File No. 33-51233
CIK #896298
Securities and Exchange Commission
Washington, D.C. 20549-1004
Amendment No. 1
To
Form S-6
For Registration under the Securities Act of 1933 of Securities of Unit
Investment Trusts Registered on Form N-8B-2.
A. Exact Name of Trust: Insured Municipals Income Trust
154th Insured Multi-Series
B. Name of Depositor: Van Kampen Merritt Inc.
C. Complete address of Depositor's principal executive offices:
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
D. Name and complete address of agents for service:
Chapman and Cutler Van Kampen Merritt Inc.
Attention: Mark J. Kneedy Attention: John C. Merritt,
111 W. Monroe Street Chairman
Chicago, Illinois 60603 One Parkview Plaza
Oakbrook Terrace, Illinois 60181
E. Title and amount of securities being registered: 35,559* Units
F. Proposed maximum offering price to the public of the securities being
registered: ($1020 per Unit**): $36,270,180
G. Amount of filing fee, computed at one twenty-nineth of 1 percent of
proposed maximum aggregate offering price to the public: $12,506.94
($351.72 previously paid)
H. Approximate date of proposed sale to the public:
As Soon As Practicable After The Effective Date Of The
Registration Statement
____
/X:/ Check box if it is proposed that this filing will become effective
on February 3, 1994 at 2:00 P.M.
pursuant to Rule 487.
* 23,706 Units registered for primary distribution.
11,853 Units registered for resale by Depositor of Units
previously sold in primary distribution.
** Estimated solely for the purpose of calculating the
registration fee.
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
--
Insured Municipals Income Trust,
154th Insured Multi-Series
Cross Reference Sheet
Pursuant to Rule 404(c) of Regulation C
under the Securities Act of 1933
(Form N-8B-2 Items Required by Instruction
1 as to Prospectus on Form S-6)
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
I. Organization and General Information
1. (a) Name of trust) )
(b) Title of securities issued ) Prospectus Front Cover Page
2. Name and address of Depositor ) Introduction
) Summary of Essential Financial
) Information
) Trust Administration
3. Name and address of Trustee ) Introduction
) Summary of Essential Financial
) Information
) Trust Administration
4. Name and address of principal ) Underwriting
underwriter )
5. Organization of trust ) Introduction
6. Execution and termination of ) Introduction
Trust Indenture and Agreement ) Trust Administration
7. Changes of Name ) *
8. Fiscal year ) *
9. Material Litigation ) *
II. General Description of the Trust and Securities of the Trust
10. General information regarding ) Introduction
trust's securities and rights ) Unitholder Explanations
of security holders ) Trust Information
) Trust Administration
11. Type of securities comprising ) Introduction
units ) Trust Information
) Trust Portfolios
12. Certain information regarding ) *
periodic payment certificates )
13. (a) Load, fees, charges and ) Introduction
expenses ) Summary of Essential Financial
) Information
) Unitholder Explanations
Trust Information
Trust Administration
(b) Certain information regarding )
periodic payment plan ) *
certificates )
(c) Certain percentages ) Introduction
) Summary of Essential Financial
) Information
) Unitholder Explanations
(d) Certain other fees, expenses ) Unitholder Explanations
or charges payable by holders) Trust Administration
(e) Certain profits to be received) Unitholder Explanations
by depositor, principal ) Underwriting
underwriter, trustee or ) Notes to Portfolios
affiliated persons )
(f) Ratio of annual charges to ) *
income )
14. Issuance of trust's securities ) Unitholder Explanations
15. Receipt and handling of payments ) *
from purchasers )
16. Acquisition and disposition of ) Introduction
underlying securities ) Unitholder Explanations
) Trust Administration
17. Withdrawal or redemption ) Unitholder Explanations
) Trust Administration
18. (a) Receipt and disposition ) Introduction
of income ) Unitholder Explanations
(b) Reinvestment of distributions ) *
(c) Reserves or special funds ) Unitholder Explanations
) Trust Administration
(d) Schedule of distributions ) *
19. Records, accounts and reports ) Unitholder Explanations
Trust Administration )
20. Certain miscellaneous provisions ) Trust Administration
of Trust Agreement )
21. Loans to security holders ) *
22. Limitations on liability ) Trust Portfolios
) Trust Administration
23. Bonding arrangements ) *
24. Other material provisions of ) *
trust indenture or agreement )
III. Organization, Personnel and Affiliated Persons of Depositor
25. Organization of Depositor ) Trust Administration
26. Fees received by Depositor ) Trust Administration
27. Business of Depositor ) Trust Administration
28. Certain information as to )
officials and affiliated ) *
persons of Depositor )
29. Companies owning securities of ) *
Depositor )
30. Controlling persons of Depositor ) *
31. Compensation of Directors ) *
32. Compensation of Directors ) *
33. Compensation of Employees ) *
34. Compensation to other persons ) Unitholder Explanations
IV. Distribution and Redemption of Securities
35. Distribution of trust's securities Introduction
by states Settlement of Bonds in the Trusts
36. Suspension of sales of trust's ) *
securities )
37. Revocation of authority to ) *
distribute )
38. (a) Method of distribution )
(b) Underwriting agreements ) Unitholder Explanations
(c) Selling agreements )
39. (a) Organization of principal )
underwriter )
) Trust Administration
(b) N.A.S.D. membership by )
principal underwriter )
40. Certain fees received by ) *
principal underwriter )
41. (a) Business of principal ) Trust Administration
underwriter )
)
(b) Branch offices of principal ) *
underwriter )
(c) Salesmen of principal ) *
underwriter )
)
42. Ownership of securities of the )
trust )
)
43. Certain brokerage commissions ) *
received by principal underwriter)
44. (a) Method of valuation ) Introduction
) Summary of Essential Financial
) Information
) Unitholder Explanations
) Trust Administration
(b) Schedule as to offering price ) *
(c) Variation in offering price ) Unitholder Explanations
to certain persons )
45. Suspension of redemption rights ) *
46. (a) Redemption valuation ) Unitholder Explanations
) Trust Administration
(b) Schedule as to redemption ) *
price )
)
47. Purchase and sale of interests ) Unitholder Explanations
in underlying securities ) Trust Administration
V. Information Concerning the Trustee or Custodian
48. Organization and regulation of ) Trust Administration
trustee )
)
49. Fees and expenses of trustee ) Summary of Essential Financial
) Information
) Trust Administration
50. Trustee's lien ) Trust Administration
VI. Information Concerning Insurance of Holders of Securities
51. Insurance of holders of trust's )
securities ) *
VII. Policy of Registrant
52. (a) Provisions of trust agreement ) Trust Administration
with respect to replacement )
or elimination of portfolio )
securities )
(b) Transactions involving ) *
elimination of underlying )
securities )
(c) Policy regarding substitution ) Trust Administration
or elimination of underlying )
securities )
(d) Fundamental policy not ) *
otherwise covered )
53. Tax Status of trust ) Trust Information
) Other Matters
VIII. Financial and Statistical Information
54. Trust's securities during last ten ) *
years )
55. )
56. Certain information regarding ) *
57. periodic payment certificates )
58. )
59. Financial statements (Instructions ) Other Matters
1(c) to Form S-6) )
_________________________________
* Inapplicable, omitted, answer negative or not required
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed
with the Securities and Exchange Commission. These securities may
not be sold nor may offers to buy be accepted prior to the time the
registration statement becomes effective. This Prospectus shall
not constitute an offer to sell or the solicitation of an offer to
buy nor shall there be any sale of these securities in any State in
which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any State.
PRELIMINARY PROSPECTUS DATED FEBRUARY 3, 1994
SUBJECT TO COMPLETION
February 3, 1994 Van Kampen Merritt
INSURED MUNICIPALS INCOME TRUST, 154TH INSURED MULTI-SERIES
IM-IT 316
IM-IT 76th Intermediate
Colorado IM-IT 67
Connecticut IM-IT 23
Florida IM-IT 76
In the opinion of counsel, interest to the Fund and to Unitholders, with
certain exceptions, is excludable under existing law from gross income for
Federal income taxes. In addition, the interest income of each State Trust is,
in the opinion of counsel, exempt to the extent indicated from state and local
taxes, when held by residents of the state where the issuers of Bonds in such
Trust are located. Capital gains, if any, are subject to Federal tax.
THE FUND. The objectives of the Fund are Federal and, in the case of a
State Trust, state tax-exempt income and conservation of capital through an
investment in a diversified, insured portfolio of tax-exempt bonds. The Fund
consists of five underlying separate unit investment trusts designated as
Insured Municipals Income Trust, Series 316 (the "IM-IT"), Insured Municipals
Income Trust, 76th Intermediate Series (the "IM-IT Intermediate Trust"),
Colorado Insured Municipals Income Trust, Series 67 (the "Colorado IM-IT
Trust"), Connecticut Insured Municipals Income Trust, Series 23 (the
"Connecticut IM-IT Trust") and Florida Insured Municipals Income Trust, Series
76 (the "Florida IM-IT Trust"). The various trusts are collectively referred
to herein as the "Trusts", the Colorado IM-IT, Connecticut IM-IT and Florida
IM-IT Trusts are sometimes collectively referred to herein as the "State
Trusts", while the IM-IT, IM-IT Intermediate, Colorado IM-IT, Connecticut
IM-IT and Florida IM-IT Trusts are sometimes collectively referred to herein
as the "Insured Trusts". Each Trust initially consists of delivery statements
relating to contracts to purchase securities and, thereafter, will consist of
such securities as may continue to be held (the "Bonds" or "Securities"). Such
Securities are interest-bearing obligations issued by or on behalf of
municipalities and other governmental authorities, the interest on which is,
in the opinion of recognized bond counsel to the issuing governmental
authority, exempt from all Federal income taxes under the existing law. In
addition, the interest income of each State Trust is, in the opinion of
counsel, exempt to the extent indicated from state and local taxes, when held
by residents of the state where the issuers of Bonds in such Trust are
located.
"AAA" RATING FOR THE INSURED TRUSTS. Insurance guaranteeing the payments
of principal and interest, when due, on the Securities in the portfolio of
each Insured Trust has been obtained from a municipal bond insurance company
either by such Trust or by the issuer of the Bonds involved, by a prior owner
of the Bonds or by the Sponsor prior to the deposit of such Bonds in an
Insured Trust. See "Unitholder Explanations--Insurance on the Bonds in the
Insured Trusts" on page 22. Insurance obtained by an Insured Trust applies
only while Bonds are retained in such Trust while insurance obtained on
Preinsured Bonds is effective so long as such Bonds are outstanding. The
Trustee, upon the sale of a Bond insured under an insurance policy obtained by
an Insured Trust, has a right to obtain from the insurer involved permanent
insurance for such Bond upon the payment of a single predetermined insurance
premium and any expenses related thereto from the proceeds of the sale of such
Bond. INSURANCE RELATES ONLY TO THE BONDS IN A TRUST AND NOT TO THE UNITS
OFFERED HEREBY OR TO THE MARKET VALUE THEREOF. As a result of such insurance,
the Units of each Insured Trust have received a rating of "AAA" by Standard &
Poor's Corporation. Standard & Poor's Corporation has indicated that this
rating is not a recommendation to buy, hold or sell Units nor does it take
into account the extent to which expenses of each Insured Trust or sales by
each Insured Trust of Bonds for less than the purchase price paid by such
Trust will reduce payments to Unitholders of the interest and principal
required to be paid on such Bonds. See "Unitholder Explanations--Insurance on
the Bonds in the Insured Trusts". No representation is made as to any
insurer's ability to meet its commitments.
PUBLIC OFFERING PRICE. The Public Offering Price of the Units of each
Trust during the initial offering period is equal to the aggregate offering
price of the Securities in such Trust's portfolio and cash, if any, in the
Principal Account held or owned by such Trust Fund plus the applicable sales
charge plus Purchased Interest and accrued interest, if any. After the initial
public offering period, the secondary market Public Offering Price of each
Trust will be equal to the aggregate bid price of the Securities in such Trust
and cash, if any, in the Principal Account held or owned by such Trust Fund
plus the applicable sales charge plus Purchased Interest and accrued interest,
if any. Sales charges for the Trusts in the initial market, expressed both as
a percentage of the Public Offering Price (excluding Purchased Interest) and
as a percentage of the aggregate offering price of the Securities, are set
forth in footnote (2) under "Summary of Essential Financial Information". For
sales charges in the secondary market, see "Unitholder Explanations--Public
Offering". If the Securities in each Trust were available for direct purchase
by investors, the purchase price of the Securities would not include the sales
charge included in the Public Offering Price of the Units. During the initial
offering period, the sales charge is reduced on a graduated scale for sales
involving at least 100 Units. If Units were available for purchase at the
opening of business on the Date of Deposit (except for the IM-IT as of 8:00
A.M. Central Time on the Date of Deposit), the Public Offering Price per Unit
would have been that amount set forth in the "Summary of Essential Financial
Information" for each Trust. See "Unitholder Explanations--Public Offering".
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>
2 Introduction
ESTIMATED CURRENT RETURN AND ESTIMATED LONG-TERM RETURN. The annual
Estimated Current Return and Estimated Long-Term Return to Unitholders at the
opening of business (except for the IM-IT as of 8:00 A.M. Central Time on the
Date of Deposit) on February 3, 1994, were as set forth under "Per Unit
Information" for each Trust. The methods of calculating Estimated Current
Return and Estimated Long-Term Return are set forth in the footnotes to the
"Per Unit Information" for each Trust.
OBJECTIVES OF THE FUND. The objectives of the Fund are income exempt from
Federal income tax and, in the case of a State Trust, Federal and state income
tax (if any) and conservation of capital through an investment in diversified
portfolios of Federal and state tax-exempt obligations. There is, of course,
no guarantee that the Fund will achieve its objectives. The Fund may be an
appropriate investment vehicle for investors who desire to participate in a
portfolio of tax-exempt fixed income securities with greater diversification
than they might be able to acquire individually. In addition, securities of
the type deposited in the Fund are often not available in small amounts.
DISTRIBUTIONS. Purchasers of Units will receive distributions on a
monthly basis. See "Unitholder Explanations--Settlement of Bonds in the
Trusts". Record dates will be the first day of each month. Distributions will
be made on the fifteenth day of the month subsequent to the respective record
dates.
MARKET FOR UNITS. Although not obligated to do so, the Sponsor, Van
Kampen Merritt Inc., intends to, and certain of the other Underwriters may,
maintain a secondary market for the Units at prices based upon the aggregate
bid prices of the Securities in the respective Trusts plus Purchased Interest;
however, during the initial offering period such prices will be based upon the
aggregate offering prices of the Securities plus Purchased Interest. If such a
market is not maintained and no other over-the-counter market is available, a
Unitholder will be able to dispose of his Units only through redemption at
prices based upon the bid prices of the underlying Securities plus Purchased
Interest (see "Unitholder Explanations--Public Offering--Redemption of Units"
and "Unitholder Explanations-- Public Offering--Market for Units").
REINVESTMENT OPTION. Unitholders have the opportunity to have their
distributions reinvested into an open-end, management investment company as
described herein. See "Unitholder Explanations--Public Offering-- Reinvestment
Option".
<PAGE>
Summary of Essential Financial Information 3
<TABLE>
INSURED MUNICIPALS INCOME TRUST,
154TH INSURED MULTI-SERIES
SUMMARY OF ESSENTIAL FINANCIAL INFORMATION
AT THE OPENING OF BUSINESS ON THE DATE OF DEPOSIT: FEBRUARY 3, 1994
(EXCEPT FOR THE IM-IT AS OF 8:00 A.M. CENTRAL TIME ON THE DATE OF DEPOSIT)
SPONSOR: VAN KAMPEN MERRITT INC.
EVALUATOR: AMERICAN PORTFOLIO EVALUATION SERVICES
(A DIVISION OF A SUBSIDIARY OF THE SPONSOR)
TRUSTEE: THE BANK OF NEW YORK
<CAPTION>
IM-IT
INTERMEDIATE COLORADO
GENERAL INFORMATION IM-IT TRUST IM-IT TRUST
<S> <C> <C> <C>
Principal Amount (Par Value) of Securities in Trust.................. $ 9,395,000 $ 5,030,000 $ 2,900,000
Number of Units...................................................... 9,620 5,030 3,019
Fractional Undivided Interest in the Trust per Unit.................. 1/9,620 1/5,030 1/3,019
Principal Amount (Par Value) of Securities per Unit <F1>............. $ 976.61 $ 1,000.00 $ 960.58
Public Offering Price:
Aggregate Offering Price of Securities in Portfolio.............. $ 9,093,420 $ 4,963,663 $ 2,847,865
Aggregate Offering Price of Securities per Unit.................. $ 945.26 $ 986.81 $ 943.31
Sales Charge <F2>................................................ $ 48.70 $ 40.04 $ 48.61
Purchased Interest <F3>.......................................... $ 58,088 $ 20,864 $ 24,406
Purchased Interest per Unit <F3>................................. $ 6.04 $ 4.15 $ 8.08
Public Offering Price per Unit <F3>.............................. $ 1,000.00 $ 1,031.00 $ 1,000.00
Redemption Price per Unit, including Purchased Interest <F3>......... $ 943.96 $ 983.65 $ 944.18
Secondary Market Repurchase Price per Unit, including Purchased
Interest <F3>...................................................... $ 951.30 $ 990.96 $ 951.39
Excess of Public Offering Price per Unit Over Redemption Price per
Unit............................................................... $ 56.04 $ 47.35 $ 55.82
Excess of Sponsor's Initial Repurchase Price per Unit Over Redemption
Price per Unit..................................................... $ 7.34 $ 7.31 $ 7.21
Minimum Value of the Trust under which Trust Agreement may be
terminated......................................................... $ 1,879,000 $ 1,006,000 $ 580,000
Minimum Principal Distribution.......... $1.00 per Unit
First Settlement Date................... February 10, 1994
Evaluator's Annual Supervisory Fee...... Maximum of $0.25 per Unit
Evaluator's Annual Evaluation Fee....... $0.30 per $1,000 principal amount of
Bonds <F4>
Evaluations for purpose of sale, purchase or redemption of Units are made
as of 4:00 P.M. Eastern time on days of trading on the New York Stock
Exchange next following receipt of an order for a sale or purchase of
Units or receipt by The Bank of New York of Units tendered for redemption.
<FN>
<F1>Many unit investment trusts comprised of municipal securities issue a
number of units such that each unit represents approximately $1,000
principal amount of underlying securities. The Sponsor, on the other hand,
in determining the number of Units for each Trust, other than IM-IT
Limited Maturity, IM-IT Intermediate, and IM-IT Short Intermediate Trusts,
has elected not to follow this format but rather to provide that number of
Units which will establish as close as possible as of the Date of Deposit
a Public Offering Price per Unit of $1,000. For IM-IT Limited Maturity,
IM-IT Intermediate, and IM-IT Short Intermediate Trusts, on the other
hand, each unit represents $1,000 principal amount of underlying
securities in such Trust on the Date of Deposit.
<F2>Sales charges for the Trusts, expressed as a percentage of the Public
Offering Price per Unit (excluding Purchased Interest) and in parenthesis
as a percentage of the aggregate offering price of the Securities, are as
follows: an IM-IT or a State Trust - 4.9% (5.152%); an IM-IT Limited
Maturity Trust - 4.3% (4.493%); an IM-IT Intermediate Trust - 3.9%
(4.058%); an IM-IT Short Intermediate Trust - 3.0% (3.093%).
<F3>Purchased Interest is a portion of the unpaid interest that has accrued on
the Bonds from the later of the last payment date on the Bonds or the date
of issuance thereof through the First Settlement Date and is included in
the calculation of the Public Offering Price. Purchased Interest will be
distributed to Unitholders as Units are redeemed or Securities mature or
are called. Anyone ordering Units for settlement after the First
Settlement Date will pay accrued interest from
<PAGE>
4 Summary of Essential Financial Information
such date to the date of settlement (normally five business days after
order) less distributions from the Interest Account subsequent to the
First Settlement Date. For purchases settling on the First Settlement
Date, no accrued interest will be added to the Public Offering Price other
than the Purchased Interest already included therein. After the initial
offering period, the Sponsor's Repurchase Price per Unit will be
determined as described under the caption "Public Offering-- Market for
Units."
<F4>Such fee is based on the outstanding principal amount of Securities in
each Trust on the Date of Deposit for the first year and as of the close
of business on January 1 for each year thereafter.
</TABLE>
<PAGE>
Summary of Essential Financial Information 5
<TABLE>
INSURED MUNICIPALS INCOME TRUST,
154TH INSURED MULTI-SERIES
SUMMARY OF ESSENTIAL FINANCIAL INFORMATION (CONTINUED)
AT THE OPENING OF BUSINESS ON THE DATE OF DEPOSIT: FEBRUARY 3, 1994
(EXCEPT FOR THE IM-IT AS OF 8:00 A.M. CENTRAL TIME ON THE DATE OF DEPOSIT)
SPONSOR: VAN KAMPEN MERRITT INC.
EVALUATOR: AMERICAN PORTFOLIO EVALUATION SERVICES
(A DIVISION OF A SUBSIDIARY OF THE SPONSOR)
TRUSTEE: THE BANK OF NEW YORK
<CAPTION>
CONNECTICUT FLORIDA
GENERAL INFORMATION IM-IT TRUST IM-IT TRUST
<S> <C> <C>
Principal Amount (Par Value) of Securities in Trust................................... $ 2,970,000 $ 2,950,000
Number of Units....................................................................... 3,055 2,982
Fractional Undivided Interest in the Trust per Unit................................... 1/3,055 1/2,982
Principal Amount (Par Value) of Securities per Unit <F1>.............................. $ 972.18 $ 989.27
Public Offering Price:
Aggregate Offering Price of Securities in Portfolio............................... $ 2,887,174 $ 2,825,085
Aggregate Offering Price of Securities per Unit................................... $ 945.07 $ 947.38
Sales Charge <F2>................................................................. $ 48.68 $ 48.81
Purchased Interest <F3>........................................................... $ 19,082 $ 11,362
Purchased Interest per Unit <F3>.................................................. $ 6.25 $ 3.81
Public Offering Price per Unit <F3>............................................... $ 1,000.00 $ 1,000.00
Redemption Price per Unit, including Purchased Interest <F3>.......................... $ 943.98 $ 943.86
Secondary Market Repurchase Price per Unit, including Purchased Interest <F3>......... $ 951.32 $ 951.19
Excess of Public Offering Price per Unit Over Redemption Price per Unit............... $ 56.02 $ 56.14
Excess of Sponsor's Initial Repurchase Price per Unit Over Redemption Price per Unit.. $ 7.34 $ 7.33
Minimum Value of the Trust under which Trust Agreement may be terminated.............. $ 594,000 $ 590,000
Minimum Principal Distribution.......... $1.00 per Unit
First Settlement Date................... February 10, 1994
Evaluator's Annual Supervisory Fee...... Maximum of $0.25 per Unit
Evaluator's Annual Evaluation Fee....... $0.30 per $1,000 principal amount of
Bonds <F4>
Evaluations for purpose of sale, purchase or redemption of Units are made
as of 4:00 P.M. Eastern time on days of trading on the New York Stock
Exchange next following receipt of an order for a sale or purchase of
Units or receipt by The Bank of New York of Units tendered for redemption.
<FN>
<F1>Many unit investment trusts comprised of municipal securities issue a
number of units such that each unit represents approximately $1,000
principal amount of underlying securities. The Sponsor, on the other hand,
in determining the number of Units for each Trust, other than IM-IT
Limited Maturity, IM-IT Intermediate, and IM-IT Short Intermediate Trusts,
has elected not to follow this format but rather to provide that number of
Units which will establish as close as possible as of the Date of Deposit
a Public Offering Price per Unit of $1,000. For IM-IT Limited Maturity,
IM-IT Intermediate, and IM-IT Short Intermediate Trusts, on the other
hand, each unit represents $1,000 principal amount of underlying
securities in such Trust on the Date of Deposit.
<F2>Sales charges for the Trusts, expressed as a percentage of the Public
Offering Price per Unit (excluding Purchased Interest) and in parenthesis
as a percentage of the aggregate offering price of the Securities, are as
follows: an IM-IT or a State Trust - 4.9% (5.152%); an IM-IT Limited
Maturity Trust - 4.3% (4.493%); an IM-IT Intermediate Trust - 3.9%
(4.058%); an IM-IT Short Intermediate Trust - 3.0% (3.093%).
<F3>Purchased Interest is a portion of the unpaid interest that has accrued on
the Bonds from the later of the last payment date on the Bonds or the date
of issuance thereof through the First Settlement Date and is included in
the calculation of the Public Offering Price. Purchased Interest will be
distributed to Unitholders as Units are redeemed or Securities mature or
are called. Anyone ordering Units for settlement after the First
Settlement Date will pay accrued interest from such date to the date of
settlement (normally five business days after order) less distributions
from the Interest Account subsequent to the First Settlement Date. For
purchases settling on the First Settlement Date, no accrued interest will
be added to the Public Offering Price other than the Purchased Interest
already included therein. After the initial offering period, the Sponsor's
Repurchase Price per Unit will be determined as described under the
caption "Public Offering-- Market for Units."
<PAGE>
6 Summary of Essential Financial Information
<F4>Such fee is based on the outstanding principal amount of Securities in
each Trust on the Date of Deposit for the first year and as of the close
of business on January 1 for each year thereafter.
</TABLE>
<PAGE>
Unitholder Explanations 7
SETTLEMENT OF BONDS IN THE TRUSTS
THE FUND. Insured Municipals Income Trust, 154th Insured Multi-Series
(the "Fund"), was created under the laws of the State of New York pursuant to
a Trust Indenture and Agreement (the "Trust Agreement"), dated the Date of
Deposit, among Van Kampen Merritt Inc., as Sponsor, American Portfolio
Evaluation Services, a division of Van Kampen Merritt Investment Advisory
Corp., as Evaluator, and The Bank of New York, as Trustee.
The Fund consists of five separate portfolios of delivery statements
relating to contracts to purchase interest-bearing obligations issued by or on
behalf of states and territories of the United States, and political
subdivisions and authorities thereof, the interest on which is, in the opinion
of recognized bond counsel to the issuing authorities, excludable from gross
income for Federal income tax under existing law. All issuers of Securities in
a State Trust are located in the State for which such Trust is named or in
United States territories or possessions and their public authorities;
consequently, in the opinion of recognized bond counsel to such State issuers,
the related interest earned on such Securities is exempt to the extent
indicated from state and local taxes of such State. With the exception of the
New York and Pennsylvania Trusts, Units of such Trusts may be purchased only
by residents of the State for which such Trust is named. Units of a New York
Trust may be purchased by residents of New York, Connecticut, Florida and
Massachusetts. Units of a Pennsylvania Trust may be purchased by residents of
Pennsylvania, Connecticut, Florida, Maryland, New York, Ohio and West
Virginia. Offerees in the States of Indiana, Virginia and Washington may
purchase Units of the IM-IT and IM-IT Intermediate Trusts only. On the Date of
Deposit, the Sponsor deposited with the Trustee the aggregate principal amount
of Securities in each Trust as indicated under "General Information--
Principal Amount (Par Value) of Securities in Trust" in the "Summary of
Essential Financial Information". Such Securities consist of delivery
statements relating to contracts for the purchase of certain interest-bearing
obligations and cash, cash equivalents and/or irrevocable letters of credit
issued by a financial institution in the amount required for such purchases.
Thereafter, the Trustee, in exchange for the Securities so deposited,
delivered to the Sponsor the certificates evidencing the ownership of the
number of Units in each Trust as indicated under "Summary of Essential
Financial Information." Unless otherwise terminated as provided herein, the
Trust Agreement for any IM-IT or State Trust will terminate at the end of the
calendar year prior to the fiftieth anniversary of its execution, and the
Trust Agreement for any IM-IT Limited Maturity Trust, IM-IT Intermediate
Trust, or IM-IT Short Intermediate Trust will terminate at the end of the
calendar year prior to the twentieth anniversary of its execution.
The portfolio of any IM-IT or State Trust consists of Bonds maturing
approximately 15 to 40 years from the Date of Deposit. The approximate range
of maturities from the Date of Deposit for Bonds in any IM-IT Limited Maturity
Trust, IM-IT Intermediate Trust, and IM-IT Short Intermediate Trust is 12 to
15 years, 5 to 15 years and 3 to 7 years, respectively. The dollar-weighted
average maturity of the Bonds in any IM-IT Intermediate Trust and IM-IT Short
Intermediate Trust is less than or equal to 10 years and 5 years,
respectively.
Certain of the Bonds in certain of the Trusts may be "zero coupon" bonds.
See footnote (6) in "Notes to Portfolios". Zero coupon bonds are purchased at
a deep discount because the buyer receives only the right to receive a final
payment at the maturity of the bond and does not receive any periodic interest
payments. The effect of owning deep discount bonds which do not make current
interest payments (such as the zero coupon bonds) is that a fixed yield is
earned not only on the original investment but also, in effect, on all
discount earned during the life of such obligation. This implicit reinvestment
of earnings at the same rate eliminates the risk of being unable to reinvest
the income on such obligation at a rate as high as the implicit yield on the
discount obligation, but at the same time eliminates the holder's ability to
reinvest at higher rates in the future. For this reason, zero coupon bonds are
subject to substantially greater price fluctuations during periods of changing
market interest rates than are securities of comparable quality which pay
interest.
Certain of the Bonds in certain of the Trusts may have been purchased on
a "when, as and if issued" or "delayed delivery" basis. See footnote (5) in
"Notes to Portfolios". The delivery of any such Securities may be delayed or
may not occur. Interest on these Securities begins accruing to the benefit of
Unitholders on their respective dates of delivery. To the extent any
Securities are actually delivered to the Fund after their respective expected
dates
<PAGE>
8 Unitholder Explanations
of delivery, Unitholders who purchase their Units prior to the date such
Securities are actually delivered to the Trustee would be required to adjust
their tax basis in their Units for a portion of the interest accruing on such
Securities during the interval between their purchase of Units and the actual
delivery of such Securities. As a result of any such adjustment, the Estimated
Current Returns during the first year would be slightly lower than those
stated herein which would be the returns after the first year, assuming the
portfolio of a Trust and estimated annual expenses other than that of the
Trustee (which may be reduced in the first year only) do not vary from that
set forth under "Per Unit Information" for the applicable Trust. Holders of
the Units will be "at risk" with respect to all Securities in the portfolios
including "when, as and if issued" and "delayed delivery" Securities (i.e.,
may derive either gain or loss from fluctuations in the evaluation of such
Securities) from the date they commit for Units. For a discussion of the
Sponsor's obligations in the event of the failure of any contract for the
purchase of any of the Securities and limited right to substitute other
tax-exempt bonds to replace any failed contract, see "Replacement Bonds"
below.
Each Unit initially offered represents the fractional undivided interest
in the principal and net income of a Trust indicated under "Summary of
Essential Financial Information". To the extent that any Units are redeemed by
the Trustee, the fractional undivided interest in a Trust represented by each
unredeemed Unit will increase, although the actual interest in such Trust
represented by such fraction will remain unchanged. Units will remain
outstanding until redeemed upon tender to the Trustee by Unitholders, which
may include the Sponsor or the Underwriters, or until the termination of the
Trust Agreement.
OBJECTIVES AND SECURITIES SELECTION. The objectives of the Fund are
income exempt from Federal income taxation and, in the case of a State Trust,
Federal and state income taxation and conservation of capital through an
investment in diversified portfolios of Federal and state tax-exempt
obligations. There is, of course, no guarantee that the Trusts will achieve
their respective objectives. The Fund may be an appropriate investment vehicle
for investors who desire to participate in a portfolio of tax-exempt fixed
income securities with greater diversification than they might be able to
acquire individually. In addition, securities of the type deposited in the
Fund are often not available in small amounts.
Insurance guaranteeing the timely payment, when due, of all principal and
interest on the Bonds in each Insured Trust has been obtained by such Trust
from either AMBAC Indemnity Corporation ("AMBAC Indemnity"), Financial
Guaranty Insurance Company ("Financial Guaranty" or "FGIC") or a combination
thereof (collectively, the "Portfolio Insurers"), or by the issuer of such
Bonds, by a prior owner of such Bonds, or by the Sponsor prior to the deposit
of such Bonds in such Trust from (1) AMBAC Indemnity or one of its
subsidiaries, American Municipal Bond Assurance Corporation ("AMBAC") or MGIC
Indemnity Corporation ("MGIC Indemnity"), (2) Financial Guaranty, (3)
Municipal Bond Investors Assurance Corporation ("MBIA"), (4) Bond Investors
Guaranty Insurance Company ("BIG"), (5) National Union Fire Insurance Company
of Pittsburgh, PA. ("National Union"), (6) Capital Guaranty Insurance Company
("Capital Guaranty"), (7) Capital Markets Assurance Corporation ("CapMAC")
and/or (8) Financial Security Assurance Inc. ("Financial Security" or "FSA")
(collectively, the "Preinsured Bond Insurers") (see "Unitholder
Explanations--Insurance on the Bonds in the Insured Trusts"). Insurance
obtained by an Insured Trust is effective only while the Bonds thus insured
are held in such Trust. The Trustee has the right to acquire permanent
insurance from a Portfolio Insurer with respect to each Bond insured by the
respective Portfolio Insurer under a Trust portfolio insurance policy.
Insurance relating to Bonds insured by the issuer, by a prior owner of such
Bonds or by the Sponsor is effective so long as such Bonds are outstanding.
Bonds insured under a policy of insurance obtained by the issuer, by a prior
owner of such Bonds or by the Sponsor from one of the Preinsured Bond Insurers
(the "Preinsured Bonds") are not additionally insured by an Insured Trust. No
representation is made as to any insurer's ability to meet its commitments.
Neither the Public Offering Price nor any evaluation of Units for
purposes of repurchases or redemptions reflects any element of value for the
insurance obtained by an Insured Trust, if any, unless Bonds are in default in
payment of principal or interest or in significant risk of such default. See
"Unitholder Explanations--Public Offering--Offering Price". On the other hand,
the value, if any, of Preinsured Bond insurance is reflected and included in
the market value of such Bonds.
<PAGE>
Unitholder Explanations 9
In order for bonds to be eligible for insurance, they must have credit
characteristics which would qualify them for at least the Standard & Poor's
Corporation rating of "BBB-" or at least the Moody's Investors Service, Inc.
rating of "Baa", which in brief represent the lowest ratings for securities of
investment grade (see "Other Matters--Description of Securities Ratings").
Insurance is not a substitute for the basic credit of an issuer, but
supplements the existing credit and provides additional security therefor. If
an issue is accepted for insurance, a non-cancellable policy for the prompt
payment of interest and principal on the bonds, when due, is issued by the
insurer. Any premium or premiums relating to Preinsured Bond insurance is paid
by the issuer, by a prior owner of such Bonds or by the Sponsor and a monthly
premium is paid by an Insured Trust for the portfolio insurance, if any,
obtained by such Trust. The Trustee has the right to obtain permanent
insurance from a Portfolio Insurer in connection with the sale of a Bond
insured under the insurance policy obtained from the respective Portfolio
Insurer by an Insured Trust upon the payment of a single predetermined
insurance premium from the proceeds of the sale of such Bond. Accordingly, any
Bond in an Insured Trust is eligible to be sold on an insured basis. All Bonds
insured by the Portfolio Insurers and the Preinsured Bond Insurers receive a
"AAA" rating by Standard & Poor's Corporation. See "Unitholder
Explanations--Insurance on the Bonds in the Insured Trusts".
In selecting Securities for the Trusts the following facts, among others,
were considered by the Sponsor: (a) either the Standard & Poor's Corporation
rating of the Securities was in no case less than "BBB-" in the case of the
Insured Trusts, or the Moody's Investors Service, Inc. rating of the
Securities was in no case less than "Baa" in the case of the Insured Trusts,
including provisional or conditional ratings, respectively, or, if not rated,
the Securities had, in the opinion of the Sponsor, credit characteristics
sufficiently similar to the credit characteristics of interest-bearing
tax-exempt obligations that were so rated as to be acceptable for acquisition
by the Fund (see "Other Matters-- Description of Securities Ratings"), (b) the
prices of the Securities relative to other bonds of comparable quality and
maturity, (c) the diversification of Securities as to purpose of issue and
location of issuer and (d) with respect to the Insured Trusts, the
availability and cost of insurance for the prompt payment of principal and
interest, when due, on the Securities. Subsequent to the Date of Deposit, a
Security may cease to be rated or its rating may be reduced below the minimum
required as of the Date of Deposit. Neither event requires elimination of such
Security from the portfolio of a Trust but may be considered in the Sponsor's
determination as to whether or not to direct the Trustee to dispose of the
Security (see "Trust Administration--Fund Administration and
Expenses--Portfolio Administration").
To the best knowledge of the Sponsor, there is no litigation pending as
of the Date of Deposit in respect of any Securities which might reasonably be
expected to have a material adverse effect upon the Fund or any of the Trusts.
At any time after the Date of Deposit, litigation may be initiated on a
variety of grounds with respect to Securities in the Fund. Such litigation,
as, for example, suits challenging the issuance of pollution control revenue
bonds under environmental protection statutes, may affect the validity of such
Securities or the tax-free nature of the interest thereon. While the outcome
of litigation of such nature can never be entirely predicted, the Fund has
received or will receive opinions of bond counsel to the issuing authorities
of each Security on the date of issuance to the effect that such Securities
have been validly issued and that the interest thereon is exempt from Federal
income tax. In addition, other factors may arise from time to time which
potentially may impair the ability of issuers to meet obligations undertaken
with respect to the Securities.
PORTFOLIO CONCENTRATIONS. Certain of the Bonds in certain of the Trusts
may be general obligations of a governmental entity that are backed by the
taxing power of such entity. In view of this an investment in such a Trust
should be made with an understanding of the characteristics of such issuers
and the risks which such an investment may entail. All other Bonds in the
Trusts are revenue bonds payable from the income of a specific project or
authority and are not supported by the issuer's power to levy taxes. General
obligation bonds are secured by the issuer's pledge of its faith, credit and
taxing power for the payment of principal and interest. Revenue bonds, on the
other hand, are payable only from the revenues derived from a particular
facility or class of facilities or, in some cases, from the proceeds of a
special excise tax or other specific revenue source. There are, of course,
variations in the security of the different Bonds in the Fund, both within a
particular classification and between classifications, depending on numerous
factors. See "General" for each Trust.
<PAGE>
10 Unitholder Explanations
Certain of the Bonds in certain of the Trusts may be obligations which
derive their payments from mortgage loans. Certain of such housing bonds may
be FHA insured or may be single family mortgage revenue bonds issued for the
purpose of acquiring from originating financial institutions notes secured by
mortgages on residences located within the issuer's boundaries and owned by
persons of low or moderate income. In view of this an investment in such a
Trust should be made with an understanding of the characteristics of such
issuers and the risks which such an investment may entail. Mortgage loans are
generally partially or completely prepaid prior to their final maturities as a
result of events such as sale of the mortgaged premises, default, condemnation
or casualty loss. Because these bonds are subject to extraordinary mandatory
redemption in whole or in part from such prepayments of mortgage loans, a
substantial portion of such bonds will probably be redeemed prior to their
scheduled maturities or even prior to their ordinary call dates. Extraordinary
mandatory redemption without premium could also result from the failure of the
originating financial institutions to make mortgage loans in sufficient
amounts within a specified time period. Additionally, unusually high rates of
default on the underlying mortgage loans may reduce revenues available for the
payment of principal of or interest on such mortgage revenue bonds. These
bonds were issued under Section 103A of the Internal Revenue Code, which
Section contains certain requirements relating to the use of the proceeds of
such bonds in order for the interest on such bonds to retain its tax-exempt
status. In each case the issuer of the bonds has covenanted to comply with
applicable requirements and bond counsel to such issuer has issued an opinion
that the interest on the bonds is exempt from Federal income tax under
existing laws and regulations. Certain issuers of housing bonds have
considered various ways to redeem bonds they have issued prior to the stated
first redemption dates for such bonds. In connection with the housing bonds
held by the Fund, the Sponsor at the Date of Deposit is not aware that any of
the respective issuers of such Bonds are actively considering the redemption
of such Bonds prior to their respective stated initial call dates. See
"General" for each Trust.
Certain of the Bonds in certain of the Trusts may be health care revenue
bonds. In view of this an investment in such a Trust should be made with an
understanding of the characteristics of such issuers and the risks which such
an investment may entail. Ratings of bonds issued for health care facilities
are often based on feasibility studies that contain projections of occupancy
levels, revenues and expenses. A facility's gross receipts and net income
available for debt service may be affected by future events and conditions
including, among other things, demand for services and the ability of the
facility to provide the services required, physicians' confidence in the
facility, management capabilities, competition with other health care
facilities, efforts by insurers and governmental agencies to limit rates,
legislation establishing state rate-setting agencies, expenses, the cost and
possible unavailability of malpractice insurance, the funding of Medicare,
Medicaid and other similar third party payor programs, government regulation
and the termination or restriction of governmental financial assistance,
including that associated with Medicare, Medicaid and other similar third
party payor programs. Pursuant to recent Federal legislation, Medicare
reimbursements are currently calculated on a prospective basis utilizing a
single nationwide schedule of rates. Prior to such legislation Medicare
reimbursements were based on the actual costs incurred by the health facility.
The current legislation may adversely affect reimbursements to hospitals and
other facilities for services provided under the Medicare program. Such
adverse changes also may adversely affect the ratings of Securities held in
the portfolios of the Fund; however, because of the insurance obtained by each
of the Insured Trusts, the "AAA" rating of the Units of each of the Insured
Trusts would not be affected. See "General" for each Trust.
Certain of the Bonds in certain of the Trusts may be obligations of
public utility issuers, including those selling wholesale and retail electric
power and gas. In view of this an investment in such a Trust should be made
with an understanding of the characteristics of such issuers and the risks
which such an investment may entail. General problems of such issuers would
include the difficulty in financing large construction programs in an
inflationary period, the limitations on operations and increased costs and
delays attributable to environmental considerations, the difficulty of the
capital market in absorbing utility debt, the difficulty in obtaining fuel at
reasonable prices and the effect of energy conservation. All of such issuers
have been experiencing certain of these problems in varying degrees. In
addition, Federal, state and municipal governmental authorities may from time
to time review existing, and impose additional, regulations governing the
licensing, construction and operation of nuclear power plants, which may
<PAGE>
Unitholder Explanations 11
adversely affect the ability of the issuers of certain of the Bonds in the
portfolio to make payments of principal and/or interest on such Bonds. See
"General" for each Trust.
Certain of the Bonds in certain of the Trusts may be obligations of
issuers whose revenues are derived from the sale of water and/or sewerage
services. In view of this an investment in such a Trust should be made with an
understanding of the characteristics of such issuers and the risks which such
an investment may entail. Such Bonds are generally payable from user fees. The
problems of such issuers include the ability to obtain timely and adequate
rate increases, population decline resulting in decreased user fees, the
difficulty of financing large construction programs, the limitations on
operations and increased costs and delays attributable to environmental
considerations, the increasing difficulty of obtaining or discovering new
supplies of fresh water, the effect of conservation programs and the impact of
"no-growth" zoning ordinances. All of such issuers have been experiencing
certain of these problems in varying degrees. See "General" for each Trust.
Certain of the Bonds in certain of the Trusts may be industrial revenue
bonds ("IRBs"). In view of this an investment in such a Trust should be made
with an understanding of the characteristics of such issuers and the risks
which such an investment may entail. IRBs have generally been issued under
bond resolutions pursuant to which the revenues and receipts payable under the
arrangements with the operator of a particular project have been assigned and
pledged to purchasers. In some cases, a mortgage on the underlying project may
have been granted as security for the IRBs. Regardless of the structure,
payment of IRBs is solely dependent upon the creditworthiness of the corporate
operator of the project or corporate guarantor. Corporate operators or
guarantors may be affected by many factors which may have an adverse impact on
the credit quality of the particular company or industry. These include
cyclicality of revenues and earnings, regulatory and environmental
restrictions, litigation resulting from accidents or environmentally-caused
illnesses, extensive competition and financial deterioration resulting from a
corporate restructuring pursuant to a leveraged buy-out, takeover or
otherwise. Such a restructuring may result in the operator of a project
becoming highly leveraged which may impact on such operator's creditworthiness
which in turn would have an adverse impact on the rating and/or market value
of such Bonds. Further, the possibility of such a restructuring may have an
adverse impact on the market for and consequently the value of such Bonds,
even though no actual takeover or other action is ever contemplated or
effected. See "General" for each Trust.
Certain of the Bonds in certain of the Trusts may be obligations that are
secured by lease payments of a governmental entity (hereinafter called "lease
obligations"). Lease obligations are often in the form of certificates of
participation. In view of this an investment in such a Trust should be made
with an understanding of the characteristics of such issuers and the risks
which such an investment may entail. Although the lease obligations do not
constitute general obligations of the municipality for which the
municipality's taxing power is pledged, a lease obligation is ordinarily
backed by the municipality's covenant to appropriate for and make the payments
due under the lease obligation. However, certain lease obligations contain
"non-appropriation" clauses which provide that the municipality has no
obligation to make lease payments in future years unless money is appropriated
for such purpose on a yearly basis. A governmental entity that enters into
such a lease agreement cannot obligate future governments to appropriate for
and make lease payments but covenants to take such action as is necessary to
include any lease payments due in its budgets and to make the appropriations
therefor. A governmental entity's failure to appropriate for and to make
payments under its lease obligation could result in insufficient funds
available for payment of the obligations secured thereby. Although
"non-appropriation" lease obligations are secured by the leased property,
disposition of the property in the event of foreclosure might prove difficult.
See "General" for each Trust.
Certain of the Bonds in certain of the Trusts may be obligations of
issuers which are, or which govern the operation of, schools, colleges and
universities and whose revenues are derived mainly from ad valorem taxes or
for higher education systems, from tuition, dormitory revenues, grants and
endowments. In view of this an investment in such a Trust should be made with
an understanding of the characteristics of such issuers and the risks which
such an investment may entail. General problems relating to school bonds
include litigation contesting the State constitutionality of financing public
education in part from ad valorem taxes, thereby creating a disparity in
educational funds available to schools in wealthy areas and schools in poor
areas. Litigation or legislation on this issue may affect the sources of funds
available for the payment of school bonds in the Trusts. General problems
relating to college and
<PAGE>
12 Unitholder Explanations
university obligations include the prospect of a declining percentage of the
population consisting of "college" age individuals, possible inability to
raise tuitions and fees sufficiently to cover increased operating costs, the
uncertainty of continued receipt of Federal grants and state funding, and
government legislation or regulations which may adversely affect the revenues
or costs of such issuers. All of such issuers have been experiencing certain
of these problems in varying degrees. See "General" for each Trust.
