Chapman and Cutler
111 West Monroe Street
Chicago, Illinois 60603
June 28, 1995
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549-1004
Attn: Filing Desk, Stop 1-4
Re:Insured Municipals Income Trust, 179th Insured Multi-Series
(File No. 33-59289) (CIK #896314)
Gentlemen:
In accordance with the requirements of Rule 497(b) of the General
Rules and Regulations under the Securities Act of 1933, there is filed a
form of Prospectus to be used in connection with the public offering of
the securities covered by the subject Registration Statement in the exact
form in which such Prospectus will be used.
Very truly yours,
CHAPMAN AND CUTLER
By Mark J. Kneedy
MJK/cjw
Enclosures
June 27, 1995
Van Kampen American Capital
Insured Municipals Income Trust, 179th Insured Multi-Series
IM-IT 81st Limited Maturity
New York IM-IT Intermediate Pennsylvania IM-IT 203
Laddered Maturity Series 16
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 portfolio of tax-exempt bonds. The Fund consists
of three underlying separate unit investment trusts designated as Insured
Municipals Income Trust, 81st Limited Maturity Series (the "IM-IT Limited
Maturity Trust"), New York IM-IT Intermediate Laddered Maturity Series 16 (the
"New York IM-IT Intermediate Laddered Maturity Trust") and Pennsylvania
Insured Municipals Income Trust, Series 203 (the "Pennsylvania IM-IT Trust").
The various trusts are collectively referred to herein as the "Trusts". The
New York IM-IT Intermediate Laddered Maturity and Pennsylvania IM-IT Trusts
are sometimes collectively referred to herein as the "State Trusts", while the
IM-IT Limited Maturity, New York IM-IT Intermediate Laddered Maturity and
Pennsylvania IM-IT Trusts are sometimes collectively referred to herein as the
"Insured Trusts"and the New York IM-IT Intermediate Laddered Maturity is
sometimes referred to herein as the "State Intermediate Laddered Maturity
Trust". 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, a Division of The
McGraw-Hill Companies. Standard & Poor's 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
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 accrued interest, if any. Sales charges for the Trusts in the
initial market, expressed both as a percentage of the Public Offering Price
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
close of business on the day before the Date of Deposit (except for the
Pennsylvania IM-IT Trust 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.
Estimated Current Return and Estimated Long-Term Return. The annual Estimated
Current Returns and Estimated Long-Term Returns to Unitholders as of the close
of business on the day before the Date of Deposit (except for the Pennsylvania
IM-IT Trust as of 8:00 A.M. Central Time on the Date of Deposit) under the
monthly and semi-annual distribution plans 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. Units
of the Trust are not deposits or obligations of, or guaranteed or endorsed by,
any bank and are not federally insured or otherwise protected by the Federal
Deposit Insurance Corporation, the Federal Reserve Board or any other agency
and involve investment risk, including the possible loss of principal.
Distribution Options. Purchasers of Units who desire to receive distributions
on a monthly or semi-annual basis may elect to do so at the time of settlement
during the initial public offering period. See "Unitholder
Explanations--Settlement of Bonds in the Trusts--Change of Distribution
Option". The plan of distribution selected by such purchasers will remain in
effect until changed. Those indicating no choice will be deemed to have chosen
the monthly distribution plan. Record dates for monthly distributions will be
the first day of each month and record dates for semi-annual distributions
will be the first day of the months indicated under "Per Unit Information"for
the applicable Trust. 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
American Capital Distributors, 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
interest accrued to the date of settlement; however, during the initial
offering period such prices will be based upon the aggregate offering prices
of the Securities plus interest accrued to the date of settlement. 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 interest
accrued to the date of settlement (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".
Risk Factors. An investment in the Trusts should be made with an understanding
of the risks associated therewith, including, among other factors, the
inability of the issuer or an insurer to pay the principal of or interest on a
bond when due, volatile interest rates, early call provisions, and changes to
the tax status of the Bonds. See "Unitholder Explanations--Settlement of Bonds
in the Trusts--Risk Factors".
<TABLE>
INSURED MUNICIPALS INCOME TRUST
179th Insured Multi-Series
Summary of Essential Financial Information
At the Close of Business on the day before the Date of Deposit: June 26, 1995
(except for the Pennsylvania IM-IT Trust as of 8:00 A.M. Central Time
on the Date of Deposit: June 27, 1995)
Sponsor: Van Kampen American Capital Distributors, Inc.
Evaluator: American Portfolio Evaluation Services
(A division of a subsidiary of the Sponsor)
Trustee: The Bank of New York
<CAPTION>
New York IM-IT
IM-IT Intermediate
Limited Laddered Pennsylvania
GENERAL INFORMATION Maturity Trust Maturity Trust IM-IT Trust
<S> <C> <C> <C>
Principal Amount (Par Value) of Securities in Trust <F1>.................. $ 5,000,000 $ 3,000,000 $ 3,035,000
Number of Units........................................................... 5,000 3,000 3,088
Fractional Undivided Interest in the Trust per Unit....................... 1/5,000 1/3,000 1/3,088
Principal Amount (Par Value) of Securities per Unit <F2>.................. $ 1,000.00 $ 1,000.00 $ 982.84
Public Offering Price: ...................................................
Aggregate Offering Price of Securities in Portfolio...................... $ 4,895,403 $ 2,983,477 $ 2,936,717
Aggregate Offering Price of Securities per Unit.......................... $ 979.08 $ 994.49 $ 951.01
Sales Charge <F3>........................................................ $ 43.99 $ 30.75 $ 48.99
Public Offering Price per Unit <F4>...................................... $ 1,023.07 $ 1,025.24 $ 1,000.00
Redemption Price per Unit <F4>............................................ $ 971.51 $ 986.90 $ 944.09
Secondary Market Repurchase Price per Unit <F4>........................... $ 979.08 $ 994.49 $ 951.01
Excess of Public Offering Price per Unit Over Redemption Price per Unit... $ 51.56 $ 38.34 $ 55.91
Excess of Sponsor's Initial Repurchase Price per Unit Over Redemption
Price per Unit........................................................... $ 7.57 $ 7.59 $ 6.92
Minimum Value of the Trust under which Trust Agreement may be
terminated............................................................... $ 1,000,000 $ 600,000 $ 607,000
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Minimum Principal Distribution............$1.00 per Unit
First Settlement Date.....................June 30, 1995
Evaluator's Annual Supervisory Fee........Maximum of $0.25 per Unit
Evaluator's Annual Evaluation Fee <F5>....$0.30 per $1,000 principal amount of Bonds
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> Because certain of the Securities in certain Trusts may from time to time
under certain circumstances be sold or redeemed or will be called or mature in
accordance with their terms (including the call or sale of zero coupon bonds
at prices less than par value), there is no guarantee that the value of each
Unit at the respective Trusts' termination will be equal to the Principal
Amount (Par Value) of Securities per Unit stated above.
<F2> 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, State Intermediate Laddered Maturity 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, State Intermediate Laddered Maturity 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.
<F3> Sales charges for the Trusts, expressed as a percentage of the Public Offering
Price per Unit and in parenthesis as a percentage of the aggregate offering
price of the Securities, are as follows: a State Trust (other than a State
Intermediate Laddered Maturity 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 or a State Intermediate Laddered Maturity
Trust - 3.0% (3.093%).
<F4> Anyone ordering Units for settlement after the First Settlement Date will pay
accrued interest from such date to the date of settlement (normally three
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. 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."
<F5> 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>
SETTLEMENT OF BONDS IN THE TRUSTS
The Fund. Insured Municipals Income Trust, 179th 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 American Capital Distributors, Inc., as Sponsor,
American Portfolio Evaluation Services, a division of Van Kampen American
Capital Investment Advisory Corp., as Evaluator, and The Bank of New York, as
Trustee.
The Fund consists of three 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 Illinois, Indiana, Virginia and Washington may purchase Units of
the IM-IT Limited Maturity Trust 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 State
Trust (other than a State Intermediate Laddered Maturity 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, State Intermediate Laddered Maturity 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 State Trust (other than a State Intermediate Laddered
Maturity 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, State Intermediate Laddered Maturity Trust and IM-IT Short Intermediate
Trust is 12 to 15 years, 5 to 15 years, 5 to 10 years and 3 to 7 years,
respectively. The dollar-weighted average maturity of the Bonds in any IM-IT
Intermediate Trust, State Intermediate Laddered Maturity Trust and IM-IT Short
Intermediate Trust is less than or equal to 10 years, 10 years and 5 years,
respectively.
The portfolio of any State Intermediate Laddered Maturity Trust is structured
so that approximately 20% of the Bonds contained in such portfolio will mature
each year, commencing in approximately the fifth year of the Trust, entitling
each Unitholder to a return of principal. This return of principal may offer
Unitholders the opportunity to respond to changing economic conditions and to
specific financial needs that may arise between the fifth and tenth years of a
State Intermediate Laddered Maturity Trust. However, the flexibility provided
by the return of principal may at the same time eliminate a Unitholder's
ability to reinvest the amount returned at a rate as high as the implicit
yield on the obligations which matured.
The portfolios of the Trusts may consist of bonds that were acquired at a
market discount from par value at maturity. The coupon interest rates on the
discount bonds at the time they were purchased and deposited in such Trust
were lower than the current market interest rates for newly issued bonds of
comparable rating and type. If such interest rates for newly issued comparable
bonds increase, the market discount of previously issued bonds will become
greater, and if such interest rates for newly issued comparable bonds decline,
the market discount of previously issued bonds will be reduced, other things
being equal. Investors should also note that the value of bonds purchased at a
market discount will increase in value faster than bonds purchased at a market
premium if interest rates decrease. Conversely, if interest rates increase,
the value of bonds purchased at a market discount will decrease faster than
bonds purchased at a market premium. In addition, if interest rates rise, the
prepayment risk of higher yielding, premium bonds and the prepayment benefit
for lower yielding, discount bonds will be reduced. A bond purchased at a
market discount and held to maturity will have a larger portion of its total
return in the form of taxable income and capital gain and less in the form of
tax-exempt interest income than a comparable bond newly issued at current
market rates. See "Other Matters--Federal Tax Status."Market discount
attributable to interest changes does not indicate a lack of market confidence
in the issue. Neither the Sponsor nor the Trustee shall be liable in any way
for any default, failure or defect in any of the Bonds.
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 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. A State
Intermediate Laddered Maturity Trust has additional objectives of providing
protection against changes in interest rates and investment flexibility
through an investment in a laddered portfolio of intermediate-term
interest-bearing obligations with maturities ranging from approximately 5 to
10 years in which roughly 20% of the obligations contained in such portfolio
will mature each year commencing in approximately the fifth year of the Trust.
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) MBIA
Insurance 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.
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, a
Division of The McGraw-Hill Companies ("Standard & Poor's"), 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.
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 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.
Risk Factors. 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.
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 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 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 a State Trust (other than a
State Intermediate Laddered Maturity Trust) or, in the case of an IM-IT
Limited Maturity, IM-IT Intermediate, State Intermediate Laddered Maturity or
IM-IT Short Intermediate Trust, must have a fixed maturity date within the
range 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 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
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 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 on a monthly basis, unless the Unitholder elects to
receive them semi-annually. 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.
The first distribution of funds from the Principal Account, if any, will be
made on the first semi-annual distribution date to Unitholders of record on
the first semi-annual record date, and thereafter such distributions will be
made on a semi-annual basis, except under certain special circumstances (see
"Unitholder Explanations--Public Offering -Distributions of Interest and
Principal").
Change of Distribution Option. The plan of distribution selected by a
Unitholder will remain in effect until changed. Unitholders purchasing Units
in the secondary market will initially receive distributions in accordance
with the election of the prior owner. Unitholders may change the plan of
distribution in which they are participating. For convenience of Unitholders,
the Trustee will furnish a card for this purpose; cards may also be obtained
upon request from the Trustee. Unitholders desiring to change their plan of
distribution may so indicate on the card and return it together with their
certificate and such other documentation that the Trustee may then require, to
the Trustee. Certificates should only be sent by registered or certified mail
to minimize the possibility of their being lost or stolen. If the card and
certificate are properly presented to the Trustee, the change will become
effective as of the opening of business on the first day after the next
succeeding semi-annual record date and will be effective, unless further
changed, for all subsequent distributions.
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.
Certificates for Units will bear appropriate notations on their face
indicating which plan of distribution has been selected in respect thereof. If
a change in the plan of distribution is made, the existing certificate must be
surrendered to the Trustee and a new certificate will be issued, at no charge
to the Unitholder, to reflect the currently effective plan of distribution.
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 close of business on the day before the Date of Deposit (except for
the Pennsylvania IM-IT Trust as of 8:00 A.M. Central Time on the Date of
Deposit) the Estimated Current Returns and the Estimated Long-Term Returns,
under the monthly and semi-annual distribution plans, 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; 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-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 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, 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 June 30, 1995. The first monthly
record date for each Trust (August 1, 1995) is 31 days from such date. The
daily rates of estimated net annual interest income per Unit accrued on a
monthly basis are $.14653, $.11674 and $.14836 for the IM-IT Limited Maturity,
New York IM-IT Intermediate Laddered Maturity and Pennsylvania IM-IT Trusts,
respectively. This amounts to $4.54, $3.62 and $4.60 for the IM-IT Limited
Maturity, New York IM-IT Intermediate Laddered Maturity and Pennsylvania IM-IT
Trusts, respectively.
Utilizing the preceding information assuming the monthly payment option, the
following procedure illustrates the calculation of first year estimated net
annual interest income per Unit for the Pennsylvania IM-IT Trust:
The Pennsylvania IM-IT Trust accrues
$4.60 to the first record date plus
$44.50 which is 10 normal distributions at $4.45, and finally adding
$4.31 which has accrued from June 1, 1996 until June 30, 1996 which completes
the 360 day cycle (29 days times the daily factor)
Total $53.41 interest earned / $1,000.00 (Date of Deposit Public Offering
Price) = 5.34% Estimated Current Return as of the Date of Deposit.
ACCRUED INTEREST
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 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.
In an effort to reduce the amount of accrued interest which would otherwise
have to be paid by Unitholders, the Trustee will advance the amount of 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, 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 accrued interest from the purchaser of his
Units. Since the Trustee has the use of the funds 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. 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 (5.152% of the aggregate offering price of the Securities) for
a State Trust (other than a State Intermediate Laddered Maturity Trust), 4.3%
of the Public Offering Price (4.493% of the aggregate offering price of the
Securities) for an IM-IT Limited Maturity Trust, 3.9% of the Public Offering
Price (4.058% of the aggregate offering price of the Securities) for an IM-IT
Intermediate Trust and 3.0% of the Public Offering Price (3.093% of the
aggregate offering price of the Securities) for an IM-IT Short Intermediate
Trust or a State Intermediate Laddered Maturity 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 accrued
interest, if any. 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:
<TABLE>
<CAPTION>
Years To Maturity Sales Charge Years To Maturity Sales Charge
<S> <C> <C> <C>
1 1.52% 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
</TABLE>
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, the sales charge on a Trust consisting entirely of
a portfolio of Bonds with 15 years to maturity would be 5.10%. The sales
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
State (other than a
State Intermediate
Aggregate Number of Laddered Maturity
Units Purchased Trust) and National
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 American Capital-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. In the event units of more than one trust
are purchased on the Initial Purchase Date, the aggregate dollar amount of
such purchases will be used to determine whether purchasers are eligible for a
reduced sales charge. Such aggregate dollar amount will be divided by the
public offering price per unit (on the day preceding the date of purchase) of
each respective trust purchased to determine the total number of units which
such amount could have purchased of each individual trust. Purchasers must
then consult the applicable trust's prospectus to determine whether the total
number of units which could have been purchased of a specific trust would have
qualified for a reduced sales charge and, if so qualified, the amount of such
reduction. Assuming a purchaser qualifies for a sales charge reduction or
reductions, to determine the applicable sales charge reduction or reductions
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 American Capital Distributors, 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.
Units may be purchased in the primary or secondary market at the Public
Offering Price (for purchases which do not qualify for a sales charge
reduction for quantity purchases) less the concession the Sponsor typically
allows to brokers and dealers for purchases (see "Trust
Administration--General--Unit Distribution") by (1) investors who purchase
Units through registered investment advisers, certified financial planners and
registered broker-dealers who in each case either charge periodic fees for
financial planning, investment advisory or asset management services, or
provide such services in connection with the establishment of an investment
account for which a comprehensive "wrap fee"charge is imposed, (2) bank trust
departments investing funds over which they exercise exclusive discretionary
investment authority and that are held in a fiduciary, agency, custodial or
similar capacity, (3) any person who for at least 90 days, has been an
officer, director or bona fide employee of any firm offering Units for sale to
investors or their immediate family members (as described above) and (4)
officers and directors of bank holding companies that make Units available
directly or through subsidiaries or bank affiliates. Notwithstanding anything
to the contrary in this Prospectus, such investors, bank trust departments,
firm employees and bank holding company officers and directors who purchase
Units through this program will not receive sales charge reductions for
quantity purchases.
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 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.
Such price determination as of the close of business on the day before the
Date of Deposit (except for the Pennsylvania IM-IT Trust 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 close of business on the day before the Date
of Deposit (except for the Pennsylvania IM-IT Trust 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 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 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. 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 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 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 three 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 three 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
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 the aggregate bid prices of
the Securities in the portfolio of each Trust 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 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 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 under the
plan of distributions chosen. 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 semi-annual record date, and
distributions to the Unitholders as of such record date will be made on or
shortly after the fifteenth day of such month. 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.
However, should the amount available for distribution in the Principal Account
equal or exceed $10.00 per Unit, the Trustee will make a special distribution
from the Principal Account on the next succeeding monthly distribution date to
holders of record on the related monthly record date.
