File No. 333-17213
CIK #896360
Securities and Exchange Commission
Washington, D.C. 20549-1004
Amendment No. 1
To
Form S-6
For Registration under the Securities Act of 1933 of Securities of Unit
Investment Trusts Registered on Form N-8B-2.
A. Exact Name of Trust:
Insured Municipals Income Trust
215th Insured Multi-Series
B. Name of Depositor:
Van Kampen American Capital
Distributors, Inc.
C. Complete address of Depositor's principal executive offices:
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
D. Name and complete address of agents for service:
Chapman and Cutler
Attention: Mark J. Kneedy
111 W. Monroe Street
Chicago, Illinois 60603
Van Kampen American Capital
Distributors, Inc.
Attention: Don G. Powell, Chairman
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
E. Title and amount of securities being registered: 28,206* Units
F. Proposed maximum offering price to the public of the securities
being registered: ($1020 per Unit**): $28,770,120
G. Amount of filing fee, computed at one thirty-third of 1 percent
of proposed maximum aggregate offering price to the public:
$8,718.22 ($309.09 previously paid)
H. Approximate date of proposed sale to the public:
As Soon As Practicable After The Effective Date Of The
Registration Statement
____
/ X :/Check box if it is proposed that this filing will become effective
on April 23, 1997 at 2:00 P.M.
pursuant to Rule 487.
* 18,804 Units registered for primary distribution.
9,402 Units registered for resale by Depositor of Units
previously sold in primary distribution.
** Estimated solely for the purpose of calculating the
registration fee.
Insured Municipals Income Trust,
215th Insured Multi-Series
Cross Reference Sheet
Pursuant to Rule 404(c) of Regulation C
under the Securities Act of 1933
(Form N-8B-2 Items Required by Instruction
1 as to Prospectus on Form S-6)
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
I. Organization and General Information
1. (a) Name of trust )
(b) Title of securities issued ) Prospectus Part I Front Cover Page
2. Name and address of Depositor ) Part II-Introduction
) Part I-Summary of Essential Financial
) Information
) Part II-Trust Administration
3. Name and address of Trustee ) Part II-Introduction
) Part I-Summary of Essential Financial
) Information
) Part II-Trust Administration
4. Name and address of principal ) Part I-Other Matters-Underwriting
underwriter )
5. Organization of trust ) Part II-Introduction
6. Execution and termination of ) Part II-Introduction
Trust Indenture and Agreement ) Part II-Trust Administration
7. Changes of Name ) *
8. Fiscal year ) *
9. Material Litigation ) *
II. General Description of the Trust and Securities of the Trust
10. General information regarding ) Part II-Introduction
trust's securities and rights ) Part II-Unitholder Explanations
of security holders ) Part II-Trust Administration
11. Type of securities comprising ) Part II-Introduction
units ) Part I-Trust Information
) Part I-Portfolios
12. Certain information regarding ) *
periodic payment certificates )
13. (a) Load, fees, charges and ) Part II-Introduction
expenses ) Part I-Summary of Essential Financial
) Information
) Part II-Unitholder Explanations
) Part I-Trust Information
) Part II-Trust Administration
(b) Certain information regard- ) *
ing periodic payment plan )
certificates )
(c) Certain percentages ) Part I-Summary of Essential Financial
) Information
) Part II-Unitholder Explanations
(d) Certain other fees, ) Part II-Unitholder Explanations
expenses or charges ) Part II-Trust Administration
payable by holders )
(e) Certain profits to be ) Part II-Unitholder Explanations
received by depositor, ) Part I-Other Matters-Underwriting
principal underwriter, ) Part I-Notes to Portfolios
trustee or affiliated )
persons )
(f) Ratio of annual charges ) *
to income )
14. Issuance of trust's securities ) Part II-Unitholder Explanations
15. Receipt and handling of payments ) *
from purchasers )
16. Acquisition and disposition of ) Part II-Introduction
underlying securities ) Part II-Unitholder Explanations
) Part II-Trust Administration
17. Withdrawal or redemption ) Part II-Unitholder Explanations
) Part II-Trust Administration
18. (a) Receipt and disposition ) Part II-Introduction
of income ) Part II-Unitholder Explanations
(b) Reinvestment of distribu- ) *
tions )
(c) Reserves or special funds ) Part II-Unitholder Explanations
) Part II-Trust Administration
(d) Schedule of distributions ) *
19. Records, accounts and reports ) Part II-Unitholder Explanations
) Part II-Trust Administration
20. Certain miscellaneous provisions ) Part II-Trust Administration
of Trust Agreement )
21. Loans to security holders ) *
22. Limitations on liability ) Part I-Portfolios
) Part II-Trust Administration
23. Bonding arrangements ) *
24. Other material provisions of ) *
trust indenture or agreement )
III. Organization, Personnel and Affiliated Persons of Depositor
25. Organization of Depositor ) Part II-Trust Administration
26. Fees received by Depositor ) Part II-Trust Administration
27. Business of Depositor ) Part II-Trust Administration
28. Certain information as to )
officials and affiliated ) *
persons of Depositor )
29. Companies owning securities of ) *
Depositor )
30. Controlling persons of Depositor ) *
31. Compensation of Directors ) *
32. Compensation of Directors ) *
33. Compensation of Employees ) *
34. Compensation to other persons ) Part II-Unitholder Explanations
IV. Distribution and Redemption of Securities
35. Distribution of trust's ) Part II-Introduction
securities by states ) Part II-Settlement of Bonds in the
Trusts
36. Suspension of sales of trust's ) *
securities )
37. Revocation of authority to ) *
distribute )
38. (a) Method of distribution )
(b) Underwriting agreements ) Part II-Unitholder Explanations
(c) Selling agreements )
39. (a) Organization of principal )
underwriter )
) Part II-Trust Administration
(b) N.A.S.D. membership by )
principal underwriter )
40. Certain fees received by ) *
principal underwriter )
41. (a) Business of principal ) Part II-Trust Administration
underwriter )
(b) Branch offices of principal ) *
underwriter )
(c) Salesmen of principal ) *
underwriter )
42. Ownership of securities of the ) *
trust )
43. Certain brokerage commissions )
received by principal ) *
underwriter )
44. (a) Method of valuation ) Part II-Introduction
) Part I-Summary of Essential Financial
) Information
) Part II-Unitholder Explanations
) Part II-Trust Administration
(b) Schedule as to offering ) *
price )
(c) Variation in offering price ) Part II-Unitholder Explanations
to certain persons )
45. Suspension of redemption rights ) *
46. (a) Redemption valuation ) Part II-Unitholder Explanations
) Part II-Trust Administration
(b) Schedule as to redemption ) *
price )
47. Purchase and sale of interests ) Part II-Unitholder Explanations
in underlying securities ) Part II-Trust Administration
V. Information Concerning the Trustee or Custodian
48. Organization and regulation of ) Part II-Trust Administration
trustee )
49. Fees and expenses of trustee ) Part I-Summary of Essential Financial
) Information
) Part II-Trust Administration
50. Trustee's lien ) Part II-Trust Administration
VI. Information Concerning Insurance of Holders of Securities
51. Insurance of holders of trust's )
securities ) *
VII. Policy of Registrant
52. (a) Provisions of trust agree- )
ment with respect to )
replacement or elimi- ) Part II-Trust Administration
nation of portfolio )
securities )
(b) Transactions involving )
elimination of underlying ) *
securities )
(c) Policy regarding substitu- ) Part II-Trust Administration
tion or elimination of )
underlying securities )
(d) Fundamental policy not ) *
otherwise covered )
53. Tax Status of trust ) Part I-Trust Information
) Part II-Federal Tax Status
VIII. Financial and Statistical Information
54. Trust's securities during ) *
last ten years )
55. )
)
56. Certain information regarding ) *
)
57. Periodic payment certificates )
58. )
59. Financial statements (Instruc- ) Part I-Other Matters
tions 1(c) to Form S-6) )
__________________________________
* Inapplicable, omitted, answer negative or not required
April 23, 1997
Van Kampen American Capital
Prospectus Part I
Insured Municipals Income Trust, 215th Insured Multi-Series
IM-IT 388 Florida IM-IT 114 Georgia IM-IT 84
California IM-IT 165
This Part I of the Prospectus may not be distributed unless accompanied by
Part II. Both parts of this Prospectus should be retained for future reference.
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 four underlying separate unit investment trusts designated as Insured
Municipals Income Trust, Series 388 (the "IM-IT Trust" ), California
Insured Municipals Income Trust, Series 165 (the "California IM-IT
Trust" ), Florida Insured Municipals Income Trust, Series 114 (the "
Florida IM-IT Trust" ) and Georgia Insured Municipals Income Trust, Series
84 (the "Georgia IM-IT Trust" ). The various trusts are collectively
referred to herein as the "Trusts" and the "Insured Trusts" .
The California IM-IT, Florida IM-IT and Georgia IM-IT Trusts are sometimes
collectively referred to herein as the "State Trusts" . Each Trust
initially consists of delivery statements relating to contracts to purchase
securities and, thereafter, will consist of such securities as may continue to
be held (the "Bonds" or "Securities" ). Such Securities are
interest-bearing obligations issued by or on behalf of municipalities and
other governmental authorities, the interest on which is, in the opinion of
recognized bond counsel to the issuing governmental authority, exempt from all
Federal income taxes under 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.
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.
INSURED MUNICIPALS INCOME TRUST, 215th Insured Multi-Series
At the Close of Business on the day before the Date of Deposit: April 22, 1997
(except for the IM-IT as of 8:00 A.M. Central Time
on the Date of Deposit: April 23, 1997)
Sponsor: Van Kampen American Capital Distributors, Inc.
Evaluator: American Portfolio Evaluation Services
(A division of an affiliate of the Sponsor)
Trustee: The Bank of New York
<TABLE>
<CAPTION>
California Florida Georgia
GENERAL INFORMATION IM-IT Trust IM-IT Trust IM-IT Trust IM-IT Trust
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Principal Amount (Par Value) of Securities in Trust <F1>................... $ 9,025,000 $ 3,700,000 $ 3,055,000 $ 3,010,000
Number of Units............................................................ 9,025 3,706 3,053 3,020
Fractional Undivided Interest in the Trust per Unit ....................... 1/9,025 1/3,706 1/3,053 1/3,020
Principal Amount (Par Value) of Securities per Unit........................ $ 1,000.00 $ 998.38 $ 1,000.66 $ 996.69
Public Offering Price: ....................................................
Aggregate Offering Price of Securities in Portfolio....................... $ 8,582,815 $ 3,524,422 $ 2,903,426 $ 2,872,033
Aggregate Offering Price of Securities per Unit........................... $ 951.00 $ 951.00 $ 951.01 $ 951.00
Sales Charge <F2>......................................................... $ 49.00 $ 49.00 $ 48.99 $ 49.00
Public Offering Price per Unit <F3>....................................... $ 1,000.00 $ 1,000.00 $ 1,000.00 $ 1,000.00
Redemption Price per Unit <F3>............................................. $ 943.51 $ 943.57 $ 943.56 $ 943.53
Secondary Market Repurchase Price per Unit <F3>............................ $ 951.00 $ 951.00 $ 951.01 $ 951.00
Excess of Public Offering Price per Unit Over Redemption Price per Unit.... $ 56.49 $ 56.43 $ 56.44 $ 56.47
Excess of Sponsor's Initial Repurchase Price per Unit Over Redemption
Price per Unit............................................................. $ 7.49 $ 7.43 $ 7.45 $ 7.47
Minimum Value of the Trust under which Trust Agreement may be terminated... $ 1,805,000 $ 740,000 $ 611,000 $ 602,000
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
First Settlement Date................April 28, 1997
Evaluator's Annual Supervisory Fee...Maximum of $0.25 per Unit
Evaluator's Annual Evaluation Fee....$0.30 per $1,000 principal amount of Bonds
Evaluation Time......................4:00 p.m. Eastern Time
- ----------
<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 Trust's termination will be equal to the Principal
Amount (Par Value) of Securities per Unit stated above.
<F2>Sales charges for the Trusts, expressed as a percentage of the Public Offering
Price per Unit and as a percentage of the aggregate offering price of the
Securities are set forth under "Unitholder Explanations--Public
Offering--General" in Part II of this Prospectus. Notwithstanding anything
to the contrary in Part II of this Prospectus, employees, officers and
directors (including their spouses, children, grandchildren, parents,
grandparents, siblings, mothers-in-law, fathers-in-law, sons-in-law and
daughters-in-law, and trustees, custodians or fiduciaries for the benefit of
such persons (collectively referred to herein as "related purchasers"
)) of Van Kampen American Capital Distributors, Inc. and its affiliates and
Underwriters and their affiliates may purchase Units at the Public Offering
Price less the applicable underwriting commission or less the applicable
dealer concession in the absence of an underwriting commission and employees,
officers and directors (including related purchasers) of dealers and their
affiliates and vendors providing services to the Sponsor may purchase Units at
the Public Offering Price less the applicable dealer concession.
<F3>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 "Unitholder
Explanations--Public Offering--Market for Units" in Part II of this
Prospectus.
</TABLE>
IM-IT
- --------------------------------------------------------------------------
General. The IM-IT consists of 12 issues of Securities. One of the Bonds in
the IM-IT is a general obligation of the governmental entity issuing it and is
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 11 states or
territories, divided by purpose of issues (and percentage of principal amount
to total IM-IT) as follows: General Purpose, 2 (22%); Higher Education, 2
(19%); Health Care, 2 (17%); Other Care, 1 (11%); Public Building, 1 (11%);
Retail Electric/Gas/Telephone, 1 (11%); Water and Sewer, 2 (8%) and General
Obligation, 1 (1%). No Bond issue has received a provisional rating. The
dollar weighted average maturity of the Bonds in the Trust is 28 years.
Tax Status. For a discussion of the Federal tax status of income earned on
IM-IT Trust Units, see "Federal Tax Status" in Part II of this
Prospectus.
<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......................... $ 55.41 $ 55.41
Less: Estimated Annual Expense per Unit <F2>...................... $ 1.81 $ 1.31
Less: Annual Premium on Portfolio Insurance per Unit.............. -- --
Estimated Net Annual Interest Income per Unit..................... $ 53.60 $ 54.10
Calculation of Estimated Interest Earnings per Unit:
Estimated Net Annual Interest Income per Unit..................... $ 53.60 $ 54.10
Divided by 12 and 2, respectively................................. $ 4.46 $ 27.05
Estimated Daily Rate of Net Interest Accrual per Unit.............. $ .14889 $ .15028
Estimated Current Return Based on Public Offering Price <F1><F3>... 5.36% 5.41%
Estimated Long-Term Return <F3>.................................... 5.42% 5.47%
Estimated Initial Monthly Distribution (May 1997).................. $ 1.78
Estimated Initial Semi-annual Distribution (June 1997)............. $ 6.31
Estimated Normal Distribution per Unit <F3>........................ $ 4.46 $ 27.05
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Trustee's Annual Fee <F1><F4>... $.91 and $.51 per $1,000 principal amount of Bonds, respectively, for those portions of the IM-IT
Trust under the monthly and semi-annual distribution plans
Record and Computation Dates.... TENTH day of the month as follows: monthly--each month; semi-annual--June and December
Distribution Dates.............. TWENTY-FIFTH day of the month as follows: monthly--each month; semi-annual--
June and December
- ----------
<FN>
<F1>During the first year the Trustee will reduce its fee by approximately $.41
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 $55.82. Estimated Annual Expense
per Unit (excluding insurance) will be increased to $2.22 and $1.72 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" in Part II of
this Prospectus.
<F2>Excluding insurance costs. The Estimated Annual Expenses are expected to
fluctuate periodically (see "Trust Administration--Fund Administration and
Expenses--Miscellaneous Expenses" in Part II of this Prospectus).
<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" in Part II of this Prospectus. For
a discussion of how these returns are calculated, see "Unitholder
Explanations--Estimated Current Returns and Estimated Long-Term Returns"
in Part II of this Prospectus. 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 "Other
Matters--Estimated Cash Flows to Unitholders" .
<F4>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 $4,603. Assuming in the alternative that all Unitholders had elected the
monthly distribution plan, such fees would initially amount to $8,213.
</TABLE>
<TABLE>
INSURED MUNICIPALS INCOME TRUST
SERIES 388 (215TH INSURED MULTI-SERIES)
PORTFOLIO As of April 23, 1997
<CAPTION>
Offering
Price To
Aggregate Name of Issuer, Title, Interest Rate and Maturity Date of Redemption IM-IT
either Bonds Deposited or Bonds Contracted for<F1><F5> Rating<F2> Feature<F3> Trust<F4>
- ------------- -------------------------------------------------------------- -------------- ------------------ -------------
<S> <C> <C> <C> <C> <C>
$ 250,000 Red River Authority, Texas, Pollution Control Revenue
Refunding Bonds (MBIA Insured) 6.00% Due 6/1/2020............ AAA 2006 @ 102 $ 251,633
25,000 Soledad Unified School District (Monterrey County,
California) General Obligation Bonds, Election of 1995,
Series 1997 (FGIC Insured) #0.00% Due 6/1/2021............. AAA 6,017<F6>
500,000 Utah, Water Financing Agency, Revenue Bonds (Pooled Loan
Financing Program) Series 1997A (MBIA Insured) #5.75% Due 2007 @ 101
10/1/2021..................................................... AAA 2018 @ 100 S.F. 489,680
1,000,000 Pennsylvania Intergovernmental Cooperation Authority, Special
Tax Revenue Refunding Bonds (City of Philadelphia Funding 2003 @ 100
Program) Series 1993A (MBIA Insured) #5.00% Due 6/15/2022.... AAA 2014 @ 100 S.F. 881,840
1,000,000 County of Cook, Illinois, Revenue Bonds (Jewish Federation of
Metropolitan Chicago Projects) Series 1996 (AMBAC Indemnity 2006 @ 102
Insured) #6.00% Due 8/15/2022................................ AAA 2017 @ 100 S.F. 1,005,000
1,000,000 Rhode Island Convention Center Authority, Refunding Revenue 2004 @ 102
Bonds, Series 1993C (MBIA Insured) #5.00% Due 5/15/2023...... AAA 2009 @ 100 S.F. 874,030
1,000,000 Anchorage, Alaska, Electric Utility Revenue Bonds, Senior 2006 @ 102
Lien Series B (MBIA Insured) #5.50% Due 2/1/2026............. AAA 2017 @ 100 S.F. 939,370
500,000 City of Kalamazoo, Michigan, Hospital Finance Authority,
Hospital Revenue Refunding and Improvement Bonds (Bronson
Methodist Hospital) Series 1996 (MBIA Insured) #5.875% Due 2006 @ 102
5/15/2026..................................................... AAA 2017 @ 100 S.F. 493,935
750,000 New Hampshire Higher Educational and Health Facilities
Authority, Revenue Bonds, Saint Anselm College Issue, Series 2006 @ 102
1996 (MBIA Insured) #5.75% Due 7/1/2026...................... AAA 2017 @ 100 S.F. 733,020
1,000,000 District of Columbia, University Revenue Bonds, American
University Issue, Series 1996 (AMBAC Indemnity Insured) 2006 @ 101
#5.625% Due 10/1/2026......................................... AAA 2017 @ 100 S.F. 953,420
1,000,000 Illinois Health Facilities Authority, Revenue Bonds, Highland
Park Hospital, Series 1997 (MBIA Insured) #5.75% Due 2007 @ 102
10/1/2026##................................................... AAA 2018 @ 100 S.F. 967,110
1,000,000 Special Care Facilities Financing Authority of the City of
Birmingham, Alabama, Baptist Medical Centers, Revenue Bonds,
Series 1996A (Baptist Health System, Inc.) MBIA Insured 2006 @ 102
#5.875% Due 11/15/2026........................................ AAA 2020 @ 100 S.F. 987,760
$ 9,025,000 $ 8,582,815
============= =============
</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" in Part II of
this Prospectus.
For an explanation of the footnotes used on this page, see "Notes to
Portfolios" .
CALIFORNIA IM-IT TRUST
- --------------------------------------------------------------------------
General. The California IM-IT Trust consists of 9 issues of Securities. Two of
the Bonds in the California 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 California IM-IT Trust) as follows: Certificate of Participation, 2
(18%); General Obligation, 2 (15%); Health Care, 1 (14%); Water and Sewer, 1
(14%); Higher Education, 1 (13%); Public Building, 1 (13%) and Transportation,
1 (13%). No Bond issue has received a provisional rating.
Risk Factors. The Trust will invest substantially all of its assets in
California Municipal Obligations. The Trust is therefore susceptible to
political, economic or regulatory factors affecting issuers of California
Municipal Obligations. These include the possible adverse effects of certain
California constitutional amendments, legislative measures, voter initiatives
and other matters that are described below. The following information provides
only a brief summary of the complex factors affecting the financial situation
in California (the "State" ) and is derived from sources that are
generally available to investors and are believed to be accurate. No
independent verification has been made of the accuracy or completeness of any
of the following information. It is based in part on information obtained from
various State and local agencies in California or contained in official
statements for various California Municipal Obligations.
There can be no assurance that future statewide or regional economic
difficulties, and the resulting impact on State or local governmental finances
generally, will not adversely affect the market value of California 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.
California's economy is the largest among the 50 states and one of the largest
in the world. The State's population of almost 32 million represents 12.3% of
the total United States population and grew by 27% in the 1980s. While the
State's substantial population growth during the 1980s stimulated local
economic growth and diversification and sustained a real estate boom between
1984 and 1990, it has increased strains on the State's limited water resources
and its infrastructure. Resultant traffic congestion, school over-crowding and
high housing costs have increased demands for government services and may
impede future economic growth. Population growth has slowed between 1991 and
1993 even while substantial immigration has continued, due to a significant
increase in outmigration by California residents. Generally, the household
incomes of new residents have been departing households, which may have a
major long-term socioeconomic and fiscal impact. However, with the California
economy improving, the recent net outmigration within the Continental U.S. is
expected to decrease or be reversed.