Certain of the Bonds in certain of the Trusts may be obligations which
are payable from and secured by revenues derived from the ownership and
operation of facilities such as airports, bridges, turnpikes, port
authorities, convention centers and arenas. In view of this an investment in
such a Trust should be made with an understanding of the characteristics of
such issuers and the risks which such an investment may entail. The major
portion of an airport's gross operating income is generally derived from fees
received from signatory airlines pursuant to use agreements which consist of
annual payments for leases, occupancy of certain terminal space and service
fees. Airport operating income may therefore be affected by the ability of the
airlines to meet their obligations under the use agreements. The air transport
industry is experiencing significant variations in earnings and traffic, due
to increased competition, excess capacity, increased costs, deregulation,
traffic constraints and other factors, and several airlines are experiencing
severe financial difficulties. The Sponsor cannot predict what effect these
industry conditions may have on airport revenues which are dependent for
payment on the financial condition of the airlines and their usage of the
particular airport facility. Similarly, payment on Bonds related to other
facilities is dependent on revenues from the projects, such as user fees from
ports, tolls on turnpikes and bridges and rents from buildings. Therefore,
payment may be adversely affected by reduction in revenues due to such factors
as increased cost of maintenance, decreased use of a facility, lower cost of
alternative modes of transportation, scarcity of fuel and reduction or loss of
rents. See "General" for each Trust.
Certain of the Bonds in certain of the Trusts may be obligations which
are payable from and secured by revenues derived from the operation of
resource recovery facilities. In view of this an investment in such a Trust
should be made with an understanding of the characteristics of such issuers
and the risks which such an investment may entail. Resource recovery
facilities are designed to process solid waste, generate steam and convert
steam to electricity. Resource recovery bonds may be subject to extraordinary
optional redemption at par upon the occurrence of certain circumstances,
including but not limited to: destruction or condemnation of a project;
contracts relating to a project becoming void, unenforceable or impossible to
perform; changes in the economic availability of raw materials, operating
supplies or facilities necessary for the operation of a project or
technological or other unavoidable changes adversely affecting the operation
of a project; administrative or judicial actions which render contracts
relating to the projects void, unenforceable or impossible to perform; or
impose unreasonable burdens or excessive liabilities. The Sponsor cannot
predict the causes or likelihood of the redemption of resource recovery bonds
in such a Trust prior to the stated maturity of the Bonds. See "General" for
each Trust.
REPLACEMENT BONDS. Because certain of the Securities in the Fund may from
time to time under certain circumstances be sold or redeemed or will mature in
accordance with their terms and because the proceeds from such events will be
distributed to Unitholders and will not be reinvested, no assurance can be
given that any Trust will retain for any length of time its present size and
composition. Neither the Sponsor nor the Trustee shall be liable in any way
for any default, failure or defect in any Security. In the event of a failure
to deliver any Security that has been purchased for the Fund under a contract,
including those Securities purchased on a "when, as and if issued" basis
("Failed Bonds"), the Sponsor is authorized under the Trust Agreement to
direct the Trustee to acquire other bonds ("Replacement Bonds") to make up the
original corpus of the Fund.
The Replacement Bonds must be purchased within 20 days after delivery of
the notice of the failed contract and the purchase price (exclusive of accrued
interest) may not exceed the amount of funds reserved for the purchase of the
Failed Bonds. The Replacement Bonds (i) must be tax-exempt bonds issued by
states or territories of the United States or political subdivisions thereof
and, in the case of replacement of bonds in a State Trust, shall have the
benefit of an exemption from state taxation of interest to an extent equal to
or greater than that of the bonds they replace, (ii) must have a fixed
maturity date of at least 10 years in the case of an IM-IT or a State Trust
or, in the case of an IM-IT Limited Maturity, IM-IT Intermediate, or IM-IT
Short Intermediate Trust, must have a fixed maturity date within the range
<PAGE>
Unitholder Explanations 13
set forth under "Unitholder Explanations--Settlement of Bonds in the
Trusts--The Fund", (iii) must be purchased at a price that results in a yield
to maturity and in a current return, in each case as of the Date of Deposit,
at least equal to that of the Failed Bonds, (iv) shall not be "when, as and if
issued" bonds, (v) must be rated "BBB-" or better in the case of the Insured
Trusts by Standard & Poor's Corporation or "Baa" or better in the case of the
Insured Trusts by Moody's Investors Service, Inc. and (vi) with respect to
each Insured Trust, must be insured by one of the Preinsured Bond Insurers or
be eligible for (and when acquired be insured under) the insurance obtained by
such Insured Trust. Whenever a Replacement Bond has been acquired for the
Fund, the Trustee shall, within five days thereafter, notify all Unitholders
of the affected Trust of the acquisition of the Replacement Bond and shall, on
the next monthly distribution date which is more than 30 days thereafter, make
a pro rata distribution of the amount, if any, by which the cost to the
affected Trust of the Failed Bond exceeded the cost of the Replacement Bond
plus accrued interest. Once the original corpus of a Trust is acquired, the
Trustee will have no power to vary the investment of the Trust; i.e., the
Trust will have no managerial power to take advantage of market variation to
improve a Unitholder's investment.
If the right of limited substitution described in the preceding paragraph
shall not be utilized to acquire Replacement Bonds in the event of a failed
contract, the Sponsor will refund the sales charge attributable to such Failed
Bonds to all Unitholders of the affected Trust and distribute the principal,
Purchased Interest and accrued interest (at the coupon rate of such Failed
Bonds to the date the Failed Bonds are removed from the Fund) attributable to
such Failed Bonds not more than 30 days after such removal or such earlier
time as the Trustee in its sole discretion deems to be in the interest of the
Unitholders. All such interest paid to a Unitholder which accrued after the
expected date of settlement for purchase of his Units will be paid by the
Sponsor and accordingly will not be treated as tax-exempt income. In the event
a Replacement Bond should not be acquired by the Fund, the Estimated Net
Annual Interest Income per Unit for the affected Trust would be reduced and
the Estimated Current Return and Estimated Long-Term Return thereon might be
lowered. In addition, Unitholders should be aware that they may not be able at
the time of receipt of such principal to reinvest such proceeds in other
securities at a yield equal to or in excess of the yield which such proceeds
were earning to Unitholders in the affected Trust.
BOND REDEMPTIONS. Certain of the Bonds in certain of the Trusts may be
subject to redemption prior to their stated maturity date pursuant to sinking
fund provisions, call provisions or extraordinary optional or mandatory
redemption provisions or otherwise. A sinking fund is a reserve fund
accumulated over a period of time for retirement of debt. A callable debt
obligation is one which is subject to redemption or refunding prior to
maturity at the option of the issuer. A refunding is a method by which a debt
obligation is redeemed, at or before maturity, by the proceeds of a new debt
obligation. In general, call provisions are more likely to be exercised when
the offering side valuation is at a premium over par than when it is at a
discount from par. The exercise of redemption or call provisions will (except
to the extent the proceeds of the called Bonds are used to pay for Unit
redemptions) result in the distribution of principal and may result in a
reduction in the amount of subsequent interest distributions; it may also
affect the current return on Units of the Trust involved. Each Trust portfolio
contains a listing of the sinking fund and call provisions, if any, with
respect to each of the debt obligations. Extraordinary optional redemptions
and mandatory redemptions result from the happening of certain events.
Generally, events that may permit the extraordinary optional redemption of
Bonds or may require the mandatory redemption of Bonds include, among others:
a final determination that the interest on the Bonds is taxable; the
substantial damage or destruction by fire or other casualty of the project for
which the proceeds of the Bonds were used; an exercise by a local, state or
Federal governmental unit of its power of eminent domain to take all or
substantially all of the project for which the proceeds of the Bonds were
used; changes in the economic availability of raw materials, operating
supplies or facilities or technological or other changes which render the
operation of the project for which the proceeds of the Bonds were used
uneconomic; changes in law or an administrative or judicial decree which
renders the performance of the agreement under which the proceeds of the Bonds
were made available to finance the project impossible or which creates
unreasonable burdens or which imposes excessive liabilities, such as taxes,
not imposed on the date the Bonds are issued on the issuer of the Bonds or the
user of the proceeds of the Bonds; an administrative or judicial decree which
requires the cessation of a substantial part of the operations of the project
financed with the proceeds of the Bonds; an overestimate of the costs of the
project to be financed with the proceeds of the Bonds resulting in excess
proceeds of the Bonds which may be
<PAGE>
14 Unitholder Explanations
applied to redeem Bonds; or an underestimate of a source of funds securing the
Bonds resulting in excess funds which may be applied to redeem Bonds. The
issuer of certain Bonds in a Trust may have sold or reserved the right to
sell, upon the satisfaction of certain conditions, to third parties all or any
portion of its rights to call Bonds in accordance with the stated redemption
provisions of such Bonds. In such a case the issuer no longer has the right to
call the Bonds for redemption unless it reacquires the rights from such third
party. A third party pursuant to these rights may exercise the redemption
provisions with respect to a Bond at a time when the issuer of the Bond might
not have called a Bond for redemption had it not sold such rights. The Sponsor
is unable to predict all of the circumstances which may result in such
redemption of an issue of Bonds. See "Portfolio" for each Trust and footnote
(3) in the "Notes to Portfolios". See also the discussion of single family
mortgage and multi-family revenue bonds above for more information on the call
provisions of such bonds.
DISTRIBUTIONS. Distributions of interest received by the Fund, pro rated
on an annual basis, will be made monthly. The first such distribution will be
in the amount indicated under 'Per Unit Information' for the applicable Trust
and will be made on the fifteenth day of the month indicated under "Initial
Distribution" therein to Unitholders of record on the first day of such month.
Distribution of funds from the Principal Account, if any, will also be made
monthly, except under certain special circumstances (see "Unitholder
Explanations--Public Offering--Distributions of Interest and Principal").
CERTIFICATES. The Trustee is authorized to treat as the record owner of
Units that person who is registered as such owner on the books of the Trustee.
Ownership of Units of each Trust is evidenced by separate registered
certificates executed by the Trustee and the Sponsor. Certificates are
transferable by presentation and surrender to the Trustee properly endorsed or
accompanied by a written instrument or instruments of transfer. A Unitholder
must sign exactly as his name appears on the face of the certificate with the
signature guaranteed by a participant in the Securities Transfer Agents
Medallion Program ("STAMP") or such other signature guaranty program in
addition to, or in substitution for, STAMP, as may be accepted by the Trustee.
In certain instances the Trustee may require additional documents such as, but
not limited to, trust instruments, certificates of death, appointments as
executor or administrator or certificates of corporate authority. Certificates
will be issued in denominations of one Unit or any multiple thereof.
Although no such charge is now made or contemplated, the Trustee may
require a Unitholder to pay a reasonable fee for each certificate re-issued
(other than as a result of a change in plan of distribution) or transferred
and to pay any governmental charge that may be imposed in connection with each
such transfer or interchange. Destroyed, stolen, mutilated or lost
certificates will be replaced upon delivery to the Trustee of satisfactory
indemnity, evidence of ownership and payment of expenses incurred. Mutilated
certificates must be surrendered to the Trustee for replacement.
ESTIMATED CURRENT RETURNS AND ESTIMATED LONG-TERM RETURNS
As of the opening of business on the Date of Deposit (except for the
IM-IT as of 8:00 A.M. Central Time on the Date of Deposit) the Estimated
Current Return and the Estimated Long-Term Return were as set forth in the
"Per Unit Information" for each Trust. Estimated Current Return is calculated
by dividing the estimated net annual interest income per Unit by the Public
Offering Price. The estimated net annual interest income per Unit will vary
with changes in fees and expenses of the Trustee and the Evaluator and with
the principal prepayment, redemption, maturity, exchange or sale of Securities
while the Public Offering Price will vary with changes in the offering price
of the underlying Securities and with changes in the Purchased Interest;
therefore, there is no assurance that the present Estimated Current Return
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 takes into
account the amortization of premiums and the accretion of discounts) and
estimated retirements of all of the Securities in a Trust and (2) takes into
account the expenses and sales charge associated with each Trust Unit. Since
the market values and estimated retirements of the Securities and the expenses
of a Trust will change, there is no assurance that the present Estimated
Long-Term Return will be realized in the future. The Estimated Current Return
and Estimated Long-Term Return are expected to differ because the calculation
of Estimated Long-
<PAGE>
Unitholder Explanations 15
Term Return reflects the estimated date and amount of principal returned while
the Estimated Current Return calculation includes only net annual interest
income and Public Offering Price.
In order to acquire certain of the Securities contracted for by the
Sponsor for deposit in the Fund, it may be necessary for the Sponsor or
Trustee to pay on the settlement dates for delivery of such Securities amounts
covering accrued interest on such Securities which exceed (1) the amounts paid
by Unitholders and (2) the amounts which will be made available through cash
furnished by the Sponsor on the Date of Deposit, which amount of cash may
exceed the interest which would accrue to the First Settlement Date. The
Trustee has agreed to pay for any amounts necessary to cover any such excess
and will be reimbursed therefor, without interest, when funds become available
from interest payments on the particular Securities with respect to which such
payments may have been made. Also, since interest on any "when, as and if
issued" Securities does not begin accruing as tax-exempt interest income to
the benefit of Unitholders until their respective dates of delivery, the
Trustee may, in order to maintain (or in some cases approach) for the
Unitholders the same estimated net annual interest incomes during the first
year of the Trusts' operations as is indicated under "Per Unit Information"
for the applicable Trust, reduce its fee (and to the extent necessary pay
Trust expenses) in an amount equal to that indicated under "Per Unit
Information" for the applicable Trust.
INTEREST EARNING SCHEDULE
CALCULATION OF ESTIMATED NET ANNUAL INTEREST INCOME. The estimated net
annual interest income is based on 360 days. To account for the estimated net
annual interest income per Unit in a Trust, it is necessary to use the
following information.
The beginning interest date for each Trust is February 10, 1994. The
first record date for each Trust (March 1, 1994) is 21 days from such date.
The daily rates of estimated net annual interest income per Unit are $.13699,
$.11900, $.12864, $.12818 and $.13082 for the IM-IT, IM-IT Intermediate,
Colorado IM-IT, Connecticut IM-IT and Florida IM-IT Trusts, respectively. This
amounts to $2.88, $2.50, $2.70, $2.69 and $2.75 for the IM-IT, IM-IT
Intermediate, Colorado IM-IT, Connecticut IM-IT and Florida IM-IT Trusts,
respectively.
Utilizing the preceding information, the following procedure illustrates
the calculation of first year estimated net annual interest income per Unit
for the Colorado IM-IT Trust:
The Colorado IM-IT Trust accrues
$2.70 to the first record date plus
$38.60 which is 10 normal distributions at $3.86, and finally adding
$5.01 which has accrued from January 1, 1995 until February 10, 1995
which completes the 360 day cycle (39 days times the daily
factor)
Total $46.31 interest earned / $1,000.00 (Date of Deposit Public Offering
Price) = 4.63% Estimated Current Return as of the Date of
Deposit.
PURCHASED AND ACCRUED INTEREST
PURCHASED INTEREST. Purchased Interest is a portion of the unpaid
interest that has accrued on the Securities from the later of the last payment
date on the Securities or the date of issuance thereof through the First
Settlement Date and is included in the calculation of the Public Offering
Price. Purchased Interest will be distributed to Unitholders as Units are
redeemed or Securities mature or are called. See "Summary of Essential
Financial Information" for the amount of Purchased Interest per Unit for each
Trust. Purchased Interest is an element of the price Unitholders will receive
in connection with the sale or redemption of Units prior to the termination of
the Trust.
ACCRUED INTEREST. Accrued Interest is an accumulation of unpaid interest
on securities which generally is paid semi-annually, although the Trust
accrues such interest daily. Because of this, the Trust always has an amount
of interest earned but not yet collected by the Trustee. For this reason, with
respect to sales settling subsequent to the First Settlement Date, the Public
Offering Price of Units will have added to it the proportionate share of
accrued
<PAGE>
16 Unitholder Explanations
interest to the date of settlement. Unitholders will receive on the next
distribution date of the Trust the amount, if any, of accrued interest paid on
their Units.
As indicated in "Purchased Interest", accrued interest as of the First
Settlement Date includes Purchased Interest. In an effort to reduce the amount
of Purchased Interest which would otherwise have to be paid by Unitholders,
the Trustee may advance a portion of such accrued interest to the Sponsor as
the Unitholder of record as of the First Settlement Date. Consequently, the
amount of accrued interest to be added to the Public Offering Price of Units
will include only accrued interest from the First Settlement Date to the date
of settlement (other than the Purchased Interest already included therein),
less any distributions from the Interest Account subsequent to the First
Settlement Date. See "Public Offering--Distributions of Interest and
Principal."
Because of the varying interest payment dates of the Securities, accrued
interest at any point in time will be greater than the amount of interest
actually received by a Trust and distributed to Unitholders. If a Unitholder
sells or redeems all or a portion of his Units, he will be entitled to receive
his proportionate share of the Purchased Interest and accrued interest from
the purchaser of his Units. Since the Trustee has the use of the funds
(including Purchased Interest) held in the Interest Account for distributions
to Unitholders and since such Account is non-interest-bearing to Unitholders,
the Trustee benefits thereby.
PUBLIC OFFERING
GENERAL. Units are offered at the Public Offering Price which includes
Purchased Interest. During the initial offering period the Public Offering
Price is based on the offering prices of the Securities in each Trust and
includes a sales charge of 4.9% of the Public Offering Price (excluding
Purchased Interest) (5.152% of the aggregate offering price of the Securities)
for an IM-IT or a State Trust, 4.3% of the Public Offering Price (excluding
Purchased Interest) (4.493% of the aggregate offering price of the Securities)
for an IM-IT Limited Maturity Trust, 3.9% of the Public Offering Price
(excluding Purchased Interest) (4.058% of the aggregate offering price of the
Securities) for an IM-IT Intermediate Trust and 3.0% of the Public Offering
Price (excluding Purchased Interest) (3.093% of the aggregate offering price
of the Securities) for an IM-IT Short Intermediate Trust. After the initial
public offering period, the secondary market Public Offering Price is based on
the bid prices of the Securities in each Trust and includes a sales charge
determined in accordance with the table set forth below, which is based upon
the dollar weighted average maturity of each Trust plus in each case Purchased
Interest. For purposes of computation, Bonds will be deemed to mature on their
expressed maturity dates unless: (a) the Bonds have been called for redemption
or funds or securities have been placed in escrow to redeem them on an earlier
call date, in which case such call date will be deemed to be the date upon
which they mature; or (b) such Bonds are subject to a "mandatory tender", in
which case such mandatory tender will be deemed to be the date upon which they
mature.
The effect of this method of sales charge computation will be that
different sales charge rates will be applied to each Trust based upon the
dollar weighted average maturity of such Trust's Portfolio, in accordance with
the following schedule:
YEARS TO MATURITY SALES CHARGE YEARS TO MATURITY SALES CHARGE
1................... 1.523% 9.................... 4.712%
2................... 2.041 10................... 4.932
3................... 2.564 11................... 4.932
4................... 3.199 12................... 4.932
5................... 3.842 13................... 5.374
6................... 4.058 14................... 5.374
7................... 4.275 15................... 5.374
8................... 4.493 16 to 30............. 6.045
The sales charges in the above table are expressed as a percentage of the
aggregate bid prices of the Securities in a Trust. Expressed as a percent of
the Public Offering Price (excluding Purchased Interest), the sales charge on
a Trust consisting entirely of a portfolio of Bonds with 15 years to maturity
would be 5.10%. The sales
<PAGE>
Unitholder Explanations 17
charge applicable to quantity purchases during the initial offering period is,
however, reduced on a graduated basis to any person acquiring 100 or more
Units as follows:
<TABLE>
<CAPTION>
DOLLAR AMOUNT OF SALES
CHARGE REDUCTION PER UNIT
IM-IT,
AGGREGATE NUMBER OF STATE AND NATIONAL
UNITS PURCHASED QUALITY TRUSTS OTHER TRUSTS
<S> <C> <C>
100-249 Units................................... $ 4.00 $ 4.00
250-499 Units................................... $ 6.00 $ 6.00
500-999 Units................................... $ 14.00 $ 9.00
1,000 or more Units............................. $ 19.00 $ 11.00
</TABLE>
Any such reduced sales charge shall be the responsibility of the selling
Underwriter, broker, dealer or agent. The Sponsor will, however, increase the
concession or agency commission for such quantity purchases. See "Public
Offering--Unit Distribution". This reduced sales charge structure will apply
on all purchases by the same person from any one Underwriter or dealer of
units of Van Kampen Merritt-sponsored unit investment trusts which are being
offered in the initial offering period (a) on any one day (the "Initial
Purchase Date") or (b) on any day subsequent to the Initial Purchase Date, if
(1) the units purchased are of a unit investment trust purchased on the
Initial Purchase Date, and (2) the person purchasing the units purchased a
sufficient amount of units on the Initial Purchase Date to qualify for a
reduced sales charge on such date. To determine the applicable sales charge
for units purchased in accordance with (b) above, it is necessary to
accumulate all purchases made on the Initial Purchase Date and all purchases
made in accordance with (b) above. Units purchased in the name of the spouse
of a purchaser or in the name of a child of such purchaser under 21 years of
age will be deemed for the purposes of calculating the applicable sales charge
to be additional purchases by the purchaser. The reduced sales charges will
also be applicable to a trustee or other fiduciary purchasing securities for
one or more trust estate or fiduciary accounts. Employees of Van Kampen
Merritt Inc. and its subsidiaries may purchase Units of the Trust at the
current Public Offering Price less the underwriting commission during the
initial offering period, and less the dealer's concession for secondary market
transactions. Registered representatives of selling Underwriters may purchase
Units of the Fund at the current Public Offering Price less the underwriting
commission during the initial offering period, and less the dealer's
concession for secondary market transactions. Registered representatives of
selling brokers, dealers, or agents may purchase Units of the Fund at the
current Public Offering Price less the dealer's concession during the initial
offering period and for secondary market transactions.
OFFERING PRICE. Public Offering Price of the Units will vary from the
amounts stated under "Summary of Essential Financial Information" in
accordance with fluctuations in the prices of the underlying Securities in
each Trust.
As indicated above, the price of the Units as of the date the Securities
were deposited in each Trust was determined by adding to the aggregate
offering price of the Securities of a Trust an amount equal to the applicable
sales charge expressed as a percentage of the aggregate offering price of the
Securities plus Purchased Interest and dividing the sum so obtained by the
number of Units outstanding. This computation produced a gross underwriting
commission equal to such sales charge expressed as a percentage of the Public
Offering Price (excluding Purchased Interest). Such price determination as of
the opening of business on the Date of Deposit (except for the IM-IT as of
8:00 A.M. Central Time on the Date of Deposit) was made on the basis of an
evaluation of the Securities in each Trust prepared by Interactive Data
Services, Inc., a firm regularly engaged in the business of evaluating,
quoting or appraising comparable securities. After the opening of business on
the Date of Deposit (except for the IM-IT as of 8:00 A.M. Central Time on the
Date of Deposit) and during the period of initial offering, the Evaluator will
appraise or cause to be appraised daily the value of the underlying Securities
of each Trust as of 4:00 P.M. Eastern time on days the New York Stock Exchange
is open for business and will adjust the Public Offering Price of the Units
commensurate with such appraisal. Such Public Offering Price will be effective
for all orders received at or prior to 4:00 P.M. Eastern time on each such
day. Orders received by the Trustee, Sponsor or any Underwriter for purchases,
sales or redemptions after that time, or on a day when the New York Stock
Exchange is closed, will be held until the next determination of price. For
secondary market sales the Public Offering Price per Unit will be equal to the
aggregate bid
<PAGE>
18 Unitholder Explanations
price of the Securities in the Trust plus an amount equal to the applicable
secondary market sales charge expressed as a percentage of the aggregate bid
price of the Securities plus Purchased Interest and dividing the sum so
attained by the number of Units then outstanding. This computation produces a
gross commission equal to such sales charge expressed as a percentage of the
Public Offering Price (excluding Purchased Interest). For secondary market
purposes such appraisal and adjustment with respect to a Trust will be made by
the Evaluator as of 4:00 P.M. Eastern time on days in which the New York Stock
Exchange is open for each day on which any Unit of such Trust is tendered for
redemption, and it shall determine the aggregate value of any Trust as of 4:00
P.M. Eastern time on such other days as may be necessary.
The aggregate price of the Securities in each Trust has been and will be
determined on the basis of bid prices or offering prices, as is appropriate,
(a) on the basis of current market prices for the Securities obtained from
dealers or brokers who customarily deal in bonds comparable to those held by
the Fund; (b) if such prices are not available for any particular Securities,
on the basis of current market prices for comparable bonds; (c) by causing the
value of the Securities to be determined by others engaged in the practice of
evaluation, quoting or appraising comparable bonds; or (d) by any combination
of the above. Market prices of the Securities will generally fluctuate with
changes in market interest rates. Unless Bonds are in default in payment of
principal or interest or in significant risk of such default, the Evaluator
will not attribute any value to the insurance obtained by an Insured Trust, if
any.
The Evaluator will consider in its evaluation of Bonds which are in
default in payment of principal or interest or, in the Sponsor's opinion, in
significant risk of such default (the "Defaulted Bonds") the value of the
insurance guaranteeing interest and principal payments. The value of the
insurance will be equal to the difference between (i) the market value of
Defaulted Bonds assuming the exercise of the right to obtain Permanent
Insurance (less the insurance premiums and related expenses attributable to
the purchase of Permanent Insurance) and (ii) the market value of such
Defaulted Bonds not covered by Permanent Insurance. In addition, the Evaluator
will consider the ability of the affected Portfolio Insurer to meet its
commitments under any Trust insurance policy, including the commitments to
issue Permanent Insurance. It is the position of the Sponsor that this is a
fair method of valuing the Bonds and the insurance obtained by an Insured
Trust and reflects a proper valuation method in accordance with the provisions
of the Investment Company Act of 1940.
No value has been ascribed to insurance obtained by an Insured Trust, if
any, as of the date of this Prospectus.
The initial or primary Public Offering Price of the Units is equal to the
offering price per Unit of the underlying Securities in each Trust plus the
applicable sales charge plus Purchased Interest and interest accrued but
unpaid from the First Settlement Date to the date of settlement. The secondary
market Public Offering Price is equal to the bid price per Unit of the
Securities in each Trust plus the applicable sales charge plus Purchased
Interest and accrued interest. The offering price of Securities in each Trust
may be expected to average approximately 0.5%-1% more than the bid price of
such Securities. On the Date of Deposit, the offering side evaluations of the
Securities in the Trusts were higher than the bid side evaluations of such
Securities by the respective amounts indicated under footnote (5) in "Notes to
Portfolios".
Although payment is normally made five business days following the order
for purchase, payment may be made prior thereto. A person will become the
owner of Units on the date of settlement provided payment has been received.
Cash, if any, made available to the Sponsor prior to the date of settlement
for the purchase of Units may be used in the Sponsor's business and may be
deemed to be a benefit to the Sponsor, subject to the limitations of the
Securities Exchange Act of 1934. Delivery of certificates representing Units
so ordered will be made five business days following such order or shortly
thereafter. See "Redemption of Units" below for information regarding the
ability to redeem Units ordered for purchase.
MARKET FOR UNITS. During the initial public offering period, the Sponsor
and/or certain of the Underwriters intend to offer to purchase Units at a
price equivalent to the Public Offering Price which is based upon the
aggregate offering price per Unit of the underlying Securities in each Trust
and the amount of Purchased Interest for each Trust plus accrued interest to
the date of settlement less the related sales commission. Afterward, although
they are not obligated to do so, the Sponsor intends to, and certain of the
other Underwriters may, maintain a market for the Units offered hereby and to
offer continuously to purchase such Units at prices, subject to change at any
time, based upon
<PAGE>
Unitholder Explanations 19
the aggregate bid prices of the Securities in the portfolio of each Trust plus
Purchased Interest plus interest accrued to the date of settlement and plus
any principal cash on hand, less any amounts representing taxes or other
governmental charges payable out of the Trust and less any accrued Trust
expenses. If the supply of Units exceeds demand or if some other business
reason warrants it, the Sponsor and/or the Underwriters may either discontinue
all purchases of Units or discontinue purchases of Units at such prices. In
the event that a market is not maintained for the Units and the Unitholder
cannot find another purchaser, a Unitholder of any Trust desiring to dispose
of his Units may be able to dispose of such Units only by tendering them to
the Trustee for redemption at the Redemption Price, which is based upon the
aggregate bid price of the Securities in the portfolio of such Trust plus
Purchased Interest and any accrued interest. The aggregate bid prices of the
underlying Securities in a Trust are expected to be less than the related
aggregate offering prices. See "Redemption of Units" below. A Unitholder who
wishes to dispose of his Units should inquire of his broker as to current
market prices in order to determine whether there is in existence any price in
excess of the Redemption Price and, if so, the amount thereof.
DISTRIBUTIONS OF INTEREST AND PRINCIPAL. Interest received by the Fund,
including that part of the proceeds of any disposition of Securities which
represents Purchased Interest and/or accrued interest, is credited by the
Trustee to the Interest Account for the appropriate Trust. Other receipts are
credited to the Principal Account for the appropriate Trust. Interest received
by the Fund after deduction of amounts sufficient to reimburse the Trustee,
without interest, for any amounts advanced and paid to the Sponsor as the
Unitholder of record as of the First Settlement Date (see "Public
Offering--Offering Price" above) will be distributed on or shortly after the
fifteenth day of each month on a pro rata basis to Unitholders of record of a
Trust as of the preceding record date who are entitled to distributions at
that time. All distributions will be net of applicable expenses. The pro rata
share of cash in the Principal Account of a Trust will be computed as of the
date set forth under "Per Unit Information" for the applicable Trust, and
thereafter as of the record date, and distributions to the Unitholders as of
such record date will be made on or shortly after the fifteenth day of such
month. Proceeds received from the disposition of any of the Securities after
such record date and prior to the following distribution date will be held in
the Principal Account and not distributed until the next distribution date.
The Trustee is not required to pay interest on funds held in any Principal or
Interest Account (but may itself earn interest thereon and therefore benefits
from the use of such funds) nor to make a distribution from the Principal
Account unless the amount available for distribution therein shall equal at
least $1.00 per Unit.
The distribution to the Unitholders of a Trust as of each record date
after the First Settlement Date will be made on the following distribution
date or shortly thereafter and shall consist of an amount substantially equal
to such portion of the Unitholder's pro rata share of the estimated net Annual
interest Income in the Interest Account of such Trust after deducting
estimated expenses. Because interest payments are not received by the Fund at
a constant rate throughout the year, such interest distribution may be more or
less than the amount credited to such Interest Account as of the record date.
For the purpose of minimizing fluctuations in the distributions from an
Interest Account, the Trustee is authorized to advance such amounts as may be
necessary to provide interest distributions of approximately equal amounts.
The Trustee shall be reimbursed, without interest, for any such advances from
funds in the applicable Interest Account on the ensuing record date. Persons
who purchase Units between a record date and a distribution date will receive
their first distribution on the second distribution date after the purchase.
As of the first day of each month, the Trustee will deduct from the
Interest Account and, to the extent funds are not sufficient therein, from the
Principal Account, amounts necessary to pay the expenses of the Fund (as
determined on the basis set forth under "Trust Administration--Fund
Administration and Expenses"). The Trustee also may withdraw from said
Accounts such amounts, if any, as it deems necessary to establish a reserve
for any governmental charges payable out of the Fund. Amounts so withdrawn
shall not be considered a part of the Fund's assets until such time as the
Trustee shall return all or any part of such amounts to the appropriate
Accounts. In addition, the Trustee may withdraw from the Interest and
Principal Accounts such amounts as may be necessary to cover purchases of
Replacement Bonds and redemptions of Units by the Trustee.
REINVESTMENT OPTION. Unitholders of all unit investment trusts sponsored
by Van Kampen Merritt Inc. (except Unitholders of a New York IM-IT Trust or a
New York IM-IT Intermediate Laddered Maturity Trust), may elect to have each
distribution of interest income, capital gains and/or principal on their Units
automatically reinvested in shares of
<PAGE>
20 Unitholder Explanations
any of the open ended mutual funds (except for B shares) listed under "Trust
Administration--Sponsor" which are registered in the Unitholder's state of
residence. New York IM-IT Trust and New York IM-IT Intermediate Laddered
Maturity Trust Unitholders, other than those residing in the Commonwealth of
Massachusetts, may elect to have each distribution of interest income, capital
gains and/or principal on their Units automatically reinvested in shares of
First Investors New York Insured Tax Free Fund, Inc., a fund which invests
primarily in securities exempt from federal and New York state and city income
tax. Such mutual funds are hereinafter collectively referred to as the
"Reinvestment Funds".
Each Reinvestment Fund has investment objectives which differ in certain
respects from those of the Trusts. The prospectus relating to each
Reinvestment Fund describes the investment policies of such fund and sets
forth the procedures to follow to commence reinvestment. A Unitholder may
obtain a prospectus for the respective Reinvestment Funds from Van Kampen
Merritt Inc. at One Parkview Plaza, Oakbrook Terrace, Illinois 60181. Texas
residents who desire to reinvest may request that a broker-dealer registered
in Texas send the prospectus relating to the respective fund.
After becoming a participant in a reinvestment plan, each distribution of
interest income, capital gains and/or principal on the participant's Units
will, on the applicable distribution date, automatically be applied, as
directed by such person, as of such distribution date by the Trustee to
purchase shares (or fractions thereof) of the applicable Reinvestment Fund at
a net asset value as computed as of the close of trading on the New York Stock
Exchange on such date, plus a sales charge of $1.00 per $100 of reinvestment
except if the participant selects the First Investors New York Insured Tax
Free Fund, Inc., in which case the sales charge will be $1.50 per $100 of
reinvestment, or except if the participant selects the Van Kampen Merritt
Money Market Fund or the Van Kampen Merritt Tax Free Money Fund in which case
no sales charge applies. A minimum of one-half of such sales charge would be
paid to Van Kampen Merritt Inc. for all Reinvestment Funds except First
Investors New York Insured Tax Free Fund, Inc., in which case such sales
charge would be paid to First Investors Management Company, Inc.
Confirmations of all reinvestments by a Unitholder into a Reinvestment
Fund will be mailed to the Unitholder by such Reinvestment Fund.
A participant may at any time prior to five days preceding the next
succeeding distribution date, by so notifying the Trustee in writing, elect to
terminate his or her reinvestment plan and receive future distributions of his
or her Units in cash. There will be no charge or other penalty for such
termination. Each Reinvestment Fund, its sponsor and investment adviser shall
have the right to terminate at any time the reinvestment plan relating to such
fund.
REDEMPTION OF UNITS. A Unitholder may redeem all or a portion of his
Units by tender to the Trustee, at its Unit Investment Trust Division, 101
Barclay Street, 20th Floor, New York, New York 10286, of the certificates
representing the Units to be redeemed, duly endorsed or accompanied by proper
instruments of transfer with signature guaranteed (or by providing
satisfactory indemnity, as in connection with lost, stolen or destroyed
certificates) and by payment of applicable governmental charges, if any. Thus,
redemption of Units cannot be effected until certificates representing such
Units have been delivered to the person seeking redemption or satisfactory
indemnity provided. No redemption fee will be charged. On the seventh calendar
day following such tender, or if the seventh calendar day is not a business
day, on the first business day prior thereto, the Unitholder will be entitled
to receive in cash an amount for each Unit equal to the Redemption Price per
Unit next computed after receipt by the Trustee of such tender of Units. The
"date of tender" is deemed to be the date on which Units are received by the
Trustee, except that as regards Units received after 4:00 P.M. Eastern time on
days of trading on the New York Stock Exchange, the date of tender is the next
day on which such Exchange is open for trading and such Units will be deemed
to have been tendered to the Trustee on such day for redemption at the
Redemption Price computed on that day.
Under regulations issued by the Internal Revenue Service, the Trustee
will be required to withhold a specified percentage of the principal amount of
a Unit redemption if the Trustee has not been furnished the redeeming
Unitholder's tax identification number in the manner required by such
regulations. Any amount so withheld is transmitted to the Internal Revenue
Service and may be recovered by the Unitholder only when filing a return.
Under normal circumstances the Trustee obtains the Unitholder's tax
identification number from the selling broker. However, at any time a
Unitholder elects to tender Units for redemption, such Unitholder should
provide a tax identification
<PAGE>
Unitholder Explanations 21
number to the Trustee in order to avoid this possible "back-up withholding" in
the event the Trustee has not been previously provided such number.
Purchased Interest and accrued interest paid on redemption shall be
withdrawn from the Interest Account of such Trust or, if the balance therein
is insufficient, from the Principal Account of such Trust. All other amounts
will be withdrawn from the Principal Account of such Trust. The Trustee is
empowered to sell underlying Securities of a Trust in order to make funds
available for redemption. Units so redeemed shall be cancelled.
The Redemption Price per Unit (as well as the secondary market Public
Offering Price) will be determined on the basis of the bid price of the
Securities in each Trust, while the initial and primary Public Offering Price
of Units will be determined on the basis of the offering price of the
Securities in each Trust, as of 4:00 P.M. Eastern time on days of trading on
the New York Stock Exchange on the date any such determination is made. On the
Date of Deposit the Public Offering Price per Unit (which is based on the
offering prices of the Bonds and Purchased Interest in each Trust and includes
the sales charge) exceeded the value at which Units could have been redeemed
(based upon the current bid prices of the Securities and Purchased Interest in
such Trust) by the amount shown under "Summary of Essential Financial
Information". While the Trustee has the power to determine the Redemption
Price per Unit when Units are tendered for redemption, such authority has been
delegated to the Evaluator which determines the price per Unit on a daily
basis. The Redemption Price per Unit is the pro rata share of each Unit in
each Trust on the basis of (i) the cash on hand in such Trust or moneys in the
process of being collected, (ii) the value of the Securities in such Trust
based on the bid prices of the Securities therein, except for cases in which
the value of insurance has been included, (iii) Purchased Interest for each
Trust and (iv) interest accrued thereon, less (a) amounts representing taxes
or other governmental charges payable out of such Trust and (b) the accrued
expenses of such Trust. The Evaluator may determine the value of the
Securities in each Trust by employing any of the methods set forth in "Public
Offering--Offering Price". In determining the Redemption Price per Unit no
value will be assigned to the portfolio insurance maintained on the Bonds in
an Insured Trust unless such Bonds are in default in payment of principal or
interest or in significant risk of such default. For a description of the
situations in which the Evaluator may value the insurance obtained by the
Insured Trusts, see "Public Offering--Offering Price" above.
The price at which Units may be redeemed could be less than the price
paid by the Unitholder. As stated above, the Trustee may sell Securities to
cover redemptions. When Securities are sold, the size and diversity of the
affected Trust will be reduced. Such sales may be required at a time when
Securities would not otherwise be sold and might result in lower prices than
might otherwise be realized.
The right of redemption may be suspended and payment postponed for any
period during which the New York Stock Exchange is closed, other than for
customary weekend and holiday closings, or during which the Securities and
Exchange Commission determines that trading on that Exchange is restricted or
an emergency exists, as a result of which disposal or evaluation of the
Securities in the Trusts is not reasonably practicable, or for such other
periods as the Securities and Exchange Commission may by order permit. Under
certain extreme circumstances the Sponsor may apply to the Securities and
Exchange Commission for an order permitting a full or partial suspension of
the right of Unitholders to redeem their Units.
REPORTS PROVIDED. The Trustee shall furnish Unitholders of a Trust in
connection with each distribution a statement of the amount of interest and
the amount of other receipts (received since the preceding distribution), if
any, being distributed expressed in each case as a dollar amount representing
the pro rata share of each Unit of a Trust outstanding. For as long as the
Trustee deems it to be in the best interests of the Unitholders, the accounts
of each Trust shall be audited, not less frequently than annually, by
independent certified public accountants and the report of such accountants
shall be furnished by the Trustee to Unitholders of such Trusts upon request.
Within a reasonable period of time after the end of each calendar year, the
Trustee shall furnish to each person who at any time during the calendar year
was a registered Unitholder of a Trust a statement (i) as to the Interest
Account: interest received (including amounts representing interest received
upon any disposition of Securities) and the percentage of such interest by
states in which the issuers of the Securities are located, the amount of
Purchased Interest, deductions for applicable taxes and for fees and expenses
of such Trust, for purchases of Replacement Bonds and for redemptions of
Units, if any, and the balance remaining after such distributions and
deductions, expressed in each case both as a
<PAGE>
22 Unitholder Explanations
total dollar amount and as a dollar amount representing the pro rata share of
each Unit outstanding on the last business day of such calendar year; (ii) as
to the Principal Account: the dates of disposition of any Securities and the
net proceeds received therefrom (excluding any portion representing accrued
interest), the amount paid for purchases of Replacement Bonds and for
redemptions of Units, if any, deductions for payment of applicable taxes and
fees and expenses of the Trustee, the amount of "when issued" interest treated
as a return of capital, if any, and the balance remaining after such
distributions and deductions expressed both as a total dollar amount and as a
dollar amount representing the pro rata share of each Unit outstanding on the
last business day of such calendar year; (iii) a list of the Securities held
and the number of Units outstanding on the last business day of such calendar
year; (iv) the Redemption Price per Unit based upon the last computation
thereof made during such calendar year; and (v) amounts actually distributed
during such calendar year from the Interest and Principal Accounts, separately
stated, expressed both as total dollar amounts and as dollar amounts
representing the pro rata share of each Unit outstanding.
In order to comply with Federal and state tax reporting requirements,
Unitholders will be furnished, upon request to the Trustee, evaluations of the
Securities in a Trust furnished to it by the Evaluator.
INSURANCE ON THE BONDS IN THE INSURED TRUSTS
Insurance has been obtained by each Insured Trust or by the issuer of
such Bonds, or by a prior owner of such Bonds, or by the Sponsor prior to the
deposit of such Bonds in a Trust guaranteeing prompt payment of interest and
principal, when due, in respect of the Bonds in such Trust. See "Unitholder
Explanations--Settlement of Bonds in the Trusts--Objectives and Securities
Selection". An insurance policy obtained by an Insured Trust, if any, is non-
cancellable and will continue in force so long as such Trust is in existence,
the respective Portfolio Insurer referred to below is still in business and
the Bonds described in such policy continue to be held by such Trust (see
"Portfolio" for the respective Insured Trust). Any portfolio insurance premium
for an Insured Trust, which is an obligation of such Trust, is paid by each
Trust on a monthly basis. Non-payment of premiums on a policy obtained by an
Insured Trust will not result in the cancellation of insurance but will force
the insurer to take action against the Trustee to recover premium payments due
it. The Trustee in turn will be entitled to recover such payments from such
Trust. Premium rates for each issue of Bonds protected by a policy obtained by
an Insured Trust, if any, are fixed for the life of the Trust. The premium for
any Preinsured Bond insurance has been paid by such issuer, by a prior owner
of such Bonds or the Sponsor and any such policy or policies are
non-cancellable and will continue in force so long as the Bonds so insured are
outstanding and the respective Preinsured Bond Insurer remains in business. If
the provider of an original issuance insurance policy is unable to meet its
obligations under such policy or if the rating assigned to the claims-paying
ability of any such insurer deteriorates, the Portfolio Insurers have no
obligation to insure any issue adversely affected by either of the above
described events.
The aforementioned portfolio insurance obtained by an Insured Trust, if
any, guarantees the timely payment of principal and interest on the Bonds as
they fall due. For the purposes of insurance obtained by an Insured Trust,
"when due" generally means the stated maturity date for the payment of
principal and interest. However, in the event (a) an issuer of a Bond defaults
in the payment of principal or interest on such Bond, (b) such issuer enters
into a bankruptcy proceeding or (c) the maturity of such Bond is accelerated,
the affected Portfolio Insurer has the option, in its sole discretion, after
receiving notice of the earliest to occur of such a default, bankruptcy
proceeding or acceleration to pay the outstanding principal amount of such
Bond plus accrued interest to the date of such payment and thereby retire the
Bond from the affected Trust prior to such Bond's stated maturity date. The
insurance does not guarantee the market value of the Bonds or the value of the
Units. Insurance obtained by an Insured Trust, if any, is only effective as to
Bonds owned by and held in such Trust. In the event of a sale of any such Bond
by the Trustee, such insurance terminates as to such Bond on the date of sale.
Pursuant to an irrevocable commitment of the Portfolio Insurers, the
Trustee, upon the sale of a Bond covered under a portfolio insurance policy
obtained by an Insured Trust, has the right to obtain permanent insurance with
respect to such Bond (i.e., insurance to maturity of the Bonds regardless of
the identity of the holder thereof) (the "Permanent Insurance") upon the
payment of a single predetermined insurance premium and any expenses related
thereto from the proceeds of the sale of such Bond. Accordingly, any Bond in
an Insured Trust is eligible to be sold on
<PAGE>
Unitholder Explanations 23
an insured basis. It is expected that the Trustee would exercise the right to
obtain Permanent Insurance only if upon such exercise the affected Trust would
receive net proceeds (sale of Bond proceeds less the insurance premium and
related expenses attributable to the Permanent Insurance) from such sale in
excess of the sale proceeds if such Bonds were sold on an uninsured basis. The
insurance premium with respect to each Bond eligible for Permanent Insurance
would be determined based upon the insurability of each Bond as of the Date of
Deposit and would not be increased or decreased for any change in the
creditworthiness of each Bond.
The Sponsor believes that the Permanent Insurance option provides an
advantage to an Insured Trust in that each Bond insured by a Trust insurance
policy may be sold out of the affected Trust with the benefits of the
insurance attaching thereto. Thus, the value of the insurance, if any, at the
time of sale, can be realized in the market value of the Bond so sold (which
is not the case in connection with any value attributable to an Insured
Trust's portfolio insurance). See "Public Offering--Offering Price". Because
any such insurance value may be realized in the market value of the Bond upon
the sale thereof upon exercise of the Permanent Insurance option, the Sponsor
anticipates that (a) in the event an Insured Trust were to be comprised of a
substantial percentage of Bonds in default or significant risk of default, it
is much less likely that such Trust would need at some point in time to seek a
suspension of redemptions of Units than if such Trust were to have no such
option (see "Public Offering--Redemption of Units") and (b) at the time of
termination of an Insured Trust, if such Trust were holding defaulted Bonds or
Bonds in significant risk of default such Trust would not need to hold such
Bonds until their respective maturities in order to realize the benefits of
such Trust's portfolio insurance (see "Trust Administration--Amendment or
Termination").