The 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 attributable as is consistent with the distribution plan
chosen. 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 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, under the
applicable plan of distribution.
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 American Capital Distributors, 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 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
American Capital Distributors, 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, the Van Kampen Merritt Tax Free Money Fund, the Van Kampen
Merritt Florida Insured Tax Free Income Fund, the Van Kampen Merritt New
Jersey Tax Free Income Fund, or the Van Kampen Merritt New York Tax Free
Income Fund, in which case no sales charge applies. A minimum of one-half of
such sales charge would be paid to Van Kampen American Capital Distributors,
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 third business day following such
tender the Unitholder will be entitled to receive in cash an amount for each
Unit equal to the Redemption Price per Unit next computed after receipt by the
Trustee of such tender of Units. The "date of tender"is deemed to be the date
on which Units are received by the Trustee, except that as regards Units
received after 4:00 P.M. Eastern time on days of trading on the New York Stock
Exchange, the date of tender is the next day on which such Exchange is open
for trading and such Units will be deemed to have been tendered to the Trustee
on such day for redemption at the Redemption Price computed on that day.
Under regulations issued by the Internal Revenue Service, the Trustee will be
required to withhold a specified percentage of the principal amount of a Unit
redemption if the Trustee has not been furnished the redeeming Unitholder's
tax identification number in the manner required by such regulations. Any
amount so withheld is transmitted to the Internal Revenue Service and may be
recovered by the Unitholder only when filing a return. Under normal
circumstances the Trustee obtains the Unitholder's tax identification number
from the selling broker. However, at any time a Unitholder elects to tender
Units for redemption, such Unitholder should provide a tax identification
number to the Trustee in order to avoid this possible "back-up withholding"in
the event the Trustee has not been previously provided such number.
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 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 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) 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 and may be less than the par value of the Securities
represented by the Units so redeemed. 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, 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 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.
Each distribution statement of a Trust will reflect pertinent information in
respect of the other plan of distribution so that Unitholders may be informed
regarding the results of such other plan of distribution.
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 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 $1,988,000,000 (unaudited) and statutory capital of
approximately $1,148,000,000 (unaudited) as of March 31, 1994. 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 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.
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.
MBIA Insurance 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, the Commonwealth of the Northern Mariana
Islands, the Commonwealth of Puerto Rico, the Virgin Islands of the United
States and the Territory of Guam. As of March 31, 1995 MBIA had admitted
assets of $3.5 billion (unaudited), total liabilities of $2.4 billion
(unaudited), and total capital and surplus of $1.1 billion (unaudited)
determined in accordance with statutory accounting practices prescribed or
permitted by insurance regulatory authorities. As of December 31, 1994, the
Insurer had admitted assets of $3.4 billion (audited), total liabilities of
$2.3 billion (audited), and total capital and surplus of $1.1 billion
(audited) determined in accordance with statutory accounting practices
prescribed or permitted by insurance regulatory authorities. Copies of 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 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 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 March 31,
1995, the total capital and surplus of Financial Guaranty was approximately
$962,700,000. 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 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, 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") is a "Aaa/AAA"rated
monoline stock insurance company incorporated in the State of Maryland, and is
a wholly owned subsidiary of Capital Guaranty Corporation, a Maryland
insurance holding company. Capital Guaranty Corporation is a publicly owned
company whose shares are traded on the New York Stock Exchange.
Capital Guaranty is authorized to provide insurance in all 50 states, the
District of Columbia, the Commonwealth of Puerto Rico, Guam and the U.S.
Virgin Islands. Capital Guaranty focuses on insuring municipal securities and
our policies guaranty the timely payment of principal and interest when due
for payment on new issue and secondary market issue municipal bond
transactions. Capital Guaranty's claims-paying ability is rated "Triple-A"by
both Moody's and Standard & Poor's. Therefore, if Capital Guaranty insures an
issue with a stand alone rating of less than "Triple-A,"such issue would be
"upgraded"to "Aaa/AAA"by virtue of Capital Guaranty's Insurance.
As of December 31, 1994, Capital Guaranty had more than $15.7 billion in net
exposure outstanding (excluding defeased issues). The total statutory
policyholders' surplus and contingency reserve of Capital Guaranty was
$196,529,000, and the total admitted assets were $303,723,316 as reported to
the Insurance Department of the State of Maryland as of December 31, 1994.
Financial statements for Capital Guaranty Insurance Company, that have been
prepared in accordance with statutory insurance accounting standards, are
available upon request. The address of Capital Guaranty's headquarters and its
telephone number are Steuart Tower, 22nd Floor, One Market Plaza, San
Francisco, CA 94105-1413 and (415) 995-8000.
CapMAC is a New York-domiciled monoline stock insurance company which engages
only in the business of financial guarantee and surety insurance. CapMAC is
licensed in 50 states in addition to the District of Columbia, the
Commonwealth of Puerto Rico and the territory of Guam. CapMAC insures
structured asset-backed, corporate, municipal and other financial obligations
in the U.S. and international capital markets. CapMAC also provides financial
guarantee reinsurance for structured asset-backed, corporate, municipal and
other financial obligations written by other major insurance companies.
CapMAC's claims-paying ability is rated "Aaa"by Moody's Investors Service,
Inc., "AAA"by Standard & Poor's, "AAA"by Duff & Phelps Credit Rating Co. and
"AAA"by Nippon Investors Service Inc. 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. Neither Holdings nor any of its stockholders is
obligated to pay any claims under any policy 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. Such insurance
laws regulate, among other things, the amount of net exposure per risk that
CapMAC may retain, capital transfers, dividends, investment of assets, changes
in control, transactions with affiliates and consolidations and acquisitions.
CapMAC is subject to periodic regulatory examinations by the same regulatory
authorities.
CapMAC's obligations under the Policy(s) may be reinsured. Such reinsurance
does not relieve CapMAC of any of its obligations under the Policy(s).
THE POLICY IS NOT COVERED BY THE PROPERTY/CASUALTY INSURANCE SECURITY FUND
SPECIFIED IN ARTICLE 76 OF THE NEW YORK INSURANCE LAW.
As at December 31, 1994 and 1993, CapMAC had qualified statutory capital
(which consists of policyholders' surplus and contingency reserve) of
approximately $170 million and $168 million, respectively, and had not
incurred any debt obligations. Article 69 of the New York State Insurance Law
requires CapMAC to establish and maintain the contingency reserve, which is
available to cover claims under policies issued by CapMAC.
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.
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 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 or as a guarantee of the market
value of such Trust or of the Units.
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 "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) may or may not have a
higher yield than uninsured bonds rated "AAA"by Standard & Poor's. 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.
The Bonds in the Insured Trusts are insured as follows:
<TABLE>
<CAPTION>
Bonds insured Bonds insured
under AMBAC under Financial
Trust Indemnity Guaranty Preinsured
portfolio insurance portfolio insurance Bonds Total
<S> <C> <C> <C> <C>
IM-IT Limited Maturity.......................... -- -- 100% 100%
New York IM-IT Intermediate Laddered Maturity... -- -- 100% 100%
Pennsylvania IM-IT.............................. -- -- 100% 100%
</TABLE>
The breakdown of the Preinsured Bonds is as follows: IM-IT Limited Maturity
Trust--AMBAC Indemnity 12%, Capital Guaranty 8%, Financial Guaranty 7% and
MBIA 73%; New York IM-IT Intermediate Laddered Maturity Trust--AMBAC Indemnity
21%, Financial Guaranty 28%, MBIA 43% and FSA 8%; Pennsylvania IM-IT
Trust--AMBAC Indemnity 17%, Capital Guaranty 16%, Financial Guaranty 8%,
MBIA 51% and FSA 8%.
IM-IT LIMITED MATURITY TRUST
General. The IM-IT Limited Maturity Trust consists of 13 issues of Securities.
Seven of the Bonds in the IM-IT Limited Maturity 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 9 states or territories, divided by purpose
of issues (percentage of principal amount to total IM-IT Limited Maturity
Trust) as follows: General Obligations, 7 (46%); Industrial Revenue, 1 (15%);
Public Building, 1 (12%); Water and Sewer, 1 (10%); Public Education, 1 (8%);
Retail Electric/Gas, 1 (5%) and Waste Disposal, 1 (4%). No Bond issue has
received a provisional rating. All of the obligations in the IM-IT Limited
Maturity Trust mature within 12-15 years of the Date of Deposit. The dollar
weighted average maturity of the Bonds in the Trust is 14.6 years.
Tax Status. For a discussion of the Federal tax status of income earned on
IM-IT Limited Maturity Units, see "Other Matters--Federal Tax Status".
<TABLE>
Per Unit Information:
<CAPTION>
Semi-
Monthly Annual
<S> <C> <C>
Calculation of Estimated Net Annual Unit Income <F1>:
Estimated Annual Interest Income per Unit................................. $ 54.29 $ 54.29
Less: Estimated Annual Expense per Unit <F2>.............................. $ 1.54 $ 1.08
Less: Annual Premium on Portfolio Insurance per Unit...................... -- --
Estimated Net Annual Interest Income per Unit............................. $ 52.75 $ 53.21
Calculation of Estimated Interest Earnings per Unit:
Estimated Net Annual Interest Income per Unit............................. $ 52.75 $ 53.21
Divided by 12 and 2, respectively......................................... $ 4.40 $ 26.61
Estimated Daily Rate of Net Interest Accrual per Unit...................... $ .14652 $ .14780
Estimated Current Return Based on Public Offering Price <F1><F3><F4><F5>... 5.16% 5.20%
Estimated Long-Term Return <F3><F4><F5>.................................... 5.23% 5.27%
Estimated Initial Monthly Distribution (August 1995)....................... $ 4.54
Estimated Initial Semi-annual Distribution (December 1995)................. $ 22.31
Estimated Normal Distribution per Unit <F5>................................ $ 4.40 $ 26.61
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Trustee's Annual Fee <F1>...... $.91 and $.51 per $1,000 principal amount of Bonds, respectively, for those portions of the IM-IT
Limited Maturity Trust under the monthly and semi-annual distribution plans
Record and Computation Dates... FIRST day of the month as follows: monthly--each month; semi-annual--June and December
Distribution Dates............. FIFTEENTH day of the month as follows: monthly--each month; semi-annual--June
and December commencing August 15, 1995
<FN>
<F1>During the first year the Trustee will reduce its fee by approximately $.83
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 $55.12. Estimated Annual Expense per Unit (excluding
insurance) will be increased to $2.37 and $1.91 under the monthly and
semi-annual distribution plans, respectively; and Estimated Net Annual
Interest Income per Unit will remain the same as shown. See "Estimated Current
Returns and Estimated Long-Term Returns."
<F2>Excluding insurance costs. The Estimated Annual Expenses are expected to
fluctuate periodically (see "Trust Administration--Fund Administration and
Expenses--Miscellaneous Expenses").
<F3>The Estimated Current Returns and Estimated Long-Term Returns are increased
for transactions entitled to a reduced sales charge. See "Unitholder
Explanations--Public Offering--General".
<F4>The Estimated Current Returns are calculated by dividing the Estimated Net
Annual Interest Income per Unit by the Public Offering Price. The Estimated
Net Annual Interest Income per Unit will vary with changes in fees and
expenses of the Trustee 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; therefore, there is no assurance that the present Estimated
Current Returns indicated above will be realized in the future. The Estimated
Long-Term Returns are calculated using a formula which (1) takes into
consideration, and determines and factors in the relative weightings of, the
market values, yields (which takes into account the amortization of premiums
and the accretion of discounts) and estimated retirements of all of the
Securities in the Trust and (2) takes into account the expenses and sales
charge associated with each Trust Unit. Since the market values and estimated
retirements of the Securities and the expenses of the Trust will change, there
is no assurance that the present Estimated Long-Term Returns as indicated
above will be realized in the future. The Estimated Current Returns and
Estimated Long-Term Returns 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"
</TABLE>
<TABLE>
INSURED MUNICIPALS INCOME TRUST
81ST LIMITED MATURITY SERIES (179TH INSURED MULTI-SERIES)
PORTFOLIO As of June 27, 1995
<CAPTION>
Offering
Price To
IM-IT
Limited
Aggregate Name of Issuer, Title, Interest Rate andMaturity Date of Redemption Maturity
Principal<F1> either Bonds Deposited orBonds Contracted for<F1><F5> Rating<F2> Feature<F3> Trust<F4>
<S> <C> <C> <C> <C>
$ 210,000 Harris County Utility District No. 5, Texas, Waste
Disposal Contract Revenue Bonds, Series 1995 (Service
Area A) MBIA Insured**
5.55% Due 4/1/2009......................................... AAA 2005 @ 100 $ 208,058
250,000 Public Utility District No. 1 of Chelan County,
Washington, Chelan Hydro Consolidated System Revenue
Bonds, Refunding Series 1995B (MBIA Insured)
#5.65% Due 7/1/2009........................................ AAA 2005 @ 102 250,052
600,000 Howard County Jail and Juvenile Detention Center Building
Corporation (Howard County, Indiana) First Mortgage
Refunding Bonds of 1995 (AMBAC Indemnity Insured)** 2005 @ 102
#5.60% Due 7/15/2009....................................... AAA 2009 @ 100 S.F. 597,228
115,000 City of Los Angeles, California, General Obligation Bonds,
Series 1994A (MBIA Insured)
5.90% Due 9/1/2009......................................... AAA 2004 @ 102 117,445
170,000 City of Evanston, Cook County, Illinois, Special Service
Area No. 5, Unlimited Ad Valorem Property Tax General
Obligation Bonds, Series 1995 (MBIA Insured)**
5.70% Due 12/1/2009........................................ AAA 2005 @ 100 170,850
400,000 Concord Community Schools Building Corporation, Elkhart,
Indiana, First Mortgage Bonds, Series 1995 (Capital
Guaranty Insured)
#5.625% Due 1/1/2010....................................... AAA 2005 @ 101.5 395,192
150,000 City of League City, Texas (Galveston and Harris
Counties) General Obligation Bonds, Series 1995 (MBIA
Insured)
#5.40% Due 2/1/2010........................................ AAA 2005 @ 100 144,885
765,000 City of Sugarland, Texas (Fort Bend County) Public
Improvement and Refunding General Obligation Bonds,
Series 1995 (MBIA Insured)**
#5.75% Due 3/15/2010....................................... AAA 2005 @ 100 764,992
495,000 City of Dearborn, County of Wayne, Michigan, Sewage
Disposal System Revenue Bonds, Series 1995A (MBIA
Insured)
#5.10% Due 4/1/2010........................................ AAA 2004 @ 101 468,048
200,000 Reeths-Puffer Schools, County of Muskegon, Michigan, 1995
School Building and Site and Refunding Bonds (General
Obligation-Unlimited Tax) FGIC Insured
#5.70% Due 5/1/2010........................................ AAA 2005 @ 101 201,000
750,000 District of Columbia (Washington, D.C.) General Obligation
Bonds, Series 1993E (MBIA Insured)
#6.00% Due 6/1/2010........................................ AAA 2003 @ 102 756,487
Offering
Price To
IM-IT
Limited
Aggregate Name of Issuer, Title, Interest Rate andMaturity Date of Redemption Maturity
Principal<F1> either Bonds Deposited orBonds Contracted for<F1><F5> Rating<F2> Feature<F3> Trust<F4>
$ 750,000 County of Monroe, New York, Industrial Development Agency,
Civic Facility Revenue Bonds (Nazareth College of
Rochester Project) Series 1995 (MBIA Insured) 2005 @ 102
5.80% Due 6/1/2010......................................... AAA 2009 @ 100 S.F. $ 760,133
145,000 County of Westmoreland, Commonwealth of Pennsylvania,
General Obligation Refunding Bonds, Series 1993G (FGIC
Insured)
#0.00% Due 6/1/2010........................................ AAA 61,033 <F6>
$ 5,000,000 $ 4,895,403
</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".
NEW YORK IM-IT INTERMEDIATE LADDERED MATURITY TRUST
General. The New York IM-IT Intermediate Laddered Maturity Trust consists of
14 issues of Securities. Eight of the Bonds in the New York IM-IT Intermediate
Laddered Maturity 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 New York IM-IT
Intermediate Laddered Maturity Trust) as follows: General Obligations, 8
(44%); Higher Education, 2 (26%); Transportation, 1 (13%); Public Building, 2
(12%) and Other Care, 1 (5%). No Bond issue has received a provisional rating.
All of the obligations in the New York IM-IT Intermediate Laddered Maturity
Trust mature within 4-10 years of the Date of Deposit. Commencing in
approximately the fourth year of the Trust, roughly 20% of the Bonds contained
in the Trust will mature each year. The dollar weighted average maturity of
the Bonds in the Trust is 5.97 years.
Risk Factors. A resident of New York State (or New York City) will be subject
to New York State (or New York City) personal income tax with respect to gains
realized when New York Obligations held in the New York IM-IT Intermediate
Laddered Maturity Trust are sold, redeemed or paid at maturity or when his
Units are sold or redeemed, such gain will equal the proceeds of sale,
redemption or payment less the tax basis of the New York Obligation or Unit
(adjusted to reflect (a) the amortization of premium or discount, if any, on
New York Obligations held in the Trust, (b) accrued original issue discount,
with respect to each New York Obligation which, at the time the New York
Obligation was issued had original issue discount, and (c) the deposit of New
York Obligations with accrued interest in the Trust after the Unitholder's
settlement date).
Interest or gain from the New York IM-IT Intermediate Laddered Maturity Trust
derived by a Unitholder who is not a resident of New York State (or New York
City) will not be subject to New York State (or New York City) personal income
tax, unless the Units are property employed in a business, trade, profession
or occupation carried on in New York State (or New York City).