From mid-1990 to late 1993, the State's economy suffered its worst recession
since the 1930s, with recovery starting later than for the nation as a whole.
The State has experienced the worst job losses of any post-war recession.
Prerecession job levels may not be realized until near the end of the decade.
The largest job losses have been in Southern California, led by declines in
the aerospace and construction industries. Weakness statewide occurred in
manufacturing, construction, services and trade. Additional military base
closures will have further adverse effects on the State's economy later in the
decade.
Since the start of 1994, the California economy has shown signs of steady
recovery and growth. The State Department of Finance reports net job growth,
particularly in construction and related manufacturing, wholesale and retail
trade, transportation, recreation and services. This growth has offset the
continuing but slowing job losses in the aerospace industry and restructuring
of the finance and utility sectors, Unemployment in the State was down
substantially in 1994 from its 10% peak in January, 1994, but still remains
higher than the national average rate. Retail sales were up strongly in 1994
from year-earlier figures. Delay or slowdown in recovery will adversely affect
State revenues.
Certain California Municipal Obligations may be obligations of issuers which
rely in whole or in part, directly or indirectly, on ad valorem property taxes
as a source of revenue. The taxing powers of California local governments and
districts are limited by Article XIIIA of the California Constitution, enacted
by the voters in 1978 and commonly known as "Proposition 13." Briefly,
Article XIIIA limits to 1% of full cash value the rate of ad valorem property
taxes on real property and generally restricts the reassessment of property to
2% per year, except upon new construction or change of ownership (subject to a
number of exemptions). Taxing entities may, however, raise ad valorem taxes
above the 1% limit to pay debt service on voter-approved bonded indebtedness.
Under Article XIIIA, the basic 1% ad valorem tax levy is applied against the
assessed value of property as of the owner's date of acquisition (or as of
March 1, 1975, if acquired earlier), subject to certain adjustments. This
system has resulted in widely varying amounts of tax on similarly situated
properties. Several lawsuits have been filed challenging the acquisition-based
assessment system of Proposition 13, and on June 18, 1992 the U.S. Supreme
Court announced a decision upholding Proposition 13.
Article XIIIA prohibits local governments from raising revenues through ad
valorem property taxes above the 1% limit; it also requires voters of any
governmental unit to give two-thirds approval to levy any "special
tax." Court decisions, however, allowed non-voter approved levy of "
general taxes" which were not dedicated to a specific use. In response to
these decisions, the voters of the State in 1986 adopted an initiative statute
which imposed significant new limits on the ability of local entities to raise
or levy general taxes, except by receiving majority local voter approval.
Significant elements of this initiative, "Proposition 62," have been
overturned in recent court cases. An initiative proposed to re-enact the
provisions of Proposition 62 as a constitutional amendment was defeated by the
voters in November 1990, but such a proposal may be renewed in the future.
California and its local governments are subject to an annual "
appropriations limit" imposed by Article XIIIB of the California
Constitution, enacted by the voters in 1979 and significantly amended by
Propositions 98 and 111 in 1988 and 1990, respectively. Article XIIIB
prohibits the State or any covered local government from spending "
appropriations subject to limitation" in excess of the appropriations
limit imposed. "Appropriations subject to limitation" are
authorizations to spend "proceeds of taxes," which consists of tax
revenues and certain other funds, including proceeds from regulatory licenses,
user charges or other fees, to the extent that such proceeds exceed the cost
of providing the product or service, but "proceeds of taxes" excludes
most State subventions to local governments. No limit is imposed on
appropriations of funds which are not "proceeds of taxes," such as
reasonable user charges or fees and certain other non-tax funds, including
bond proceeds.
Among the expenditures not included in the Article XIIIB appropriations limit
are (1) the debt service cost of bonds issued or authorized prior to January
1, 1979, or subsequently authorized by the voters, (2) appropriations arising
from certain emergencies declared by the Governor, (3) appropriations for
certain capital outlay projects, (4) appropriations by the State of post-1989
increases in gasoline taxes and vehicle weight fees, and (5) appropriations
made in certain cases of emergency.
The appropriations limit for each year is adjusted annually to reflect changes
in cost of living and population, and any transfers of service
responsibilities between government units. The definitions for such
adjustments were liberalized in 1990 by Proposition 111 to follow more closely
growth in California's economy.
"Excess" revenues are measured over a two-year cycle. With respect to
local governments, excess revenues must be returned by a revision of tax rates
or fee schedules within the two subsequent fiscal years. The appropriations
limit for a local government may be overridden by referendum under certain
conditions for up to four years at a time. With respect to the State, 50% of
any excess revenues is to be distributed to K-12 school districts and
community college districts (collectively, "K-14 districts" ) and the
other 50% is to be refunded to taxpayers. With more liberal annual adjustment
factors since 1988, and depressed revenues since 1990 because of the
recession, few governments, including the State, are currently operating near
their spending limits, but this condition may change over time. Local
governments may by voter approval exceed their spending limits for up to four
years.
Because of the complex nature of Articles XIIIA and XIIIB of the California
Constitution, the ambiguities and possible inconsistencies in their terms, and
the impossibility of predicting future appropriations or changes in population
and cost of living, and the probability of continuing legal challenges, it is
not currently possible to determine fully the impact of Article XIIIA or
Article XIIIB on California Municipal Obligations or on the ability of
California or local governments to pay debt service on such California
Municipal Obligations. It is not presently possible to predict the outcome of
any pending litigation with respect to the ultimate scope, impact or
constitutionality of either Article XIIIA or Article XIIIB, or the impact of
any such determinations upon State agencies or local governments, or upon
their ability to pay debt service on their obligations. Future initiative or
legislative changes in laws or the California Constitution may also affect the
ability of the State or local issuers to repay their obligations.
Under the California Constitution, debt service on outstanding general
obligation bonds is the second charge to the General Fund after support of the
public school system and public institutions of higher education. Total
outstanding general obligation bond and lease purchase debt of the State
increased from $9.4 billion at June 30, 1987 to $23.5 billion at June 30,
1994. In FY 1993-94, debt service on general obligation bonds and lease
purchase debt was approximately 5.2% of General Fund revenues.
The principal sources of General Fund revenues in 1993-94 were the California
personal income tax (44% of total revenues), the sales tax (35%), bank and
corporation taxes (12%), and the gross premium tax on insurance (3%).
California maintains a Special Fund for Economic Uncertainties (the "
Economic Uncertainties Fund" ), derived from General Fund revenues, as a
reserve to meet cash needs of the General Fund.
Throughout the 1980s, State spending increased rapidly as the State population
and economy also grew rapidly, including increased spending for many
assistance programs to local governments, which were constrained by
Proposition 13 and other laws. The largest State program is assistance to
local public school districts. In 1988, an initiative (Proposition 98) was
enacted which (subject to suspension by a two-thirds vote of the Legislature
and the Governor) guarantees local school districts and community college
districts a minimum share of State General Fund revenues (currently about
33%).
Since the start of 1990-91 Fiscal Year, the State has faced adverse economic,
fiscal and budget conditions. The economic recession seriously affected State
tax revenues. It also caused increased expenditures for health and welfare
programs. The State is also facing a structural imbalance in its budget with
the largest programs supported by the General Fund (education, health, welfare
and corrections) growing at rates significantly higher than the growth rates
for the principal revenue sources of the General Fund. These structural
concerns will be exacerbated in coming years by the expected need to
substantially increase capital and operating funds for corrections as a result
of a "Three Strikes" law enacted in 1994.
As a result of these factors, among others, from the late 1980's until
1992-1993, the State had a period of nearly chronic budget imbalance, with
expenditures exceeding revenues in four out of six years, and the State
accumulated and sustained a budget deficit in the budget reserve, the Special
Fund for Economic Uncertainties ("SFEU" ) approaching $2.8 billion at
its peak at June 30, 1993. Starting in the 1990-91 Fiscal Year and for each
year thereafter, each budget required multibillion dollar actions to bring
projected revenues and expenditures into balance and to close large "
budget gaps" which were identified. The Legislature and Governor
eventually agreed on a number of different steps to produce Budget Acts in the
years 1991-92 to 1994-95, including: significant cuts in health and welfare
program expenditures; transfers of program responsibilities and funding from
the State to local governments, coupled with some reduction in mandates on
local government; transfer of about $3.6 billion in annual local property tax
revenues from cities, counties, redevelopment agencies and some other
districts to local school districts, thereby reducing State funding for
schools; reduction in growth of support for higher education programs, coupled
with increases in student fees; revenue increases (particularly in the 1992-93
Fiscal Year budget), most of which were for a short duration; increased
reliance on aid from the federal government to offset the costs of
incarcerating, educating and providing health and welfare services to
undocumented aliens (although these efforts have produced much less federal
aid than the State Administration has requested) and various on-time
adjustments and accounting changes.
Despite these budget actions, the effects of the recession led to large,
unanticipated deficits in the SFEU, as compared to projected positive
balances. By the start of the 1993-94 Fiscal Year, the accumulated deficit was
so large (almost $2.8 billion) that it was impractical to budget to retire it
in one year, so a two-year program was implemented, using the issuance of
revenue anticipation warrants to carry a portion of the deficit over the end
of the fiscal year. When the economy failed to recover sufficiently in
1993-94, a second two-year plan was implemented in 1994-95, to carry the final
retirement of the deficit into 1995-96.
The combination of stringent budget actions cutting State expenditures, and
the turnaround of the economy by late 1993, finally led to the restoration of
positive financial results. While General Fund revenues and expenditures were
essentially equal in FY 1992-93 (following two years of excess expenditures
over revenues), the General Fund had positive operating results in FY 1993-94
and 1994-95, which have reduced the accumulated budget deficit to around $600
million as of June 30, 1995.
A consequence of the accumulated budget deficits in the early 1990's, together
with other factors such as disbursement of funds to local school districts
"borrowed" from future fiscal years and hence not shown in the annual
budget, was to significantly reduce the State's cash resources available to
pay its ongoing obligations. When the Legislature and the Governor failed to
adopt a budget for the 1992-93 Fiscal Year by July 1, 1992, which would have
allowed the State to carry out its normal annual cash flow borrowing to
replenish its cash reserves, the State Controller was forced to issue
registered warrants ("IOUs" ) to pay a variety of obligations
representing prior years' or continuing appropriations, and mandates from
court orders. Available funds were used to make constitutionally-mandated
payments, such as debt service on bonds and warrants. Between July 1 and
September 4, 1992 the State Controller issued a total of approximately $3.8
billion of registered warrants. After that date, all remaining outstanding
registered warrants (about $2.9 billion) were called for redemptions from
proceeds of the issuance of 1992 Interim Notes after the budget was adopted.
The State's cash condition became so serious in late spring of 1992 that the
State Controller was required to issue revenue anticipation warrants maturing
in the following fiscal year in order to pay the State's continuing
obligations. The State was forced to rely increasingly on external debt
markets to meet its cash needs, as a succession of notes and warrants (both
forms of short-term cash flow financing) were issued in the period from June
1992 to July 1994, often needed to pay previously-maturing notes or warrants.
These borrowings were used also in part to spread out the repayment of the
accumulated budget deficit over the end of a fiscal year.
The State issued $7.0 billion of short-term debt in July, 1994 to meet its
cash flow needs and to finance the deferral of part of the accumulated budget
deficit to the 1995-96 fiscal year. In order to assure repayment of the $4
billion, 22-month part of this borrowing, the State enacted legislation (the
"Trigger Law" ) which can lead to automatic, across-the-board cuts in
General Fund expenditures in either the 1994-95 or 1995-96 fiscal years if
cash flow projections made at certain times during those years show
deterioration from the projections made in July 1994 when the borrowings were
made. On November 15, 1994, the State Controller as part of the Trigger Law
reported that the cash position of the General Fund on June 30, 1995 would be
about $580 million better than earlier projected, so no automatic budget
adjustments were required in 1994-95. The Controller's report showed that loss
of federal funds was offset by higher revenues, lower expenditures, and
certain other increases in cash resources.
For the first time in four years, the State entered the 1995-96 fiscal year
with strengthening revenues based on an improving economy. The major feature
of the Governor's proposed Budget, a 15% phased tax cut, was rejected by the
Legislature.
The 1995-96 Budget Act was signed by the Governor on August 3, 1995, 34 days
after the start of the fiscal year. The Budget Act projects General Fund
revenues and transfers of $44.1 billion. Expenditures are budgeted at $43.4
billion. The Department of Finance projects that, after repaying the last of
the carryover budget deficit, there will be positive balance of less than $30
million in the budget reserve, the Special Fund for Economic Uncertainties, at
June 30, 1996, providing no margin for adverse results during the year.
The Department of Finance projects cash flow borrowings in the 1995-96 Fiscal
Year will be the smallest in many years, comprising about $2 billion of notes
to be issued in April, 1996, and maturing by June 30, 1996. With full payment
of $4 billion of revenue anticipation warrants on April 25, 1996, the
Department sees no further need for borrowing over the end of the fiscal year.
The Department projects that available cash resources to pay State obligations
will be almost $2 billion at June 30, 1996. This "cushion" will be
re-examined by the State Controller on October 15, 1995, in the third step in
the Budget Adjustment Law process. If the Controller believes the available
cash resources on June 30, 1996 will, in fact, be zero or less, her report
would start a process which could lead to automatic budget cuts starting in
December, 1995.
The principal features of the 1995-96 Budget Act, in addition to those noted
above, are additional cuts in health and welfare expenditures (some of which
are subject to approvals or waivers by the federal government); assumed
further federal aid for illegal immigrant costs; and an increase in per-pupil
funding for public schools and community colleges, the first such significant
increase in four years.
State general obligation bonds ratings were reduced in July, 1994 to "
A1" by Moody's and "A" by S&P. Both of these ratings were reduced
from "AAA" levels which the State held until late 1991. There can be
no assurance that such ratings will be maintained in the future. It should be
noted that the creditworthiness of obligations issued by local California
issuers may be unrelated to the creditworthiness of obligations issued by the
State of California, and that there is no obligation on the part of the State
to make payment on such local obligations in the event of default.
The State is involved in certain legal proceedings (described in the State's
recent financial statements) that, if decided against the State, may require
the State to make significant future expenditures or may substantially impair
revenues. Trial courts have recently entered tentative decisions or
injunctions which would overturn several parts of the State's recent budget
compromises. The matters covered by these lawsuits include a deferral of
payments by the State to the Public Employees Retirement System, reductions in
welfare payments, and the use of certain cigarette tax funds for health costs.
All of these cases are subject to further proceedings and appeals, and if the
State eventually loses, the final remedies may not have to be implemented in
one year.
There are a number of State agencies, instrumentalities and political
subdivisions of the State that issue Municipal Obligations, some of which may
be conduit revenue obligations payable from payments from private borrowers.
These entities are subject to various economic risks and uncertainties, and
the credit quality of the securities issued by them may vary considerably from
the credit quality of the obligations backed by the full faith and credit of
the State.
Property tax revenues received by local governments declined more than 50%
following passage of Proposition 13. Subsequently, the California Legislature
enacted measures to provide for the redistribution of the State's General Fund
surplus to local agencies, the reallocation of certain State revenues to local
agencies and the assumption of certain governmental functions by the State to
assist municipal issuers to raise revenues. Total local assistance from the
State's General Fund was budgeted at approximately 75% of General Fund
expenditures in recent years, including the effect of implementing reductions
in certain aid programs. To reduce State General Fund support for school
districts, the 1992-93 and 1993-94 Budget Acts caused local governments to
transfer $3.9 billion of property tax revenues to school districts,
representing loss of the post-Proposition 13 "bailout" aid. The
largest share of these transfers came from counties, and the balance from
cities, special districts and redevelopment agencies. In order to make up this
shortfall, the Legislature proposed and voters approved in 1993 dedicating
0.5% of the sales tax to counties and cities for public safety purposes. In
addition, the Legislature has changed laws to relieve local governments of
certain mandates, allowing them to reduce costs.
To the extent the State should be constrained by its Article XIII
appropriations limit, or its obligation to conform to Proposition 98, or other
fiscal considerations, the absolute level, or the rate of growth, of State
assistance to local governments may be further reduced. Any such reductions in
State aid could compound the serious fiscal constraints already experienced by
many local governments, particularly counties. At lease one rural county
(Butte) publicly announced that it might enter bankruptcy proceedings in
August 1990, although such plans were put off after the Governor approved
legislation to provide additional funds for the county. Other counties have
also indicated that their budgetary condition is extremely grave. The Richmond
Unified School District (Contra Costa County) entered bankruptcy proceedings
in May 1991 but the proceedings have been dismissed. Los Angeles County, the
largest in the State, has reported severe fiscal problems, leading to a
nominal $1.2 billion deficit in its $11 billion budget for the 1995-96 Fiscal
Year. To balance the budget, the county has imposed severe cuts in services,
particularly for health care. The Legislature is considering actions to help
alleviate the County's fiscal problems, but none were completed before August
15, 1995. As a result of its bankruptcy proceedings (discussed further below)
Orange County also has implemented stringent cuts in services and has laid off
workers.
California Municipal Obligations which are assessment bonds may be adversely
affected by a general decline in real estate values or a slowdown in real
estate sales activity. In many cases, such bonds are secured by land which is
undeveloped at the time of issuance but anticipated to be developed within a
few years after issuance. In the event of such reduction or slowdown, such
development may not occur or may be delayed, thereby increasing the risk of a
default on the bonds. Because the special assessments or taxes securing these
bonds are not the personal liability of the owners of the property assessed,
the lien on the property is the only security for the bonds. Moreover, in most
cases the issuer of these bonds is not required to make payments on the bonds
in the event of delinquency in the payment of assessments or taxes, except
from amounts, if any, in a reserve fund established for the bonds.
Certain California long-term lease obligations, though typically payable from
the general fund of the municipality, are subject to "abatement" in
the event the facility being leased is unavailable for beneficial use and
occupancy by the municipality during the term of the lease. Abatement is not a
default, and there may be no remedies available to the holders of the
certificates evidencing the lease obligation in the event abatement occurs.
The most common cases of abatement are failure to complete construction of the
facility before the end of the period during which lease payments have been
capitalized and uninsured casualty losses to the facility (e.g., due to
earthquake). In the event abatement occurs with respect to a lease obligation,
lease payments may be interrupted (if all available insurance proceeds and
reserves are exhausted) and the certificates may not be paid when due.
Several years ago the Richmond Unified School District (the "District"
) entered into a lease transaction in which certain existing properties of the
District were sold and leased back in order to obtain funds to cover operating
deficits. Following a fiscal crisis in which the District's finances were
taken over by a State receiver (including a brief period under bankruptcy
court protection), the District failed to make rental payments on this lease,
resulting in a lawsuit by the Trustee for the Certificate of Participation
holders, in which the State was a named defendant (on the grounds that it
controlled the District's finances). One of the defenses raised in answer to
this lawsuit was the invalidity of the original lease transaction. The trial
court has upheld the validity of the District's lease, and the case has been
settled. Any judgment in any future case against the position asserted by the
Trustee in the Richmond case may have adverse implications for lease
transactions of a similar nature by other California entities.
The repayment of industrial development securities secured by real property
may be affected by California laws limiting foreclosure rights of creditors.
Securities backed by health care and hospital revenues may be affected by
changes in State regulations governing cost reimbursements to health care
providers under Medi-Cal (the State's Medicaid program), including risks
related to the policy of awarding exclusive contracts to certain hospitals.
Limitations on ad valorem property taxes may particularly affect "tax
allocation" bonds issued by California redevelopment agencies. Such bonds
are secured solely by the increase in assessed valuation of a redevelopment
project area after the start of redevelopment activity. In the event that
assessed values in the redevelopment project decline (e.g., because of a major
natural disaster such as an earthquake), the tax increment revenue may be
insufficient to make principal and interest payments on these bonds. Both
Moody's and S&P suspended ratings on California tax allocation bonds after the
enactment of Articles XIIIA and XIIIB, and only resumed such ratings on a
selective basis.
Proposition 87, approved by California voters in 1988, requires that all
revenues produced by a tax rate increase go directly to the taxing entity
which increased such tax rate to repay that entity's general obligation
indebtedness. As a result, redevelopment agencies (which, typically, are the
Issuers of tax allocation securities) no longer receive an increase in tax
increment when taxes on property in the project area are increased to repay
voter-approved bonded indebtedness.
The effect of these various constitutional and statutory changes upon the
ability of California municipal securities issuers to pay interest and
principal on their obligations remains unclear. Furthermore, other measures
affecting the taxing or spending authority of California or its political
subdivisions may be approved or enacted in the future. Legislation has been or
may be introduced which would modify existing taxes or other revenue-raising
measures or which either would further limit or, alternatively, would increase
the abilities of state and local governments to impose new taxes or increase
existing taxes. It is not presently possible to determine the impact of any
such legislation on California Municipal Obligations in which the Fund may
invest, future allocations of state revenues to local governments or the
abilities of state or local governments to pay the interest on, or repay the
principal of, such California Municipal Obligations.