Except as indicated below, insurance obtained by an Insured Trust has no
effect on the price or redemption value of Units. It is the present intention
of the Evaluator to attribute a value for such insurance (including the right
to obtain Permanent Insurance) for the purpose of computing the price or
redemption value of Units if the Bonds covered by such insurance are in
default in payment of principal or interest or in significant risk of such
default. The value of the insurance will be the difference between (i) the
market value of a Bond which is in default in payment of principal or interest
or in significant risk of such default assuming the exercise of the right to
obtain Permanent Insurance (less the insurance premium and related expenses
attributable to the purchase of Permanent Insurance) and (ii) the market value
of such Bonds not covered by Permanent Insurance. See "Public
Offering--Offering Price". It is also the present intention of the Trustee not
to sell such Bonds to effect redemptions or for any other reason but rather to
retain them in the portfolio because value attributable to the insurance
cannot be realized upon sale. See "Public Offering-- Offering Price" herein
for a more complete description of an Insured Trust's method of valuing
defaulted Bonds and Bonds which have a significant risk of default. Insurance
obtained by the issuer of a Bond is effective so long as such Bond is
outstanding. Therefore, any such insurance may be considered to represent an
element of market value in regard to the Bonds thus insured, but the exact
effect, if any, of this insurance on such market value cannot be predicted.
The portfolio insurance policy or policies obtained by an Insured Trust,
if any, with respect to the Bonds in such Trust were issued by one or more of
the Portfolio Insurers. Any other Preinsured Bond insurance policy (or
commitment therefor) was issued by one of the Preinsured Bond Insurers. See
"Unitholder Explanations--Settlement of Bonds in the Trusts--Objectives and
Securities Selection".
AMBAC Indemnity Corporation ("AMBAC Indemnity") is a Wisconsin-domiciled
stock insurance corporation regulated by the Office of the Commissioner of
Insurance of the State of Wisconsin and licensed to do business in 50 states,
the District of Columbia and the Commonwealth of Puerto Rico, with admitted
assets of approximately $1,936,000,000 (unaudited) and statutory capital of
approximately $1,096,000,000 (unaudited) as of September 30, 1993. Statutory
capital consists of AMBAC Indemnity's policyholders' surplus and statutory
contingency reserve. AMBAC Indemnity is a wholly owned subsidiary of AMBAC
Inc., a 100% publicly-held company. Moody's Investors Service, Inc. and
Standard & Poor's Corporation have both assigned a triple-A claims-paying
ability rating to AMBAC Indemnity.
Copies of its financial statements prepared in accordance with statutory
accounting standards are available from AMBAC Indemnity. The address of AMBAC
Indemnity's administrative offices and its telephone number are One State
Street Plaza, 17th Floor, New York, New York, 10004 and (212) 668-0340.
<PAGE>
24 Unitholder Explanations
AMBAC Indemnity has entered into quota share reinsurance agreements under
which a percentage of the insurance underwritten pursuant to certain municipal
bond insurance programs of AMBAC Indemnity has been and will be assumed by a
number of foreign and domestic unaffiliated reinsurers.
Municipal Bond Investors Assurance Corporation ("MBIA") is the principal
operating subsidiary of MBIA Inc., a New York Stock Exchange listed company.
MBIA Inc. is not obligated to pay the debts of or claims against MBIA. MBIA is
a limited liability corporation rather than a several liability association.
MBIA is domiciled in the State of New York and licensed to do business in all
fifty states, the District of Columbia and the Commonwealth of Puerto Rico. As
of December 31, 1992 MBIA had admitted assets of $2.6 billion (audited), total
liabilities of $1.7 billion (audited), and total capital and surplus of $896
million (audited) determined in accordance with statutory accounting practices
prescribed or permitted by insurance regulatory authorities. As of September
30, 1993, MBIA had admitted assets of $3.0 billion (unaudited), total
liabilities of $2.0 billion (uaudited), and total capital and surplus of $951
million (unaudited) determined in accordance with statutory accounting
practices prescribed or permitted by insurance regulatory authorities. Copies
of MBIA's year end financial statements prepared in accordance with statutory
accounting practices are available from MBIA. The address of MBIA is 113 King
Street, Armonk, New York 10504.
Effective December 31, 1989, MBIA Inc. acquired Bond Investors Group,
Inc. On January 5, 1990, MBIA acquired all of the outstanding stock of Bond
Investors Group, Inc., the parent of Bond Investors Guaranty Insurance Company
(BIG), now known as MBIA Insurance Corp. of Illinois. Through a reinsurance
agreement, BIG has ceded all of its net insured risks, as well as its unearned
premium and contingency reserves, to MBIA and MBIA has reinsured BIG's net
outstanding exposure.
Moody's Investors Service, Inc. rates all bond issues insured by MBIA
"Aaa" and short term loans "MIG 1," both designated to be of the highest
quality.
Standard & Poor's Corporation rates all new issues insured by MBIA "AAA"
Prime Grade.
The Moody's Investors Service, Inc. rating of MBIA should be evaluated
independently of the Standard & Poor's Corporation rating of MBIA. No
application has been made to any other rating agency in order to obtain
additional ratings on the Bonds. The ratings reflect the respective rating
agency's current assessment of the creditworthiness of MBIA and its ability to
pay claims on its policies of insurance. Any further explanation as to the
significance of the above ratings may be obtained only from the applicable
rating agency.
The above ratings are not recommendations to buy, sell or hold the Bonds,
and such ratings may be subject to revision or withdrawal at any time by the
rating agencies. Any downward revision or withdrawal of either or both ratings
may have an adverse effect on the market price of the Bonds.
Financial Guaranty Insurance Company ("Financial Guaranty" or "FGIC") is
a wholly-owned subsidiary of FGIC Corporation (the "Corporation"), a Delaware
holding company. The Corporation is a wholly-owned subsidiary of General
Electric Capital Corporation ("GECC"). Neither the Corporation nor GECC is
obligated to pay the debts of or the claims against Financial Guaranty.
Financial Guaranty is domiciled in the State of New York and is subject to
regulation by the State of New York Insurance Department. As of September 30,
1993, the total capital and surplus of Financial Guaranty was approximately
$744,722,000. Copies of Financial Guaranty's financial statements, prepared on
the basis of statutory accounting principles, and the Corporation's financial
statements, prepared on the basis of generally accepted accounting principles,
may be obtained by writing to Financial Guaranty at 115 Broadway, New York,
New York 10006, Attention: Communications Department, telephone number: (212)
312-3000 or to the New York State Insurance Department at 160 West Broadway,
18th Floor, New York, New York 10013, Attention: Property Companies Bureau,
telephone number: (212) 621-0389.
In addition, Financial Guaranty Insurance Company is currently licensed
to write insurance in all 50 states and the District of Columbia.
Financial Security Assurance, Inc. ("Financial Security" or "FSA") is a
monoline insurance company incorporated on March 16, 1984 under the laws of
the State of New York. The operations of Financial Security commenced on July
25, 1985, and Financial Security received its New York State insurance license
on September
<PAGE>
Unitholder Explanations 25
23, 1985. Financial Security and its two wholly owned subsidiaries are
licensed to engage in the financial guaranty insurance business in 49 states,
the District of Columbia and Puerto Rico.
Financial Security and its subsidiaries are engaged exclusively in the
business of writing financial guaranty insurance, principally in respect of
asset-backed and other collateralized securities offered in domestic and
foreign markets. Financial Security and its subsidiaries also write financial
guaranty insurance in respect of municipal and other obligations and reinsure
financial guaranty insurance policies written by other leading insurance
companies. In general, financial guaranty insurance consists of the issuance
of a guaranty of scheduled payments of an issuer's securities, thereby
enhancing the credit rating of those securities, in consideration for payment
of a premium to the insurer.
Financial Security is approximately 91.6% owned by U S WEST, Inc. and
8.4% owned by The Tokio Marine and Fire Insurance Co., Ltd. ("Tokio Marine").
Neither U S WEST, Inc. nor Tokio Marine is obligated to pay the debts of or
the claims against Financial Security. Financial Security is domiciled in the
State of New York and is subject to regulation by the State of New York
Insurance Department. As of March 31, 1993, the total policyholders' surplus
and contingency reserves and the total unearned premium reserve, respectively,
of Financial Security and its consolidated subsidiaries were, in accordance
with generally accepted accounting principles, approximately $479,110,000
(unaudited) and $220,078,000 (unaudited), and the total shareholders' equity
and the total unearned premium reserve, respectively, of Financial Security
and its consolidated subsidiaries were, in accordance with generally accepted
accounting principles, approximately $628,119,000 (unaudited) and $202,493,000
(unaudited). Copies of Financial Security's financial statements may be
obtained by writing to Financial Security at 350 Park Avenue, New York, New
York, 10022, Attention: Communications Department. Its telephone number is
(212) 826-0100.
Pursuant to an intercompany agreement, liabilities on financial guaranty
insurance written by Financial Security or either of its subsidiaries are
reinsured among such companies on an agreed-upon percentage substantially
proportional to their respective capital, surplus and reserves, subject to
applicable statutory risk limitations. In addition, Financial Security
reinsures a portion of its liabilities under certain of its financial guaranty
insurance policies with unaffiliated reinsurers under various quota share
treaties and on a transaction-by-transaction basis. Such reinsurance is
utilized by Financial Security as a risk management device and to comply with
certain statutory and rating agency requirements; it does not alter or limit
Financial Security's obligations under any financial guaranty insurance
policy.
Financial Security's claims-paying ability is rated "Aaa" by Moody's
Investors Service, Inc., and "AAA" by Standard & Poor's Corporation, Nippon
Investors Service Inc., Duff & Phelps Inc. and Australian Ratings Pty. Ltd.
Such ratings reflect only the views of the respective rating agencies, are not
recommendations to buy, sell or hold securities and are subject to revision or
withdrawal at any time by such rating agencies.
Capital Guaranty Insurance Company ("Capital Guaranty") was incorporated
in Maryland on June 25, 1986, and is a wholly-owned subsidiary of Capital
Guaranty Corporation, a Maryland insurance holding company.
Capital Guaranty Corporation is owned by the following investors:
Constellation Investments, Inc., an affiliate of Baltimore Gas and Electric;
Fleet/Norstar Financial Group, Inc.; Safeco Corporation; Sibag Finance
Corporation, an affiliate of Siemens A.G.; and United States Fidelity and
Guaranty Company and management.
Capital Guaranty, headquartered in San Francisco, is a monoline financial
guaranty insurer engaged in the underwriting and development of financial
guaranty insurance. Capital Guaranty insures general obligation, tax supported
and revenue bonds structured as tax-exempt and taxable securities as well as
selectively insures taxable corporate/asset backed securities. Standard &
Poor's Corporation rates the claims paying ability of Capital Guaranty "AAA."
Capital Guaranty's insured portfolio currently includes over $9 billion
in total principal and interest insured. As of September 30, 1993, the total
policyholders' surplus of Capital Guaranty was approximately $181,383,432
(unaudited), and the total admitted assets were approximately $270,021,126
(unaudited) as reported to the Insurance Department of the State of Maryland.
Financial statements for Capital Guaranty Insurance Company, that have been
prepared in accordance with statutory insurance accounting standards, are
available upon request. The address of
<PAGE>
26 Unitholder Explanations
Capital Guaranty's headquarters and its telephone number are Steuart Tower,
22nd Floor, One Market Plaza, San Francisco, CA 94105-1413 and (415) 995-8000.
CapMAC is a New York-domiciled monoline stock insurance company which
engages only in the business of financial guarantee and surety insurance.
CapMAC is licensed in 48 states in addition to the District of Columbia, the
Commonwealth of Puerto Rico and the territory of Guam. CapMAC insures
structured asset-backed, corporate and other financial obligations in the
domestic and foreign capital markets. CapMAC may also provide financial
guarantee reinsurance for structured asset-backed, corporate and municipal
obligations written by other major insurance companies.
CapMAC's claims-paying ability is rated "Aaa" by Moody's Investors
Service, Inc. ("Moody's"), "AAA" by Standard & Poor's Corporation ("Standard &
Poor's"), and "AAA" by Duff & Phelps, Inc. ("Duff & Phelps"). Such ratings
reflect only the views of the respective rating agencies, are not
recommendations to buy, sell or hold securities and are subject to revision or
withdrawal at any time by such rating agencies.
CapMAC is wholly owned by CapMAC Holdings Inc. ("Holdings"), a company
that is owned by a group of institutional and other investors, including
CapMAC's management and employees. CapMAC commenced operations on December 24,
1987 as an indirect, wholly-owned subsidiary of Citibank (New York State), a
wholly-owned subsidiary of Citicorp. On June 25, 1992, Citibank (New York
State) sold CapMAC to Holdings (the "Sale").
Neither Holdings nor any of its stockholders is obligated to pay any
claims under any surety bond issued by CapMAC or any debts of CapMAC or to
make additional capital contributions.
CapMAC is regulated by the Superintendent of Insurance of the State of
New York. In addition, CapMAC is subject to regulation by the insurance
departments of the other jurisdictions in which it is licensed. CapMAC is
subject to periodic regulatory examinations by the same regulatory
authorities.
CapMAC is bound by insurance laws and regulations regarding capital
transfers, limitations upon dividends, investment of assets, changes in
control, transactions with affiliates and consolidations and acquisitions. The
amount of exposure per risk that CapMAC may retain, after giving effect to
reinsurance, collateral or other security, is also regulated. Statutory and
regulatory accounting practices may prescribe appropriate rates at which
premiums are earned and the levels of reserves required. In addition, various
insurance laws restrict the incurrence of debt, regulate permissible
investments of reserves, capital and surplus, and govern the form of surety
bonds.
CapMAC's obligations under the Surety Bond(s) may be reinsured. Such
reinsurance does not relieve CapMAC of any of its obligations under the Surety
Bond(s).
THE SURETY BONDS ARE NOT COVERED BY THE PROPERTY/CASUALTY INSURANCE
SECURITY FUND SPECIFIED IN ARTICLE 76 OF THE NEW YORK INSURANCE LAW.
In connection with the Sale, Holdings and CapMAC entered into an
Ownership Policy Agreement (the "Ownership Policy Agreement"), which sets
forth Holdings' intent with respect to its ownership and control of CapMAC and
provides for certain policies and agreements with respect to Holdings'
exercise of its control of CapMAC. In the Ownership Policy Agreement, Holdings
has agreed that, during the term of the Ownership Policy Agreement, it will
not, and will not permit any stockholder of Holdings to enter into any
transaction the result of which would be a change of control (as defined in
the Ownership Policy Agreement) of CapMAC, unless the long term debt
obligations or claims-paying ability of the person which would control CapMAC
after such transaction or its direct or indirect parent are rated in a high
investment grade category, unless Holdings or CapMAC has confirmed that
CapMAC's claims-paying ability rating by Moody's (the "Rating") in effect
immediately prior to any such change of control will not be downgraded by
Moody's upon such change of control or unless such change of control occurs as
a result of a public offering of Holdings' capital stock.
In addition, the Ownership Policy Agreement includes agreements (i) not
to change the "zero-loss" underwriting standards or policies and procedures of
CapMAC in a manner that would materially and adversely affect the risk profile
of CapMAC's book of business, (ii) that CapMAC will adhere to the aggregate
leverage limitations and maintain capitalization levels considered by Moody's
from time to time as consistent with maintaining CapMAC's Rating and (iii)
that until CapMAC's statutory capital surplus and contingency reserve
("qualified statutory capital")
<PAGE>
Unitholder Explanations 27
equal $250 million, CapMAC will maintain a specified amount of qualified
statutory capital in excess of the amount of qualified statutory capital that
CapMAC is required at such time to maintain under the aggregate leverage
limitations set forth in Article 69 of the New York Insurance Law.
The Ownership Policy Agreement will terminate on the earlier of the date
on which a change of control of CapMAC occurs and the date on which CapMAC and
Holdings agree in writing to terminate the Ownership Policy Agreement;
provided that, CapMAC or Holdings has confirmed that CapMAC's Rating in effect
immediately prior to any such termination will not be downgraded upon such
termination.
As of December 31, 1992 and 1991, CapMAC had statutory capital and
surplus of approximately $148 million and $232 million, respectively, and had
not incurred any debt obligations. On June 26, 1992, CapMAC made a special
distribution (the "Distribution") to Holdings in connection with the Sale in
an aggregate amount that caused the total of CapMAC's statutory capital and
surplus to decline to approximately $150 million. Holdings applied
substantially all of the proceeds of the Distribution to repay debt owed to
Citicorp that was incurred in connection with the capitalization of CapMAC. As
of June 30, 1992, CapMAC had statutory capital and surplus of approximately
$150 million and had not incurred any debt obligations. In addition, at
December 31, 1992 CapMAC had a statutory contingency reserve of approximately
$15 million, which is also available to cover claims under surety bonds issued
by CapMAC. Article 69 of the New York State Insurance Law requires that CapMAC
establishes and maintains the contingency reserve.
In addition to its capital (including contingency reserve) and other
reinsurance available to pay claims under its surety bonds, on June 25, 1992,
CapMAC entered into a Stop Loss Reinsurance Agreement (the "Stop Loss
Agreement") with Winterthur Swiss Insurance Company (the "Reinsurer"), which
is rated AAA by Standard & Poor's and Aaa by Moody's, pursuant to which the
Reinsurer will be required to pay any losses incurred by CapMAC during the
term of the Stop Loss Agreement on the surety bonds covered under the Stop
Loss Agreement in excess of a specified amount of losses incurred by CapMAC
under such surety bonds (such specified amount initially being $100 million
and increasing annually by an amount equal to 66 2/3% of the increase in
CapMAC's statutory capital and surplus) up to an aggregate limit payable under
the Stop Loss Agreement of $50 million. The Stop Loss Agreement has an initial
term of seven years, is extendable for one-year periods and is subject to
early termination upon the occurrence of certain events.
CapMAC also has available a $100,000,000 standby corporate liquidity
facility (the "Liquidity Facility") provided by a syndicate of banks rated
A1+/P1 by Standard & Poor's and Moody's, respectively, having a term of 360
days. Under the Liquidity Facility CapMAC will be able, subject to satisfying
certain conditions, to borrow funds from time to time in order to enable it to
fund any claim payments or payments made in settlement or mitigation of claims
payments under its surety bonds, including the Surety Bond(s).
Copies of CapMAC's financial statements prepared in accordance with
statutory accounting standards, which differ from generally accepted
accounting principles, and filed with the Insurance Department of the State of
New York are available upon request. CapMAC is located at 885 Third Avenue,
New York, New York 10022, and its telephone number is (212) 755-1155.
In order to be in an Insured Trust, Bonds must be insured by one of the
Preinsured Bond Insurers or be eligible for the insurance being obtained by
such Trust. In determining eligibility for insurance, the Preinsured Bond
Insurers, AMBAC Indemnity and Financial Guaranty have applied their own
standards which correspond generally to the standards they normally use in
establishing the insurability of new issues of municipal bonds and which are
not necessarily the criteria used in the selection of Bonds by the Sponsor. To
the extent the standards of the Preinsured Bond Insurers, AMBAC Indemnity and
Financial Guaranty are more restrictive than those of the Sponsor, the
previously stated Trust investment criteria have been limited with respect to
the Bonds. This decision is made prior to the Date of Deposit, as debt
obligations not eligible for insurance are not deposited in an Insured Trust.
Thus, all of the Bonds in the portfolios of the Insured Trusts in the Fund are
insured either by the respective Trust or by the issuer of the Bonds, by a
prior owner of such Bonds or by the Sponsor prior to the deposit of such Bonds
in a Trust.
<PAGE>
28 Unitholder Explanations
Because the Bonds are insured by one of the Portfolio Insurers or one of
the Preinsured Bond Insurers as to the timely payment of principal and
interest, when due, and on the basis of the various reinsurance agreements in
effect, Standard & Poor's Corporation has assigned to the Units of each
Insured Trust its "AAA" investment rating. See "Description of Securities
Ratings". The obtaining of this rating by an Insured Trust should not be
construed as an approval of the offering of the Units by Standard & Poor's
Corporation or as a guarantee of the market value of such Trust or of the
Units.
On the date of this Prospectus, the Estimated Current Returns on the
Securities in the IM-IT, Colorado IM-IT Trust and Connecticut IM-IT Trust were
4.93%, 4.63% and 4.61%, respectively, after payment of the insurance premium
or premiums payable by each Trust, while the Estimated Long-Term Returns on
such Trusts were 4.95%, 4.58% and 4.65%, respectively. The Estimated Current
Returns on identical portfolios without the insurance obtained by the
above-mentioned Trusts would have been 4.95%, 4.65% and 4.66%, respectively,
on such date, while the Estimated Long-Term Returns on identical portfolios
without the insurance obtained by the above mentioned Trusts would have been
4.96%, 4.60% and 4.69%, respectively.
An objective of portfolio insurance obtained by an Insured Trust is to
obtain a higher yield on the portfolio of such Trust than would be available
if all the Securities in such portfolio had Standard & Poor's Corporation
"AAA" rating and yet at the same time to have the protection of insurance of
prompt payment of interest and principal, when due, on the Bonds. There is, of
course, no certainty that this result will be achieved. Preinsured Bonds in an
Insured Trust (all of which are rated "AAA" by Standard & Poor's Corporation)
may or may not have a higher yield than uninsured bonds rated "AAA" by
Standard & Poor's Corporation. In selecting such Bonds for an Insured Trust,
the Sponsor has applied the criteria hereinbefore described.
In the event of nonpayment of interest or principal, when due, in respect
of a Bond, AMBAC Indemnity shall make such payment not later than 30 days and
Financial Guaranty shall make such payment within one business day after the
respective insurer has been notified that such nonpayment has occurred or is
threatened (but not earlier than the date such payment is due). The insurer,
as regards any payment it may make, will succeed to the rights of the Trustee
in respect thereof. All policies issued by the Portfolio Insurers and the
Preinsured Bond Insurers are substantially identical insofar as obligations to
an Insured Trust are concerned.
The Internal Revenue Service has issued a letter ruling which holds in
effect that insurance proceeds representing maturing interest on defaulted
municipal obligations paid to holders of insured bonds, under policy
provisions substantially identical to the policies described herein, will be
excludable from Federal gross income under Section 103(a)(1) of the Internal
Revenue Code to the same extent as if such payments were made by the issuer of
the municipal obligations. Holders of Units in an Insured Trust should discuss
with their tax advisers the degree of reliance which they may place on this
letter ruling. However, Chapman and Cutler, counsel for the Sponsor, has given
an opinion to the effect such payment of proceeds would be excludable from
Federal gross income if, and to the same extent as, such interest would have
been so excludable if paid by the issuer of the defaulted obligations. See
"Other Matters--Federal Tax Status".
Each Portfolio Insurer is subject to regulation by the department of
insurance in the state in which it is qualified to do business. Such
regulation, however, is no guarantee that each Portfolio Insurer will be able
to perform on its contract of insurance in the event a claim should be made
thereunder at some time in the future. At the date hereof, it is reported that
no claims have been submitted or are expected to be submitted to any of the
Portfolio Insurers which would materially impair the ability of any such
company to meet its commitment pursuant to any contract of bond or portfolio
insurance.
The information relating to each Portfolio Insurer has been furnished by
such companies. The financial information with respect to each Portfolio
Insurer appears in reports filed with state insurance regulatory authorities
and is subject to audit and review by such authorities. No representation is
made herein as to the accuracy or adequacy of such information or as to the
absence of material adverse changes in such information subsequent to the
dates thereof.
<PAGE>
Unitholder Explanations 29
The Bonds in the Insured Trusts are insured as follows:
<TABLE>
<CAPTION>
BONDS INSURED BONDS INSURED
UNDER AMBAC UNDER FINANCIAL
INDEMNITY GUARANTY PREINSURED
TRUST PORTFOLIO INSURANCE PORTFOLIO INSURANCE BONDS TOTAL
<S> <C> <C> <C> <C>
IM-IT............................................... 11% 0% 89% 100%
IM-IT Intermediate.................................. 0% 0% 100% 100%
Colorado IM-IT...................................... 17% 0% 83% 100%
Connecticut IM-IT................................... 31% 0% 69% 100%
Florida IM-IT....................................... 0% 0% 100% 100%
</TABLE>
The breakdown of the Preinsured Bonds is as follows: IM-IT--AMBAC
Indemnity 11%, Financial Guaranty 41% and MBIA 37%; IM-IT Intermediate
Trust--AMBAC Indemnity 42%, Financial Guaranty 15%, MBIA 7% and FSA 36%;
Colorado IM-IT Trust--AMBAC Indemnity 9%, Financial Guaranty 5% and MBIA 69%;
Connecticut IM-IT Trust--AMBAC Indemnity 10%, Financial Guaranty 17%, MBIA 29%
and CapMAC 13%; Florida IM-IT Trust-- AMBAC Indemnity 34%, Financial Guaranty
32%, MBIA 25% and FSA 9%.
<PAGE>
30
IM-IT-- Series 316
IM-IT
GENERAL. The IM-IT consists of 12 issues of Securities. Two of the Bonds
in the IM-IT are general obligations of the governmental entities issuing them
and are backed by the taxing power thereof. The remaining issues are payable
from the income of a specific project or authority and are not supported by
the issuer's power to levy taxes. These issues are located in 10 states or
territories, divided by purpose of issues (and percentage of principal amount
to total IM-IT) as follows: Health Care, 2 (22%); Transportation, 2 (16%);
Single Family Mortgage Revenue, 1 (11%); Water and Sewer, 1 (11%); Wholesale
Electric, 1 (11%); Public Building, 1 (10%); General Obligations, 2 (7%);
Multi-Family Mortgage Revenue, 1 (7%) and Retail Electric/Gas, 1 (5%). Three
bond issues aggregating approximately 25% of the aggregate principal amount of
the Securities in the Trust are obligations of issuers located in the State of
Illinois. No Bond issue has received a provisional rating. The dollar weighted
average maturity of the Bonds in the Trust is 27 years.
TAX STATUS. For a discussion of the Federal tax status of income earned
on IM-IT Units, see "Other Matters-- Federal Tax Status".
<TABLE>
<CAPTION>
PER UNIT INFORMATION:
CALCULATION OF ESTIMATED NET ANNUAL UNIT INCOME <F1>
<S> <C>
Estimated Annual Interest Income per Unit................................................................ $ 50.81
Less: Estimated Annual Expense per Unit <F2>............................................................. $ 1.33
Less: Annual Premium on Portfolio Insurance per Unit..................................................... $ .17
Estimated Net Annual Interest Income per Unit............................................................ $ 49.31
CALCULATION OF ESTIMATED INTEREST EARNINGS PER UNIT:
Estimated Net Annual Interest Income per Unit............................................................ $ 49.31
Divided by 12............................................................................................ $ 4.11
Estimated Daily Rate of Net Interest Accrual per Unit.......................................................... $ .13699
ESTIMATED CURRENT RETURN BASED ON PUBLIC OFFERING PRICE <F1><F3><F4><F5>....................................... 4.93%
ESTIMATED LONG-TERM RETURN <F3><F4><F5>........................................................................ 4.95%
Initial Distribution (March 1994).............................................................................. $ 2.88
ESTIMATED NORMAL DISTRIBUTION PER UNIT <F5>.................................................................... $ 4.11
PURCHASED INTEREST <F6>........................................................................................ $ 6.04
Trustee's Annual Fee <F1>.............. $.98 per $1,000 principal amount of
Bonds
Record and Computation Dates........... FIRST day of each month
DISTRIBUTION DATES..................... FIFTEENTH DAY OF EACH MONTH COMMENCING
MARCH 15, 1994
<FN>
<F1> During the first year the Trustee will reduce its fee by approximately
$.48 per Unit (which amount is the estimated interest to be earned per Unit
prior to the expected delivery dates for the "when, as and if issued"
Bonds included in this Trust). Should such estimated interest exceed such
amount, the Trustee will reduce its fee up to its annual fee. After the
first year, the Trustee's fee will be that amount indicated above.
Estimated annual interest income per Unit will be increased to $51.29.
Estimated Annual Expense per Unit (excluding insurance) will be increased
to $1.81; and estimated net annual interest income per Unit will remain
the same as shown. See "Estimated Current Returns and Estimated Long-Term
Returns." Based on the outstanding principal amount of Securities as of
the Date of Deposit, the Trustee's annual fee would be $9,207.
<F2> Excluding insurance costs.
<F3> The Estimated Current Return and Estimated Long-Term Return are increased
for transactions entitled to a reduced sales charge. See "Unitholder
Explanations--Public Offering--General".
<F4> The Estimated Current Return is calculated by dividing the estimated net
annual interest income per Unit by the Public Offering Price. The
estimated net annual interest income per Unit will vary with changes in
fees and expenses of the Trustee and the Evaluator and with the principal
prepayment, redemption, maturity, exchange or sale of Securities while
the Public Offering Price will vary with changes in the offering price of
the underlying Securities and with changes in the Purchased Interest;
therefore, there is no assurance that the present Estimated Current
Return indicated above will be realized in the future. The Estimated
Long-Term Return is calculated using a formula which <F1>takes into
consideration, and determines and factors in the relative weightings of,
the market values, yields (which takes into account the amortization of
premiums and the accretion of discounts) and estimated retirements of all
of the Securities in the Trust and <F2>takes into account the expenses
and sales charge associated with each Trust Unit. Since the market values
and estimated retirements of the Securities and the expenses of the Trust
will change, there is no assurance that the present Estimated Long-Term
Return as indicated above will be realized in the future. The Estimated
Current Return and Estimated Long-Term Return are expected to differ
because the calculation of the Estimated Long-Term Return reflects the
estimated date and amount of principal returned while the Estimated
Current Return calculation includes only net annual interest income and
Public Offering Price.
<F5> These figures are based on estimated per Unit cash flows. Estimated cash
flows will vary with changes in fees and expenses, with changes in
current interest rates and with the principal prepayment, redemption,
maturity, call, exchange or sale of the underlying Securities. The
estimated cash flows for this Series are set forth under "Estimated Cash
Flows to Unitholders".
<F6> See "Unitholder Explanations--Purchased and Accrued Interest".
</TABLE>
<PAGE>
IM-IT-- Series 316 31
<TABLE>
INSURED MUNICIPALS INCOME TRUST
SERIES 316 (154TH INSURED MULTI-SERIES)
PORTFOLIO AS OF FEBRUARY 3, 1994
<CAPTION>
NAME OF ISSUER, TITLE, INTEREST RATE AND OFFERING
AGGREGATE MATURITY DATE OF EITHER BONDS DEPOSITED OR REDEMPTION PRICE TO
PRINCIPAL<F1> BONDS CONTRACTED FOR<F1><F5> RATING<F2> FEATURE<F3> IM-IT<F4>
<S> <C> <C> <C> <C>
$ 1,000,000 Illinois State Toll Highway Authority, Toll Highway Priority
Revenue Bonds, Series 1992A (FGIC Insured)
#5.75% Due 1/1/2017.......................................... AAA 2003 @ 102 $ 1,025,220
1,000,000 North Carolina Eastern Municipal Power Agency, Power System
Revenue Bonds, Refunding Series 1993B (FGIC Insured) 2003 @ 100
#5.50% Due 1/1/2017.......................................... AAA 2015 @ 100 S.F. 1,005,000
350,000 City of Chicago, Illinois, Unlimited Tax General Obligation
Bonds, Project Series 1993 (FGIC Insured) 2004 @ 102
#5.25% Due 1/1/2018.......................................... AAA 2014 @ 100 S.F. 342,437
1,060,000 Wisconsin State Health and Educational Facilities Authority,
Revenue Bonds (Sisters of the Sorrowful Mother Ministry
Corporation) Series 1993C (MBIA Insured) 2003 @ 102
#5.50% Due 8/15/2019......................................... AAA 2014 @ 100 S.F. 1,065,300
1,000,000 Chicago, Illinois, Wastewater Transmission Revenue Refunding
Bonds, Series 1993 (FGIC Insured) 2003 @ 100
#5.125% Due 1/1/2020......................................... AAA 2014 @ 100 S.F. 954,260
325,000 Okemos Public Schools, County of Ingham, State of Michigan,
1993 Refunding Bonds (Unlimited Tax-General Obligation) MBIA
Insured
#0.00% Due 5/1/2020.......................................... AAA 77,649<F6>
500,000 Harris County, Texas, Toll Road Senior Lien Revenue Refunding
Bonds, Series 1994 (FGIC Insured) 2004 @ 102
#5.375% Due 8/15/2020........................................ AAA 2017 @ 100 S.F. 501,440
500,000 South Carolina State Public Service Authority, Revenue
Refunding Bonds, Series A (MBIA Insured) 2003 @ 102
#5.50% Due 7/1/2021.......................................... AAA 2014 @ 100 S.F. 505,725
1,000,000 Rhode Island Convention Center Authority, Revenue Bonds, Series
1993 (MBIA Insured) 2004 @ 102
#5.00% Due 5/15/2023......................................... AAA 2009 @ 100 S.F. 946,410
1,000,000 Washington State Health Care Facilities Authority, Revenue
Bonds (Harris Memorial Hospital, Bremerton) Series 1994
(AMBAC Indemnity Insured)** 2004 @ 102
#5.40% Due 8/15/2023......................................... AAA 2014 @ 100 S.F. 990,480
650,000 The Mayor and Council of Rockville (Maryland) Mortgage Revenue
Refunding Bonds (FHA Insured Mortgage Loan-The Summit
Apartments Project) Series 1994A (MBIA Insured) 2004 @ 102
5.70% Due 1/1/2026........................................... AAA 2019 @ 100 S.F. 664,449
1,010,000 Maine State Housing Authority, Mortgage Purchase Revenue Bonds,
Series 1994A** 2004 @ 102
5.70% Due 11/15/2026......................................... AA- 2021 @ 100 S.F. 1,015,050
$ 9,395,000 $ 9,093,420
</TABLE>
All of the Bonds in the portfolio are insured either by one of the Preinsured
Bond Insurers (as indicated in the Bond name) or under the portfolio insurance
policy obtained by the Trust from AMBAC Indemnity. See "Unitholder
Explanations--Insurance on the Bonds in the Insured Trusts".
For an explanation of the footnotes used on this page, see "Notes to
Portfolios".
<PAGE>
32 IM-IT-- 76th Intermediate Series
IM-IT INTERMEDIATE TRUST
GENERAL. The IM-IT Intermediate Trust consists of 11 issues of
Securities. Three of the Bonds in the IM-IT Intermediate Trust are general
obligations of the governmental entities issuing them and are backed by the
taxing power thereof. The remaining issues are payable from the income of a
specific project or authority and are not supported by the issuer's power to
levy taxes. These issues are located in 7 states or territories, divided by
purpose of issues (and percentage of principal amount to total IM-IT
Intermediate Trust) as follows: Health Care, 3 (32%); General Obligations, 3
(20%); General Purpose, 1 (15%); Water and Sewer, 1 (15%); Public Education, 1
(12%) and Certificates of Participation, 2 (6%). Two bond issues aggregating
approximately 30% of the aggregate principal amount of the Securities in the
Trust are obligations of issuers located in the State of Pennsylvania. No Bond
issue has received a provisional rating. All of the obligations in the IM-IT
Intermediate Trust mature within 5-15 years of the Date of Deposit. The dollar
weighted average maturity of the Bonds in the Trust is 10.0 years.
TAX STATUS. For a discussion of the Federal tax status of income earned
on IM-IT Intermediate Trust Units, see "Other Matters--Federal Tax Status".
<TABLE>
<CAPTION>
PER UNIT INFORMATION:
CALCULATION OF ESTIMATED NET ANNUAL UNIT INCOME <F1>
<S> <C>
Estimated Annual Interest Income per Unit................................................................ $ 44.15
Less: Estimated Annual Expense per Unit <F2>............................................................. $ 1.31
Less: Annual Premium on Portfolio Insurance per Unit..................................................... --
Estimated Net Annual Interest Income per Unit............................................................ $ 42.84
CALCULATION OF ESTIMATED INTEREST EARNINGS PER UNIT:
Estimated Net Annual Interest Income per Unit............................................................ $ 42.84
Divided by 12............................................................................................ $ 3.57
Estimated Daily Rate of Net Interest Accrual per Unit.......................................................... $ .11900
ESTIMATED CURRENT RETURN BASED ON PUBLIC OFFERING PRICE <F1><F3><F4><F5>....................................... 4.16%
ESTIMATED LONG-TERM RETURN <F3><F4><F5>........................................................................ 4.25%
Initial Distribution (March 1994).............................................................................. $ 2.50
ESTIMATED NORMAL DISTRIBUTION PER UNIT <F5>.................................................................... $ 3.57
PURCHASED INTEREST <F6>........................................................................................ $ 4.15
Trustee's Annual Fee <F1>.............. $.98 per $1,000 principal amount of
Bonds
Record and Computation Dates........... FIRST day of each month
DISTRIBUTION DATES..................... FIFTEENTH DAY OF EACH MONTH COMMENCING
MARCH 15, 1994
<FN>
<F1> During the first year the Trustee will reduce its fee by approximately
$.62 per Unit (which amount is the estimated interest to be earned per
Unit prior to the expected delivery dates for the "when, as and if
issued" Bonds included in this Trust). Should such estimated interest
exceed such amount, the Trustee will reduce its fee up to its annual fee.
After the first year, the Trustee's fee will be that amount indicated
above. Estimated annual interest income per Unit will be increased to
$44.77. Estimated Annual Expense per Unit (excluding insurance) will be
increased to $1.93; and estimated net annual interest income per Unit
will remain the same as shown. See "Estimated Current Returns and
Estimated Long-Term Returns." Based on the outstanding principal amount
of Securities as of the Date of Deposit, the Trustee's annual fee would
be $4,929.
<F2> Excluding insurance costs.
<F3> The Estimated Current Return and Estimated Long-Term Return are increased
for transactions entitled to a reduced sales charge. See "Unitholder
Explanations--Public Offering--General".
<F4> The Estimated Current Return is calculated by dividing the estimated net
annual interest income per Unit by the Public Offering Price. The
estimated net annual interest income per Unit will vary with changes in
fees and expenses of the Trustee and the Evaluator and with the principal
prepayment, redemption, maturity, exchange or sale of Securities while
the Public Offering Price will vary with changes in the offering price of
the underlying Securities and with changes in the Purchased Interest;
therefore, there is no assurance that the present Estimated Current
Return indicated above will be realized in the future. The Estimated
Long-Term Return is calculated using a formula which <F1>takes into
consideration, and determines and factors in the relative weightings of,
the market values, yields (which takes into account the amortization of
premiums and the accretion of discounts) and estimated retirements of all
of the Securities in the Trust and <F2>takes into account the expenses
and sales charge associated with each Trust Unit. Since the market values
and estimated retirements of the Securities and the expenses of the Trust
will change, there is no assurance that the present Estimated Long-Term
Return as indicated above will be realized in the future. The Estimated
Current Return and Estimated Long-Term Return are expected to differ
because the calculation of the Estimated Long-Term Return reflects the
estimated date and amount of principal returned while the Estimated
Current Return calculation includes only net annual interest income and
Public Offering Price.
<F5> These figures are based on estimated per Unit cash flows. Estimated cash
flows will vary with changes in fees and expenses, with changes in
current interest rates and with the principal prepayment, redemption,
maturity, call, exchange or sale of the underlying Securities. The
estimated cash flows for this Series are set forth under "Estimated Cash
Flows to Unitholders".
<F6> See "Unitholder Explanations--Purchased and Accrued Interest".
</TABLE>
<PAGE>
IM-IT-- 76th Intermediate Series 33
<TABLE>
INSURED MUNICIPALS INCOME TRUST
76TH INTERMEDIATE SERIES (154TH INSURED MULTI-SERIES)
PORTFOLIO AS OF FEBRUARY 3, 1994
<CAPTION>
OFFERING
PRICE TO
NAME OF ISSUER, TITLE, INTEREST RATE AND IM-IT
AGGREGATE MATURITY DATE OF EITHER BONDS DEPOSITED OR REDEMPTION INTERMEDIATE
PRINCIPAL<F1> BONDS CONTRACTED FOR<F1><F5> RATING<F2> FEATURE<F3> TRUST<F4>
<S> <C> <C> <C> <C>
$ 750,000 Pennsylvania Intergovernmental Cooperation Authority, Special
Tax Revenue Bonds (City of Philadelphia Funding Program)
Series 1993 (FGIC Insured)
4.90% Due 6/15/2003.......................................... AAA $ 769,710
105,000 Maricopa County, Arizona, Industrial Development Authority,
Health Facilities Revenue Refunding Bonds (Catholic Health
Care) MBIA Insured
#4.70% Due 7/1/2003.......................................... AAA 105,394
750,000 Butler County Hospital Authority, Pennsylvania, Hospital
Revenue Bonds (Butler Memorial Hospital) Series 1993A (FSA
Insured)
#4.75% Due 7/1/2003.......................................... AAA 758,902
500,000 Indiana State University Board of Trustees, Indiana State
University Student Fee Bonds, Series H (AMBAC Indemnity
Insured)**
#4.50% Due 10/1/2003......................................... AAA 498,015
275,000 Kenosha County, Wisconsin, Unlimited Tax General Obligation
Corporate Purpose Bonds, Series 1994A (MBIA Insured)
4.60% Due 11/1/2003.......................................... AAA 276,032
300,000 School Board of Polk County, Florida, Master Lease Program,
Certificates of Participation, Series 1994 (FSA Insured)
#200M--4.60% Due 1/1/2004.................................... AAA 199,172
#100M--4.70% Due 1/1/2005.................................... AAA 2004 @ 102 99,529
600,000 Valparaiso Multi-Schools Building Corporation (Porter County,
Indiana) First Mortgage Refunding Bonds, Series 1994 (AMBAC
Indemnity Insured)**
#4.60% Due 1/1/2004.......................................... AAA 599,862
250,000 Cypress-Fairbanks Independent School District, Texas, Unlimited
Tax General Obligation Refunding Bonds, Series 1991B (AMBAC
Indemnity Insured)
#0.00% Due 8/1/2004.......................................... AAA 151,542<F6>
750,000 Michigan State Hospital Finance Authority, Hospital Revenue and
Refunding Bonds (The Detroit Medical Center Obligated Group)
Series 1993B (AMBAC Indemnity Insured)
4.80% Due 8/15/2004.......................................... AAA 755,873
750,000 North Austin Municipal Utility District No. 1, City of Austin,
Texas, Contract Revenue Refunding Bonds, Series 1994 (FSA
Insured)**
4.70% Due 11/15/2004......................................... AAA 2003 @ 100 749,632
$ 5,030,000 $ 4,963,663
</TABLE>
All of the Bonds in the portfolio are insured by one of the Preinsured Bond
Insurers as indicated in the Bond name. See "Unitholder
Explanations--Insurance on the Bonds in the Insured Trusts".
For an explanation of the footnotes used on this page, see "Notes to
Portfolios".
<PAGE>
34 Colorado IM-IT-- Series 67
COLORADO IM-IT TRUST
GENERAL. The Colorado IM-IT Trust consists of 8 issues of Securities.
Two of the Bonds in the Colorado IM-IT Trust are general obligations of the
governmental entities issuing them and are backed by the taxing power thereof.
The remaining issues are payable from the income of a specific project or
authority and are not supported by the issuer's power to levy taxes. These
issues are divided by purpose of issues (and percentage of principal amount to
total Colorado IM-IT Trust) as follows: Health Care, 3 (35%); Industrial
Revenue, 1 (17%); Retail Electric/Gas, 1 (17%); Water and Sewer, 1 (17%) and
General Obligations, 2 (14%). No Bond issue has received a provisional rating.
SPECIAL CONSIDERATIONS. The State Constitution requires that expenditures
for any fiscal year not exceed revenues for such fiscal year. By statute, the
amount of General Fund revenues available for appropriation is based upon
revenue estimates which, together with other available resources, must exceed
annual appropriations by the amount of the unappropriated reserve (the
"Unappropriated Reserve"). The Unappropriated Reserve requirement for fiscal
year 1991, 1992 and 1993 was set at 3%. For fiscal year 1992 and thereafter,
General Fund appropriations are also limited by statute to an amount equal to
the cost of performing certain required reappraisals of taxable property plus
an amount equal to the lesser of (i) five percent of Colorado personal income
or (ii) 106% of the total General Fund appropriations for the previous fiscal
year. This restriction does not apply to any General Fund appropriations which
are required as a result of a new federal law, a final state or federal court
order or moneys derived from the increase in the rate or amount of any tax or
fee approved by a majority of the registered electors of the State voting at
any general election. In addition, the statutory limit on the level of General
Fund appropriations may be exceeded for a given fiscal year upon the
declaration of a State fiscal emergency by the State General Assembly.
The 1991 fiscal year end fund balance was $16.3 million, which was $62.8
million below the 3% Unappropriated Reserve requirement. As of the end of the
1992 fiscal year, the fund balance was $133.3 million, which was $49.1 million
over the 3% Unappropriated Reserve requirement. Based on June 20, 1993
estimates, the 1993 fiscal year ending fund balance is expected to be $281.8
million, or $189.7 million over the 3% required Unappropriated Reserve.
On November 3, 1992, voters in Colorado approved a constitutional
amendment (the "Amendment") which, in general, became effective December 31,
1992, and which could restrict the ability of the State and local governments
to increase revenues and impose taxes. The Amendment applies to the State and
all local governments, including home rule entities ("Districts").
Enterprises, defined as government-owned businesses authorized to issue
revenue bonds and receiving under 10% of annual revenue in grants from all
Colorado state and local governments combined, are excluded from the
provisions of the Amendment.
The provisions of the Amendment are unclear and will probably require
judicial interpretation. Among other provisions, beginning November 4, 1992,
the Amendment requires voter approval prior to tax increases, creation of
debt, or mill levy or valuation for assessment ratio increases. The Amendment
also limits increases in government spending and property tax revenues to
specified percentages. The Amendment requires that District property tax
revenues yield no more than the prior year's revenues adjusted for inflation,
voter approved changes and (except with regard to school districts) local
growth in property values according to a formula set forth in the Amendment.
School districts are allowed to adjust tax levies for changes in student
enrollment. Pursuant to the Amendment, local government spending is to be
limited by the same formula as the limitation for property tax revenues. The
Amendment limits increases in expenditures from the State general fund and
program revenues (cash funds) to the growth in inflation plus the percentage
change in State population in the prior calendar year. The basis for initial
spending and revenue limits are fiscal year 1992 spending and 1991 property
taxes collected in 1992. The basis for spending and revenue limits for fiscal
year 1994 and later years will be the prior fiscal year's spending and
property taxes collected in the prior calendar year. Debt service changes,
reductions and voter-approved revenue changes are excluded from the
calculation basis. The Amendment also prohibits new or increased real property
transfer tax rates, new State real property taxes and local District income
taxes.