Amounts paid on defaulted New York Obligations held by the Trustee under
policies of insurance issued with respect to such New York Obligations will be
excludable from income for New York State and New York City income tax
purposes, if and to the same extent as, such interest would have been
excludable if paid by the respective issuer.
For purposes of the New York State and New York City franchise tax on
corporations, Unitholders which are subject to such tax will be required to
include in their entire net income any interest or gains distributed to them
even though distributed in respect of New York obligations.
If borrowed funds are used to purchase Units in the Trust, all (or part) of
the interest on such indebtedness will not be deductible for New York State
and New York City tax purposes. The purchase of Units may be considered to
have been made with borrowed funds even though such funds are not directly
traceable to the purchase of Units in any New York Trust.
The Portfolio of the New York IM-IT Intermediate Laddered Maturity Trust
includes obligations issued by New York State (the "State"), by its various
public bodies (the "Agencies"), and/or by other entities located within the
State, including the City of New York (the "City").
Some of the more significant events relating to the financial situation in New
York are summarized below. This section provides only a brief summary of the
complex factors affecting the financial situation in New York and is based in
part on Official Statements issued by, and on other information reported by
the State, the City and the Agencies in connection with the issuance of their
respective securities.
There can be no assurance that future statewide or regional economic
difficulties, and the resulting impact on State or local government finances
generally, will not adversely affect the market value of New York Municipal
Obligations held in the portfolio of the Trust or the ability of particular
obligors to make timely payments of debt service on (or relating to) those
obligations.
The State has historically been one of the wealthiest states in the nation.
For decades, however, the State economy has grown more slowly than that of the
nation as a whole, gradually eroding the State's relative economic affluence.
Statewide, urban centers have experienced significant changes involving
migration of the more affluent to the suburbs and an influx of generally less
affluent residents. Regionally, the older Northeast cities have suffered
because of the relative success that the South and the West have had in
attracting people and business. The City has also had to face greater
competition as other major cities have developed financial and business
capabilities which make them less dependent on the specialized services
traditionally available almost exclusively in the City.
The State has for many years had a very high state and local tax burden
relative to other states. The burden of State and local taxation, in
combination with the many other causes of regional economic dislocation, has
contributed to the decisions of some businesses and individuals to relocate
outside, or not locate within, the State.
A national recession commenced in mid-1990. The downturn continued throughout
the State's 1990-91 fiscal year and was followed by a period of weak economic
growth during the 1991 calendar year. For calendar year 1992, the national
economy continued to recover, although at a rate below all post-war
recoveries. For calendar year 1993, the economy is expected to grow faster
than 1992, but still at a very moderate rate, as compared to other recoveries.
The national recession has been more severe in the State because of factors
such as a significant retrenchment in the financial services industry,
cutbacks in defense spending, and an overbuilt real estate market.
1993-94 Fiscal Year. On April 5, 1993, the State Legislature approved a $32.08
billion budget. Following enactment of the budget the 1993-94 State Financial
Plan was formulated on April 16, 1993. This Plan projects General Fund
receipts and transfers from other funds at $32.367 billion and disbursements
and transfers to other funds at $32.300 billion. In comparison to the
Governor's recommended Executive Budget for the 1993-94 fiscal year, as
revised on February 18, 1993, the 1993-94 State Financial Plan reflects
increases in both receipts and disbursements in the General Fund of $811
million.
While a portion of the increased receipts was the result of a $487 million
increase in the State's 1992-93 positive year-end margin at March 31, 1993 to
$671 million, the balance of such increased receipts is based upon (i) a
projected $269 million increase in receipts resulting from improved 1992-93
results and the expectation of an improving economy, (ii) projected additional
payments of $200 million from the Federal government as reimbursements for
indigent medical care, (iii) the early payment of $50 million of personal tax
returns in 1992-93 which otherwise would have been paid in 1993-94; offset by
(iv) the State Legislature's failure to enact $195 million of additional
revenue-raising recommendations proposed by the Governor. There can be no
assurances that all of the projected receipts referred to above will be
received.
Despite the $811 million increase in disbursements included in the 1993-94
State Financial Plan, a reduction in aid to some local government units can be
expected. To offset a portion of such reductions, the 1993-94 State Financial
Plan contains a package of mandate relief, cost containment and other
proposals to reduce the costs of many programs for which local governments
provide funding. There can be no assurance, however, that localities that
suffer cuts will not be adversely affected, leading to further requests for
State financial assistance.
There can be no assurance that the State will not face substantial potential
budget gaps in the future resulting from a significant disparity between tax
revenues projected from a lower recurring receipts base and the spending
required to maintain State programs at current levels. To address any
potential budgetary imbalance, the State may need to take significant actions
to align recurring receipts and disbursements.
1992-93 Fiscal Year. Before giving effect to a 1992-93 year-end deposit to the
refund reserve account of $671 million, General Fund receipts in 1992-93 would
have been $716 million higher than originally projected. This year-end deposit
effectively reduced 1992-93 receipts by $671 million and made those receipts
available for 1993-94.
The State's favorable performance primarily resulted from income tax
collections that were $700 million higher than projected which reflected both
stronger economic activity and tax-induced one-time acceleration of income
into 1992. In other areas larger than projected business tax collections and
unbudgeted receipts offset the loss of $200 million of anticipated Federal
reimbursement and losses of, or shortfalls in, other projected revenue
sources.
For 1992-93, disbursements and transfers to other funds (including the deposit
to the refund reserve account discussed above) totalled $30.829 billion, an
increase of $45 million above projections in April 1992.
Fiscal year 1992-93 was the first time in four years that the State did not
incur a cash-basis operating deficit in the General Fund requiring the
issuance of deficit notes or other bonds, spending cuts or other revenue
raising measures.
Indebtedness. As of March 31, 1993, the total amount of long-term State
general obligation debt authorized but unissued stood at $2.4 billion. As of
the same date, the State had approximately $5.4 billion in general obligation
bonds. The State issued $850 million in tax and revenue anticipation notes
("TRANS") on April 28, 1993. The State does not project the need to issue
additional TRANS during the State's 1993-94 fiscal year.
The State projects that its borrowings for capital purposes during the State's
1993-94 fiscal year will consist of $460 million in general obligation bonds
and $140 million in new commercial paper issuances. In addition, the State
expects to issue $140 million in bonds for the purpose of redeeming
outstanding bond anticipation notes. The Legislature has authorized the
issuance of up to $85 million in certificates of participation during the
State's 1993-94 fiscal year for personal and real property acquisitions during
the State's 1993-94 fiscal year. The projection of the State regarding its
borrowings for the 1993-94 fiscal year may change if actual receipts fall
short of State projections or if other circumstances require.
In June 1990, legislation was enacted creating the "New York Local Government
Assistance Corporation"("LGAC"), a public benefit corporation empowered to
issue long-term obligations to fund certain payments to local governments
traditionally funded through the State's annual seasonal borrowing. To date,
LGAC has issued its bonds to provide net proceeds of $3.28 billion. LGAC has
been authorized to issue additional bonds to provide net proceeds of $703
million during the State's 1993-94 fiscal year.
Ratings. The $850 million in TRANS issued by the State in April 1993 were
rated SP-1-Plus by S&P on April 26, 1993, and MIG-1 by Moody's on April 23,
1993, which represents the highest ratings given by such agencies and the
first time the State's TRANS have received these ratings since its May 1989
TRANS issuance. Both agencies cited the State's improved fiscal position as a
significant factor in the upgrading of the April 1993 TRANS.
Moody's rating of the State's general obligation bonds stood at A on April 23,
1993, and S&P's rating stood at A- with a stable outlook on April 26, 1993, an
improvement from S&P's negative outlook prior to April 1993. Previously,
Moody's lowered its rating to A on June 6, 1990, its rating having been A1
since May 27, 1986. S&P lowered its rating from A to A- on January 13, 1992.
S&P's previous ratings were A from March 1990 to January 1992, AA- from August
1987 to March 1990 and A+ from November 1982 to August 1987.
Moody's, in confirming its rating of the State's general obligation bonds, and
S&P, in improving its outlook on such bonds from negative to stable, noted the
State's improved fiscal condition and reasonable revenue assumptions contained
in the 1993-94 State budget.
The City accounts for approximately 41% of the State's population and personal
income, and the City's financial health affects the State in numerous ways.
In response to the City's fiscal crisis in 1975, the State took a number of
steps to assist the City in returning to fiscal stability. Among other
actions, the State Legislature (i) created MAC to assist with long-term
financing for the City's short-term debt and other cash requirements and (ii)
created the State Financial Control Board (the "Control Board") to review and
approve the City's budgets and City four-year financial plans (the financial
plans also apply to certain City-related public agencies (the "Covered
Organizations").
In February 1975, the New York State Urban Development Corporation ("UDC"),
which had approximately $1 billion of outstanding debt, defaulted on certain
of its short-term notes. Shortly after the UDC default, the City entered a
period of financial crisis. Both the State Legislature and the United States
Congress enacted legislation in response to this crisis. During 1975, the
State Legislature (i) created MAC to assist with long-term financing for the
City's short-term debt and other cash requirements and (ii) created the State
Financial Control Board (the "Control Board") to review and approve the City's
budgets and City four-year financial plans (the financial plans also apply to
certain City-related public agencies (the "Covered Organizations").
Over the past three years, the rate of economic growth in the City has slowed
substantially, and the City's economy is currently in recession. The City
projects, and its current four-year financial plan assumes, a recovery early
in the 1993 calendar year. The Mayor is responsible for preparing the City's
four-year financial plan, including the City's current financial plan. The
City Comptroller has issued reports concluding that the recession of the
City's economy will be more severe and last longer than is assumed in the
financial plan.
Fiscal Year 1993 and 1993-1996 Financial Plan. The City's 1993 fiscal year
results are projected to be balanced in accordance with generally accepted
accounting principles ("GAAP"). The City was required to close substantial
budget gaps in its 1990, 1991 and 1992 fiscal years in order to maintain
balanced operating results.
The City's modified Financial Plan dated February 9, 1993 covering fiscal
years 1993-1996 projects budget gaps for 1994 through 1996. The Office of the
State Deputy Controller for the City of New York has estimated that under the
modified Financial Plan budget gaps will be $102 million for fiscal year 1994,
$196 million for fiscal year 1995 and $354 million for fiscal year 1996,
primarily due to anticipated higher spending on labor costs.
However, the City's modified Plan is dependent upon a gap-closing program,
certain elements of which the staff of Control Board identified on March 25,
1993 to be at risk due to projected levels of State and Federal aid and
revenue and expenditures estimates which may not be achievable. The Control
Board indicated that the City's modified Financial Plan does not make progress
towards establishing a balanced budget process. The Control Board's report
identified budget gap risks of $1.0 billion, $1.9 billion, $2.3 billion and
$2.6 billion in fiscal years 1994 through 1997, respectively.
On June 3, 1993, the Mayor announced that State and federal aid for Fiscal
Year 1993-1994 would be $280 million less than projected and that in order to
balance the City's budget $176 million of previously announced contingent
budget cuts would be imposed. The Mayor indicated that further savings would
entail serious reductions in services. The State Comptroller on June 14, 1993
criticized efforts by the Mayor and City Council to balance the City's budget
which rely primarily on one-shot revenues. The Comptroller added that the
City's budget should be based on "recurring revenues that fund recurring
expenditures."Given the foregoing factors, there can be no assurance that the
City will continue to maintain a balanced budget, or that it can maintain a
balanced budget without additional tax or other revenue increases or
reductions in City services, which could adversely affect the City's economic
base.
Pursuant to State law, the City prepares a four-year annual financial plan,
which is reviewed and revised on a quarterly basis and which includes the
City's capital, revenue and expense projections. The City is required to
submit its financial plans to review bodies, including the Control Board. If
the City were to experience certain adverse financial circumstances, including
the occurrence or the substantial likelihood and imminence of the occurrence
of an annual operating deficit of more than $100 million or the loss of access
to the public credit markets to satisfy the City's capital and seasonal
financial requirements, the Control Board would be required by State law to
exercise certain powers, including prior approval of City financial plans,
proposed borrowings and certain contracts.
The City depends on the State for State aid both to enable the City to balance
its budget and to meet its cash requirements. As a result of the national and
regional economic recession, the State's projections of tax revenues for its
1991 and 1992 fiscal years were substantially reduced. For its 1993 fiscal
year, the State, before taking any remedial action reflected in the State
budget enacted by the State Legislature on April 2, 1992 reported a potential
budget deficit of $4.8 billion. If the State experiences revenue shortfalls or
spending increases beyond its projections during its 1993 fiscal year or
subsequent years, such developments could also result in reductions in
projected State aid to the City. In addition, there can be no assurance that
State budgets in future fiscal years will be adopted by the April 1 statutory
deadline and that there will not be adverse effects on the City's cash flow
and additional City expenditures as a result of such delays.
The City's projections set forth in its financial plan are based on various
assumptions and contingencies which are uncertain and which may not
materialize. Changes in major assumptions could significantly affect the
City's ability to balance its budget as required by State law and to meet its
annual cash flow and financing requirements. Such assumptions and
contingencies include the timing of any regional and local economic recovery,
the absence of wage increases in excess of the increases assumed in its
financial plan, employment growth, provision of State and Federal aid and
mandate relief, State legislative approval of future State budgets, levels of
education expenditures as may be required by State law, adoption of future
City budgets by the New York City Council, and approval by the Governor or the
State Legislature and the cooperation of MAC with respect to various other
actions proposed in such financial plan.
The City's ability to maintain a balanced operating budget is dependent on
whether it can implement necessary service and personnel reduction programs
successfully. As discussed above, the City must identify additional
expenditure reductions and revenue sources to achieve balanced operating
budgets for fiscal years 1994 and thereafter. Any such proposed expenditure
reductions will be difficult to implement because of their size and the
substantial expenditure reductions already imposed on City operations in the
past two years.
Attaining a balanced budget is also dependent upon the City's ability to
market its securities successfully in the public credit markets. The City's
financing program for fiscal years 1993 through 1996 contemplates issuance of
$15.7 billion of general obligation bonds primarily to reconstruct and
rehabilitate the City's infrastructure and physical assets and to make capital
investments. A significant portion of such bond financing is used to reimburse
the City's general fund for capital expenditures already incurred. In
addition, the City issues revenue and tax anticipation notes to finance its
seasonal working capital requirements. The terms and success of projected
public sales of City general obligation bonds and notes will be subject to
prevailing market conditions at the time of the sale, and no assurance can be
given that the credit markets will absorb the projected amounts of public bond
and note sales. In addition, future developments concerning the City and
public discussion of such developments, the City's future financial needs and
other issues may affect the market for outstanding City general obligation
bonds and notes. If the City were unable to sell its general obligation bonds
and notes, it would be prevented from meeting its planned operating and
capital expenditures.
The City Comptroller, the staff of the Control Board, the Office of the State
Deputy Comptroller for the City of New York (the "OSDC") and other agencies
and public officials have issued reports and made public statements which,
among other things, state that projected revenues may be less and future
expenditures may be greater than those forecast in the financial plan. In
addition, the Control Board and other agencies have questioned whether the
City has the capacity to generate sufficient revenues in the future to meet
the costs of its expenditure increases and to provide necessary services. It
is reasonable to expect that such reports and statements will continue to be
issued and to engender public comment.
Fiscal Years 1990, 1991 and 1992. The City achieved balanced operating results
as reported in accordance with GAAP for the 1992 fiscal year. During the 1990
and 1991 fiscal years, the City implemented various actions to offset a
projected budget deficit of $3.2 billion for the 1991 fiscal year, which
resulted from declines in City revenue sources and increased public assistance
needs due to the recession. Such actions included $822 million of tax
increases and substantial expenditure reductions.
The quarterly modification to the City's financial plan submitted to the
Control Board on May 7, 1992 (the "1992 Modification") projected a balanced
budget in accordance with GAAP for the 1992 fiscal year after taking into
account a discretionary transfer of $455 million to the 1993 fiscal year as
the result of a 1992 fiscal year surplus. In order to achieve a balanced
budget for the 1992 fiscal year, during the 1991 fiscal year, the City
proposed various actions for the 1992 fiscal year to close a projected gap of
$3.3 billion in the 1992 fiscal year.
On November 19, 1992, the City submitted to the Control Board the Financial
Plan for the 1993 through 1996 fiscal years, which is a modification to a
financial plan submitted to the Control Board on June 11, 1992 (the "June
Financial Plan"), and which relates to the City, the Board of Education
("BOE") and the City University of New York ("CUNY"). The 1993-1996 Financial
Plan projects revenues and expenditures of $29.9 billion each for the 1993
fiscal year balanced in accordance with GAAP.
During the 1992 fiscal year, the City proposed various actions to close a
previously projected gap of approximately $1.2 billion for the 1993 fiscal
year. The gap-closing actions for the 1993 fiscal year proposed during the
1992 fiscal year and outlined in the City's June Financial Plan included $489
million of discretionary transfers from the 1992 fiscal year. The 1993-1996
City Financial Plan includes additional gap-closing actions to offset an
additional potential $81 million budget gap.
The 1993-1996 Financial Plan also sets forth projections and outlines a
proposed gap-closing program for the 1994 through 1996 fiscal years to close
projected budget gaps of $1.7 billion, $2.0 billion and $2.6 billion,
respectively, in the 1994 through 1996 fiscal years. On February 9, 1993, the
City issued a modification to the 1993-1996 Financial Plan (the "February
Modification"). The February Modification projects budget gaps for fiscal
years 1994, 1995 and 1996 of $2.1 billion, $3.1 billion and $3.8 billion,
respectively.
