Energy, the adequacy of Medicaid
reimbursement for services rendered by doctors and dentists to
Medicaid eligible children, the Commissioner of Health's calculation
of the hospital assessment required by the Health Care Cost Reduction
Act of 1991, refusal of the State to share with Camden County
federal funding the State recently received for disproportionate
share hospital payments made to county psychiatric facilities,
the constitutionality of annual A-901 hazardous and solid waste
licensure renewal fees collected by the Department of Environmental
Protection and Energy. 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.
Debt Ratings. For many years, both Moody's and Standard and Poor's
have rated New Jersey general obligation bonds Aaa and AAA, respectively.
On July 3, 1991, however, Standard and Poor's Corporation downgraded
New Jersey general obligation bonds to AA+. On June 4, 1992, Standard
and Poor's Corporation placed New Jersey general obligation bonds
on CreditWatch with negative implications, citing as it 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 have been closed
before the new budget year which began on July 1, 1993. Standard
and Poor's suggested the State could close fiscal 1992's budget
Page 31
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 and Poor's reaffirmed its "AA+" rating
for New Jersey general obligation bonds and removed the debt from
its CreditWatch list, although it stated that New Jersey's long-term
financial outlook was negative. Standard and Poor's Corporation
was concerned that the State was entering fiscal 1993 with only
a $26 million surplus and remained concerned about whether the
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 and 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 and Poor's reaffirmed its
"AA+" rating at the same time.
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 will persist.
On August 15, 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 (albeit rising) debt ratios, and on the negative side,
a continued reliance on one-time revenues and a dependence on
pension-related savings to achieve budgetary balance.
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 or political conditions.
The foregoing information constitutes only a brief summary of
some of the financial difficulties which may impact certain issuers
of Bonds and does not purport to be a complete description of
all adverse conditions to which the issuer in the New Jersey Trusts
are subject. Additionally, many factors including national economics,
social and environmental policies and conditions, which are not
within the control of the issuers of Bonds, could affect or could
have an adverse impact on the financial conditions, which are
not within the control of the issuers of Bonds, political subdivisions
and private businesses located in the State.
The Sponsor is unable to predict whether or to what extent such
factors or other factors may affect the issuers of Bonds, the
market value or marketability of the Bonds or the ability of the
respective issuers of the Bonds acquired by the New Jersey Trusts
to pay interest on or principal of the Bonds.
The Tennessee Trusts.
The following discussion regarding Tennessee's economy is based
upon information drawn from publicly available sources and is
included for the purpose of providing information about general
economic conditions that may or not affect issuers of the Tennessee
obligations. The Sponsor has not independently verified any of
the information contained in such publicly available documents.
The State Constitution of Tennessee requires a balanced budget.
No legal authority exists for deficit spending for operating purposes
beyond the end of a fiscal year. Tennessee State law permits tax
anticipation borrowing but any amount borrowed must be repaid
during the fiscal year for which the borrowing was done. Tennessee
has not issued any debt for operating purposes during recent years
with the exception of some advances which were made from the Federal
Unemployment Trust Fund in 1984. No such advances are now outstanding
nor is borrowing of any type for operating purposes contemplated.
The State constitution of Tennessee forbids the expenditure of
the proceeds of any debt obligation for a purpose other than the
purpose for which it was authorized by statute. Under State law,
the term of bonds authorized an issued cannot exceed the expected
life of the projects being financed. Furthermore, the amount of
a debt obligation cannot exceed the amount authorized by the General
Assembly.
Page 32
The recommended State budget for Fiscal Year 1994-95 is $12,570,380,800.
State revenues are scheduled to be obtained from taxes, each of
which will generate a certain percentage of the total revenues
as follows: sales (54%); franchise and excise (12%); gasoline
(11%); gross receipts and privilege (4%); motor vehicle (3%);
income and inheritance (3%); insurance and banking (3%); tobacco,
beer, and alcoholic beverages (2%) and all other taxes (8%).
For Fiscal Year 1994-95, State revenues are scheduled to be allocated
in the following percentages: education (44%); health and social
services (22%); transportation (11%); law, safety and correction
(9%); cities and counties (8%); general government (3%); resources
and regulation (2%) and business and economic development (1%).
Overall, the economic indicators were positive for Tennessee for
1993. After a slow start, inflation-adjusted personal income in
Tennessee rebounded in the second quarter, resulting in overall
growth of 4.4% from the second quarter of 1992 to the second quarter
of 1993. Tennessee's employment also grew in 1993, although its
growth was not as impressive as income growth. Third-quarter statistics
for 1993 show that Tennessee nonagricultural employment was 1.7%
above the same quarter in 1992. In 1994, the Tennessee economy
continued to expand. From December, 1993 to December, 1994 Tennessee's
seasonally adjusted employment grew from 2,395,100 people to 2,567,300
people, while its unemployment rate decreased from 4.6% to 3.8%
over that same period.
An increase in consumer spending is reflected in Tennessee taxable
sales, which grew 10.4% from the third quarter of 1992 to the
third quarter of 1993. Long-term average growth for taxable sales
is 8.5%, but the distinction between this figure and the recent
10.4% figure is more substantial than first appearances suggest
because the long-term average includes some periods of significantly
higher inflation than the most recent quarters. Adjusted for inflation,
taxable sales grew by 7.5% from the third quarter of 1992 to the
third quarter of 1993, which is triple the long-term inflation-adjusted
average of 2.5%.
The largest contributor to Tennessee's employment growth is services,
accounting for 40.9% of the employment growth that occurred from
the third quarter of 1992 to the third quarter of 1993. While
it is still the most substantial source of employment growth for
Tennessee, services has historically grown at a higher rate. Similarly,
the large trade sector is not as dominant, contributing 27.8%
of employment growth from the third quarter of 1992 to the third
quarter of 1993. Another section that has become less influential
on total employment growth in Tennessee is the finance, insurance,
and real estate industry, which contributed nothing to employment
growth during the year ending in the third quarter of 1993.
Bond Ratings. Tennessee's general obligation bonds are rated Aaa
by Moody's and AA+ by Standard & Poor's. There can be no assurance
that the economic conditions on which these ratings are based
will continue or that particular obligations contained in the
Portfolio of the Tennessee Insured Trust may not be adversely
affected by changes in economic or political conditions.
Legal Proceedings. Tennessee is involved in certain legal proceedings
that, if decided against the State, may require the State to make
significant future expenditures or may substantially impair revenues.
The Tennessee Supreme Court currently is reviewing a case in which
the lower court found the Tennessee Department of Revenue improperly
defined non-business earnings for tax purposes. Although this
case involves only $925,000, its outcome could affect at least
five other cases and could have a detrimental impact to Tennessee's
revenue base. If the case is affirmed, Tennessee could lose an
estimated $80 million to $100 million a year in corporate income
taxes. The Tennessee Supreme Court also may hear a similar case
in which the lower court found the taxpayer's partial sale of
business holdings resulting in taxable business income. A ruling
in favor of the taxpayer could result in a $10 million tax refund.
Two other tax related cases could also affect the State's financial
condition. A recently filed class-action suit seeks damages in
excess of $25 million for the allegedly illegal collection of
sales taxes paid on extended warranty contracts on motor vehicles.
In addition, a coalition of more than a dozen hospitals is considering
a class-action suit to challenge the legality or Tennessee's Medicaid
service tax. Tennessee's hospitals currently pay approximately
$504 million dollars in special taxes.
The foregoing information constitutes only a brief summary of
some of the financial difficulties which may impact certain issuers
of Bonds and does not purport to be a complete or exhaustive description
of all adverse
Page 33
conditions to which the issuers in the Tennessee Trusts are subject.
Additionally, many factors including national economic, social
and environmental policies and conditions, which are not within
the control of the issuers of Bonds, could affect or could have
an adverse impact on the financial condition of the State, various
agencies and political subdivisions located in the State. The
Sponsor is unable to predict whether or to what extent such factors
or other factors may affect the issuers of Bonds, the market value
or marketability of the Bonds or the ability of the respective
issuers of the bonds acquired by the Tennessee Trusts to pay interest
on or principal of the bonds.
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 local government. The laws
of such states and local governments vary with respect to the
taxation of such obligations and each Unit holder is advised to
consult his own tax advisor as to the status of his Units under
state and local tax laws.