According to the Colorado Economic Prespective, Fourth Quarter, FY
1992-93, June 20, 1993 (the "Economic Report"), inflation for 1992 was 3.7%
and population grew at the rate of 2.7% in Colorado. Accordingly, under the
Amendment, increases in State expenditures during the 1994 fiscal year will be
limited to 6.4% over expenditures during the 1993 fiscal year. The 1993 fiscal
year is the base year for calculating the limitation for the 1994 fiscal year.
For the 1993 fiscal year, the Office of State Planning and Budgeting estimates
that general fund revenues will total $3,341.7 million and that program
revenues (cash funds) will total $1,753.4 million, or total estimated base
revenues of $5,095.1 million. Expenditures for the 1994 fiscal year,
therefore, cannot exceed $5,421.2 million. However, the
<PAGE>
Colorado IM-IT-- Series 67 35
1994 fiscal year general fund and program revenues (cash funds) are projected
to be only $5,220.4 million, or $200.8 million less than expenditures allowed
under the spending limitation.
There is also a statutory restriction on the amount of annual increases
in taxes that the various taxing jurisdictions in Colorado can levy without
electoral approval. This restriction does not apply to taxes levied to pay
general obligation debt.
As the State experienced revenue shortfalls in the mid-1980s, it adopted
various measures, including impoundment of funds by the Governor, reduction of
appropriations by the General Assembly, a temporary increase in the sales tax,
deferral of certain tax reductions and inter-fund borrowings. On a GAAP basis,
the State had unrestricted General Fund balances at June 30 of approximately
$100.3 million in fiscal year 1988, $134.4 million in fiscal year 1989, $116.6
million in fiscal year 1990, $16.3 million in fiscal year 1991 and $133.3
million in fiscal year 1992. The fiscal year 1993 unrestricted general fund is
currently estimated to be $281.8 million.
For fiscal year 1992, the following tax categories generated the
following respective revenue percentages of the State's $2,995.8 million total
gross receipts: individual income taxes represented 53.7% of gross fiscal year
1992 receipts; excise taxes represented 33.4% of gross fiscal year 1992
receipts; and corporate income taxes represented 3.7% of gross fiscal year
1992 receipts. The final budget for fiscal year 1993 projects general fund
revenues of approximately $3,341.7 million and appropriations of approximately
$3,046.7 million. The percentages of general fund revenue generated by type of
tax for fiscal year 1993 are not expected to be significantly different from
fiscal year 1992 percentages.
Under its constitution, the State of Colorado is not permitted to issue
general obligation bonds secured by the full faith and credit of the State.
However, certain agencies and instrumentalities of the State are authorized to
issue bonds secured by revenues from specific projects and activities. The
State enters into certain lease transactions which are subject to annual
renewal at the option of the State. In addition, the State is authorized to
issue short-term revenue anticipation notes. Local governmental units in the
State are also authorized to incur indebtedness. The major source of financing
for such local government indebtedness is an ad valorem property tax. In
addition, in order to finance public projects, local governments in the State
can issue revenue bonds payable from the revenues of a utility or enterprise
or from the proceeds of an excise tax, or assessment bonds payable from
special assessments. Colorado local governments can also finance public
projects through leases which are subject to annual appropriation at the
option of the local government. Local governments in Colorado also issue tax
anticipation notes. The Amendment requires prior voter approval for the
creation of any multiple fiscal year debt or other financial obligation
whatsoever, except for refundings at a lower rate or obligations of an
enterprise.
Based on data published by the State of Colorado, Office of State
Planning and Budgeting as presented in the Economic Report, over 50% of
non-agricultural employment in Colorado in 1992 was concentrated in the retail
and wholesale trade and service sectors, reflecting the importance of tourism
to the State's economy and of Denver as a regional economic and transportation
hub. The government and manufacturing sectors followed as the fourth and fifth
largest employment sectors in the State, representing approximately 18.3% and
11.5%, respectively, of non-agricultural employment in the State in 1992.
According to the Economic Report, during the first quarter of 1993,
45,900 net new jobs were generated in the Colorado economy, an increase of
24.4% over the first quarter of 1992. However, the unemployment rate rose from
an average of 5.5% during the first quarter of 1992 to 5.8% during the first
quarter of 1993. Total retail sales increased by 9.8% during the first quarter
of 1993 as compared to the same period in 1992.
Personal income rose 6.6% in Colorado during 1992 and 5.5% in 1991. In
1992, Colorado was the twelfth fastest growing state in terms of personal
income growth. However, because of heavy migration into the state and a large
increase in low-paying retail sector jobs, per capita personal income in
Colorado increased by only 3.8% in 1992, 0.1% below the increase in per capita
personal income for the nation as a whole.
Economic conditions in the State may have continuing effects on other
governmental units within the State (including issuers of the Bonds in the
Colorado IM-IT Trust), which, to varying degrees, have also experienced
reduced revenues as a result of recessionary conditions and other factors.
TAX STATUS. For a discussion of the Federal tax status of income earned
on Colorado IM-IT Trust Units, see "Other Matters--Federal Tax Status".
Neither the Sponsor nor its counsel have independently examined the Bonds
to be deposited in and held in the Trust. However, although Chapman and Cutler
expresses no opinion with respect to the issuance of the Bonds, in rendering
its opinion expressed herein, it has assumed that: (i) the Bonds were validly
issued, (ii) the interest thereon
<PAGE>
36 Colorado IM-IT-- Series 67
is excludable from gross income for federal income tax purposes, and (iii)
interest on the Bonds, if received directly by a Unitholder, would be exempt
from the income tax imposed by the State that is applicable to individuals and
corporations (the "State Income Tax"). This opinion does not address the
taxation of persons other than full time residents of Colorado.
In the opinion of Chapman and Cutler, counsel to the Sponsor, under
existing Colorado law:
Because Colorado income tax law is based upon the Federal law, the
Colorado IM-IT Trust is not an association taxable as a corporation for
purposes of Colorado income taxation.
With respect to Colorado Unitholders, in view of the relationship between
Federal and Colorado tax computations described above:
(1) Each Colorado Unitholder will be treated as owning a pro rata share
of each asset of the Colorado IM-IT Trust for Colorado income tax
purposes in the proportion that the number of Units of such Trust held
by the Unitholder bears to the total number of outstanding Units of
the Colorado IM-IT Trust, and the income of the Colorado IM-IT Trust
will therefore be treated as the income of each Colorado Unitholder
under Colorado law in the proportion described;
(2) Interest on Bonds that would not be includable in income for
Colorado income tax purposes when paid directly to a Colorado
Unitholder will be exempt from Colorado income taxation when received
by the Colorado IM-IT Trust and attributed to such Colorado Unitholder
and when distributed to such Colorado Unitholder;
(3) Any proceeds paid under an insurance policy or policies issued to
the Colorado IM-IT Trust with respect to the Bonds in the Colorado
IM-IT Trust which represent maturing interest on defaulted obligations
held by the Trustee will be excludable from Colorado adjusted gross
income if, and to the same extent as, such interest would have been so
excludable if paid in the normal course by the issuer of the defaulted
obligations;
(4) Any proceeds paid under individual policies obtained by issuers of
Bonds in the Colorado IM-IT Trust which represent maturing interest on
defaulted obligations held by the Trustee will not be includable in
income for Colorado income tax purposes if, and to the same extent as,
such interest would not have been so includable if paid in the normal
course by the issuer of the defaulted obligations;
(5) Each Colorado Unitholder will realize taxable gain or loss when the
Colorado IM-IT Trust disposes of a Bond (whether by sale, exchange,
redemption, or payment at maturity) or when the Colorado Unitholder
redeems or sells Units at a price that differs from original cost as
adjusted for amortization of bond discount or premium and other basis
adjustments (including any basis reduction that may be required to
reflect a Colorado Unitholder's share of interest, if any, accruing on
Bonds during the interval between the Colorado Unitholder's settlement
date and the date such Bonds are delivered to the Colorado IM-IT
Trust, if later);
(6) Tax cost reduction requirements relating to amortization of bond
premium may, under some circumstances, result in Colorado Unitholders
realizing taxable gain when their Units are sold or redeemed for an
amount equal to or less than their original cost; and
(7) If interest on indebtedness incurred or continued by a Colorado
Unitholder to purchase Units in the Colorado IM-IT Trust is not
deductible for federal income tax purposes, it also will be
non-deductible for Colorado income tax purposes.
Unitholders should be aware that all tax-exempt interest, including their
share of interest on the Bonds paid to the Colorado IM-IT Trust, is taken into
account for purposes of determining eligibility for the Colorado Property Tax/
Rent/Heat Rebate.
<PAGE>
Colorado IM-IT-- Series 67 37
<TABLE>
<CAPTION>
PER UNIT INFORMATION:
CALCULATION OF ESTIMATED NET ANNUAL UNIT INCOME <F1>
<S> <C>
Estimated Annual Interest Income per Unit................................................................ $ 48.39
Less: Estimated Annual Expense per Unit <F2>............................................................. $ 1.91
Less: Annual Premium on Portfolio Insurance per Unit..................................................... $ .17
Estimated Net Annual Interest Income per Unit............................................................ $ 46.31
CALCULATION OF ESTIMATED INTEREST EARNINGS PER UNIT:
Estimated Net Annual Interest Income per Unit............................................................ $ 46.31
Divided by 12............................................................................................ $ 3.86
Estimated Daily Rate of Net Interest Accrual per Unit.......................................................... $ .12864
ESTIMATED CURRENT RETURN BASED ON PUBLIC OFFERING PRICE <F1><F3><F4><F5>....................................... 4.63%
ESTIMATED LONG-TERM RETURN <F3><F4><F5>........................................................................ 4.58%
Initial Distribution (March 1994).............................................................................. $ 2.70
ESTIMATED NORMAL DISTRIBUTION PER UNIT <F5>.................................................................... $ 3.86
PURCHASED INTEREST <F6>........................................................................................ $ 8.08
Trustee's Annual Fee <F1>.............. $.98 per $1,000 principal amount of
Bonds
Record and Computation Dates........... FIRST day of each month
DISTRIBUTION DATES..................... FIFTEENTH DAY OF EACH MONTH COMMENCING
MARCH 15, 1994
<FN>
<F1> During the first year the Trustee will reduce its fee by approximately
$.12 per Unit (which amount is the estimated interest to be earned per
Unit prior to the expected delivery dates for the "when, as and if
issued" Bonds included in this Trust). Should such estimated interest
exceed such amount, the Trustee will reduce its fee up to its annual fee.
After the first year, the Trustee's fee will be that amount indicated
above. Estimated annual interest income per Unit will be increased to
$48.51. Estimated Annual Expense per Unit (excluding insurance) will be
increased to $2.03; and estimated net annual interest income per Unit
will remain the same as shown. See "Estimated Current Returns and
Estimated Long-Term Returns." Based on the outstanding principal amount
of Securities as of the Date of Deposit, the Trustee's annual fee would
be $2,842.
<F2> Excluding insurance costs.
<F3> The Estimated Current Return and Estimated Long-Term Return are increased
for transactions entitled to a reduced sales charge. See "Unitholder
Explanations--Public Offering--General".
<F4> The Estimated Current Return is calculated by dividing the estimated net
annual interest income per Unit by the Public Offering Price. The
estimated net annual interest income per Unit will vary with changes in
fees and expenses of the Trustee and the Evaluator and with the principal
prepayment, redemption, maturity, exchange or sale of Securities while
the Public Offering Price will vary with changes in the offering price of
the underlying Securities and with changes in the Purchased Interest;
therefore, there is no assurance that the present Estimated Current
Return indicated above will be realized in the future. The Estimated
Long-Term Return is calculated using a formula which <F1>takes into
consideration, and determines and factors in the relative weightings of,
the market values, yields (which takes into account the amortization of
premiums and the accretion of discounts) and estimated retirements of all
of the Securities in the Trust and <F2>takes into account the expenses
and sales charge associated with each Trust Unit. Since the market values
and estimated retirements of the Securities and the expenses of the Trust
will change, there is no assurance that the present Estimated Long-Term
Return as indicated above will be realized in the future. The Estimated
Current Return and Estimated Long-Term Return are expected to differ
because the calculation of the Estimated Long-Term Return reflects the
estimated date and amount of principal returned while the Estimated
Current Return calculation includes only net annual interest income and
Public Offering Price.
<F5> These figures are based on estimated per Unit cash flows. Estimated cash
flows will vary with changes in fees and expenses, with changes in
current interest rates and with the principal prepayment, redemption,
maturity, call, exchange or sale of the underlying Securities. The
estimated cash flows for this Series are set forth under "Estimated Cash
Flows to Unitholders".
<F6> See "Unitholder Explanations--Purchased and Accrued Interest".
</TABLE>
<PAGE>
38 Colorado IM-IT-- Series 67
<TABLE>
COLORADO INSURED MUNICIPALS INCOME TRUST
SERIES 67 (154TH INSURED MULTI-SERIES)
PORTFOLIO AS OF FEBRUARY 3, 1994
<CAPTION>
OFFERING
PRICE TO
NAME OF ISSUER, TITLE, INTEREST RATE AND COLORADO
AGGREGATE MATURITY DATE OF EITHER BONDS DEPOSITED OR REDEMPTION IM-IT
PRINCIPAL<F1> BONDS CONTRACTED FOR<F1><F5> RATING<F2> FEATURE<F3> TRUST<F4>
<S> <C> <C> <C> <C>
$ 500,000 Metro Wastewater Reclamation District, Colorado, Sewer
Refunding Bonds, Series 1993B (MBIA Insured) 2003 @ 100
#4.75% Due 4/1/2012.......................................... AAA 2009 @ 100 S.F. $ 487,670
250,000 Colorado Health Facilities Authority, Hospital Revenue Bonds
(North Colorado Medical Center) Series 1993 (MBIA Insured) 2003 @ 102
#5.95% Due 5/15/2012......................................... AAA 2006 @ 100 S.F. 270,378
250,000 Jefferson County School District No. R-1 (Jefferson County,
Colorado) General Obligation Bonds, Series 1992 (AMBAC
Indemnity Insured) 2002 @ 101
#6.00% Due 12/15/2012........................................ AAA 2009 @ 100 S.F. 270,547
500,000 Adams County, Colorado, Pollution Control Refunding Revenue
Bonds, Series 1993A (Public Service Company of Colorado
Project) MBIA Insured
#5.875% Due 4/1/2014......................................... AAA 2003 @ 101 534,900
150,000 City of Thornton, Adams County, Colorado, Unlimited Tax-General
Obligation Water Refunding Capital Appreciation Bonds, Series
1991 (FGIC Insured)
#0.00% Due 12/1/2015......................................... AAA 49,107<F6>
250,000 Colorado Health Facilities Authority, Refunding Revenue Bonds
(Rose Medical Center Project) Series 1993 (MBIA Insured) 2003 @ 102
#5.125% Due 8/15/2021........................................ AAA 2014 @ 100 S.F. 250,333
500,000 City of Colorado Springs, Colorado, Utilities System
Improvement and Refunding Revenue Bonds, Series 1994A** 2004 @ 100
#5.125% Due 11/15/2023....................................... AA 2020 @ 100 S.F. 493,835
500,000 City and County of Denver, Colorado, Revenue Bonds, Series 1994
(Sisters of Charity of Leavenworth Health Services
Corporation) MBIA Insured 2003 @ 102
#5.00% Due 12/1/2023......................................... AAA 2014 @ 100 S.F. 491,095
$ 2,900,000 $ 2,847,865
</TABLE>
All of the Bonds in the portfolio are insured either by one of the Preinsured
Bond Insurers (as indicated in the Bond name) or under the portfolio insurance
policy obtained by the Trust from AMBAC Indemnity. See "Unitholder
Explanations--Insurance on the Bonds in the IM-IT Trusts".
For an explanation of the footnotes used on this page, see "Notes to
Portfolios".
<PAGE>
Connecticut IM-IT-- Series 23 39
CONNECTICUT IM-IT TRUST
GENERAL. The Connecticut IM-IT Trust consists of 9 issues of Securities.
Five of the Bonds in the Connecticut IM-IT Trust are general obligations of
the governmental entities issuing them and are backed by the taxing power
thereof. The remaining issues are payable from the income of a specific
project or authority and are not supported by the issuer's power to levy
taxes. These issues are divided by purpose of issues (and percentage of
principal amount to total Connecticut IM-IT Trust) as follows: General
Obligations, 5 (36%); Health Care, 2 (34%); Single Family Mortgage Revenue, 1
(17%) and Transportation, 1 (13%). No Bond issue has received a provisional
rating.
SPECIAL CONSIDERATIONS. Investors should be aware that manufacturing was
historically the most important economic activity within the State of
Connecticut but, in terms of number of persons employed, manufacturing has
declined in the last ten years while both trade and service-related industries
have become more important, and in 1992 manufacturing accounted for only 20.1%
of total non-agricultural employment in Connecticut. Defense-related business
represents a relatively high proportion of the manufacturing sector;
reductions in defense spending have already had a substantial adverse effect
on Connecticut's economy, and the State's largest defense contractors have
announced substantial planned labor force reductions scheduled to occur over
the next four years. Connecticut is now in a recession, the depth and duration
of which are uncertain. Moreover, while unemployment in the State as a whole
has generally remained below the national level, as of May 1993, the estimated
rate of unemployment in Connecticut on a seasonally adjusted basis was 7.4%,
compared to 6.9% for the United States as a whole, and certain geographic
areas in the State have been affected by high unemployment and poverty. The
State derives over 70% of its revenues from taxes imposed by it, the most
important of which have been the sales and use taxes and the corporation
business tax, each of which is sensitive to changes in the level of economic
activity in the State, but the Connecticut income tax on individuals, trusts,
and estates enacted in 1991 is expected to supersede each of them in
importance. There can be no assurance that general economic difficulties or
the financial circumstances of the State or its towns and cities will not
adversely affect the market value of the Bonds in the Connecticut IM-IT Trust
or the ability of the obligors to pay debt service on such Bonds.
The General Fund budget adopted by Connecticut for the 1986-87 fiscal
year contemplated both revenues and expenditures of $4,300,000,000. The
General Fund ended the 1986-87 fiscal year with a surplus of $365,200,000. The
General Fund budget for the 1987-88 fiscal year contemplated General Fund
revenues and expenditures of $4,915,800,000. However, the General Fund ended
the 1987-88 fiscal year with a deficit of $115,600,000. The General Fund
budget adopted for the 1988-89 fiscal year anticipated that General Fund
expenditures of $5,551,000,000 and certain educational expenses of
$206,700,000 not previously paid through the General Fund would be funded in
part from surpluses of prior years and in part from higher tax revenues
projected to result from tax laws in effect for the 1987-88 fiscal year and
stricter enforcement thereof; a substantial deficit was projected during the
third quarter of the 1988-89 fiscal year, but largely because of tax law
changes that took effect before the end of the fiscal year, the deficit was
kept to $28,000,000. The General Fund budget adopted for the 1989-90 fiscal
year anticipated expenditures of approximately $6,224,500,000 and, by virtue
of tax increase legislation enacted to take effect generally at the beginning
of the fiscal year, revenues slightly exceeding such amount. However, largely
because of tax revenue shortfalls, the General Fund ended the 1989-90 fiscal
year with a deficit for the year of $259,500,000, wiping out reserves for such
events built up in prior years. The General Fund budget adopted for the
1990-91 fiscal year anticipated expenditures of $6,433,000,000, but no
significant new or increased taxes were enacted. Primarily because of
significant declines in tax revenues and unanticipated expenditures reflective
of economic adversity, the General Fund ended the 1990-91 fiscal year alone
with a further deficit of $809,000,000.
A General Fund budget for the 1991-92 fiscal year was not enacted until
August 22, 1991. This budget anticipated General Fund expenditures of
$7,007,861,328 and revenues of $7,426,390,000. Projected decreases in revenues
resulting from a 25% reduction in the sales tax rate effective October 1,
1991, the repeal of the taxes on the capital gains and interest and dividend
income of resident individuals for years starting after 1991, and the
phase-out of the corporation business tax surcharge over two years commencing
with taxable years starting after 1991 were expected to be more than offset by
a new general income tax imposed at effective rates not to exceed 4.5% on the
Connecticut taxable income of resident and non-resident individuals, trusts,
and estates. The General Fund ended the 1991-92 fiscal year with an operating
surplus of $110,000,000. The General Fund budget for the 1992-93 fiscal year
anticipated General Fund expenditures of $7,372,062,859 and revenues of
$7,372,210,000. The General Fund ended the 1992-93 fiscal year with an
operating surplus of $113,500,000. Balanced General Fund budgets for the
biennium ending June 30, 1995, have been adopted appropriating expenditures of
$7,828,900,000 for the 1993-94 fiscal year and $8,266,000,000 for the 1994-95
fiscal year. In addition, expenditures of Federal, State and local funds
<PAGE>
40 Connecticut IM-IT-- Series 23
in the twelve years started July 1, 1984 for repair of the State's roads and
bridges now projected at $9,500,000,000 are anticipated, a portion of the
State's $4,100,000,000 share of which would be financed by bonds expected to
total $3,700,000,000 and by direct payments both of which would be supported
by a Special Transportation Fund first created by the General Assembly for the
1984-85 fiscal year.
To fund operating cash requirements, prior to the 1991-92 fiscal year the
State borrowed up to $750,000,000 pursuant to authorization to issue
commercial paper and on July 29, 1991, it issued $200,000,000 of General
Obligation Temporary Notes, none of which temporary borrowings are currently
outstanding. To fund the cumulative General Fund deficit for the 1989-90 and
1990-91 fiscal years, the legislation enacted August 22, 1991, authorized the
State Treasurer to issue Economic Recovery Notes up to the aggregate amount of
such deficit, which must be payable no later than June 30, 1996; at least
$50,000,000 of such Notes, but not more than a cap amount, is to be retired
each fiscal year commencing with the 1991-92 fiscal year, and any
unappropriated surplus up to $205,000,000 in the General Fund at the end of
each of the three fiscal years commencing with the 1991-92 fiscal year must by
applied to retire such Notes as may remain outstanding at those times. On
September 25, 1991, and October 24, 1991, the State issued $640,710,000 and
$325,002,000, respectively, of such Economic Recovery Notes, of which
$630,610,000 was outstanding as of January 1, 1994.
As a result of the State's budget problems, the ratings of its general
obligation bonds were reduced by Standard & Poor's from AA+ to AA on March 29,
1990, and by Moody's from Aa1 to Aa on April 9, 1990. Moreover, because of
these problems, on September 13, 1991, Standard & Poor's reduced its ratings
of the State's general obligation bonds and certain other obligations that
depend in part on the creditworthiness of the State to AA-. On March 7, 1991,
Moody's downgraded its ratings of the revenue bonds of four Connecticut
hospitals because of the effects of the State's restrictive controlled
reimbursement environment under which they have been operating.
General obligation bonds issued by Connecticut municipalities are payable
primarily only from ad valorem taxes on property subject to taxation by the
municipality. Certain Connecticut municipalities have experienced severe
fiscal difficulties and have reported operating and accumulated deficits in
recent years. The most notable of these is the City of Bridgeport, which filed
a bankruptcy petition on June 7, 1991. The State opposed the petition. The
United States Bankruptcy Court for the District of Connecticut has held that
Bridgeport has authority to file such a petition but that its petition should
be dismissed on the grounds that Bridgeport was not insolvent when the
petition was filed. Regional economic difficulties, reductions in revenues,
and increased expenses could lead to further fiscal problems for the State and
its political subdivisions, authorities, and agencies. Difficulty in payment
of debt service on borrowings could result in declines, possibly severe, in
the value of their outstanding obligations and increases in their future
borrowing costs.
TAX STATUS. For a discussion of the Federal tax status of income earned
on Connecticut IM-IT Trust Units, see "Other Matters--Federal tax Status".
The assets of the Connecticut IM-IT Trust will consist of obligations
(the "Bonds"); certain of the Bonds have been issued by or on behalf of the
State of Connecticut or its political subdivisions or other public
instrumentalities, state or local authorities, districts, or similar public
entities created under the laws of the State of Connecticut ("Connecticut
Bonds") and the balance of the Bonds have been issued by or on behalf of
entities classified for the relevant purposes as territories or possessions of
the United States, including one or more of Puerto Rico, Guam, or the Virgin
Islands, the interest on the obligations of which Federal law would prohibit
Connecticut from taxing if received directly by the Unitholders. Certain
Connecticut Bonds in the Connecticut IM-IT Trust were issued prior to the
enactment of the Connecticut income tax on the Connecticut taxable income of
individuals, trusts, and estates (the "Connecticut Income Tax"); therefore,
bond counsel to the issuers of such Bonds did not opine as to the exemption of
the interest on such Bonds from such tax. However, the Sponsor and special
counsel to the Trusts for Connecticut tax matters believe that such interest
will be so exempt. Interest on Bonds in the Connecticut IM-IT Trust issued by
other issuers, if any, is, in the opinion of bond counsel to such issuers,
exempt from state taxation.
The Connecticut Income Tax was enacted in August, 1991. Generally, a
Unitholder recognizes gain or loss for purposes of this tax to the same extent
as he recognizes gain or loss for Federal income tax purposes. Ordinarily this
would mean that gain or loss would be recognized by a Unitholder upon the
maturity, redemption, sale, or other disposition by the Connecticut IM-IT
Trust of a Bond held by it, or upon the redemption, sale or other disposition
of a Unit of the Connecticut IM-IT Trust held by the Unitholder.
However, on June 19, 1992, Connecticut legislation was adopted that
provides that gains and losses from the sale or exchange of Connecticut Bonds
held as capital assets will not be taken into account for purposes of the
Connecticut Income Tax for taxable years starting on or after January 1, 1992.
It is not clear whether this provision
<PAGE>
Connecticut IM-IT-- Series 23 41
would apply to gain or loss recognized by a Unitholder upon the maturity or
redemption of a Connecticut Bond held by the Connecticut IM-IT Trust or, to
the extent attributable to Connecticut Bonds held by the Connecticut IM-IT
Trust, to gain or loss recognized by a Unitholder upon the redemption, sale,
or other disposition of a Unit of the Connecticut IM-IT Trust held by the
Unitholder. Unitholders are urged to consult their own tax advisors concerning
these matters.
In the opinion of Day, Berry & Howard, special counsel to the Fund for
Connecticut tax matters, which relies explicitly on the opinion of Chapman and
Cutler regarding Federal income tax matters, under existing Connecticut law:
The Connecticut IM-IT Trust is not liable for any tax on or measured
by net income imposed by the State of Connecticut.
Interest income of the Connecticut IM-IT Trust from a Bond issued by
or on behalf of the State of Connecticut, any political subdivision
thereof, or public instrumentality, state or local authority, district, or
similar public entity created under the laws of the State of Connecticut
(a "Connecticut Bond"), or from a Bond issued by United States territories
or possessions the interest on which Federal law would prohibit
Connecticut from taxing if received directly by a Unitholder from the
issuer thereof, is not taxable under the Connecticut tax on the
Connecticut taxable income of individuals, trusts, and estates (the
"Connecticut Income Tax"), when any such interest is received by the
Connecticut IM-IT Trust or distributed by it to such a Unitholder.
Insurance proceeds received by the Connecticut IM-IT Trust
representing maturing interest on defaulted Bonds held by the Connecticut
IM-IT Trust are not taxable under the Connecticut Income Tax if, and to
the same extent as, such interest would not be taxable thereunder if paid
directly to the Connecticut IM-IT Trust by the issuer of such Bonds.
Gains and losses recognized by a Unitholder for Federal income tax
purposes upon the maturity, redemption, sale, or other disposition by the
Connecticut IM-IT Trust of a Bond held by the Connecticut IM-IT Trust or
upon the redemption, sale, or other disposition of a Unit of the
Connecticut IM-IT Trust held by a Unitholder are taken into account as
gains or losses, respectively, for purposes of the Connecticut Income Tax,
except that, in the case of a Unitholder holding a Unit of the Connecticut
IM-IT Trust as a capital asset, such gains and losses recognized upon the
sale or exchange of a Connecticut Bond held by the Connecticut IM-IT Trust
are excluded from gains and losses taken into account for purposes of such
tax and no opinion is expressed as to the treatment for purposes of such
tax of gains and losses recognized upon the maturity or redemption of a
Connecticut Bond held by the Connecticut IM-IT Trust or, to the extent
attributable to Connecticut Bonds, of gains and losses recognized upon the
redemption, sale, or other disposition by a Unitholder of a Unit of the
Connecticut IM-IT Trust held by him.
The portion of any interest income or capital gain of the Connecticut
IM-IT Trust that is allocable to a Unitholder that is subject to the
Connecticut corporation business tax is includable in the gross income of
such Unitholder for purposes of such tax.
An interest in a Unit of the Connecticut IM-IT Trust that is owned by
or attributable to a Connecticut resident at the time of his death is
includable in his gross estate for purposes of the Connecticut succession
tax and the Connecticut estate tax.
<PAGE>
42 Connecticut IM-IT-- Series 23
<TABLE>
<CAPTION>
PER UNIT INFORMATION:
CALCULATION OF ESTIMATED NET ANNUAL UNIT INCOME:
<S> <C>
Estimated Annual Interest Income per Unit................................................................ $ 48.56
Less: Estimated Annual Expense per Unit <F1>............................................................. $ 1.99
Less: Annual Premium on Portfolio Insurance per Unit..................................................... $ .43
Estimated Net Annual Interest Income per Unit............................................................ $ 46.14
CALCULATION OF ESTIMATED INTEREST EARNINGS PER UNIT:
Estimated Net Annual Interest Income per Unit............................................................ $ 46.14
Divided by 12............................................................................................ $ 3.85
Estimated Daily Rate of Net Interest Accrual per Unit.......................................................... $ .12818
ESTIMATED CURRENT RETURN BASED ON PUBLIC OFFERING PRICE <F2><F3><F4>........................................... 4.61%
ESTIMATED LONG-TERM RETURN <F2><F3><F4>........................................................................ 4.65%
Initial Distribution (March 1994).............................................................................. $ 2.69
ESTIMATED NORMAL DISTRIBUTION PER UNIT <F4>.................................................................... $ 3.85
PURCHASED INTEREST <F5>........................................................................................ $ 6.25
Trustee's Annual Fee................... $.98 per $1,000 principal amount of
Bonds
Record and Computation Dates........... FIRST day of each month
DISTRIBUTION DATES..................... FIFTEENTH DAY OF EACH MONTH COMMENCING
MARCH 15, 1994
<FN>
<F1> Excluding insurance costs.
<F2> The Estimated Current Return and Estimated Long-Term Return are increased
for transactions entitled to a reduced sales charge. See "Unitholder
Explanations--Public Offering--General".
<F3> The Estimated Current Return is calculated by dividing the estimated net
annual interest income per Unit by the Public Offering Price. The
estimated net annual interest income per Unit will vary with changes in
fees and expenses of the Trustee and the Evaluator and with the principal
prepayment, redemption, maturity, exchange or sale of Securities while
the Public Offering Price will vary with changes in the offering price of
the underlying Securities and with changes in the Purchased Interest;
therefore, there is no assurance that the present Estimated Current
Return indicated above will be realized in the future. The Estimated
Long-Term Return is calculated using a formula which <F1>takes into
consideration, and determines and factors in the relative weightings of,
the market values, yields (which takes into account the amortization of
premiums and the accretion of discounts) and estimated retirements of all
of the Securities in the Trust and <F2>takes into account the expenses
and sales charge associated with each Trust Unit. Since the market values
and estimated retirements of the Securities and the expenses of the Trust
will change, there is no assurance that the present Estimated Long-Term
Return as indicated above will be realized in the future. The Estimated
Current Return and Estimated Long-Term Return are expected to differ
because the calculation of the Estimated Long-Term Return reflects the
estimated date and amount of principal returned while the Estimated
Current Return calculation includes only net annual interest income and
Public Offering Price.
<F4> These figures are based on estimated per Unit cash flows. Estimated cash
flows will vary with changes in fees and expenses, with changes in
current interest rates and with the principal prepayment, redemption,
maturity, call, exchange or sale of the underlying Securities. The
estimated cash flows for this Series are set forth under "Estimated Cash
Flows to Unitholders".
<F5> See "Unitholder Explanations--Purchased and Accrued Interest".
</TABLE>
<PAGE>
Connecticut IM-IT-- Series 23 43
<TABLE>
CONNECTICUT INSURED MUNICIPALS INCOME TRUST
SERIES 23 (154TH INSURED MULTI-SERIES)
PORTFOLIO AS OF FEBRUARY 3, 1994
<CAPTION>
OFFERING
PRICE TO
NAME OF ISSUER, TITLE, INTEREST RATE AND CONNECTICUT
AGGREGATE MATURITY DATE OF EITHER BONDS DEPOSITED OR REDEMPTION IM-IT
PRINCIPAL<F1> BONDS CONTRACTED FOR<F1><F5> RATING<F2> FEATURE<F3> TRUST<F4>
<S> <C> <C> <C> <C>
$ 350,000 City of New Britain, Connecticut, General Obligation Bonds,
Series 1994 (MBIA Insured)
4.80% Due 2/1/2011........................................... AAA $ 346,868
120,000 State of Connecticut, General Obligation Capital Appreciation
Bonds (College Savings Plan, Series 1992A)
#0.00% Due 5/15/2012......................................... AA- 46,684<F6>
300,000 Town of North Branford, Connecticut, General Obligation Bonds,
Series 1994
#150M--5.00% Due 2/1/2013.................................... N/R 2004 @ 102 149,463
#150M--5.00% Due 2/1/2014.................................... N/R 2004 @ 102 149,436
300,000 Commonwealth of Puerto Rico, Public Improvement Bonds (General
Obligation) Series 1993 (AMBAC Indemnity Insured) 2002 @ 101.5
5.85% Due 7/1/2015........................................... AAA 2012 @ 100 S.F. 319,461
500,000 Connecticut State Housing Finance Authority, Housing Mortgage
Finance Program Revenue Bonds, Series 1993F-1 2003 @ 102
5.60% Due 5/15/2019.......................................... AA 2015 @ 100 S.F. 502,500
400,000 Commonwealth of Puerto Rico, Highway and Transportation
Authority, Highway Revenue Refunding Bonds, Series X (CapMAC
Insured) 2003 @ 101.5
#5.25% Due 7/1/2021.......................................... AAA 2020 @ 100 S.F. 407,652
500,000 Connecticut State Health and Educational Facilities Authority,
Revenue Bonds, Lawrence and Memorial Hospital Issue, Series
1993D (MBIA Insured) 2003 @ 102
#5.00% Due 7/1/2022.......................................... AAA 2014 @ 100 S.F. 482,705
500,000 Connecticut State Health and Educational Facilities Authority,
Revenue Bonds, Saint Francis Hospital and Memorial Center
Issue, Series 1993C (FGIC Insured) 2003 @ 102
#5.00% Due 7/1/2023.......................................... AAA 2014 @ 100 S.F. 482,405
$ 2,970,000 $ 2,887,174
</TABLE>
All of the Bonds in the portfolio are insured either by one of the Preinsured
Bond Insurers (as indicated in the Bond name) or under the portfolio insurance
policy obtained by the Trust from AMBAC Indemnity. See "Unitholder
Explanations--Insurance on the Bonds in the Insured Trusts".
For an explanation of the footnotes used on this page, see "Notes to
Portfolios".
<PAGE>
44 Florida IM-IT-- Series 76
FLORIDA IM-IT TRUST
GENERAL. The Florida IM-IT Trust consists of 9 issues of Securities.
None of the Bonds in the Florida IM-IT Trust are general obligations of the
governmental entities issuing them or are backed by the taxing power thereof.
All of the issues are payable from the income of a specific project or
authority and are not supported by the issuer's power to levy taxes. These
issues are divided by purpose of issues (and percentage of principal amount to
total Florida IM-IT Trust) as follows: Water and Sewer, 4 (43%); Health Care,
2 (34%); Retail Electric/Gas, 1 (9%); Certificates of Participation, 1 (8%)
and General Purpose, 1 (6%). No Bond issue has received a provisional rating.
SPECIAL CONSIDERATIONS. 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 seven percent and in 1990 the share had edged
downward to six percent. 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
for 9.48% of total U.S. housing starts in 1991 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 11.3% of the U.S.'s total annual starts, and except
for the recession years 1980-82, and the recession beginning in 1990, starts
have exceeded 160,000 a year.
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 (with an estimated population of 13.4 million), 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 200,000 range annually
well into the 1990s. This population trend should provide plenty of 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 have eliminated tax deductions for
owners of two or more residential real estate properties and have lengthened
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.
Since 1980, the State's job creation rate is well over 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 income is international trade. Since 1980, the
State's unemployment rate has generally been below that of the U.S. Only in
the last two years has the State's unemployment rate moved ahead of the
national average. 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 October 1993, the Organization
estimates that the unemployment rate will be 6.5% for 1993-94 and 6.0% in
1994-95. The State's two largest and fastest growing private employment
categories are the service and trade sectors. Together, they account for more
than 50% of the total non-farm employment growth between 1991-92 and 1992-93.
The service sector has overtaken the trade sector and is now the State's
largest employment category.
Tourism is one of Florida's most important industries. Approximately 39.3
million tourists visited the State in 1991, as reported by the Florida
Department of Commence. In terms of business activities and state tax
revenues, tourists in Florida in 1991 represented an estimated 4.4 million
additional residents. Visitors to the State tend to arrive equally 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. Tourist arrivals should be slightly negatively impacted as a
result of Hurricane Andrew, but should recover and approximate in 1993-94 the
number expected prior to the storm. When the final numbers are in, it is
expected that by the end of the State's current fiscal year, 41.9 million
domestic and international tourists will have visited the State, up 7.8% from
the 39 million tourists that visited Florida in 1991-92. In 1993-94, tourist
arrivals should approximate 43.2 million.
<PAGE>
Florida IM-IT-- Series 76 45
The State's per capita personal income in 1990 of $18,539 was slightly
below the national average of $18,696 and significantly ahead of that for the
southeast United States, which was $16,514. Growth in real personal income in
the State follows a course similar to that of the nation, increasing 0.3% in
1991-92 and increasing 2.7% in 1992-93. Real personal income in the State is
estimated to increase 3.7% in 1993-94 and 4.6% in 1994-95. Personal income was
affected by Hurricane Andrew, which should have some lingering effects. By the
end of 1994-95, real personal income per capita in the State is projected to
average 4.8% higher than its 1992-93 level.
Compared to other states, Florida has a proportionately greater
retirement age population which comprises 18.3% (as of April 1, 1991) of the
State's population and is forecast to grow at an average annual rate of over
1.96% through the 1990s. Thus, property income (dividends, interest, and rent)
and transfer payments (Social Security and pension benefits, among other
sources of income) are a relatively more important source of income. For
example, Florida's total wages and salaries and other labor income in 1990 was
54.9% of total income, while a similar figure for the nation for 1990 was
64.8%. Transfer payments are typically less sensitive to the business cycle
than employment income and, therefore, act as stabilizing forces in weak
economic periods. While many of the U.S.'s senior citizens choose the State as
their place of retirement, the State is also recognized as attracting a
significant number of working age people. Since 1980, the prime working age
population (18-44) has grown at an average annual rate of 3.6%.
In fiscal year 1991-92, approximately 64% of the State's total direct
revenue to its three operating funds was derived from State taxes, with
federal grants and other special revenue accounting for the balance. State
sales and use tax, corporate income tax, and beverage tax amounted to 68%, 7%
and 5%, respectively, of total receipts by the General Revenue Fund during
fiscal year 1991-92. In that same year, expenditures for education, health and
welfare, and public safety amounted to 53%, 30% and 13.3%, respectively, of
total expenditures from the General Revenue Fund.
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 120,000, and to increase to 138,100
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. The construction figures above include additional housing
starts as a result of destruction by Hurricane Andrew. Total construction
expenditures are forecasted to increase 13.8% this year and increase 14.3%
next year.
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 suffficient amount to
prevent a deficit in any fund. Additionally, the State Constitution prohibits
issuance of State obligations to fund State operations.
Estimated fiscal year 1992-93 General Revenue plus Working Capital funds
available total $13,554.8 million, an 8.2% increase over 1992-93. This
reflects a transfer of $190 million, out of an estimated $220.0 million in
non-recurring revenue due to Andrew, to a hurricane relief trust fund. Of the
total General Revenue plus Working Capital funds available to the State,
$12,959.2 million of that is Estimated Revenues (excluding the Andrew impact)
which represents an increase of 7.5% 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
1993-94 are estimated at $277.9 million. Estimated, fiscal year 1994-95
General Revenue plus Working Capital funds available total $14,310.7 million,
a 5.6% increase over 1993-94. This amount reflects a transfer of $159.00
million in non-recurring revenue due to Hurricane Andrew, to a hurricane
relief trust fund. The $13,944.0 million in Estimated Revenues (excluding the
Hurricane Andrew impact) represent an increase of 7.6% over the previous
year's Estimated Revenues. The massive effort to rebuild and replace destroyed
or damaged property in the wake of 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.
<PAGE>
46 Florida IM-IT-- Series 76
In fiscal year 1992-93, approximately 62% of the State's total direct
revenue to its three operating funds were 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 1992-93. In that same year, expenditures
for education, health and welfare, and public safety amounted to approximately
49%, 30%, and 11%, respectively, of total expenditures from the General
Revenue Fund.
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
the municipalities therein. 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, 1992, sales and use tax
receipts (exclusive of the tax on gasoline and special fuels) totalled
$8,375.5 million, an increase of 2.7% over fiscal year 1990-91.
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 totalling $435.2 million in fiscal year ending June 30, 1992.
Alcoholic beverage tax receipts declined 1.0% over the previous year. The
revenues collected from this tax are deposited into the State's General
Revenue Fund.
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 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, 1992, receipts from this source were $801.3 million, an increase of
14.2% from fiscal year 1990-91.
The State also imposes a 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 $472.4 million during fiscal year 1991-92, a 0.5% increase
from the previous fiscal year. For the fiscal year 1990-91, 76.21% of the
documentary stamp tax revenues was deposited to the general Revenue Fund.
Beginning in fiscal year 1992-93, 71.29% of these taxes are to be deposited to
the General Revenue Fund.
On January 12, 1988, the State began its own lottery. State law requires
that lottery revenues be distributed 50% to the public in prizes, 38% for use
in enhancing education, and the balance, 12.0% for costs of administering the
lottery. Fiscal year 1991-92 lottery ticket sales totalled $2.19 billion,
providing education with $835.4 million.
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 $67.2 million during fiscal year
1991-92, down 6.9% from the previous year. Beginning in fiscal year 1989-90,
60.0% of this amount was transferred to the General Revenue Fund. The 60.0%
allocation is expected to continue.
At the end of fiscal 1992, approximately $4.52 billion in principal
amount of debt secured by the full faith and credit of the State was
outstanding. In addition, since July 1, 1992, the State issued about $274
million in principal amount of full faith and credit bonds.
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
believe 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.
<PAGE>
Florida IM-IT-- Series 76 47
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 affect on
Florida's financial position.
In the wake of the U.S. Supreme Court decision holding that a Hawaii law
unfairly discriminated against out-of-state liquor producers, suits have been
filed in the State's courts contesting a similar State law (in effect prior to
1985) that seek $384 million in tax refunds. A trial court, in a ruling that
was subsequently upheld by the State's Supreme Court, found the State law in
question to be unconstitutional but made its ruling operate prospectively,
thereby denying any tax refunds. The issue of whether the unconstitutionality
of the tax should be applied retroactively was recently decided by the United
States Supreme Court. The Supreme Court found in favor of the taxpayers. On
remand from the U.S. Supreme Court, the Florida Supreme Court, on January 15,
1991, mandated further proceedings to fashion a "clear and certain remedy"
consistent with constitutional restrictions and the opinion of the U.S.
Supreme Court. The Florida Department of Revenue has proposed to the Florida
Supreme Court that the Department be allowed to collect back tax from those
who received a tax preference under the prior law. If the Department's
proposal is rejected and tax refunds are ordered to all potential claimants, a
liability of approximately $298 million could result. The case is now before
the Florida Circuit Court, Second Judicial District. That court will hear the
affected parties' response to the Department's proposed collection of the tax
at the higher rate charged to out-of-staters.
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 State
Supreme Court ruled in favor of the State. Similar issues have been raised in
other cases where insurers have challenged taxes imposed on premiums received
for certain motor vehicle service agreements. These four cases and pending
refund claims total about $200 million.
Florida maintains a bond rating of Aa and AA from Moody's Investors
Service and Standard & Poor's Corporation, 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 Florida is
in satisfactory economic health, there can be no assurance that there will not
be a decline in economic conditions or that particular Municipal Obligations
purchased by the Fund will not be adversely affected by any such changes.
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, the Sponsor has no reason to
believe that the information is not correct in all material respects.
TAX STATUS. For a discussion of the Federal tax status of income earned
on Florida IM-IT Trust units, see "Other Matters--Federal Tax Status".
The Bonds were accompanied by opinions of Bond Counsel to the respective
issuers thereof to the effect that the Bonds were exempt from the Florida
intangibles tax. Neither the Sponsor nor its counsel have independently
reviewed such opinions or examined the Bonds to be deposited in and held by
the Florida IM-IT Trust and have assumed the correctness as of the date of
deposit of the opinions of Bond Counsel.
In the opinion of Chapman and Cutler, counsel to the Sponsor, under
existing law:
For Florida state income tax purposes, the Florida IM-IT Trust will
not be subject to the Florida income tax imposed by Chapter 220, Florida
Statutes. In addition, Florida does not impose any income taxes at the
local level.
Because Florida does not impose an income tax on individuals,
non-corporate Unitholders residing in Florida will not be subject to any
Florida income taxation on income realized by the Florida IM-IT Trust.
Any amounts paid to the Florida IM-IT Trust or to non-corporate
Unitholders residing in Florida under an insurance policy issued to the
Florida IM-IT Trust or the Sponsor 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.
<PAGE>
48 Florida IM-IT-- Series 76
Corporate Unitholders with commercial domiciles in Florida will be
subject to Florida income or franchise taxation on income realized by
the Florida IM-IT Trust and on payments of interest pursuant to any
insurance policy. Other corporate Unitholders will be subject to Florida
income or franchise taxation on income realized by the Florida IM-IT
Trust (or on payments of interest pursuant to any insurance policy) only
to the extent that the income realized does not constitute "non-business
income" as defined by Chapter 220.