Various actions proposed in the 1993-1996 Financial Plan are subject to
approval by the Governor and approval by the State Legislature, and the
proposed increase in Federal aid is subject to approval by Congress and the
President. The State Legislature has in the past failed to approve certain
proposals similar to those that the 1993-1996 Financial Plan assumes will be
approved by the State Legislature during the 1993 fiscal year. If these
actions cannot be implemented, the City will be required to take other actions
to decrease expenditures or increase revenues to maintain a balanced financial
plan.
On March 9, 1993, OSDC issued a report on the February Modification. The
report expressed concern that the budget gaps projected for fiscal years 1994
through 1996 are the largest the City has faced at this point in the financial
planning cycle in at least a decade, and concluded that the February
Modification represented a step backward in the City's efforts to bring
recurring revenues into line with recurring expenditures.
The City is a defendant in a significant number of lawsuits. Such litigation
includes, but is not limited to, actions commenced and claims asserted against
the City arising out of alleged constitutional violations, torts, breaches of
contracts, and other violations of law and condemnation proceedings. While the
ultimate outcome and fiscal impact, if any, on the proceedings and claims are
not currently predictable, adverse determinations in certain of them might
have a material adverse effect upon the City's ability to carry out its
financial plan. As of June 30, 1992, legal claims in excess of $341 billion
were outstanding against the City for which the City estimated its potential
future liability to be $2.3 billion.
As of the date of this prospectus, Moody's rating of the City's general
obligation bonds stood at Baa1 and S&P's rating stood at A-. On February 11,
1991, Moody's had lowered its rating from A.
On March 30, 1993, in confirming its Baa1 rating, Moody's noted that:
The financial plan for fiscal year 1994 and beyond shows an ongoing imbalance
between the City's expenditures and revenues. The key indication of this
structural imbalance is not necessarily the presence of sizable out-year
budget gaps, but the recurring use of one-shot actions to close gaps.
One-shots constitute a significant share of the proposed gap-closing program
for fiscal year 1994, and they represent an even larger share of those
measures which the City seems reasonably certain to attain. Several major
elements of the program, including certain state actions, federal counter
cyclical aid and part of the city's tax package, remain uncertain. However,
the gap closing plan may be substantially altered when the executive budget is
offered later this spring.
On March 30, 1993, S&P affirmed its A- rating with a negative outlook, stating
that:
The City's key credit factors are marked by a high and growing debt burden,
and taxation levels that are relatively high, but stable. The City's economy
is broad-based and diverse, but currently is in prolonged recession, with slow
growth prospects for the foreseeable future.
The rating outlook is negative, reflecting the continued fiscal pressure
facing the City, driven by continued weakness in the local economy, rising
spending pressures for education and labor costs of city employees, and
increasing costs associated with rising debt for capital construction and
repair.
The current financial plan for the City assumes substantial increases in aid
from national and state governments. Maintenance of the current rating, and
stabilization of the rating outlook, will depend on the City's success in
realizing budgetary aid from these governments, or replacing those revenues
with ongoing revenue-raising measures or spending reductions under the City's
control. However, increased reliance on non-recurring budget balancing
measures that would support current spending, but defer budgetary gaps to
future years, would be viewed by S&P as detrimental to New York City's
single-'A-' rating.
Previously, Moody's had raised its rating to A in May, 1988, to Baa1 in
December, 1985, to Baa in November, 1983 and to Ba1 in November, 1981. S&P had
raised its rating to A- in November, 1987, to BBB+ in July, 1985 and to BBB in
March, 1981.
On May 9, 1990, Moody's revised downward its rating on outstanding City
revenue anticipation notes from MIG-1 to MIG-2 and rated the $900 million
Notes then being sold MIG-2. On April 30, 1991 Moody's confirmed its MIG-2
rating for the outstanding revenue anticipation notes and for the $1.25
billion in notes then being sold. On April 29, 1991, S&P revised downward its
rating on City revenue anticipation notes from SP-1 to SP-2.
As of December 31, 1992, the City and MAC had, respectively, $20.3 billion and
$4.7 billion of outstanding net long-term indebtedness.
Certain Agencies of the State have faced substantial financial difficulties
which could adversely affect the ability of such Agencies to make payments of
interest on, and principal amounts of, their respective bonds. The
difficulties have in certain instances caused the State (under so-called
"moral obligation"provisions which are non-binding statutory provisions for
State appropriations to maintain various debt service reserve funds) to
appropriate funds on behalf of the Agencies. Moreover, it is expected that the
problems faced by these Agencies will continue and will require increasing
amounts of State assistance in future years. Failure of the State to
appropriate necessary amounts or to take other action to permit those Agencies
having financial difficulties to meet their obligations could result in a
default by one or more of the Agencies. Such default, if it were to occur,
would be likely to have a significant adverse effect on investor confidence
in, and therefore the market price of, obligations of the defaulting Agencies.
In addition, any default in payment on any general obligation of any Agency
whose bonds contain a moral obligation provision could constitute a failure of
certain conditions that must be satisfied in connection with Federal
guarantees of City and MAC obligations and could thus jeopardize the City's
long-term financing plans.
As of September 30, 1992, the State reported that there were eighteen Agencies
that each had outstanding debt of $100 million or more. These eighteen
Agencies had an aggregate of $62.2 billion of outstanding debt, including
refunding bonds, of which the State was obligated under lease-purchase,
contractual obligation or moral obligation provisions on $25.3 billion.
The State is a defendant in numerous legal proceedings pertaining to matters
incidental to the performance of routine governmental operations. Such
litigation includes, but is not limited to, claims asserted against the State
arising from alleged torts, alleged breaches of contracts, condemnation
proceedings and other alleged violations of State and Federal laws. Included
in the State's outstanding litigation are a number of cases challenging the
constitutionality or the adequacy and effectiveness of a variety of
significant social welfare programs primarily involving the State's mental
hygiene programs. Adverse judgments in these matters generally could result in
injunctive relief coupled with prospective changes in patient care which could
require substantial increased financing of the litigated programs in the
future.
The State is also engaged in a variety of claims wherein significant monetary
damages are sought. Actions commenced by several Indian nations claim that
significant amounts of land were unconstitutionally taken from the Indians in
violation of various treaties and agreements during the eighteenth and
nineteenth centuries. The claimants seek recovery of approximately six million
acres of land as well as compensatory and punitive damages.
The U.S. Supreme Court on March 30, 1993 referred to a Special Master for
determination of damages in an action by the State of Delaware to recover
certain unclaimed dividends, interest and other distributions made by issuers
of securities held by New York based-brokers incorporated in Delaware. (State
of Delaware v. State of New York.) The State had taken such unclaimed property
under its Abandoned Property Law. The State expects that it may pay a
significant amount in damages during fiscal year 1993-94 but it has indicated
that it has sufficient funds on hand to pay any such award, including funds
held in contingency reserves. The State's 1993-94 Financial Plan includes the
establishment of a $100 million contingency reserve fund which would be
available to fund such an award which some reports have estimated at $100-$800
million.
In Schulz v. State of New York, commenced May 24, 1993 ("Schulz 1993"),
petitioners have challenged the constitutionality of mass transportation
bonding programs of the New York State Thruway Authority and the Metropolitan
Transportation Authority. On May 24, 1993, the Supreme Court, Albany County,
temporarily enjoined the State from implementing those bonding programs. In
previous actions Mr. Schulz and others have challenged on similar grounds
bonding programs for the New York State Urban Development Corporation and the
New York Local Government Assistance Corporation. While there have been no
decisions on the merits in such previous actions, by an opinion dated May 11,
1993, the New York Court of Appeals held in a proceeding commenced on April
29, 1991 in the Supreme Court, Albany County (Schulz v. State of New York),
that petitioners had standing as voters under the State Constitution to bring
such action.
Petitioners in Schulz 1993 have asserted that issuance of bonds by the two
Authorities is subject to approval by statewide referendum. At this time there
can be no forecast of the likelihood of success on the merits by the
petitioners, but a decision upholding this constitutional challenge could
restrict and limit the ability of the State and its instrumentalities to
borrow funds in the future. The State has not indicated that the temporary
injunction issued by the Supreme Court in this action will have any immediate
impact on its financial condition or interfere with projects requiring
immediate action.
Adverse developments in the foregoing proceedings or new proceedings could
adversely affect the financial condition of the State in the future.
Certain localities in addition to New York City could have financial problems
leading to requests for additional State assistance. Both the Revised
1992-1993 State Financial Plan and the recommended 1993-94 State Financial
Plan includes a significant reduction in State aid to localities in such
programs as revenue sharing and aid to education from projected base-line
growth in such programs. It is expected that such reductions will result in
the need for localities to reduce their spending or increase their revenues.
The potential impact on the State of such actions by localities is not
included in projections of State receipts and expenditures in the State's
1993-94 fiscal year.
Fiscal difficulties experienced by the City of Yonkers ("Yonkers") resulted in
the creation of the Financial Control Board for the City of Yonkers (the
"Yonkers Board") by the State in 1984. The Yonkers Board is charged with
oversight of the fiscal affairs of Yonkers. Future actions taken by the
Governor or the State Legislature to assist Yonkers could result in allocation
of State resources in amounts that cannot yet be determined.
Municipalities and school districts have engaged in substantial short-term and
long-term borrowings. In 1991, the total indebtedness of all localities in the
State was approximately $31.6 billion, of which $16.8 billion was debt of New
York City (excluding $6.7 billion in MAC debt). State law requires the
Comptroller to review and make recommendations concerning the budgets of those
local government units other than New York City authorized by State law to
issue debt to finance deficits during the period that such deficit financing
is outstanding. Fifteen localities had outstanding indebtedness for state
financing at the close of their fiscal year ending in 1991. In 1992, an
unusually large number of local government units requested authorization for
deficit financings. According to the Comptroller, ten local government units
have been authorized to issue deficit financing in the aggregate amount of
$131.1 million.
Certain proposed Federal expenditure reductions could reduce, or in some cases
eliminate, Federal funding of some local programs and accordingly might impose
substantial increased expenditure requirements on affected localities. If the
State, New York City or any of the Agencies were to suffer serious financial
difficulties jeopardizing their respective access to the public credit
markets, the marketability of notes and bonds issued by localities within the
State, including notes or bonds in the New York IM-IT Intermediate Laddered
Maturity Trust, could be adversely affected. Localities also face anticipated
and potential problems resulting from certain pending litigation, judicial
decisions, and long-range economic trends. The longer-range potential problems
of declining urban population, increasing expenditures, and other economic
trends could adversely affect localities and require increasing State
assistance in the future.
Tax Status. For a discussion of the Federal tax status of income earned on New
York IM-IT Intermediate Laddered Maturity Trust Units, see "Other
Matters--Federal Tax Status".
In the opinion of Tanner Propp & Farber, special counsel to the Fund for New
York tax matters, under existing New York law:
The New York IM-IT Intermediate Laddered Maturity Trust is not an association
taxable as a corporation and the income of the New York IM-IT Intermediate
Laddered Maturity Trust will be treated as the income of the Unitholders under
the income tax laws of the State and City of New York. Individuals who reside
in New York State or City will not be subject to State and City tax on
interest income which is exempt from Federal income tax under section 103 of
the Internal Revenue Code of 1986 and derived from obligations of New York
State or a political subdivision thereof, although they will be subject to New
York State and City tax with respect to any gains realized when such
obligations are sold, redeemed or paid at maturity or when any such Units are
sold or redeemed.
<TABLE>
<CAPTION>
Per Unit Information: Semi-
Monthly Annual
<S> <C> <C>
Calculation of Estimated Net Annual Unit Income <F1>:
Estimated Annual Interest Income per Unit................................. $ 44.47 $ 44.47
Less: Estimated Annual Expense per Unit <F2>.............................. $ 2.44 $ 1.98
Less: Annual Premium on Portfolio Insurance per Unit...................... -- --
Estimated Net Annual Interest Income per Unit............................. $ 42.03 $ 42.49
Calculation of Estimated Interest Earnings per Unit:
Estimated Net Annual Interest Income per Unit............................. $ 42.03 $ 42.49
Divided by 12 and 2, respectively......................................... $ 3.50 $ 21.25
Estimated Daily Rate of Net Interest Accrual per Unit...................... $ .11674 $ .11802
Estimated Current Return Based on Public Offering Price <F1><F3><F4><F5>... 4.10% 4.14%
Estimated Long-Term Return <F3><F4><F5>.................................... 4.25% 4.30%
Estimated Initial Monthly Distribution (August 1995)....................... $ 3.62
Estimated Initial Semi-annual Distribution (November 1995)................. $ 14.28
Estimated Normal Distribution per Unit <F5>................................ $ 3.50 $ 21.25
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Trustee's Annual Fee <F1>...... $.91 and $.51 per $1,000 principal amount of Bonds, respectively, for those portions of the
New York IM-IT Intermediate Laddered Maturity Trust under the monthly and semi-annual
distribution plans
Record and Computation Dates... FIRST day of the month as follows: monthly--each month; semi-annual--May and November
Distribution Dates............. FIFTEENTH day of the month as follows: monthly--each month; semi-annual--May
and November commencing August 15, 1995
<FN>
<F1>During the first year the Trustee will reduce its fee by approximately $.05
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 $44.52. Estimated Annual Expense per Unit (excluding
insurance) will be increased to $2.49 and $2.03 under the monthly and
semi-annual distribution plans, respectively; and Estimated Net Annual
Interest Income per Unit will remain the same as shown. See "Estimated Current
Returns and Estimated Long-Term Returns."
<F2>Excluding insurance costs. The Estimated Annual Expenses are expected to
fluctuate periodically (see "Trust Administration--Fund Administration and
Expenses--Miscellaneous Expenses").
<F3>The Estimated Current Returns and Estimated Long-Term Returns are increased
for transactions entitled to a reduced sales charge. See "Unitholder
Explanations--Public Offering--General".
<F4>The Estimated Current Returns are calculated by dividing the Estimated Net
Annual Interest Income per Unit by the Public Offering Price. The Estimated
Net Annual Interest Income per Unit will vary with changes in fees and
expenses of the Trustee 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; therefore, there is no assurance that the present Estimated
Current Returns indicated above will be realized in the future. The Estimated
Long-Term Returns are calculated using a formula which (1) takes into
consideration, and determines and factors in the relative weightings of, the
market values, yields (which takes into account the amortization of premiums
and the accretion of discounts) and estimated retirements of all of the
Securities in the Trust and (2) takes into account the expenses and sales
charge associated with each Trust Unit. Since the market values and estimated
retirements of the Securities and the expenses of the Trust will change, there
is no assurance that the present Estimated Long-Term Returns as indicated
above will be realized in the future. The Estimated Current Returns and
Estimated Long-Term Returns 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".
</TABLE>
<TABLE>
NEW YORK INTERMEDIATE LADDERED MATURITY
SERIES 16 (179TH INSURED MULTI-SERIES)
PORTFOLIO As of June 27, 1995
<CAPTION>
Offering
Price To
New York
IM-IT
Intermediate
Laddered
Aggregate Name of Issuer, Title, Interest Rate andMaturity Date of Redemption Maturity
Principal<F1> either Bonds Deposited orBonds Contracted for<F1><F5> Rating<F2> Feature<F3> Trust<F4>
<S> <C> <C> <C> <C>
$ 250,000 County of Erie, New York, General Obligation Bonds, Series
1995B (FGIC Insured)
#100M-4.40% Due 6/15/1999..................................... AAA 100,375
150M-5.00% Due 6/15/2003...................................... AAA $ 151,538
500,000 New York Dormitory Authority, Revenue Refunding Bonds (New
York University) Series 1993A (MBIA Insured)
#4.20% Due 7/1/1999........................................... AAA 498,240
145,000 New York Medical Care Facilities Finance Agency, Revenue
Refunding Bonds, Mental Health Services, Series F (FSA
Insured)
#4.30% Due 2/15/2000.......................................... AAA 143,445
390,000 Metropolitan Transportation Authority, New York,
Transportation Facilities Revenue Refunding Bonds, Series M
(AMBAC Indemnity Insured)
#4.50% Due 7/1/2000........................................... AAA 390,597
355,000 New York City Industrial Development Agency (New York) Civic
Facility Revenue Bonds (New School for Social Research
Project) Series 1995A (MBIA Insured)**
#65M-4.60% Due 9/1/2000....................................... AAA 65,388
290M-4.80% Due 9/1/2002....................................... AAA 291,087
150,000 Rensselaer County, New York, General Obligation Bonds, Series
A (FGIC Insured)
#0.00% Due 5/1/2001........................................... AAA 113,877 <F6>
450,000 City of Glen Cove, Nassau County, New York, General
Obligation Bonds, Series 1995A (FGIC Insured)
4.60% Due 6/15/2001........................................... AAA 449,361
210,000 Sherrill, New York, City School District Bonds, Unlimited
Tax- General Obligation, Series 1995 (Bank Qualified) AMBAC
Indemnity Insured
4.75% Due 6/15/2002........................................... AAA 212,018
100,000 The City of New York, General Obligation Bonds, Fiscal 1992
Series I (FSA Insured)
6.00% Due 8/1/2002............................................ AAA 106,890
295,000 County of Monroe Industrial Development Agency (New York)
Civic Facility Revenue Bonds (Nazareth College of Rochester
Project) Series 1995 (MBIA Insured)
5.10% Due 6/1/2003............................................ AAA 299,927
Offering
Price To
New York
IM-IT
Intermediate
Laddered
Aggregate Name of Issuer, Title, Interest Rate andMaturity Date of Redemption Maturity
Principal<F1> either Bonds Deposited orBonds Contracted for<F1><F5> Rating<F2> Feature<F3> Trust<F4>
$ 30,000 East Glenville, New York, Fire District No. 3, Unlimited
Tax-General Obligation Bonds, Series 1995 (AMBAC Indemnity
Insured)
5.60% Due 6/15/2003........................................... AAA $ 31,583
125,000 Norwood-Norfolk, New York, Central School District, Unlimited
Tax-General Obligation Bonds, Series 1995 (Bank Qualified)
MBIA Insured
5.25% Due 6/15/2003........................................... AAA 129,151
$ 3,000,000 $ 2,983,477
</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".