Substantially all of California is within an active geologic region subject to
major seismic activity. Northern California in 1989 and Southern California in
1994 experienced major earthquakes causing billions of dollars in damages. The
federal government provided more than $1.8 billion in aid for both
earthquakes, and neither event is expected to have any long-term negative
economic impact. Any California Municipal Obligation in the Portfolio could be
affected by an interruption of revenues because of damaged facilities, or,
consequently, income tax deductions for casualty losses or property tax
assessment reductions. Compensatory financial assistance could be constrained
by the inability of (i) an issuer to have obtained earthquake insurance
coverage at reasonable rates; (ii) an insurer to perform on its contracts of
insurance in the event of widespread losses; or (iii) the Federal or State
government to appropriate sufficient funds within their respective budget
limitations.
On January 17, 1994, a major earthquake with an estimated magnitude 6.8 on the
Richter scale struck the Los Angeles area, causing significant property damage
to public and private facilities, presently estimated at $15-20 billion. While
over $9.5 billion of federal aid, and a projected $1.9 billion of State aid,
plus insurance proceeds, will reimburse much of that loss, there were bill be
come ultimate loss of health and income in the region, in addition to costs of
the disruption caused by the event. Short-term economic projections are
generally neutral, as the infusion of aid will restore billions of dollars to
the local economy within a few months; already the local construction industry
has picked up. Although the earthquake will hinder recovery from the recession
in Southern California, already hard-hit, its long-term impact is not expected
to be material in the context of the overall wealth of the region. Almost five
years after the event, there are few remaining effects of the 1989 Loma Prieta
earthquake in northern California (which, however, caused less severe damage
than Northridge).
On December 7, 1994, Orange County, California (the "County" ),
together with its pooled investment fund (the "Pools" ) filed for
protection under Chapter 9 of the federal Bankruptcy Code, after reports that
the Pools had suffered significant market losses in its investments caused a
liquidity crisis for the Pools and the County. Approximately 180 other public
entities, most but not all located in the County, were also depositors in the
Pools. The County estimated the Pools' loss at about $1.64 billion, or 23%, of
its initial deposits of around $7.5 billion. Many of the entities which kept
moneys in the Pools, including the County, faced cash flow difficulties
because of the bankruptcy filing and may be required to reduce programs or
capital projects. Moody's and Standard & Poor's have suspended, reduced to
below investment grade levels, or placed on "Credit Watch" various
securities of the County and the entities participating in the Pools.
On May 2, 1995, the Bankruptcy Court approved a settlement agreement covering
claims of the other participating entities against the County and the Pools.
Most participants have received in cash 80% (90% for school districts) of
their Pools' investment; the balance is to be paid in the future. The County
succeeded in deferring, by consent, until June 30, 1996, the repayment of $800
million of short-term obligations due in July and August, 1995; these notes
are, however, considered to be in default by Moody's and S&P. On June 27,
1995, County voters turned down a proposal for a temporary 0.5% increase in
the local sales tax, making the County's fiscal recovery much harder.
The State of California has no obligation with respect to any obligations or
securities of the County or any of the other participating entities, although
under existing legal precedents, the State may be obligated to ensure that
school districts have sufficient funds to operate. All school districts were
able to meet their obligations in the 1994-95 Fiscal Year.
Tax Status. For a discussion of the Federal tax status of income earned on
California IM-IT Trust Units, see "Federal Tax Status" in Part II of
this Prospectus.
In the opinion of Orrick, Herrington & Sutcliffe, LLP, special counsel to the
Fund for California tax matters, under existing California income and property
tax law applicable to individuals who are California residents:
(1)the California IM-IT Trust is not an association taxable as a corporation
and the income of the California IM-IT Trust will be treated as the income of
the Unitholders under the income tax laws of California;
(2)amounts treated as interest on the underlying Securities in the California
IM-IT Trust which are exempt from tax under California personal income tax and
property tax laws when received by the California IM-IT Trust will, under such
laws, retain their status as tax-exempt interest when distributed to
Unitholders. However, interest on the underlying Securities attributed to a
Unitholder which is a corporation subject to the California franchise tax laws
may be includable in its gross income for purposes of determining its
California franchise tax. Further, certain interest which is attributable to a
Unitholder subject to the California personal income tax and which is treated
as an item of tax preference for purposes of the federal alternative minimum
tax pursuant to Section 57(a)(5) of the Internal Revenue Code of 1986 may also
be treated as an item of tax preference that must be taken into account in
computing such Unitholder's alternative minimum taxable income for purposes of
the California alternative minimum tax enacted by 1987 California Statutes,
chapter 1138. However, because of the provisions of the California
Constitution exempting the interest on bonds issued by the State of
California, or by local governments within the state, from taxes levied on
income, the application of the new California alternative minimum tax to
interest otherwise exempt from the California personal income tax in some
cases may be unclear;
(3)under California income tax law, each Unitholder in the California IM-IT
Trust will have a taxable event when the California IM-IT Trust disposes of a
Security (whether by sale, exchange, redemption, or payment at maturity) or
when the Unitholder redeems or sells Units. Because of the requirement that
tax cost basis be reduced to reflect amortization of bond premium, under some
circumstances a Unitholder may realize taxable gains when Units are sold or
redeemed for an amount equal to, or less than, their original cost. The total
cost of each Unit in the California IM-IT Trust to a Unitholder is allocated
among each of the Bond issues held in the California IM-IT Trust (in
accordance with the proportion of the California IM-IT Trust comprised by each
Bond issue) in order to determine his per Unit tax cost for each Bond issue;
and the tax cost reduction requirements relating to amortization of bond
premium will apply separately to the per Unit tax cost of each Bond issue.
Unitholders' bases in their units, and the bases for their fractional interest
in each Trust asset, may have to be adjusted for their pro rata share of
accrued interest received, if any, on Securities delivered after the
Unitholders' respective settlement dates;
(4)under the California personal property tax laws, bonds (including the
Securities in the California IM-IT Trust) or any interest therein is exempt
from such tax;
(5)any proceeds paid under the insurance policy issued to the California IM-IT
Trust with respect to the Securities which represent maturing interest on
defaulted obligations held by the Trustee will be exempt from California
personal income tax if, and to the same extent as, such interest would have
been so exempt if paid by the issuer of the defaulted obligations; and
(6)under Section 17280(b)(2) of the California Revenue and Taxation Code,
interest on indebtedness incurred or continued to purchase or carry Units of
the California IM-IT Trust is not deductible for the purposes of the
California personal income tax. While there presently is no California
authority interpreting this provision, Section 17280(b)(2) directs the
California Franchise Tax Board to prescribe regulations determining the proper
allocation and apportionment of interest costs for this purpose. The Franchise
Tax Board has not yet proposed or prescribed such regulations. In interpreting
the generally similar Federal provision, the Internal Revenue Service has
taken the position that such indebtedness need not be directly traceable to
the purchase or carrying of Units (although the Service has not contended that
a deduction for interest on indebtedness incurred to purchase or improve a
personal residence or to purchase goods or services for personal consumption
will be disallowed). In the absence of conflicting regulations or other
California authority, the California Franchise Tax Board generally has
interpreted California statutory tax provisions in accord with Internal
Revenue Service interpretations of similar Federal provisions.
At the respective times of issuance of the Securities, opinions relating to
the validity thereof and to the exemption of interest thereon from Federal
income tax and California personal income tax are rendered by bond counsel to
the respective issuing authorities. Except in certain instances in which
Orrick, Herrington & Sutcliffe acted as bond counsel to issuers of Securities,
and as such made a review of proceedings relating to the issuance of certain
Securities at the time of their issuance, Orrick, Herrington & Sutcliffe has
not made any special review for the California IM-IT Trust of the proceedings
relating to the issuance of the Securities or of the basis for such opinions.
<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......................... $ 55.33 $ 55.33
Less: Estimated Annual Expense per Unit <F2>...................... $ 2.33 $ 1.92
Less: Annual Premium on Portfolio Insurance per Unit.............. -- --
Estimated Net Annual Interest Income per Unit..................... $ 53.00 $ 53.41
Calculation of Estimated Interest Earnings per Unit:
Estimated Net Annual Interest Income per Unit..................... $ 53.00 $ 53.41
Divided by 12 and 2, respectively................................. $ 4.41 $ 26.70
Estimated Daily Rate of Net Interest Accrual per Unit.............. $ .14722 $ .14835
Estimated Current Return Based on Public Offering Price <F1><F3>... 5.30% 5.34%
Estimated Long-Term Return <F3>.................................... 5.34% 5.38%
Estimated Initial Monthly Distribution (May 1997).................. $ 1.76
Estimated Initial Semi-annual Distribution (July 1997)............. $ 10.68
Estimated Normal Distribution per Unit <F3>........................ $ 4.41 $ 26.70
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Trustee's Annual Fee <F1><F4>... $.91 and $.51 per $1,000 principal amount of Bonds, respectively, for those portions of the
California IM-IT Trust under the monthly and semi-annual distribution plans
Record and Computation Dates.... TENTH day of the month as follows: monthly--each month; semi-annual--January and July
Distribution Dates.............. TWENTY-FIFTH day of the month as follows: monthly--each month; semi-annual--
January and July.
- ----------
<FN>
<F1>During the first year the Trustee will reduce its fee by approximately $.04
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 $55.37. Estimated Annual Expense
per Unit (excluding insurance) will be increased to $2.37 and $1.96 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" in Part II of
this Prospectus.
<F2>Excluding insurance costs. The Estimated Annual Expenses are expected to
fluctuate periodically (see "Trust Administration--Fund Administration and
Expenses--Miscellaneous Expenses" in Part II of this Prospectus).
<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" in Part II of this Prospectus. For
a discussion of how these returns are calculated, see "Unitholder
Explanations--Estimated Current Returns and Estimated Long-Term Returns"
in Part II of this Prospectus. 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 "Other
Matters--Estimated Cash Flows to Unitholders" .
<F4>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 $1,887. Assuming in the alternative that all Unitholders had elected the
monthly distribution plan, such fees would initially amount to $3,367.
</TABLE>
<TABLE>
CALIFORNIA INSURED MUNICIPALS INCOME TRUST
SERIES 165 (215TH INSURED MULTI-SERIES)
PORTFOLIO As of April 23, 1997
<CAPTION>
Offering
Price To
California
Aggregate Name of Issuer, Title, Interest Rate and Maturity Date of Redemption IM-IT
either Bonds Deposited or Bonds Contracted for<F1><F5> Rating<F2> Feature<F3> Trust<F4>
- ------------- -------------------------------------------------------------- -------------- ------------------ -------------
<S> <C> <C> <C> <C> <C>
$ 50,000 Soledad Unified School District (Monterrey County,
California) General Obligation Bonds, Election of 1995,
Series 1997 (FGIC Insured) #0.00% Due 6/1/2021............. AAA $ 12,437<F6>
500,000 Los Angeles, California, Convention and Exhibition Center
Authority, Lease Revenue Bonds, Refunding Series 1993A (MBIA 2003 @ 102
Insured) #5.125% Due 8/15/2021............................... AAA 2019 @ 100 S.F. 449,800
150,000 Bakersfield, California, Certificates of Participation,
Convention Center Expansion Project (MBIA Insured) #5.875% 2007 @ 101
Due 4/1/2022.................................................. AAA 2018 @ 100 S.F. 150,255
500,000 City of Oakland, California, General Obligation Bonds (MBIA 2006 @ 102
Insured) 5.90% Due 12/15/2022##.............................. AAA 2020 @ 100 S.F. 502,500
500,000 Los Angeles County, California, Metropolitan Authority, Sales
Tax Revenue Bonds, Proposition A, 1st Tier Senior Series A 2006 @ 101
(MBIA Insured) #6.00% Due 7/1/2023........................... AAA 2021 @ 100 S.F. 506,500
500,000 University of California, California, Revenue Refunding
Multiple Purpose Project Bonds, Series C (AMBAC Indemnity 2003 @ 102
Insured) #5.00% Due 9/1/2023................................. AAA 2020 @ 100 S.F. 439,655
500,000 California Health Facilities Financing Authority, Insured
Health Facility Refunding Revenue Bonds (Catholic Healthcare 2006 @ 102
West) Series 1996A (MBIA Insured) #6.00% Due 7/1/2025........ AAA 2018 @ 100 S.F. 504,760
500,000 County of Orange, California, Recovery Certificates of 2006 @ 102
Participation, Series 1996 (MBIA Insured) #6.00% Due 7/1/2026 AAA 2020 @ 100 S.F. 504,465
500,000 Department of Water and Power of the City of Los Angeles,
California, Electric Plant Refunding Revenue Bonds, Second 2003 @ 102
Issue of 1993 (FGIC Insured) #5.25% Due 11/15/2026........... AAA 2020 @ 100 S.F. 454,050
$ 3,700,000 $ 3,524,422
============= =============
</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" in Part II of
this Prospectus.
For an explanation of the footnotes used on this page, see "Notes to
Portfolios" .
FLORIDA IM-IT TRUST
- --------------------------------------------------------------------------
General. The Florida IM-IT Trust consists of 9 issues of Securities. None of
the Bonds in the Florida IM-IT Trust are general obligations of the
governmental entities issuing them or are backed by the taxing power thereof.
All of the issues are payable from the income of a specific project or
authority and are not supported by the issuer's power to levy taxes. These
issues are divided by purpose of issues (and percentage of principal amount to
total Florida IM-IT Trust) as follows: Health Care, 3 (33%); Certificate of
Participation, 1 (16%); Higher Education, 1 (16%); Water and Sewer, 1 (16%);
General Purpose, 1 (13%); Transportation, 1 (4%) and Public Building, 1 (2%).
No Bond issue has received a provisional rating.
Risk Factors. Population. Historically, population growth has been a crucial
driving force for Florida's economy. It has accounted for the state's
tendency to outperform the U.S. economy in terms of job creation and total
income growth. Between 1960 and 1995, Florida's population grew by 9.2
million people, a 185% increase. This is more than four times the 46% growth
in U.S. population over the same period. The state's population has
accelerated since the FY 1990-91 recession, sparked by improving economies. In
1994, Florida ranked fourth in population with 13.9 million. By 1996,
Florida's population increased to 14.4 million, with projections of 15 million
by 1999. Florida's attraction, as both a growth and retirement state, has kept
net migration fairly steady with an average of 245,035 new residents a year
from 1990 through 1995. The U.S. average population increase since 1984 is
about 1% annually, while Florida's average annual rate of increase is about
2.3%. However, during 1992-1996, Florida's annual net migration increase has
averaged 1.82% and is predicted at 1.8% for 1997-98. Yet, Florida continues to
be the fastest growing of the eleven largest states. In addition to attracting
senior citizens to Florida as a place for retirement, the State is also
recognized as attracting a significant number of working age individuals.
Since 1985, the prime working age population (18-44) has grown at an average
annual rate of 2.2%. The share of Florida's total working age population
(18-59) to total State population is approximately 54%. This share is not
expected to change appreciably into the twenty-first century.
Income. The State's personal income has been growing strongly the last several
years and has generally outperformed both the United States as a whole and the
southeast in particular, according to the U.S. Department of Commerce and the
Florida Consensus Economic Estimating Conference. This is due to the fact that
Florida's population has been growing at a very strong pace and, since the
early 1970s, the State's economy has diversified so as to provide a broader
economic base. As a result, Florida's real per capita personal income has
tracked closely with the national average and has tracked above the southeast.
In fiscal years 1994-95 and 1995-96, Florida's per capita personal income was
$22,253, and $23,371 respectively, a 5.02% increase. The 1994-95 figure is
6.1% higher than per capita personal income in the southeast region and
represents 99% of the national figure. Florida's per capita personal income
is expected to increase 4.04% in fiscal year 1996-97 and 5.2% in fiscal year
1997-98.
Florida's economy is expected to slow some in the current fiscal year and in
FY 1997-98. An expected rise in interest rates in early 1997 should moderate
housing markets and consumption of durable goods. Overall, consumption can be
expected to stay in line with changes in income and jobs. Also, the
combination of an investment boom in earlier years and decelerating growth in
the overall economy should slow business investment through FY 1997-98.
Nevertheless, Florida's economy will outperform the nation's bolstered by
population growth well in excess of that for the United States.
Total income growth in Florida is expected to stabilize from its cyclical peak
of 4.6% in FY 1994-95, decelerating slightly to 4.5% in FY 1995-96 and falling
to 4.2% in FY 96-97. Total personal income is expected to rise to 4.4% by FY
1997-98 in Florida and 2.3% for the United States. Florida's growth rates for
per capita real income parallel those for total income, though at lower
levels, peaking at 2.6% in 1996, falling in 1997 to 2.3%, then achieving the
peak growth rate again by 1998.
Because Florida has a proportionately greater retirement age population,
property income (dividends, interest, and rent) and transfer payments (Social
Security and pension benefits, among other sources of income) are relatively
more important sources of income. For example, Florida's total wages and
salaries and other labor income in 1996 was 59% of total personal income,
while a similar figure for the nation was 68%. Property income accounted for
24% of total personal income in Florida in 1996 and transfer payments made up
17%. Property income and transfer payments for the U.S. were each 16%.
Transfer payments are typically less sensitive to the business cycle than
employment income and, therefore, act as stabilizing forces in weak economic
periods.
Employment. Since 1985, the State's population has increased an estimated
26.1%. In the same period, Florida's total non-farm employment has grown by
approximately 37.9%. Since 1985, the job creation rate in the State is almost
twice that of the nation as a whole. Contributing to the State's rapid rate of
growth in employment and income is international trade. Changes to its economy
have also contributed to the State's strong performance. The State is now less
dependent on employment from construction, construction-related manufacturing,
and resource-based manufacturing, which have declined as a proportion of total
State employment. The State's private sector employment is 86.4% of total
non-farm employment. While the southeast and the nation have a greater
proportion of manufacturing jobs, which tend to pay higher wages, service jobs
tend to be less sensitive to swings in the business cycle. The State has a
concentration of manufacturing jobs in high-tech and high value-added sectors,
such as electrical and electronic equipment, as well as printing and
publishing. These types of manufacturing jobs tend to be less cyclical. The
State's unemployment rate throughout the 1980's tracked below the nation's. As
the State's economic growth has slowed, its unemployment rate has tracked
above and below the national average. According to the U.S. Department of
Commerce, the Florida Department of Labor and Employment Security, and the
Florida Consensus Economic Estimating Conference (together, the "
Organization" ), the State's unemployment rate was 6.6% during 1994 and
5.5% during 1995. In November, 1996, the unemployment rate was 4.8%, giving an
11-month average in 1996 of 5.3%. The national unemployment rate in 1994 and
1995 was 6.1% and 5.6%, respectively, with an average in 1996 of 5.4%.
Consistent with income growth, Florida's non-farm employment growth increased
4.1%, 3.9%, and 3.2% in fiscal years ending in 1994, 1995, and 1996,
respectively.
The State's economy is expected to decelerate along with the nation, but is
expected to outperform the nation as a whole. Total non-farm employment in
Florida is expected to increase 2.9% or 180,000 new jobs in 1996-97 and remain
stable at 2.9% or 183,500 new jobs in 1997-98. In comparison, the U.S. growth
rate in 1997-98 is predicted at only 1.3%. Trade and services, the two
largest, account for more than half of the total non-farm employment.
The strongest areas in job growth in Florida in FY 1997-98 are expected to be
in services and a combination of retail and wholesale trade. Services are
forecast to lead the economy, growing 4.3% (93,500 jobs) in FY 1997-98, and
accounting for about 51% of total new jobs in that year. Services are the
single largest source of employment in Florida, making up about 35% of total
non-farm employment in FY 1997-98. Health care accounts for about 26% of total
services employment.
Wholesale and retail trade is projected to increase 2.9% in FY 1997-98 (47,100
new jobs), which parallels general economic growth. This sector is the second
largest, with about 25% of all jobs in the state, and will contribute about
26% of the new jobs created in FY 1997-98. Construction will exhibit modest
growth of 2.5% (7,800 new jobs) reflecting stable construction activity
supported by population growth.
The slower growing sectors are expected to account for only 35% of total jobs
in Florida in 1997-98. Of these, government is the largest, with just under
15% of total jobs. Combined federal, state and local government jobs are
expected to grow 2% (19,500 new jobs) with most of this increase at the local
level. Job creation in transportation, communications, and public utilities
combined (less than 5% of total employment) is forecast to slow to 1.4% (4,500
new jobs) in FY 1997-98. This partly reflects current restructuring of the
industry. Manufacturing, with slightly more than 7% of total jobs, will have
the slowest positive growth rate among the major sectors in FY 1997-98, at
less than 1% (2,800 new jobs). However, over the same period, manufacturing
employment in the nation is projected to decline about 1%. This is generally
due to global competitive pressures forcing producers to substitute machinery
and equipment for labor through strong investment.
Tourism. Tourism is one of Florida's most important industries. Approximately
41.8 million tourists visited the State in 1993, as reported by the Florida
Department of Commerce. Although during the next several years the number of
visitors to Florida decreased, in 1995, there were more than 41 million
national and international visitors, and the peak reached in 1993 was almost
reached in 1996. The 1995 tourist industry generated $35.31 billion in sales
by Florida businesses, over $2 billion in sales tax revenue, and more than
732,800 Floridians were directly employed in travel related jobs. Visitors to
the State tend to arrive slightly more by air than by car. The State's tourist
industry over the years has become more sophisticated, attracting visitors
year-round and, to a degree, reducing its seasonality. By the end of fiscal
year 1997-98, 43.9 million domestic and international tourists are expected to
have visited the State, representing 3.2% growth from 1996-97.