Units will be subject to Florida estate tax only if held by Florida
residents. However, the Florida estate tax is limited to the amount of
the credit for state death taxes provided for in Section 2011 of the
Internal Revenue Code.
Neither the Bonds nor the Units will be subject to the Florida ad
valorem property tax, the Florida intangibles personal property tax or
Florida sales or use tax.
<TABLE>
<CAPTION>
PER UNIT INFORMATION:
CALCULATION OF ESTIMATED NET ANNUAL UNIT INCOME <F1>
<S> <C>
Estimated Annual Interest Income per Unit................................................................ $ 49.00
Less: Estimated Annual Expense per Unit <F2>............................................................. $ 1.90
Less: Annual Premium on Portfolio Insurance per Unit..................................................... --
Estimated Net Annual Interest Income per Unit............................................................ $ 47.10
CALCULATION OF ESTIMATED INTEREST EARNINGS PER UNIT:
Estimated Net Annual Interest Income per Unit............................................................ $ 47.10
Divided by 12............................................................................................ $ 3.93
Estimated Daily Rate of Net Interest Accrual per Unit.......................................................... $ .13082
ESTIMATED CURRENT RETURN BASED ON PUBLIC OFFERING PRICE <F1><F3><F4><F5>....................................... 4.71%
ESTIMATED LONG-TERM RETURN <F3><F4><F5>........................................................................ 4.78%
Initial Distribution (March 1994).............................................................................. $ 2.75
ESTIMATED NORMAL DISTRIBUTION PER UNIT <F5>.................................................................... $ 3.93
PURCHASED INTEREST <F6>........................................................................................ $ 3.81
Trustee's Annual Fee <F1>.............. $.98 per $1,000 principal amount of
Bonds
Record and Computation Dates........... FIRST day of each month
DISTRIBUTION DATES..................... FIFTEENTH DAY OF EACH MONTH COMMENCING
MARCH 15, 1994
<FN>
<F1> During the first year the Trustee will reduce its fee by approximately
$.17 per Unit (which amount is the estimated interest to be earned per
Unit prior to the expected delivery dates for the "when, as and if
issued" Bonds included in this Trust). Should such estimated interest
exceed such amount, the Trustee will reduce its fee up to its annual fee.
After the first year, the Trustee's fee will be that amount indicated
above. Estimated annual interest income per Unit will be increased to
$49.17. Estimated Annual Expense per Unit (excluding insurance) will be
increased to $2.07; and estimated net annual interest income per Unit
will remain the same as shown. See "Estimated Current Returns and
Estimated Long-Term Returns." Based on the outstanding principal amount
of Securities as of the Date of Deposit, the Trustee's annual fee would
be $2,891.
<F2> Excluding insurance costs.
<F3> The Estimated Current Return and Estimated Long-Term Return are increased
for transactions entitled to a reduced sales charge. See "Unitholder
Explanations--Public Offering--General".
<F4> The Estimated Current Return is calculated by dividing the estimated net
annual interest income per Unit by the Public Offering Price. The
estimated net annual interest income per Unit will vary with changes in
fees and expenses of the Trustee and the Evaluator and with the principal
prepayment, redemption, maturity, exchange or sale of Securities while
the Public Offering Price will vary with changes in the offering price of
the underlying Securities and with changes in the Purchased Interest;
therefore, there is no assurance that the present Estimated Current
Return indicated above will be realized in the future. The Estimated
Long-Term Return is calculated using a formula which <F1>takes into
consideration, and determines and factors in the relative weightings of,
the market values, yields (which takes into account the amortization of
premiums and the accretion of discounts) and estimated retirements of all
of the Securities in the Trust and <F2>takes into account the expenses
and sales charge associated with each Trust Unit. Since the market values
and estimated retirements of the Securities and the expenses of the Trust
will change, there is no assurance that the present Estimated Long-Term
Return as indicated above will be realized in the future. The Estimated
Current Return and Estimated Long-Term Return are expected to differ
because the calculation of the Estimated Long-Term Return reflects the
estimated date and amount of principal returned while the Estimated
Current Return calculation includes only net annual interest income and
Public Offering Price.
<F5> These figures are based on estimated per Unit cash flows. Estimated cash
flows will vary with changes in fees and expenses, with changes in
current interest rates and with the principal prepayment, redemption,
maturity, call, exchange or sale of the underlying Securities. The
estimated cash flows for this Series are set forth under "Estimated Cash
Flows to Unitholders".
<F6> See "Unitholder Explanations--Purchased and Accrued Interest".
</TABLE>
<PAGE>
Florida IM-IT-- Series 76 49
<TABLE>
FLORIDA INSURED MUNICIPALS INCOME TRUST
SERIES 76 (154TH INSURED MULTI-SERIES)
PORTFOLIO AS OF FEBRUARY 3, 1994
<CAPTION>
OFFERING
PRICE TO
NAME OF ISSUER, TITLE, INTEREST RATE AND FLORIDA
AGGREGATE MATURITY DATE OF EITHER BONDS DEPOSITED OR REDEMPTION IM-IT
PRINCIPAL<F1> BONDS CONTRACTED FOR<F1><F5> RATING<F2> FEATURE<F3> TRUST<F4>
<S> <C> <C> <C> <C>
$ 250,000 School Board of Polk County, Florida, Master Lease Program,
Certificates of Participation, Series 1994 (FSA Insured) 2004 @ 102
#4.875% Due 1/1/2018......................................... AAA 2017 @ 100 S.F. $ 236,933
95,000 City of Niceville, Florida, Water and Sewer Refunding Revenue
Bonds (Bank Qualified) FGIC Insured
#0.00% Due 6/1/2018.......................................... AAA 26,101<F6>
500,000 City of Miami, Florida, Health Facilities Authority, Health
Facilities Revenue Refunding Bonds (Mercy Hospital Project)
Series 1994A (AMBAC Indemnity Insured) 2004 @ 102
#5.125% Due 8/15/2020........................................ AAA 2017 @ 100 S.F. 486,025
170,000 Collier County Water-Sewer District (Florida) Water and Sewer
Refunding Revenue Bonds, Series 1994B (FGIC Insured)** 2003 @ 102
#5.25% Due 7/1/2021.......................................... AAA 2017 @ 100 S.F. 169,619
500,000 City of Gulf Breeze, Florida, South Santa Rosa Utility System
Revenue Bonds, Series 1994 (AMBAC Indemnity Insured) 2004 @ 102
5.375% Due 10/1/2021......................................... AAA 2013 @ 100 S.F. 505,885
500,000 City of Melbourne, Florida, Water and Sewer Refunding Revenue
Bonds, Series 1994A (FGIC Insured)** 2004 @ 102
#5.00% Due 10/1/2022......................................... AAA 2019 @ 100 S.F. 484,400
250,000 City of Palm Bay, Florida, Utility System Refunding Revenue
Bonds, Series 1994 (Palm Bay Utility Corporation Project)
MBIA Insured 2003 @ 102
#5.00% Due 10/1/2022......................................... AAA 2020 @ 100 S.F. 242,025
500,000 Dade County, Florida, Public Facilities Authority, Revenue
Refunding Bonds (Jackson Memorial Hospital) Series 1993 (MBIA
Insured) 2003 @ 102
#5.25% Due 6/1/2023.......................................... AAA 2019 @ 100 S.F. 495,100
185,000 St. Lucie County, Florida, Sales Tax Refunding Revenue Bonds,
Series 1994 (FGIC Insured) 2003 @ 102
#5.00% Due 10/1/2023......................................... AAA 2020 @ 100 S.F. 178,997
$ 2,950,000 $ 2,825,085
All of the Bonds in the portfolio are insured by one of the Preinsured Bond
Insurers as indicated in the Bond name. See "Unitholder
Explanations--Insurance on the Bonds in the Insured Trusts".
For an explanation of the footnotes used on this page, see "Notes to
Portfolios".
<PAGE>
50 Notes to Portfolios
NOTES TO PORTFOLIOS:
AS OF THE DATE OF DEPOSIT: FEBRUARY 3, 1994
<FN>
<F1> All Securities are represented by "regular way" or "when issued"
contracts for the performance of which an irrevocable letter of credit,
obtained from an affiliate of the Trustee, has been deposited with the
Trustee. At the Date of Deposit, Securities may have been delivered to
the Sponsor pursuant to certain of these contracts; the Sponsor has
assigned to the Trustee all of its right, title and interest in and to
such Securities. Contracts to acquire Securities were entered into during
the period from September 30, 1993 to February 3, 1994. These Securities
have expected settlement dates ranging from February 3, 1994 to March 3,
1994 (see "Unitholder Explanations").
<F2> All ratings are by Standard & Poor's Corporation unless otherwise
indicated. "*" indicates that the rating of the Bond is by Moody's
Investors Service, Inc. The ratings represent the latest published
ratings by the respective ratings agency or, if not published, represent
private letter ratings or those ratings expected to be published by the
respective ratings agency. "Y" indicates that such rating is contingent
upon physical receipt by the respective ratings agency of a policy of
insurance obtained by the issuer of the bonds involved and issued by the
Preinsured Bond Insurer named in the bond's title. A commitment for
insurance in connection with these bonds has been issued by the
Preinsured Bond Insurer named in the bond's title. "N/R" indicates that
the applicable rating service did not provide a rating for that
particular Security. For a brief description of the rating symbols and
their related meanings, see "Other Matters-- Description of Securities
Ratings".
<F3> There is shown under this heading the year in which each issue of Bonds
is initially or currently callable and the call price for that year. Each
issue of Bonds continues to be callable at declining prices thereafter
(but not below par value) except for original issue discount bonds which
are redeemable at prices based on the issue price plus the amount of
original issue discount accreted to redemption date plus, if applicable,
some premium, the amount of which will decline in subsequent years.
"S.F." indicates a sinking fund is established with respect to an issue
of Bonds. Redemption pursuant to call provisions generally will, and
redemption pursuant to sinking fund provisions may, occur at times when
the redeemed bonds have an offering side valuation which represents a
premium over par. Certain Bonds may be subject to redemption without
premium prior to the date shown pursuant to extraordinary optional or
mandatory redemptions if certain events occur. Single family mortgage
revenue bonds and housing authority bonds are most likely to be called
subject to such provisions, but other bonds may have similar call
features. Notwithstanding any provisions to the contrary, certain bond
issuers have in the past and others may in the future attempt to redeem
Bonds prior to their initially scheduled call dates and at prices which
do not include any premiums. For a general discussion of certain of these
events, see "Unitholder Explanations--Bond Redemptions". To the extent
that the Securities were deposited in a Trust at a price higher than the
price at which they are redeemed, this will represent a loss of capital
when compared with the original Public Offering Price of the Units.
Conversely, to the extent that the Bonds were acquired at a price lower
than the redemption price, this will represent an increase in capital
when compared with the original Public Offering Price of the Units.
Distributions will generally be reduced by the amount of the income which
would otherwise have been paid with respect to redeemed Securities and
there will be distributed to Unitholders the principal amount and any
premium received on such redemption. The Estimated Current Return and
Estimated Long-Term Return in this event may be affected by such
redemptions. For the Federal tax effect on Unitholders of such
redemptions and resultant distributions, see paragraph <F2>under "Other
Matters--Federal Tax Status".
<F4> Evaluation of Securities is made on the basis of current offering prices
for the Securities. The offering prices are greater than the current bid
prices of the Securities which is the basis on which Unit value is
determined for purposes of redemption of Units (see "Unitholder
Explanations--Public Offering--Offering Price").
<F5> Other information regarding the Bonds in each Trust, as of the Date of
Deposit, is as follows:
ANNUAL PROFIT
INSURANCE COST TO (LOSS) TO ANNUAL INTEREST BID SIDE EVALUATION
TRUST COST SPONSOR SPONSOR INCOME TO TRUST OF BONDS
IM-IT................................. $ 1,616 $ 9,028,806 $ 64,614 $ 493,420 $ 9,022,763
IM-IT Intermediate.................... -- $ 4,927,666 $ 35,997 $ 225,210 $ 4,926,888
Colorado IM-IT........................ $ 500 $ 2,833,577 $ 14,288 $ 146,438 $ 2,826,063
Connecticut IM-IT..................... $ 1,300 $ 2,855,943 $ 31,231 $ 148,350 $ 2,864,788
Florida IM-IT......................... -- $ 2,805,637 $ 19,448 $ 146,613 $ 2,803,231
The Sponsor may have entered into contracts which hedge interest rate
fluctuations on certain Bonds in certain Portfolios. The cost of any such
contracts and the corresponding gain or loss is included in the Cost to
Sponsor.
<PAGE>
Notes to Portfolios 51
Certain Securities in the Fund, if any, marked by a double asterisk (**),
have been purchased on a "when, as and if issued" or "delayed delivery"
basis. Interest on these Securities begins accruing to the benefit of
Unitholders on their respective dates of delivery. Delivery is expected
to take place at various dates after the First Settlement Date as
follows:
PERCENT OF
AGGREGATE PRINCIPAL RANGE OF DAYS SUBSEQUENT
TRUST AMOUNT TO FIRST SETTLEMENT DATE
IM-IT............................... 21% 6 to 23 days
IM-IT Intermediate.................. 37% 7 to 21 days
Colorado IM-IT...................... 17% 5 days
Connecticut IM-IT................... 0% --
Florida IM-IT....................... 23% 5 to 7 days
On the Date of Deposit, the offering side evaluations of the Securities
in the IM-IT, IM-IT Intermediate, Colorado IM-IT, Connecticut IM-IT and
Florida IM-IT Trusts were higher than the bid side evaluations of such
Securities by 0.75%, 0.73%, 0.75%, 0.75% and 0.74%, respectively, of the
aggregate principal amounts of such Securities.
"#" indicates that such Bond was issued at an original issue discount.
The tax effect of Bonds issued at an original issue discount is described
in "Other Matters--Federal Tax Status".
<F6> This Bond has been purchased at a deep discount from the par value
because there is little or no stated interest income thereon. Bonds which
pay no interest are normally described as "zero coupon" bonds. Over the
life of bonds purchased at a deep discount the value of such bonds will
increase such that upon maturity the holders of such bonds will receive
100% of the principal amount thereof. Approximately 3%, 5%, 5%, 4% and 3%
of the aggregate principal amount of the Securities in the IM-IT, IM-IT
Intermediate Trust, Colorado IM-IT Trust, Connecticut IM-IT Trust and
Florida IM-IT Trust, respectively, are "zero coupon" bonds, respectively.
<F7> The issuer of this Bond has sold or reserved the right to sell to third
parties all or a portion of its right to call the Bond in accordance with
the redemption provisions of the Bond. See "Unitholder
Explanations--Settlement of Bonds in the Trusts--Bond Redemptions."
</TABLE>
<PAGE>
52 Underwriting
UNDERWRITING. The Underwriters named below have severally purchased Units
in the following respective amounts from the Sponsor.
<TABLE>
<CAPTION>
NAME ADDRESS IM-IT UNITS
<S> <C> <C>
A. G. Edwards & Sons, Inc. One North Jefferson Avenue, St. Louis, Missouri 63103 3,000
Van Kampen Merritt Inc. One Parkview Plaza, Oakbrook Terrace, Illinois 60181 1,170
Edward D. Jones & Co. 201 Progress Parkway, Maryland Heights, Missouri 63043 1,000
Kemper Securities, Inc. 77 West Wacker Drive, 28th Floor, Chicago, Illinois 60601 500
B. C. Ziegler and Company 215 North Main Street, West Bend, Wisconsin 53095 400
Robert W. Baird & Co. Inc. 777 East Wisconsin Avenue, Milwaukee, Wisconsin 53202 250
J. C. Bradford & Co. 330 Commerce Street, Nashville, Tennessee 37201 250
Dean Witter Reynolds, Incorporated 2 World Trade Center, 59th Floor, New York, New York 10048 250
William R. Hough & Company 100 Second Avenue South, 8th Floor, St. Petersburg, Florida 250
33701
Nathan & Lewis Securities, Inc. 119 West 40th Street, New York, New York 10018 250
The Principal/Eppler, Guerin & Turner, Fountain Place, 1445 Ross Avenue, Suite 2300, Dallas, Texas 250
Inc. 75201
Prudential Securities Inc. 32 Old Slip, 16th Floor, Financial Square, New York, New York 250
Unit Investment Trust Department 10292
Roosevelt & Cross Inc. 20 Exchange Place, New York, New York 10005 250
Stifel, Nicolaus & Company, Incorporated 500 North Broadway, St. Louis, Missouri 63102 250
Advest, Inc. 280 Trumbull Street, Hartford, Connecticut 06103 100
Butler, Wick & Co., Inc. City Center One, Suite 700, P.O. Box 149, Youngstown, Ohio 100
44501
Ferris, Baker Watts, Inc. 100 Light Street, Baltimore, Maryland 21203 100
Fidelity Capital Markets 161 Devonshire Street D4, Boston, Massachusetts 02110 100
A Division of National Financial
Services
Corporation
First of Michigan Corporation 100 Renaissance Center, 26th Floor, Detroit, Michigan 48243 100
Gruntal & Co., Incorporated 14 Wall Street, New York, New York 10005 100
J. J. B. Hilliard, W. L. Lyons, Inc. 501 South Fourth Street, Louisville, Kentucky 40202 100
Janney Montgomery Scott Inc. 1801 Market Street, 11th Floor, Philadelphia, Pennsylvania 100
19103
Linsco/Private Ledger Financial Services, 5871 Oberlin Drive, San Diego, California 92121 100
Inc.
Oppenheimer & Co., Inc. World Financial Center, 8th Floor, New York, New York 10281 100
Smith Barney Shearson 2 World Trade Center, 101st Floor, New York, New York 10048 100
Southwest Securities Inc. 1201 Elm Street, Suite 4300, Dallas, Texas 75270 100
Wheat, First Securities, Inc. River Front Plaza, 901 East Byrd Street, Richmond, Virginia 100
23219
9,620
</TABLE>
<TABLE>
<CAPTION>
IM-IT
INTERMEDIATE
NAME ADDRESS TRUST UNITS
<S> <C> <C>
Van Kampen Merritt Inc. One Parkview Plaza, Oakbrook Terrace, Illinois 60181 3,430
Dean Witter Reynolds, Incorporated 2 World Trade Center, 59th Floor, New York, New York 10048 250
Prudential Securities Inc. 32 Old Slip, 16th Floor, Financial Square, New York, New York 250
Unit Investment Trust Department 10292
Robert W. Baird & Co. Inc. 777 East Wisconsin Avenue, Milwaukee, Wisconsin 53202 100
A. G. Edwards & Sons, Inc. One North Jefferson Avenue, St. Louis, Missouri 63103 100
Fidelity Capital Markets 161 Devonshire Street D4, Boston, Massachusetts 02110 100
A Division of National Financial
Services
Corporation
First of Michigan Corporation 100 Renaissance Center, 26th Floor, Detroit, Michigan 48243 100
Gruntal & Co., Incorporated 14 Wall Street, New York, New York 10005 100
Edward D. Jones & Co. 201 Progress Parkway, Maryland Heights, Missouri 63043 100
Kemper Securities, Inc. 77 West Wacker Drive, 28th Floor, Chicago, Illinois 60601 100
Nathan & Lewis Securities, Inc. 119 West 40th Street, New York, New York 10018 100
Oppenheimer & Co., Inc. World Financial Center, 8th Floor, New York, New York 10281 100
Raymond James & Associates, Inc. 880 Carillon Parkway, St. Petersburg, Florida 33733 100
Southwest Securities Inc. 1201 Elm Street, Suite 4300, Dallas, Texas 75270 100
5,030
</TABLE>
<PAGE>
Underwriting 53
<TABLE>
<CAPTION>
COLORADO
IM-IT TRUST
NAME ADDRESS UNITS
<S> <C> <C>
Van Kampen Merritt Inc. One Parkview Plaza, Oakbrook Terrace, Illinois 60181 2,069
Smith Barney Shearson 2 World Trade Center, 101st Floor, New York, New York 10048 250
Dain Bosworth Incorporated 100 Dain Tower, Minneapolis, Minnesota 55402 100
Dean Witter Reynolds, Incorporated 2 World Trade Center, 59th Floor, New York, New York 10048 100
A. G. Edwards & Sons, Inc. One North Jefferson Avenue, St. Louis, Missouri 63103 100
Gruntal & Co., Incorporated 14 Wall Street, New York, New York 10005 100
Edward D. Jones & Co. 201 Progress Parkway, Maryland Heights, Missouri 63043 100
Kemper Securities, Inc. 77 West Wacker Drive, 28th Floor, Chicago, Illinois 60601 100
Prudential Securities Inc. 32 Old Slip, 16th Floor, Financial Square, New York, New York 100
Unit Investment Trust Department 10292
3,019
</TABLE>
<TABLE>
<CAPTION>
CONNECTICUT
IM-IT TRUST
NAME ADDRESS UNITS
<S> <C> <C>
Van Kampen Merritt Inc. One Parkview Plaza, Oakbrook Terrace, Illinois 60181 2,155
A. G. Edwards & Sons, Inc. One North Jefferson Avenue, St. Louis, Missouri 63103 350
Advest, Inc. 280 Trumbull Street, Hartford, Connecticut 06103 250
Dean Witter Reynolds, Incorporated 2 World Trade Center, 59th Floor, New York, New York 10048 100
Gruntal & Co., Incorporated 14 Wall Street, New York, New York 10005 100
Prudential Securities Inc. 32 Old Slip, 16th Floor, Financial Square, New York, New York 100
Unit Investment Trust Department 10292
3,055
</TABLE>
<TABLE>
<CAPTION>
FLORIDA
IM-IT TRUST
NAME ADDRESS UNITS
<S> <C> <C>
Van Kampen Merritt Inc. One Parkview Plaza, Oakbrook Terrace, Illinois 60181 2,107
A. G. Edwards & Sons, Inc. One North Jefferson Avenue, St. Louis, Missouri 63103 250
Robert W. Baird & Co. Inc. 777 East Wisconsin Avenue, Milwaukee, Wisconsin 53202 125
Dean Witter Reynolds, Incorporated 2 World Trade Center, 59th Floor, New York, New York 10048 100
First of Michigan Corporation 100 Renaissance Center, 26th Floor, Detroit, Michigan 48243 100
Gruntal & Co., Incorporated 14 Wall Street, New York, New York 10005 100
Edward D. Jones & Co. 201 Progress Parkway, Maryland Heights, Missouri 63043 100
Prudential Securities Inc. 32 Old Slip, 16th Floor, Financial Square, New York, New York 100
Unit Investment Trust Department 10292
2,982
</TABLE>
Units may also be sold to broker-dealers and others at prices
representing the per Unit concession or agency commission stated under "Trust
Administration--General--Unit Distribution". However, resales of Units by such
broker-dealers and others to the public will be made at the Public Offering
Price described in the Prospectus. The Sponsor reserves the right to reject,
in whole or in part, any order for the purchase of Units and the right to
change the amount of the concession or agency commission from time to time.
In addition to any other benefits the Underwriters may realize from the
sale of the Units of the Fund, the Agreement Among Underwriters provides that
the Sponsor will share on a pro rata basis among those Underwriters who
underwrite at least 250 Units 50% of the aggregate gain, if any, represented
by the difference between the Sponsor's cost of the Securities in connection
with their acquisition and the evaluation thereof on the Date of Deposit less
deductions for certain accrued interest and certain other costs. See "Trust
Administration--General--Sponsor and Underwriter Compensation" and "Portfolio"
for the applicable Trust.
Underwriters and broker-dealers of the Trusts, banks and/or others are
eligible to participate in a program in which such firms receive from the
Sponsor a nominal award for each of their representatives who have sold a
minimum number of units of unit investment trusts created by the Sponsor
during a specified time period. In addition,
<PAGE>
54 Underwriting
at various times the Sponsor may implement other programs under which the
sales forces of Underwriters, brokers, dealers, banks and/or others may be
eligible to win other nominal awards for certain sales efforts, or under which
the Sponsor will reallow to any such Underwriters, brokers, dealers, banks
and/or others that sponsor sales contests or recognition programs conforming
to criteria established by the Sponsor, or participate in sales programs
sponsored by the Sponsor, an amount not exceeding the total applicable sales
charges on the sales generated by such persons at the public offering price
during such programs. Also, the Sponsor in its discretion may from time to
time pursuant to objective criteria established by the Sponsor pay fees to
qualifying underwriters, brokers, dealers, banks or others for certain
services or activities which are primarily intended to result in sales of
Units of the Trusts. Such payments are made by the Sponsor out of its own
assets, and not out of the assets of the Trusts. These programs will not
change the price Unitholders pay for their Units or the amount that the Trusts
will receive from the Units sold. Approximately every eighteen months the
Sponsor holds a business seminar which is open to Underwriters that sell units
of trusts it sponsors. The Sponsor pays substantially all costs associated
with the seminar, excluding Underwriter travel costs. Each Underwriter is
invited to send a certain number of representatives based on the gross number
of units such firm underwrites during a designated time period.
<PAGE>
Trust Administration 55
FUND ADMINISTRATION AND EXPENSES
SPONSOR. Van Kampen Merritt Inc., a Delaware corporation, is the Sponsor
of the Trust. Van Kampen Merritt Inc. is primarily owned by Clayton, Dubilier
& Rice, Inc., a New York-based private investment firm. Van Kampen Merritt
Inc. management owns a significant minority equity position. Van Kampen
Merritt Inc. specializes in the underwriting and distribution of unit
investment trusts and mutual funds. The Sponsor is a member of the National
Association of Securities Dealers, Inc. and has its principal office at One
Parkview Plaza, Oakbrook Terrace, Illinois 60181, (708) 684-6000. It maintains
a branch office in Philadelphia and has regional representatives in Atlanta,
Dallas, Los Angeles, New York, San Francisco, Seattle and Tampa. As of
September 30, 1993 the total stockholders' equity of Van Kampen Merritt Inc.
was $200,885,000 (unaudited). (This paragraph relates only to the Sponsor and
not to the Insured Municipals Income Trust or to any Insured Multi-Series
thereof or to any other Underwriter. The information is included herein only
for the purpose of informing investors as to the financial responsibility of
the Sponsor and its ability to carry out its contractual obligations. More
detailed financial information will be made available by the Sponsor upon
request.)
As of November 30, 1993, the Sponsor and its affiliates managed or
supervised approximately $38.5 billion of investment products, of which over
$25 billion is invested in municipal securities. The Sponsor and its
affiliates managed $23 billion of assets, consisting of $8.2 billion for 19
open end mutual funds, $8.3 billion for 33 closed-end funds and $6.5 billion
for 51 institutional accounts. The Sponsor has also deposited approximately
$23.5 billion of unit investment trusts. Based on cumulative assets deposited,
the Sponsor believes that it is the largest sponsor of insured municipal unit
investment trusts, primarily through the success of its Insured Municipal
Income Trust(R) or the IM-IT(R) trust. The Sponsor also provides surveillance
and evaluation services at cost for approximately $15.5 billion of unit
investment trust assets outstanding. Since 1976, the Sponsor has serviced over
one million retail investor accounts, opened through retail distribution
firms. Van Kampen Merritt Inc. is the sponsor of the various series of the
trusts listed below and the distributor of the mutual funds and closed-end
funds listed below. Unitholders may only invest in the trusts, mutual funds
and closed-end funds which are registered for sale in the state of residence
of such Unitholder. In order for a Unitholder to invest in the trusts, mutual
funds and closed-end funds listed below, such Unitholder must obtain a
prospectus relating to the trust or fund involved. A prospectus is the only
means by which an offer can be delivered to investors.
<TABLE>
<CAPTION>
NAME OF TRUST TRUST INVESTMENT OBJECTIVE
<S> <C>
Insured Municipals Income Trust................ Tax-exempt income by investing in insured municipal securities
California Insured Municipals Income Trust..... Double tax-exemption for California residents by investing in insured
California municipal securities
New York Insured Municipals Income Trust....... Double and in certain cases triple tax-exemption for New York residents
by investing in insured New York municipal securities
Pennsylvania Insured Municipals Income Trust... Double and in certain cases triple tax-exemption for Pennsylvania
residents by investing in insured Pennsylvania municipal securities
Insured Municipals Income Trust, Insured Tax-exempt income by investing in insured municipal securities; all
Multi-Series................................. issuers of bonds in a state trust are located in such state or in
(Premium Bond Series, National, Limited territories or possessions of the United States-- providing
Maturity, Intermediate, Short Intermediate, exemptions from all state income tax for residents of such state
Discount, Alabama, Arizona, California, (except for the Oklahoma IM-IT Trust where a portion of the income of
California Intermediate, California the Trust is subject to the Oklahoma state income tax)
Intermediate Laddered Maturity, California
Premium, Colorado, Connecticut, Florida,
Florida Intermediate, Florida Intermediate
Laddered Maturity, Georgia, Louisiana,
Massachusetts, Massachusetts Premium,
Michigan, Michigan Intermediate, Michigan
Intermediate Laddered Maturity, Michigan
Premium, Minnesota, Missouri, Missouri Inter-
mediate Laddered Maturity, Missouri Premium,
New Jersey, New Jersey Intermediate Laddered
Maturity, New Mexico, New York, New York
Intermediate, New York Intermediate Laddered
Maturity, New York Limited Maturity, Ohio,
Ohio Intermediate, Ohio IM-IT Intermediate
Laddered Maturity, Ohio Premium, Oklahoma,
Pennsylvania, Pennsylvania Intermediate,
Pennsylvania Intermediate Laddered Maturity,
Pennsylvania Premium, Tennessee, Texas,
Washington, West Virginia)
Insured Tax Free Bond Trust.................... Tax-exempt income by investing in insured municipal securities
Insured Tax Free Bond Trust, Insured Tax-exempt income by investing in insured municipal securities; all
Multi-Series................................. issuers of bonds in a state trust are located in such state--providing
(National, Limited Maturity, New York) exemptions from state income tax for residents of such state
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
56 Trust Administration
<S> <C>
NAME OF TRUST TRUST INVESTMENT OBJECTIVE (Continued)
Investors' Quality Tax-Exempt Trust............ Tax-exempt income by investing in municipal securities
Investors' Quality Tax-Exempt Trust, Tax-exempt income by investing in municipal securities; all issuers of
Multi-Series................................. bonds in a state trust are located in such state or in territories or
(National, National AMT, Intermediate, possessions of the United States--providing exemptions from state
Alabama, Arizona, Arkansas, California, income tax for residents of such state
Colorado, Connecticut, Delaware, Florida,
Georgia, Kansas, Kentucky, Maine, Maryland,
Massachusetts, Michigan, Minnesota, Missouri,
Nebraska, New Jersey, New York, North
Carolina, Ohio, Oregon, Pennsylvania, South
Carolina, Virginia)
Investors' Quality Municipals Trust, AMT Tax-exempt income for investors not subject to the alternative minimum
Series....................................... tax by investing in municipal securities, some or all of which are
subject to the Federal alternative minimum tax
Investors' Corporate Income Trust.............. Taxable income by investing in corporate bonds
Investors' Governmental Securities--Income Taxable income by investing in government-backed GNMA securities
Trust........................................
Van Kampen Merritt International Bond Income High current income through an investment in a diversified portfolio of
Trust........................................ foreign currency denominated corporate debt obligations
Van Kampen Merritt Insured Income Trust........ High current income consistent with preservation of capital through a
diversified investment in a fixed portfolio of insured, long-term or
intermediate-term corporate debt securities
Van Kampen Merritt Utility Income Trust........ High dividend income and capital appreciation by investing in common
stock of electric utilities
Van Kampen Merritt Blue Chip Opportunity Provide the potential for capital appreciation and income by investing
Trust........................................ in a portfolio of actively traded, New York Stock Exchange listed
equity securities which are components of the Dow Jones Industrial
Average*
Van Kampen Merritt Blue Chip Opportunity and Protect Unitholders' capital and provide the potential for capital
Treasury Trust............................... appreciation and income by investing a portion of its portfolio in
"zero coupon" U.S. Treasury obligations and the remainder of the
trust's portfolio in actively traded, New York Stock Exchange listed
equity securities which at the time of the creation of the trust were
components of the Dow Jones Industrial Average*
Van Kampen Merritt Emerging Markets Income High current income consistent with preservation of capital through a
Trust........................................ diversified investment in a fixed portfolio primarily consisting of
Brady Bonds of emerging market countries that have restructured
sovereign debt pursuant to the framework of the Brady Plan
Van Kampen Merritt Global Telecommunications Provide the potential for capital appreciation and income consistent
Trust........................................ with the preservation of invested capital, by investing in a portfolio
of equity securities which provide equipment for or services to the
telecommunications industry
Van Kampen Merritt Global Energy Trust......... Provide the potential for capital appreciation and income consistent
with the preservation of invested capital, by investing in a portfolio
of equity securities diversified within the energy industry
NAME OF MUTUAL FUND FUND INVESTMENT OBJECTIVE
Van Kampen Merritt U.S. Government Fund........ High current income by investing in U.S. Government securities
Van Kampen Merritt Insured Tax Free Income High current income exempt from Federal income taxes by investing in
Fund.......................................... insured municipal securities
Van Kampen Merritt Municipal Income Fund....... High level of current income exempt from Federal income tax, consistent
with preservation of capital
Van Kampen Merritt Tax Free High Income Fund... High current income exempt from Federal income taxes by investing in
medium and lower grade municipal securities
Van Kampen Merritt California Insured Tax Free High current income exempt from Federal and California income taxes by
Fund.......................................... investing in insured California municipal securities
Van Kampen Merritt High Yield Fund............. Provide a high level of current income by investing in medium and lower
grade domestic and foreign government and corporate debt securities.
The Fund will seek capital appreciation as a secondary objective
Van Kampen Merritt Growth and Income Fund...... Long-term growth of both capital and dividend income by investing in
dividend paying common stocks
Van Kampen Merritt Pennsylvania Tax Free Income High current income exempt from Federal and Pennsylvania state and
Fund.......................................... local income taxes by investing in medium and lower grade Pennsylvania
municipal securities
Van Kampen Merritt Money Market Fund........... High current income by investing in a broad range of money market
instruments that will mature within twelve months
Van Kampen Merritt Tax Free Money Fund......... High current income exempt from Federal income taxes by investing in a
broad range of municipal securities that will mature within twelve
months
Van Kampen Merritt Short-Term Global Income High current income by investing in a global portfolio of high quality
Fund.......................................... debt securities denominated in various currencies having remaining
maturities of not more than three years
Van Kampen Merritt Adjustable Rate U.S. High level of current income with a relatively stable net asset value
Government Fund............................... investing in U.S. Government securities
Van Kampen Merritt Limited Term Municipal High level of current income exempt from federal income tax, consistent
Income Fund................................... with preservation of capital
</TABLE>
* The Dow Jones Industrial Average is the property of Dow Jones & Company,
Inc. Dow Jones & Company, Inc. has not granted to the Trust or the Sponsor
a license to use the Dow Jones Industrial Average.
<PAGE>
Trust Administration 57
<TABLE>
<CAPTION>
NAME OF CLOSED-END FUND FUND INVESTMENT OBJECTIVE
<S> <C>
Van Kampen Merritt Municipal Income Trust...... High current income exempt from Federal income taxes with safety of
principal by investing in a diversified portfolio of investment grade
municipal securities
Van Kampen Merritt California Municipal High current income exempt from Federal and California income taxes
Trust......................................... with safety of principal by investing in a diversified portfolio of
investment grade California municipal securities
Van Kampen Merritt Intermediate Term High High current income while seeking to preserve shareholders' capital by
Income Trust.................................. investing in a diversified portfolio of high yield fixed income
securities
Van Kampen Merritt Limited Term High Income High current income while seeking to preserve shareholders' capital by
Trust......................................... investing in a diversified portfolio of high yield fixed income
securities
Van Kampen Merritt Prime Rate Income Trust..... High current income, consistent with preservation of capital by
investing in interests in floating or variable rate senior loans
Van Kampen Merritt Investment Grade Municipal High current income exempt from Federal income tax, consistent with
Trust......................................... preservation of capital
Van Kampen Merritt Municipal Trust............. High level of current income exempt from Federal income tax, consistent
with preservation of capital
Van Kampen Merritt California Quality Municipal High current income exempt from Federal and California income taxes
Trust......................................... with safety of principal by investing in a diversified portfolio of
investment grade California municipal securities
Van Kampen Merritt Florida Quality Municipal High current income exempt from Federal income taxes and Florida
Trust......................................... intangible personal property taxes with safety of principal by
investing in a diversified portfolio of investment grade Florida
municipal securities
Van Kampen Merritt New York Quality Municipal High current income exempt from Federal as well as New York State and
Trust......................................... New York City income taxes with safety of principal by investing in a
diversified portfolio of investment grade New York municipal
securities
Van Kampen Merritt Ohio Quality Municipal High current income exempt from Federal and Ohio income taxes with
Trust......................................... safety of principal by investing in a diversified portfolio of
investment grade Ohio municipal securities
Van Kampen Merritt Pennsylvania Quality High current income exempt from Federal and Pennsylvania income taxes
Municipal Trust............................... with safety of principal by investing in a diversified portfolio of
investment grade Pennsylvania municipal securities
Van Kampen Merritt Trust for Investment Grade High level of current income exempt from Federal income tax, consistent
Municipals.................................... with preservation of capital
Van Kampen Merritt Trust for Insured High level of current income exempt from Federal income tax, consistent
Municipals.................................... with preservation of capital by investing in a diversified portfolio of
municipal securities which are covered by insurance with respect to
timely payment of principal and interest
Van Kampen Merritt Trust for Investment Grade High level of current income exempt from Federal and California income
CA Municipals................................. taxes, consistent with preservation of capital by investing in a
diversified portfolio of California municipal securities
Van Kampen Merritt Trust for Investment Grade High level of current income exempt from Federal income taxes,
FL Municipals................................. consistent with preservation of capital. The Fund also seeks to offer
its Shareholders the opportunity to own securities exempt from Florida
intangible personal property taxes
Van Kampen Merritt Trust for Investment Grade High level of current income exempt from Federal income taxes and New
NJ Municipals................................. Jersey gross income taxes, consistent with preservation of capital
Van Kampen Merritt Trust for Investment Grade High level of current income exempt from Federal as well as from New
NY Municipals................................. York State and New York City income taxes, consistent with
preservation of capital
Van Kampen Merritt Trust for Investment Grade High level of current income exempt from Federal and Pennsylvania
PA Municipals................................. income taxes and, where possible under local law, local income and
property taxes, consistent with preservation of capital
Van Kampen Merritt Municipal Opportunity High level of current income exempt from Federal income tax, consistent
Trust......................................... with preservation of capital by investing in a diversified portfolio of
municipal securities
Van Kampen Merritt Advantage Municipal Income High level of current income exempt from Federal income tax, consistent
Trust......................................... with preservation of capital by investing in a diversified portfolio of
municipal securities
Van Kampen Merritt Advantage Pennsylvania High level of current income exempt from Federal and Pennsylvania
Municipal Income Trust........................ income taxes and, where possible under local law, local income and
property taxes, consistent with preservation of capital
Van Kampen Merritt Strategic Sector Municipal Provide common shareholders with a high level of current income exempt
Trust......................................... from Federal income taxes, consistent with preservation of capital
Van Kampen Merritt Value Municipal Income High level of current income exempt from Federal income taxes,
Trust......................................... consistent with preservation of capital
Van Kampen Merritt California Value Municipal High level of current income exempt from Federal and California income
Income Trust.................................. taxes, consistent with preservation of capital
Van Kampen Merritt Massachusetts Value High level of current income exempt from Federal income taxes and
Municipal Income Trust........................ Massachusetts personal income taxes, consistent with preservation of
capital
Van Kampen Merritt New Jersey Value Municipal High level of current income exempt from Federal income taxes and New
Income Trust.................................. Jersey gross income tax, consistent with preservation of capital
Van Kampen Merritt New York Value Municipal High level of current income exempt from Federal as well as New York
Income Trust.................................. State and New York City income taxes, consistent with preservation of
capital
Van Kampen Merritt Ohio Value Municipal Income High level of current income exempt from Federal and Ohio income taxes,
Trust......................................... consistent with preservation of capital
Van Kampen Merritt Pennsylvania Value Municipal High level of current income exempt from Federal and Pennsylvania
Income Trust.................................. income taxes, consistent with preservation of capital
Van Kampen Merritt Municipal Opportunity Trust High level of current income exempt from federal income tax, consistent
II............................................ with preservation of capital
Van Kampen Merritt Florida Municipal High level of current income exempt from federal income tax, consistent
Opportunity Trust............................. with preservation of capital. The Fund seeks to offer its common
shareholders the opportunity to own securities exempt from Florida
intangible personal property taxes
Van Kampen Merritt Advantage Municipal Income Provide common shareholders with a high level of current income exempt
Trust II...................................... from federal income tax, consistent with preservation of capital
Van Kampen Merritt Select Sector Municipal To provide common shareholders with a high level of current income
Trust......................................... exempt from federal income tax, consistent with preservation of capital
</TABLE>
<PAGE>
58 Trust Administration
If the Sponsor shall fail to perform any of its duties under the Trust
Agreement or become incapable of acting or become bankrupt or its affairs are
taken over by public authorities, then the Trustee may (i) appoint a successor
Sponsor at rates of compensation deemed by the Trustee to be reasonable and
not exceeding amounts prescribed by the Securities and Exchange Commission,
(ii) terminate the Trust Agreement and liquidate the Fund as provided therein
or (iii) continue to act as Trustee without terminating the Trust Agreement.
All costs and expenses incurred in creating and establishing the Fund,
including the cost of the initial preparation, printing and execution of the
Trust Agreement and the certificates, legal and accounting expenses,
advertising and selling expenses, expenses of the Trustee, initial evaluation
fees and other out-of-pocket expenses have been borne by the Sponsor at no
cost to the Fund.
COMPENSATION OF SPONSOR AND EVALUATOR. The Sponsor will not receive any
fees in connection with its activities relating to the Fund. However, American
Portfolio Evaluation Services, a division of Van Kampen Merritt Investment
Advisory Corp., which is a wholly-owned subsidiary corporation of the Sponsor,
will receive an annual supervisory fee as indicated under "Summary of
Essential Financial Information" for providing portfolio supervisory services
for the Fund. Such fee (which is based on the number of Units outstanding in
each Trust on January 1 of each year) may exceed the actual costs of providing
such supervisory services for this Fund, but at no time will the total amount
received for portfolio supervisory services rendered to Insured Municipals
Income Trust, 1st Insured Multi-Series and subsequent series and to any other
unit investment trusts sponsored by the Sponsor for which the Evaluator
provides portfolio supervisory services in any calendar year exceed the
aggregate cost to the Evaluator of supplying such services in such year. In
addition, the Evaluator shall receive an annual evaluation fee as indicated
under "Summary of Essential Financial Information" for regularly evaluating
each Trust's portfolio. Both of the foregoing fees may be increased without
approval of the Unitholders by amounts not exceeding proportionate increases
under the category "All Services Less Rent of Shelter" in the Consumer Price
Index published by the United States Department of Labor or, if such category
is no longer published, in a comparable category. The Sponsor and the
Underwriters will receive sales commissions and may realize other profits (or
losses) in connection with the sale of Units and the deposit of the Securities
as described under "General--Sponsor and Underwriter Compensation" below.
TRUSTEE. The Trustee is The Bank of New York, a trust company organized
under the laws of New York. The Bank of New York has its offices at 101
Barclay Street, New York, New York 10286 (800) 221-7668. The Bank of New York
is subject to supervision and examination by the Superintendent of Banks of
the State of New York and the Board of Governors of the Federal Reserve
System, and its deposits are insured by the Federal Deposit Insurance
Corporation to the extent permitted by law.
The duties of the Trustee are primarily ministerial in nature. It did not
participate in the selection of Bonds for the portfolios of any of the Trusts.
In accordance with the Trust Agreement, the Trustee shall keep proper
books of record and account of all transactions at its office for the Fund.
Such records shall include the name and address of, and the certificates
issued by the Fund to, every Unitholder of the Fund. Such books and records
shall be open to inspection by any Unitholder at all reasonable times during
the usual business hours. The Trustee shall make such annual or other reports
as may from time to time be required under any applicable state or Federal
statute, rule or regulation (see "Unitholder Explanations--Public
Offering--Reports Provided"). The Trustee is required to keep a certified copy
or duplicate original of the Trust Agreement on file in its office available
for inspection at all reasonable times during the usual business hours by any
Unitholder, together with a current list of the Securities held in the Fund.
Under the Trust Agreement, the Trustee or any successor trustee may
resign and be discharged of the trusts created by the Trust Agreement by
executing an instrument in writing and filing the same with the Sponsor. The
Trustee or successor trustee must mail a copy of the notice of resignation to
all Fund Unitholders then of record, not less than 60 days before the date
specified in such notice when such resignation is to take effect. The Sponsor
upon receiving notice of such resignation is obligated to appoint a successor
trustee promptly. If, upon such resignation, no successor trustee has been
appointed and has accepted the appointment within 30 days after notification,
the retiring Trustee may apply to a court of competent jurisdiction for the
appointment of a successor. The Sponsor may remove the Trustee and appoint a
successor trustee as provided in the Trust Agreement at any time with or
without cause. Notice of such removal and appointment shall be mailed to each
Unitholder by the Sponsor. Upon execution of a written acceptance of such
appointment by such successor trustee, all the rights, powers, duties and
obligations of
<PAGE>
Trust Administration 59
the original trustee shall vest in the successor. The resignation or removal
of a Trustee becomes effective only when the successor trustee accepts its
appointment as such or when a court of competent jurisdiction appoints a
successor trustee.
Any corporation into which a Trustee may be merged or with which it may
be consolidated, or any corporation resulting from any merger or consolidation
to which a Trustee shall be a party, shall be the successor trustee. The
Trustee must be a banking corporation organized under the laws of the United
States or any state and having at all times an aggregate capital, surplus and
undivided profits of not less than $5,000,000.