PENNSYLVANIA IM-IT TRUST
General. The Pennsylvania IM-IT Trust consists of 8 issues of Securities.
Three of the Bonds in the Pennsylvania 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 Pennsylvania IM-IT Trust) as follows: General
Obligations, 3 (33%); Health Care, 2 (26%); General Purpose, 1 (17%); Water
and Sewer, 1 (16%) and Higher Education, 1 (8%). No Bond issue has received a
provisional rating.
Risk Factors. Investors should be aware of certain factors that might affect
the financial conditions of the Commonwealth of Pennsylvania. Pennsylvania
historically has been identified as a heavy industry state although that
reputation has changed recently as the industrial composition of the
Commonwealth diversified when the coal, steel and railroad industries began to
decline. A more diversified economy was necessary as the traditionally strong
industries in the Commonwealth declined due to a long-term shift in jobs,
investment and workers away from the northeast part of the nation. The major
sources of growth in Pennsylvania are in the service sector, including trade,
medical and the health services, education and financial institutions.
Pennsylvania's agricultural industries are also an important component of the
Commonwealth's economic structure, accounting for more than $3.6 billion in
crop and livestock products annually, while agribusiness and food related
industries support $39 billion in economic activity annually.
Non-agricultural employment in the Commonwealth declined by 5.1 percent during
the recessionary period from 1980 to 1983. In 1984, the declining trend was
reversed as employment grew by 2.9 percent over 1983 levels. From 1983 to
1990, Commonwealth employment continued to grow each year, increasing an
additional 14.3 percent. For the last three years, unemployment in the
Commonwealth has declined 1.2 percent. The growth in employment experienced in
Pennsylvania is comparable to the growth in employment in the Middle Atlantic
Region which has occurred during this period.
Back to back recessions in the early 1980s reduced the manufacturing sector's
employment levels moderately during 1980 and 1981, sharply during 1982, and
even further in 1983. Non-manufacturing employment has increased steadily
since 1980 to its 1993 level of 81.6 percent of total Commonwealth employment.
Consequently, manufacturing employment constitutes a diminished share of total
employment within the Commonwealth. Manufacturing, contributing 18.4 percent
of 1993 non-agricultural employment, has fallen behind both the services
sector and the trade sector as the largest single source of employment within
the Commonwealth. In 1993 the services sector accounted for 29.9 percent of
all non-agricultural employment while the trade sector accounted for 22.4
percent.
From 1983 to 1989, Pennsylvania's annual average unemployment rate dropped
from 11.8 percent to 4.5 percent, falling below the national rate in 1986 for
the first time in over a decade. Pennsylvania's annual average unemployment
rate remained below the national average from 1986 until 1990. Slower economic
growth caused the unemployment rate in the Commonwealth to rise to 6.9 percent
in 1991 and 7.5 percent in 1992. The resumption of faster economic growth
resulted in a decrease in the Commonwealth's unemployment rate to 7.1 percent
in 1993. As of July 1994, the seasonally adjusted unemployment rate for the
Commonwealth was 6.5 percent compared to 6.1 percent for the United States.
The five year period from fiscal 1989 through fiscal 1993 was marked by public
health and welfare costs growing at a rate double the growth rate for all the
state expenditures. Rising caseloads, increased utilization of services and
rising prices joined to produce the rapid rise of public health and welfare
costs at a time when a national recession caused tax revenues to stagnate and
even decline. During the period from fiscal 1989 through fiscal 1993, public
health and welfare costs rose by an average annual rate of 10.9 percent while
tax revenues were growing at an average annual rate of 5.5 percent.
Consequently, spending on other budget programs was restrained to a growth
rate below 5.0 percent and sources of revenues other than taxes became larger
components of fund revenues. Among those sources are transfers from other
funds and hospital and nursing home pooling of contributions to use as federal
matching funds.
Tax revenues declined in fiscal 1991 as a result of the recession in the
economy. A $2.7 billion tax increase enacted for fiscal 1992 brought financial
stability to the General Fund. That tax increase included several taxes with
retroactive effective dates which generated some one-time revenues during
fiscal 1992. The absence of those revenues in fiscal 1993 contributed to the
decline in tax revenues shown for fiscal 1993.
It should be noted that the creditworthiness of obligations issued by local
Pennsylvania issuers may be unrelated to the creditworthiness of obligations
issued by the Commonwealth of Pennsylvania, and there is no obligation on the
part of the Commonwealth to make payment on such local obligations in the
event of default.
Financial information for the principal operating funds of the Commonwealth is
maintained on a budgetary basis of accounting. A budgetary basis of accounting
is used for the purpose of ensuring compliance with the enacted operating
budget and is governed by applicable statutes of the Commonwealth and by
administrative procedures. The Commonwealth also prepares annual financial
statements in accordance with generally accepted accounting principles
("GAAP"). The budgetary basis financial information maintained by the
Commonwealth to monitor and enforce budgetary control is adjusted at fiscal
year-end to reflect appropriate accruals for financial reporting in conformity
with GAAP.
Fiscal 1991 Financial Results. GAAP Basis: During fiscal 1991 the General Fund
experienced an $861.2 million operating deficit resulting in a fund balance
deficit of $980.9 million at June 30, 1991. The operating deficit was a
consequence of the effect of a national recession that restrained budget
revenues and pushed expenditures above budgeted levels. At June 30, 1991, a
negative unreserved-undesignated balance of $1,146.2 million was reported.
During fiscal 1991 the balance then available in the Tax Stabilization Reserve
Fund was used to maintain vital state spending.
Budgetary Basis: A deficit of $453.6 million was recorded by the General Fund
at June 30, 1991. The deficit was a consequence of higher-than-budgeted
expenditures and lower-than-estimated revenues during the fiscal year brought
about by the national economic recession that began during the fiscal year.
The budgetary basis deficit at June 30, 1991 was carried into the 1992 fiscal
year and funded in the fiscal 1992 budget. A number of actions were taken
throughout the fiscal year by the Commonwealth to mitigate the effects of the
recession on budget revenues and expenditures. Actions taken, together with
normal appropriation lapses, produced $871 million in expenditure reductions
and increases in revenues and other transfers for the fiscal year. The most
significant of these actions were a $214 million transfer from the
Pennsylvania Industrial Development Authority, a $134 million transfer from
the Tax Stabilization Reserve Fund, and a pooled financing program to match
federal Medicaid funds replacing $145 million of state funds.
Fiscal 1992 Financial Results. GAAP Basis: During fiscal 1992 the General Fund
reported a $1.1 billion operating surplus. This operating surplus was achieved
through legislated tax rate increases and tax base broadening measures enacted
in August 1991 and by controlling expenditures through numerous cost reduction
measures implemented throughout the fiscal year. As a result of the fiscal
1992 operating surplus, the fund balance increased to $87.5 million and the
unreserved-undesignated deficit dropped to $138.6 million from its fiscal 1991
level of $1,146.2 million.
Budgetary Basis: Eliminating the budget deficit carried into fiscal 1992 from
fiscal 1991 and providing revenues for fiscal 1992 budgeted expenditures
required tax revisions that were estimated to have increased receipts for the
1992 fiscal year by over $2.7 billion. Total revenues for the fiscal year were
$14,516.8 million, a $2,654.5 million increase over cash revenues during
fiscal 1991. Originally based on forecasts for an economic recovery, the
budget revenue estimates were revised downward during the fiscal year to
reflect continued recessionary economic activity. Largely due to the tax
revisions enacted for the budget, corporate tax receipts totalled $3,761.2
million, up from $2,656.3 million in fiscal 1991, sales tax receipts increased
by $302 million to $4,499.7 million, and personal income tax receipts totalled
$4,807.4 million, an increase of $1,443.8 million over receipts in fiscal
1991.
As a result of the lowered revenue estimate during the fiscal year, increased
emphasis was placed on restraining expenditure growth and reducing expenditure
levels. A number of cost reductions were implemented during the fiscal year
that contributed to $296.8 million of appropriation lapses. These
appropriation lapses were responsible for the $8.8 million surplus at fiscal
year-end, after accounting for the required ten percent transfer of the
surplus to the Tax Stabilization Reserve Fund.
Spending increases in the fiscal 1992 budget were largely accounted for by
increases for education, social services and corrections programs.
Commonwealth funds for the support of public schools were increased by 9.8
percent to provide a $438 million increase to $4.9 billion for fiscal 1992.
The fiscal 1992 budget provided additional funds for basic and special
education and included provisions designed to help restrain the annual
increase of special education costs, an area of recent rapid cost increases.
Child welfare appropriations supporting county operated child welfare programs
were increased $67 million, more than 31.5 percent over fiscal 1991. Other
social service areas such as medical and cash assistance also received
significant funding increases as costs rose quickly as a result of the
economic recession and high inflation rates of medical care costs. The costs
of corrections programs, reflecting the marked increase in the prisoner
population, increased by 12 percent. Economic development efforts, largely
funded from bond proceeds in fiscal 1991, were continued with General Fund
appropriations for fiscal 1992.
The budget included the use of several Medicaid pooled financing transactions.
These pooling transactions replaced $135 million of Commonwealth funds,
allowing total spending under the budget to increase by an equal amount.
Fiscal 1993 Financial Results. GAAP Basis: The fund balance of the General
Fund increased by $611.4 million during the fiscal year, led by an increase in
the unreserved balance of $576.8 million over the prior fiscal year balance.
At June 30, 1993, the fund balance totalled $698.9 and the
unreserved/undesignated balance totalled $64.4 million. A continuing recovery
of the Commonwealth's financial condition from the effects of the national
economic recession of 1990 and 1991 is demonstrated by this increase in the
balance and a return to a positive unreserved/undesignated balance. The
previous positive unreserved/undesignated balance was recorded in fiscal 1987.
For the second consecutive fiscal year the increase in the
unreserved/undesignated balance exceeded the increase recorded in the
budgetary basis unappropriated surplus during the fiscal year.
Budgetary Basis: The 1993 fiscal year closed with revenues higher than
anticipated and expenditures about as projected, resulting in an ending
unappropriated balance surplus (prior to the ten percent transfer to the Tax
Stabilization Reserve Fund) of $242.3 million, slightly higher than estimated
in May 1993. Cash revenues were $41.5 million above the budget estimate and
totalled $14.633 billion representing less than a one percent increase over
revenues for the 1992 fiscal year. A reduction in the personal income tax rate
in July 1992 and the one-time receipt of revenues from retroactive corporate
tax increases in fiscal 1992 were responsible, in part, for the low revenue
growth in fiscal 1993.
Appropriations less lapses totalled $13.870 billion representing a 1.1 percent
increase over expenditures during fiscal 1992. The low growth in spending is a
consequence of a low rate of revenue growth, significant one-time expenses
during fiscal 1992, increased tax refund reserves to cushion against adverse
decisions on pending litigations, and the receipt of federal funds for
expenditures previously paid out of Commonwealth funds.
By state statute, ten percent of the budgetary basis unappropriated surplus at
the end of a fiscal year is to be transferred to the Tax Stabilization Reserve
Fund. The transfer for the fiscal 1993 balance was $24.2 million. The
remaining unappropriated surplus of $218.0 million was carried forward into
the 1994 fiscal year.
Fiscal 1994 Financial Results (Budgetary Basis). Commonwealth revenues during
the fiscal year totalled $15,210.7 million, $38.6 million above the fiscal
year estimate, and 3.9 percent over Commonwealth revenues during the previous
fiscal year. The sales tax was an important contributor to the higher than
estimated revenues. Collections from the sales tax were $5.124 billion, a 6.1
percent increase from the prior fiscal year and $81.3 million above estimate.
The strength of collections from the sales tax offset the lower than budgeted
performance of the personal income tax which ended the fiscal year $74.4
million below estimate. The shortfall in the personal income tax was largely
due to shortfalls in income not subject to withholding such as interest,
dividends and other income. Tax refunds in fiscal 1994 were reduced
substantially below the $530 million amount provided in fiscal 1993. The
higher fiscal 1993 amount and the reduced fiscal 1994 amount occurred because
reserves of approximately $160 million were added to fiscal 1993 tax refunds
to cover potential payments if the Commonwealth lost litigation known as
Philadelphia Suburban Corp v. Commonwealth. Those reserves were carried into
fiscal 1994 until the litigation was decided in the Commonwealth's favor in
December 1993 and $147.3 million of reserves for tax refunds were released.
Expenditures, excluding pooled financing expenditures and net of all fiscal
1994 appropriation lapses, totalled $14,934.4 million representing a 7.2
percent increase over fiscal 1993 expenditures. Medical assistance and
corrections spending contributed to the rate of spending growth for the fiscal
year.
The Commonwealth maintained an operating balance on a budgetary basis for
fiscal 1994 producing a fiscal year ending unappropriated surplus of $335.8
million. By state statute, ten percent ($33.6 million) of that surplus will be
transferred to the Tax Stabilization Reserve Fund and the remaining balance
will be carried over into the fiscal 1995 fiscal year.
Fiscal 1995 Budget. The fiscal 1995 budget was approved by the Governor on
June 16, 1994 and provided for $15,652.9 million of appropriations from
Commonwealth funds, an increase of 3.9 percent over appropriations, including
supplemental appropriations, for fiscal 1994. Medical assistance expenditures
represent the largest single increase in the budget ($221 million)
representing a nine percent increase over the prior fiscal year. The budget
includes a reform of the state-funded public assistance program that added
certain categories of eligibility to the program but also limited the
availability of such assistance to other eligible persons. Education subsidies
to local school districts were increased by $132.2 million to continue the
increased funding for the poorest school districts in the state.
The budget also includes tax reductions totalling an estimated $166.4 million.
Low income working families will benefit from an increase of the dependent
exemption to $3,000 from $1,500 for the first dependent and from $1,000 for
all additional dependents. A reduction to the corporate net income tax rate
from 12.25 percent to 9.99 percent to be phased in over a period of four years
was enacted. A net operating loss provision has been added to the corporate
net income tax and will be phased in over three years with a $500,000 per firm
annual cap on losses used to offset profits. Several other tax changes to the
sales tax, the inheritance tax and the capital stock and franchise tax were
also enacted.
The fiscal 1995 budget projects a $4 million fiscal year-end unappropriated
surplus. No assumption as to appropriation lapses in fiscal 1995 has been made.
Proposed Fiscal 1996 Budget. On March 7, 1995, Pennsylvania Governor Tom Ridge
presented his proposed budget to the General Assembly for the fiscal year
beginning July 1, 1995. The proposed budget includes spending growth of 2.3%.
It includes a reduction of the Corporate Net Income Tax from 10.99% to 9.99%
retroactive to January 1, 1995, resulting in a projected tax cut of $143
million in the next fiscal year. The proposed budget includes a proportionate
increase in funds for crime-fighting and a proportionate decrease in funds for
welfare. The General Assembly will proceed with its consideration of the
fiscal 1996 budget.
All outstanding general obligation bonds of the Commonwealth are rated AA- by
S&P and A1 by Moody's.
Any explanation concerning the significance of such ratings must be obtained
from the rating agencies. There is no assurance that any ratings will continue
for any period of time or that they will not be revised or withdrawn.
The City of Philadelphia ("Philadelphia") is the largest city in the
Commonwealth, with an estimated population of 1,585,577 according to the 1990
Census. Philadelphia functions both as a city of the first class and a county
for the purpose of administering various governmental programs.
For the fiscal year ending June 30, 1991, Philadelphia experienced a
cumulative General Fund balance deficit of $153.5 million. The audit findings
for the fiscal year ending June 30, 1992, place the Cumulative General Fund
balance deficit at $224.9.
Legislation providing for the establishment of the Pennsylvania
Intergovernmental Cooperation Authority ("PICA") to assist first class cities
in remedying fiscal emergencies was enacted by the General Assembly and
approved by the Governor in June, 1991. PICA is designed to provide assistance
through the issuance of funding debt to liquidate budget deficits and to make
factual findings and recommendations to the assisted city concerning its
budgetary and fiscal affairs. An intergovernmental cooperation agreement
between Philadelphia and PICA was approved by City Council on January 3, 1992,
and approved by the PICA Board and signed by the Mayor on January 8, 1992. At
this time, Philadelphia is operating under a five year fiscal plan approved by
PICA on April 6, 1992. Full implementation of the five year plan was delayed
due to labor negotiations that were not completed until October 1992, three
months after the expiration of the old labor contracts. The terms of the new
labor contracts are estimated to cost approximately $144.0 million more than
what was budgeted in the original five year plan. An amended five year plan
was approved by PICA in May 1993. The audit findings show a surplus of
approximately $3 million for the fiscal year ending June 30, 1993. The fiscal
1994 budget projects no deficit and a balanced budget for the year ending June
30, 1994. The Mayor's latest update of the five year financial plan was
approved by PICA on May 2, 1994.
In June 1992, PICA issued $474,555,000 of its Special Tax Revenue Bonds to
provide financial assistance to Philadelphia and to liquidate the cumulative
General Fund balance deficit. PICA issued $643,430,000 in July 1993 and
$178,675,000 in August 1993 of Special Tax Revenue Bonds to refund certain
general obligation bonds of the City and to fund additional capital projects.