Expenses and Charges
Fees
The Trustee's, Sponsors' and Evaluator's fees are set forth under
"Summary of Essential Financial Information" in Part I of the
Prospectus. The Sponsors' fee, which is earned for portfolio supervisory
services, is based on the number of Units outstanding at December
1 of each year. The Sponsors' fee, which will not to exceed the
maximum amount set forth under "Summary of Essential Financial
Information" in Part I of the Prospectus, may exceed the actual
costs of providing portfolio supervisory services for a particular
Trust, but at no time will the total amount the Sponsors receive
for portfolio supervisory services rendered to all Trusts in any
calendar year exceed the aggregate cost to them of supplying such
services in such year.
The Trustee will receive for its ordinary recurring services to
each Trust an annual fee in the amount set forth under "Summary
of Essential Financial Information" in Part I of the Prospectus
for such Trust. Such fees may be adjusted as set forth below.
There is no minimum fee and, except as hereinafter set forth,
no maximum fee. For a discussion of certain benefits derived by
the Trustee from the funds of each Trust, see "Rights of Unit
Holders-Distribution of Interest and Principal". For a discussion
of the services performed by the Trustee pursuant to its obligations
under each Trust Agreement, reference is made to the material
set forth under "Rights of Unit Holders". The Evaluator will receive
an amount as set forth under the "Summary of Essential Financial
Information" in Part I of the Prospectus relating to each Trust
for each daily evaluation of the Bonds in such Trust. See "Evaluator-
Responsibility". The Trustee's and Evaluator's fees are payable
monthly on or before each Distribution Date and the Sponsors'
annual fee is payable annually on December 1, each from the Interest
Account of each Trust to the extent funds are available and then
from the Principal Account thereof. These fees may be increased
without approval of the Unit holders of the related Trust 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". If the balances in
the Principal and Interest Accounts of a Trust are insufficient to
provide for amounts payable by such Trust, or amounts payable to
the Trustee which are secured by prior lien on such Trust, the
Trustee is permitted to sell Bonds from such Trust to pay such amounts.
Insurance Premiums
The insurance premium for the insurance obtained by each Trust,
which is an obligation of each separate Trust, is payable monthly
by the Trustee on behalf of each Trust. As Bonds in the portfolio
of a Trust mature, are redeemed by their respective issuers or
are sold by the Trustee, the amount of the premium payable by
such Trust will be reduced in respect of those Bonds no longer
owned by and held in such Trust. A Trust does not incur any expense
for insurance which has been obtained by an issuer of a Pre-insured
Bond or another party, since the premium or premiums for such
insurance have been paid by such issuer or other party; Pre-insured
Bonds, however, are additionally insured by such Trust. No premium
will be paid by a Trust on Bonds that are pre-insured by either
the Association or the Corporation. The premium payable for Permanent
Insurance and the related custodial fee will be paid solely from
the proceeds of the sale of a Bond from a Trust in the event the
Trustee exercises the right to obtain Permanent Insurance on such Bond.
Page 34
Other Charges
The following additional charges are or may be incurred by a Trust:
all expenses (including audit and counsel fees) of the Trustee
incurred in connection with its activities under the Trust Agreement
for such Trust, including the expenses and costs of any action
undertaken by the Trustee to protect such Trust and the rights
and interest of the Unit holders thereof; fees of the Trustee
for any extraordinary services performed under the Trust Agreement
for such Trust; indemnification of the Trustee for any loss or
liability not attributable to gross negligence, bad faith or willful
misconduct on its part, arising out of or in connection with its
acceptance or administration of such Trust; annual auditing fees
as provided in the Trust Agreement for such Trust; and all taxes
and other governmental charges imposed upon the Bonds or any part
of such Trust (no such taxes or charges are being levied or made
or, to the knowledge of the Sponsors, contemplated). The above
expenses, including the Trustee's fee, when paid by or owing to
the Trustee, are secured by a lien on the applicable Trust. In
addition, if the balances in the Interest and Principal Accounts
of the applicable Series are insufficient to provide for amounts
payable by such Trust, the Trustee is empowered to sell Bonds
in order to make funds available to pay all expenses.
PUBLIC OFFERING
Offering Price
The Public Offering Price of Units of a Trust for secondary market
purchases will be determined by adding to the Evaluator's determination
of the aggregate bid price of the Bonds in a Trust the appropriate
sales charge determined in accordance with the schedule set forth
below, based upon the years to the pricing life date of each bond
in the underlying portfolio.
The effect of this method of sales charge computation will be
that different sales charge rates will be applied to each of the
various Bonds in the Trust based upon the years to the pricing
life date of such bonds, in accordance with the following schedule:
<TABLE>
<CAPTION>
Percentage Percentage
of Public of Public
Years to Pricing Life Date Offering Price Invested
__________________________ ______________ __________
<S> <C> <C>
0.000 - 1.000 1.0% 1.010%
1.001 - 2.000 2.0% 2.041%
2.001 - 4.000 3.0% 3.093%
4.001 - 8.000 4.0% 4.167%
8.001 - 12.000 5.0% 5.263%
12.001 - 15.000 5.5% 5.820%
15.001 - or more 5.7% 6.045%
</TABLE>
However, the minimum sales charge on units will be 2% of the Public
Offering Price. There will be no reduction of the sales charges
for volume purchases. A dealer will receive from the co-Sponsors
a dealer concession of 70% of the sales charge, subject to change
from time to time. A proportionate share of accrued and undistributed
interest on the Bonds at the date of delivery of the Units to
the purchaser is also added to the Public Offering Price.
Each Sponsor has agreed to reduce the Public Offering Price of
Units for employees and officers (including their immediate families
and trustees, custodians or fiduciaries for the benefit of such
person) in the accounts listed below. J. C. Bradford & Co., offers
Units to employees and officers in both the primary and secondary
market at a price equal to the Public Offering Price less 50%
of the Sponsor's commission. Glickenhaus & Co. offers Units to
employees and officers in the secondary market at the secondary
market bid price plus $5.00. Raymond James & Associates, Inc.
offers Units to employees and officers in both the primary and
secondary market at a price equal to the Public Offering Price
per Unit less $32.00 per Unit plus a $100.00 fee per transaction.
Certain commercial banks are making Units of the Trusts available
to their customers on an agency basis. A portion of the sales
charge discussed above is retained by or remitted to
Page 35
the banks. Under the Glass-Stegall Act, banks are prohibited from
underwriting Units of the Trusts; however, the Glass-Stegall Act
does permit certain agency transactions, and banking regulators
have not indicated that these particular agency transactions are
not permitted under such Act. In addition, state securities laws
on this issue may differ from the interpretations of federal law
expressed herein and banks and financial institutions may be required
to register as dealers pursuant to state law.
For information relating to the calculation of the Redemption
Price, which is based upon the aggregate bid price of the underlying
Bonds, see "Rights of Unit Holders-Certificates" and "Rights of
Unit Holders-Redemption". Unless Bonds are in default in payment
of principal or interest or in significant risk of such default,
the Evaluator will not attribute any value to the Units of a Trust
due to the insurance obtained by such Trust.
The Evaluator will consider in its evaluation of Defaulted Bonds,
which are covered by insurance obtained by a Trust, the value
of the insurance guaranteeing the principal payments. The value
of the insurance will be equal to the difference between (i) the
market value of Defaulted Bonds assuming the exercise of the right
to obtain Permanent Insurance (less the insurance premium attributable
to the purchase of Permanent Insurance and the related custodial
fee) and (ii) the market value of such Defaulted Bonds not covered
by Permanent Insurance. In any case the Evaluator will consider
the ability of the insurer for that Trust to meet its commitments
under that Trust's insurance policy, including the commitment
to issue Permanent Insurance. The Evaluator intends to use a similar
valuation method with respect to Bonds insured under a policy
issued to a Trust if there is a significant risk of default and
a resulting decrease in the market value. For a description of
the circumstances under which a full or partial suspension of
the right of Unit holders of the affected Trust to redeem their
Units may occur, see "Rights of Unit Holders-Redemption".
If the Trustee does not exercise the right to obtain Permanent
Insurance on any Defaulted Bonds in a Trust, it is the present
intention of the Trustee, so long as such Trust contains either
some bonds not in default or any Pre-insured Bonds, not to sell
Defaulted Bonds to effect redemptions or for any other reason
but rather to retain them in the related Trust portfolio BECAUSE
VALUE ATTRIBUTABLE TO THE INSURANCE OBTAINED BY A TRUST CANNOT
BE REALIZED UPON SALE. Insurance obtained by the issuer of Pre-insured
Bonds, or by some other party, is effective so long as such Pre-insured
Bond is outstanding and the insurer of such Bond continues to
fulfill its obligations. Therefore, any such insurance may be
considered to represent an element of market value in regard to
the Pre-insured Bond, but the exact effect, if any, of this insurance
on such market value cannot be quantified. Regardless of whether
the insurer of a Pre-insured Bond continues to fulfill its obligations,
however, such Bond will in any case continue to be insured under
the policy obtained by the related Trust, as long as the Bond
is held in such Trust.