Revenues and Expenses. Estimated fiscal year 1996-97 General Revenue plus
Working Capital and Budget Stabilization funds available to the State total
$16,601.7 million. Of the total General Revenue plus Working Capital and
Budget Stabilization funds available to the State, $15,566.9 million of that
is Estimated Revenues. With effective General Revenues plus Working Capital
Fund appropriations at $15,582.2 million, unencumbered reserves at the end of
1996-97 are estimated at $610.1 million with $219.4 million of this amount
from the working Capital Fund. Estimated fiscal year 1997-98 General Revenue
plus Working Capital and Budget Stabilization funds available total $17,384.9
million, a 4.7% increase over 1996-97. The $16,301.5 million in Estimated
Revenues represents an increase of 4.7% over the previous year's Estimated
Revenues. Total estimated appropriations in the combined General Revenue and
Working Capital Fund for 1997-98 are $16,716.6 million, a 7.3% increase from
1996-97.
In fiscal year 1997-98, approximately 72% of the State's $16,716.6 million
General revenue will come from sales tax collections. Corporate income tax,
intangible personal property tax, and beverage tax will account for 8%, 4% and
3%, respectively, of total General Revenue Funds available during fiscal
1997-98. In that same year, expenditures for education, human services, and
criminal justice and corrections will amount to approximately 52%, 26%, and
16%, respectively, of total expenditures from the General Revenue Fund.
The State's sales and use tax (6%) currently accounts for the State's single
largest source of tax receipts. Slightly less than 10% of the State's sales
and use tax is designated for local governments and is distributed to the
respective counties in which collected for such use by the counties, and the
municipalities therein. In addition to this distribution, local governments
may assess (by referendum) a 0.5% or a 1.0% discretionary sales surtax within
their county. Proceeds from this local option sales tax are earmarked for
funding local infrastructure programs and acquiring land for public recreation
or conservation or protection of natural resources as provided under
applicable Florida law. Certain charter counties have other additional taxing
powers, and non-consolidated counties with a population in excess of 800,000
may levy a local option sales tax to fund indigent health care. It alone
cannot exceed 0.5% and when combined with the infrastructure surtax cannot
exceed 1.0%. For the fiscal year ended June 30, 1998, sales and use tax
receipts (exclusive of the tax on gasoline and special fuels) are expected to
total $12,035.9 million, an increase of 6.6% over fiscal year 1996-97.
The second largest source of State tax receipts is the tax on motor fuels.
However, these revenues are almost entirely dedicated trust funds for specific
purposes and are not included in the State's General Revenue Fund.
The State's second largest funding source for the General Revenue Fund is the
corporate income tax. All receipts of the corporate income tax are credited to
the General Revenue Fund. For the fiscal year ending June 30, 1998, receipts
from this source are estimated to be $1,290.1 million, an increase of 2.3%
from fiscal year 1996-97.
The State imposes an alcoholic beverage wholesale tax (excise tax) on beer,
wine, and liquor. This tax is one of the State's major tax sources, with
revenues estimated at $455.1 million in fiscal year 1997-98. Alcoholic
beverage tax receipts are expected to increase 1.4% from the previous year's
total. This tax generates 3.3% of the State's total General Revenue and the
revenues collected are deposited into the State's General Revenue Fund.
The State imposes a documentary stamp tax on deeds and other documents
relating to realty, corporate shares, bonds, certificates of indebtedness,
promissory notes, wage assignments, and retail charge accounts. The
documentary stamp tax collections are expected to total $870.6 million during
fiscal year 1997-98, a 3.7% increase from the previous fiscal year. In fiscal
year 1997-98, 62.63% of these taxes are to be deposited to the General Revenue
Fund.
The State imposes a gross receipts tax of 2.5% on electric, natural and
manufactured gas, and telecommunications services. All gross receipts
utilities tax collections are credited to the State's Public Education Capital
Outlay and Debt Service Trust Fund. In fiscal year 1997-98, this tax is
estimated at $607.1 million.
The State imposes an intangible personal property tax on stocks, bonds,
including bonds secured by liens in Florida real property, notes, governmental
leaseholds, and certain other intangibles not secured by a lien on Florida
real property. The annual rate of tax is 2 mils. The State also imposes a
non-recurring 2 mil tax on mortgages and other obligations secured by liens on
Florida real property. The intangible personal property tax provides 3.9% of
the revenues for the General Revenue Fund as well as funding the county
revenue sharing program. In fiscal year 1997-98, total intangible personal
property tax collections are estimated at $1,000.6 million, a 2% increase over
the prior year. Of the tax proceeds, 66.5% are distributed to the General
Revenue Fund.
The State began its own lottery in 1988. State law requires that lottery
revenues be distributed 50.0% to the public in prizes, 38.0% for use in
enhancing education, and the balance, 12.0%, for costs of administering the
lottery. Fiscal year 1994-95 lottery ticket sales totalled $2.3 billion,
providing education with approximately $874 million. In fiscal year 1997-98,
sales are estimated at $2,104 million with $799.4 million available for
education enhancements.
Debt-Balanced Budget Requirement. As of June 30, 1996, the state's net
outstanding debt totaled $9.2 billion. Approximately 67% is full faith and
credit bonds while the remaining 33% is comprised of revenue bonds pledging a
specific tax or revenue. The Governor's Recommended Budget for Fiscal Year
1997-98 includes six bond issues totaling $1.38 billion for construction of
schools, roads, bridges, and prisons, and the purchase of environmentally
sensitive lands.
The State Constitution and statutes mandate that the State budget, as a whole,
and each separate fund within the State budget, be kept in balance from
currently available revenues each fiscal year. If the Governor or Comptroller
believe a deficit will occur in any State fund, by statute, he must certify
his opinion to the Administrative Commission, which is then authorized to
reduce all State agency budgets and releases by a sufficient amount to prevent
a deficit in any fund. Additionally, the State Constitution prohibits issuance
of State obligations to fund State operations.
Litigation. Currently under litigation are several issues relating to State
actions or State taxes that put at risk substantial amounts of General Revenue
Fund monies. Accordingly, there is no assurance that any such matters,
individually or in the aggregate, will not have a material adverse affect on
the State's financial position.
Florida law provides preferential tax treatment to insurers who maintain a
home office in the State. Certain insurers challenged the constitutionality of
this tax preference and sought a refund of taxes paid. Recently, the Florida
Supreme Court ruled in favor of the State. This case and others, along with
pending refund claims, total about $150 million.
The State imposes a $295 fee on the issuance of certificates of title for
motor vehicles previously titled outside the State. The State has been sued by
plaintiffs alleging that this fee violates the Commerce Clause of the U.S.
Constitution. The Circuit Court in which the case was filed has granted
summary judgment for the plaintiffs and has enjoined further collection of the
impact fee and has ordered refunds to all those who have paid the fee since
the collection of the fee went into effect. In the State's appeal of the lower
court's decision, the Florida Supreme Court ruled that this fee was
unconstitutional under the Commerce Clause. Thus, the Supreme Court approved
the lower court's order enjoining further collection of the fee and requiring
refund of the previously collected fees. The refund exposure of the State has
been estimated to be in excess of $88 million.
The State maintains a bond rating of Aa, AA and AA from Moody's Investors
Service, Standard & Poor's and Fitch, respectively, on the majority of its
general obligation bonds, although the rating of a particular series of
revenue bonds relates primarily to the project, facility, or other revenue
source from which such series derives funds for repayment. While these ratings
and some of the information presented above indicate that the State is in
satisfactory economic health, there can be no assurance that there will not be
a decline in economic conditions or that particular Florida Bonds purchased by
the fund will not be adversely affected by any such changes.
The sources for the information presented above include official statements
and financial statements of the State of Florida. While the Sponsor has not
independently verified this information, it has no reason to believe that the
information is not correct in all material respects.
Tax Status. For a discussion of the Federal tax status of income earned on
Florida IM-IT Trust units, see "Federal Tax Status" in Part II of this
Prospectus.
The Bonds were accompanied by opinions of Bond Counsel to the respective
issuers thereof to the effect that the Bonds were exempt from the Florida
intangibles tax. Neither the Sponsor nor its counsel have independently
reviewed such opinions or examined the Bonds to be deposited in and held by
the Florida IM-IT Trust and have assumed the correctness as of the date of
deposit of the opinions of Bond Counsel.
"Non-Corporate Unitholder" means a Unitholder of the Florida Trust who
is an individual not subject to the Florida state income tax on corporations
under Chapter 220, Florida Statutes and "Corporate Unitholder" means a
Unitholder of the Florida Trust that is a corporation, bank or savings
association or other entity subject to Florida state income tax on
corporations or franchise tax imposed on banks or savings associations under
Chapter 220, Florida Statutes.
In the opinion of Chapman and Cutler, counsel to the Sponsor, under existing
law:
For Florida state income tax purposes, the Florida IM-IT Trust will not be
subject to the Florida income tax imposed by Chapter 220, Florida Statutes.
Because Florida does not impose an income tax on individuals, Non-Corporate
Unitholders residing in Florida will not be subject to any Florida income
taxation on income realized by the Florida IM-IT Trust. Any amounts paid to
the Florida IM-IT Trust or to Non-Corporate Unitholders under an insurance
policy issued to the Florida IM-IT Trust or the Sponsor which represent
maturing interest on defaulted obligations held by the Trustee will not be
subject to the Florida income tax imposed by Chapter 220, Florida Statutes.
Corporate Unitholders with commercial domiciles in Florida will be subject to
Florida income or franchise taxation on income realized by the Florida IM-IT
Trust and on payments of interest pursuant to any insurance policy to the
extent such income constitutes "non business income" as defined by
Chapter 220 or is otherwise allocable to Florida under Chapter 220. Other
Corporate Unitholders will be subject to Florida income or franchise taxation
on income realized by the Florida IM-IT Trust (or on payments of interest
pursuant to any insurance policy) only to the extent that the income realized
does not constitute "non-business income" as defined by Chapter 220
and if such income is otherwise allocable to Florida under Chapter 220.
Units will be subject to Florida estate tax only if held by Florida residents.
However, the Florida estate tax is limited to the amount of the credit for
state death taxes provided for in Section 2011 of the Internal Revenue Code.
Neither the Bonds nor the Units will be subject to the Florida ad valorem
property tax, the Florida intangible personal property tax or the Florida
sales or use tax.
Chapman and Cutler has expressed no opinion with respect to taxation under any
other provision of Florida law. Ownership of the Units may result in
collateral Florida tax consequences to certain taxpayers. Prospective
investors should consult their tax advisors as to the applicability of any
such collateral consequences.
<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......................... $ 54.72 $ 54.72
Less: Estimated Annual Expense per Unit <F2>...................... $ 2.32 $ 1.91
Less: Annual Premium on Portfolio Insurance per Unit.............. -- --
Estimated Net Annual Interest Income per Unit..................... $ 52.40 $ 52.81
Calculation of Estimated Interest Earnings per Unit:
Estimated Net Annual Interest Income per Unit..................... $ 52.40 $ 52.81
Divided by 12 and 2, respectively................................. $ 4.36 $ 26.40
Estimated Daily Rate of Net Interest Accrual per Unit.............. $ .14556 $ .14670
Estimated Current Return Based on Public Offering Price <F1><F3>... 5.24% 5.28%
Estimated Long-Term Return <F3>.................................... 5.29% 5.33%
Estimated Initial Monthly Distribution (May 1997).................. $ 1.74
Estimated Initial Semi-annual Distribution (July 1997)............. $ 10.56
Estimated Normal Distribution per Unit <F3>........................ $ 4.36 $ 26.40
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Trustee's Annual Fee <F1><F4>... $.91 and $.51 per $1,000 principal amount of Bonds, respectively, for those portions of the
Florida IM-IT Trust under the monthly and semi-annual distribution plans
Record and Computation Dates.... TENTH day of the month as follows: monthly--each month; semi-annual--January and July
Distribution Dates.............. TWENTY-FIFTH day of the month as follows: monthly--each month; semi-annual--
January and July
- ----------
<FN>
<F1>During the first year the Trustee will reduce its fee by approximately $.09
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 $54.81. Estimated Annual Expense
per Unit (excluding insurance) will be increased to $2.41 and $2.00 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" in Part II of
this Prospectus.
<F2>Excluding insurance costs. The Estimated Annual Expenses are expected to
fluctuate periodically (see "Trust Administration--Fund Administration and
Expenses--Miscellaneous Expenses" in Part II of this Prospectus).
<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" in Part II of this Prospectus. For
a discussion of how these returns are calculated, see "Unitholder
Explanations--Estimated Current Returns and Estimated Long-Term Returns"
in Part II of this Prospectus. 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 "Other
Matters--Estimated Cash Flows to Unitholders" .
<F4>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 $1,558. Assuming in the alternative that all Unitholders had elected the
monthly distribution plan, such fees would initially amount to $2,780.
</TABLE>
<TABLE>
FLORIDA INSURED MUNICIPALS INCOME TRUST
SERIES 114 (215TH INSURED MULTI-SERIES)
PORTFOLIO As of April 23, 1997
<CAPTION>
Offering
Price To
Florida
Aggregate Name of Issuer, Title, Interest Rate and Maturity Date of Redemption IM-IT
either Bonds Deposited or Bonds Contracted for<F1><F5> Rating<F2> Feature<F3> Trust<F4>
- ------------- -------------------------------------------------------------- -------------- ------------------ -------------
<S> <C> <C> <C> <C> <C>
$ 400,000 First Florida Governmental Financing Commission, Florida,
Revenue Bonds, Multi-County Program (MBIA Insured) #5.70% 2007 @ 101
Due 7/1/2017##................................................ AAA 2013 @ 100 S.F. $ 396,000
110,000 Orlando and Orange County Expressway Authority, Florida,
Expressway Revenue Refunding Senior Lien Bonds, Series 1993 2003 @ 102
(FGIC Insured) #5.25% Due 7/1/2023........................... AAA 2019 @ 100 S.F. 101,475
500,000 Altamonte Springs, Florida, Health Facilities Authority,
Hospital Revenue Bonds (Adventist Health/Sunbelt, Inc.) 2003 @ 102
Series 1993B (AMBAC Indemnity Insured) #5.375% Due 11/15/2023 AAA 2019 @ 100 S.F. 466,865
250,000 North Broward, Florida, Hospital District, Revenue Refunding 2007 @ 101
and Improvement Bonds (MBIA Insured) #5.375% Due 1/15/2024... AAA 2018 @ 100 S.F. 233,683
500,000 School Board of Dade County, Florida, Certificates of
Participation, Series 1996A (AMBAC Indemnity Insured) #5.50% 2006 @ 101
Due 5/1/2025.................................................. AAA 2017 @ 100 S.F. 475,240
500,000 Volusia County, Florida, Educational Facilities Authority,
Revenue Bonds (Stetson University, Inc. Project) Series 1996A 2006 @ 102
(MBIA Insured) #5.50% Due 6/1/2026......................... AAA 2018 @ 100 S.F. 478,140
250,000 Venice, Florida, Healthcare Revenue Bonds, Bon Secours Health 2006 @ 102
System Project (MBIA Insured) #5.625% Due 8/15/2026.......... AAA 2017 @ 100 S.F. 241,692
500,000 Cocoa, Florida, Water & Sewer System Revenue Improvement
Bonds (FGIC Insured) #5.875% Due 10/1/2026##................. AAA 2007 @ 101 502,500
45,000 Dade County, Florida, Professional Sports Franchise
Facilities, Tax Revenue Capital Appreciation Bonds (MBIA
Insured) #0.00% Due 10/1/2026................................ AAA 7,831<F6>
$ 3,055,000 $ 2,903,426
============= =============
</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" in Part II of
this Prospectus.
For an explanation of the footnotes used on this page, see "Notes to
Portfolios" .
GEORGIA IM-IT TRUST
- --------------------------------------------------------------------------
General. The Georgia IM-IT Trust consists of 8 issues of Securities. None of
the Bonds in the Georgia IM-IT Trust are general obligations of the
governmental entities issuing them or are backed by the taxing power thereof.
All of the issues are payable from the income of a specific project or
authority and are not supported by the issuer's power to levy taxes. These
issues are divided by purpose of issues (and percentage of principal amount to
total Georgia IM-IT Trust) as follows: Water and Sewer, 3 (38%); Health Care,
2 (29%); Transportation, 1 (19%); Higher Education, 1 (8%) and General
Purpose, 1 (6%). No Bond issue has received a provisional rating.
Risk Factors. The following brief summary regarding the economy of Georgia is
based upon information drawn from publicly available sources and is included
for purposes of providing information about general economic conditions that
may or may not affect issuers of the Georgia obligations. The Sponsor has not
independently verified any of the information contained in such publicly
available documents.
Constitutional Considerations. The Georgia Constitution permits the issuance
by the State of general obligation debt and of certain guaranteed revenue
debt. The State may incur guaranteed revenue debt by guaranteeing the payment
of certain revenue obligations issued by an instrumentality of the State. The
Georgia Constitution prohibits the incurring of any general obligation debt or
guaranteed revenue debt if the highest aggregate annual debt service
requirement for the then current year or any subsequent fiscal year for
outstanding general obligation debt and guaranteed revenue debt, including the
proposed debt, exceed 10 percent of the total revenue receipts, less refunds,
of the State treasury in the fiscal year immediately preceding the year in
which any such debt is to be incurred.
The Georgia Constitution also permits the State to incur public debt to supply
a temporary deficit in the State treasury in any fiscal year created by a
delay in collecting the taxes of that year. Such debt must not exceed, in the
aggregate, 5% of the total revenue receipts, less refunds, of the State
treasury in the fiscal year immediately preceding the year in which such debt
is incurred. The debt incurred must be repaid on or before the last day of the
fiscal year in which it is to be incurred out of the taxes levied for that
fiscal year. No such debt may be incurred to supply a temporary deficit in the
State treasury. No such short-term debt has been incurred under this provision
since the inception of the constitutional authority referred to in this
paragraph.
Virtually all of the issues of long-term debt obligations issued by or on
behalf of the State of Georgia and counties, municipalities and other
political subdivisions and public authorities thereof are required by law to
be validated and confirmed in a judicial proceeding prior to issuance. The
legal effect of an approved validation in Georgia is to render incontestable
the validity of the pertinent bond issue and the security therefor.
The State and Its Economy. The State operates on a fiscal year beginning July
1 and ending June 30. The state's recovery from the economic recession of the
early 1990's has been steady and is better than regional trends, albeit half
the rate of earlier recoveries. While this recovery does not meet the
explosive patterns set in past cycles, recent state data reveal that Georgia
ranks among the top five states in the nation in employment and total
population growth. The top three industries of the 3.417 million
non-agricultural workers employed in Georgia in 1995 were in trade (25.3%),
services (24.5%) and manufacturing (17.2%). The 1996 annual average
unemployment rate for Georgia was 4.5% as compared to the 1995 annual average
unemployment rate of 4.9%.
The national unemployment rate in 1995 and 1996 was 5.6% and 5.4%,
respectively. Georgia's unemployment rate has decreased every year since 1992.
In 1994 and 1995, Georgia's per capita personal income increased 5.5%, from
$20,612 to $21,741, respectively. The national per capita personal income for
1994 and 1995 was $22,047 and $23,208, respectively, an increase of 5.3%.
Recently, the rates of growth in the public and private sectors have dropped.
Revenues (adjusted for inflation) are advancing at around a 4% annual rate.
Income growth during 1996 and 1997 is increasing between 3 and 4 percent and
employment gains are 2 and 3 percent. In Georgia, growth in employment in
trade and services leads the nation, at 5 to 6 percent; however, this high
percentage does not coincide with the general economic advance.
For fiscal years 1997 and 1998, real growth in income, employment, and
revenues is expected to be about 3 to 4 percent, 1.5 to 2.5 percent, and 3.5
to 4.5 percent, respectively. It is predicted that the growth rate for
Georgia's economy will slow for the remainder of the decade.
Three legislative measures were of significance in 1996. First, Georgia's four
cent sales tax on eligible food and beverage was reduced by half beginning
October 1, 1996 and will be reduced by an additional once cent on October 1,
1997, with the final one cent eliminated on October 1, 1998. Second, in 1995,
the Georgia Department of Revenue issued the first of four, equal yearly
refund checks to eligible federal military retirees pursuant to House Bill 90.
House Bill 3 required the Department of Revenue, in October 1996, to issue
refunds to a second category of eligible retirees. Last, the Georgia
Intangible Tax was formally abolished by voter referendum in November of 1996.
Net collections in fiscal year 1996 totaled $9.928 billion, an increase of
$813.26 million or 8.9% over fiscal year 1995. The top revenue producer was
personal income tax at $4.233 billion or 42.64% of total revenue. This tax
revenue increased 10.3% from fiscal year 1995. The second leader in revenue
was sales and use tax at $3.951 billion, or 39.8% of total revenue. Sales use
tax revenue increased 8.4% from fiscal year 1995. Income and sales taxes
together have accounted for roughly 85% of total revenues since 1989.
Corporate income tax was the third largest revenue at $696.6 million, or 7.02%
of total fiscal year 1996 revenue. This was an 8.9% increase from fiscal year
1995. The fourth and fifth revenue producers for fiscal year 1996 were motor
fuel taxes at 4% or $396.9 million, and motor vehicle taxes at 2.15% or $213.5
million.
Actual total revenue in fiscal years 1995 and 1996 was $10.304 billion and
$11.167 billion, respectively. Actual expenditures and appropriations for
state funds for fiscal years 1995 and 1996 were $10.03 billion, and $10.68
billion, respectively. Total surplus for fiscal years 1995 and 1996 was $104.3
million, and $91.45 million, respectively. The Revenue Shortfall Reserve Fund
(3% of revenues) for fiscal years 1995 and 1996 was $288.8 million and $313.4
million, respectively, marking the third consecutive year of buildup in that
reserve.