TRUSTEE'S FEE. For its services the Trustee will receive a fee based on
the aggregate outstanding principal amount of Securities in each Trust as of
the opening of business on January 2 and July 2 of each year as set forth
under "Per Unit Information" for the applicable Trust. During the first year
the Trustee may agree to reduce its fee (and to the extent necessary pay
miscellaneous expenses of a Trust) as stated under "Per Unit Information" for
the applicable Trust. The Trustee's fees are payable monthly on or before the
fifteenth day of each month from the Interest Account of each Trust to the
extent funds are available and then from the Principal Account of each Trust,
with such payments being based on each Trust's portion of such expenses. Since
the Trustee has the use of the funds being held in the Principal and Interest
Accounts for future distributions, payment of expenses and redemptions and
since such Accounts are non-interest bearing to Unitholders, the Trustee
benefits thereby. Part of the Trustee's compensation for its services to each
Trust is expected to result from the use of these funds. Such fees may be
increased without approval of the Unitholders by amounts not exceeding
proportionate increases under the category "All Services Less Rent of Shelter"
in the Consumer Price Index published by the United States Department of Labor
or, if such category is no longer published, in a comparable category. The
Trustee's fees will not be increased in future years in order to make up any
reduction in the Trustee's fees described under "Per Unit Information" for the
applicable Trust. For a discussion of the services rendered by the Trustee
pursuant to its obligations under the Trust Agreement, see "Unitholder
Explanations--Public Offering--Reports Provided" and "Trustee" above.
PORTFOLIO ADMINISTRATION. The Trustee is empowered to sell, for the
purpose of redeeming Units tendered by any Unitholder, and for the payment of
expenses for which funds may not be available, such of the Bonds designated by
the Evaluator as the Trustee in its sole discretion may deem necessary. The
Evaluator, in designating such Securities, will consider a variety of factors,
including (a) interest rates, (b) market value and (c) marketability. In
connection with the Insured Trusts to the extent that Bonds are sold which are
current in payment of principal and interest in order to meet redemption
requests and defaulted Bonds are retained in the portfolio in order to
preserve the related insurance protection applicable to said Bonds, the
overall quality of the Bonds remaining in such Trust's portfolio will tend to
diminish. Except as described in this section and in certain other unusual
circumstances for which it is determined by the Trustee to be in the best
interests of the Unitholders or if there is no alternative, the Trustee is not
empowered to sell Bonds from an Insured Trust which are in default in payment
of principal or interest or in significant risk of such default and for which
value has been attributed for the insurance obtained by such Insured Trust.
Because of such restrictions on the Trustee under certain circumstances, the
Sponsor may seek a full or partial suspension of the right of Unitholders to
redeem their Units in an Insured Trust. See "Unitholder Explanations--Public
Offering--Redemption of Units". The Sponsor is empowered, but not obligated,
to direct the Trustee to dispose of Bonds in the event of an advanced
refunding.
The Sponsor is required to instruct the Trustee to reject any offer made
by an issuer of any of the Securities to issue new obligations in exchange or
substitution for any Security pursuant to a refunding or refinancing plan,
except that the Sponsor may instruct the Trustee to accept or reject such an
offer or to take any other action with respect thereto as the Sponsor may deem
proper if (1) the issuer is in default with respect to such Security or (2) in
the written opinion of the Sponsor the issuer will probably default with
respect to such Security in the reasonably foreseeable future. Any obligation
so received in exchange or substitution will be held by the Trustee subject to
the terms and conditions of the Trust Agreement to the same extent as
Securities originally deposited thereunder. Within five days after the deposit
of obligations in exchange or substitution for underlying Securities, the
Trustee is required to give notice thereof to each Unitholder of the Trust
thereby affected, identifying the Securities eliminated and the Securities
substituted therefor. Except as stated herein and under "Unitholder
Explanations--Settlement of Bonds in the Trusts" regarding the substitution of
Replacement Bonds for Failed Bonds, the acquisition by the Fund of any
securities other than the Securities initially deposited is not permitted.
<PAGE>
60 Trust Administration
If any default in the payment of principal or interest on any Security
occurs and no provision for payment is made therefor within 30 days, the
Trustee is required to notify the Sponsor thereof. If the Sponsor fails to
instruct the Trustee to sell or to hold such Security within 30 days after
notification by the Trustee to the Sponsor of such default, the Trustee may in
its discretion sell the defaulted Security and not be liable for any
depreciation or loss thereby incurred.
SPONSOR PURCHASES OF UNITS. The Trustee shall notify the Sponsor of any
tender of Units for redemption. If the Sponsor's bid in the secondary market
at that time equals or exceeds the Redemption Price per Unit, it may purchase
such Units by notifying the Trustee before the close of business on the second
succeeding business day and by making payment therefor to the Unitholder not
later than the day on which the Units would otherwise have been redeemed by
the Trustee. Units held by the Sponsor may be tendered to the Trustee for
redemption as any other Units.
The offering price of any Units acquired by the Sponsor will be in accord
with the Public Offering Price described in the then currently effective
prospectus describing such Units. Any profit resulting from the resale of such
Units will belong to the Sponsor which likewise will bear any loss resulting
from a lower offering or Redemption Price subsequent to its acquisition of
such Units.
INSURANCE PREMIUMS. The cost of the portfolio insurance obtained by the
respective Trusts, if any, is that amount shown in footnote (5) in "Notes to
Portfolios", so long as such Trust retains the Bonds. Premiums, which are
obligations of each Insured Trust, are payable monthly by the Trustee on
behalf of the respective Trust. As Bonds in the portfolio of an Insured Trust
are redeemed by their respective issuers or are sold by the Trustee, the
amount of the premium will be reduced in respect of those Bonds no longer
owned by and held in such Trust. If the Trustee exercises the right to obtain
permanent insurance, the premiums payable for such permanent insurance will be
paid solely from the proceeds of the sale of the related Bonds. The premiums
for such permanent insurance with respect to each Bond will decline over the
life of the Bond. A Trust does not incur any expense for Preinsured Bond
insurance, since the premium or premiums for such insurance have been paid by
the issuer or the Sponsor prior to the deposit of such Preinsured Bonds in a
Trust. Preinsured Bonds are not additionally insured by an Insured Trust.
MISCELLANEOUS EXPENSES. The following additional charges are or may be
incurred by the Trusts: (a) fees of the Trustee for extraordinary services,
(b) expenses of the Trustee (including legal and auditing expenses) and of
counsel designated by the Sponsor, (c) various governmental charges, (d)
expenses and costs of any action taken by the Trustee to protect the Trusts
and the rights and interests of Unitholders, (e) indemnification of the
Trustee for any loss, liability or expenses incurred by it in the
administration of the Fund without negligence, bad faith or willful misconduct
on its part, (f) any special custodial fees payable in connection with the
sale of any of the Bonds in a Trust and (g) expenditures incurred in
contacting Unitholders upon termination of the Trusts.
The fees and expenses set forth herein are payable out of the Trusts.
When such fees and expenses are paid by or owing to the Trustee, they are
secured by a lien on the portfolio or portfolios of the applicable Trust or
Trusts. If the balances in the Interest and Principal Accounts are
insufficient to provide for amounts payable by the Fund, the Trustee has the
power to sell Securities to pay such amounts.
GENERAL
AMENDMENT OR TERMINATION. The Sponsor and the Trustee have the power to
amend the Trust Agreement without the consent of any of the Unitholders when
such an amendment is (a) to cure an ambiguity or to correct or supplement any
provision of the Trust Agreement which may be defective or inconsistent with
any other provision contained therein or (b) to make such other provisions as
shall not adversely affect the interest of the Unitholders (as determined in
good faith by the Sponsor and the Trustee), provided that the Trust Agreement
may not be amended to increase the number of Units issuable thereunder or to
permit the deposit or acquisition of securities either in addition to or in
substitution for any of the Securities initially deposited in the Fund, except
for the substitution of certain refunding securities for such Securities. In
the event of any amendment, the Trustee is obligated to notify promptly all
Unitholders of the substance of such amendment.
A Trust may be terminated at any time by consent of Unitholders of 51% of
the Units of such Trust then outstanding or by the Trustee when the value of
such Trust, as shown by any semi-annual evaluation, is less than that
indicated under "Summary of Essential Financial Information". A Trust will be
liquidated by the Trustee in the event that a sufficient number of Units not
yet sold are tendered for redemption by the Underwriters, including the
Sponsor,
<PAGE>
Trust Administration 61
so that the net worth of such Trust would be reduced to less than 40% of the
initial principal amount of such Trust. If a Trust is liquidated because of
the redemption of unsold Units by the Underwriters, the Sponsor will refund to
each purchaser of Units the entire sales charge paid by such purchaser. The
Trust Agreement provides that each Trust shall terminate upon the redemption,
sale or other disposition of the last Security held in such Trust, but in no
event shall it continue beyond the end of the year preceding the fiftieth
anniversary of the Trust Agreement in the case of an IM-IT, a State Trust or a
National Quality Trust, or beyond the end of the year preceding the twentieth
anniversary of the Trust Agreement in the case of an IM-IT Limited Maturity,
IM-IT Intermediate and IM-IT Short Intermediate Trust. In the event of
termination of the Fund or any Trust, written notice thereof will be sent by
the Trustee to each Unitholder of such Trust at his address appearing on the
registration books of the Fund maintained by the Trustee. Within a reasonable
time thereafter the Trustee shall liquidate any Securities then held in such
Trust and shall deduct from the funds of such Trust any accrued costs,
expenses or indemnities provided by the Trust Agreement, including estimated
compensation of the Trustee and costs of liquidation and any amounts required
as a reserve to provide for payment of any applicable taxes or other
governmental charges. The sale of Securities in the Trust upon termination may
result in a lower amount than might otherwise be realized if such sale were
not required at such time. For this reason, among others, the amount realized
by a Unitholder upon termination may be less than the principal amount of
Securities represented by the Units held by such Unitholder. The Trustee shall
then distribute to each Unitholder his share of the balance of the Interest
and Principal Accounts. With such distribution the Unitholder shall be
furnished a final distribution statement of the amount distributable. At such
time as the Trustee in its sole discretion shall determine that any amounts
held in reserve are no longer necessary, it shall make distribution thereof to
Unitholders in the same manner.
Notwithstanding the foregoing, in connection with final distributions to
Unitholders of an Insured Trust, it should be noted that because the portfolio
insurance obtained by an Insured 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 such Bond which is in default, by reason of nonpayment
of principal or interest, will not reflect any value based on such insurance.
Therefore, in connection with any liquidation, it shall not be necessary for
the Trustee to, and the Trustee does not currently intend to, dispose of any
Bond or Bonds if retention of such Bond or Bonds, until due, shall be deemed
to be in the best interest of Unitholders, including, but not limited to,
situations in which a Bond or Bonds so insured are in default and situations
in which a Bond or Bonds so insured have deteriorated market prices resulting
from a significant risk of default. Since the Preinsured Bonds will reflect
the value of the related insurance, it is the present intention of the Sponsor
not to direct the Trustee to hold any of such Preinsured Bonds after the date
of termination. All proceeds received, less applicable expenses, from
insurance on defaulted Bonds not disposed of at the date of termination will
ultimately be distributed to Unitholders of record as of such date of
termination as soon as practicable after the date such defaulted Bond or Bonds
become due and applicable insurance proceeds have been received by the
Trustee.
LIMITATION ON LIABILITIES. The Sponsor, the Evaluator and the Trustee
shall be under no liability to Unitholders for taking any action or for
refraining from taking any action in good faith pursuant to the Trust
Agreement, or for errors in judgment, but shall be liable only for their own
willful misfeasance, bad faith or gross negligence in the performance of their
duties or by reason of their reckless disregard of their obligations and
duties hereunder. The Trustee shall not be liable for depreciation or loss
incurred by reason of the sale by the Trustee of any of the Securities. In the
event of the failure of the Sponsor to act under the Trust Agreement, the
Trustee may act thereunder and shall not be liable for any action taken by it
in good faith under the Trust Agreement.
The Trustee shall not be liable for any taxes or other governmental
charges imposed upon or in respect of the Securities or upon the interest
thereon or upon it as Trustee under the Trust Agreement or upon or in respect
of the Fund which the Trustee may be required to pay under any present or
future law of the United States of America or of any other taxing authority
having jurisdiction. In addition, the Trust Agreement contains other customary
provisions limiting the liability of the Trustee.
The Trustee, Sponsor and Unitholders may rely on any evaluation furnished
by the Evaluator and shall have no responsibility for the accuracy thereof.
Determinations by the Evaluator under the Trust Agreement shall be made in
good faith upon the basis of the best information available to it; provided,
however, that the Evaluator shall be under no liability to the Trustee,
Sponsor or Unitholders for errors in judgment. This provision shall not
protect the Evaluator in any case of willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations and duties.
<PAGE>
62 Trust Administration
UNIT DISTRIBUTION. During the initial offering period, Units will be
distributed to the public by Underwriters, broker-dealers and others (see
"Underwriting") at the Public Offering Price, plus accrued interest computed
as described above under "Unitholder Explanations--Interest Earning
Schedule--Accrued Interest (Accrued Interest to Carry)". Upon the completion
of the initial offering, Units repurchased in the secondary market, if any,
may be offered by this Prospectus at the secondary Public Offering Price in
the manner described.
The Sponsor intends to qualify the Units for sale in a number of states.
Broker-dealers or others will be allowed a concession or agency commission in
connection with the distribution of Units during the initial offering period
of $25.00 per Unit for less than 100 Units, $29.00 per Unit for any single
transaction of 100 to 249 Units, $28.50 per Unit for any single transaction of
250 to 499 Units, $31.50 per Unit for any single transaction of 500 to 999
Units and $31.00 per Unit for any single transaction of 1,000 or more Units of
an IM-IT Intermediate Trust, and in the case of an IM-IT, a State Trust or a
National Quality Trust, $30.00 per Unit for less than 100 Units, $36.00 per
Unit for any single transaction of 100 to 249 Units, $38.00 per Unit for any
single transaction of 250 to 499 Units, $39.00 per Unit for any single
transaction of 500 to 999 Units and $39.00 per Unit for any single transaction
of 1,000 or more Units, provided that such Units are acquired either from the
Sponsor (in the case of dealer transactions) or through the Sponsor (in the
case of transactions involving brokers or others). The increased concession or
agency commission is a result of the discount given to purchasers for quantity
purchases. See "Unitholder Explanations--Public Offering--General". Certain
commercial banks are making Units of the Fund available to their customers on
an agency basis. A portion of the sales charge paid by these customers (equal
to the agency commission referred to above) is retained by or remitted to the
banks. Under the Glass-Steagall Act, banks are prohibited from underwriting
Units of the Fund; however, the Glass-Steagall Act does permit certain agency
transactions and the banking regulators have not indicated that these
particular agency transactions are not permitted under such Act. In addition,
state securities laws on this issue may differ from the interpretations of
federal law expressed herein and banks and financial institutions may be
required to register as dealers pursuant to state law. Any quantity discount
(see "Unitholder Explanations-- Public Offering--General") provided to
investors will be borne by the selling dealer or agent. For secondary market
transactions, such concession or agency commission will amount to 70% of the
applicable sales charge as determined using the table found in "Unitholder
Explanations--Public Offering".
To facilitate the handling of transactions during the initial offering
period, sales of Units shall normally be limited to transactions involving a
minimum of five Units. Further purchases may be made in multiples of one Unit.
The minimum purchase in the secondary market will be one Unit.
The Sponsor reserves the right to reject, in whole or in part, any order
for the purchase of Units and to change the amount of the concession or agency
commission to dealers and others from time to time. See "Underwriting".
SPONSOR AND UNDERWRITER COMPENSATION. The Underwriters will receive a
gross sales commission equal to that percentage of the Public Offering Price
of the Units (excluding Purchased Interest) as indicated under "Unitholder
Explanations--Public Offering--Offering Price" less any reduced sales charges
for quantity purchases as described under "Unitholder Explanations--Public
Offering--General".
The Sponsor will receive from the Underwriters the excess of such gross
sales commission over $35.00, $29.00, $27.00, $22.00 and $35.00 per Unit of
any Quality, IM-IT Limited Maturity, IM-IT Intermediate, IM-IT Short
Intermediate and other Insured Trusts, respectively, as of the Date of
Deposit. In connection with quantity sales to purchasers of any IM-IT, State
Trust or National Quality Trust the Underwriters will receive from the Sponsor
commissions totalling $37.00 per Unit for any single transaction of 100 to 249
Units, $39.00 per Unit for any single transaction of 250 to 499 Units, $40.00
per Unit for any single transaction of 500 to 999 Units and $39.00 per Unit
for any single transaction of 1,000 or more Units. In connection with quantity
sales to purchasers of any IM-IT Intermediate Trust the Underwriters will
receive from the Sponsor commissions totalling $30.00 per Unit for any single
transaction of 100 to 249 Units, $29.50 per Unit for any single transaction of
250 to 499 Units, $32.50 per Unit for any single transaction of 500 to 999
Units and $31.00 per Unit for any single transaction of 1,000 or more Units.
In addition, A. G. Edwards & Sons, Inc. ("Edwards"), which acts as a Managing
Underwriter of Units of the various series of the IM-IT and IM-IT Intermediate
Trusts, respectively, will receive from the Sponsor reimbursement for certain
costs and further compensation in the amount of $5.00 for each Unit it
underwrites of the IM-IT, and $3.00 for each Unit it underwrites of the IM-IT
Intermediate Trust, provided it underwrites a minimum of 1,500 Units of the
IM-IT Intermediate Trust. See "Unitholder Explanations--Public
Offering--General". If The Principal/Eppler, Guerin & Turner, Inc. commits (on
the Date of Deposit) to underwrite a total of 4,000 or more Units of this
series of the IM-IT, any
<PAGE>
Trust Administration 63
other series of the IM-IT and/or any series of the Texas Insured Municipals
Income Trust during any calendar month, then The Principal/Eppler, Guerin &
Turner, Inc. will receive an additional $1.00 per Unit for each of the Units
of such Trusts it commits to underwrite in said month. In addition, the
Sponsor will receive from the Managing Underwriters of the Connecticut IM-IT
Trust (who underwrite 15% of the Trust involved or 1,000 Units of the Trust,
whichever is greater) the excess of such gross sales commission over $38.00
per Unit of the Trust, as of the Date of Deposit. Also, any such Managing
Underwriter that sells a total of 25% or 1,500 Units, whichever is greater, of
the Connecticut IM-IT Trust will receive an additional $2.00 per each such
Unit. Further, each Underwriter who underwrites 1,000 or more Units in any
Trust will receive additional compensation from the Sponsor of $1.00 for each
Unit it underwrites. In addition, the Sponsor and certain of the Underwriters
will realize a profit or the Sponsor will sustain a loss, as the case may be,
as a result of the difference between the price paid for the Securities by the
Sponsor and the cost of such Securities to a Trust (which is based on the
determination by Interactive Data Services, Inc. of the aggregate offering
price of the underlying Securities in such Trust on the Date of Deposit). See
"Underwriting" and "Portfolio" for the applicable Trust and "Notes to
Portfolios". The Sponsor and the Underwriters may also realize profits or
sustain losses with respect to Securities deposited in each Trust which were
acquired by the Sponsor from underwriting syndicates of which they were
members. The Sponsor has participated as sole underwriter or as manager or as
a member of the underwriting syndicates from which none of the aggregate
principal amount of the Securities in the portfolios of the Fund were
acquired. The Underwriters may further realize additional profit or loss
during the initial offering period as a result of the possible fluctuations in
the market value of the Securities in each Trust after the Date of Deposit,
since all proceeds received from purchasers of Units (excluding dealer
concessions or agency commissions allowed, if any) will be retained by the
Underwriters. Affiliates of an Underwriter are entitled to the same dealer
concessions or agency commissions that are available to the Underwriter.
As stated under "Unitholder Explanations--Public Offering--Market for
Units", the Sponsor intends to, and certain of the other Underwriters may,
maintain a secondary market for the Units of the Fund. In so maintaining a
market, such person or persons will also realize profits or sustain losses in
the amount of any difference between the price at which Units are purchased
and the price at which Units are resold (which price is based on the bid
prices of the Securities in such Trust and includes a sales charge). In
addition, such person or persons will also realize profits or sustain losses
resulting from a redemption of such repurchased Units at a price above or
below the purchase price for such Units, respectively.
<PAGE>
64 Other Matters
OTHER MATTERS
LEGAL OPINIONS. The legality of the Units offered hereby and certain
matters relating to Federal, Colorado and Florida tax law have been passed
upon by Chapman and Cutler, 111 West Monroe Street, Chicago, Illinois 60603,
as counsel for the Sponsor. Day, Berry & Howard has acted as special counsel
to the Fund for Connecticut tax matters. Tanner Propp & Farber has acted as
counsel for the Trustee and as special counsel to the Fund for New York tax
matters. None of the special counsel for the Fund has expressed any opinion
regarding the completeness or materiality of any matters contained in this
Prospectus other than the tax opinion set forth under "Tax Status" relating to
the Trust for which it has provided an opinion.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS. The statements of condition and
the related securities portfolios at the Date of Deposit included in this
Prospectus have been audited by Grant Thornton, independent certified public
accountants, as set forth in their report in this prospectus, and are included
herein in reliance upon the authority of said firm as experts in accounting
and auditing.
FEDERAL TAX STATUS
In the opinion of Chapman and Cutler, counsel for the Sponsor, under
existing law:
(1) Each Trust is not an association taxable as a corporation for
Federal income tax purposes and interest and accrued original issue
discount on Bonds which is excludable from gross income under the
Internal Revenue Code of 1986 (the "Code") will retain its status when
distributed to Unitholders, except to the extent such interest is
subject to the alternative minimum tax, an additional tax on branches
of foreign corporations and the environmental tax (the "Superfund
Tax"), as noted below;
(2) Each Unitholder is considered to be the owner of a pro rata portion
of the respective Trust under subpart E, subchapter J of chapter 1 of
the Code and will have a taxable event when such Trust disposes of a
Bond, or when the Unitholder redeems or sells his Units. Unitholders
must reduce the tax basis of their Units for their share of accrued
interest received by the respective Trust, if any, on Bonds delivered
after the Unitholders pay for their Units to the extent that such
interest accrued on such Bonds during the period from the Unitholder's
settlement date to the date such Bonds are delivered to the respective
Trust and, consequently, such Unitholders may have an increase in
taxable gain or reduction in capital loss upon the disposition of such
Units. Gain or loss upon the sale or redemption of Units is measured
by comparing the proceeds of such sale or redemption with the adjusted
basis of the Units. If the Trustee disposes of Bonds (whether by sale,
payment on maturity, redemption or otherwise), gain or loss is
recognized to the Unitholder. The amount of any such gain or loss is
measured by comparing the Unitholder's pro rata share of the total
proceeds from such disposition with the Unitholder's basis for his or
her fractional interest in the asset disposed of. In the case of a
Unitholder who purchases Units, such basis (before adjustment for
earned original issue discount and amortized bond premium, if any) is
determined by apportioning the cost of the Units among each of the
Trust assets ratably according to value as of the date of acquisition
of the Units. The tax cost reduction requirements of the Code relating
to amortization of bond premium may, under some circumstances, result
in the Unitholder realizing a taxable gain when his Units are sold or
redeemed for an amount equal to his original cost;
(3) Any proceeds paid under an insurance policy or policies dated the
Date of Deposit, issued to an Insured Trust by AMBAC Indemnity,
Financial Guaranty or a combination thereof with respect to the Bonds
which represent maturing interest on defaulted obligations held by the
Trustee will be excludable from Federal gross income if, and to the
same extent as, such interest would have been so excludable if paid by
the issuer of the defaulted obligations; and
(4) Any proceeds paid under individual policies obtained by issuers of
Bonds which represent maturing interest on defaulted obligations held
by the Trustee will be excludable from Federal gross income if, and to
the same extent as, such interest would have been excludable if paid
in the normal course by the issuer of the defaulted obligations.
Sections 1288 and 1272 of the Code provide a complex set of rules
governing the accrual of original issue discount. These rules provide that
original issue discount accrues either on the basis of a constant compound
interest
<PAGE>
Other Matters 65
rate or ratably over the term of the Bond, depending on the date the Bond was
issued. In addition, special rules apply if the purchase price of a Bond
exceeds the original issue price plus the amount of original issue discount
which would have previously accrued based upon its issue price (its "adjusted
issue price") to prior owners. The application of these rules will also vary
depending on the value of the Bond on the date a Unitholder acquires his Units
and the price the Unitholder pays for his Units. Investors with questions
regarding these Code sections should consult with their tax advisers.
"The Revenue Reconciliation Act of 1993" (the "Tax Act") subjects
tax-exempt bonds to the market discount rules of the Code effective for bonds
purchased after April 30, 1993. In general, market discount is the amount (if
any) by which the stated redemption price at maturity exceeds an investor's
purchase price (except to the extent that such difference, if any, is
attributable to original issue discount not yet accrued). Market discount can
arise based on the price a Trust pays for Bonds or the price a Unitholder pays
for his or her Units. Under the Tax Act, accretion of market discount is
taxable as ordinary income; under prior law the accretion had been treated as
capital gain. Market discount that accretes while a Trust holds a Bond would
be recognized as ordinary income by the Unitholders when principal payments
are received on the Bond, upon sale or at redemption (including early
redemption), or upon the sale or redemption of his or her Units, unless a
Unitholder elects to include market discount in taxable income as it accrues.
The market discount rules are complex and Unitholders should consult their tax
advisers regarding these rules and their application.
In the case of certain corporations, the alternative minimum tax and the
Superfund Tax for taxable years beginning after December 31, 1986 depends 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). "Adjusted current
earnings" includes all tax exempt interest, including interest on all of the
Bonds in the Fund. Unitholders are urged to consult their tax advisers with
respect to the particular tax consequences to them including the corporate
alternative minimum tax, the Superfund Tax and the branch profits tax imposed
by Section 884 of the Code.
Counsel for the Sponsor has also advised that under Section 265 of the
Code, interest on indebtedness incurred or continued to purchase or carry
Units of a Trust is not deductible for Federal income tax purposes. The
Internal Revenue Service has taken the position that such indebtedness need
not be directly traceable to the purchase or carrying of Units (however, these
rules generally do not apply to interest paid on indebtedness incurred to
purchase or improve a personal residence). Also, under Section 265 of the
Code, certain financial institutions that acquire Units would generally not be
able to deduct any of the interest expense attributable to ownership of such
Units. Investors with questions regarding this issue should consult with their
tax advisers.
In the case of certain of the Bonds in the Fund, the opinions of bond
counsel indicate that interest on such Bonds received by a "substantial user"
of the facilities being financed with the proceeds of these Bonds, or persons
related thereto, for periods while such Bonds are held by such a user or
related person, will not be excludible from Federal gross income, although
interest on such Bonds received by others would be excludible from Federal
gross income. "Substantial user" and "related person" are defined under U.S.
Treasury Regulations. Any person who believes that he or she may be a
"substantial user" or a "related person" as so defined should contact his or
her tax adviser.
In the opinion of Tanner Propp & Farber, special counsel to the Fund for
New York tax matters, under existing law, the Fund and each Trust are not
associations taxable as corporations and the income of each Trust will be
treated as the income of the Unitholders under the income tax laws of the
State and City of New York.
All statements of law in the Prospectus concerning exclusion from gross
income for Federal, state or other tax purposes are the opinions of counsel
and are to be so construed.
At the respective times of issuance of the Bonds, opinions relating to
the validity thereof and to the exclusion of interest thereon from Federal
gross income are rendered by bond counsel to the respective issuing
authorities. Neither the Sponsor nor Chapman and Cutler has made any special
review for the Fund of the proceedings relating to the issuance of the Bonds
or of the basis for such opinions.
<PAGE>
66 Other Matters
In the case of corporations, the alternative tax rate applicable to
long-term capital gains is 35%, effective for long-term capital gains realized
in taxable years beginning on or after January 1, 1993. For taxpayers other
than corporations, net capital gains are subject to a maximum marginal stated
tax rate of 28%. However, it should be noted that legislative proposals are
introduced from time to time that affect tax rates and could affect relative
differences at which ordinary income and capital gains are taxed. Under the
Code, taxpayers must disclose to the Internal Revenue Service the amount of
tax-exempt interest earned during the year.
Section 86 of the Code, in general, provides that 50% of Social Security
benefits are includible in gross income to the extent that the sum of
"modified adjusted gross income" plus 50% of the Social Security benefits
received exceeds a "base amount". The base amount is $25,000 for unmarried
taxpayers, $32,000 for married taxpayers filing a joint return and zero for
married taxpayers who do not live apart at all times during the taxable year
and who file separate returns. Modified adjusted gross income is adjusted
gross income determined without regard to certain otherwise allowable
deductions and exclusions from gross income and by including tax-exempt
interest. To the extent that Social Security benefits are includible in gross
income, they will be treated as any other item of gross income.
In addition, under the Tax Act, for taxable years beginning after
December 31, 1993, up to 85% 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 a discussion of the state tax status of income earned on Units of a
Trust, see "Tax Status" for the applicable Trust. Except as noted therein, the
exemption of interest on state and local obligations for Federal income tax
purposes discussed above does not necessarily result in exemption under the
income or other tax laws of any State or City. The laws of the several States
vary with respect to the taxation of such obligations.
<PAGE>
Other Matters 67
DESCRIPTION OF SECURITIES RATINGS*
STANDARD & POOR'S CORPORATION. A Standard & Poor's Corporation
("Standard & Poor's") corporate or municipal bond rating is a current
assessment of the creditworthiness of an obligor with respect to a specific
debt obligation. This assessment of creditworthiness may take into
consideration obligors such as guarantors, insurers or lessees.
The bond rating is not a recommendation to purchase or sell a security,
inasmuch as it does not comment as to market price.
The ratings are based on current information furnished to Standard &
Poor's by the issuer and obtained by Standard & Poor's from other sources it
considers reliable. The ratings may be changed, suspended or withdrawn as a
result of changes in, or unavailability of, such information.
The ratings are based, in varying degrees, on the following
considerations:
I. Likelihood of default--capacity and willingness of the obligor as to
the timely payment of interest and repayment of principal in accordance
with the terms of the obligation.
II. Nature of and provisions of the obligation.
III. Protection afforded by, and relative position of, the obligation in
the event of bankruptcy, reorganization or other arrangements under the
laws of bankruptcy and other laws affecting creditors' rights.
AAA--This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.
AA--Bonds rated AA also qualify as high-quality debt obligations.
Capacity to pay principal and interest is very strong, and in the majority of
instances they differ from AAA issues only in small degree.
A--Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions.
BBB--Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay interest and repay
principal for debt in this category than in higher rated categories.
Plus (+) or Minus (-): To provide more detailed indications of credit
quality, the ratings from "AA" to "BBB" may be modified by the addition of a
plus or minus sign to show relative standing within the major rating
categories.
Provisional Ratings: A provisional rating ("p") assumes the successful
completion of the project being financed by the issuance of the bonds being
rated and indicates that payment of debt service requirements is largely or
entirely dependent upon the successful and timely completion of the project.
This rating, however, while addressing credit quality subsequent to
completion, makes no comment on the likelihood of, or the risk of default upon
failure of, such completion. Accordingly, the investor should exercise his own
judgment with respect to such likelihood and risk.
MOODY'S INVESTORS SERVICE, INC. A brief description of the applicable
Moody's Investors Service, Inc. ("Moody's") rating symbols and their meanings
follows:
Aaa--Bonds which are rated Aaa are judged to be the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge". Interest payments are protected by a large, or by an
exceptionally stable, margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such issues.
With the occasional exception of oversupply in a few specific instances, the
safety of obligations of this class is so absolute that their market value is
affected solely by money market fluctuations.
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
*As published by the rating companies.
<PAGE>
68 Other Matters
Aaa securities. These Aa bonds are high grade, their market value virtually
immune to all but money market influences, with the occasional exception of
oversupply in a few specific instances.
A--Bonds which are rated A possess many favorable investment attributes
and are to be considered as higher medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may
be present which suggest a susceptibility to impairment sometime in the
future. The market value of A-rated bonds may be influenced to some degree by
credit circumstances during a sustained period of depressed business
conditions. During periods of normalcy, bonds of this quality frequently move
in parallel with Aaa and Aa obligations, with the occasional exception of
oversupply in a few specific instances.
Baa--Bonds which are rated Baa are considered as medium grade
obligations; i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well.
Moody's bond rating symbols may contain numerical modifiers of a generic
rating classification. The modifier 1 indicates that the bond ranks at the
high end of its category; the modifier 2 indicates a mid-range ranking; and
the modifier 3 indicates that the issue ranks in the lower end of its generic
rating category.
Con--Bonds for which the security depends upon the completion of some act
or the fulfillment of some condition are rated conditionally. These are bonds
secured by (a) earnings of projects under construction, (b) earnings of
projects unseasoned in operating experience, (c) rentals which begin when
facilities are completed, or (d) payments to which some other limiting
condition attaches. Parenthetical rating denotes probable credit stature upon
completion of construction or elimination of basis of condition.
<PAGE>
Other Matters 69
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors of Van Kampen Merritt Inc. and the Unitholders
of Insured Municipals Income Trust, 154th Insured Multi-Series (IM-IT,
IM-IT Intermediate, Colorado IM-IT, Connecticut IM-IT and Florida IM-IT
Trusts):
We have audited the accompanying statements of condition and the
related portfolios of Insured Municipals Income Trust, 154th Insured
Multi-Series (IM-IT, IM-IT Intermediate, Colorado IM-IT, Connecticut
IM-IT and Florida IM-IT Trusts) as of February 3, 1994. The statements
of condition and portfolios are the responsibility of the Sponsor. Our
responsibility is to express an opinion on such financial statements
based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included
confirmation of irrevocable letters of credit deposited to purchase
tax-exempt securities by correspondence with the Trustee. An audit also
includes assessing the accounting principles used and significant
estimates made by the Sponsor, as well as evaluating the overall
financial statement presentation. We believe our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Insured
Municipals Income Trust, 154th Insured Multi-Series (IM-IT, IM-IT
Intermediate, Colorado IM-IT, Connecticut IM-IT and Florida IM-IT
Trusts) as of February 3, 1994, in conformity with generally accepted
accounting principles.
Chicago, Illinois GRANT THORNTON
February 3, 1994
<PAGE>
70 Other Matters
<TABLE>
INSURED MUNICIPALS INCOME TRUST
154TH INSURED MULTI-SERIES
STATEMENTS OF CONDITION
AS OF THE DATE OF DEPOSIT: FEBRUARY 3, 1994
<CAPTION>
IM-IT
INTERMEDIATE COLORADO CONNECTICUT FLORIDA
INVESTMENT IN SECURITIES IM-IT TRUST IM-IT TRUST IM-IT TRUST IM-IT TRUST
<S> <C> <C> <C> <C> <C>
Contracts to purchase tax-exempt securities
<F1><F2><F4>.............................. $ 9,093,420 $ 4,963,663 $ 2,847,865 $ 2,887,174 $ 2,825,085
Accrued interest to the First Settlement
Date <F1><F4>............................. 58,088 20,864 30,530 19,082 11,362
Total.............................. $ 9,151,508 $ 4,984,527 $ 2,878,395 $ 2,906,256 $ 2,836,447
LIABILITY AND INTEREST OF UNITHOLDERS
Liability--
Accrued interest payable to Sponsor
<F1><F4>................................ $ -- $ -- $ 6,124 $ -- $ --
Interest of Unitholders--
Cost to investors <F3>................ 9,620,000 5,185,930 3,019,000 3,055,000 2,982,000
Less: Gross underwriting commission <F3>.. 468,492 201,403 146,729 148,744 145,553
Net interest to Unitholders
<F1><F3><F4>..................... 9,151,508 4,984,527 2,872,271 2,906,256 2,836,447
Total.............................. $ 9,151,508 $ 4,984,527 $ 2,878,395 $ 2,906,256 $ 2,836,447
<FN>
<F1> The aggregate value of the Securities listed under "Portfolio" for each
Trust herein, and their cost to such Trust are the same. The value of the
Securities is determined by Interactive Data Services, Inc. on the bases
set forth under "Unitholder Explanations--Public Offering--Offering
Price". The contracts to purchase tax-exempt Securities are
collateralized by irrevocable letters of credit which have been deposited
with the Trustee in and for the following amounts:
OFFERING ACCRUED
PRINCIPAL PRICE INTEREST TO
AMOUNT OF AMOUNT OF OF BONDS EXPECTED
LETTER OF BONDS UNDER UNDER DELIVERY
CREDIT CONTRACTS CONTRACTS DATES
IM-IT........................................... $ 9,153,978 $ 9,395,000 $ 9,093,420 $ 60,558
IM-IT Intermediate Trust........................ $ 4,985,411 $ 5,030,000 $ 4,963,663 $ 21,748
Colorado IM-IT Trust............................ $ 2,876,402 $ 2,900,000 $ 2,847,865 $ 28,537
Connecticut IM-IT Trust......................... $ 2,903,902 $ 2,970,000 $ 2,887,174 $ 16,728
Florida IM-IT Trust............................. $ 2,836,418 $ 2,950,000 $ 2,825,085 $ 11,333
<F2> Insurance coverage providing for timely payment, when due, of all
principal and interest on the Bonds in the Insured Trusts has been
obtained either by such Trusts, by a prior owner of the Bonds or by the
issuers of the Bonds involved. Such insurance does not guarantee the
market value of the Bonds or the value of the Units. The insurance
obtained by the Insured Trusts is effective only while Bonds thus insured
are held in such Trusts. Neither the bid nor offering prices of the
underlying Bonds or of the Units, absent situations in which bonds are in
default in payment of principal or interest or in significant risk of
such default, include value, if any, attributable to the insurance
obtained by such Trusts.
<F3> The aggregate public offering price (exclusive of interest) and the
aggregate sales charge are computed on the bases set forth under
"Unitholder Explanations--Public Offering--Offering Price" and "Trust
Administration--General-- Sponsor and Underwriter Profits" and assume all
single transactions involve less than 100 Units. For single transactions
involving 100 or more Units, the sales charge is reduced (see "Unitholder
Explanations--Public Offering--General") resulting in an equal reduction
in both the Cost to investors and the Gross underwriting commission while
the Net interest to Unitholders remains unchanged.
<F4> Accrued interest on the underlying Securities represents the interest
accrued as of the First Settlement Date from the later of the last
payment date on the Securities or the date of issuance thereof. The
Trustee may advance to the Trust a portion of the accrued interest on the
underlying Securities for distribution to the Sponsor as the Unitholder
of record as of the First Settlement Date. A portion of the accrued
interest ("Purchased Interest") on the underlying Securities, as
indicated under "Summary of Essential Financial Information", is payable
by investors and is included in the Public Offering Price. Purchased
Interest is the difference between Accrued interest to the First
Settlement Date and Accrued interest payable to Sponsor.
</TABLE>
<PAGE>
Other Matters 71
EQUIVALENT TAXABLE ESTIMATED CURRENT RETURN TABLES
As of the date of this prospectus, the following tables show the
approximate taxable estimated current returns for individuals that are
equivalent to tax-exempt estimated current returns under combined Federal and
State taxes (where applicable) using the published Federal and State tax rates
(where applicable) scheduled to be in effect in 1994. They incorporate
increased tax rates for higher income taxpayers that were included in the
Revenue Reconciliation Act of 1993. These tables illustrate approximately what
you would have to earn on taxable investments to equal the tax-exempt
estimated current return in your income tax bracket. For cases in which more
than one State bracket falls within a Federal bracket, the highest State
bracket is combined with the Federal bracket. The combined State and Federal
tax rates shown reflect the fact that State tax payments are currently
deductible for Federal tax purposes. The tables do not show the approximate
taxable estimated current returns for individuals that are subject to the
alternative minimum tax. The taxable equivalent estimated current returns may
be somewhat higher than the equivalent returns indicated in the following
tables for those individuals who have adjusted gross incomes in excess of
$111,800. The tables do not reflect the effect of limitations on itemized
deductions and the deduction for personal exemptions. They were designed to
phase out certain benefits of these deductions for higher income taxpayers.
These limitations, in effect, raise the marginal maximum Federal tax rate to
approximately 44 percent for taxpayers filing a joint return and entitled to
four personal exemptions and to approximately 41 percent for taxpayers filing
a single return entitled to only one personal exemption. These limitations are
subject to certain maximums, which depend on the number of exemptions claimed
and the total amount of the taxpayer's itemized deductions. For example, the
limitation on itemized deductions will not cause a taxpayer to lose more than
80% of his allowable itemized deductions, with certain exceptions. See "Other
Matters--Federal Tax Status" for a more detailed discussion of recent Federal
tax legislation, including a discussion of provisions affecting corporations.
<TABLE>
IM-IT
<CAPTION>
TAXABLE INCOME ($1,000'S) TAX-EXEMPT ESTIMATED CURRENT RETURN
SINGLE JOINT TAX
RETURN RETURN BRACKET 4 1/2% 5% 5 1/2% 6% 6 1/2% 7% 7 1/2%
EQUIVALENT TAXABLE ESTIMATED CURRENT RETURN
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0 - 22.80 $ 0 - 38.00 15% 5.29% 5.88% 6.47% 7.06% 7.65% 8.24% 8.82%
22.80 - 55.10 38.00 - 91.90 28 6.25 6.94 7.64 8.33 9.03 9.72 10.42
55.10 - 115.00 91.90 - 140.00 31 6.52 7.25 7.97 8.70 9.42 10.14 10.87
115.00 - 250.00 140.00 - 250.00 36 7.03 7.81 8.59 9.38 10.16 10.94 11.72
Over 250.00 Over 250.00 39.6 7.45 8.28 9.11 9.93 10.76 11.59 12.42
</TABLE>
<TABLE>
INTERMEDIATE
<CAPTION>
TAXABLE INCOME ($1,000'S) TAX-EXEMPT ESTIMATED CURRENT RETURN
SINGLE JOINT TAX
RETURN RETURN BRACKET 4% 4 1/2% 5% 5 1/2% 6% 6 1/2% 7%
EQUIVALENT TAXABLE ESTIMATED CURRENT RETURN
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0 - 22.80 $ 0 - 38.00 15% 4.71% 5.29% 5.88% 6.47% 7.06% 7.65% 8.24%
22.80 - 55.10 38.00 - 91.90 28 5.56 6.25 6.94 7.64 8.33 9.03 9.72
55.10 - 115.00 91.90 - 140.00 31 5.80 6.52 7.25 7.97 8.70 9.42 10.14
115.00 - 250.00 140.00 - 250.00 36 6.25 7.03 7.81 8.59 9.38 10.16 10.94
Over 250.00 Over 250.00 39.6 6.62 7.45 8.28 9.11 9.93 10.76 11.59
</TABLE>
<TABLE>
COLORADO
<CAPTION>
TAXABLE INCOME ($1,000'S) TAX-EXEMPT ESTIMATED CURRENT RETURN
SINGLE JOINT TAX
RETURN RETURN BRACKET 4 1/2% 5% 5 1/2% 6% 6 1/2% 7% 7 1/2%
EQUIVALENT TAXABLE ESTIMATED CURRENT RETURN
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0 - 22.80 $ 0 - 38.00 19.3% 5.58% 6.20% 6.82% 7.43% 8.05% 8.67% 9.29%
22.80 - 55.10 38.00 - 91.90 31.6 6.58 7.31 8.04 8.77 9.50 10.23 10.96
55.10 - 115.00 91.90 - 140.00 34.5 6.87 7.63 8.40 9.16 9.92 10.69 11.45
115.00 - 250.00 140.00 - 250.00 39.2 7.40 8.22 9.05 9.87 10.69 11.51 12.34
Over 250.00 Over 250.00 42.6 7.84 8.71 9.58 10.45 11.32 12.20 13.07
</TABLE>
<PAGE>
72 Other Matters
<TABLE>
CONNECTICUT
<CAPTION>
TAXABLE INCOME ($1,000'S) TAX-EXEMPT ESTIMATED CURRENT RETURN
SINGLE JOINT TAX
RETURN RETURN BRACKET* 4 1/2% 5% 5 1/2% 6% 6 1/2% 7% 7 1/2%
EQUIVALENT TAXABLE ESTIMATED CURRENT RETURN
$ 0 - 38.00 17.5% 5.45% 6.06% 6.67% 7.27% 7.88% 8.48% 9.09%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0 - 22.80 18.3 5.51 6.12 6.73 7.34 7.96 8.57 9.18
22.80 - 55.10 38.00 - 91.90 30.8 6.50 7.23 7.95 8.67 9.39 10.12 10.84
55.10 - 115.00 91.90 - 140.00 34.1 6.83 7.59 8.35 9.10 9.86 10.62 11.38
115.00 - 250.00 140.00 - 250.00 38.9 7.36 8.18 9.00 9.82 10.64 11.46 12.27
Over 250.00 Over 250.00 42.3 7.80 8.67 9.53 10.40 11.27 12.13 13.00
</TABLE>
*The table takes into account the Connecticut income tax. The Connecticut
income tax is based on Connecticut taxable income, which is not
tied to Federal taxable income. Connecticut taxable income is equal to
Connecticut adjusted gross income ("CAGI") (which is Federal adjusted gross
income with certain modifications) minus the allowable personal exemption
($12,000 in the case of single individuals; $24,000 for married persons filing
jointly). Although not reflected in the table, the Connecticut income tax
provides for a personal exemption phase-out, which essentially doubles the
effective marginal Connecticut income tax rate for single taxpayers whose CAGI
is between $24,000 and $35,001 at which point the personal exemption is
completely phased out. For married taxpayers filing a joint return, the
effective marginal Connecticut income tax rate is doubled where CAGI is
between $48,000 and $71,001, at which point the personal exemption is
completely phased out. In addition, as reflected in the rates shown, the
Connecticut income tax provides for a tax credit (at varying percentages
depending on the taxpayer's CAGI) against the income tax which is based on
CAGI and, in effect, varies the income tax rate for taxpayers. Investors
should consult their own tax advisors regarding the effect of the credit on
marginal tax rates at specific CAGI levels.
<TABLE>
FLORIDA
<CAPTION>
TAXABLE INCOME ($1,000'S) TAX-EXEMPT ESTIMATED CURRENT RETURN
SINGLE JOINT TAX
RETURN RETURN BRACKET* 4 1/2% 5% 5 1/2% 6% 6 1/2% 7% 7 1/2%
EQUIVALENT TAXABLE ESTIMATED CURRENT RETURN
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0 - 22.80 $ 0 - 38.00 15% 5.29% 5.88% 6.47% 7.06% 7.65% 8.24% 8.82%
22.80 - 55.10 38.00 - 91.90 28 6.25 6.94 7.64 8.33 9.03 9.72 10.42
55.10 - 115.00 91.90 - 140.00 31 6.52 7.25 7.97 8.70 9.42 10.14 10.87
115.00 - 250.00 140.00 - 250.00 36 7.03 7.81 8.59 9.38 10.16 10.94 11.72
Over 250.00 Over 250.00 39.6 7.45 8.28 9.11 9.93 10.76 11.59 12.42
</TABLE>
*The State of Florida imposes no income tax on individuals; accordingly, the
table reflects only exemption from Federal income taxes. The table does not
reflect the exemption of Units of the Florida IM-IT Trust from the State's
intangible tax; accordingly, Florida residents subject to such tax would need
a somewhat higher taxable estimated current return than those shown to equal
the tax-exempt estimated current return of the Florida IM-IT Trust.