Market for Units
Although they are not obligated to do so, the Sponsors intend
to maintain a market for the Units of each Trust and continuously
offer to purchase such Units at prices based upon the aggregate
bid price of the Bonds in such Trust (the "Sponsors' Repurchase
Price"). The Sponsors Repurchase Price of a Unit shall be not
less than the Redemption Price of such Unit plus accrued interest
through the expected Settlement Date. See "Rights of Unit Holders-
Redemption-Computation of Redemption Price per Unit". There is no
sales charge incurred when a Unit holder sells Units back to the
Sponsors. Any Units repurchased by the Sponsors may be reoffered
to the public by the Sponsors at the Public Offering Price at the
time, plus accrued interest. If the supply of Units of a Trust
exceeds demand, or for some other business reason, the Sponsors
may discontinue purchases of Units of such Trust. The Sponsors
do not guarantee the enforceability, marketability, or price of
any Bond in a Trust portfolio or of the related Units. In the
event that a market is not maintained for the Units of a Trust,
a Unit holder of such Trust desiring to dispose of his Units may
be able to do so only by tendering such Units to the Trustee for
redemption at the applicable Redemption Price, which is based upon
the aggregate bid price of the underlying Bonds. If a Unit holder
wishes to dispose of his Units, he should inquire of the Sponsors
as to current market prices prior to making a tender for redemption
to the Trustee. See "Rights of Unit Holders-Redemption" and "Sponsors".
Page 36
Distribution of Units
It is the Sponsors' intention to effect a public distribution
of the Units solely through their own organizations. However,
Units may be sold to dealers who are members of the National Association
of Securities Dealers, Inc. at prices which represent a concession
of 70% of the sales charge (see "Public Offering-Offering Price"),
per Unit of the Public Offering Price, subject in each case to
change from time to time by the Agent for the Sponsors. In maintaining
a market for the Units (see "Public Offering-Market for Units")
the Sponsors will also 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 (the Public Offering
Price which includes the sales charge set forth in Part I under
"Summary of Essential Financial Information") or redeem such Units
(based on the aggregate bid side valuation of the Bonds).
RIGHTS OF UNIT HOLDERS
Certificates
Ownership of Units of a Trust is evidenced by registered certificates
executed by the Trustee and the Sponsors. The Trustee is authorized
to treat as the record owner of Units that person who is registered
as such owner on the books of the Trustee. Certificates are transferable
by presentation and surrender to the Trustee properly endorsed
and accompanied by a written instrument or instruments of transfer.
Certificates may be issued in denominations of one Unit or any
multiple thereof. A Unit holder may be required to pay $2.00 per
certificate reissued or transferred, and to pay any governmental
charge that may be imposed in connection with each such transfer
or interchange. For new certificates issued to replace destroyed,
stolen or lost certificates, the Unit holder must furnish indemnity
satisfactory to the Trustee and must pay such expenses as the
Trustee may incur. Mutilated certificates must be surrendered
to the Trustee for replacement.
Distribution of Interest and Principal
While interest will be distributed semi-annually, quarterly (2),
or monthly, depending on the method of distribution chosen, principal,
including capital gains, will be distributed only semi-annually;
provided, however, that, other than for purposes of redemption,
no distribution need be made from the Principal Account of a Trust
if the balance therein is less than $1.00 per unit then outstanding
and that if at any time the pro rata share represented by the
Units of cash in the Principal Account of such Trust exceeds $10.00
per Unit as of a Monthly Record Date, the Trustee shall, on the
next succeeding Monthly Distribution Date, distribute the Unit
holder's pro rata share of the balance of the Principal Account.
Interest (semi-annually, quarterly or monthly) and principal,
including capital gains, if any (semi-annually) received by a
Trust will be distributed on each Distribution Date to Unit holders
of record of such Trust as of the preceding Record Date who are
entitled to such distributions at that time under the plan of
distribution chosen. All distributions to Unit holders of a Trust
will be net of applicable expenses and funds required for the
redemption of Units thereof. See "Summary of Essential Information"
in Part I of the Prospectus, "The Trusts-Expenses and Charges"
and "Rights of Unit Holders-Redemption".
The Trustee will credit to the Interest Account of a Trust all
interest received by such Trust, including that part of the proceeds
of any disposition of underlying Bonds which represents accrued
interest (including insurance proceeds representing accrued interest).
Other receipts of a Trust will be credited to the related Principal
Account. The pro rata share of the Interest Account and the pro
rata share of cash in the Principal Account of a Trust represented
by each Unit on such Trust will be computed by the Trustee each
month as of the Record Date. See "Summary of Essential Financial
Information" in Part I of the Prospectus relating to such Trust.
Proceeds received from the disposition of any of the Bonds in
a Trust subsequent to a Record Date and prior to the next succeeding
Distribution Date will be held in the Principal Account of such
Trust and will not be distributed until the second succeeding
Distribution Date. Because interest on the Bonds is not received
by a Trust at a constant rate throughout the year, any particular
interest distribution may be more or less than the amount credited
to the Interest Account of such Trust as of the Record Date. Persons
who purchase Units between a Record Date and the next succeeding
Distribution Date will receive their first distribution on the
second Distribution Date following their purchase of Units under
the applicable plan of distribution. No distribution need be made
from the Principal Account of a Trust if the balance therein is
less than an amount sufficient to distribute $1.00 per unit. The
difference between the estimated
________________
(2) Quarterly distributions are available only to Unit holders
of M.I.N.T. Series 1 through M.I.N.T. Series 20, as provided in
the respective Trust Agreement for such Trust.
Page 37
net interest accrued to a Record date and the estimated net interest
accrued to the related Distribution Date is an asset of the respective
Unit holder and will be realized in subsequent distributions or
upon the earlier of the sale of such Units or the maturity, redemption
or sale of Bonds in the Trusts. Record dates for monthly distributions
will be the tenth day of the month, record dates for quarterly
distributions (for Trusts providing quarterly distributions) will
be the tenth day of March, June, September and December and record
dates for semi-annual distributions will be the tenth day of June
and December. See "Summary of Essential Financial Information"
in Part I of the Prospectus relating to such Trust.
Unit holders will initially receive distributions in accordance
with the election of the prior owner. Each April, the Trustee
will furnish each Unit holder a card to be returned together with
the Certificate by June 10 of such year if the Unit holder desires
to change his plan of distribution, and the change will become
effective on June 11 of such year for the ensuing twelve months.
For a discussion of redemption of Units, see "Rights of Unit Holders-
Redemption-Tender of Units". The Trustee will, as of the twenty-fifth
day of each month, deduct from the Interest Account of each Trust
and, to the extent funds are not sufficient therein, from the Principal
Account of such Trust, amounts necessary to pay the expenses of
such Trust as of the tenth day of such month. See "The Trusts-Expenses
and Charges". The Trustee also may withdraw from said accounts
such amounts, if any, as it deems necessary to establish a reserve
for any governmental charges payable out of such Trust. Amounts
so withdrawn shall not be considered a part of such Trust's assets
until such time as the Trustee shall return all or any part of
such amounts to the appropriate account. In addition, the Trustee
may withdraw from the Interest Account and the Principal Account
of a Trust such amounts as may be necessary to cover redemption
of related Units by the Trustee. See "Rights of Unit Holders-Redemption".
Funds which are available for future distributions, payments of
expenses and redemptions of a particular Trust, are in accounts
which are non-interest bearing to the Unit holders of such Trust
and are available for use by the Trustee pursuant to normal banking
procedures.