The first four months of fiscal year 1997 have produced revenue of $3.3057
billion. Estimated total revenue for fiscal years 1997 and 1998 is $11.324
billion, and $11.777 billion, respectively. Budgeted expenditures and
appropriations for fiscal year 1997 are $11.341 billion. The first and second
highest expenditures out of the state's operating budget for fiscal year 1997
are education, at 54.2%, and human resources, at 24%, respectively. Total
surplus for fiscal year 1997 is estimated at $476.3 million.
Appropriations totaling $11.777 billion are recommended by the Governor for
expenditure by state agencies during fiscal year 1998. The appropriations
would be funded from the following four sources: $11.12 billion from taxes and
fees, $510 million in lottery proceeds, $148.8 million from the Indigent Care
Trust Fund, and $750,000 from anti-fraud levies.
Georgia's total assets at the end of fiscal years 1995 and 1996 were $9.336
billion and $10.722 billion, respectively. Total liabilities for fiscal year
1995 were $8.577 billion, and for fiscal year 1996 were $9.656 billion. Total
fund equity for fiscal year 1995 was $759 million and for fiscal year 1996,
$1.066 billion.
As of October 31, 1996, Georgia had authorized total aggregate general
obligation debt of $7,995,920,000. In the amended fiscal year 1996 and 1997
appropriations, $495,450,000 in general obligation debt was authorized. For
fiscal year 1998, Governor Miller recommended $508,800,000 in bonds, the
proceeds of which are to be used for various planned capital projects of the
State, its departments and agencies. Total direct obligations issued for
fiscal years ended June 30, 1975 through June 30, 1997 is $8,189,495,000.
Georgia has no direct obligations authorized but unissued during that period.
Georgia's total outstanding debt as of October 31, 1996 is $4,727,630,000.
Georgia's aggregate fiscal year debt service on all outstanding bonds as of
October 31, 1996 is approximately $7.15 billion.
Bond Ratings. Currently, Moody's Investors Service, Inc. rates Georgia general
obligation bonds Aaa, Standard & Poor's rates such bonds AA+ and Fitch rates
such bonds as AAA.
Legal Proceedings. Georgia is involved in certain legal proceedings that, if
decided against the State, may require the State to make significant future
expenditures or may substantially impair revenues.
Three suits have been filed against the State of Georgia seeking refunds of
liquor taxes under O.C.G.A. Section 48-2-35, in light of Bacchus Imports, Ltd.
v. Dias, 468 U.S. 263 (1984) under Georgia's pre-Bacchus statute. In James B.
Beam Distilling Co. v. State, 501 U.S. 529 (decided June 20, 1991) the Supreme
Court indicated that Bacchus was retroactive, but only within the bounds of
State statutes of limitations and procedural bars, and left State courts to
determine any remedy in light of reliance interests, equitable considerations,
and other defenses. Georgia's statute of limitations in O.C.G.A. Section
48-2-35 has run on all pre-Bacchus claims for refund except five pending
claims seeking $31.7 million dollars in tax plus interest. On remand, the
Fulton County Superior Court has ruled that procedural bars and other defenses
bar any recovery by taxpayers on Beam's claims for refund. The Georgia Supreme
Court has affirmed and Beam's petition to the United States Supreme Court for
a rehearing was denied on February 21, 1995. Thus, the Beam case is now
concluded. The state has filed a Motion for Summary Judgment, based upon Beam,
in the remaining two suits for refund, i.e., Joseph E. Seagram & Sons, Inc. v.
State and Heublein, Inc. v. State in DeKalb County Superior Court.
Age International, Inc. v. State (two cases) and Age International, Inc. v.
Miller. Three suits (two for refund and one for declaratory and injunctive
relief) have been filed against the State of Georgia by out-of-state producers
of alcoholic beverages. The first suit for refund seeks $96 million in refunds
of alcohol taxes imposed under Georgia's post-Bacchus statute, O.C.G.A. \xa4
3-4-60. These claims constitute 99% of all such taxes paid during the three
years preceding these claims. In addition, the claimants have filed a second
suit for refund for an additional $23 million for later time periods. These
two cases encompass all known or anticipated claims for refund of such type
within the apparently applicable statutes of limitations. The two Age refund
cases are still pending in the trial court. The Age declaratory/injunctive
relief case was dismissed by the federal District Court. That dismissal was
affirmed by the Eleventh Circuit Court of Appeals, and plaintiffs petition for
rehearing was denied August 24, 1995.
In Board of Public Education for Savannah/Chatham County v. State of Georgia,
the local school board claimed that the State should finance the major portion
of the costs of its desegregation program. The Savannah Board originally
requested restitution in the amount of $30 million, but the Federal District
Court set forth a formula which would require a State payment in the amount of
approximately $8.9 million computed through June 30, 1994. Subsequently the
parties agreed to a settlement. In March 1995, the State paid $8.925 million
to the plaintiffs, in partial satisfaction of the settlement agreement. A
similar complaint has been filed by DeKalb County and there are approximately
five other school districts which potentially might attempt to file similar
claims. In the DeKalb County case alone, the plaintiffs sought approximately
$67.5 million of restitution, however, the State's motion to reconsider was
granted, reducing the required state payment to approximately $28 million. The
DeKalb case has been appealed and is awaiting final argument and decision.
In Edgar Muellar v. Collins, plaintiff filed suit in Superior Court of Fulton
County, Georgia. Plaintiff challenges the constitutionality of Georgia's
transfer fee provided by O.C.G.A. \xa4 40-3-21.1 (often referred to as "
impact fee" ) by asserting that the fee violates the Commerce, Due Process,
Equal Protection, and Privileges and Immunities Clause of the United States
Constitution. Plaintiff seeks to prohibit the State from further collections
and to require the State to return to her and those similarly situated all
fees previously collected. A similar lawsuit previously filed in the Superior
Court of Chatham County, Georgia, Johnsen v. Collins, has been voluntarily
dismissed and will likely be joined with the action currently pending in
Fulton County. From May of 1992 to June 7, 1995, the State collected
$24,168,202.72 under the transfer fee provision. All amounts collected after
June 7, 1995, are being paid into an escrow account. As of July 25, 1995, the
escrow account contains $46,070.00. The State continues to collect
approximately $500,000 to $600,000 per month.
In Buskirk and Estill v. State of Georgia, et al., plaintiffs in this case
filed a civil action in the Superior Court of Fulton County, Georgia, (No.
E-31547) on behalf of all "classified employees of the State of Georgia or
its agencies and departments during all or part of fiscal years 1992 through
1995 who were eligible to receive within grade pay increases and who would
have received same were it not for a freeze of within grade pay increases."
Presently pending before the court is the plaintiffs' motion for class
certification, which is not opposed by the State. Discovery as to liability
issues has been completed, and once the class has been certified and various
local defendants have been added, the parties will likely file cross motions
for summary judgment on liability issues. If the plaintiffs prevail, the
parties will conduct separate discovery on the issue of damages. The State
believes that it has good and adequate defenses to the claims made, but,
should the plaintiffs prevail in every aspect of their claims, the liability
of the State in this matter could be as much as $295,000,000 based on best
estimates currently available.
The foregoing information does not purport to be a complete or exhaustive
description of all conditions to which the issuers of Bonds in the Georgia
IM-IT Trust are subject. Many factors including national economic, social and
environmental policies and conditions, which are not within the control of the
issuers of Bonds could affect or could have an adverse impact on the financial
condition of the State and various agencies and political subdivisions located
in the State. Since Georgia Bonds in the Georgia IM-IT Trust (other than
general obligation bonds issued by the State) are payable from revenue derived
from a specific source or authority, the impact of a pronounced decline in the
national economy or difficulties in significant industries within the State
could result in a decrease in the amount of revenues realized from such source
or by such authority and thus adversely affect the ability of the respective
issuers of the Georgia Bonds in the Georgia IM-IT Trust to pay the debt
service requirements on the Georgia Bonds. Similarly, such adverse economic
developments could result in a decrease in tax revenues realized by the State
and thus could adversely affect the ability of the State to pay the debt
service requirements of any Georgia general obligation bonds in the Georgia
IM-IT Trust.
Tax Status. For a discussion of the Federal tax status of income earned on
Georgia IM-IT Trust Units, see "Federal Tax Status" in Part II of this
Prospectus.
In the opinion of Chapman and Cutler, counsel to the Sponsor, under existing
Georgia law:
(1)For Georgia income tax purposes, the Georgia IM-IT Trust is not an
association taxable as a corporation, and the income of the Georgia IM-IT
Trust will be treated as the income of the Unitholders. Interest on the
Georgia Bonds which is exempt from Georgia income tax when received by the
Georgia IM-IT Trust, and which would be exempt from Georgia income tax if
received directly by a Unitholder, will retain its status as tax-exempt
interest when distributed by the Georgia IM-IT Trust and received by the
Unitholders.
(2)If the Trustee disposes of a Georgia Bond (whether by sale, exchange,
payment on maturity, retirement or otherwise) or if a Unitholder redeems or
sells his Unit, the Unitholder will recognize gain or loss for Georgia income
tax purposes to the same extent that gain or loss would be recognized for
federal income tax purposes (except in the case of Georgia Bonds issued before
March 11, 1987 issued with original issue discount owned by the Georgia IM-IT
Trust in which case gain or loss for Georgia income tax purposes may differ
from the amount recognized for federal income tax purposes because original
issue discount on such Georgia Bonds may be determined by accruing said
original issue discount on a ratable basis). Due to the amortization of bond
premium and other basis adjustments required by the Internal Revenue Code, a
Unitholder, under some circumstances, may realize taxable gain when his or her
Units are sold or redeemed for an amount less than or equal to their original
cost.
(3)Amounts paid under an insurance policy or policies issued to the Georgia
IM-IT Trust, if any, with respect to the Georgia Bonds in the Georgia IM-IT
Trust which represent maturing interest on defaulted obligations held by the
Trustee will be exempt from State income taxes if, and to the extent as, such
interest would have been so exempt if paid by the issuer of the defaulted
obligations provided that, at the time such policies are purchased the amounts
paid for such policies are reasonable, customary and consistent with the
reasonable expectation that the issuer of the obligations, rather than the
insurer, will pay debt service on the obligations.
(4)Neither the Georgia Bonds nor the Units will be subject to Georgia sales or
use tax.
Chapman and Cutler has expressed no opinion with respect to taxation under any
other provision of Georgia law. Ownership of the Units may result in
collateral Georgia tax consequences to certain taxpayers. Prospective
investors should consult their tax advisors as to the applicability of any
such collateral consequences.
<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......................... $ 54.42 $ 54.42
Less: Estimated Annual Expense per Unit <F2>...................... $ 2.42 $ 1.99
Less: Annual Premium on Portfolio Insurance per Unit.............. -- --
Estimated Net Annual Interest Income per Unit..................... $ 52.00 $ 52.43
Calculation of Estimated Interest Earnings per Unit:
Estimated Net Annual Interest Income per Unit..................... $ 52.00 $ 52.43
Divided by 12 and 2, respectively................................. $ 4.33 $ 26.21
Estimated Daily Rate of Net Interest Accrual per Unit.............. $ .14444 $ .14566
Estimated Current Return Based on Public Offering Price <F1><F3>... 5.20% 5.24%
Estimated Long-Term Return <F3>.................................... 5.22% 5.26%
Estimated Initial Monthly Distribution (May 1997).................. $ 1.73
Estimated Initial Semi-annual Distribution (July 1997)............. $ 10.48
Estimated Normal Distribution per Unit <F3>........................ $ 4.33 $ 26.21
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Trustee's Annual Fee <F1><F4>... $.91 and $.51 per $1,000 principal amount of Bonds, respectively, for those portions of the
Georgia IM-IT Trust under the monthly and semi-annual distribution plans
Record and Computation Dates.... TENTH day of the month as follows: monthly--each month; semi-annual--January and July
Distribution Dates.............. TWENTY-FIFTH day of the month as follows: monthly--each month; semi-annual--
January and July
- ----------
<FN>
<F1>During the first year the Trustee will reduce its fee by approximately $.03
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 $54.45. Estimated Annual Expense
per Unit (excluding insurance) will be increased to $2.45 and $2.02 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" in Part II of
this Prospectus.
<F2>Excluding insurance costs. The Estimated Annual Expenses are expected to
fluctuate periodically (see "Trust Administration--Fund Administration and
Expenses--Miscellaneous Expenses" in Part II of this Prospectus).
<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" in Part II of this Prospectus. For
a discussion of how these returns are calculated, see "Unitholder
Explanations--Estimated Current Returns and Estimated Long-Term Returns"
in Part II of this Prospectus. 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 "Other
Matters--Estimated Cash Flows to Unitholders" .
<F4>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 $1,535. Assuming in the alternative that all Unitholders had elected the
monthly distribution plan, such fees would initially amount to $2,739.
</TABLE>
<TABLE>
GEORGIA INSURED MUNICIPALS INCOME TRUST
SERIES 84 (215TH INSURED MULTI-SERIES)
PORTFOLIO As of April 23, 1997
<CAPTION>
Offering
Price To
Georgia
Aggregate Name of Issuer, Title, Interest Rate and Maturity Date of either Redemption IM-IT
Bonds Deposited or Bonds Contracted for<F1><F5> Rating<F2> Feature<F3> Trust<F4>
- ------------- -------------------------------------------------------------------- -------------- ------------------ -------------
<S> <C> <C> <C> <C>
$ 150,000 Columbus, Georgia, Water and Sewer Revenue Bonds (FGIC Insured) 2007 @ 102
5.80% Due 5/1/2017##................................................ AAA 2014 @ 100 S.F. $ 151,145
250,000 Marietta, Georgia, Development Authority, First Mortgage Revenue 2005 @ 102
Bonds, Life College, Series A (FSA Insured) #5.95% Due 9/1/2019.... AAA 2015 @ 100 S.F. 254,115
560,000 Metropolitan Atlanta Rapid Transportation Authority, Georgia, Sales
Tax Revenue Refunding Bonds, Second Indenture, Series A (MBIA 2006 @ 102
Insured) 5.625% Due 7/1/2020....................................... AAA 2019 @ 100 S.F. 551,034
500,000 Rockdale County, Georgia, Water and Sewer Authority, Revenue Bonds 2007 @ 102
(FSA Insured) #5.00% Due 7/1/2022.................................. AAA 2018 @ 100 S.F. 450,440
475,000 Hospital Authority of Hall County and the City of Gainesville,
Georgia, Improvement and Refunding Revenue Anticipation
Certificates (Northeast Georgia Healthcare Project) Series 1995 2005 @ 102
(MBIA Insured) #6.00% Due 10/1/2025##.............................. AAA 2021 @ 100 S.F. 482,125
175,000 Dalton, Georgia, Development Authority, Revenue Bonds (MBIA
Insured) 5.50% Due 08/15/2026...................................... AAA 2018 @ 100 S.F. 168,026
400,000 Clarke County, Georgia, Hospital Authority, Revenue Certificates,
Athens Regional Medical Center Project (MBIA Insured) #5.00% Due 2007 @ 100
1/1/2027............................................................ AAA 2023 @ 100 S.F. 351,808
500,000 Richmond County, Georgia, Water and Sewer Revenue Refunding and 2006 @ 102
Improvement Bonds (FGIC Insured) #5.25% Due 10/1/2028.............. AAA 2023 @ 100 S.F. 463,340
$ 3,010,000 $ 2,872,033
============= =============
</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" in Part II of
this Prospectus.
For an explanation of the footnotes used on this page, see "Notes to
Portfolios" .
As of the Date of Deposit: April 23, 1997
- --------------------------------------------------------------------------
(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 April
17, 1997 to April 23, 1997. These Securities have expected settlement dates
ranging from April 23, 1997 to May 21, 1997 (see "Unitholder
Explanations--Settlement of Bonds in the Trusts" in Part II of this
Prospectus).
(2)All ratings are by Standard & Poor's unless otherwise indicated. "*"
indicates that the rating of the Bond is by Moody's. The ratings represent
the latest published ratings by the respective rating agency or, if not
published, represent private letter ratings or those ratings expected to be
published by the respective rating agency. "Y" indicates that such
rating is contingent upon physical receipt by the respective rating 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 "Description of Ratings" in Part II of this Prospectus.
(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. 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. For a
general discussion of certain of these events, see "Unitholder
Explanations--Settlement of Bonds in the Trusts--Risk Factors" in Part II
of this Prospectus. 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 "Federal Tax Status" in Part II of this Prospectus.
(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" in Part II of this Prospectus).
(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
Insurance Cost to (Loss) to Income to Evaluation
Trust Cost Sponsor Sponsor Trust of Bonds
----------- ------------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C>
IM-IT.............. $-- $ 8,531,311 $ 51,504 $ 503,750 $ 8,515,221
California IM-IT... $-- $ 3,497,088 $ 27,334 $ 205,188 $ 3,496,859
Florida IM-IT...... $-- $ 2,885,873 $ 17,553 $ 167,325 $ 2,880,682
Georgia IM-IT...... $-- $ 2,853,922 $ 18,111 $ 164,450 $ 2,849,458
</TABLE>
The Bonds in the Insured Trusts are insured as follows:
<TABLE>
<CAPTION>
Bonds insured Bonds insured
under AMBAC under Financial
Trust Indemnity Guaranty Preinsured Total
portfolio insurance portfolio insurance Bonds
----------------------- ----------------------- ------------- --------
<S> <C> <C> <C> <C>
IM-IT.............. -- -- 100% 100%
California IM-IT... -- -- 100% 100%
Florida IM-IT...... -- -- 100% 100%
Georgia IM-IT...... -- -- 100% 100%
</TABLE>
The breakdown of the Preinsured Bond Insurers is as follows: IM-IT
Trust--AMBAC Indemnity 22% and MBIA 78%; California IM-IT Trust--AMBAC
Indemnity 13%, Financial Guaranty 15% and MBIA 72%; Florida IM-IT Trust--AMBAC
Indemnity 33%, Financial Guaranty 20% and MBIA 47%; Georgia IM-IT
Trust--Financial Guaranty 22%, MBIA 53% and FSA 25%.
The Sponsor may have entered into contracts which hedge interest rate
fluctuations on certain Bonds in certain Trusts. The cost of any such
contracts and the corresponding gain or loss is included in the Cost to
Sponsor. Securities marked by a double pound symbol (##) following the
maturity date 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
Aggregate Principal Range of Days Subsequent to
Trust Amount First Settlement Date
---------------------- -------------------------------
<S> <C> <C>
IM-IT.............. 11% 23 days
California IM-IT... 14% 2 days
Florida IM-IT...... 29% 1 to 3 days
Georgia IM-IT...... 21% 1 day
</TABLE>
On the Date of Deposit, the offering side evaluations of the Securities in the
IM-IT, California IM-IT, Florida IM-IT and Georgia IM-IT Trusts were higher
than the bid side evaluations of such Securities by 0.75%, 0.74%, 0.74% and
0.75%, respectively, of the aggregate principal amounts of such Securities.
"#" prior to the coupon rate 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 "Federal Tax Status" in Part II of this
Prospectus.
(6)This Bond has been purchased at a deep discount from the par value because
there is little or no stated interest 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 0.3%, 1% and 1%,
of the aggregate principal amount of the Securities in the IM-IT Trust,
California IM-IT Trust and Florida IM-IT Trust, respectively, are "zero
coupon" bonds. See "Unitholder Explanations--Settlement of Bonds in
the Trusts--Risk Factors" in Part II of this Prospectus for a discussion
of zero coupon bonds.
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, 215th Insured
Multi-Series (IM-IT, California IM-IT, Florida IM-IT and Georgia IM-IT Trusts):
We have audited the accompanying statements of condition and the related
portfolios of Insured Municipals Income Trust, 215th Insured Multi-Series
(IM-IT, California IM-IT, Florida IM-IT and Georgia IM-IT Trusts) as of April
23, 1997. 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, 215th Insured Multi-Series (IM-IT, California IM-IT, Florida IM-IT and
Georgia IM-IT Trusts) as of April 23, 1997, in conformity with generally
accepted accounting principles.
GRANT THORNTON LLP
Chicago, Illinois
April 23, 1997
<TABLE>
INSURED MUNICIPALS INCOME TRUST,
215th INSURED MULTI-SERIES
Statements of Condition
As of April 23, 1997
<CAPTION>
INVESTMENT IN SECURITIES California Florida Georgia
IM-IT Trust IM-IT Trust IM-IT Trust IM-IT Trust
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Contracts to purchase tax-exempt securities <F1><F2><F3>... $ 8,582,815 $ 3,524,422 $ 2,903,426 $ 2,872,033
Accrued interest to the First Settlement Date <F1><F3>..... 150,653 52,625 47,921 44,365
------------- ------------- ------------- -------------
Total...................................................... $ 8,733,468 $ 3,577,047 $ 2,951,347 $ 2,916,398
============= ============= ============= =============
LIABILITY AND INTEREST OF UNITHOLDERS
Liability--
Accrued interest payable to Sponsor <F1><F3>............... $ 150,653 $ 52,625 $ 47,921 $ 44,365
Interest of Unitholders--
Cost to investors <F4>..................................... 9,025,000 3,706,000 3,053,000 3,020,000
Less: Gross underwriting commission <F4>................... 442,185 181,578 149,574 147,967
------------- ------------- ------------- -------------
Net interest to Unitholders <F1><F3><F4>................... 8,582,815 3,524,422 2,903,426 2,872,033
------------- ------------- ------------- -------------
Total...................................................... $ 8,733,468 $ 3,577,047 $ 2,951,347 $ 2,916,398
============= ============= ============= =============
==========
<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 Corporation on the bases set
forth under "Unitholder Explanations--Public Offering--Offering Price"
in Part II of this Prospectus. 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>
Principal Offering Accrued
Amount of Amount of Price of Interest to
Letter of Bonds Under Bonds Under Expected
Credit Contracts Contracts Delivery Dates
------------- ------------- ------------- -----------------
<S> <C> <C> <C> <C>
IM-IT Trust.............. $ 8,732,679 $ 9,025,000 $ 8,582,815 $ 149,864
California IM-IT Trust... $ 3,574,843 $ 3,700,000 $ 3,524,422 $ 50,421
Florida IM-IT Trust...... $ 2,950,262 $ 3,055,000 $ 2,903,426 $ 46,836
Georgia IM-IT Trust...... $ 2,914,841 $ 3,010,000 $ 2,872,033 $ 42,808
<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 by such
Trusts, by a prior owner of such Bonds, by the Sponsor prior to the deposit of
such Bonds or by the issuers of such Bonds. 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 Trustee will advance to the Trust the amount of net interest accrued to
April 28, 1997, the First Settlement Date, for distribution to the Sponsor as
the Unitholder of record as of the First Settlement Date.