A comparison of tax-free and equivalent taxable estimated current returns
with the returns on various taxable investments is one element to consider in
making an investment decision. The Sponsor may from time to time in its
advertising and sales materials compare the then current estimated returns on
the Trusts and returns over specified periods on other similar Van Kampen
Merritt sponsored unit investment trusts with returns on taxable investments
such as corporate or U.S. Government bonds, bank CDs and money market accounts
or money market funds, each of which has investment characteristics that may
differ from those of the Trusts. U.S. Government bonds, for example, are
backed by the full faith and credit of the U.S. Government and bank CDs and
money market accounts are insured by an agency of the federal government.
Money market accounts and money market funds provide stability of principal,
but pay interest at rates that vary with the condition of the short-term debt
market. The investment characteristics of the Trusts are described more fully
elsewhere in this Prospectus.
<PAGE>
Other Matters 73
ESTIMATED CASH FLOWS TO UNITHOLDERS
The tables below set forth the per Unit estimated distributions of
interest, principal and rebates of Purchased Interest to Unitholders. The
tables assume no changes in expenses, no changes in the current interest
rates, no exchanges, redemptions, sales or prepayments of the underlying
Securities prior to maturity or expected retirement date and the receipt of
principal upon maturity or expected retirement date. To the extent the
foregoing assumptions change actual distributions will vary.
<TABLE>
IM-IT
MONTHLY
<CAPTION>
ESTIMATED
ESTIMATED ESTIMATED PURCHASED ESTIMATED
DISTRIBUTION DATES INTEREST PRINCIPAL INTEREST TOTAL
(EACH MONTH) DISTRIBUTION DISTRIBUTION REBATE DISTRIBUTION
<S> <C> <C> <C> <C> <C> <C>
March 1994 2.88 2.88
April 1994 - December 2002 4.11 4.11
January 2003 4.11 $103.95 $.67 108.73
February 2003 - December 2004 3.64 3.64
January 2005 3.64 155.92 1.04 160.60
February 2005 - August 2005 2.92 2.92
September 2005 2.66 110.19 .71 113.56
October 2005 - December 2005 2.43 2.43
January 2006 2.43 67.56 .45 70.44
February 2006 2.12 104.99 .71 107.82
March 2006 - August 2006 1.64 1.64
September 2006 1.52 51.98 .33 53.83
October 2006 - December 2017 1.42 1.42
January 2018 1.42 36.38 .23 38.03
February 2018 - December 2019 1.26 1.26
January 2020 1.26 103.95 .63 105.84
February 2020 - April 2020 .83 .83
May 2020 .83 33.79 34.62
June 2020 - May 2023 .83 .83
June 2023 .61 103.95 .61 105.17
July 2023 - August 2023 .41 .41
September 2023 .17 103.95 .66 104.78
</TABLE>
<PAGE>
74 Other Matters
<TABLE>
IM-IT INTERMEDIATE TRUST
MONTHLY
<CAPTION>
ESTIMATED
ESTIMATED ESTIMATED PURCHASED ESTIMATED
DISTRIBUTION DATES INTEREST PRINCIPAL INTEREST TOTAL
(EACH MONTH) DISTRIBUTION DISTRIBUTION REBATE DISTRIBUTION
<S> <C> <C> <C> <C> <C> <C>
March 1994 $ 2.50 $ 2.50
April 1994 - June 2003 3.57 3.57
July 2003 3.25 $319.08 $ 1.43 323.76
August 2003 - September 2003 2.32 2.32
October 2003 2.32 99.40 .41 102.13
November 2003 1.96 54.68 .23 56.87
December 2003 1.76 1.76
January 2004 1.76 159.04 .68 161.48
February 2004 - July 2004 1.16 1.16
August 2004 1.16 49.70 50.86
September 2004 .86 149.11 .66 150.63
October 2004 - November 2004 .59 .59
December 2004 .29 149.10 .65 150.04
January 2005 .02 19.89 .09 20.00
</TABLE>
<PAGE>
Other Matters 75
<TABLE>
COLORADO IM-IT TRUST
MONTHLY
<CAPTION>
ESTIMATED
ESTIMATED ESTIMATED PURCHASED ESTIMATED
DISTRIBUTION DATES INTEREST PRINCIPAL INTEREST TOTAL
(EACH MONTH) DISTRIBUTION DISTRIBUTION REBATE DISTRIBUTION
<S> <C> <C> <C> <C> <C> <C>
March 1994 $ 2.70 $ 2.70
April 1994 - December 2002 3.86 3.86
January 2003 3.64 $ 83.63 $.83 88.10
February 2003 - March 2004 3.45 3.45
April 2004 3.45 165.62 1.62 170.69
May 2004 - May 2005 2.66 2.66
June 2005 2.45 82.81 .82 86.08
July 2005 - August 2005 2.26 2.26
September 2005 2.08 82.81 .71 85.60
October 2005 - March 2012 1.91 1.91
April 2012 1.91 165.62 1.31 168.84
May 2012 - November 2015 1.28 1.28
December 2015 1.28 49.68 50.96
January 2016 - November 2023 1.28 1.28
December 2023 .92 331.24 2.79 334.95
</TABLE>
<PAGE>
76 Other Matters
<TABLE>
CONNECTICUT IM-IT TRUST
MONTHLY
<CAPTION>
ESTIMATED
ESTIMATED ESTIMATED PURCHASED ESTIMATED
DISTRIBUTION DATES INTEREST PRINCIPAL INTEREST TOTAL
(EACH MONTH) DISTRIBUTION DISTRIBUTION REBATE DISTRIBUTION
<S> <C> <C> <C> <C> <C> <C>
March 1994 $ 2.69 $ 2.69
April 1994 - June 2002 3.85 3.85
July 2002 3.85 $ 99.67 $.74 104.26
August 2002 - May 2005 3.38 3.38
June 2005 2.99 163.66 1.18 167.83
July 2005 2.65 130.94 .88 134.47
August 2005 - January 2011 2.10 2.10
February 2011 2.10 114.56 .71 117.37
March 2011 - May 2012 1.65 1.65
June 2012 1.65 39.28 40.93
July 2012 - January 2013 1.66 1.66
February 2013 1.66 49.10 .32 51.08
March 2013 - January 2014 1.46 1.46
February 2014 1.46 49.10 .32 50.88
March 2014 - June 2022 1.27 1.27
July 2022 1.27 163.67 1.05 165.99
August 2022 - June 2023 .60 .60
July 2023 .60 163.66 1.05 165.31
</TABLE>
<PAGE>
Other Matters 77
<TABLE>
FLORIDA IM-IT TRUST
MONTHLY
<CAPTION>
ESTIMATED
ESTIMATED ESTIMATED PURCHASED ESTIMATED
DISTRIBUTION DATES INTEREST PRINCIPAL INTEREST TOTAL
(EACH MONTH) DISTRIBUTION DISTRIBUTION REBATE DISTRIBUTION
<S> <C> <C> <C> <C> <C> <C>
March 1994 $ 2.75 $ 2.75
April 1994 - September 2006 3.93 3.93
October 2006 3.93 $167.67 $.69 172.29
November 2006 - December 2017 3.19 3.19
January 2018 3.19 83.83 .32 87.34
February 2018 - May 2018 2.86 2.86
June 2018 2.86 31.86 34.72
July 2018 - August 2020 2.86 2.86
September 2020 2.49 167.67 .66 170.82
October 2020 - June 2021 2.17 2.17
July 2021 2.17 57.01 .23 59.41
August 2021 - September 2022 1.92 1.92
October 2022 1.92 251.51 .98 254.41
November 2022 - May 2023 .90 .90
June 2023 .90 167.68 .68 169.26
July 2023 - September 2023 .19 .19
October 2023 .19 62.03 .24 62.46
</TABLE>
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
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
Fund, the Sponsor or the Underwriters. 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.
Title Page
INTRODUCTION..................................... 2
SUMMARY OF ESSENTIAL FINANCIAL INFORMATION....... 3
UNITHOLDER EXPLANATIONS.......................... 7
Settlement of Bonds in the Trusts............... 7
The Fund...................................... 7
Objectives and Securities Selection........... 8
Portfolio Concentrations...................... 9
Replacement Bonds............................. 12
Bond Redemptions.............................. 13
Distributions................................. 14
Certificates.................................. 14
Estimated Current Returns and Estimated
Long-Term Returns............................. 14
Interest Earning Schedule....................... 15
Calculation of Estimated Net Annual Interest
Income...................................... 15
Purchased and Accrued Interest.................. 15
Purchased Interest............................ 15
Accrued Interest.............................. 15
Public Offering................................. 16
General....................................... 16
Offering Price................................ 17
Market for Units.............................. 18
Distributions of Interest and Principal....... 19
Reinvestment Option........................... 19
Redemption of Units........................... 20
Reports Provided.............................. 21
Insurance on the Bonds in the Insured Trusts.... 22
IM-IT............................................ 30
IM-IT INTERMEDIATE TRUST......................... 32
COLORADO IM-IT TRUST............................. 34
CONNECTICUT IM-IT TRUST.......................... 39
FLORIDA IM-IT TRUST.............................. 44
NOTES TO PORTFOLIOS.............................. 50
UNDERWRITING..................................... 52
TRUST ADMINISTRATION............................. 55
Fund Administration and Expenses................ 55
Sponsor....................................... 55
Compensation of Sponsor and Evaluator......... 58
Trustee....................................... 58
Trustee's Fee................................. 59
Portfolio Administration...................... 59
Sponsor Purchases of Units.................... 60
Insurance Premiums............................ 60
Miscellaneous Expenses........................ 60
General......................................... 60
Amendment or Termination...................... 60
Limitation on Liabilities..................... 61
Unit Distribution............................. 62
Sponsor and Underwriter Compensation.......... 62
OTHER MATTERS.................................... 64
Legal Opinions.................................. 64
Independent Certified Public Accountants........ 64
FEDERAL TAX STATUS............................... 64
DESCRIPTION OF SECURITIES RATINGS................ 67
REPORT OF INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS..................................... 68
STATEMENTS OF CONDITION.......................... 69
EQUIVALENT TAXABLE ESTIMATED CURRENT RETURN
TABLES.......................................... 70
ESTIMATED CASH FLOWS TO UNITHOLDERS.............. 72
This Prospectus contains information concerning the Fund and the Sponsor, but
does not contain all of the information set forth in the registration
statements and exhibits relating thereto, which the fund 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.
(R) denotes a registered trademark of Van Kampen Merritt Inc.
P R O S P E C T U S
February 3, 1994
LOGO
INSURED MUNICIPALS INCOME TRUST, 154TH INSURED MULTI-SERIES
IM-IT 316
IM-IT 76th Intermediate
Colorado IM-IT 67
Connecticut IM-IT 23
Florida IM-IT 76
LOGO
<PAGE>
One Parkview Plaza (R)
Oakbrook Terrace, Illinois 60181
Mellon Bank Center
1735 Market Street, Suite 1300
Philadelphia, Pennsylvania 19103
Please retain this Prospectus for future reference.
<PAGE>
Contents of Registration Statement
This Amendment of Registration Statement comprises the following
papers and documents:
The facing sheet
The Cross-Reference sheet
The Prospectus
The signatures
The consents of independent public accountants, ratings
services and legal counsel
The following exhibits:
1.1 Copy of Trust Agreement.
1.4 Copy of Municipal Bond Fund Portfolio Insurance Policies issued by
AMBAC Indemnity Corporation and/or Financial Guaranty Insurance
Company for any Trust.
1.5 Copy of Agreement Among Underwriters.
3.1 Opinion and consent of counsel as to legality of securities being
registered.
3.2 Opinion of counsel as to Federal, Colorado and Florida income tax
status of securities being registered.
3.3 Opinion and consent of counsel as to income tax status of the Fund
under New York law.
3.4 Opinion and consent of counsel as to income tax status to
Connecticut residents of Units of the Connecticut IM-IT Trust.
4.1 Consent of Interactive Data Services, Inc.
4.2 Consent of Standard & Poor's Corporation.
4.3 Consent of Grant Thornton.
Signatures
The Registrant, Insured Municipals Income Trust, 154th Insured Multi-
Series hereby identifies Insured Municipals Income Trust, 77th Insured
Multi-Series and Insured Municipals Income Trust and Investors' Quality
Tax-Exempt Trust, Multi-Series 189 for purposes of the representations
required by Rule 487 and represents the following: (1) that the
portfolio securities deposited in the series as to the securities of
which this Registration Statement is being filed do not differ materially
in type or quality from those deposited in such previous series; (2)
that, except to the extent necessary to identify the specific portfolio
securities deposited in, and to provide essential financial information
for, the series with respect to the securities of which this Registration
Statement is being filed, this Registration Statement does not contain
disclosures that differ in any material respect from those contained in
the registration statements for such previous series as to which the
effective date was determined by the Commission or the staff; and (3)
that it has complied with Rule 460 under the Securities Act of 1933.
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Insured Municipals Income Trust, 154th Insured Multi-Series
has duly caused this Amendment to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City
of Chicago and State of Illinois on the 3rd day of February, 1994.
Insured Municipals Income Trust
154th Insured Multi-Series
By Van Kampen Merritt Inc.
By Sandra A. Waterworth
Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below by the
following persons in the capacities indicated and on February 3, 1994.
Signature Title
John C. Merritt Chairman, Chief Executive )
Officer and Director )
William R. Rybak Senior Vice President and )
Chief Financial Officer )
Ronald A. Nyberg Director )
William R. Molinari Director )
Sandra A. Waterworth
(Attorney-in-fact*)
*An executed copy of each of the related powers of attorney was
filed with the Securities and Exchange Commission in connection with
the Registration Statement on Form S-6 of Insured Municipals Income
Trust and Investors' Quality Tax-Exempt Trust, Multi-Series 203
(File No. 33-65744) and the same are hereby incorporated herein by
this reference.
Exhibit 1.1
--
Insured Municipals Income Trust
154th Insured Multi-Series
Trust Agreement
Dated: February 3, 1994
This Trust Agreement between Van Kampen Merritt Inc., as Depositor,
American Portfolio Evaluation Services, a division of Van Kampen Merritt
Investment Advisory Corp., as Evaluator, and The Bank of New York, as
Trustee, sets forth certain provisions in full and incorporates other
provisions by reference to the document entitled "Insured Municipals
Income Trust, Standard Terms and Conditions of Trust, Effective July 29,
1987 for 36th Insured Multi-Series and Subsequent Series" (herein called
the "Standard Terms and Conditions of Trust"), and such provisions as are
set forth in full and such provisions as are incorporated by reference
constitute a single instrument. All references herein to Articles and
Sections are to Articles and Sections of the Standard Terms and
Conditions of Trust.
Witnesseth That:
In consideration of the premises and of the mutual agreements herein
contained, the Depositor and the Trustee agree as follows:
Part I
Standard Terms and Conditions of Trust
Subject to the provisions of Part II hereof, all the provisions
contained in the Standard Terms and Conditions of Trust are herein
incorporated by reference in their entirety and shall be deemed to be a
part of this instrument as fully and to the same extent as though said
provisions had been set forth in full in this instrument.
Part II
Special Terms and Conditions of Trust
The following special terms and conditions are hereby agreed to:
(a) The Bonds defined in Section 1.01(4) listed in the
Schedules hereto have been deposited in the Trusts under this Trust
Agreement.
(b) The fractional undivided interest in and ownership of the
various Trusts represented by each Unit thereof is the amount set
forth under "Summary of Essential Financial Information-Fractional
Undivided Interest in the Trust per Unit" in the Prospectus.
(c) The approximate amounts, if any, which the Trustee shall
be required to advance out of its own funds and cause to be paid to
the Depositor pursuant to Section 3.05 shall be the amount per Unit
that the Trustee agreed to reduce its fee or pay Trust expenses set
forth in the footnotes to the "Per Unit Information" for each Trust
in the Prospectus times the number of units in such Trust referred
to in Part II (b) of this Trust Agreement.
(d) The First General Record Date and the amount of the second
distribution of funds from the Interest Account of each Trust shall
be the record date for the Interest Account and the amount set forth
under "Interest Earning Schedule" in the Prospectus.
(e) The First Settlement Date shall be the date set forth
under "Summary of Essential Financial Information - First Settlement
Date" in the Prospectus.
(f) Any monies held to purchase "when-issued" bonds will be
held in noninterest bearing accounts.
(g) The Evaluation Time for purpose of sale, purchase or
redemption of Units shall be 4:00 P.M. Eastern Time.
(h) The face of the form of the Certificates will be
substantially as follows:
No.__________ Certificate of Ownership ___________ Units
--Evidencing--
An Undivided Interest
--In--
This is to certify that _____________ is the owner and registered
holder of this Certificate evidencing the ownership of ___________ units
of fractional undivided interest in the above-named Trust created
pursuant to the Indenture, a copy of which is available at the office of
the Trustee. This Certificate is issued under and is subject to the
terms, provisions and conditions of the Indenture to which the Holder of
this Certificate by virtue of the acceptance hereof assents and is bound,
a summary of which Indenture is contained in the Prospectus relating to
the Trust. This Certificate is transferable and interchangeable by the
registered owner in person or by his duly authorized attorney at the
Trustee's office upon surrender of this Certificate properly endorsed or
accompanied by a written instrument of transfer and any other documents
that the Trustee may require for transfer, in form satisfactory to the
Trustee and payment of the fees and expenses provided in the Indenture.
Witness the facsimile signature of a duly authorized officer of the
Sponsor and the manual signature of an authorized signatory of the
Trustee.
Dated:
Van Kampen Merritt Inc. The Bank of New York
Depositor Trustee
By _______________________________ By _______________________________
Chairman Authorized Signatory
(i) Section 8.02(d) and (e) of the Standard Terms and
Conditions of Trust are hereby stricken and replaced by the
following:
(d) distribution to each Certificateholder of such Trust
such holder's pro rata share of the balance of the Interest
Account of such Trust;
(e) distribution to each Certificateholder of such Trust
such holder's pro rata share of the balance of the Principal
Account of such Trust; and
In Witness Whereof, Van Kampen Merritt Inc. has caused this
Trust Agreement to be executed by one of its Vice Presidents or
Assistant Vice Presidents and its corporate seal to be hereto
affixed and attested by its Secretary or one of its Vice Presidents
or Assistant Secretaries, American Portfolio Evaluation Services, a
division of Van Kampen Merritt Investment Advisory Corp., has caused
this Trust Indenture and Agreement to be executed by its President
or one of its Vice Presidents and its corporate seal to be hereto
affixed and attested to by its Secretary, its Assistant Secretary or
one of its Assistant Vice Presidents and The Bank of New York, has
caused this Trust Agreement to be executed by one of its Vice
Presidents and its corporate seal to be hereto affixed and attested
to by one of its Vice Presidents, Assistant Vice Presidents or
Assistant Treasurers; all as of the day, month and year first above
written.
Van Kampen Merritt Inc.
By Sandra A. Waterworth
Vice President
(Seal)
Attest:
By Gina M. Scumaci
Assistant Secretary
American Portfolio Evaluation
Services, a division of Van Kampen
Merritt Investment Advisory Corp.
By Dennis J. Mcdonnell
President
(Seal)
Attest:
By Scott E. Martin
Secretary
The Bank Of New York
By Jeffrey Bieselin
Vice President
(Seal)
Attest:
By Norbert Loney
Assistant Treasurer
Schedules To Trust Agreement
Securities Initially Deposited
In
Insured Municipals Income Trust, 154th Insured Multi-Series
(Note: Incorporated herein and made a part hereof as indicated below are
the corresponding "Portfolios" of each of the Trusts as set forth in
the Prospectus.)
Exhibit 1.4
--
AMBAC
AMBAC Indemnity Corporation
c/o CT Corporation Systems
Municipal Bond Investment 44 East Mifflin Street
Trust Insurance Policy Madison, Wisconsin 53703
Administrative Office:
One State Street Plaza
New York, New York 10004
AMBAC Indemnity Corporation (AMBAC) A Wisconsin Stock Insurance Company
Agrees to Guarantee
Insured Municipals Income Trust, 154th Insured Multi-Series
(Insured Municipals Income Trust, Series 316)
to Van Kampen Merritt Inc.
("Investment Trust") the insured, the payment of that portion of the
principal of and interest on each of the Bonds which shall be due during
the Policy Period but is unpaid by reason of Nonpayment by the Issuer, in
consideration of the insurance premium paid and subject to the terms and
conditions contained herein or added hereto.
Policy No. FE013143
Policy Date: February 3, 1994
Trustee: The Bank of New York
101 Barclay Street, 17flW
New York, New York 10286
In Witness Whereof, the Insurer has caused this Policy to be affixed
with a facsimile of its corporate seal and to be signed by its duly
authorized officers in facsimile to become effective as its original seal
and signatures and binding upon the Insurer by virtue of the
countersignature of its duly authorized representative.
P. Lassiter
President@AMBAC Indemnity Corporation
Stephen D. Cooke
Secretary
/w/ Catherine J. Freehill
Authorized Representative@
AMBAC AMBAC Indemnity Corporation
c/o CT Corporation Systems
Schedule of Bonds 44 East Mifflin Street
(a part of the Application and Policy) Madison, Wisconsin 53703
Administrative Office:
One State Street Plaza
New York, New York 10004
Insured Municipals Income Trust, 154th Insured Multi-Series
(Insured Municipals Income Trust, Series 316)
Date of Application: February 3, 1994
<TABLE>
<CAPTION>
Item Par Full Name Purpose of Intere Date Maturi Annual Initial
No. Value of Issuer Bonds st of ty Premium Annual
Rate Bonds Date Rate Premium
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1. $1,010M Maine State Mortgage Purchase Revenue 5.700% 01/15/ 11/15/ .1600% $1,616.00
Authority. Bonds, Series 1994A 94 26
(SMIP Option Premium
Rate: .80%
</TABLE>
* Premium attributable to the original insured amount of each Item of Bonds.
AMBAC
AMBAC Indemnity Corporation
c/o CT Corporation Systems
Municipal Bond Investment 44 East Mifflin Street
Trust Insurance Policy Madison, Wisconsin 53703
Administrative Office:
One State Street Plaza
New York, New York 10004
AMBAC Indemnity Corporation (AMBAC) A Wisconsin Stock Insurance Company
Agrees to Guarantee
Insured Municipals Income Trust, 154th Insured Multi-Series
(Connecticut Insured Municipals Income Trust, Series 23)
to Van Kampen Merritt Inc.
("Investment Trust") the insured, the payment of that portion of the
principal of and interest on each of the Bonds which shall be due during
the Policy Period but is unpaid by reason of Nonpayment by the Issuer, in
consideration of the insurance premium paid and subject to the terms and
conditions contained herein or added hereto.
Policy No. FE013161
Policy Date: February 3, 1994
Trustee: The Bank of New York
101 Barclay Street, 17flW
New York, New York 10286
In Witness Whereof, the Insurer has caused this Policy to be affixed
with a facsimile of its corporate seal and to be signed by its duly
authorized officers in facsimile to become effective as its original seal
and signatures and binding upon the Insurer by virtue of the
countersignature of its duly authorized representative.
P. Lassiter
President@AMBAC Indemnity Corporation
Stephen D. Cooke
Secretary
/w/ Catherine J. Freehill
Authorized Representative@
<TABLE>
AMBAC AMBAC Indemnity Corporation
c/o CT Corporation Systems
Schedule of Bonds 44 East Mifflin Street
(a part of the Application and Policy) Madison, Wisconsin 53703
Administrative Office:
One State Street Plaza
New York, New York 10004
Insured Municipals Income Trust, 154th Insured Multi-Series
(Connecticut Insured Municipals Income Trust, Series 23)
Date of Application: February 3, 1994
<CAPTION>
Item Par Full Name Purpose of Intere Date Maturi Annual Initial
No. Value of Issuer Bonds st of ty Premium Annual
Rate Bonds Date Rate Premium
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1. $120M State of General Obligation Capital 0.000% 15/14/ 15/15/ .1000% $ 120.00
Connecticut Appreciation Bonds (College 92 12
Savings Plan, Series 1992A
(SMIP Option Premium
Rate: .60%)
2. $150M Town of North General Obligation Bonds 5.000% 02/01/ 02/01/ .1100% $ 165.00
Branford Series 1994 94 14
Connecticut (SMIP Option Premium
Rate: .62%)
3. $150M Town of North General Obligation Bonds 5.000% 02/01/ 02/01/ .1100% $ 165.00
Branford Series 1994 94 13
Connecticut (SMIP Option Premium
Rate: .62%)
4. $500M Connecticut Housing Mortgage Finance 5.600% 11/15/ 05/15/ .1700% $ 850.00
State Housing Program Revenue Bonds, 93 19
Finance Series 1993F-1 (SMIP
Authority Option Premium Rate:
.85%)
</TABLE>
* Premium attributable to the original insured amount of each Item of Bonds.
AMBAC
AMBAC Indemnity Corporation
c/o CT Corporation Systems
Municipal Bond Investment 44 East Mifflin Street
Trust Insurance Policy Madison, Wisconsin 53703
Administrative Office:
One State Street Plaza
New York, New York 10004
AMBAC Indemnity Corporation (AMBAC) A Wisconsin Stock Insurance Company
Agrees to Guarantee
Insured Municipals Income Trust, 154th Insured Multi-Series
(Colorado Insured Municipals Income Trust, Series 67)
to Van Kampen Merritt Inc.
("Investment Trust") the insured, the payment of that portion of the
principal of and interest on each of the Bonds which shall be due during
the Policy Period but is unpaid by reason of Nonpayment by the Issuer, in
consideration of the insurance premium paid and subject to the terms and
conditions contained herein or added hereto.
Policy No. FE013152
Policy Date: February 3, 1994
Trustee: The Bank of New York
101 Barclay Street, 17flW
New York, New York 10286
In Witness Whereof, the Insurer has caused this Policy to be affixed
with a facsimile of its corporate seal and to be signed by its duly
authorized officers in facsimile to become effective as its original seal
and signatures and binding upon the Insurer by virtue of the
countersignature of its duly authorized representative.
P. Lassiter
President@AMBAC Indemnity Corporation
Stephen D. Cooke
Secretary
/w/ Catherine J. Freehill
Authorized Representative@
1. Definitions
(a) "Policy" is this policy of insurance and all applications and
schedules for Municipal Bond Investment Trust Insurance relating hereto,
all of which are hereby incorporated by reference herein.
(b) "Bonds" are the specific securities covered by this Policy and
are identified and described in the Schedule attached hereto and hereby
made a part hereof.
(c) "Issuer" is each respective issuer, identified in the Schedule,
of the Bonds.
(d) "Investment Trust" is the entity represented to have an
insurable interest in the Bonds insured under this Policy, identified on
the face of this Policy.
(e) "Trustee" is the Trustee of the Investment Trust, or any
successor Trustee thereto or Co-Trustee therewith.
(f) "Sponsor" is the firm or entity responsible for creating the
Investment Trust and thereafter performing the services to it required of
its sponsor, or any successor Sponsor thereof or Co-Sponsor therewith.
(g) "Insured Instrument" is any instrument evidencing all or any
part of the principal or of interest on a Bond which is Due for Payment.
(h) "Policy Period" is the period during which this Policy of
insurance is effective. The Policy Period commences at 12:01 A.M.
(i) "Premium Installment Period" is the period for which
installments of the annual insurance premium are payable monthly,
quarterly or semiannually, as determined initially for the Investment
Trust.
(j) "Nonpayment" is the failure of an Issuer to provide sufficient
funds to the payment agent for payment in full of all principal and
interest on a Bond which is Due for Payment.
(k) "Due for Payment," when referring to principal of a Bond (or
Insured Instrument evidencing such principal), is when the stated
maturity date has been reached, and does not refer to any earlier date on
which payment is due by reason of call for redemption, acceleration or
other advancement of maturity; and when referring to interest on a Bond
(or Insured Instrument evidencing such interest), is when the stated date
for payment has been reached.
(l) "Bond Proceedings" are the legal proceedings by which each of
the Bonds has been authorized, issued or secured, including the governing
statutes, the pertinent resolutions and ordinances of the Issuer, and any
trust indenture, mortgage, lease agreement or other contract relating to
the Bond or its security.
2. Noncancellability and Termination-Refunds of Premium
This Policy cannot be cancelled by AMBAC. The insurance provided by
this Policy shall remain in force throughout the Policy period. This
Policy provides for payment to the Trustee as a result of Nonpayment of
the Bonds. In the event the Trustee sells any of the Bonds, then this
Policy shall be terminated as to any such Bond on the date of said sale,
and AMBAC shall not have any liability under t his Policy on account of
Nonpayment of any such Bond occurring thereafter. This Policy shall be
terminated as to any Bond which AMBAC has been notified by the Sponsor or
by the Trustee has been redeemed from or sold by the Investment Trust, or
was not deposited by the Sponsor, or the contract to purchase which has
failed, on the date such notice is received by AMBAC, and AMBAC shall not
have any liability under this Policy on account of Nonpayment of any such
Bond occurring thereafter. When AMBAC is notified by the Trustee or the
Sponsor that any of the Bonds have been redeemed or sold from the
Investment Trust, or were not deposited into it, or a contract to
purchase any such Bonds has failed, a refund of any prepaid premium
thereof shall be made to the Investment Trust or the Sponsor, as the case
may be. Such notification to AMBAC must specify the amount of Bonds
affected, identify each by its Item Number in an Application identified
by its date and designate the date of such disposal or failure.
3. payment by Insurer-Amount, When and How Payable
(a) Amount-Payment by AMBAC of the aggregate of the face amount of
all Insured Instruments of the Investment Trust as to which there has
been a Nonpayment, reduced by the aggregate of: (i) the amount which the
Issuer shall have provided for payment of Insured Instruments by the time
of Nonpayment; and (ii) the amount which has been received from any other
source to pay Insured Instruments; such payment shall fully discharge
AMBAC from any further liability on account of the Nonpayment.
(b) When Payable-The payment due the Investment Trust shall be made
not later than thirty days after notice from the Trustee is received by
AMBAC that Nonpayment has occurred, but not earlier than the date on
which the Insured Instruments are Due for Payment.
(c) How Payable-The payment due the Investment Trust shall be paid
by AMBAC in exchange for delivery of Insured Instruments, not less in
face amount than the amount of the payment, in bearer form, free and
clear of all liens and encumbrances and uncancelled. In cases where an
Insured Instrument is issuable only in a form whereby principal is
payable to registered holders or their assigns, AMBAC shall pay principal
only upon presentation and surrender of the unpaid Insured Instrument,
uncancelled and free of any adverse claim, together with an instrument of
assignment, in satisfactory form, so as to permit ownership of such
Insured Instrument to be registered in the name of AMBAC or its nominee.
In cases where an Insured Instrument is issuable only in a form whereby
interest is payable to registered holders or their assigns, AMBAC shall
pay interest only upon presentation of proof that the claimant is the
person entitled to the pa shall pay interest only upon presentation of
proof that the claimant is the person entitled to the payment of interest
on the Insured Instrument and delivery of an instrument of assignment, in
satisfactory form, transferring to AMBAC all rights under such Insured
Instrument to receive the interest in respect of which the insurance
payment was made.
4. Rights of AMBAC
(a) Subrogation-When AMBAC has made payment with respect to an
Insured Instrument, it shall be subrogated to all of the rights to
payment of the Investment Trust thereon or in relation thereto to the
extent of such payment.
(b) Vesting of Rights and Powers-When AMBAC has made the payment
due to the Investment Trust as described in Condition 3, and until the
full amount of such payment has been recovered, AMBAC shall be vested
with all of the Investment Trust's options, votes, rights, powers and the
like under the Bond Proceedings. AMBAC shall not be liable to the
Investment Trust for any loss or damage resulting from the exercise of or
failure to exercise any of such options, votes, rights, powers and the
like.
(c) Exercise of Rights and Powers-AMBAC may, in its absolute
discretion, exercise or fail to exercise any option, vote, right, power
or the like it may have as holder or registered owner of an Insured
Instrument with respect to which it has made payment. AMBAC shall not be
liable to the Investment Trust for any loss or damage resulting therefrom
(d) Securing of Rights-The Trustee shall execute and deliver
instruments and do whatever else is necessary to secure the foregoing
rights for AMBAC, and will do nothing to prejudice them.
5. Payment of Insurance Premium Installments
The Trustee shall pay, when due, successively, the full amount of
each installment of the insurance premium. Each installment of the
insurance premium is due on or before the last day of the expiring
Premium Installment Period.
If AMBAC has not received such payment on or before such last day,
it shall give notice to the Sponsor to that effect. Such installment
shall be deemed to have been paid when due if AMBAC receives such payment
within ten days after it has given such notice.
The Trustee shall, with each payment, notify AMBAC of all Bonds
which, during the expiring Premium Installment period, were redeemed from
or sold by the Investment Trust, or the contract to purchase which
failed, or which have not been deposited by the Sponsor. Such
notification to AMBAC must specify the amounts of Bonds affected and
identify each by its Item Number in an Application identified by date.
No such notice need be given as to Bonds with respect to which AMBAC has
previously been notified to the same effect.
6. Where Notice is Given
All submissions, designations, payments, notices, reports and other
data or documents required to be submitted shall be mailed to AMBAC at
its administrative office, or to the Investment Trust at its address
shown on the face of this Policy or such other address as it shall
designate.
7. Waiver of Conditions
No permission affecting this insurance shall exist, or waiver of any
condition be valid, unless expressed in writing added hereto. Each of
the conditions of this Policy is hereby made severable, and waiver of one
condition is not a waiver of any other condition.
8. Suit
No suit or action on this Policy for the recovery of any amount
shall be sustained in any court of law or equity unless all of the
conditions of this Policy shall have been complied with (unless
specifically waived by AMBAC in writing) and unless commended within two
years after a Nonpayment.
9. Conflict of Laws
Any provision of this Policy which is on conflict with the laws of
the jurisdiction in which it is effective is hereby amended to conform
with the minimum requirements of such laws.
<TABLE>
<CAPTION>
AMBAC AMBAC Indemnity Corporation
<S> <C>
c/o CT Corporation Systems
Schedule of Bonds (a part of the Application and Policy) 44 East Mifflin Street
Madison, Wisconsin 53703
Administrative Office:
One State Street Plaza
New York, New York 10004
Insured Municipals Income Trust, 154th Insured Multi-Series
(Colorado Insured Municipals Income Trust, Series 67) Date of Application: February 3, 1994
<CAPTION>
Item Par Full Name Purpose of Intere Date Maturi Annual Initial
No. Value of Issuer Bonds st of ty Premium Annual
Rate Bonds Date Rate Premium
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1. $500M City of Colorado Utilities System Improvement 5.125% 01/15/94 11/15/23 .1000% $500.00
Springs, Colorado and Refunding Revenue Bonds,
Series 1994A
(SMIP Option Premium
Rate: .60%)
</TABLE>
* Premium attributable to the original insured amount of each Item of Bonds.
Exhibit 1.5
Dated: June 1, 1992
--
Master Agreement Among Underwriters
For Unit Investment Trusts Sponsored by
Van Kampen Merritt Inc.
Van Kampen Merritt Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
Gentlemen:
1. The Trust. We understand that you, Van Kampen Merritt Inc.
(the "Sponsor"), are entering into this agreement (the "Agreement") in
counterparts with us and other firms who may be underwriters for issues
of various series of unit investment trusts for which you will act as
Sponsor. This Agreement shall apply to any offering after May 1, 1992 of
units of fractional undivided interest in such various series unit
investment trusts in which we elect to act as an underwriter
(underwriters with respect to each such trust being hereinafter called
"Underwriters") after receipt of a notice from you stating the name and
size of the trust and that our participation as an Underwriter in the
proposed offering shall be subject to the provisions of this Agreement.
The issuer of the units of fractional undivided interests in a series of
a unit investment trust offered in any offering of units made pursuant to
this Agreement is hereinafter referred to as the "Trust" and the
reference to "Trust" in this Agreement applies only to such Trust, and
such units of such Trust offered are hereinafter called the "Units".
Each Trust is or will be registered as a "unit investment trust" under
the Investment Company Act of 1940 (the "1940 Act") by appropriate
filings with the Securities and Exchange Commission (the "Commission").
Additionally, each Trust is or will be registered with the Commission
under the Securities Act of 1933 (the "1933 Act") on Form S-6 or its
successor forms, including a proposed form of prospectus (the
"Preliminary Prospectus").
The registration statement as finally amended and revised at the
time it becomes effective is herein referred to as the "Registration
Statement" and the related prospectus is herein referred to as the
"Prospectus", except that if the prospectus filed by the Trust pursuant
to Rule 424(b) under the 1933 Act shall differ from the prospectus on
file at the time the Registration Statement shall become effective, the
term "Prospectus" shall refer to the prospectus filed pursuant to Rule
424(b) from and after the date on which it shall have been filed.
The following provisions of this Agreement shall apply separately to
each individual offering of Units by a Trust.
We understand that as of the date upon which we have agreed to
underwrite Units of the Trust the Commission shall not have issued any
order preventing or restraining the use of any Preliminary Prospectus
and, further, that each Preliminary Prospectus shall conform in all
material respects to the requirements of the 1933 Act and the Rules and
Regulations thereunder and, as of its date, shall not include any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements therein not misleading; and when the Registration
Statement becomes effective, it and the Prospectus, and any amendments or
supplements thereto, will contain all statements that are required to be
stated therein in accordance with the 1933 Act and the Rules and
Regulations thereunder and will in all material respects conform to the
requirements of the 1933 Act and the Rules and Regulations thereunder,
and neither the Registration Statement nor the Prospectus, nor any
amendment or supplement thereto, will contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading;
provided, however, that you make no representation or warranty as to
information contained in or omitted from any Preliminary Prospectus, the
Registration Statement, the Prospectus or any such amendment or
supplement, in reliance upon and in conformity with, written information
furnished to you by or on behalf of any Underwriter specifically for use
in the preparation thereof.
2. Designation and Authority of Representative. You are hereby
authorized to act as our representative (the "Representative") in
connection with all matters to which this Agreement relates and to take
the action provided herein to be taken by you as you may otherwise deem
necessary or advisable. We understand that we have no obligations under
this Agreement with respect to any Trust in which we choose not to
participate as an Underwriter.
You will be under no liability to us for any act or omission except
for obligations expressly assumed by you herein and no obligations on
your part will be implied or inferred herefrom. The rights and
liabilities of the respective parties hereto are several and not joint,
and nothing herein or hereunder will constitute then a partnership,
association or separate entity.
3. Profit or Loss in Acquisition of Securities. It is understood
that the acquisition of securities (the "Securities") for deposit in the
portfolio of the Trust shall be at your cost and risk. We acknowledge
that you will share with us any net deposit profits in the amounts and to
the extent, if any, indicated under "Sponsor and Underwriter
Compensation" in the Prospectus. For the purposes of determining the
number of Units underwritten, we understand that we will be credited for
that number of Units set forth opposite our name in the section entitled
"Underwriting" in the prospectus.
We agree that you shall have no liability (as Representative or
otherwise) with respect to the issue form, validity, legality,
enforceability, value of, or title to the Securities, except for the
exercise of due care in determining the genuineness of such Securities
and the conformance thereof with the descriptions and qualifications
appearing in the Prospectus.
4. Purchase of Units. Promptly after you make a determination to
offer Units of a Trust and you inquire as to whether we desire to
participate in such offering, we will advise you promptly as to the
number of Units which we will purchase or of our decision not to
participate in such offering. Such advice may be written or oral. The
delivery to the Sponsor of a completed Schedule A to this Agreement shall
constitute adequate written advice. Oral advice shall be binding but
shall be promptly confirmed in writing by us by means of telegraph,
telegram or other form of wire or facsimile transmission. Such written
confirmation shall contain the information requested by Schedule A to
this Agreement. You may rely on and we hereby commit on the terms and
conditions of this Agreement to purchase and pay for the number of Units
of the Trust set forth in such advice (the "Unit Commitment"). Our Unit
Commitment may be increased only by mutual agreement between us and you
at any time prior to the date as of which the Trust Agreement for the
Trust is executed (the "Date of Deposit"). We agree that you in your
sole discretion reserve the right to decrease our Unit Commitment at any
time prior to the Date of Deposit and if you so elect to make such a
decrease, you will notify us of such an election by telephone and
promptly confirm the same in writing.
The price to be paid for such Units shall be the Public Offering
Price per Unit (as defined in the Prospectus) as first determined on the
Date of Deposit or such later determination on such Date of Deposit as
you shall advise us, less the sum per Unit indicated under "Sponsor and
Underwriter Compensation" in the Prospectus. Further, each Underwriter
who underwrites that number of Units indicated under "Sponsor and
Underwriter Compensation" in the Prospectus will receive from the Sponsor
that additional compensation indicated under such section of the
Prospectus for each Unit it underwrites, providing the Trust size is in
excess of that number of Units, if any, indicated under such section of
the Prospectus. At the Date of Deposit, we will become the owner of the
Units and be entitled to the benefits (except for interest, if any,
accruing from the Date of Deposit to the First Settlement Date) as well
as the risks inherent therein. We acknowledge that those persons, if
any, named in the Prospectus under "Sponsor and Underwriter Compensation"
are Managing or Co-Managing Underwriters of the Trust, as indicated
therein, and we acknowledge that those persons specifically named therein
will receive as additional compensation those respective per Unit amounts
set forth in such section of the Prospectus.
You are authorized to retain custody of our Units until the
Registration Statement relating thereto has become effective under the
1933 Act and you shall have received payment from us for such Units.
You are authorized to file an amendment to said Registration
Statement describing the Securities and furnishing information based
thereon or relating thereto and any further amendments or supplements to
the Registration Statement or Prospectus which you may deem necessary or
advisable. We will furnish to you upon your request such information as
will be required to insure that the Registration Statement and Prospectus
are current insofar as they relate to us and we thereafter continue to
furnish you with such information as may be necessary to keep current and
correct the information previously supplied.
We understand that the Trust will also take action with respect to
the offering and sale of Units in accordance with the Blue Sky or
securities laws of certain states in which it is proposed that the Units
may be offered and sold.
5. Public Offering. You agree that you will advise us promptly
when the Registration Statement has become effective, and we agree that
when we are advised that the Units are released for public offering, we
will make a public offering thereof by means of the Prospectus under the
1933 Act, as amended, which describes the deposit of Securities and
related information. The Public Offering Price and the terms and
conditions of the public offering shall be as set forth in the Prospectus
and shall rely with respect to the offering price of the Securities upon
the determination of the Evaluator named in the Prospectus. Public
advertisement of the offering, if any, shall be made by you on behalf of
the Underwriters on such date as you shall determine. We agree that
before we use any Trust advertising material which we have created, we
will obtain your prior approval to use such advertising materials.
6. Public Offering Price. We agree that each day while this
Agreement is in effect and the evaluation of the Trust is made by the
Evaluator named in the Prospectus, we will contact you for such
evaluation and of the resultant Public Offering Price for the purpose of
the offering and sale of the respective Units to the public. We agree as
required by Section 22(d) of the 1940 Act to offer and sell our Units at
the current Public Offering Price described in the Prospectus.
7. Permitted Transactions. It is agreed that part or all of the
Units purchased by us may be sold to dealers, or other entities with whom
we can legally grant a concession or agency commission, only at the then
effective Public Offering Price, less the concession described in the
Prospectus.
From time to time prior to the termination of this Agreement, at
your Request, we will advise you of the number of our Units which remain
unsold and, at your request, we agree to deliver to you any of such
unsold Units to be sold for our account to retail accounts or, less the
concession or agency commission then effective, to dealers or others.
If prior to the termination of this Agreement, or such earlier date
as you may determine and advise us thereof in writing, you shall purchase
or contract to purchase any of our Units or any Units issued in exchange
therefor, in the open market or otherwise, or if any such Units shall be
tendered to the Trustee for redemption because not effectively placed for
investment by us, we agree to repurchase such Units at a price equal to
the total cost of such purchase, including accrued interest and
commissions, if any, and transfer taxes on redelivery. Regardless of the
amount paid on the repurchase of any such Units, it is agreed that they
may be resold by us only at the then effective Public Offering Price.
Until the termination of this Agreement, we agree that we will make
no purchase of Units other than (i) purchases provided for in this
Agreement, (ii) purchases approved by you and (iii) purchases as broker
in executing unsolicited orders.
8. Compliance With Commission Order. We hereby agree as follows:
(a) we will refund all sales charges to purchasers of Units from us or
any dealer participating in the distribution of Units who purchased such
Units from us if, within ninety days from the time that the Registration
Statement of the respective Units under the 1933 Act shall have become
effective, (i) the net worth of the trust shall be reduced to less than
20% of the principal amount of Securities originally deposited therein or
(ii) the Trust shall have been terminated; (b) you may instruct the
Trustee on the Date of Deposit that, in the event that redemption by any
Underwriters of Units constituting part of any unsold allotment of Units
shall result in the Trust having a net worth of less than 40% of the
principal amount of Securities originally deposited therein, the Trustee
shall terminate the Trust in the manner provided in the Trust Indenture
and Agreement (as defined in the Prospectus) and distribute the
Securities and other assets of the Trust pursuant to the provisions of
the Trust Indenture and Agreement; and (c) in the event that the Trust
shall have been terminated pursuant to (b) above, we will refund any
sales charges to any purchaser of such Units who purchased from us, or
purchased from a dealer participating in the distribution of such Units
who purchased such Units from us. We authorize you to charge our account
for all refunds of sales charges in respect to our Units.
9. Substitution of Underwriters. We authorize you to arrange for
the substitution hereunder of other persons, who may include you and us,
for all or any part of the commitment of any nondefaulting Underwriter
with the consent of such Underwriter, and of any defaulting Underwriter
without the consent thereof, upon such terms and conditions as you may
deem advisable, provided that the number of Units to be purchased by us
shall not be increased without our consent and that such substitution
shall not in any way affect the liability of any defaulting Underwriter
to the other Underwriters for damages from such default, nor relieve any
other Underwriter of any obligation under this Agreement. The expenses
chargeable to the account of any defaulting Underwriter and not paid for
by it or by a person substituted for such Underwriter and any additional
losses or expenses arising from such default shall be considered to be
expenses under this Agreement and shall be charged against the accounts
of the nondefaulting Underwriters in proportion to their respective
commitments.