Because interest on Bonds in a Trust is payable at varying intervals,
usually in semi-annual installments, the interest accruing to
such Trust will not be equal to the amount of money received and
available monthly and quarterly (for Trusts providing quarterly
distributions) for distribution from the Interest Account of such
Trust to Unit holders choosing the monthly or quarterly payment
plans, respectively. Therefore, on each monthly and quarterly
Distribution Date, the amount of interest actually deposited in
an Interest Account and available for distribution may be more
or less than the monthly or quarterly interest distributions made
therefrom. In order to eliminate fluctuations in monthly and quarterly
interest distributions resulting from such variances during the
first year of a Trust, the Trustee is required by the Trust Agreement
to advance such amounts to such Trust as may be necessary to provide
monthly and quarterly interest distributions to the Unit holders
of such Trust of approximately equal amounts. The Trustee will
be reimbursed, without interest, for any such advances from funds
available from the Interest Account of the affected Trust on the
next ensuing monthly and quarterly Record Date. The Trustee is
not required to pay interest on funds held in the Principal or
Interest Account of each Trust (but may itself earn interest thereon
and therefore benefit from the use of such funds). In addition,
because of the varying interest payment dates of the Bonds comprising
each Trust portfolio, accrued interest at any point in time will
be greater than the amount of interest actually received by a
Trust and distributed to Unit holders thereof. Therefore, there
will always remain an item of accrued interest that is added to
the value of the Units of a Trust. If a Unit holder sells all
or a portion of his Units he will be entitled to receive his proportionate
share of the accrued interest from the purchaser of his Units.
Similarly, if a Unit holder redeems all or a portion of his Units,
the Redemption Price per Unit which he is entitled to receive
from the Trustee will also include accrued interest on the Bonds.
Thus, the accrued interest attributable to a Unit will not be
entirely recovered until the holder redeems or sells such Unit
or until the related Trust is terminated.
Page 38
Reinvestment Option
The Sponsors have entered into an arrangement with First Investors
Insured Tax Exempt Fund, Inc. ("First Investors") which permits
Unit holders of the Trusts to elect to have each distribution
of interest income, capital gains or principal on his Units automatically
reinvested in shares of First Investors at the price (plus sales
charge) described below. First Investors, whose investment adviser
is First Investors Management Company (the "Adviser"), is an open-end,
diversified management investment company with the objective of
providing, through investment in a professionally managed, insured
portfolio of municipal bonds, a high level of current tax-exempt
income. First Investors has investment objectives which differ
in certain respects from those of the Trusts. First Investors
is permitted to own tax-exempt bonds rated less than A by Moody's
or Standard & Poor's and bonds not rated by Moody's or Standard
& Poor's, if, in the judgment of the Adviser, such bonds are suitable
for achieving First Investors' investment objectives and if, in
the judgment of the independent insurance company (AMBAC Indemnity)
which issues insurance covering the securities in the portfolio
of First Investors, such bonds are acceptable for issuance of
municipal bond insurance. As a result of such insurance the fund
has received a rating of AAA by Standard & Poor's. First Investors
may also own (not to exceed 10% of the portfolio on average) short-term,
fixed-income investments, the interest income from which may be
subject to Federal income tax, as described in the Prospectus
relating to First Investors. Each person who purchases Units of
a Trust may request from First Investors a prospectus describing
First Investors and a form by which such person may elect to become
a participant in the reinvestment plan. Texas residents may request
from First Investors that broker-dealers registered in Texas send
such materials. Thereafter, as directed by such person, each distribution
of interest income, capital gains or principal on the participant's
Units will, on the applicable Distribution Date, automatically
be applied as of that date by the Trustee to purchase shares (or
fractions thereof) of First Investors at a net asset value as
computed as of the close of trading on the New York Stock Exchange
on such date, plus a sales charge of 1 1/2% of the offering price
of such shares. The sales charge will be paid to the Adviser and
First Investors Corporation, as principal underwriters of First
Investors, which will reallow 1.0% to underwriters and dealers.
The balance will be invested in First Investors. Confirmation
of all transactions undertaken for each participant in the reinvestment
plan will be mailed to such participant by First Investors indicating
distributions and shares (or fractions thereof) of First Investors
purchased on his behalf. A participant may at any time prior to
five days preceding the next succeeding Distribution Date, by
so notifying the Trustee in writing, elect to terminate his participation
in the reinvestment plan and receive future distributions on his
Units in cash. There will be no charge or other penalty for such
termination. The Sponsors, First Investors and the Adviser each
will have the right to terminate this investment plan. Reinvestment
of distributions through the reinvestment plan will not affect
the income tax status of the distributions. For more information
on the reinvestment plan please write Administrative Data Management,
10 Woodbridge Center Drive, Woodbridge, New Jersey 07095-1198,
Attn: Client Relations. The reinvestment option currently is unavailable
to Massachusetts residents.
Reports and Records
The Trustee will furnish Unit holders 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
Unit holder of record of a Trust, a statement providing the following
information: (1) as to the Interest Account of such Trust: interest
received (including amounts representing interest received upon
any disposition of Bonds and any earned original issue discount),
and, deductions for payment of applicable taxes and for fees and
expenses of such Trust (including insurance costs), redemptions
of Units of such 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 of
such Trust outstanding on the last business day of such calendar
year; (2) as to the Principal Account of such Trust: the dates
of disposition of any Bonds and the net proceeds received therefrom
(including any earned original issue discount but excluding any
portion representing interest, the premium attributable to the
Trustee's exercise of the right to obtain Permanent Insurance
and any related custodial fee), deductions for payments of applicable
taxes and for fees and expenses of such Trust, for purchases of
Replacement Bonds, and for redemptions of Units, and the balance
remaining after such distributions and deductions, expressed both
as a total dollar amount and as a dollar amount representing the
pro rata share of each Unit outstanding on the last business day
of such calendar year; (3) a list
Page 39
of the Bonds held and the number of Units outstanding on the last
business day of such calendar year; (4) the Redemption Price per
Unit based upon the last computation thereof made during such
calendar year; (5) amounts actually distributed during such calendar
year from the Interest Account of such Trust and from the Principal
Account of such Trust, separately stated, expressed both as total
dollar amounts and as dollar amounts representing the pro rata
share of each Unit outstanding; and (6) determinations made by
the Trustee regarding Federal or state tax law. The Trustee shall
keep available for inspection by Unit holders of a Trust 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 Unit holders, certificates issued or
held, a current list of Bonds in the respective Trust portfolio
and a copy of the Trust Agreement for the Trust.
Redemption
Tender of Units
While it is anticipated that Units can be sold in the secondary
market, Units may also be tendered to the Trustee for redemption
at its corporate trust office at 101 Barclay Street, New York,
NY 10268, upon payment of any relevant tax. At the present time
there are not specific taxes related to the redemption of the
Units. No redemption fee will be charged by the Sponsors or the
Trustee. Units redeemed by the Trustee will be canceled.
Certificates for Units to be redeemed must be delivered to the
Trustee and must be properly endorsed and accompanied by a written
instrument of transfer. Thus, redemption of Units cannot be effected
until Certificates representing such Units have been delivered
to the Trustee by the person seeking redemption. See "Rights of
Unit Holders-Certificates". Unit holders must sign exactly as
their names appear on the face of the Certificate with signature(s)
guaranteed by a participant in the Securities Transfer Agents
Medallion Program ("STAMP") or such other signature guaranty program
in addition to, or in substitution for, STAMP, as may be accepted
by the Trustee. In certain instances the Trustee may require additional
documents such as, but not limited to, trust instruments, certificates
of death, appointments as executor or administrator, or certificates
of corporate authority. Within three business days following such
tender, the Unit holder will be entitled to receive in cash an
amount for each Unit tendered equal to the applicable Redemption
Price per Unit computed as of the Evaluation Time set forth under
"Summary of Essential Financial Information" in Part I as of the
next subsequent Evaluation Time. See "Computation of Redemption
Price per Unit". The "date of tender" is deemed to be the date
on which Units are received by the Trustee, except that with respect
to Units received after the Evaluation Time on the New York Stock
Exchange, Inc., the date of tender is the next day on which such
Exchange is open for trading or the next day on which there is
a sufficient degree of trading in Units of the Trust, and such
Units will be deemed to have been tendered to the Trustee on such
day for redemption at the applicable Redemption Price computed
on that day. For information relating to the purchase by the Sponsors
of Units tendered to the Trustee for redemption at prices in excess
of the applicable Redemption Price, see "Purchase by the Sponsors
of Units Tendered for Redemption".