<F4>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 Compensation" in Part II
of this Prospectus 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" in
Part II of this Prospectus) resulting in an equal reduction in both the Cost
to investors and the Gross underwriting commission while the Net interest to
Unitholders remains unchanged.
</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 1997. 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. The tables assume that Federal
taxable income is equal to State income subject to tax, and for cases in which
more than one State rate falls within a Federal bracket, the State rate
corresponding to the highest income within that Federal bracket is used. 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
reflect any local taxes or any taxes other than personal income taxes. 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 $121,200. The tables do not reflect
the effect of Federal or State limitations (if any) on the amount of allowable
itemized deductions and the deduction for personal or dependent exemptions or
any other credits. These limitations 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 "
Federal Tax Status" in Part II of this Prospectus for a more detailed
discussion of recent Federal tax legislation, including a discussion of
provisions affecting corporations.
IM-IT
<TABLE>
<CAPTION>
Taxable Income ($1,000's) Tax-Exempt Estimated Current Return
- --------------------------------------- -------------------------------------------------------------------------
Single Joint Tax 5% 5 1/2% 6% 6 1/2% 7% 7 1/2% 8%
Return Return Bracket Equivalent Taxable Estimated Current Return
- --------------------------------------- ------- -------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0 - 24.65 $ 0 - 41.20 15% 5.88% 6.47% 7.06% 7.65% 8.24% 8.82% 9.41%
24.65 - 59.75 41.20 - 99.60 28 6.94 7.64 8.33 9.03 9.72 10.42 11.11
59.75 - 124.65 99.60 - 151.75 31 7.25 7.97 8.70 9.42 10.14 10.87 11.59
124.65 - 271.05 151.75 - 271.05 36 7.81 8.59 9.38 10.16 10.94 11.72 12.50
Over 271.05 Over 271.05 39.6 8.28 9.11 9.93 10.76 11.59 12.42 13.25
</TABLE>
CALIFORNIA
<TABLE>
<CAPTION>
Taxable Income ($1,000's) Tax-Exempt Estimated Current Return
- --------------------------------------- -------------------------------------------------------------------------
Single Joint Tax 5% 5 1/2% 6% 6 1/2% 7% 7 1/2% 8%
Return Return Bracket Equivalent Taxable Estimated Current Return
- --------------------------------------- ------- -------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0 - 24.65 $ 0 - 41.20 20.1% 6.26% 6.88% 7.51% 8.14% 8.76% 9.39% 10.01%
24.65 - 59.75 41.20 - 99.60 34.7 7.66 8.42 9.19 9.95 10.72 11.49 12.25
59.75 - 124.65 99.60 - 151.75 37.4 7.99 8.79 9.58 10.38 11.18 11.98 12.78
124.65 - 271.05 151.75 - 271.05 42 8.62 9.48 10.34 11.21 12.07 12.93 13.79
Over 271.05 Over 271.05 45.2 9.12 10.04 10.95 11.86 12.77 13.69 14.60
</TABLE>
- ----------
* The State tax brackets are those for 1996. The 1997 brackets will be
adjusted to take into account changes in the California Consumer Price Index.
These adjustments have not yet been released.
FLORIDA
<TABLE>
<CAPTION>
Taxable Income ($1,000's) Tax-Exempt Estimated Current Return
- --------------------------------------- -------------------------------------------------------------------------
Single Joint Tax 5% 5 1/2% 6% 6 1/2% 7% 7 1/2% 8%
Return Return Bracket Equivalent Taxable Estimated Current Return
- --------------------------------------- ------- -------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0 - 24.65 $ 0 - 41.20 15% 5.88% 6.47% 7.06% 7.65% 8.24% 8.82% 9.41%
24.65 - 59.75 41.20 - 99.60 28 6.94 7.64 8.33 9.03 9.72 10.42 11.11
59.75 - 124.65 99.60 - 151.75 31 7.25 7.97 8.70 9.42 10.14 10.87 11.59
124.65 - 271.05 151.75 - 271.05 36 7.81 8.59 9.38 10.16 10.94 11.72 12.50
Over 271.05 Over 271.05 39.6 8.28 9.11 9.93 10.76 11.59 12.42 13.25
</TABLE>
- ----------
* The State of Florida does not impose an income tax on individuals. However,
Florida does impose an intangible personal property tax, which is not included
in this table, because it is generally based on property value rather than
income.
GEORGIA
<TABLE>
<CAPTION>
Taxable Income ($1,000's) Tax-Exempt Estimated Current Return
- --------------------------------------- -------------------------------------------------------------------------
Single Joint Tax 5% 5 1/2% 6% 6 1/2% 7% 7 1/2% 8%
Return Return Bracket Equivalent Taxable Estimated Current Return
- --------------------------------------- ------- -------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0 - 24.65 $ 0 - 41.20 20.1% 6.26% 6.88% 7.51% 8.14% 8.76% 9.39% 10.01%
24.65 - 59.75 41.20 - 99.60 32.3 7.39 8.12 8.86 9.60 10.34 11.08 11.82
59.75 - 124.65 99.60 - 151.75 35.1 7.70 8.47 9.24 10.02 10.79 11.56 12.33
124.65 - 271.05 151.75 - 271.05 39.8 8.31 9.14 9.97 10.80 11.63 12.46 13.29
Over 271.05 Over 271.05 43.2 8.80 9.68 10.56 11.44 12.32 13.20 14.08
</TABLE>
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 inflation rates and
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 Trust
<TABLE>
Monthly
<CAPTION>
Estimated Estimated Estimated
Distribution Dates Interest Principal Total
(Each Month) Distribution Distribution Distribution
- ----------------------------------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
May 1997 $ 1.78 $ 1.78
June 1997 - May 2008 4.46 4.46
June 2008 4.42 $ 27.70 32.12
July 2008 - August 2008 4.33 4.33
September 2008 3.88 110.80 114.68
October 2008 - May 2021 3.79 3.79
June 2021 3.79 2.77 6.56
July 2021 - September 2021 3.79 3.79
October 2021 3.71 55.40 59.11
November 2021 - June 2022 3.53 3.53
July 2022 3.16 110.80 113.96
August 2022 - May 2023 3.08 3.08
June 2023 2.71 110.81 113.52
July 2023 - January 2026 2.64 2.64
February 2026 2.49 110.80 113.29
March 2026 - May 2026 2.15 2.15
June 2026 1.93 55.40 57.33
July 2026 1.77 83.11 84.88
August 2026 - September 2026 1.50 1.50
October 2026 1.19 221.60 222.79
November 2026 .48 .48
December 2026 .04 110.81 110.85
</TABLE>
<TABLE>
Semi-annual
<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>
June 1997 $ 6.31 $ 6.31
December 1997 - December 2007 27.05 27.05
June 2008 27.00 $ 27.70 54.70
September 2008 110.80 110.80
December 2008 24.16 24.16
June 2009 - December 2020 22.98 22.98
June 2021 22.98 2.77 25.75
October 2021 55.40 55.40
December 2021 22.39 22.39
June 2022 21.43 21.43
July 2022 110.80 110.80
December 2022 18.80 18.80
June 2023 18.35 110.81 129.16
December 2023 - December 2025 16.02 16.02
February 2026 110.80 110.80
June 2026 13.67 55.40 69.07
July 2026 83.11 83.11
October 2026 221.60 221.60
December 2026 6.58 110.81 117.39
</TABLE>
IM-IT Trust (Continued)
California IM-IT Trust
<TABLE>
Monthly
<CAPTION>
Estimated Estimated Estimated
Distribution Dates Interest Principal Total
(Each Month) Distribution Distribution Distribution
- ---------------------------------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
May 1997 $ 1.76 $ 1.76
June 1997 - March 2008 4.41 4.41
April 2008 4.35 $ 40.47 44.82
May 2008 - June 2008 4.22 4.22
July 2008 3.63 404.75 408.38
August 2008 - December 2008 2.25 2.25
January 2009 1.72 134.92 136.64
February 2009 - May 2021 1.61 1.61
June 2021 1.61 13.49 15.10
July 2021 - August 2021 1.61 1.61
September 2021 1.15 134.91 136.06
October 2021 - August 2023 1.05 1.05
September 2023 .89 134.92 135.81
October 2023 - November 2026 .51 .51
December 2026 .03 134.92 134.95
</TABLE>
<TABLE>
Semi-annual
<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>
July 1997 $ 10.68 $ 10.68
January 1998 - January 2008 26.70 26.70
April 2008 $ 40.47 40.47
July 2008 25.47 404.75 430.22
January 2009 13.12 134.92 148.04
July 2009 - January 2021 9.77 9.77
June 2021 13.49 13.49
July 2021 9.77 9.77
September 2021 134.91 134.91
January 2022 7.06 7.06
July 2022 - July 2023 6.41 6.41
September 2023 134.92 134.92
January 2024 4.05 4.05
July 2024 - July 2026 3.12 3.12
December 2026 2.12 134.92 137.04
</TABLE>
Florida IM-IT Trust
<TABLE>
Monthly
<CAPTION>
Estimated Estimated Estimated
Distribution Dates Interest Principal Total
(Each Month) Distribution Distribution Distribution
- ----------------------------------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
May 1997 $ 1.74 $ 1.74
June 1997 - September 2008 4.36 4.36
October 2008 4.13 $ 163.77 167.90
November 2008 - June 2017 3.58 3.58
July 2017 3.40 131.02 134.42
August 2017 - June 2023 2.98 2.98
July 2023 2.93 36.03 38.96
August 2023 - November 2023 2.83 2.83
December 2023 2.23 163.77 166.00
January 2024 2.12 2.12
February 2024 1.82 81.89 83.71
March 2024 - April 2025 1.76 1.76
May 2025 1.54 163.77 165.31
June 2025 - May 2026 1.03 1.03
June 2026 .81 163.77 164.58
July 2026 - August 2026 .31 .31
September 2026 81.89 81.89
</TABLE>
<TABLE>
Semi-annual
<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>
July 1997 $ 10.56 $ 10.56
January 1998 - July 2008 26.40 26.40
October 2008 $ 163.77 163.77
January 2009 23.81 23.81
July 2009 - January 2017 21.70 21.70
July 2017 21.51 131.02 152.53
January 2018 - January 2023 18.05 18.05
July 2023 18.00 36.03 54.03
December 2023 163.77 163.77
January 2024 15.81 15.81
February 2024 81.89 81.89
July 2024 10.74 10.74
January 2025 10.68 10.68
May 2025 163.77 163.77
July 2025 8.99 8.99
January 2026 6.28 6.28
June 2026 163.77 163.77
September 2026 81.89 81.89
</TABLE>
Georgia IM-IT Trust
<TABLE>
Monthly
<CAPTION>
Estimated Estimated Estimated
Distribution Dates Interest Principal Total
(Each Month) Distribution Distribution Distribution
- ----------------------------------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
May 1997 $ 1.73 $ 1.73
June 1997 - August 2007 4.33 4.33
September 2007 4.21 $ 82.78 86.99
October 2007 3.70 157.28 160.98
November 2007 - October 2009 3.17 3.17
November 2009 3.10 49.67 52.77
December 2009 - June 2020 2.93 2.93
July 2020 2.68 185.43 188.11
August 2020 - June 2022 2.09 2.09
July 2022 1.89 165.56 167.45
August 2022 - August 2026 1.42 1.42
September 2026 1.21 57.95 59.16
October 2026 - December 2026 1.17 1.17
January 2027 1.01 132.45 133.46
February 2027 - September 2028 .63 .63
October 2028 .42 165.56 165.98
</TABLE>
<TABLE>
Semi-annual
<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>
July 1997 $ 10.48 $ 10.48
January 1998 - July 2007 26.21 26.21
September 2007 $ 82.78 82.78
October 2007 157.28 157.28
January 2008 21.95 21.95
July 2008 - July 2009 19.19 19.19
November 2009 49.67 49.67
January 2010 18.66 18.66
July 2010 - January 2020 17.79 17.79
July 2020 17.53 185.43 202.96
January 2021 - January 2022 12.69 12.69
July 2022 12.49 165.56 178.05
January 2023 - July 2026 8.66 8.66
September 2026 57.95 57.95
January 2027 7.24 132.45 139.69
July 2027 - July 2028 3.88 3.88
October 2028 1.72 165.56 167.28
</TABLE>
UNDERWRITING
- --------------------------------------------------------------------------
The Underwriters named below have severally purchased Units in the following
respective amounts from the Sponsor. For additional information regarding the
Underwriters, including information relating to compensation and benefits
received by the Underwriters, see "Unitholder
Explanations--Underwriting" in Part II of this Prospectus.
<TABLE>
<CAPTION>
IM-IT
Trust
Name Address Units
---------
<S> <C> <C>
Van Kampen American Capital Dist., Inc. One Parkview Plaza, Oakbrook Terrace, Illinois 60181 5,825
A.G. Edwards & Sons, Inc. One North Jefferson Avenue, St. Louis, Missouri 63103 1,000
J.J.B. Hilliard, W.L. Lyons, Inc. 501 South Fourth Street, Louisville, Kentucky 40202 250
Principal Financial Securities, Inc. Fountain Place, 1445 Ross Avenue, Suite 2300, Dallas, Texas 75201 250
R. Seelaus & Co., Inc. The Atrium @ 47 Maple Street, Summit, New Jersey 07901 250
Stifel, Nicolaus & Company, Incorporated 500 North Broadway, St. Louis, Missouri 63102 250
Advest, Inc. 90 State House Square, Hartford, Connecticut 06103 100
Robert W. Baird & Co. Inc. 777 East Wisconsin Avenue, Milwaukee, Wisconsin 53202 100
Dean Witter Reynolds, Incorporated 2 World Trade Center, 59th Floor, New York, New York 10048 100
Gruntal & Co., Incorporated 14 Wall Street, New York, New York 10005 100
Edward D. Jones & Co. 201 Progress Parkway, Maryland Heights, Missouri 63043 100
McDonald Investment Center, 800 Superior Avenue, Suite 2100, Cleveland, Ohio
McDonald & Company Securities, Inc. 44114 100
Oppenheimer & Co., Inc. World Financial Center, 8th Floor, New York, New York 10281 100
Pershing DIV of DLJ Secs Corp. One Pershing Plaza, 7th Floor, Jersey City, New Jersey 07399 100
Prudential Securities Inc. 1 New York Plaza, 14th Floor, New York, New York 10292-2014 100
Roosevelt & Cross Inc. 20 Exchange Place, New York, New York 10005 100
Southwest Securities Inc. 1201 Elm Street, Suite 4300, Dallas, Texas 75270 100
US Clearing Corp. 26 Broadway, New York, New York 10004 100
9,025
=========
</TABLE>
<TABLE>
<CAPTION>
California
IM-IT Trust
Name Address Units
----------------
<S> <C> <C>
Van Kampen American Capital Dist., Inc. One Parkview Plaza, Oakbrook Terrace, Illinois 60181 2,906
Crowell, Weedon & Company One Wilshire Boulevard, Los Angeles, California 90017 100
Dean Witter Reynolds, Incorporated 2 World Trade Center, 59th Floor, New York, New York 10048 100
A.G. Edwards & Sons, Inc. One North Jefferson Avenue, St. Louis, Missouri 63103 100
Gruntal & Co., Incorporated 14 Wall Street, New York, New York 10005 100
Edward D. Jones & Co. 201 Progress Parkway, Maryland Heights, Missouri 63043 100
McLaughlin, Piven, Vogel Securities, Inc. 30 Wall Street, 5th Floor, New York, New York 10005 100
Pershing DIV of DLJ Secs Corp. One Pershing Plaza, 7th Floor, Jersey City, New Jersey 07399 100
Prudential Securities Inc. 1 New York Plaza, 14th Floor, New York, New York 10292-2014 100
3,706
================
</TABLE>
<TABLE>
<CAPTION>
Florida IM-IT
Name Address Trust Units
-----------------
<S> <C> <C>
Van Kampen American Capital Dist., Inc. One Parkview Plaza, Oakbrook Terrace, Illinois 60181 2,503
A.G. Edwards & Sons, Inc. One North Jefferson Avenue, St. Louis, Missouri 63103 250
Dean Witter Reynolds, Incorporated 2 World Trade Center, 59th Floor, New York, New York 10048 100
Gruntal & Co., Incorporated 14 Wall Street, New York, New York 10005 100
Prudential Securities Inc. 1 New York Plaza, 14th Floor, New York, New York 10292-2014 100
3,053
=================
</TABLE>
<TABLE>
<CAPTION>
Georgia IM-IT
Name Address Trust Units
-----------------
<S> <C> <C>
Van Kampen American Capital Dist., Inc. One Parkview Plaza, Oakbrook Terrace, Illinois 60181 2,420
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
Prudential Securities Inc. 1 New York Plaza, 14th Floor, New York, New York 10292-2014 100
Smith Barney Inc. 388 Greenwich Street, 23rd Floor, New York, New York 10013 100
3,020
=================
</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>
SUMMARY OF ESSENTIAL FINANCIAL INFORMATION 2
IM-IT 3
CALIFORNIA IM-IT TRUST 5
FLORIDA IM-IT TRUST 15
GEORGIA IM-IT TRUST 22
OTHER MATTERS 30
Report of Independent Certified Public Accountants 30
Statements of Condition 31
Equivalent Taxable Estimated Current Return Tables 32
Estimated Cash Flows to Unitholders 34
Underwriting 39
</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 PART I
April 23, 1997
Insured Municipals Income Trust,
215th Insured Multi-Series
IM-IT 388
California IM-IT 165
Florida IM-IT 114
Georgia IM-IT 84
A Wealth of Knowledge A Knowledge of Wealth
VAN KAMPEN AMERICAN CAPITAL
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
2800 Post Oak Boulevard
Houston, Texas 77056
This Part I of the Prospectus may not be distributed unless accompanied by
Part II. Both Parts of this Prospectus should be retained for future reference.
February 1997
Van Kampen American Capital
Prospectus Part II
Insured Municipals Income Trust, Insured Multi-Series and
Insured Municipals Income Trust and Investors' Quality Tax-Exempt Trust,
Multi-Series
This Part II of the Prospectus may not be distributed unless accompanied by
Part I. Both Parts of this Prospectus should be retained for future reference.
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 the underlying separate unit investment trusts set forth in Part I of this
Prospectus. 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 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. The Bonds in an IM-IT Discount Trust were acquired at prices which
result in an IM-IT Discount Trust portfolio, as a whole, being purchased at a
deep discount from the aggregate par value of such Bonds. Gains based upon the
difference, if any, between the value of the Bonds at maturity, redemption or
sale and their purchase price at a discount (plus earned original issue
discount) will constitute taxable ordinary income with respect to a Unitholder
who is not a dealer with respect to his Units. Except in specific instances as
noted in Part I of this Prospectus, the information contained in this Part II
shall apply to each Trust in its entirety.
"AAA" Rating for the Insured Trusts Only. 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" . 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" ). 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.
Units of the Trusts are not insured by the FDIC, are not deposits or other
obligations of, or guaranteed by, any government agency and are subject to
investment risk, including possible loss of the principal amount invested.
Public Offering Price. The Public Offering Price of the Units of each Trust
during the initial offering period includes the aggregate offering price of
the Securities in such Trust's portfolio, an applicable sales charge, cash, if
any, in the Principal Account held or owned by such Trust, and accrued
interest, if any. After the initial public offering period, the secondary
market Public Offering Price of each Trust will include the aggregate bid
price of the Securities in such Trust, an applicable sales charge, cash, if
any, in the Principal Account held or owned by such Trust, and 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
under "Unitholder Explanations--Public Offering--General." For sales
charges in the secondary market, see "Unitholder Explanations--Public
Offering--General" . 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 an IM-IT, an IM-IT Discount or a 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" in Part I of this Prospectus for each Trust. The
minimum purchase requirement is one Unit except for certain transactions
described under "Trust Administration--General--Unit Distribution" .
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 an IM-IT, an
IM-IT Discount or a 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 in Part I of
this Prospectus. The methods of calculating Estimated Current Return and
Estimated Long-Term Return are set forth under "Unitholder
Explanations--Estimated Current Returns and Estimated Long-Term Returns."
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.
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 tenth day of each month and record dates for semi-annual
distributions will be the tenth day of the months indicated under "Per
Unit Information" for the applicable Trust in Part I of this Prospectus.
Distributions will be made on the twenty-fifth 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 of any Van Kampen American Capital-sponsored
unit investment trust may utilize their redemption or termination proceeds to
purchase units of any other Van Kampen American Capital trust in the initial
offering period accepting rollover investments subject to a reduced sales
charge to the extent stated in the related prospectus (which may be deferred
in certain cases).
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" .