10. Termination. This Agreement shall terminate with respect to
each Trust which we have agreed to underwrite 30 days after the date on
which the public offering of the Units of such Trust is made in
accordance with Section 5 hereof unless sooner terminated by you,
provided that you may extend this Agreement for not more than eleven
successive periods of 30 days each upon notice to us and each of the
other Underwriters.
Notwithstanding any settlement on the termination of this Agreement,
we agree to pay our share of any amount payable on account of any claim,
demand or liability which may be asserted against the Underwriters, or
any of them, based on the claim that the Underwriters constitute an
association, unincorporated business or other separate entity and our
share of any expenses incurred by you in defending against any such
claim, demand or liability. We also agree to pay any stamp taxes which
may be assessed and paid after such settlement on account of any Units
received or sold hereunder for our account.
Notwithstanding any termination of this Agreement, no sales of the
Units shall be made by us at any time except in conformity with the
provisions of Section 22(d) of the 1940 Act.
11. Default by Other Underwriters. Default by any one or more of
the other Underwriters in respect of their several obligations under this
Agreement shall neither release you nor us from any of our respective
obligations hereunder.
12. Notices. Notices hereunder shall by deemed to have been duly
given if mailed or telegraphed to us at our address set forth below, in
the case of notices to us, or to you at your address set forth at the
head of this Agreement, in the case of notices to you.
13. Net Capital. You represent that you, and we represent that we,
are in compliance with the capital requirements of Rule 15c-3-1
promulgated by the Commission under the Securities and Exchange Act of
1934, and we may, in accordance with and pursuant to such Rule 15c-3-1,
agree to purchase the amount of Units to be purchased by you and us,
respectively, under the Agreement.
14. Miscellaneous. We confirm that we are a member in good
standing of the National Association of Securities Dealers, Inc.
We confirm that we will take reasonable steps to provide the
Preliminary Prospectus or final Prospectus to any person making written
request therefor to us and to make the Preliminary Prospectus or the
final Prospectus available to each person associated with us expected to
solicit customers' orders for the Units prior to the effective
registration date and the final Prospectus if he is expected to offer the
Units after the effective date. We understand that you will supply us
upon our request with sufficient copies of such prospectuses to comply
with the foregoing.
This Agreement is being executed by us and delivered to you in
duplicate. Upon your confirmation hereof and of agreements in identical
form with each of the other Underwriters, this Agreement shall constitute
a valid and binding contract between us.
Very truly yours,
Confirmed as of the date set forth at the head of this Agreement
Van Kampen Merritt, Inc. Indicated below our firm
name and address exactly as we
By____________________________ wish to appear in the Prospectus
Title__________________________ ____________________________________
____________________________________
____________________________________
Exhibit 3.1
Chapman and Cutler
111 West Monroe Street
Chicago, Illinois 60603
February 3, 1994
Van Kampen Merritt Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
Re:Insured Municipals Income Trust, 154th Insured Multi-Series
Gentlemen:
We have served as counsel for Van Kampen Merritt Inc., as Sponsor
and Depositor of Insured Municipals Income Trust, 154th Insured Multi-
Series (hereinafter referred to as the "Fund"), in connection with the
preparation, execution and delivery of a Trust Agreement dated February
3, 1994 between Van Kampen Merritt Inc., as Depositor, American Portfolio
Evaluation Services, a division of Van Kampen Merritt Investment Advisory
Corp., as Evaluator, and The Bank of New York, as Trustee, pursuant to
which the Depositor has delivered to and deposited Bonds listed in the
Schedules to the Trust Agreement with the Trustee and pursuant to which
the Trustee has issued to or on the order of the Depositor a certificate
or certificates representing Units of fractional undivided interest in
and ownership of the several Trusts of said Fund (hereinafter referred to
as the "Units") created under said Trust Agreement.
In connection therewith, we have examined such pertinent records and
documents and matters of law as we have deemed necessary in order to
enable us to express the opinions hereinafter set forth.
Based upon the foregoing, we are of the opinion that:
1. The execution and delivery of the Trust Agreement and the
execution and issuance of certificates evidencing the Units in the
several Trusts of the Fund have been duly authorized; and
2. The certificates evidencing the Units in the several
Trusts of the Fund when duly executed and delivered by the Depositor
and the Trustee in accordance with the aforementioned Trust
Agreement, will constitute valid and binding obligations of such
Trusts and the Depositor in accordance with the terms thereof.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement (File No. 33-51233) relating to the Units referred
to above and to the use of our name and to the reference to our firm in
said Registration Statement and in the related Prospectus.
Respectfully submitted,
Chapman and Cutler
MJK/ch
Exhibit 3.2
Chapman and Cutler
111 West Monroe Street
Chicago, Illinois 60603
February 3, 1994
Van Kampen Merritt Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
The Bank of New York
101 Barclay Street
New York, New York 10286
Re:Insured Municipals Income Trust, 154th Insured Multi-Series
Gentlemen:
We have acted as counsel for Van Kampen Merritt Inc., Depositor of
Insured Municipals Income Trust, 154th Insured Multi-Series (the "Fund"),
in connection with the issuance of Units of fractional undivided interest
in the several Trusts of said Fund under a Trust Agreement dated February
3, 1994 (the "Indenture") between Van Kampen Merritt Inc., as Depositor,
American Portfolio Evaluation Services, a division of Van Kampen Merritt
Investment Advisory Corp., as Evaluator, and The Bank of New York, as
Trustee. In this connection, we have examined the Registration
Statement, the form of Prospectus proposed to be filed with the
Securities and Exchange Commission, the Indenture and such other
instruments and documents as we have deemed pertinent. Based upon the
foregoing and upon an investigation of such matters of law as we consider
to be applicable, we are of the opinion that, under existing Federal
income tax law:
(i) Each Trust is not an association taxable as a corporation
but will be governed by the provisions of subchapter J (relating to
trusts) of chapter 1, Internal Revenue Code of 1986 (the "Code").
(ii) Each Unitholder will be considered as owning a pro rata
share of each asset of the respective Trust in the proportion that
the number of Units of such Trust held by him bears to the total
number of Units outstanding of such Trust. Under subpart E,
subchapter J of chapter 1 of the Code, income of each Trust will be
treated as income of each Unitholder of the respective Trust in the
proportion described, and an item of Trust income will have the same
character in the hands of a Unitholder as it would have in the hands
of the Trustee. Accordingly, to the extent that the income of a
Trust consists of interest excludable from gross income under
Section 103 of the
Code, such income will be excludable from Federal gross income of
the Unitholders, except in the case of a Unitholder who is a
substantial user (or a person related to such user) of a facility
financed through issuance of any industrial development bonds or
certain private activity bonds held by the respective Trust. In the
case of such Unitholder (and no other) interest received with
respect to his Units attributable to such industrial development
bonds or such private activity bonds is includable in his gross
income. In the case of certain corporations, interest on the Bonds
is included in computing the alternative minimum tax pursuant to
Section 56(c) of the Code, the environmental tax (the "Superfund
Tax") imposed by Section 59A of the Code, and the branch profits tax
imposed by Section 884 of the Code with respect to U.S. branches of
foreign corporations.
(iii) Gain or loss will be recognized to a Unitholder upon
redemption or sale of his Units. Such gain or loss is measured by
comparing the proceeds of such redemption or sale with the adjusted
basis of the Units represented by his Certificate. Before
adjustment, such basis would normally be cost if the Unitholder had
acquired his Units by purchase, plus his aliquot share of advances
by the Trustee to the Trust to pay interest on Bonds delivered after
the Unitholder's settlement date to the extent that such interest
accrued on the Bonds during the period from the Unitholder's
settlement date to the date such Bonds are delivered to the
respective Trust, but only to the extent that such advances are to
be repaid to the Trustee out of interest received by such Trust with
respect to such Bonds. In addition, such basis will be increased by
the Unitholder's aliquot share of the accrued original issue
discount with respect to each Bond held by the Fund with respect to
which there was an original issue discount at the time the Bond was
issued and reduced by the annual amortization of bond premium, if
any, on Bonds held by the Trust.
(iv) If the Trustee disposes of a Trust asset (whether by sale,
payment on maturity, redemption or otherwise) gain or loss is
recognized to the Unitholder and the amount thereof is measured by
comparing the Unitholder's aliquot share of the total proceeds from
the transaction with his basis for his fractional interest in the
asset disposed of. Such basis is ascertained by apportioning the
tax basis for his Units among each of the Trust assets (as of the
date on which his Units were acquired) ratably according to their
values as of the valuation date nearest the date on which he
purchased such Units. A Unitholder's basis in his Units and of his
fractional interest in each Trust asset must be reduced by the
amount of his aliquot share of interest received by the Trust, if
any, on Bonds delivered after the Unitholder's settlement date to
the extent that such interest accrued on the Bonds during the period
from the Unitholder's settlement date to the date such Bonds are
delivered to the Trust, must be reduced by the annual amortization
of bond premium, if any, on Bonds held by the Trust and must be
increased by the Unitholder's share of the accrued original issue
discount with respect to each Bond which, at the time the Bond was
issued, had original issue discount.
(v) In the case of any Bond held by the Trust where the
"stated redemption price at maturity" exceeds the "issue price",
such excess shall be original issue discount. With respect to each
Unitholder, upon the purchase of his Units subsequent to the
original issuance of Bonds held by the Trust, Section 1272(a)(7) of
the Code provides for a reduction in the accrued "daily portion" of
such original issue discount upon the purchase of a Bond subsequent
to the Bond's original issue, under certain circumstances. In the
case of any Bond held by the Trust the interest on which is
excludable from gross income under Section 103 of the Code, any
original issue discount which accrues with respect thereto will be
treated as interest which is excludable from gross income under
Section 103 of the Code.
(vi) We have examined the Municipal Bond Unit Investment Trust
Insurance Policies, if any, issued to certain of the Trusts on the
Date of Deposit by AMBAC Indemnity Corporation, Financial Guaranty
Insurance Corporation or a combination thereof. Each such policy,
or a combination of such policies, insures all bonds held by the
Trustee for that particular Trust (other than bonds described in
paragraph (vii)) against default in the prompt payment of principal
and interest. In our opinion, any amount paid under each said
policy, or a combination of said policies, which represents maturing
interest on defaulted obligations held by the Trustee will be
excludable from Federal gross income if, and to the same extent as,
such interest would have been so excludable if paid by the issuer.
Paragraph (ii) of this opinion is accordingly applicable to
insurance proceeds representing maturing interest.
(vii) Certain bonds in the portfolios of certain of the Trusts
have been insured by the issuers thereof against default in the
prompt payment of principal and interest. Insurance has been
obtained for such bonds, or, in the case of a commitment, the bonds
will be ultimately insured under the terms of such an insurance
policy, which are designated as issuer insured bonds on the
portfolio pages of the respective Trusts in the Prospectus for the
Fund, by the issuer of such bonds. Insurance obtained by the issuer
is effective so long as such bonds remain outstanding. For each of
these bonds, we have been advised that the aggregate principal
amount of such bonds listed on the portfolio page for the respective
Trust was acquired by the applicable Trust and are part of the
series of such bonds listed on the portfolio page for the respective
Trust in the aggregate principal amount listed on the portfolio page
for the respective Trust. Based upon the assumption that the bonds
acquired by the applicable Trust are part of the series covered by
an insurance policy or, in the case of a commitment, will be
ultimately insured under the terms of such an insurance policy, it
is our opinion that any amounts received by the applicable Trust
representing maturing interest on such bonds will be excludable from
Federal gross income if, and to the same extent as, such interest
would have been so excludable if paid in normal course by the Issuer
notwithstanding the source of the payment is from policy proceeds.
Paragraph (ii) of this opinion is accordingly applicable to such
payment.
Sections 1288 and 1272 of the Code provide a complex set of rules
governing the accrual of original issue discount. These rules provide
that original issue discount accrues either on the basis of a constant
compound interest rate or ratably over the term of the Bond, depending on
the date the Bond was issued. In addition, special rules apply if the
purchase price of a Bond exceeds the original issue price plus the amount
of original issue discount which accrued to prior owners. The
application of these rules will also vary depending on the value of the
bond on the date a Unitholder acquires his Units, and the price the
Unitholder pays for his Units.
Because the Trusts do not include any "private activity" bonds
within the meaning of Section 141 of the Code issued on or after
August 8, 1986, none of the Trust Fund's interest income shall be treated
as an item of tax preference when computing the alternative minimum tax.
In the case of corporations, for taxable years beginning after
December 31, 1986, the alternative minimum tax and the Superfund Tax
depend upon the corporation's taxable income with certain adjustments.
Pursuant to Section 56(c) of the Code, one of the adjustment items
used in computing AMTI and the Superfund Tax of a corporation (other than
an S Corporation, Regulated Investment Company, Real Estate Investment
Trust or REMIC) for taxable years beginning after 1989, is an amount
equal to 75% of the excess of such corporation's "adjusted current
earnings" over an amount equal to its AMTI (before such adjustment item
and the alternative tax net operating loss deduction). "Adjusted current
earnings" includes all tax-exempt interest, including interest on all
Bonds in the Trust, and tax-exempt original issue discount.
Effective for tax returns filed after December 31, 1987, all
taxpayers are required to disclose to the Internal Revenue Service the
amount of tax-exempt interest earned during the year.
Section 265 of the Code provides for a reduction in each taxable
year of 100 percent of the otherwise deductible interest on indebtedness
incurred or continued by financial institutions, to which either
Section 585 or Section 593 of the Code applies, to purchase or carry
obligations acquired after August 7, 1986, the interest on which is
exempt from Federal income taxes for such taxable year. Under rules
prescribed by Section 265, the amount of interest otherwise deductible by
such financial institutions in any taxable year which is deemed to be
attributable to tax-exempt obligations acquired after August 7, 1986,
will be the amount that bears the same ratio to the interest deduction
otherwise allowable (determined without regard to Section 265) to the
taxpayer for the taxable year as the taxpayer's average adjusted basis
(within the meaning of Section 1016) of tax-exempt obligations acquired
after August 7, 1986, bears to such average adjusted basis for all assets
of the taxpayer, unless such financial institution can otherwise
establish, under regulations, to be prescribed by the Secretary of the
Treasury, the amount of interest on indebtedness incurred or continued to
purchase or carry such obligations.
We also call attention to the fact that, under Section 265 of the
Code, interest on indebtedness incurred or continued to purchase or carry
Units is not deductible for Federal income tax purposes. Under rules
used by the Internal Revenue Service for determining when borrowed funds
are considered used for the purpose of purchasing or carrying particular
assets, the purchase of Units may be considered to have been made with
borrowed funds even though the borrowed funds are not directly traceable
to the purchase of Units. However, these rules generally do not apply to
interest paid on indebtedness incurred for expenditures of a personal
nature such as a mortgage incurred to purchase or improve a personal
residence.
"The Revenue Reconciliation Act of 1993" (the "Tax Act") subjects
tax-exempt bonds to the market discount rules of the code effective for
bonds purchased after April 30, 1993. In general, market discount is the
amount (if any) by which the stated redemption price at maturity exceeds
an investor's purchase price (except to the extent that such difference,
if any, is attributable to original issue discount not yet accrued).
Market discount can arise based on the price a Trust pays for Bonds or
the price a Unitholder pays for his or her Units. Under the Tax Act,
accretion of market discount is taxable as ordinary income; under prior
law, the accretion had been treated as capital gain. Market discount
that accretes while a Trust holds a Bond would be recognized as ordinary
income by the Unitholders when principal payments are received on the
Bond, upon sale or at redemption (including early redemption), or upon
the sale of redemption of his or her Units, unless a Unitholder elects to
include market discount in taxable income as it accrues.
We have also examined the income tax law of the State of Colorado,
which is based upon the Federal Law, to determine its applicability to
the Colorado IM-IT Trust (the "Colorado Trust") being created as part of
the Fund and to the holders of Units in the Colorado Trust who are
residents of the State of Colorado ("Colorado Unitholders"). Although we
express no opinion with respect to the issuance of the bonds, in
rendering our opinion expressed herein, we have assumed that: (i) the
bonds were validly issued, (ii) and interest thereon is excludable from
gross income for federal income tax purposes, (iii) interest on the
bonds, if received directly by a Unitholder, would be exempt from the
income tax imposed by the State that is applicable to individuals and
corporations (the "State Income Tax"). This opinion does not address the
taxation of persons other than full time residents of Colorado. Based
upon the foregoing it is our opinion that under Colorado income tax law,
as presently enacted and construed:
(a) The Colorado Trust is not an association taxable as a
corporation for purposes of Colorado income taxation.
(b) Each Colorado Unitholder will be treated as owning a pro-
rata share of each asset of the Colorado Trust for Colorado income
tax purposes in the proportion that the number of Units of such
Trust held by him bears to the total number of outstanding Units of
the Colorado Trust, and the income of the Colorado Trust will
therefore be treated as the income of each Colorado Unitholder under
Colorado law in the proportion described and an item of income of
the Colorado Trust will have the same character in the hands of a
Colorado Unitholder as it would have in the hands of the Trustee.
(c) Gain or loss will be recognized by a Colorado Unitholder
upon redemption or sale of his Units. Such gain or loss is measured
by comparing the proceeds of such redemption or sale with the
adjusted basis of the Units represented by his Certificate. Before
adjustment, such basis would normally be cost if the Colorado
Unitholder has acquired his Units by purchase, plus his aliquot
share of advances by the Trustee to the Colorado Trust to pay
interest on bonds delivered after the Colorado Unitholder's
settlement date to the extent that such interest accrued on such
bonds during the period from the Colorado Unitholder's settlement
date to the date such bonds are delivered to the Colorado Trust, but
only to the extent that such advances are to be repaid to the
Trustee out of interest received by such Trust with respect to such
bonds. In addition, such basis will be increased by the Colorado
Unitholder's aliquot share of the accrued original issue discount
with respect to each bond held by such Trust with respect to which
there was an original issue discount at the time such bond was
issued and reduced by the annual amortization of bond premium, if
any, on the bonds held by the Colorado Trust.
(d) If the Trustee disposes of a bond (whether by sale,
payment on maturity, redemption or otherwise) gain or loss is
recognized to the Colorado Unitholder and the amount thereof is
measured by comparing the Colorado Unitholder's aliquot share of the
total proceeds from the transaction with his basis for his
fractional interest in the bond disposed of. Such basis is
ascertained by apportioning the tax basis for his Units among each
of the bonds (as of the date on which his units were acquired)
ratably according to their values as of the valuation date nearest
the date on which he purchased such Units. A Colorado Unitholder's
basis in his Units and of his fractional interest in each bond must
be reduced by the amount of his aliquot share of interest received
by the Colorado Trust, if any, in bonds delivered after the Colorado
Unitholder's settlement date to the extent that such interest
accrued on such bonds during the period from the Colorado
Unitholder's settlement date to the date such bonds are delivered to
the Colorado Trust, must be reduced by the annual amortization of
bond premium, if any, on bonds held by such Trust and must be
increased by the Colorado Unitholder's share of the accrued original
issue discount with respect to each bond which, at the time such
bond was issued, had original issue discount.
(e) If interest on indebtedness incurred or continued by a
Colorado Unitholder to purchase Units in the Colorado Trust is not
deductible for Federal income tax purposes, it will also be
nondeductible for Colorado income tax purposes.
(f) So long as the Colorado Trust holds obligations issued, on
or after May 1, 1980, by the State of Colorado or its political
subdivisions (the "Colorado Bonds"), then to the extent the interest
on the Colorado bonds is excludable from Federal gross income of a
Colorado Unitholder pursuant to Section 103 of the Code, such
interest will be excludable from Colorado adjusted gross income of
such Unitholder.
(g) Any amounts paid under an insurance policy issued to the
Colorado Trust which represent maturing interest on defaulted
obligations held by the Trustee will be excludable from Colorado
adjusted gross income if, and to the same extent as, such interest
would have been so excludable if paid by the issuer. Paragraph (f)
of this opinion is accordingly applicable to insurance proceeds
representing maturing interest.
(h) Certain of the bonds in the Colorado Trust have been
insured by the issuers thereof against default in the prompt payment
of principal and interest. Based upon the exemptions and
assumptions referred to above, it is our opinion that any amounts
received by the Colorado Trust representing maturing interest on
such bonds will be excludable from Colorado adjusted gross income
if, and to the same extent as, such interest would have been so
excludable if paid in normal course by the issuer notwithstanding
the source of the payment is from policy proceeds. Paragraph (f) of
this opinion is accordingly applicable to such payment.
We have not examined any of the Bonds to be deposited and held in
the Colorado Trust or the proceedings for the issuance thereof or the
opinions of bond counsel with respect thereto, and therefore express no
opinion as to the exemption from State income taxes of interest on the
Bonds if received directly by a Unitholder.
We have also examined certain laws of the State of Florida, to
determine their applicability to the Florida IM-IT Intermediate Laddered
Maturity Series 5 Trust (the "Florida Trust") being created as part of
the Fund and to the holders of Units in the Florida Trust who are
residents of the State of Florida. "Non-Corporate Unitholder" means a
Unitholder of the Florida Trust who is an individual not subject to the
Florida state income tax on corporations under Chapter 220, Florida
Statutes and "Corporate Unitholder" means a Unitholder of the Florida
Trust that is a corporation, bank or savings association subject to the
Florida state income tax on corporations or franchise tax imposed on
banks or savings associations under Chapter 220, Florida Statutes.
Although we express no opinion with respect thereto, in rendering
the opinion expressed herein, we have assumed that the Bonds were validly
issued by the State of Florida or its instrumentalities or
municipalities. Based on the foregoing, it is our opinion that:
(a) Neither the Florida Trust nor Non-Corporate Unitholders
will be subject to the Florida income tax imposed by Chapter 220,
Florida Statutes. Therefore, any amounts paid to the Florida Trust
or Non-Corporate Unitholders under an insurance policy issued to the
Florida Trust, the Issuers, the Underwriters, or the Sponsors
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.
(b) Corporate Unitholders will be subject to Florida income or
franchise taxation under Chapter 220, Florida Statutes (1) on
interest received by the Trust, (2) on payments of interest pursuant
to any insurance policy, (3) 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 (4) on gain on the sale
or redemption of Units, to the extent allocable to Florida as
"adjusted federal income." Corporate Unitholders 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 (1) through (4) of the immediately preceding
sentence to the extent that such income constitutes "nonbusiness
income."
(c) Even if interest on indebtedness incurred or continued by
a Unitholder 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 Unitholders for Florida
income tax purposes.
(d) 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.
(e) 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.
Very truly yours,
Chapman and Cutler
MJK/ch
Exhibit 3.3
Tanner Propp & Farber
99 Park Avenue
New York, NY 10016
February 3, 1994
Insured Municipals Income Trust
154th Insured Multi-Series
The Bank of New York,
As Trustee
101 Barclay Street, 17 West
New York, New York 10286
Dear Sirs:
We have acted as special counsel for the Insured Municipals Income Trust,
154th Insured Multi-Series (the "Fund") consisting of Insured Municipals
Income Trust, Series 316, Insured Municipals Income Trust, Intermediate Series
76, Colorado Insured Municipals Income Trust, Series 67, Connecticut Insured
Municipals Income Trust, Series 23 and Florida Insured Municipals Income
Trust, Series 76, (individually the "Trust" and in the aggregate the "Trusts")
for the purposes of determining the applicability of certain New York taxes
under the circumstances hereinafter described.
The Fund is created pursuant to a Trust Agreement (the "Indenture"),
dated as of today (the "Date of Deposit") among Van Kampen Merritt Inc. (the
"Depositor"), American Portfolio Evaluation Services, a division of Van Kampen
Merritt Investment Advisory Corp., as Evaluator, and The Bank of New York as
Trustee (the "Trustee"). As described in the prospectus relating to the Fund
dated today to be filed as an amendment to a registration statement previously
filed with the Securities and Exchange Commission (file number 33-51233) under
the Securities Act of 1933, as amended (the "Prospectus" and the "Registration
Statement"), the objectives of the Fund are the generation of income exempt
from Federal taxation and as regards each of the "State" Trusts exempt from
income tax and personal property tax of the State denominated in the name of
that "State" Trust, if any, to the extent indicated in the Prospectus. No
opinion is expressed herein with regard to the Federal or State tax aspects of
the bonds, the Fund, Trusts (other than New York),
units of the Trusts (the "Units") other than New York, or any interest, gains
or losses in respect thereof.
As more fully set forth in the Indenture and in the Prospectus, the
activities of the Trustee will include the following:
On the Date of Deposit, the Depositor will deposit with the Trustee with
respect to each of the Trusts, the total principal amount of interest bearing
obligations and/or contracts for the purchase thereof together with an
irrevocable letter of credit in the amount required for the purchase price and
accrued interest, if any, and an insurance policy purchased by the Depositor
evidencing the insurance guaranteeing the timely payment of principal and
interest of tile obligations comprising the corpus of such trusts oilier than
those obligations the timely payment of principal and interest of which are
guaranteed by an insurance policy purchased by the issuer thereof or a prior
owner, which may be the Depositor prior to the Date of Deposit, as more fully
set forth in the Prospectus with respect to each Trust.
We understand with respect to the obligations described in the preceding
paragraph that all insurance, whether purchased by the Depositor, a prior
owner or the issuer, provides, or will provide, that the amount paid by the
insurer in respect of any bond may not exceed the amount of principal and
interest due ()n the bond and such payment will in no event relieve the issuer
from its continuing obligation to pay such defaulted principal and interest in
accordance with the terms of the obligation.
The Trustee will not participate in the selection of the obligations to
be deposited in the Fund, and, upon the receipt thereof, will deliver to the
Depositor a registered certificate for the number of Units representing the
entire capital of each of the Trusts as more fully set forth in the Prospectus
and the Registration Statement. The Units, which are represented by
certificates ("Certificates"), will be offered to the public by the Prospectus
'upon the effectiveness of the Registration Statement.
The duties of the Trustee, which are ministerial in nature, will consist
primarily of crediting the appropriate accounts with interest received by each
of the Trusts and with the proceeds from the disposition of obligations held
in the Trusts and the distribution of such interest and proceeds to the Unit
holders of that Trust. The Trustee will also maintain records of the
registered holders of Certificates representing an interest in each Trust and
administer the redemption of Units by such Certificate holders and may perform
certain administrative functions with respect to an automatic investment
option.
Generally, obligations held in the Fund may be removed therefrom by the
Trustee only upon redemption prior to their stated maturity, at the direction
of the Depositor in the event of an advance refunding or upon the occurrence
of certain other specified events which adversely affect the sound investment
character of the Fund, such as default by the issuer in payment of interest or
principal on the obligation and no provision for payment is made therefor
either pursuant to insurance or otherwise and the Depositor fails to instruct
the Trustee, within thirty (30) days after notification, to hold such
obligation.
Prior to the termination of the Fund, the Trustee is empowered to sell
Bonds, from a list furnished by the Evaluator, only for the purpose of
redeeming Units tendered to it and of paying expenses for which funds are not
available. The Trustee does not have the power to vary the investment of any
Unit holder in the Fund, and under no circumstances may the proceeds of sale
of any obligations held by the Fund be used to purchase new obligations to be
held therein.
Article 9-A of the New York Tax Law imposes a franchise tax on business
corporations, and, for purposes of that Article, Section 208(l) defines the
term "corporation" to include, among other things, "any business conducted by
a trustee or trustees wherein interest or ownership is evidenced by
certificate or other written instrument."
The Regulations promulgated under Section 208 provide as follows:
A business conducted by a trustee or trustees in which
interest or ownership is evidenced by certificate or other
written instrument includes, but is not limited to, an
association commonly referred to as a "business trust" or
"Massachusetts trust". In determining whether a trustee
or trustees are conducting a business, the form of the
agreement is of significance but is not controlling. The
actual activities of the trustee or trustees, not their
purposes and powers, will be regarded as decisive factors
in determining whether a trust is subject to tax under
Article 9-A. The mere investment of funds and the
collection of income therefrom, with incidental
replacement of securities and reinvestment of funds, does
not constitute the conduct of a business in the case of a
business conducted by a trustee or trustees. 20 NYCRR 1-
2.3(b)(2) (July 11, 1990).
New York cases dealing with the question of whether a trust will be
subject to the franchise tax have also delineated the general rule that where
a trustee merely invests funds and collects and distributes the income
therefrom, the trust is not engaged in business and is not subject to the
franchise tax. Burrell v. Lynch, 274 A.D. 347, 84 N.Y.S.2d 171 (3rd Dept.
1948), order resettled, 274 A.D. 1083, 85 N.Y.S.2d 705 (3rd Dept. 1949).
In an opinion of the Attorney General of the State of New York, 47 N.Y.
Atty. Gen. Rep. 213 (Nov. 24, 1942), it was held that where the trustee of an
unincorporated investment trust was without authority to reinvest amounts
received upon the sales of securities and could dispose of securities making
up the trust only upon the happening of certain specified events or the
existence of certain specified conditions, the trust was not subject to the
franchise tax.
In the instant situation, the Trustee is not empowered to sell
obligations contained in the corpus of the Fund and reinvest the proceeds
therefrom. Further, the power to sell such obligations is limited to
circumstances in which the creditworthiness or soundness of the obligation is
in question or in which cash is needed to pay redeeming Unit holders or to pay
expenses, or where the Fund is liquidated pursuant to the termination of the
Indenture. Only in circumstances in which the issuer of an obligation
attempts to refinance it can the Trustee exchange an obligation for a new
security. In substance, the Trustee will merely collect and distribute income
and will not reinvest any income or proceeds, and the Trustee has no power to
vary the investment of any Unit holder in the Fund.
Under Subpart E of Part 1, Subchapter J of Chapter I of the Internal
Revenue Code of 1986, as amended (the "Code"), the grantor of a trust will be
deemed to be the owner of the trust under certain circumstances and therefore
taxable on his proportionate interest in the income thereof. Where this
Federal tax rule applies, the income attributed to the grantor will also be
income to him for New York income tax purposes. See TSB-M78(9)(c), New York
Department of Taxation and Finance, June 23, 1978.
Article 22 (Personal Income Tax) of the New York Tax Law imposes a tax on
a New York State resident individual's State adjusted gross income. Such
amount is defined by Section 612 as his Federal adjusted gross income, with an
addition for interest income on the obligations of a State or political
subdivision of a state other than New York, if excluded from his federal
adjusted gross income. Such amount is defined by Section T46112 of the
Administrative Code of the City of New York as Ins Federal adjusted gross
income, with an addition for interest income on the obligations of a state or
political subdivision of a state other than New York, if excluded from his
federal adjusted gross income. 48 U.S.C. Section 745 exempts interest on a
bond issued by the Government of Puerto Rico or a political subdivision
thereof from tax of the United States, of any State, and of any state's
county, municipality, or municipal subdivision thereof. 48 U.S.C. Section
1423a exempts interest on a bond issued by the Government of Guam or by its
authority from taxation by the United States, any state or political
subdivision. The New York Trust holds only obligations issued by New York
State or a political subdivision thereof or by the Government of Puerto Rico
or a political subdivision thereof, or by the Government of Guam or by its
authority.
By letter, dated today, Messrs. Chapman and Cutler, counsel for the
Depositor, rendered their opinion that each Unit holder of a Trust will be
considered as owning a share of each asset of that Trust in the proportion
that the number of Units held by such holder bears to the total number of
Units outstanding and the income of a Trust will be treated as the income of
each Unit holder of that Trust in said proportion pursuant to Subpart E of
Paint 1, Subchapter J of Chapter I of the Code.
Based on the foregoing and of the opinion of Messrs. Chapman and Cutler,
co-counsel for the Depositor, dated today, upon which we specifically rely, we
are of the opinion that under existing laws, rulings, and court decisions
interpreting the laws of the State and City of New York:
1. Each of the Trusts will not constitute an association taxable as a
corporation under New York law, and, accordingly, will not be subject to tax
on its income under the New York State franchise tax or the New York City
general corporation tax.
2. The income of each of the Trusts will be treated as the income of
the Unit holders under the income tax laws of the State and City of New York.
3. Resident individuals of New York State and City will not be subject
to the State or City personal income taxes on interest income on their
proportionate shares of interest income earned by a Trust on any obligation of
New York State or a political subdivision thereof or of the Government of
Puerto Rico or a political subdivision thereof or of the Government of Guam or
by its authority, to the extent such income is excludable from Federal gross
income under Code Section 103.
4. Any amounts paid under the insurance policies purchased by the
Depositor and deposited with the Trustee, as more fully described above,
representing maturing interest on defaulted obligations held by the Trustee
will not be subject to New York State or City income taxes if, and to the same
extent as, such amounts would have been excludable from New York State or City
income taxes if paid by the issuer. Paragraph 3 of this opinion is
accordingly applicable to such policy proceeds representing maturing interest.
5. Any amounts paid under an insurance policy purchased by the issuer
of an obligation or a prior owner, as more fully described above, representing
maturing interest on such defaulting obligation held by the Trustee will not
be subject to New York State or City income taxes if, and to the same extent
as, such amounts would have been excludable from New York State or City income
taxes if paid by the issuer. Paragraph 3 of this opinion is accordingly
applicable to such policy proceeds representing maturing interest.
6. Resident individuals of New York State and City who hold Units will
recognize gain or loss, if any, under the State or City personal income tax
law if the Trustee disposes of a Fund asset. The amount of such gain or loss
is measured by comparing the Unit holder's aliquot share of the total proceeds
from the transaction with his basis for his fractional interest in the asset
disposed of. Such basis is ascertained by apportioning the tax basis for his
Units among each of the Trust's assets (as of the date on which is Units were
acquired) ratably according to their values as of the valuation date nearest
the date on which he purchased such Units. A Unit holder's basis in his Units
and of his fractional interest in the Trust's assets must be reduced by the
amount of his aliquot share of interest received by the Trust, if any, on
bonds delivered after the settlement date to the extent that such interest
accrued on the Bonds during the period from the Unit holder's settlement date
to the date such Bonds are delivered to that Trust and must be adjusted for
amortization of bond premium or accretion of original issue discount, if any,
on tax-exempt obligations held by the Trust.
7. Resident individuals of New York State and City who hold Units will
recognize gain or loss, if any, under the State or City personal income tax
law if the Unit holder sells or redeems any Units. Such gain or loss is
increased by comparing the proceeds of such redemption or sale with the
adjusted basis of the Units redeemed or sold. Before adjustment, such basis
would normally be cost if the Unit holder had acquired his Units by purchase,
plus his aliquot share of advances by the Trustee to the Fund to pay interest
on Bonds delivered after the Unit holder's settlement date to the extent that
such interest accrued on the Bonds during the period from the settlement date
to the date such Bonds are delivered to the Fund, but only to the extent that
such advances are to be repaid to the Trustee out of interest received by the
Fund with respect to such Bonds.
8. Unit holders who are not residents of New York State are not subject
to the personal income tax law thereof with respect to any interest or gain
derived from a Trust or any gain from the sale or other disposition of the
Units, except to the extent that such interest or gain is from property
employed in a business, trade, profession or occupation carried on in New York
state.
In addition, we are of the opinion that no New York State stock transfer
tax will be payable in respect of any transfer of the Certificates by reason
of the exemption contained in paragraph (a) of Subdivision 8 of Section 270 of
the New York Tax Law.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement relating to the Units and to the use of our name and
the reference to our firm in the Registration Statement and in the Prospectus.
Very truly yours,
Tanner Propp & Farber
MNS:ac
Exhibit 3.4
Day, Berry & Howard
City Place
Hartford, Connecticut 06103-3499
February 3, 1994
Van Kampen Merritt Inc.
17Wll0 22nd Street
Oakbrook Terrace, Illinois 60181
Re:Insured Municipals Income Trust, 154th Insured Multi-Series
_________________________________________________
Gentlemen:
You have requested that we act as special counsel with respect to certain
Connecticut tax aspects of Connecticut Insured Municipals Income Trust, Series
23 (the "Connecticut IM-IT TruSt"), being created as part of Insured
municipals Income Trust, 154th Insured Multi-Series (the "Fund").
The Fund is created under a Trust Agreement dated the date hereof and
Standard Terms and Conditions of Trust to which it refers, both among Van
Kampen Merritt Inc., as Depositor, American Portfolio Advisory Services, a
division of Van Kampen Merritt Investment Advisory Corp., as Evaluator, and
The Bank of New York, as Trustee. The Fund will issue units in several state
trusts, one of which is the Connecticut IM-IT Trust. Each unit of the
Connecticut IM-IT Trust (a "Unit") represents a fractional undivided interest
in the principal and net income of the Connecticut IM-IT Trust. The
Connecticut IM-IT Trust and the trust for any other state included in the Fund
will each be administered as a separate and distinct entity for all purposes,
each having its own separate assets, expenses, accounts, and certificates.
You have informed us that, upon the sale of Units of the Connecticut IM-
IT Trust to investors (the "Unitholders"), the assets of the Connecticut IM-
IT Trust will consist of certain obligations (the "Bonds"); that certain of
the Bonds have been issued by or on behalf of the State of Connecticut or its
political subdivisions or other public bodies created under the laws of the
State of Connecticut, and the balance of the Bonds have been issued by or on
behalf of entities classified for the relevant purposes as territories or
possessions of the United States, including one or more of Puerto Rico, Guam,
or the Virgin Islands, the interest on the obligations of which Federal law
would prohibit Connecticut from taxing if received directly by the
Unitholders; that, in the opinion of bond counsel to the issuers of each of
the Bonds, the interest thereon is exempt from Federal income taxation; that
distributions to Unitholders of interest received by the Connecticut IM-IT
Trust and of amounts received thereby upon the maturity, redemption, sale, or
other disposition of the Bonds will be made semi-annually except in the case
of Unitholders who have elected a shorter distribution period; and that the
Connecticut IM-IT Trust will obtain insurance guaranteeing the payment of
principal and interest on all Bonds when due while the Bonds are held by the
Connecticut IM-IT Trust, except for Bonds, if any, as to which the issuer
thereof or another person has arranged for such insurance.
You have informed us that, in the opinion of Messrs. Chapman and Cutler,
for Federal income tax purposes (i) the Connecticut IM-IT Trust will not be
classified as an association, but will be governed by the provisions of
subchapter J of chapter 1 of the Internal Revenue Code of 1986, relating to
trusts; (ii) pursuant to subpart E of said subchapter J, each Unitholder will
be considered to be the owner of a portion of each asset of the Connecticut
IMIT Trust and to have a portion of each item of income of the Connecticut IM-
IT Trust, in each case such portion being equal to the part of the whole
thereof that the number of Units of the Connecticut IM-IT Trust held by him
bears to the total number of outstanding Units of the Connecticut IM-IT Trust;
(iii) each such item of income will have the same character in the hands of a
Unitholder as in the hands of the Trustee; (iv) such income will be excludable
from a Unitholder's Federal gross income to the extent it consists of interest
excludable therefrom for Federal income tax purposes; (v) gain or loss will be
recognized by a Unitholder upon the redemption or sale of his Units or upon
the maturity, redemption, sale, or other disposition of a Bond held by the
Connecticut IM-IT Trust; and (vi) any amounts received by the Connecticut IM-
IT Trust representing maturing interest on a defaulted Bond will be excludable
from gross income if, and to the same extent as, such interest would have been
so excludable if paid by its issuer.
Based on the foregoing, and relying explicitly on the opinion of Messrs.
Chapman and Cutler regarding Federal income tax matters, we are of the opinion
that, under existing Connecticut law:
1. The Connecticut IM-IT Trust is not liable for any tax on or
measured by net income imposed by the State of Connecticut.
2. Interest income of the Connecticut IM-IT Trust from a Bond
issued by or on behalf of the State of Connecticut, any political
subdivision thereof, or public instrumentality, state or local authority,
district, or similar public entity created under the laws of the State of
Connecticut (a "Connecticut Bond"), or from a Bond issued by United
States territories or possessions the interest on which Federal law would
prohibit Connecticut from taxing if received directly by a Unitholder
from the issuer thereof, is not taxable under the Connecticut tax on the
Connecticut taxable income of individuals, trusts, and estates (the
"Connecticut Income Tax"), when any such interest is received by the
Connecticut IM-IT Trust or distributed by it to such a Unitholder.
3. Insurance proceeds received by the Connecticut IMIT Trust
representing maturing interest on defaulted Bonds held by the Connecticut
IM-IT Trust are not taxable under the Connecticut Income Tax if, and to
the same extent as, such interest would not be taxable thereunder if paid
directly to the Connecticut IM-IT Trust by the issuer of such Bonds.
4. Gains and losses recognized by a Unitholder for Federal income
tax purposes upon the maturity, redemption, sale, or other disposition by
the Connecticut IM-IT Trust of a Bond held by the Connecticut IM-IT Trust
or upon the redemption, sale, or other disposition of a Unit of the
Connecticut IM-IT Trust held by a Unitholder are taken into account as
gains or losses, respectively, for purposes of the Connecticut Income
Tax, except that, in the case of a Unitholder holding a Unit of the
Connecticut IM-IT Trust as a capital asset, such gains and losses
recognized upon the sale or exchange of a Connecticut Bond held by the
Connecticut IM-IT Trust are excluded from gains and losses taken into
account for purposes of such tax, and no opinion is expressed as to the
treatment for purposes of such tax of gains and losses recognized upon
the maturity or redemption of a Connecticut Bond held by the Connecticut
IM-IT Trust or, to the extent attributable to Connecticut Bonds, of gains
and losses recognized upon the redemption, sale, or other disposition by
a Unitholder of a Unit of the Connecticut IM-IT Trust held by him.
5. The portion of any interest income or capital gain of the
Connecticut IM-IT Trust that is allocable to a Unitholder that is subject
to the Connecticut corporation business tax is includable in the gross
income of such Unitholder for purposes of such tax.
6. An interest in a Unit of the Connecticut IM-IT Trust that is
owned by or attributable to a Connecticut resident at the time of his
death is includable in his gross estate for purposes of the Connecticut
succession tax and the Connecticut estate tax.
We hereby consent, without admitting that we are in the category of
persons whose consent is required, to the filing of this opinion as an exhibit
to the Registration Statement relating to the Units and to the reference to
our firm as special Connecticut tax counsel in such Registration Statement and
the Prospectus contained therein.
We understand that you may deliver a copy of this opinion to the Trustee
and hereby consent to the Trustee's relying on this opinion as though it were
addressed to the Trustee.
Very truly yours,
Day, Berry & Howard
Exhibit 4.1
Interactive Data
14 West Street
New York, NY 10005
February 2, 1994
Van Kampen Merritt, Inc.
One Parkview Plaza
Oakbrook Terrace, IL 60181
Re: Insured Municipals Income Trust, 154th Insured Multi-Series
(A Unit Investment Trust) Registered Under the Securities Act of
1933
File No. 33-51233
Gentlemen:
We have examined the Registration Statement for the above captioned
Fund, copy of which is attached hereto.
We hereby consent to the reference in the Prospectus and Registration
Statement for the above captioned Fund to Interactive Data Services, Inc.,
as the Evaluator, and to the use of the Obligations prepared by us which
are referred to in such Prospectus and Statement.
You are authorized to file copies of this letter with the Securities
and Exchange Commission.
Very truly yours,
James Perry
Vice President
Exhibit 4.2
Standard & Poor's Corporation
25 Broadway
New York, New York 10004-1064
Mr. Mark Kneedy
Chapman & Cutler
111 West Monroe Street
Chicago, Illinois 60603
Re: Insured Municipals Income Trust, 154th Insured Multi-Series*
Dear Mr. Kneedy:
Pursuant to your request for a Standard & Poor's rating on the units of
the above-captioned trust, SEC #33-51233, we have reviewed the information
presented to us and have assigned a 'AAA' rating to the units of the trust and
a 'AAA' rating to the securities contained in the trust for as long as they
remain in the trust. The ratings are direct reflections, of the portfolio of
the trust, which will be composed solely of securities covered by bond
insurance policies that insure against default in the payment of principal and
interest on the securities so long as they remain in the trust. Since such
policies have been issued by one or more insurance companies which have been
assigned a 'AAA' claims paying ability rating by S&P, S&P has assigned a 'AAA'
rating to the units of the trust and to the securities contained in the trust
for as long as they remain in the trust.
You have permission to use the name of Standard & Poor's Corporation and
the above-assigned ratings in connection with your dissemination of
information relating to these units, provided that it is understood that the
ratings are not "market" ratings nor recommendations to buy, hold, or sell the
units of the trust or the securities contained in the trust. Further, it
should be understood the rating on the units does not take into account the
extent to which fund expenses or portfolio asset sales for less than the
fund's purchase price will reduce payment to the unit holders of the interest
and principal required to be paid on the portfolio assets. S&P reserves the
right to advise its own clients, subscribers, and the public of the ratings.
S&P relies on the sponsor and its counsel, accountants, and other experts for
the accuracy and completeness of the information submitted in connection with
the ratings. S&P does not independently verify the truth or accuracy of any
such information.
This letter evidences our consent to the use of the name of Standard &
Poor's Corporation in connection with the rating assigned to the units in the
registration statement or prospectus relating to the units or the trust.
However, this letter should not be construed as a consent by us, within the
meaning of Section 7 of the Securities Act of 1933, to the use of the name of
Standard & Poor's Corporation in connection with the ratings assigned to the
securities contained in the trust. You are hereby authorized to file a copy
of this letter with the Securities and Exchange Commission.
Please be certain to send us three copies of your final prospectus as
soon as it becomes available. Should we not receive them within a reasonable
time after the closing or should they not conform to the representations made
to us, we reserve the right to withdraw the rating.
We are pleased to have had the opportunity to be of service to you. If
we can be of further help, please do not hesitate to call upon us.
Sincerely,
Vincent S. Orgo
*Consisting of:
Insured Municipals Income Trust, Series 316
Insured Municipals Income Trust, Intermediate Series 76
Colorado Insured Municipals Income Trust, Series 67
Connecticut Insured Municipals Income Trust, Series 23
Florida Insured Municipals Income Trust, Series 76
Exhibit 4.3
Independent Certified Public Accountants' Consent
We have issued our report dated February 3, 1994 on the statements
of condition and related bond portfolios of Insured Municipals Income
Trust, 154th Insured Multi-Series (IM-IT, IM-IT Intermediate, Colorado IM-
IT, Connecticut IM-IT and Florida IM-IT Trusts) as of February 3, 1994
contained in the Registration Statement on Form S-6 and Prospectus. We
consent to the use of our report in the Registration Statement and
Prospectus and to the use of our name as it appears under the caption
"Other Matters-Report of Independent Certified Public Accountants".
Grant Thornton
Chicago, Illinois
February 3, 1994