Accrued interest paid on redemption shall be withdrawn from the
Interest Account of the applicable Trust, or, if the balance therein
is insufficient, from the Principal Account of the applicable
Trust. All other amounts paid on redemption will be withdrawn
from the Principal Account of the applicable Trust. The Trustee
is empowered to sell Bonds from a Trust in order to make funds
available for redemption of Units of such Trust. When and to the
extent Bonds are sold from a Trust, the size and diversity of
such Trust will be reduced. Such sales may be required at a time
when Bonds would not otherwise be sold and might result in lower
prices than might otherwise be realized. If the Trustee exercises
the right to obtain Permanent Insurance on a Bond, such Bond will
be sold from the applicable Trust on an insured basis. In the
event the Trustee does not exercise the right to obtain Permanent
Insurance on a Bond, such Bond will be sold from the applicable
Trust on an uninsured basis since the insurance obtained by a
Trust covers the timely payment of principal and interest, when
due, on the Bonds only while such Bonds are held in and owned
by such Trust. If the Trustee does not obtain Permanent Insurance
on a Defaulted Bond, to the extent that Bonds which are current
in payment of interest are sold from a Trust portfolio in order
to meet redemption requests
Page 40
and Defaulted Bonds are retained in the portfolio in order to
preserve the related insurance protection applicable to said Bonds,
the overall value of the Bonds remaining in such Trust will tend
to diminish. See "Sponsors-Responsibility" for the effect of selling
Defaulted Bonds to meet redemption requests.
The Trustee reserves the right to suspend the right of redemption
and to postpone the date of payment of the applicable Redemption
Price per Unit for any period during which the New York Stock
Exchange, Inc. is closed, other than weekend and holiday closings,
or during which trading on that Exchange is restricted or (as
determined by the Securities and Exchange Commission by rule or
regulation) an emergency exists as a result of which disposal
or evaluation of the underlying Bonds is not reasonably practicable,
or for such other periods as the Securities and Exchange Commission
has by order permitted.
Because insurance obtained by a Trust terminates as to Bonds therein
which are sold by the Trustee, and because the insurance obtained
by such Trust does not have a realizable cash value which can
be used by the Trustee to meet redemptions of Units thereof, under
certain circumstances the Sponsors may apply to the Securities
and Exchange Commission for an order permitting a full or partial
suspension of the right of Unit holders of the affected Trust
to redeem their Units if a significant portion of the Bonds in
such Trust portfolio are Defaulted Bonds. No assurance can be
given that the Securities and Exchange Commission will permit
the Sponsors to suspend the rights of Unit holders to redeem their
Units, and without the suspension of such redemption rights when
faced with excessive redemptions, the Sponsors may not be able
to preserve the benefits of a Trust's insurance on Defaulted Bonds.
Computation of Redemption Price Per Unit
The Redemption Price per Unit of a Trust is determined by the
Trustee on the basis of the bid prices of the Bonds in such Trust
as of the Evaluation Time stated under "Summary of Essential Financial
Information" in Part I of the Prospectus of such Trust. The Redemption
Price per Unit is each Unit's pro rata share, determined by the
Trustee, of the following: (1) the aggregate value of the Bonds
in a Trust (determined by the Evaluator as set forth below), except
for those cases in which the value of insurance has been included,
(2) cash on hand in a Trust, and (3) accrued and unpaid interest
on the Bonds in a Trust as of the date of computation, less (a)
amounts representing taxes or governmental charges payable out
of such Trust, (b) the accrued expenses of such Trust, and (c)
cash held for distribution to Unit holders of record of such Trust
as of a date prior to the evaluation. The Evaluator may determine
the value of the Bonds in a Trust (1) on the basis of current
bid prices for the Bonds, (2) if bid prices are not available
for any Bonds, on the basis of current bid prices for comparable
bonds, (3) by appraisal, or (4) by any combination of the above.
In determining the Redemption Price per Unit of a Trust no value
will be assigned to the portfolio insurance obtained by such Trust
on the Bonds in such Trust unless such Bonds are in default in
payment of principal or interest or, in the opinion of the Sponsors,
are in significant risk of default. On the other hand, Pre-insured
Bonds are entitled at all times to the benefits of insurance obtained
by their respective issuers so long as the Pre-insured Bonds are
outstanding and the insurer continues to fulfill its obligations,
and such benefits are reflected and included in the market value
of Pre-insured Bonds. For a description of the situations in which
the Evaluator may value the insurance obtained by a Trust, see
"Public Offering-Offering Price".
Purchase by the Sponsors of Units Tendered for Redemption
The Trust Agreement for each Trust requires that the Trustee notify
the Sponsors of any tender of Units of a Trust for redemption.
So long as the Sponsors are maintaining a secondary market in
the Units of such Trust, the Sponsors, prior to the close of business
on the second business day following tender, may purchase any
such Units tendered to the Trustee for redemption at the price
so bid my making payment therefor to the Unit holder in an amount
not less than the applicable Redemption Price on the date of tender.
Payment for such Units shall be made not later than the day on
which the Units would otherwise have been redeemed by the Trustee.
See "Public Offering-Markets for Units". Units held by the Sponsors
may be tendered to the Trustee for redemption as any other Units,
provided that the Sponsors shall not receive for Units purchased
as set forth above a higher price than they paid, but may receive
accrued interest from the Sponsors' date of purchase. The offering
price of any Units resold by the Sponsors will be the
Public Offering Price determined in the manner provided in this
Prospectus. See "Public Offering-Offering Price". Any profit resulting
from the resale of such Units will belong to the Sponsors which
likewise will bear any loss resulting from a lower offering or
redemption price subsequent to their acquisition of such Units.
See "Public Offering-Distribution of Units".
Page 41
SPONSORS
J. C. Bradford & Co. ("Bradford"), a Tennessee limited partnership
formed in 1927, is among the largest investment banking firms
headquartered in the Southeast. Since its founding on May 21,
1927, the firm has grown to over seventy-five offices in fifteen
states with over 600 brokers. Bradford offers a full line of investment
products and services for individual and institutional investors.
In addition, the firm provides a complete range of services to
corporate and municipal clients through its Public and Corporate
Finance Departments. Bradford is a member of the New York Stock
Exchange, the American Stock Exchange, the Pacific Stock Exchange,
the Philadelphia Stock Exchange, the Midwest Stock Exchange, the
Chicago Board of Options Exchange and the National Association
of Securities Dealers, Inc. The principal offices of Bradford
are located at 330 Commerce Street, Nashville, TN 37201.
Glickenhaus & Co. ("Glickenhaus"), a New York limited partnership
organized in 1961, is engaged in the underwriting and securities
brokerage business, and is in the investment advisory business.
It is a member of the New York Stock Exchange and the National
Association of Securities Dealers, Inc. and is an associate member
of the American Stock Exchange. Glickenhaus acts as a sponsor
for successive series of Empire State Municipal Exempt Trust (including
those sold under the name of Municipal Exempt Trust, New York
Exempt Series 1, New York Series 2 and New York Series 3), Empire
State Municipal Exempt Trust, Guaranteed Series and Empire State
Municipal Exempt Trust, Maximus Series. Glickenhaus, in addition
to participating as a member of various selling groups of other
investment companies, executes orders on behalf of investment
companies for the purchase and sale of securities of such companies
and sells securities to such companies in its capacity as a broker
or dealer in securities. The principal offices of Glickenhaus
are located 6 East 43rd Street, New York, NY 10017.
Raymond James & Associates, Inc. ("Raymond James"), a Florida
corporation, along with its affiliates Investment Management &
Research, Inc. and Robert Thomas Securities, Inc. services clients
through nearly 2000 account executives in approximately 650 offices
from coast-to-coast. A wholly-owned subsidiary of Raymond James
Financial Inc. (NYSE-RJF), Raymond James, the successor to the
business of Robert A. James Investments, Inc. was originally founded
in 1962 to provide financial planning services to investors. Raymond
James is a member of the New York, American and Philadelphia Stock
Exchanges, as well as the Chicago Board of Options Exchange. The
principal offices of Raymond James are located at 880 Carillon
Parkway, P.O. Box 12749, St. Petersburg, FL 33733-2749.
At March 31, 1995, the total partners' capital of Bradford was
$98,976,961 (unaudited); at June 30, 1995, the total partners'
capital of Glickenhaus was $131,631,236 (unaudited); and at September
30, 1994, the stock equity of Raymond James was $227,452,000 (audited).
The foregoing information with regard to the Sponsors relates
to the Sponsors only, an not to this series of MINT Group. Such
information is included only for the purpose of informing investors
as to the financial responsibility of the Sponsors and their ability
to carry out their contractual obligations. More comprehensive
financial information can be obtained upon request from any Sponsor.