As of the date hereof, the ratings on the City's long-term obligations
supported by payments from the City's General Fund are rated Ba by Moody's and
BB by S&P. Any explanation concerning the significance of such ratings must be
obtained from the rating agencies. There is no assurance that any ratings will
continue for any period of time or that they will not be revised or withdrawn.
The foregoing information constitutes only a brief summary of some of the
financial difficulties which may impact certain issuers of bonds and does not
purport to be a complete or exhaustive description of all adverse conditions
to which the issuers of the Bonds in the Pennsylvania IM-IT Trust are subject.
Additionally, many factors including national economic, social and
environmental policies and conditions, which are not within the control of the
issuers of Bonds, could have an adverse impact on the financial condition of
the State and various agencies and political subdivisions located in the
State. The Sponsor is unable to predict whether or to what extent such factors
or other factors may affect the issuers of Bonds, the market value or
marketability of the Bonds or the ability of the respective issuers of the
Bonds acquired by the Pennsylvania IM-IT Trust to pay interest on or principal
of the Bonds.
Tax Status. For a discussion of the Federal tax status of income earned on
Pennsylvania IM-IT Trust Units, see "Other Matters--Federal Tax Status".
In the opinion of Saul, Ewing, Remick & Saul, counsel to the Fund for
Pennsylvania tax matters, under existing law:
(1)Units evidencing fractional undivided interest in the Pennsylvania IM-IT
Trust, which are represented by obligations issued by the Commonwealth of
Pennsylvania, any public authority, commission, board or other agency created
by the Commonwealth of Pennsylvania, any political subdivision of the
Commonwealth of Pennsylvania or any public authority created by any such
political subdivision are not taxable under any of the personal property taxes
presently in effect in Pennsylvania;
(2)distributions of interest income to Unitholders that would not be taxable
it received directly by a Pennsylvania resident are not subject to personal
income tax under the Pennsylvania Tax Reform Code of 1971; nor will such
interest be taxable under the Philadelphia School District Investment Income
Tax imposed on Philadelphia resident individuals;
(3)a Unitholder will have a taxable event under the Pennsylvania state and
local income taxes referred to in the preceding paragraph upon the redemption
or sale of his Units. Units will be taxable under the Pennsylvania inheritance
and estate taxes;
(4)a Unitholder which is a corporation will have a taxable event under the
Pennsylvania Corporate Net Income Tax when it redeems or sells its Units.
Interest income distributed to Unitholders which are corporations is not
subject to Pennsylvania Corporate Net Income Tax or Mutual Thrift Institutions
Tax. However, banks, title insurance companies and trust companies may be
required to take the value of the Units into account in determining the
taxable value of their shares subject to the Shares Tax;
(5)under Act No. 68 of December 3, 1993, gains derived by the Fund from the
sale, exchange or other disposition of Bonds may be subject to Pennsylvania
personal or corporate income taxes. Those gains which are distributed by the
Fund to Unitholders who are individuals may be subject to Pennsylvania
Personal Income Tax. For Unitholders which are corporations, the distributed
gains may be subject to Corporate Net Income Tax or Mutual Thrift Institutions
Tax. Gains which are not distributed by the Fund may nevertheless be taxable
to Unitholders if derived by the Fund from the sale, exchange or other
disposition of Bonds issued on or after February 1, 1994. Gains which are not
distributed by the Fund will remain nontaxable to Unitholders if derived by
the Fund from the sale, exchange or other disposition of Bonds issued prior to
February 1, 1994;
(6)any proceeds paid under insurance policies issued to the Trustee or
obtained by the issuers of the Bonds with respect to the Bonds which represent
maturing interest on defaulted obligations held by the Trustee will be
excludable from Pennsylvania 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
(7)the Fund is not taxable as a corporation under Pennsylvania tax laws
applicable to corporations.
On December 3, 1993, changes to Pennsylvania laws affecting taxation of income
and gains from the sale of Commonwealth of Pennsylvania and local obligations
were enacted. Among these changes was the repeal of the exemption from tax of
gains realized upon the sale or other disposition of such obligations. The
Pennsylvania Department of Revenue has issued proposed regulations concerning
these changes. The opinions expressed above are based on our analysis of the
law and proposed regulations but are subject to modification upon review of
final regulations or other guidance that may be issued by the Department of
Revenue or future court decisions.
In rendering its opinion, Saul, Ewing, Remick & Saul has not, for timing
reasons, made an independent review of proceedings related to the issuance of
the Bonds. It has relied on Van Kampen American Capital Distributors, Inc. for
assurance that the Bonds have been issued by the Commonwealth of Pennsylvania
or by or on behalf of municipalities or other governmental agencies within the
Commonwealth.
<TABLE>
<CAPTION>
Semi-
Per Unit Information: Monthly Annual
<S> <C> <C>
Calculation of Estimated Net Annual Unit Income:
Estimated Annual Interest Income per Unit............................. $ 55.79 $ 55.79
Less: Estimated Annual Expense per Unit <F1>.......................... $ 2.38 $ 1.90
Less: Annual Premium on Portfolio Insurance per Unit.................. -- --
Estimated Net Annual Interest Income per Unit......................... $ 53.41 $ 53.89
Calculation of Estimated Interest Earnings per Unit:
Estimated Net Annual Interest Income per Unit......................... $ 53.41 $ 53.89
Divided by 12 and 2, respectively..................................... $ 4.45 $ 26.95
Estimated Daily Rate of Net Interest Accrual per Unit.................. $ .14836 $ .14971
Estimated Current Return Based on Public Offering Price <F2><F3><F4>... 5.34% 5.39%
Estimated Long-Term Return <F2><F3><F4>................................ 5.37% 5.42%
Estimated Initial Monthly Distribution (August 1995)................... $ 4.60
Estimated Initial Semi-annual Distribution (January 1996).............. $ 27.09
Estimated Normal Distribution per Unit <F4>............................ $ 4.45 $ 26.95
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Trustee's Annual Fee........... $.91 and $.51 per $1,000 principal amount of Bonds, respectively, for those portions of the
Pennsylvania IM-IT Trust under the monthly and semi-annual distribution plans
Record and Computation Dates... FIRST day of the month as follows: monthly--each month; semi-annual--January and July
Distribution Dates............. FIFTEENTH day of the month as follows: monthly--each month; semi-annual--
January and July commencing August 15, 1995
<FN>
<F1>Excluding insurance costs. The Estimated Annual Expenses are expected to
fluctuate periodically (see "Trust Administration--Fund Administration and
Expenses--Miscellaneous Expenses").
<F2>The Estimated Current Returns and Estimated Long-Term Returns are increased
for transactions entitled to a reduced sales charge. See "Unitholder
Explanations--Public Offering--General".
<F3>The Estimated Current Returns are calculated by dividing the Estimated Net
Annual Interest Income per Unit by the Public Offering Price. The Estimated
Net Annual Interest Income per Unit will vary with changes in fees and
expenses of the Trustee 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; therefore, there is no assurance that the present Estimated
Current Returns indicated above will be realized in the future. The Estimated
Long-Term Returns are calculated using a formula which (1) takes into
consideration, and determines and factors in the relative weightings of, the
market values, yields (which takes into account the amortization of premiums
and the accretion of discounts) and estimated retirements of all of the
Securities in the Trust and (2) takes into account the expenses and sales
charge associated with each Trust Unit. Since the market values and estimated
retirements of the Securities and the expenses of the Trust will change, there
is no assurance that the present Estimated Long-Term Returns as indicated
above will be realized in the future. The Estimated Current Returns and
Estimated Long-Term Returns 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".
</TABLE>
<TABLE>
PENNSYLVANIA INSURED MUNICIPALS INCOME TRUST
SERIES 203 (179TH INSURED MULTI-SERIES)
PORTFOLIO As of June 27, 1995
<CAPTION>
Offering
Price To
Aggregate Name of Issuer, Title, Interest Rate andMaturity Date of either Redemption Pennsylvania
Principal<F1> Bonds Deposited orBonds Contracted for<F1><F5> Rating<F2> Feature<F3> IM-IT Trust<F4
<S> <C> <C> <C> <C>
$ 250,000 The Hospitals and Higher Education Facilities Authority of
Philadelphia (Pennsylvania) Community College Revenue Bonds
(Community College of Philadelphia) Series 1994A (MBIA
Insured) 2004 @ 102
#6.125% Due 5/1/2014............................................ AAA 2011 @ 100 S.F. $ 255,683
500,000 City of Philadelphia, Pennsylvania, Water and Wastewater
Revenue Bonds, Series 1993 (Capital Guaranty Insured)
#5.50% Due 6/15/2015............................................ AAA 2003 @ 102 476,405
500,000 Punxsutawney Area School District (Jefferson and Indiana
Counties, Pennsylvania) General Obligation Bonds, Series 1995
(MBIA Insured) 2005 @ 100
#5.90% Due 4/15/2020............................................ AAA 2016 @ 100 S.F. 502,500
285,000 Delaware County Authority (Commonwealth of Pennsylvania)
Hospital Revenue Bonds (Crozer-Chester Medical Center) Series
1994 (MBIA Insured) 2003 @ 102
#5.30% Due 12/15/2020........................................... AAA 2012 @ 100 S.F. 261,567
250,000 County of Cambria, Commonwealth of Pennsylvania, General
Obligation Refunding Bonds, Series 1994A (FGIC Insured) 2004 @ 102
#6.20% Due 8/15/2021............................................ AAA 2017 @ 100 S.F. 257,282
250,000 Ringgold School District (Washington County, Pennsylvania)
General Obligation Bonds, Series 1995 (FSA Insured) 2005 @ 100
6.25% Due 2/1/2022.............................................. AAA 2020 @ 100 S.F. 257,570
500,000 Pennsylvania Intergovernmental Cooperation Authority, Special
Tax Revenue Bonds (City of Philadelphia Funding Program)
Series 1993 (MBIA Insured) 2003 @ 100
#5.625% Due 6/15/2023........................................... AAA 2016 @ 100 S.F. 481,090
500,000 Montgomery County Higher Education and Health Authority
(Pennsylvania) Hospital Revenue Bonds, Series 1994A (Abington
Memorial Hospital) AMBAC Indemnity Insured 2004 @ 102
#5.125% Due 6/1/2024............................................ AAA 2015 @ 100 S.F. 444,620
$ 3,035,000 $ 2,936,717
</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".
As of the Date of Deposit: June 27, 1995
(1)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 May 30,1995 to June 26,1995. These
Securities have expected settlement dates ranging from June 27,1995 to July
20,1995 (see "Unitholder Explanations").
(2)All ratings are by Standard & Poor's 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".
(3)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 (2) under "Other Matters--Federal Tax
Status".
(4)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").
(5)Other information regarding the Bonds in each Trust, as of the Date of
Deposit, is as follows:
<TABLE>
<CAPTION>
Annual
Annual Profit Interest Bid Side
Trust Insurance Cost to (Loss) to Income to Evaluation of
Cost Sponsor Sponsor Trust Bonds
<S> <C> <C> <C> <C> <C>
IM-IT Limited Maturity.......................... $-- $ 4,852,821 $ 42,582 $ 275,588 $ 4,857,538
New York IM-IT Intermediate Laddered Maturity... $-- $ 2,971,350 $ 12,127 $ 133,558 $ 2,960,700
Pennsylvania IM-IT.............................. $-- $ 2,917,559 $ 19,158 $ 172,293 $ 2,914,350
</TABLE>
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. 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:
<TABLE>
<CAPTION>
Percent of
Trust Aggregate Principal Range of Days Subsequent
Amount to First Settlement Date
<S> <C> <C>
IM-IT Limited Maturity.......................... 35% 11 to 20 days
New York IM-IT Intermediate Laddered Maturity... 12% 3 days
Pennsylvania IM-IT.............................. -- --
</TABLE>
On the Date of Deposit, the offering side evaluations of the Securities in the
IM-IT Limited Maturity, New York IM-IT Intermediate Laddered Maturity and
Pennsylvania IM-IT Trusts were higher than the bid side evaluations of such
Securities by 0.76%, 0.76% 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".
(6)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. To the extent that zero coupon bonds are sold or called prior
to maturity, there is no guarantee that the value of the proceeds received
therefrom by the Trust will equal or exceed the par value that would have been
obtained at maturity of such zero coupon bonds. Approximately 3% and 5% of the
aggregate principal amount of the Securities in the IM-IT Limited Maturity
Trust and New York IM-IT Intermediate Laddered Maturity Trust, respectively,
are "zero coupon"bonds.
Underwriting. The Underwriters named below have severally purchased Units in
the following respective amounts from the Sponsor.
<TABLE>
<CAPTION>
IM-IT Limited
Name Maturity Trust
Address Units
<S> <C> <C>
Van Kampen American Capital Dist., Inc. One Parkview Plaza, Oakbrook Terrace, Illinois 60181 4,250
Prudential Securities Inc. 1 New York Plaza, 14th Floor, New York, New York 10292-2014 250
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
Raymond James & Associates, Inc. 880 Carillon Parkway, St. Petersburg, Florida 33733 100
5,000
</TABLE>
<TABLE>
<CAPTION>
New York
IM-IT
Intermediate
Laddered
Name Maturity Trust
Address Units
<S> <C> <C>
Van Kampen American Capital Dist., Inc. One Parkview Plaza, Oakbrook Terrace, Illinois 60181 2,050
Prudential Securities Inc. 1 New York Plaza, 14th Floor, New York, New York 10292-2014 500
Dean Witter Reynolds, Incorporated 2 World Trade Center, 59th Floor, New York, New York 10048 250
Fidelity Capital Markets 164 Northern Avenue, Boston, Massachusetts 02210 100
Gruntal & Co., Incorporated 14 Wall Street, New York, New York 10005 100
3,000
</TABLE>
<TABLE>
<CAPTION>
Pennsylvania
Name IM-IT Trust
Address Units
<S> <C> <C>
Van Kampen American Capital Dist., Inc. One Parkview Plaza, Oakbrook Terrace, Illinois 60181 1,638
Janney Montgomery Scott Inc. 1801 Market Street, 11th Floor, Philadelphia, Pennsylvania 19103 250
Prudential Securities Inc. 1 New York Plaza, 14th Floor, New York, New York 10292-2014 250
Wheat First Butcher Singer River Front Plaza, 901 East Byrd Street, Richmond, Virginia 23219 250
Advest, Inc. 280 Trumbull Street, Hartford, Connecticut 06103 100
Four Falls Corporate Center, Suite 212, Route 23,
Boenning & Scattergood, Inc. West Conshohocken, Pennsylvania 19428 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
Legg Mason Wood Walker, Inc. 111 South Calvert Street, Baltimore, Maryland 21202 100
W.H. Newbolds Son & Co. 1500 Walnut Street, Philadelphia, Pennsylvania 19102 100
3,088
</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, 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.
FUND ADMINISTRATION AND EXPENSES
Sponsor. Van Kampen American Capital Distributors, Inc., a Delaware
corporation, is the Sponsor of the Trust. Van Kampen American Capital
Distributors, Inc. is primarily owned by Clayton, Dubilier & Rice, Inc., a New
York-based private investment firm. Van Kampen American Capital Distributors,
Inc. management owns a significant minority equity position. Effective
December 20, 1994, the parent of Van Kampen Merritt Inc. acquired American
Capital Management & Research, Inc. As a result, Van Kampen Merritt Inc., has
changed its name to Van Kampen American Capital Distributors, Inc. Van Kampen
American Capital Distributors, 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 offices
at One Parkview Plaza, Oakbrook Terrace, Illinois 60181, (708) 684-6000 and
2800 Post Oak Boulevard, Houston, Texas, 77056, (713) 993-0500. 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
December 31, 1994 the total stockholders' equity of Van Kampen Merritt Inc.