SETTLEMENT OF BONDS IN THE TRUSTS
- --------------------------------------------------------------------------
The Fund. This series of the Insured Municipals Income Trust or the Insured
Municipals Income Trust and Investors' Quality Tax-Exempt Trust (the "
Fund" ), consists of the underlying separate unit investment trusts
described in Part I of this Prospectus. 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 initially consists of 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 only purchase Units of a Trust named for their respective state of
residence or an IM-IT, IM-IT Limited Maturity, IM-IT Intermediate, IM-IT Short
Intermediate, IM-IT Discount Series or a National Quality Trust. 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" in Part I of this
Prospectus. Such Securities initially 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" in Part I of this Prospectus. Unless otherwise terminated as
provided herein, the Trust Agreement for any IM-IT, IM-IT Discount, State
(other than a State Intermediate Laddered Maturity Trust) or National Quality
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 IM-IT, IM-IT Discount, State (other than a State
Intermediate Laddered Maturity Trust) or National Quality 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.
Substantially all of the Bonds in an IM-IT Discount Trust are obligations
which were originally issued at a discount, including "zero coupon"
bonds. See "Federal Tax Status" for a discussion of the tax
consequences of original issue discount.
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.
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" in Part I of this Prospectus. 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 certain of the "
Preinsured Bond Insurers" described herein. Insurance obtained by an
Insured Trust is effective only while the Bonds thus insured are held in such
Trust. For information relating to insurance on the bonds, see "Unitholder
Explanations--Insurance on the Bonds in the Insured Trusts."
In selecting Securities for the Trusts, the following factors, 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 and "A-" in the case of the Quality Trusts, or the Moody's
Investors Service, Inc. ("Moody's" ) rating of the Securities was in no
case less than "Baa" in the case of the Insured Trusts and "A"
in the case of the Quality 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 "Description of
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" ).
Risk Factors. The Trusts include certain types of bonds described below.
Accordingly, an investment in a Trust should be made with an understanding of
the characteristics of and risks associated with such bonds. See "
General" for each Trust in Part I of this Prospectus. 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 may be general obligations of a governmental entity that
are backed by the taxing power of such entity. 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.
Certain of the Bonds 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. 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.
Certain of the Bonds may be health care revenue bonds. 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.
Certain of the Bonds may be obligations of public utility issuers, including
those selling wholesale and retail electric power and gas. 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. 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.
Certain of the Bonds may be obligations of issuers whose revenues are derived
from the sale of water and/or sewerage services. 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.
Certain of the Bonds may be industrial revenue bonds ("IRBs" ). 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.
Certain of the Bonds 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. 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.
Certain of the Bonds 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. 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.
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. 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. From time to time the air
transport industry has experienced significant variations in earnings and
traffic, due to increased competition, excess capacity, increased costs,
deregulation, traffic constraints and other factors, and several airlines have
experienced severe financial difficulties. 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.
Certain of the Bonds may be obligations which are payable from and secured by
revenues derived from the operation of resource recovery facilities. 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; and 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 a Trust prior to the stated maturity of the Bonds.
Certain of the Bonds may have been 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 a 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 "
Federal Tax Status." Market discount attributable to interest changes does
not indicate a lack of market confidence in the issue.
Certain of the Bonds may be "zero coupon" bonds. See footnote (6) in
"Notes to Portfolios" in Part I of this Prospectus. 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 may have been purchased on a "when, as and if
issued" or "delayed delivery" basis. See footnote (5) in "
Notes to Portfolios" in Part I of this Prospectus. 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 in Part I of this Prospectus.
Unitholders 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.
Certain of the Bonds 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" in Part I of this Prospectus. See also
the discussion of single family mortgage and multi-family revenue bonds above
for more information on the call provisions of such bonds.
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.
Replacement Bonds. Because certain of the Securities in the Fund may from time
to time under certain circumstances be sold or redeemed or will mature in
accordance with their terms and because the proceeds from such events will be
distributed to Unitholders and will not be reinvested, no assurance can be
given that any Trust will retain for any length of time its present size and
composition. Neither the Sponsor nor the Trustee shall be liable in any way
for any default, failure or defect in any Security. In the event of a failure
to deliver any Security that has been purchased for the Fund under a contract,
including those Securities purchased on a "when, as and if issued"
basis ("Failed Bonds" ), the Sponsor is authorized under the Trust
Agreement to direct the Trustee to acquire other bonds ("Replacement
Bonds" ) to make up the original corpus of the Fund.
The Replacement Bonds must be purchased within 20 days after delivery of the
notice of the failed contract and the purchase price (exclusive of accrued
interest) may not exceed the amount of funds reserved for the purchase of the
Failed Bonds. The Replacement Bonds (i) must be tax-exempt bonds issued by
states or territories of the United States or political subdivisions thereof
and, in the case of replacement of bonds in a State Trust, shall have the
benefit of an exemption from state taxation of interest to an extent equal to
or greater than that of the bonds they replace, (ii) must have a fixed
maturity date of at least 10 years in the case of an IM-IT, IM-IT Discount,
State (other than a State Intermediate Laddered Maturity Trust) or National
Quality 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 and "A-" or better in the case of the Quality Trusts by
Standard & Poor's or "Baa" or better in the case of the Insured Trusts
and "A" or better in the case of the Quality Trusts by Moody's 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.
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 in
Part I of this Prospectus and will be made on the twenty-fifth day of the
month indicated under "Initial Distribution" therein to Unitholders of
record on the tenth 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 unless a Unitholder or
the Unitholder's registered broker-dealer makes a written request to the
Trustee that ownership be in book entry form. Units are transferable by making
a written request to the Trustee and, in the case of Units evidenced as a
certificate, by presentation and surrender of such certificate to the Trustee
properly endorsed or accompanied by a written instrument or instruments of
transfer. A Unitholder must sign such written request, or such certificate
transfer instrument exactly as his name appears on the records of the Trustee,
and on the face of any certificate representing Units to be transferred, 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
an IM-IT, an IM-IT Discount or a 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
in Part I of this Prospectus. 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 the date of delivery, the
Trustee may reduce its fee (and to the extent necessary pay Trust expenses) in
order to maintain (or in some cases approach) the same estimated net annual
interest incomes during the first year of the Trusts' operations as described
under "Per Unit Information" for the applicable Trust in Part I of
this Prospectus.
ACCRUED INTEREST
- --------------------------------------------------------------------------
Accrued interest is an accumulation of unpaid interest on securities which
generally is paid semi-annually, although each Trust accrues such interest
daily. Because of this, a 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
a 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 "Unitholder
Explanations--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 aggregate offering
price of the Securities in such Trust's portfolio, a sales charge of 4.9% of
the Public Offering Price (5.152% of the aggregate offering price of the
Securities) for an IM-IT, a State (other than a State Intermediate Laddered
Maturity Trust) or a National Quality 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, 4.0% of the Public Offering Price (4.167% of the
aggregate offering price of the Securities) for an IM-IT Discount Trust, 3.9%
of the Public Offering Price (4.058% of the aggregate offering price of the
Securities) for an IM-IT Intermediate Trust, 3.0% of the Public Offering Price
(3.093% of the aggregate offering price of the Securities) for a State
Intermediate Laddered Maturity Trust and 2.0% of the Public Offering Price
(2.041% of the aggregate offering price of the Securities) for an IM-IT Short
Intermediate Trust, cash, if any, in the Principal Account held or owned by
such Trust, and accrued interest, if any. After the initial public offering
period, the secondary market public offering price is based on the bid prices
of the Securities in each Trust, an applicable sales charge as determined in
accordance with the table set forth below, which is based upon the estimated
long-term return life of each Trust, cash, if any, in the Principal Account
held or owned by such Trust, and 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 are subject to
redemption at 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 estimated
long-term return life of such Trust's Portfolio, in accordance with the
following schedule:
<TABLE>
<CAPTION>
Years To Maturity
Years To Maturity Sales Charge Sales Charge
<S> <C> <C> <C>
1 1.010 % 12 4.712 %
2 1.523 13 4.822
3 2.041 14 4.932
4 2.302 15 5.042
5 2.564 16 5.152
6 2.828 17 5.263
7 3.093 18 5.374
8 3.627 19 5.485
9 4.167 20 5.597
10 4.384 21 to 30 5.708
11 4.603
</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 4.80%. The sales
charges in the table above do not apply to IM-IT Discount Trusts. The
applicable secondary market sales charges for an IM-IT Discount Trust are set
forth in Part I of any Prospectus by which such Trust is offered. 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
-------------------------------------------------------------------
IM-IT, State
(other than a
State
Intermediate
Laddered
Maturity Trust) IM-IT Short
Aggregate Number of and National Intermediate IM-IT Discount
Units Purchased* Quality Trusts Trust Trust Other Trusts
---------------- --------------- --------------- ------------------
<S> <C> <C> <C> <C>
100-249 Units.......... $4.00 $2.00 $ 2.00 $4.00
250-499 Units.......... $6.00 $3.00 $ 4.00 $6.00
500-999 Units.......... $14.00 $4.00 $ 6.00 $9.00
1,000 or more Units.... $19.00 $6.00 $ 8.00 $11.00
____________________
* The breakpoint sales charges are also applied on a dollar basis utilizing a breakpoint
equivalent in the above table of $10 per Unit and will be applied on whichever basis is
more favorable to the investor. The breakpoints will be adjusted to take into
consideration purchase orders stated in dollars which cannot be completely fulfilled due
to the Trusts' requirement that only whole Units be issued.
</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 "Trust
Administration--General--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 affiliates
may purchase Units of the Trust at the current Public Offering Price less the
underwriting commission or less the dealer's concession in the absence of an
underwriting commission. 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.
Purchasers of units of any two consecutive series of a Trust may aggregate
purchases of units of such series for purposes of the sales charge reduction
for quantity purchases described in the table above, provided that at the time
of the initial purchase of units of such purchaser submitted a purchase order
for at least 100 units that was partially unfulfilled due to a lack of units
of such Trust series available for sale at such time. The sales charge
reduction shall be applied to the subsequent purchase of units such that the
aggregate sales charge reduction applicable to both purchases will equal the
amount described in the table above.
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. The Public Offering Price of the Units will vary from the
amounts stated under "Summary of Essential Financial Information" in
Part I of this Prospectus 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 an IM-IT, IM-IT Discount or a 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 Corporation, 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 an IM-IT, IM-IT Discount or a
Pennsylvania IM-IT Trust after 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 the Evaluation 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 the Evaluation 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 the Evaluation 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 the Evaluation 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 in "Notes to Portfolios" in Part I of this Prospectus.
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 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 twenty-fifth 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 distribution 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 in Part I of this Prospectus, 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 twenty-fifth 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.
On or before the twenty-fifth 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 unit investment trusts sponsored by Van
Kampen American Capital Distributors, Inc., may elect to have each
distribution of interest income, capital gains and/or principal on their Units
automatically reinvested in shares of any Van Kampen American Capital mutual
funds (except for B shares) which are registered in the Unitholder's state of
residence. 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. Unitholders with an existing Guaranteed Reinvestment
Option (GRO) Program account (whereby a sales charge is imposed on
distribution reinvestments) may transfer their existing account into a new GRO
account which allows purchases of Reinvestment Fund shares at net asset value
as described above.
Confirmations of all reinvestments by a Unitholder into a Reinvestment Fund
will be mailed to the Unitholder by such Reinvestment Fund. A participant may
elect to terminate his or her reinvestment plan and receive future
distributions of his or her Units in cash by notifying the Trustee in writing
at any time prior to five days before the next distribution date. 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.
Unitholders of New York Trusts, other than residents of Massachusetts, may
elect to have distributions reinvested in shares of First Investors New York
Insured Tax Free Fund, Inc. subject to a sales charge of $1.50 per $100
reinvested (paid to First Investors Management Company, Inc.).
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 by
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 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 the Evaluation 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 the Evaluation 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" in Part I of this Prospectus. 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" above. 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
Sponsor 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 Sponsor or 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, by the issuer of Bonds in
an Insured Trust, 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" . The "Portfolio Insurers" and the "
Preinsured Bond Insurers" are described under "Notes to Portfolios"
in Part I of this Prospectus. The Portfolio Insurers are either AMBAC
Indemnity Corporation or Financial Guaranty Insurance Company. 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 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 in Part I of this Prospectus). Any portfolio insurance premium
for an Insured Trust, which is an obligation of such Trust, is paid by such
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 when they
fall due. For the purposes of insurance obtained by an Insured Trust, "
when due" generally means the stated payment or 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 "Unitholder Explanations--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 "Unitholder
Explanations--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--General--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 "Unitholder
Explanations--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 "
Unitholder Explanations--Public Offering--Offering Price" 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" .
The following summary information relating to the listed insurance companies
has been obtained from publicly available information:
<TABLE>
<CAPTION>
Financial Information (in
millions of dollars)
-----------------------------------------
Date Admitted Policyholders'
Name Established Assets Surplus
- ------------------------------------------------------ -------------- ---------- ---------------
<S> <C> <C> <C>
AMBAC Indemnity Corporation (at 3/31/96).............. 1970 $ 2,440 $ 878
Capital Guaranty Insurance Corporation (at 9/30/96)... 1987 313 194
Financial Guaranty Insurance Company (at 9/30/96)..... 1984 2,436 1,097
Financial Security Assurance, Inc. (at 9/30/96)....... 1984 1,184 452
MBIA Insurance Corporation (at 9/30/96)............... 1986 4,300 1,300
</TABLE>
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 and the Portfolio Insurers 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 and the Portfolio Insurers 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. Such rating will be in effect for a period of
thirteen months from the Date of Deposit and will, unless renewed, terminate
at the end of such period. See "Description of 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 to the extent described under "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.
For information relating to the insurance on the Bonds in the Insured Trusts
and the breakdown of the insurers of Preinsured Bonds, see footnote (5) in
"Notes to Portfolios" in Part I of this Prospectus.
UNDERWRITING
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For a breakdown of the Underwriters who have severally purchased Units of each
Trust from the Sponsor, see "Other Matters--Underwriting" in Part I of
this Prospectus.
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 certain Underwriters (those 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"
herein and "Portfolio" for the applicable Trust in Part I of this
Prospectus.
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
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Sponsor. Van Kampen American Capital Distributors, Inc., a Delaware
corporation, is the Sponsor of the Trusts. The Sponsor is an indirect
subsidiary of VK/AC Holding, Inc. Prior to October 31, 1996, VK/AC Holding,
Inc. was controlled, through the ownership of a substantial majority of its
common stock, by The Clayton & Dubilier Private Equity IV Limited Partnership.
On October 31, 1996, VK/AC Holding, Inc. became a wholly owned indirect
subsidiary of Morgan Stanley Group Inc. pursuant to the closing of an
Agreement and Plan of Merger among Morgan Stanley Group Inc., MSAM Holding II,
Inc. and MSAM Acquisition Inc., whereby MSAM Acquisition Inc. was merged with
and into VK/AC Holding, Inc. and VK/AC Holding, Inc. was the surviving
corporation (the "Acquisition" ).
As a result of the Acquisition, VK/AC Holding, Inc. became a wholly owned
subsidiary of MSAM Holdings II, Inc. which, in turn, is a wholly owned
subsidiary of Morgan Stanley Group Inc. Morgan Stanley Group Inc. and various
of its directly or indirectly owned subsidiaries, including Morgan Stanley
Asset Management Inc., an investment adviser ("MSAM" ), Morgan Stanley
& Co. Incorporated, a registered broker-dealer and investment adviser, and
Morgan Stanley International, are engaged in a wide range of financial
services. Their principal businesses include securities underwriting,
distribution and trading; merger, acquisition, restructuring and other
corporate finance advisory activities; merchant banking; stock brokerage and
research services; asset management; trading of futures, options, foreign
exchange commodities and swaps (involving foreign exchange, commodities,
indices and interest rates); real estate advice, financing and investing; and
global custody, securities clearance services and securities lending. As of
September 30, 1996, MSAM, together with its affiliated investment advisory
companies, had approximately $103.5 billion of assets under management and
fiduciary advice.
On February 5, 1997, Morgan Stanley Group Inc. and Dean Witter, Discover & Co.
announced that they had entered into an Agreement and Plan of Merger to form
Morgan Stanley, Dean Witter, Discover & Co. Subject to certain conditions
being met, it is currently anticipated that the transaction will close in
mid-1997. Thereafter, Van Kampen American Capital Distributors, Inc. will be
an indirect subsidiary of Morgan Stanley, Dean Witter, Discover & Co.
Dean Witter, Discover & Co. is a financial services company with three major
businesses: full service brokerage, credit services and asset management.
Van Kampen American Capital Distributors, Inc. specializes in the underwriting
and distribution of unit investment trusts and mutual funds with roots in
money management dating back to 1926. The Sponsor is a member of the National
Association of Securities Dealers, Inc. and has offices at One Parkview Plaza,
Oakbrook Terrace, Illinois 60181, (630) 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 November 30, 1996, the total
stockholders' equity of Van Kampen American Capital Distributors, Inc. was
$129,451,000 (unaudited). (This paragraph relates only to the Sponsor and not
to the Fund or to any 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 December 31, 1996, the Sponsor and its Van Kampen American Capital
affiliates managed or supervised approximately $59 billion of investment
products, of which over $21.78 billion is invested in municipal securities.
The Sponsor and its Van Kampen American Capital affiliates managed $48 billion
of assets, consisting of $29.9 billion for 59 open end mutual funds (of which
46 are distributed by Van Kampen American Capital Distributors, Inc.), $13.12
billion for 38 closed-end funds and $4.99 billion for 114 institutional
accounts. The Sponsor has also deposited approximately $26 billion of unit
investment trusts. All of Van Kampen American Capital's open-end funds,
closed-end funds and unit investment trusts are professionally distributed by
leading financial firms nationwide. 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 two million investor accounts, opened through retail distribution firms.
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 an affiliate of the Sponsor, will receive
an annual supervisory fee as indicated under "Summary of Essential
Financial Information" in Part I of this Prospectus for providing
portfolio supervisory services for the Fund. Such fee 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
Series 1 of the Fund 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" in Part I of this Prospectus for
regularly evaluating each Trust's portfolio. Such fees are 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. 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 unit investment trust
division offices at 101 Barclay Street, New York, New York 10286, telephone
(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 in Part I of this
Prospectus. 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 in Part I of this
Prospectus. 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, the Trustee's estimated
annual fees for ordinary recurring services would initially amount to that
amount set forth under "Per Unit Information" for the applicable Trust
in Part I of the Prospectus. The Trustee's fees are payable monthly on or
before the twenty-fifth 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 in
Part I of this Prospectus. 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. The
Sponsor, in connection with the Quality Trusts, may direct the Trustee to
dispose of Securities upon default in payment of principal or interest,
institution of certain legal proceedings, default under other documents
adversely affecting debt service, default in payment of principal or interest
on other obligations of the same issuer, decline in projected income pledged
for debt service on revenue bonds or decline in price or the occurrence of
other market or credit factors, including advance refunding (i.e., the
issuance of refunding securities and the deposit of the proceeds thereof in
trust or escrow to retire the refunded securities on their respective
redemption dates), so that in the opinion of the Sponsor the retention of such
Securities would be detrimental to the interest of the Unitholders. 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--Replacement Bonds"
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" in Part I of this Prospectus, 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 of the applicable Trust.
If the balances in the Interest and Principal Accounts are insufficient to
provide for amounts payable by a Trust, the Trustee has the power to sell
Securities to pay such amounts.
GENERAL
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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" in Part I of this
Prospectus. 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 an IM-IT, an IM-IT Discount, a State (other than a State
Intermediate Laddered Maturity Trust) or a National Quality Trust, or beyond
the end of the year preceding the twentieth anniversary of the Trust Agreement
in the case of IM-IT Limited Maturity, IM-IT Intermediate, State Intermediate
Laddered Maturity and IM-IT Short Intermediate Trusts. In the event of
termination of 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 (negligence in the case of the Trustee) 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 "
Unitholder Explanations--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" . Upon the completion of the initial offering, Units repurchased
in the secondary market, if any, may be offered by this Prospectus at the
secondary market Public Offering Price plus interest accrued to the date of
settlement.
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
for any single transaction as described in the following table, provided that
the 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).
<TABLE>
<CAPTION>
IM-IT, State
(other than a
State
Intermediate
Laddered IM-IT State
IM-IT Maturity Trust) IM-IT Short IM-IT Limited Intermediate
Discount and National Intermediate Intermediate Maturity Laddered
Trust Quality Trust Trust Trust Trust Maturity Trust
<S> <C> <C> <C> <C> <C> <C>
1 - 99 Units...........$ 18.00 $ 30.00 $ 10.00 $ 25.00 $ 27.00 $ 20.00
100 - 249 Units........$ 19.00 $ 32.00 $ 11.00 $ 28.00 $ 30.00 $ 21.00
250 - 499 Units........$ 20.00 $ 34.00 $ 11.00 $ 27.00 $ 30.00 $ 21.00
500 - 999 Units........$ 20.00 $ 35.00 $ 12.00 $ 30.00 $ 32.00 $ 23.00
1,000 - 1,499 Units....$ 20.00 $ 34.00 $ 12.00 $ 29.00 $ 29.00 $ 22.00
1,500 or more Units....$ 20.00 $ 34.00 $ 12.00 $ 29.00 $ 29.00 $ 22.00
</TABLE>
The increased concession or agency commission is a result of the discount
given to purchasers for quantity purchases. See "Unitholder
Explanations--Public Offering--General" . In addition to the concessions
and agency commissions described herein, volume concessions or agency
commissions of an additional $5.00 per Unit of an IM-IT, a State (other than a
State Intermediate Laddered Maturity Trust) or a National Quality Trust and
$2.00 per Unit of all other Trusts will be given to any broker/dealer or agent
(other than Underwriters) who purchases from the Sponsor at least 250 Units of
such Trust during the initial offering period. Such additional concessions
will be allowed at the time of purchase, provided, however, the additional
concession applicable to initial purchases totaling less than 250 Units will
be paid retroactively at the end of the initial offering period. The
breakpoint concessions or agency commissions described herein are also applied
on a dollar basis utilizing a breakpoint equivalent of $1,000 per Unit and
will be applied on whichever basis is more favorable to the distributor. The
breakpoints will be adjusted to take into consideration purchase orders stated
in dollars which cannot be completely fulfilled due to the requirement that
only whole Units be issued. 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, the concession or agency
commission will amount to 70% of the applicable sales charge as determined
using the table found in "Unitholder Explanations--Public
Offering--General" . The minimum purchase in the primary and 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
"Unitholder Explanations--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 the amounts set forth in the following tables, as of the Date
of Deposit.