Limitations on Liability
The Sponsors are liable for the performance of their obligations
arising from their responsibilities under the Trust Agreement
for each Trust, but will be under no liability to the Unit holders
for taking any action or refraining from any action in good faith
or for errors in judgment and will not be responsible in any way
for depreciation or loss incurred by reason of the sale of any
Bonds, except in cases of willful misconduct, bad faith, gross
negligence or reckless disregard for their obligations and duties.
See "The Trusts-Portfolio and "Sponsors-Responsibility".
Responsibility
The Trustee shall sell, for the purposes of redeeming Units of
a Trust tendered by any Unit holder and for paying expenses of
such Trust for which funds are not available, such of the Bonds
in such Trust in a list furnished by the Sponsors as the Trustee
in its sole discretion may deem necessary. In the event the Trustee
does not exercise the right to obtain Permanent Insurance on a
Defaulted Bond or Bonds, to the extent that Bonds
Page 42
are sold from a Trust which are current in payment of principal
and interest in order to meet redemption requests and Defaulted
Bonds are retained in such Trust portfolio in order to preserve
the related insurance protection applicable to said Bonds, the
overall value of the Bonds remaining in such Trust's portfolio
will tend to diminish. In the event the Trustee does not exercise
the right to obtain Permanent Insurance on a Defaulted Bond or
Bonds, except as described below and in certain other unusual
circumstances for which it is determined by the Trustee to be
in the best interests of the Unit holders of a Trust or if there
is no alternative, the Trustee is not empowered to sell Defaulted
Bonds from such Trust for which value has been attributed for
the insurance obtained by such Trust. Because of such restrictions
on the Trustee under certain circumstances the Sponsors may seek
a full or partial suspension of the right of Unit holders of the
affected Trust to redeem their Units. See "Rights of Unit Holders-
Redemption". The Sponsors are empowered, but not obligated, to
direct the Trustee to dispose of Bonds in a Trust in the event of
advanced refunding. It is the responsibility of the Sponsors to
instruct the Trustee to reject any offer made by an issuer of any
of the Bonds in a Trust to issue new obligations in exchange and
substitution for any such Bonds pursuant to a refunding or
refinancing plan, except that the Sponsors may instruct the Trustee
to accept such an offer or to take any other action with respect
thereto as the Sponsors may deem proper if the issuer is in default
with respect to such Bonds or in the opinion of the Sponsors the
issuer will probably default in respect to such Bonds in the
foreseeable future.
Any obligations so received in exchange or substitution will be
held by the Trustee subject to the terms and conditions of the
Trust Agreement for such Trust to the same extent as Bonds originally
deposited thereunder. Within five days after the deposit of obligations
in exchange or substitution for underlying Bonds of a Trust, the
Trustee is required to give notice thereof to each Unit holder
of such Trust, identifying the obligations eliminated and the
Bonds substituted therefor. Except as stated in this and the preceding
paragraph, the acquisition by a Trust of any securities other
than the Bonds initially therein is prohibited.
If any default in the payment of principal or interest on any
Bond in a Trust occurs and no provision for payment is made therefor,
either pursuant to the portfolio insurance obtained by such Trust
or otherwise within 30 days, the Trustee is required to notify
the Sponsors thereof. If the Sponsors fail to instruct the Trustee
to sell or to hold such Bonds within 30 days after notification
by the Trustee to the Sponsors of such default, the Trustee may
in its discretion sell the Defaulted Bond and determine whether
to obtain Permanent Insurance with respect thereto and not be
liable for any depreciation or loss thereby incurred. See "The
Trust-Insurance on the Bonds".
The Sponsors may direct the Trustee to dispose of Bonds upon default
in the payment of principal or interest, institution of certain
legal proceedings or the existence of certain other impediments
to the payment of Bonds, default under other documents which may
adversely affect debt service, default in payment of principal
or interest on other obligations of the same issuer, decline in
projected income pledged for debt service on revenue Bonds, or
decline in price or the occurrence of other market factors, including
advance refunding, so that in the opinion of the Sponsors the
retention of such Bonds in a Trust would be detrimental to the
interest of the Unit holders thereof. The proceeds from any such
sales will be credited to the Principal Account of the affected
Trust for distribution to the Unit holders thereof.
Notwithstanding the foregoing in connection with final distributions
to Unit holders, if the Trustee does not exercise the right to
obtain Permanent Insurance on any Defaulted Bond, because the
portfolio insurance obtained by a Trust is applicable only while
Bonds so insured are held by such Trust, the price to be received
by such Trust upon the disposition of any Defaulted Bond will
not reflect any value based on such insurance. Therefore, in connection
with any liquidation prior to the related Mandatory Termination
Date set forth in Part I of the related Prospectus under "Summary
of Essential Financial Information", it will not be necessary
for the Trustee to, and the Trustee does not currently intend
to, dispose of any Bonds in a Trust if retention of such Bonds,
until due, shall be deemed to be in the best interest of Unit
holders of the affected Trust, including, but not limited to,
situations in which Bonds so insured are in default and situations
in which a Bond or Bonds so insured have a deteriorated market
price resulting from a significant risk of default. Since Pre-insured
Bonds will reflect the value of the insurance obtained by the
Bond issuer, it is the present intention of the Sponsors not to
direct the Trustee to hold any Pre-insured Bonds after the date
of termination of the applicable Trust. All proceeds received,
less applicable expenses, from insurance on
Page 43
Defaulted Bonds not disposed of at the applicable date of termination
will ultimately be distributed to Unit holders of record of the
applicable Trust as of such date of termination as soon as practicable
after the date such Defaulted Bonds become due and applicable
insurance proceeds have been received by the Trustee.
Agent for the Sponsors
Bradford has been appointed by the other Sponsors as agent for
purposes of taking action under each Trust Agreement (the "Agent").
If the Sponsors are unable to agree with respect to action to
be taken jointly by them under the Trust Agreements, then the
Agent for Sponsors shall act as their attorney-in-fact with respect
to such action. The Sponsors appointing the Agent as attorney-in-fact
may, by unanimous consent, appoint another Sponsor attorney-in-fact.
If one of the Sponsors fails to perform its duties under the Trust
Agreement or becomes incapable of acting or becomes bankrupt or
has its affairs taken over by public authorities or revokes its
power of attorney to the Agent without the appointment of a successor
agent, that Sponsor is automatically discharged under the Trust
Agreements and the other Sponsors act as the Sponsors.
Resignation
Any Sponsor may resign at any time provided that at the time of
such resignation one remaining Sponsor maintains a net worth of
$1,000,000 and all the remaining Sponsors are agreeable to such
resignation. Concurrent with or subsequent to such resignation
a new Sponsor may be appointed by the remaining Sponsors and the
Trustee to assume the duties of the resigning Sponsor. If, at
any time, only one Sponsor is acting under a Trust Agreement and
that Sponsor shall resign or fail to perform any of its duties
thereunder or becomes incapable of acting or becomes bankrupt
or its affairs are taken over by public authorities, then the
Trustee may appoint a successor sponsor or terminate such Trust
Agreement and liquidate such Trust.
TRUSTEE
The Trustee is The Bank of New York, a trust organized under the
laws of New York. The Bank of New York has its offices at 101
Barclay Street, New York, NY 10286 (800) 848-6468. The Bank of
New York is subject to supervision and examination by the Superintendent
of Banks of the State of New York and the Board of Governors of
the Federal Reserve System, and its deposits are insured by the
Federal Deposit Insurance Corporation to the extent permitted
by law. The duties of the Trustee are primarily administrative in nature.
The Trustee must be a banking corporation organized under the
laws of the United States or any state and must have at all times
an aggregate capital, surplus and undivided profits of not less
than $5,000,000. The Trustee did not participate in the selection
of securities for the portfolio of the Trust.
Limitations on Liability
The Trustee shall not be liable or responsible in any way for
depreciation of loss incurred by reason of the disposition of
any moneys, Bonds or certificates or in respect of any evaluation
or for any action taken in good faith reliance on prima facie
properly executed documents except in cases of willful misconduct,
bad faith, gross negligence or reckless disregard for its obligations
and duties. In addition, the Trustee shall not be personally liable
for any taxes or other governmental charges imposed upon or in
respect of a Trust which the Trustee may be required to pay under
current or future law of the United States or any other taxing
authority having jurisdiction. See "The Trusts-Portfolios".
Responsibility
For information relating to the responsibilities of the Trustee
under the Trust Agreement relating to a Trust, reference is made
to the material set forth under "Rights of Unit Holders", "Sponsors-
Responsibility" and "Sponsors-Resignation".