was $117,357,000 (audited). (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 March 31, 1995, the Sponsor and its affiliates managed or supervised
approximately $51.7 billion of investment products, of which over $24.7
billion is invested in municipal securities. The Sponsor and its affiliates
managed $38.9 billion of assets, consisting of $20.3 billion for 42 open end
mutual funds, $9.4 billion for 38 closed-end funds and $5.6 billion for 82
institutional accounts. The Sponsor has also deposited approximately $26
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 Municipals
Income Trust(R)or the IM-IT(R) trust. The Sponsor also provides surveillance
and evaluation services at cost for approximately $13 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 American Capital Distributors, Inc. is the sponsor of the
various series of the trusts listed below. Some of the mutual funds and
closed-end funds for which Van Kampen American Capital Distributors, Inc. acts
as distributor are also listed below. Only those mutual funds available for
reinvestment under the Reinvestment Option to Unitholders of unit investment
trusts are 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
Double tax-exemption for California residents by investing in
California Insured Municipals Income Trust.......................... insured California municipal securities
Double and in certain cases triple tax-exemption for New York
residents by investing in insured New York municipal
New York Insured Municipals Income Trust............................ securities
Double and in certain cases triple tax-exemption for
Pennsylvania residents by investing in insured Pennsylvania
Pennsylvania Insured Municipals Income Trust........................ municipal securities
Insured Municipals Income Trust, Insured Multi-Series
(Premium Bond Series, National, Limited Maturity, Intermediate,
Short Intermediate, Discount, Alabama, Arizona, Arkansas,
California, California Intermediate, California 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 Intermediate Laddered Maturity, Missouri
Premium, New Jersey, New Jersey Intermediate Laddered
Maturity, New Mexico, New York, New York Intermediate, New Tax-exempt income by investing in insured municipal
York Intermediate Laddered Maturity, New York Limited securities; all issuers of bonds in a state trust are located
Maturity, Ohio, Ohio Intermediate, Ohio Intermediate Laddered in such state or in territories or possessions of the United
Maturity, Ohio Premium, Oklahoma, Pennsylvania, Pennsylvania States-- providing exemptions from all state income tax for
Intermediate, Pennsylvania Intermediate Laddered Maturity, residents of such state (except for the Oklahoma IM-IT Trust
Pennsylvania Premium, Tennessee, Texas, Texas Intermediate where a portion of the income of the Trust may be subject to
Laddered Maturity, Washington, West Virginia)...................... the Oklahoma state income tax)
Insured Tax Free Bond Trust......................................... Tax-exempt income by investing in insured municipal securities
Tax-exempt income by investing in insured municipal
securities; all issuers of bonds in a state trust are located
Insured Tax Free Bond Trust, Insured Multi-Series in such state--providing exemptions from state income tax for
(National Limited Maturity, New York).............................. residents of such state
Investors' Quality Tax-Exempt Trust................................. Tax-exempt income by investing in municipal securities
Investors' Quality Tax-Exempt Trust, Multi-Series
(National, National AMT, Intermediate, Alabama, Arizona,
Arkansas, California, Colorado, Connecticut, Delaware, Tax-exempt income by investing in municipal securities; all
Florida, Georgia, Hawaii, Kansas, Kentucky, Maine, Maryland, issuers of bonds in a state trust are located in such state
Massachusetts, Michigan, Minnesota, Missouri, Nebraska, or in territories or possessions of the United
New Jersey, New York, North Carolina, Ohio, Oregon, States--providing exemptions from state income tax for
Pennsylvania, South Carolina, Virginia)............................ residents of such state
Tax-exempt income for investors not subject to the
alternative minimum tax by investing in municipal securities,
some or all of which are subject to the Federal alternative
Investors' Quality Municipals Trust, AMT Series......................minimum tax
Investors' Corporate Income Trust....................................Taxable income by investing in corporate bonds
Taxable income by investing in government-backed GNMA
Investors' Governmental Securities--Income Trust.................... securities
High current income through an investment in a diversified
portfolio of foreign currency denominated corporate debt
Van Kampen Merritt International Bond Income Trust...................obligations
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
Van Kampen Merritt Insured Income Trust..............................securities
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
Van Kampen American Capital Insured Income Trust.....................securities
High dividend income and capital appreciation by investing in
Van Kampen Merritt Utility Income Trust..............................common stock of electric utilities
Provide the potential for capital appreciation and income by
investing in a portfolio of actively traded, New York Stock
Exchange listed equity securities which are components of the
Van Kampen Merritt Select Equity Trust...............................Dow Jones Industrial Average*
Protect Unitholders' capital and provide the potential for
capital 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 the identical equity
Van Kampen Merritt Select Equity and Treasury Trust..................securities which comprise the Select Equity Trust
Provide the potential for capital appreciation and income by
investing in a portfolio of actively traded, New York Stock
Exchange listed equity securities which are components of the
Van Kampen Merritt Blue Chip Opportunity Trust.......................Dow Jones Industrial Average*
Protect Unitholders' capital and provide the potential for
capital 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
Van Kampen Merritt Blue Chip Opportunity and time of the creation of the trust were components of the Dow
Treasury Trust......................................................Jones Industrial Average*
High current income consistent with preservation of capital
through a diversified investment in a fixed portfolio
primarily consisting of Brady Bonds of emerging market
countries that have restructured sovereign debt pursuant to
Van Kampen Merritt Emerging Markets Income Trust.....................the framework of the Brady Plan
Provide the potential for capital appreciation and income
consistent with the preservation of invested capital, by
investing in a portfolio of equity securities which provide
Van Kampen Merritt Global Telecommunications Trust...................equipment for or services to the telecommunications industry
Provide the potential for capital appreciation and income
consistent with the preservation of invested capital, by
investing in a portfolio of equity securities diversified
Van Kampen Merritt Global Energy Trust...............................within the energy industry
Provide an above average total return through a combination
of potential capital appreciation and dividend income,
consistent with preservation of invested capital, by
investing in a portfolio of common stocks of the ten
Strategic Ten Trust companies in a recognized stock exchange index having the
(United States, United Kingdom, and Hong Kong Portfolios)...........highest dividend yields
Provide the potential for capital appreciation and income
consistent with the preservation of invested capital, by
investing in a portfolio of equity securities diversified
Van Kampen Merritt Brand Name Equity Trust...........................within the non-durable consumer products industry
Provide the potential for long-term capital appreciation by
investing in shares of Govett Smaller Companies Fund and to
protect Unitholders' capital by investing a portion of its
Govett Smaller Companies Fund and Treasury Trust.....................portfolio in "zero coupon"U.S. Treasury obligations
</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.
<TABLE>
<CAPTION>
Name of Mutual Fund Fund Investment Objective
<S> <C>
Van Kampen Merritt U.S. Government Fund....................High current income by investing in U.S. Government securities
High current income exempt from Federal income taxes by investing in
Van Kampen Merritt Insured Tax Free Income Fund............insured municipal securities
High level of current income exempt from Federal income tax, consistent
Van Kampen Merritt Municipal Income Fund...................with preservation of capital
High current income exempt from Federal income taxes by investing in
Van Kampen Merritt Tax Free High Income Fund...............medium and lower grade municipal securities
High current income exempt from Federal and California income taxes by
Van Kampen Merritt California Insured Tax Free Fund........investing in insured California municipal securities
Provide a high level of current income by investing in medium and lower
grade domestic and foreign government and corporate debt securities.
Van Kampen Merritt High Yield Fund.........................The Fund will seek capital appreciation as a secondary objective
Long-term growth of both capital and dividend income by investing in
Van Kampen Merritt Growth and Income Fund..................dividend paying common stocks
High current income exempt from Federal and Pennsylvania state and
local income taxes by investing in medium and lower grade Pennsylvania
Van Kampen Merritt Pennsylvania Tax Free Income Fund.......municipal securities
High current income by investing in a broad range of money market
Van Kampen Merritt Money Market Fund.......................instruments that will mature within twelve months
High current income exempt from Federal income taxes by investing in a
broad range of municipal securities that will mature within twelve
Van Kampen Merritt Tax Free Money Fund.....................months
High current income by investing in a global portfolio of high quality
debt securities denominated in various currencies having remaining
Van Kampen Merritt Short-Term Global Income Fund...........maturities of not more than three years
High level of current income with a relatively stable net asset value
Van Kampen Merritt Adjustable Rate U.S. Government Fund....investing in U.S. Government securities
High level of current income exempt from Federal income tax, consistent
Van Kampen Merritt Limited Term Municipal Income Fund......with preservation of capital
Provide capital appreciation and current income by investing in a
diversified portfolio of common stocks and income securities issued by
Van Kampen Merritt Utility Fund............................companies engaged in the utilities industry
Provide shareholders with high current income. The Fund will seek
Van Kampen Merritt Strategic Income Fund...................capital appreciation as a secondary objective
High level of current income exempt from Federal income tax and Florida
intangible personal property taxes consistent with preservation of
Van Kampen Merritt Florida Insured Tax Free Income Fund....capital
High level of current income exempt from Federal income tax and New
Van Kampen Merritt New Jersey Tax Free Income Fund.........Jersey gross income tax consistent with preservation of capital
High level of current income exempt from Federal as well as New York
State and New York City income taxes, consistent with preservation of
Van Kampen Merritt New York Tax Free Income Fund...........capital
To provide shareholders current income while also seeking to provide
Van Kampen Merritt Balanced Fund...........................capital growth
</TABLE>
<TABLE>
<CAPTION>
Name of Closed-end Fund Fund Investment Objective
<S> <C>
High current income exempt from Federal income taxes with safety of
principal by investing in a diversified portfolio of investment grade
Van Kampen Merritt Municipal Income Trust...................municipal securities
High current income exempt from Federal and California income taxes
with safety of principal by investing in a diversified portfolio of
Van Kampen Merritt California Municipal Trust...............investment grade California municipal securities
High current income while seeking to preserve shareholders' capital by
investing in a diversified portfolio of high yield fixed income
Van Kampen Merritt Intermediate Term High Income Trust......securities
High current income while seeking to preserve shareholders' capital by
investing in a diversified portfolio of high yield fixed income
Van Kampen Merritt Limited Term High Income Trust...........securities
High current income, consistent with preservation of capital by
Van Kampen Merritt Prime Rate Income Trust..................investing in interests in floating or variable rate senior loans
High current income exempt from Federal income tax, consistent with
Van Kampen Merritt Investment Grade Municipal Trust.........preservation of capital
High level of current income exempt from Federal income tax,
Van Kampen Merritt Municipal Trust..........................consistent with preservation of capital
High current income exempt from Federal and California income taxes
with safety of principal by investing in a diversified portfolio of
Van Kampen Merritt California Quality Municipal Trust.......investment grade California municipal securities
High current income exempt from Federal income taxes and Florida
intangible personal property taxes with safety of principal by
investing in a diversified portfolio of investment grade Florida
Van Kampen Merritt Florida Quality Municipal Trust..........municipal securities
High current income exempt from Federal as well as New York State and
New York City income taxes with safety of principal by investing in a
Van Kampen Merritt New York Quality Municipal Trust.........diversified portfolio of investment grade New York municipal securities
High current income exempt from Federal and Ohio income taxes with
safety of principal by investing in a diversified portfolio of
Van Kampen Merritt Ohio Quality Municipal Trust.............investment grade Ohio municipal securities
High current income exempt from Federal and Pennsylvania income taxes
with safety of principal by investing in a diversified portfolio of
Van Kampen Merritt Pennsylvania Quality Municipal Trust.....investment grade Pennsylvania municipal securities
High level of current income exempt from Federal income tax,
Van Kampen Merritt Trust for Investment Grade Municipals....consistent with preservation of capital
High level of current income exempt from Federal income tax,
consistent with preservation of capital by investing in a diversified
portfolio of municipal securities which are covered by insurance with
Van Kampen Merritt Trust for Insured Municipals.............respect to timely payment of principal and interest
High level of current income exempt from Federal and California income
Van Kampen Merritt Trust for Investment Grade CA taxes, consistent with preservation of capital by investing in a
Municipals.................................................diversified portfolio of California municipal securities
High level of current income exempt from Federal income taxes,
consistent with preservation of capital. The Fund also seeks to offer
Van Kampen Merritt Trust for Investment Grade FL its Shareholders the opportunity to own securities exempt from Florida
Municipals.................................................intangible personal property taxes
Van Kampen Merritt Trust for Investment Grade NJ
Municipals High level of current income exempt from Federal income taxes and New
..........................................................Jersey gross income taxes, consistent with preservation of capital
High level of current income exempt from Federal as well as from New
Van Kampen Merritt Trust for Investment Grade NY York State and New York City income taxes, consistent with
Municipals.................................................preservation of capital
High level of current income exempt from Federal and Pennsylvania
Van Kampen Merritt Trust for Investment Grade PA income taxes and, where possible under local law, local income and
Municipals.................................................property taxes, consistent with preservation of capital
High level of current income exempt from Federal income tax,
consistent with preservation of capital by investing in a diversified
Van Kampen Merritt Municipal Opportunity Trust..............portfolio of municipal securities
High level of current income exempt from Federal income tax,
consistent with preservation of capital by investing in a diversified
Van Kampen Merritt Advantage Municipal Income Trust.........portfolio of municipal securities
High level of current income exempt from Federal and Pennsylvania
Van Kampen Merritt Advantage Pennsylvania Municipal income taxes and, where possible under local law, local income and
Income Trust...............................................property taxes, consistent with preservation of capital
Provide common shareholders with a high level of current income exempt
Van Kampen Merritt Strategic Sector Municipal Trust.........from Federal income taxes, consistent with preservation of capital
High level of current income exempt from Federal income taxes,
Van Kampen Merritt Value Municipal Income 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
High level of current income exempt from Federal income taxes and
Van Kampen Merritt Massachusetts Value Municipal Massachusetts personal income taxes, consistent with preservation of
Income Trust..............................................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
High level of current income exempt from Federal as well as New York
Van Kampen Merritt New York Value Municipal State and New York City income taxes, consistent with preservation of
Income Trust...............................................capital
Van Kampen Merritt Ohio Value Municipal Income High level of current income exempt from Federal and Ohio income
Trust......................................................taxes, 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
High level of current income exempt from Federal income tax,
Van Kampen Merritt Municipal Opportunity Trust II...........consistent with preservation of capital
High level of current income exempt from Federal income tax,
consistent with preservation of capital. The Fund seeks to offer its
common shareholders the opportunity to own securities exempt from
Van Kampen Merritt Florida Municipal Opportunity Trust .....Florida intangible personal property taxes
Provide common shareholders with a high level of current income exempt
Van Kampen Merritt Advantage Municipal Income Trust II......from Federal income tax, consistent with preservation of capital
To provide common shareholders with a high level of current income
Van Kampen Merritt Select Sector Municipal Trust............exempt from Federal income tax, consistent with preservation of capital
</TABLE>
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 American Capital
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 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. After the first year such fee will be computed at $.51
per $1,000 principal amount of Securities for that portion of each Trust under
the semi-annual distribution plan and $.91 per $1,000 principal amount of
Securities for that portion of each Trust under the monthly distribution plan.
Based on the size of the Trust on the Date of Deposit and assuming all
Unitholders had chosen the semi-annual distribution plan, the Trustee's
estimated annual fees for ordinary recurring services would initially amount
to $2,550, $1,530 and $1,548 for the IM-IT Limited Maturity, New York IM-IT
Intermediate Laddered Maturity and Pennsylvania IM-IT Trusts, respectively.
Assuming in the alternative that all Unitholders had elected the monthly
distribution plan such fees would have initially amount to $4,550, $2,730 and
$2,762 for the above mentioned Trusts, respectively. 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.
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, (g) expenditures incurred in contacting
Unitholders upon termination of the Trusts and (h) costs incurred to reimburse
the Trustee for advancing funds to the Trusts to meet scheduled distributions
(which costs may be adjusted periodically in response to fluctuations in
short-term interest rates).
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, 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 a State Trust (other than a
State Intermediate Laddered Maturity Trust), or beyond the end of the year
preceding the twentieth anniversary of the Trust Agreement in the case of
IM-IT Limited Maturity, IM-IT Intermediate, State Intermediate Laddered
Maturity and IM-IT Short Intermediate Trusts. 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 or par 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.
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 interest accrued but unpaid
from the First Settlement Date to the date of settlement as described above
under "Unitholder Explanations--Accrued Interest--Accrued Interest". 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 plus interest accrued to the date of settlement 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 $27.00 per Unit for less than 100 Units, $31.00 per Unit for any single
transaction of 100 to 249 Units, $30.50 per Unit for any single transaction
of 250 to 499 Units, $33.50 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 Limited Maturity Trust, $20.00 per Unit for less than 100 Units,
$22.00 per Unit for any single transaction of 100 to 249 Units, $21.50 per
Unit for any single transaction of 250 to 499 Units, $24.50 per Unit for any
single transaction of 500 to 999 Units and $24.00 per Unit for any single
transaction of 1,000 or more Units of a State Intermediate Laddered Maturity
Trust and in the case of a State Trust (other than a State Intermediate
Laddered Maturity 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 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, $22.00 and $35.00 per Unit of
any IM-IT, IM-IT Limited Maturity, IM-IT Intermediate, IM-IT Short
Intermediate, State Intermediate Laddered Maturity Trust and other Insured
Trusts, respectively, as of the Date of Deposit. In connection with quantity
sales to purchasers of any State Trust (other than a State Intermediate
Laddered Maturity 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 Limited Maturity Trust the Underwriters will
receive from the Sponsor commissions totalling $32.00 per Unit for any single
transaction of 100 to 249 Units, $32.00 per Unit for any single transaction of
250 to 499 Units, $34.50 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 connection with quantity sales to purchasers of any State Intermediate
Laddered Maturity Trust the Underwriters will receive from the Sponsor
commissions totalling $23.00 per Unit for any single transaction of 100 to
249 Units, $23.00 per Unit for any single transaction of 250 to 499 Units,
$24.75 per Unit for any single transaction of 500 to 999 Units and $24.00 per
Unit for any single transaction of 1,000 or more Units. In connection with
quantity sales to purchasers of any Pennsylvania IM-IT Trust the Underwriters
will receive from the Sponsor commissions totalling $35.00 per Unit for any
single transaction of 100 to 249 Units, $36.00 per Unit for any single
transaction of 250 to 499 units, $37.00 per Unit for any single transaction of
500 to 999 Units and $38.00 per Unit for any single transaction of 1,000 or
more Units. In addition, any Underwriter that sells a total of 25% or 1,500
Units, whichever is greater, of any Pennsylvania IM-IT Trust will receive an
additional $2.00 per each such Unit. See "Unitholder Explanations--Public
Offering--General."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.
OTHER MATTERS
Legal Opinions. The legality of the Units offered hereby and certain matters
relating to Federal, tax law have been passed upon by Chapman and Cutler, 111
West Monroe Street, Chicago, Illinois 60603, as counsel for the Sponsor. Saul,
Ewing, Remich & Saul has acted as special counsel to the Fund for Pennsylvania
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 LLP, 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 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 provided
that, at the time such policies are purchased, the amounts paid for such
policies are reasonable, customary and consistent with the reasonable
expectation that the issuer of the obligations, rather than the insurer, will
pay debt service on the obligations; 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 provided that, at the time such policies
are purchased, the amounts paid for such policies are reasonable, customary
and consistent with the reasonable expectation that the issuer of the
obligations, rather than the insurer, will pay debt service on the obligations.