Page 44
Resignation
By executing an instrument in writing and filing the same with
the Sponsors, the Trustee and any successor may resign. In such
an event the Sponsors are obligated to appoint a successor trustee
as soon as possible. If the Trustee becomes incapable of acting
or becomes bankrupt or its affairs are taken over by public authorities,
if the Sponsors deem it to be in the best interest of the Unit
holders, the Sponsors may remove the Trustee and appoint a successor
as provided in the Trust Agreement for each Trust. Such resignation
or removal shall become effective upon the acceptance of appointment
by the successor trustee. If, upon resignation of a 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 a trustee becomes
effective only when the successor trustee accepts its appointment
as such or when a court of competent jurisdiction appoints a successor
trustee.
EVALUATOR
Both during and after the initial offering period, the Evaluator
is Muller Data Corporation with main offices located at 395 Hudson
Street, New York, New York, 10014-3622. The Trustee and the Sponsors
may rely on any evaluation furnished by the Evaluator and shall
have no responsibility for the accuracy thereof. Determinations
by the Evaluator under a 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 Sponsors or Unit holders of the related Trust
for errors in judgment. The Evaluator may be liable in cases of
willful misconduct, bad faith, gross negligence or reckless disregard
of its obligations and duties. The Trust Agreement for each Trust
requires the Evaluator to evaluate the Bonds on the basis of their
bid prices on each business day after the initial offering period,
when any Unit of such Trust is tendered for redemption and on
any other day such evaluation is desired by the Trustee or is
requested by the Sponsors. For information relating to the responsibility
of the Evaluator to evaluate the Bonds in a Trust on the basis
of their offering prices, see "Public Offering-Offering Price".
The Evaluator may resign or may be removed by the Sponsors and
the Trustee, and the Sponsors and the Trustee will do 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.
AMENDMENT AND TERMINATION OF THE TRUST AGREEMENT
The Sponsors and the Trustee have the power to amend a Trust Agreement
for a particular Trust without the consent of any of the Unit
holders thereof when such an amendment is (1) to cure any ambiguity
or to correct or supplement any provision of such Trust Agreement
which may be defective or inconsistent with any other provision
contained therein, or (2) to make such other provisions as shall
not adversely affect the interest of the Unit holders; and the
Sponsors and the Trustee may amend the Trust Agreement for a particular
Trust with the consent of the holders of Certificates evidencing
66 2/3% of the Units thereof then outstanding, provided that no
such amendment will reduce the interest in a Trust of any Unit
holder thereof without the consent of such Unit holder or reduce
the percentage of Units of such Trust required to consent to any
such amendment without the consent of all the Unit holders of
such Trust. In no event shall a Trust Agreement be amended to
increase the number of Units insurable thereunder or to permit
the deposit or acquisition of securities either in addition to
or in substitution for any of the Bonds initially deposited in
such Trust, except in accordance with the provisions of such Trust
Agreement. In the event of any amendment, the Trustee is obligated
to notify promptly all Unit holders of the affected Trust of the
substance of such amendment.
A Trust shall terminate upon the maturity, redemption, sale or
other disposition, as the case may be, of the last of the Bonds
in such Trust. Each trust may be liquidated by the written consent
of 66 2/3% of the Unit holders of such Trust or by the Trustee
when the value of such Trust, as shown by any evaluation, is less
than $2,000,000 or less than 20% of the aggregate principal amount
of the Bonds deposited in the Trust during the primary offering
period, whichever is lower, or in the event that Units of a Trust
not yet sold aggregating more
Page 45
than 60% of the Units of such Trust are tendered for redemption
by the Underwriters, including the Sponsors. If a Trust is liquidated
because of the redemption of unsold Units of the Trust by the
Underwriters, the Sponsors will refund to purchasers of Units
of such Trust the entire sales charge paid by such purchaser.
In no event, however, may a Trust continue beyond the Mandatory
Termination Date relating thereto as set forth in Part I of the
Prospectus for such Trust under the "Summary of Essential Information";
provided however, that prior to such Mandatory Termination Date,
the Trustee shall not dispose of any Bonds in such Trust if the
retention of such Bonds, until due, shall be deemed to be in the
best interest of the Unit holders thereof. In the event of termination
of a Trust, written notice thereof will be sent by the Trustee
to all Unit holders of the affected Trust. Within a reasonable
period after termination of a Trust, the Trustee will sell any
remaining Bonds therein, and, after paying all expenses and charges
incurred by such Trust, will distribute to each Unit holder thereof,
upon surrender for cancellation of his certificate for Units,
his pro rata share of the balances remaining in the Interest and
Principal Accounts of such Trust.
LEGAL OPINIONS
Certain legal matters have been passed upon by Chapman and Cutler,
111 W. Monroe, Chicago, IL 60603, as special counsel for the Sponsors,
and Tanner Propp & Farber, 99 Park Avenue, New York, NY 10016,
acting as counsel for the Trustee.
EXPERTS
The financial statements, including the portfolio of each Trust
appearing in Part One of the Prospectus and Registration Statement
have been audited by Ernst & Young, LLP, independent auditors, as set
forth in their reports thereon appearing therein, and in the Registration
Statement, and are included in reliance upon such reports given
upon the authority of such firm as experts in accounting and auditing.
DESCRIPTION OF BOND RATINGS
Standard & Poor's Corporation: A Standard & Poor's corporate or
municipal bond rating is a current assessment of the creditworthiness
of an obligor with respect to a specific debt obligation. This
assessment may take into consideration obligors such as guarantors,
insurers, or lessees.
The bond rating is not a recommendation to purchase, sell or hold
a security inasmuch as it does not comment as to market price
or suitability for a particular investor.
The ratings are based on current information furnished by the
issuer or obtained by Standard & Poor's from other sources it
considers reliable. Standard & Poor's does not perform any audit
in connection with any rating and may, on occasion, rely on unaudited
financial information. The ratings may be changed, suspended or
withdrawn as a result of changes in, or unavailability of, such
information or for other circumstances.
The ratings are based, in varying degrees, on the following considerations:
I. Likelihood of default-capacity and willingness of the obligor
as to timely payment of interest and repayment of principal in
accordance with the terms of the obligation;
II. Nature of provisions of the obligation; and
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-Bonds rated AAA have the highest rating assigned by Standard
& Poor's to a debt obligation. Capacity to pay interest and repay
principal is extremely strong.
AA-Bonds rated AA have a strong capacity to pay interest and repay
principal and differ from the highest rated issues only in a small degree.
Page 46
A-Bonds rated A have a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than
bonds in higher rated categories.
BBB-Bonds rated BBB are regarded as having an adequate capacity
to pay interest and repay principal. Whereas they normally exhibit
adequate protection parameters, adverse economic conditions or
hanging circumstances are more likely to lead to a weakened capacity
to pay interest and repay principal for bonds in this category
than for bonds in higher rated categories.
BB, B, CCC, CC: Bonds rated BB, B, CCC and CC are regarded, on
balance, as predominantly speculative with respect to capacity
to pay interest and repay principal in accordance with the terms
of the obligation. BB indicates the lowest degree of speculation
and CC the highest degree of speculation. While such bonds will
likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures
to adverse conditions.
Plus (+) or Minus (-): The ratings from AA to B may be modified
by the addition of a plus or minus sign to show relative standing
within the major rating categories.
Provisional Ratings: The letter "p" indicates that the rating
is provisional. A provisional rating assumes the successful completion
of the project being financed by 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 of the project, 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.
NR-Indicates that no rating has been requested, that there is
insufficient information on which to base a rating or that Standard
& Poor's does not rate a particular type of obligation as a matter of policy.
SP-1 Very strong or strong capacity to pay principal and interest.
Those issues determined to possess overwhelming safety characteristics
will be given a plus (+) designation.
SP-2 Satisfactory capacity to pay principal and interest.
SP-3 Speculative capacity to pay principal and interest.
Moody's Investors Service: A brief description of the applicable
Moody's Investors Service rating symbols and their meanings follow:
Aaa-Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as "gilt edge". Interest payments are protected by
a large, or by an exceptionally stable margin, and principal is
secure. While the various protective elements are likely to change,
such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa-Bonds which are rated Aa are judged to be of high quality by
all standards. Together with the Aaa group they comprise what
are generally known as high grade bonds. They are rated lower
than the best bonds because margins of protection may not be as
large as in Aaa securities or fluctuations of protective elements
may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in
Aaa securities.