Sections 1288 and 1272 of the Code provide a complex set of rules governing
the accrual of original issue discount. These rules provide that original
issue discount accrues either on the basis of a constant compound interest
rate or ratably over the term of the Bond, depending on the date the Bond was
issued. In addition, special rules apply if the purchase price of a Bond
exceeds the original issue price plus the amount of original issue discount
which would have previously accrued based upon its issue price (its "adjusted
issue price") 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), subject to a statutory de minimis
rule. 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.
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.
DESCRIPTION OF SECURITIES RATINGS
Standard & Poor's, A Division of The McGraw-Hill Companies. A Standard &
Poor's corporate or municipal bond rating is a current assessment of the
creditworthiness of an obligor with respect to a specific debt obligation.
This assessment of creditworthiness may take into consideration obligors such
as guarantors, insurers or lessees.
The bond rating is not a recommendation to purchase or sell a security,
inasmuch as it does not comment as to market price.
The ratings are based on current information furnished to Standard & Poor's by
the issuer and obtained by Standard & Poor's from other sources it considers
reliable. The ratings may be changed, suspended or withdrawn as a result of
changes in, or unavailability of, such information.
The ratings are based, in varying degrees, on the following considerations:
I. Likelihood of default--capacity and willingness of the obligor as to the
timely payment of interest and repayment of principal in accordance with the
terms of the obligation.
II. Nature of and provisions of the obligation.
III. Protection afforded by, and relative position of, the obligation in the
event of bankruptcy, reorganization or other 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 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.
As published by the rating companies.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors of Van Kampen American Capital Distributors, Inc.
and the Unitholders of Insured Municipals Income Trust, 179th Insured
Multi-Series (IM-IT Limited Maturity, New York IM-IT Intermediate Laddered
Maturity and Pennsylvania IM-IT Trusts):
We have audited the accompanying statements of condition and the related
portfolios of Insured Municipals Income Trust, 179th Insured Multi-Series
(IM-IT Limited Maturity, New York IM-IT Intermediate Laddered Maturity and
Pennsylvania IM-IT Trusts) as of June 27, 1995. 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, 179th Insured Multi-Series (IM-IT Limited Maturity, New York IM-IT
Intermediate Laddered Maturity and Pennsylvania IM-IT Trusts) as of June 27,
1995, in conformity with generally accepted accounting principles.
Chicago, Illinois GRANT THORNTON LLP
June 27, 1995
<TABLE>
INSURED MUNICIPALS INCOME TRUST
179th INSURED MULTI-SERIES
Statements of Condition
As of June 27, 1995
<CAPTION>
New York
IM-IT
IM-IT Intermediate
INVESTMENT IN SECURITIES Limited Laddered Pennsylvania
Maturity Trust Maturity Trust IM-IT Trust
<S> <C> <C> <C>
Contracts to purchase tax-exempt securities <F1><F2><F4>... $ 4,895,403 $ 2,983,477 $ 2,936,717
Accrued interest to the First Settlement Date <F1><F4>..... 22,377 27,991 24,489
Total...................................................... $ 4,917,780 $ 3,011,468 $ 2,961,206
LIABILITY AND INTEREST OF UNITHOLDERS
Liability-- ...............................................
Accrued interest payable to Sponsor <F1><F4> $ 22,377 $ 27,991 $ 24,489
Interest of Unitholders-- .................................
Cost to investors <F3>..................................... 5,115,350 3,075,720 3,088,000
Less: Gross underwriting commission <F3>................... 219,947 92,243 151,283
Net interest to Unitholders <F1><F3><F4>................... 4,895,403 2,983,477 2,936,717
Total...................................................... $ 4,917,780 $ 3,011,468 $ 2,961,206
<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:
</TABLE>
<TABLE>
<CAPTION>
Accrued
Principal Offering Interest to
Amount of Amount of Price of Expected
Letter of Bonds Under Bonds Under Delivery
Credit Contracts Contracts Dates
<S> <C> <C> <C> <C>
IM-IT Limited Maturity Trust............ $ 4,920,712 $ 5,000,000 $ 4,895,403 $ 25,309
New York IM-IT Intermediate Laddered
Maturity Trust......................... $ 3,010,805 $ 3,000,000 $ 2,983,477 $ 27,328
Pennsylvania IM-IT Trust................ $ 2,959,897 $ 3,035,000 $ 2,936,717 $ 23,180
<FN>
<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, by the Sponsor prior to the
deposit of such 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> The Trustee will advance to the Trust the amount of net interest accrued to
June 30, 1995, the First Settlement Date, for distribution to the Sponsor as
the Unitholder of record as of the First Settlement Date.
</TABLE>
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 1995. 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 $114,700. 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.
LIMITED MATURITY
<TABLE>
<CAPTION>
Taxable Income ($1,000's) Tax-Exempt Estimated Current Return
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Single Joint Tax
Return Return Bracket 5% 5 1/2% 6% 6 1/2% 7% 7 1/2% 8%
Equivalent Taxable Estimated Current Return
$ 0 - 23.35 $ 0 - 39.00 15% 5.88% 6.47% 7.06% 7.65% 8.24% 8.82% 9.41%
23.35 - 56.55 39.00 - 94.25 28 6.94 7.64 8.33 9.03 9.72 10.42 11.11
56.55 - 117.95 94.25 - 143.60 31 7.25 7.97 8.70 9.42 10.14 10.87 11.59
117.95 - 256.50 143.60 - 256.50 36 7.81 8.59 9.38 10.16 10.94 11.72 12.50
Over 256.50 Over 256.50 39.6 8.28 9.11 9.93 10.76 11.59 12.42 13.25
</TABLE>
NEW YORK INTERMEDIATE LADDERED MATURITY
<TABLE>
<CAPTION>
Taxable Income ($1,000's) Tax-Exempt Estimated Current Return
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Single Joint Tax
Return Return Bracket* 4% 4 1/2% 5% 5 1/2% 6% 6 1/2% 7%
Equivalent Taxable Estimated Current Return
$ 0 - 23.35 $ 0 - 39.00 21.5% 5.10% 5.73% 6.37% 7.01% 7.64% 8.28% 8.92%
23.35 - 56.55 39.00 - 94.25 33.5 6.02 6.77 7.52 8.27 9.02 9.77 10.53
56.55 - 117.95 94.25 - 143.60 36.2 6.27 7.05 7.84 8.62 9.40 10.19 10.97
117.95 - 256.50 143.60 - 256.50 40.9 6.77 7.61 8.46 9.31 10.15 11.00 11.84
Over 256.50 Over 256.50 44.2 7.17 8.06 8.96 9.86 10.75 11.65 12.54
</TABLE>
* Combined Federal and State tax bracket was computed assuming that the
investor is not subject to local income taxes, such as New York City taxes.
Should a Unitholder reside in a locality which imposes an income tax, the
Unitholder's equivalent taxable estimated current return would be greater than
the equivalent taxable estimated current returns indicated in the table. The
table does not reflect the New York State supplemental income tax based upon a
taxpayer's New York State taxable income and New York State adjusted gross
income. This supplemental tax results in an increased marginal State income
tax rate to the extent a taxpayer's New York State adjusted gross income
ranges between $100,000 and $150,000. In addition, the table does not reflect
the amendments to the New York State income tax law that impose limitations on
the deductibility of itemized deductions. The application of the New York
State supplemental income tax and limitation on itemized deductions may result
in a higher combined Federal, State and local tax rate than indicated in the
table.
PENNSYLVANIA
<TABLE>
<CAPTION>
Taxable Income ($1,000's) Tax-Exempt Estimated Current Return
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Single Joint Tax
Return Return Bracket* 5% 5 1/2% 6% 6 1/2% 7% 7 1/2% 8%
Equivalent Taxable Estimated Current Return
$ 0 - 23.35 $ 0 - 39.00 17.4 % 6.05% 6.66% 7.26 % 7.87 % 8.47 % 9.08% 9.69%
23.35 - 56.55 39.00 - 94.25 30 7.14 7.86 8.57 9.29 10.00 10.71 11.43
56.55 - 117.95 94.25 - 143.60 32.9 7.45 8.20 8.94 9.69 10.43 11.18 11.92
117.95 - 256.50 143.60 - 256.50 37.8 8.04 8.84 9.65 10.45 11.25 12.06 12.86
Over 256.50 Over 256.50 41.3 8.52 9.37 10.22 11.07 11.93 12.78 13.63
</TABLE>
* The table does not reflect the effect of the exemption of the Trust from
local personal property taxes and from the Philadelphia School District
Investment Net Income Tax; accordingly, residents of Pennsylvania subject to
such taxes would need a higher taxable estimated current return than those
shown to equal the tax-exempt estimated current return of the 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
American Capital 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.
ESTIMATED CASH FLOWS TO UNITHOLDERS
The tables below set forth the per Unit estimated monthly and semi-annual
distributions of interest and principal 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.
IM-IT Limited Maturity Trust
Monthly
<TABLE>
<CAPTION>
Estimated Estimated Estimated
Distribution Dates Interest Principal Total
(Each Month) Distribution Distribution Distribution
<S> <C> <C> <C> <C> <C> <C>
August 1995 $ 4.54 $ 4.54
September 1995 - March 2005 4.40 4.40
April 2005 4.04 $ 153.00 157.04
May 2005 3.72 3.72
June 2005 3.72 150.00 153.72
July 2005 - November 2005 2.99 2.99
December 2005 2.99 34.00 36.99
January 2006 - August 2006 2.83 2.83
September 2006 2.83 23.00 25.83
October 2006 - April 2007 2.72 2.72
May 2007 2.72 40.00 42.72
June 2007 2.53 150.00 152.53
July 2007 1.82 50.00 51.82
August 2007 - March 2009 1.59 1.59
April 2009 1.59 42.00 43.59
May 2009 - July 2009 1.40 1.40
August 2009 1.11 120.00 121.11
September 2009 - December 2009 .85 .85
January 2010 .85 80.00 80.85
February 2010 .49 30.00 30.49
March 2010 .35 .35
April 2010 .35 99.00 99.35
June 2010 29.00 29.00
</TABLE>
IM-IT Limited Maturity Trust (continued)
Semi-annual
<TABLE>
<CAPTION>
Distribution Dates Estimated Estimated Estimated
(Each June and December Interest Principal Total
Unless Otherwise Indicated) Distribution Distribution Distribution
<S> <C> <C> <C> <C> <C> <C>
December 1995 $ 22.31 $ 22.31
June 1996 - December 2004 26.61 26.61
April 2005 $ 153.00 153.00
June 2005 24.88 150.00 174.88
December 2005 18.08 34.00 52.08
June 2006 17.13 17.13
September 2006 23.00 23.00
December 2006 16.79 16.79
May 2007 40.00 40.00
June 2007 16.27 150.00 166.27
July 2007 50.00 50.00
December 2007 9.89 9.89
June 2008 - December 2008 9.66 9.66
April 2009 42.00 42.00
June 2009 9.27 9.27
August 2009 120.00 120.00
December 2009 6.00 6.00
January 2010 80.00 80.00
February 2010 30.00 30.00
April 2010 99.00 99.00
June 2010 1.99 29.00 30.99
</TABLE>
New York IM-IT Intermediate Laddered Maturity Trust
Monthly
<TABLE>
<CAPTION>
Estimated Estimated Estimated
Distribution Dates Interest Principal Total
(Each Month) Distribution Distribution Distribution
<S> <C> <C> <C> <C> <C> <C>
August 1995 $ 3.62 $ 3.62
September 1995 - June 1999 3.50 3.50
July 1999 3.46 $ 200.00 203.46
August 1999 - February 2000 2.86 2.86
March 2000 2.77 48.33 51.10
April 2000 - June 2000 2.69 2.69
July 2000 2.69 130.00 132.69
August 2000 2.22 2.22
September 2000 2.22 21.67 23.89
October 2000 - April 2001 2.13 2.13
May 2001 2.13 50.00 52.13
June 2001 2.13 2.13
July 2001 1.84 150.00 151.84
August 2001 - June 2002 1.58 1.58
July 2002 1.44 70.00 71.44
August 2002 1.31 33.33 34.64
September 2002 1.15 96.67 97.82
October 2002 - May 2003 .77 .77
June 2003 .77 98.33 99.10
July 2003 .13 101.67 101.80
</TABLE>
Semi-annual
<TABLE>
<CAPTION>
Distribution Dates Estimated Estimated Estimated
(Each May and November Interest Principal Total
Unless Otherwise Indicated) Distribution Distribution Distribution
<S> <C> <C> <C> <C> <C> <C>
November 1995 $ 14.28 $ 14.28
May 1996 - May 1999 21.25 21.25
July 1999 $ 200.00 200.00
November 1999 18.60 18.60
March 2000 48.33 48.33
May 2000 16.91 16.91
July 2000 130.00 130.00
September 2000 21.67 21.67
November 2000 14.24 14.24
May 2001 12.96 50.00 62.96
July 2001 150.00 150.00
November 2001 10.42 10.42
May 2002 9.59 9.59
July 2002 70.00 70.00
August 2002 33.33 33.33
September 2002 96.67 96.67
November 2002 7.10 7.10
May 2003 4.69 4.69
June 2003 98.33 98.33
July 2003 .92 101.67 102.59
</TABLE>
Pennsylvania IM-IT Trust
Monthly
<TABLE>
<CAPTION>
Estimated Estimated Estimated
Distribution Dates Interest Principal Total
(Each Month) Distribution Distribution Distribution
<S> <C> <C> <C> <C> <C> <C>
August 1995 $ 4.60 $ 4.60
September 1995 - January 2005 4.45 4.45
February 2005 4.45 $ 80.95 85.40
March 2005 - April 2005 4.07 4.07
May 2005 3.66 161.92 165.58
June 2005 - April 2006 3.29 3.29
May 2006 3.29 80.96 84.25
June 2006 - August 2006 2.89 2.89
September 2006 2.67 80.96 83.63
October 2006 - June 2015 2.48 2.48
July 2015 2.09 161.91 164.00
August 2015 - December 2020 1.75 1.75
January 2021 1.54 92.30 93.84
February 2021 - June 2023 1.35 1.35
July 2023 .96 161.91 162.87
August 2023 - May 2024 .61 .61
June 2024 .61 161.92 162.53
</TABLE>
Semi-annual
<TABLE>
<CAPTION>
Distribution Dates Estimated Estimated Estimated
(Each January and July Interest Principal Total
Unless Otherwise Indicated) Distribution Distribution Distribution
<S> <C> <C> <C> <C> <C> <C>
January 1996 $ 27.09 $ 27.09
July 1996 - January 2005 26.95 26.95
February 2005 $ 80.95 80.95
May 2005 161.92 161.92
July 2005 23.05 23.05
January 2006 19.94 19.94
May 2006 80.96 80.96
July 2006 19.13 19.13
September 2006 80.96 80.96
January 2007 15.63 15.63
July 2007 - January 2015 15.02 15.02
July 2015 14.63 161.91 176.54
January 2016 - July 2020 10.63 10.63
January 2021 10.42 92.30 102.72
July 2021 - January 2023 8.23 8.23
July 2023 7.83 161.91 169.74
January 2024 3.74 3.74
June 2024 3.11 161.92 165.03
</TABLE>
No person is authorized to give any information or to make any representations
not contained in this Prospectus; and any information or representation not
contained herein must not be relied upon as having been authorized by the
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.
<TABLE>
<CAPTION>
Title
Page
<S> <C>
INTRODUCTION 2
SUMMARY OF ESSENTIAL FINANCIAL INFORMATION 3
UNITHOLDER EXPLANATIONS 5
Settlement of Bonds in the Trusts 5
The Fund 5
Objectives and Securities Selection 6
Risk Factors 8
Replacement Bonds 11
Bond Redemptions 11
Distributions 12
Change of Distribution Option 12
Certificates 13
Estimated Current Returns and Estimated Long-Term Returns 13
Interest Earning Schedule 14
Calculation of Estimated Net Annual Interest Income 14
Accrued Interest 14
Accrued Interest 14
Public Offering 15
General 15
Offering Price 17
Market for Units 18
Distributions of Interest and Principal 18
Reinvestment Option 19
Redemption of Units 20
Reports Provided 21
Insurance on the Bonds in the Insured Trusts 22
IM-IT LIMITED MATURITY TRUST 28
NEW YORK IM-IT INTERMEDIATE LADDERED MATURITY
TRUST 32
PENNSYLVANIA IM-IT TRUST 44
NOTES TO PORTFOLIOS 52
UNDERWRITING 54
TRUST ADMINISTRATION 56
Fund Administration and Expenses 56
Sponsor 56
Compensation of Sponsor and Evaluator 60
Trustee 61
Trustee's Fee 61
Portfolio Administration 62
Sponsor Purchases of Units 62
Insurance Premiums 63
Miscellaneous Expenses 63
General 63
Amendment or Termination 63
Limitation on Liabilities 64
Unit Distribution 65
Sponsor and Underwriter Compensation 65
OTHER MATTERS 66
Legal Opinions 66
Independent Certified Public Accountants 66
FEDERAL TAX STATUS 67
DESCRIPTION OF SECURITIES RATINGS 70
REPORT OF INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS 72
STATEMENTS OF CONDITION 73
EQUIVALENT TAXABLE ESTIMATED CURRENT RETURN
TABLES 74
ESTIMATED CASH FLOWS TO UNITHOLDERS 76
</TABLE>
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.
PROSPECTUS
June 27, 1995
Insured Municipals Income Trust, 179thInsured Multi-Series
IM-IT 81st Limited Maturity
New York IM-IT Intermediate Laddered Maturity Series 16
Pennsylvania IM-IT 203
A Wealth of Knowledge A Knowledge of Wealthsm
VAN KAMPEN AMERICAN CAPITAL
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
2800 Post Oak Boulevard
Houston, Texas 77056
Please retain this Prospectus for future reference.