A-Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate,
but elements may be present which suggest a susceptibility to
impairment sometime in the future.
Baa-Bonds which are rated Baa are considered as medium grade obligations;
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present
but certain protective elements may be lacking or may be characteristically
unreliable over any great length of time.
Page 47
Such bonds lack outstanding investment characteristics and in
fact have few speculative characteristics as well.
Ba-Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection
of interest and principal payments may be very moderate and thereby
not well safeguarded during both good and bad times over the future.
Uncertainty of position characterized bonds in this class.
B-Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments
or of maintenance of other terms of the contract over any long
period of time may be small.
Con. (...)-Bonds for which the security depends upon the completion
of some act of the fulfillment of some condition are rated conditionally.
These bonds are secured by (a) earnings of projects under construction,
(b) earnings of projects unseasoned in operating experience, rentals
which begin when the facilities are completed, or (d) payments
to which some other limiting condition attaches. Parenthetical
rating denotes probable credit stature upon completion of construction
or elimination of basis of condition.
Moody's applies numerical modifiers 1, 2, and 3 in each generic
rating classification from Aa through B in its corporate bond
rating system. Although Industrial Revenue Bonds and Environmental
Control Revenue Bonds are tax-exempt issues, they are included
in the corporate bond rating system. The modifier 1 indicates
that the security ranks in the higher end of its generic rating
category; the modifier 2 indicates a mid-range ranking; and the
modifier 3 indicates that the issue ranks in the lower end of
its generic rating category. Moody's does not apply numerical
modifiers other than Aa, A-1, and Baa-1 which are described above,
in its municipal bond rating system.
This Prospectus contains information concerning the Trusts and
the sponsors, but does not contain all of the information set
forth in the registration statements and exhibits relating thereto,
which each Trust has filed with the Securities and Exchange Commission,
Washington, D.C., under the Securities Act of 1933 and the Investment
Company Act of 1940, and to which reference is hereby made.
No person is authorized to give any information or to make any
representations not contained in this Prospectus and any information
or representation not contained herein must not be relied upon
as having been authorized by the Trusts or the Sponsors. 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.
INDEX
Summary of Essential Financial Information A-2
Report of Independent Auditors Relating to the Trust A-4
Statement of Net Assets A-7
Portfolio Information A-10
The Trusts 1
Tax Status 16
Certain Considerations 23
Public Offering 35
Rights of Unit Holders 37
Sponsors 42
Trustee 44
Evaluator 45
Amendment and Termination of the Trust Agreements 45
Legal Opinions 46
Experts 46
Description of Bond Ratings 46
Page 48
PART II. ADDITIONAL INFORMATION NOT REQUIRED IN PROSPECTUS
Contents of Registration Statement
These Post-Effective Amendments to the Registration Statement
on Form S-6 comprise the following papers and documents:
(i) The facing sheet on Form S-6
The Cross-Reference Sheet (previously filed)
The Prospectus
Signatures
(ii) Written Consent of the following persons:
Brown & Wood (previously filed)
Ernst & Young, LLP
Page 49
MINT Group 8
By: J. C. BRADFORD & CO.
(Sponsor)
By J. Ronald Scott
(J. Ronald Scott, a General
Partner)
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
JAMES AVENT* General Partner
_______________________
(James Avent)
J.C. BRADFORD, JR.* General Partner
_______________________
(J.C. Bradford, Jr.)
BOB DOOLITTLE* General Partner
_______________________
(Bob Doolittle)
ALAN ERB* General Partner
_______________________
(Alan Erb)
R.R. HARNESS* General Partner
_______________________
(R.R. Harness)
R. MURRAY HATCHER* General Partner
_______________________
(R. Murray Hatcher)
MITCHELL JOHNSON* General Partner
_______________________
(Mitchell Johnson)
C. TAXON MALOTT* General Partner
_______________________
(C. Taxon Malott)
SIGNATURE TITLE DATE
BARRY POLSTON* General Partner
_______________________
(Barry Polston)
VICTOR PTAK* General Partner
_______________________
(Victor Ptak)
ALTON ROSS, JR.* General Partner
_______________________
(Alton Ross, Jr.)
General Partner March 1, 1996
J. Ronald Scott
(J. Ronald Scott)
MICHAEL SHEA* General Partner
_______________________
(Michael Shea)
W. LUCAS SIMONS* General Partner
_______________________
(W. Lucas Simons)
PARK SMITH* General Partner
_______________________
(Park Smith)
FRANK V. VENABLE, JR.* General Partner
_______________________
(Frank V. Venable, Jr.)
*By: J. Ronald Scott March 1, 1996
(J. Ronald Scott,
Attorney-in-Fact)
MINT Group 8
By: GLICKENHAUS & CO.
(Sponsor)
By Brian Laux
(Brian Laux, Attorney-in-Fact)
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
ROBERT SANTORO* General Partner
_______________________
(Robert Santoro)
ALFRED FEINMAN* General Partner
_______________________
(Alfred Feinman)
SETH M. GLICKENHAUS* General Partner
_______________________
(Seth M. Glickenhaus)
STEVEN B. GREEN* General Partner
_______________________
(Steven B. Green)
ARTHUR WINSTON* General Partner
(Arthur Winston)
*By Brian Laux March 1, 1996
(Brian Laux,
Attorney-in-Fact)
MINT Group 8
By: RAYMOND JAMES & ASSOCIATES,
INC.
(Sponsor)
By Richard K. Johnson
(Richard K. Johnson,
Senior Vice President)
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
THOMAS S. FRANKE* President and Director
_______________________
(Thomas S. Franke)
THOMAS A. JAMES* Director
_______________________
(Thomas A. James)
Senior Vice President
of Finance, Secretary
LYNN PIPPENGER and Director March 1, 1996
_______________________
(Lynn Pippenger)
ROBERT F. SHUCK* Director
_______________________
(Robert F. Shuck)
DENNIS W. ZANK
Director
(Dennis W. Zank)
*By Richard K. Johnson March 1, 1996
(Richard K. Johnson,
Attorney-in-Fact)
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts"
and to the use of our report dated January 5, 1996, in this Post-Effective
Amendment to the Registration Statement and related Prospectus
of The Municipal Insured National Trust Series 41 and Tennessee
Trust Series 5 dated February 29, 1996.
ERNST & YOUNG, LLP
Chicago, Illinois
February 28, 1996
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from Post
Effective Amendment to Form S-6 and is qualified in its entirety by
reference to such Post Effective Amendment to Form S-6.
</LEGEND>
<SERIES>
<NUMBER> 041
<NAME> MINT TRUST
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 7,105,957
<INVESTMENTS-AT-VALUE> 7,631,730
<RECEIVABLES> 155,918
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 7,787,648
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 26,980
<TOTAL-LIABILITIES> 26,980
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 7,105,957
<SHARES-COMMON-STOCK> 7,467
<SHARES-COMMON-PRIOR> 7,709
<ACCUMULATED-NII-CURRENT> 128,938
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 525,773
<NET-ASSETS> 7,760,668
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 476,865
<OTHER-INCOME> 0
<EXPENSES-NET> 19,385
<NET-INVESTMENT-INCOME> 457,480
<REALIZED-GAINS-CURRENT> 14,178
<APPREC-INCREASE-CURRENT> 470,370
<NET-CHANGE-FROM-OPS> 942,028
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 454,681
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 242
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 242,738
<ACCUMULATED-NII-PRIOR> 133,367
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from Post
Effective Amendment to Form S-6 and is qualified in its entirety by
reference to such Post Effective Amendment to Form S-6.
</LEGEND>
<SERIES>
<NUMBER> 005
<NAME> TENNESSEE TRUST
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 1,905,875
<INVESTMENTS-AT-VALUE> 2,029,265
<RECEIVABLES> 36,617
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,065,882
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 11,031
<TOTAL-LIABILITIES> 11,031
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,905,875
<SHARES-COMMON-STOCK> 1,997
<SHARES-COMMON-PRIOR> 2,000
<ACCUMULATED-NII-CURRENT> 25,586
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 123,390
<NET-ASSETS> 2,054,851
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 126,094
<OTHER-INCOME> 0
<EXPENSES-NET> 8,037
<NET-INVESTMENT-INCOME> 118,057
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 104,869
<NET-CHANGE-FROM-OPS> 222,926
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 115,510
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 3
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 104,385
<ACCUMULATED-NII-PRIOR> 28,576
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