<TABLE>
<CAPTION>
IM-IT, State
(other than a
State
Intermediate
Laddered IM-IT State
IM-IT Maturity Trust) IM-IT Short IM-IT Limited Intermediate
Discount and National Intermediate Intermediate Maturity Laddered
Trust Quality Trust Trust Trust Trust Maturity Trust
<S> <C> <C> <C> <C> <C> <C>
1 - 99 Units...........$ 20.00 $ 35.00 $ 12.00 $ 27.00 $ 29.00 $ 22.00
100 - 249 Units........$ 21.00 $ 37.00 $ 13.00 $ 30.00 $ 32.00 $ 23.00
250 - 499 Units........$ 22.00 $ 39.00 $ 13.50 $ 29.50 $ 32.00 $ 23.00
500 - 999 Units........$ 22.00 $ 40.00 $ 14.00 $ 32.50 $ 34.50 $ 25.00
1,000 - 1,499 Units....$ 22.00 $ 39.00 $ 14.00 $ 31.00 $ 31.00 $ 24.00
1,500 or more Units....$ 22.00 $ 39.00 $ 14.00 $ 31.00 $ 31.00 $ 24.00
</TABLE>
A. G. Edwards & Sons, Inc. which acts as a Managing Underwriter of Units of
the various series of the IM-IT or National Quality Trust, will receive from
the Sponsor reimbursement for certain costs and further compensation in the
amount of $5.00 for each Unit of the IM-IT or National Quality Trust it
underwrites. In addition, the Sponsor will receive from the Managing
Underwriters of any National Quality, (who underwrite 15% of the Trust
involved or 1,000 Units of such Trust, whichever is greater) the excess of
such gross sales commission over $38.00 per Unit of any such Trust, as of the
Date of Deposit. Also, any such Managing Underwriter that sells a total of 25%
or 1,500 Units, whichever is greater, of any individual series of such Trusts
will receive an additional $2.00 per each such Unit. 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. In addition, the Sponsor has entered into
agreements with Advest, Inc. ("Advest" ) and Gruntal & Co., Inc. ("
Gruntal" ) whereby Advest and Gruntal will receive an additional $2.00 per
Unit in connection with a minimum commitment of 1,500 Units of any New York
IM-IT Trust. In addition, the Sponsor and J. J. B. Hilliard, W. L. Lyons, Inc.
("Hilliard, Lyons" ) have entered into an agreement under which
Hilliard, Lyons may receive an additional $2.00 for each Unit of the Kentucky
Quality Trust which it underwrites, provided it underwrites a minimum of 400
Units of such Trust. 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. The breakpoints listed herein will also
be applied on a dollar basis (in addition to the Unit basis described herein)
utilizing a breakpoint equivalent of $1,000 per Unit and will be applied on
whichever basis is more favorable to the Underwriter.
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 Corporation of the aggregate offering price of the underlying
Securities in such Trust on the Date of Deposit). See "Unitholder
Explanations--Underwriting" herein and "Portfolio" for the
applicable Trust and "Notes to Portfolios" in Part I of this
Prospectus. 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 not participated as sole underwriter or as manager or
as a member of the underwriting syndicates from which the Securities in the
Trusts were acquired. The Underwriters may further realize additional profit
or loss during the initial offering period as a result of 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 a 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.
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.
Special counsel to the Fund for certain state tax matters are named under "
Tax Status" for each Trust appearing in Part I of this Prospectus. Kroll &
Tract LLP 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 in
Part I of this Prospectus.
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 as of the date of this Part II of the Prospectus:
(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;
however such interest may be taken into account in computing 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 each
asset 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 before the
date the Trust acquired ownership of the Bonds (and the amount of this
reduction may exceed the amount of accrued interest paid to the seller) 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 (subject to various
non-recognition provisions of the Code). 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
valuation date nearest the date of acquisition of the Units. The tax basis
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 less than or 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 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; 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. If a Bond is acquired with accured
interest, that portion of the price paid for the accrued interest is added to
the tax basis of the Bond. When this accrued interest is received, it is
treated as a return of capital and reduces the tax basis of the Bond. If a
Bond is purchased for a premium, the amount of the premium is added to the tax
basis of the Bond. Bond premium is amortized over the remaining term of the
Bond, and the tax basis of the Bond is reduced each tax year by the amount of
the premium amortized in that tax year. 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. Unitholders should
consult with their tax advisers regarding these rules and their application.
"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. Under current Code provisions, the
Superfund Tax does not apply to tax years beginning on or after January 1,
1996. However, the Superfund Tax could be extended retroactively. Under the
provisions of Section 884 of the Code, a branch profits tax is levied on the
"effectively connected earnings and profits" of certain foreign
corporations which include tax-exempt interest such as interest on the Bonds
in the Trust. Unitholders should 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. The U.S.
Treasury Department has proposed extending the financial institution rules to
all corporations. 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 the Code and 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 Kroll & Tract LLP, 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 (which are defined as net long-term capital
gain over net short-term capital loss for a taxable year) 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.
Ownership of the Units may result in collateral federal income tax
consequences to certain taxpayers, including, without limitation, corporations
subject to either the environmental tax or the branch profits tax, financial
institutions, certain insurance companies, certain S corporations, individual
recipients of Social Security or Railroad Retirement benefits and taxpayers
who may be deemed to have incurred (or continued) indebtedness to purchase or
carry tax-exempt obligations. Prospective investors should consult their tax
advisors as to the applicability of any collateral consequences.
For a discussion of the state tax status of income earned on Units of a Trust,
see "Tax Status" for the applicable Trust in Part I of this
Prospectus. 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 RATINGS
- --------------------------------------------------------------------------
Standard & Poor's, A Division of the McGraw-Hill Companies. A Standard &
Poor's 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
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.
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
UNITHOLDER EXPLANATIONS 3
Settlement of Bonds in the Trusts 3
The Fund 3
Objectives and Securities Selection 4
Risk Factors 4
Replacement Bonds 8
Distributions 9
Change of Distribution Option 9
Certificates 9
Estimated Current Returns and Estimated Long-Term Returns 10
Accrued Interest 11
Public Offering 11
General 11
Offering Price 13
Market for Units 15
Distributions of Interest and Principal 15
Reinvestment Option 16
Redemption of Units 16
Reports Provided 17
Insurance on the Bonds in the Insured Trusts 18
Underwriting 21
TRUST ADMINISTRATION 22
Fund Administration and Expenses 22
Sponsor 22
Compensation of Sponsor and Evaluator 23
Trustee 23
Trustee's Fee 24
Portfolio Administration 24
Sponsor Purchases of Units 25
Insurance Premiums 25
Miscellaneous Expenses 25
General 25
Amendment or Termination 25
Limitation on Liabilities 26
Unit Distribution 27
Sponsor and Underwriter Compensation 28
Legal Opinions 29
Independent Certified Public Accountants 29
FEDERAL TAX STATUS 30
DESCRIPTION OF RATINGS 33
</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
PART II
February 1997
Insured MunicipalsIncome Trust,Insured Multi-SeriesandInsured MunicipalsIncome
Trust andInvestors' Quality Tax-Exempt Trust,Multi-Series
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
This Part II of the Prospectus may not be distributed unless
accompanied by Part I. Both Parts of this Prospectus should be
retained for future reference
Contents of Registration Statement
This Amendment of Registration Statement comprises the following
papers and documents:
The facing sheet
The Cross-Reference sheet
The Prospectus
The signatures
The consents of independent public accountants, ratings
services and legal counsel
The following exhibits:
1.1 Copy of Trust Agreement.
1.5 Copy of Agreement Among Underwriters.
3.1 Opinion and consent of counsel as to legality of securities being
registered.
3.2 Opinion of counsel as to Federal, Florida and Georgia income tax
status of securities being registered.
3.3 Opinion and consent of counsel as to New York income tax status of
the Fund under New York law.
3.4 Opinion and consent of counsel as to income tax status to California
residents of Units of the California IM-IT Trust.
4.1 Consent of Interactive Data Corp.
4.2 Consent of Standard & Poor's.
4.3 Consent of Grant Thornton LLP.
EX-27 Financial Data Schedules
Signatures
The Registrant, Insured Municipals Income Trust, 215th Insured Multi-
Series hereby identifies Insured Municipals Income Trust, 77th Insured
Multi-Series and Insured Municipals Income Trust and Investors' Quality
Tax-Exempt Trust, Multi-Series 189 for purposes of the representations
required by Rule 487 and represents the following: (1) that the
portfolio securities deposited in the series as to the securities of
which this Registration Statement is being filed do not differ materially
in type or quality from those deposited in such previous series; (2)
that, except to the extent necessary to identify the specific portfolio
securities deposited in, and to provide essential financial information
for, the series with respect to the securities of which this Registration
Statement is being filed, this Registration Statement does not contain
disclosures that differ in any material respect from those contained in
the registration statements for such previous series as to which the
effective date was determined by the Commission or the staff; and (3)
that it has complied with Rule 460 under the Securities Act of 1933.
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Insured Municipals Income Trust, 215th Insured Multi-Series
has duly caused this Amendment to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City
of Chicago and State of Illinois on the 23rd day of April, 1997.
Insured Municipals Income Trust
215th Insured Multi-Series
By Van Kampen American Capital
Distributors, Inc.
By Sandra A. Waterworth
Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below on April
23, 1997 by the following persons who constitute a majority of the Board
of Directors of Van Kampen American Capital Distributors, Inc.
Signature Title
Don G. Powell Chairman and Chief Executive )
Officer )
William R. Molinari President and Chief )
Operating Officer )
Ronald A. Nyberg Executive Vice President and )
General Counsel )
William R. Rybak Executive Vice President and )
Chief Financial Officer )
Sandra A. Waterworth ) (Attorney-in-fact*)
*An executed copy of each of the related powers of attorney was filed
with the Securities and Exchange Commission in connection with the
Registration Statement on Form S-6 of Insured Municipals Income Trust
and Investors' Quality Tax-Exempt Trust, Multi-Series 203 (File No. 33-
65744) and with the Registration Statement on Form S-6 of Insured
Municipals Income Trust, 170th Insured Multi-Series (File No. 33-55891)
and the same are hereby incorporated herein by this reference.
Exhibit 1.1
Insured Municipals Income Trust
215th Insured Multi-Series
Trust Agreement
Dated: April 23, 1997
This Trust Agreement between Van Kampen American Capital
Distributors, Inc., as Depositor, American Portfolio Evaluation Services,
a division of Van Kampen American Capital Investment Advisory Corp., as
Evaluator, and The Bank of New York, as Trustee, sets forth certain
provisions in full and incorporates other provisions by reference to the
document entitled "Standard Terms and Conditions of Trust, For Van Kampen
American Capital Distributors, Inc. Tax-Exempt Trust, Dated March 16,
1995" (herein called the "Standard Terms and Conditions of Trust"), and
such provisions as are set forth in full and such provisions as are
incorporated by reference constitute a single instrument. All references
herein to Articles and Sections are to Articles and Sections of the
Standard Terms and Conditions of Trust.
Witnesseth That:
In consideration of the premises and of the mutual agreements herein
contained, the Depositor and the Trustee agree as follows:
Part I
Standard Terms and Conditions of Trust
Subject to the provisions of Part II hereof, all the provisions
contained in the Standard Terms and Conditions of Trust are herein
incorporated by reference in their entirety and shall be deemed to be a
part of this instrument as fully and to the same extent as though said
provisions had been set forth in full in this instrument.
Part II
Special Terms and Conditions of Trust
The following special terms and conditions are hereby agreed to:
(a) The Bonds defined in Section 1.01(4), listed in the
Schedules hereto, have been deposited in the Trusts under this Trust
Agreement.
(b) The fractional undivided interest in and ownership of the
various Trusts represented by each Unit thereof is the amount set
forth under "Summary of Essential Financial Information-Fractional
Undivided Interest in the Trust per Unit" in Prospectus Part I.
(c) The approximate amounts, if any, which the Trustee shall
be required to advance out of its own funds and cause to be paid to
the Depositor pursuant to Section 3.05 shall be the amount per Unit
that the Trustee agreed to reduce its fee or pay Trust expenses set
forth in the footnotes to the "Per Unit Information" for each Trust
in Prospectus Part I times the number of units in such Trust
referred to in Part II (b) of this Trust Agreement.
(d) The First General Record Date and the amount of the second
distribution of funds from the Interest Account of each Trust shall
be the record date for the Interest Account and the amount set forth
under "Per Unit Information" for each Trust in Prospectus Part I.
(e) The First Settlement Date shall be the date set forth
under "Summary of Essential Financial Information-First Settlement
Date" in Prospectus Part I.
(f) Any monies held to purchase "when issued" bonds will be
held in noninterest bearing accounts.
(g) The Evaluation Time for purpose of sale, purchase or
redemption of Units shall be 4:00 P.M. Eastern time.
(h) As set forth in Section 3.05, the Record Dates and
Distribution Dates for each Trust are those dates set forth in the
section entitled "Per Unit Information" for each Trust as appears in
Prospectus Part I.
(i) As set forth in Section 3.15, the Evaluator's Annual
Supervisory Fee shall be that amount set forth in "Summary of
Essential Financial Information-Evaluator's Annual Supervisory Fee"
in Prospectus Part I.
(j) As set forth in Section 4.03, the Evaluator's Annual
Evaluation Fee shall be that amount, and computed on that basis, set
forth in "Summary of Essential Financial Information-Evaluator's
Annual Evaluation Fee" in Prospectus Part I
(k) The Trustee's annual compensation as set forth under
Section 6.04, under each distribution plan shall be that amount as
specified in Prospectus Part I under the section entitled "Per Unit
Information" for each Trust and will include a fee to induce the
Trustee to advance funds to meet scheduled distributions.
(l) The sixth paragraph of Section 3.05 is hereby revoked and
replaced by the following paragraph:
Unitholders desiring to receive semi-annual
distributions and who purchase their Units prior to the Record
Date for the second distribution under the monthly plan of
distribution may elect at the time of purchase to receive
distributions on a semi-annual basis by notice to the Trustee.
Such notice shall be effective with respect to subsequent
distributions until changed by further notice to the Trustee.
Unitholders desiring to receive semi-annual distributions and
who purchase their Units prior to the Record Date for the first
distribution may elect at the time of purchase to receive
distributions on a semi-annual basis by notice to the Trustee.
Such notice shall be effective with respect to subsequent
distributions until changed by further notice to the Trustee.
Changes in the plan of distribution will become effective as of
opening of business on the day after the next succeeding semi-
annual Record Date and such distributions will continue until
further notice.
(m) Sections 8.02(d) and 8.02(e) are hereby revoked and
replaced with the following:
(d) distribute to each Unitholder of such Trust such
holder's pro rata share of the balance of the Interest Account
of such Trust;
(e) distribute to each Unitholder of such Trust such
holder's pro rata share of the balance of the Principal Account
of such Trust; and
In Witness Whereof, Van Kampen American Capital Distributors,
Inc. has caused this Trust Agreement to be executed by one of its
Vice Presidents or Assistant Vice Presidents and its corporate seal
to be hereto affixed and attested by its Secretary or one of its
Vice Presidents or Assistant Secretaries, American Portfolio
Evaluation Services, a division of Van Kampen American Capital
Investment Advisory Corp., has caused this Trust Indenture and
Agreement to be executed by its President or one of its Vice
Presidents and its corporate seal to be hereto affixed and attested
to by its Secretary, its Assistant Secretary or one of its Assistant
Vice Presidents and The Bank of New York, has caused this Trust
Agreement to be executed by one of its Vice Presidents and its
corporate seal to be hereto affixed and attested to by one of its
Vice Presidents, Assistant Vice Presidents or Assistant Treasurers;
all as of the day, month and year first above written.
Van Kampen American Capital
Distributors, Inc.
By Sandra A. Waterworth
Vice President
(Seal)
Attest:
By Gina M. Scumaci
Assistant Secretary
American Portfolio Evaluation
Services, a division of Van Kampen
American Capital Investment
Advisory Corp.
By Dennis J. Mcdonnell
President
(Seal)
Attest:
By Scott E. Martin
Secretary
The Bank Of New York
By Jeffrey Bieselin
Vice President
(Seal)
Attest:
By Norbert Loney
Assistant Treasurer
Schedules To Trust Agreement
Securities Initially Deposited
In
Insured Municipals Income Trust, 215th Insured Multi-Series
(Note: Incorporated herein and made a part hereof as indicated below are
the corresponding "Portfolios" of each of the Trusts as set forth in
the Prospectus.)
Exhibit 1.5
Dated: June 1, 1992
Master Agreement Among Underwriters
For Unit Investment Trusts Sponsored by
Van Kampen American Capital Distributors, Inc.
Van Kampen American Capital Distributors, Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
Gentlemen:
1. The Trust. We understand that you, Van Kampen American Capital
Distributors, Inc. (the "Sponsor"), are entering into this agreement (the
"Agreement") in counterparts with us and other firms who may be
underwriters for issues of various series of unit investment trusts for
which you will act as Sponsor. This Agreement shall apply to any
offering after May 1, 1992 of units of fractional undivided interest in
such various series unit investment trusts in which we elect to act as an
underwriter (underwriters with respect to each such trust being
hereinafter called "Underwriters") after receipt of a notice from you
stating the name and size of the trust and that our participation as an
Underwriter in the proposed offering shall be subject to the provisions
of this Agreement. The issuer of the units of fractional undivided
interests in a series of a unit investment trust offered in any offering
of units made pursuant to this Agreement is hereinafter referred to as
the "Trust" and the reference to "Trust" in this Agreement applies only
to such Trust, and such units of such Trust offered are hereinafter
called the "Units". Each Trust is or will be registered as a "unit
investment trust" under the Investment Company Act of 1940 (the "1940
Act") by appropriate filings with the Securities and Exchange Commission
(the "Commission"). Additionally, each Trust is or will be registered
with the Commission under the Securities Act of 1933 (the "1933 Act") on
Form S-6 or its successor forms, including a proposed form of prospectus
(the "Preliminary Prospectus").
The registration statement as finally amended and revised at the
time it becomes effective is herein referred to as the "Registration
Statement" and the related prospectus is herein referred to as the
"Prospectus", except that if the prospectus filed by the Trust pursuant
to Rule 424(b) under the 1933 Act shall differ from the prospectus on
file at the time the Registration Statement shall become effective, the
term "Prospectus" shall refer to the prospectus filed pursuant to Rule
424(b) from and after the date on which it shall have been filed.
The following provisions of this Agreement shall apply separately to
each individual offering of Units by a Trust.
We understand that as of the date upon which we have agreed to
underwrite Units of the Trust the Commission shall not have issued any
order preventing or restraining the use of any Preliminary Prospectus
and, further, that each Preliminary Prospectus shall conform in all
material respects to the requirements of the 1933 Act and the Rules and
Regulations thereunder and, as of its date, shall not include any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements therein not misleading; and when the Registration
Statement becomes effective, it and the Prospectus, and any amendments or
supplements thereto, will contain all statements that are required to be
stated therein in accordance with the 1933 Act and the Rules and
Regulations thereunder and will in all material respects conform to the
requirements of the 1933 Act and the Rules and Regulations thereunder,
and neither the Registration Statement nor the Prospectus, nor any
amendment or supplement thereto, will contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading;
provided, however, that you make no representation or warranty as to
information contained in or omitted from any Preliminary Prospectus, the
Registration Statement, the Prospectus or any such amendment or
supplement, in reliance upon and in conformity with, written information
furnished to you by or on behalf of any Underwriter specifically for use
in the preparation thereof.
2. Designation and Authority of Representative. You are hereby
authorized to act as our representative (the "Representative") in
connection with all matters to which this Agreement relates and to take
the action provided herein to be taken by you as you may otherwise deem
necessary or advisable. We understand that we have no obligations under
this Agreement with respect to any Trust in which we choose not to
participate as an Underwriter.
You will be under no liability to us for any act or omission except
for obligations expressly assumed by you herein and no obligations on
your part will be implied or inferred herefrom. The rights and
liabilities of the respective parties hereto are several and not joint,
and nothing herein or hereunder will constitute then a partnership,
association or separate entity.
3. Profit or Loss in Acquisition of Securities. It is understood
that the acquisition of securities (the "Securities") for deposit in the
portfolio of the Trust shall be at your cost and risk. We acknowledge
that you will share with us any net deposit profits in the amounts and to
the extent, if any, indicated under "Sponsor and Underwriter
Compensation" in the Prospectus. For the purposes of determining the
number of Units underwritten, we understand that we will be credited for
that number of Units set forth opposite our name in the section entitled
"Underwriting" in the prospectus.
We agree that you shall have no liability (as Representative or
otherwise) with respect to the issue form, validity, legality,
enforceability, value of, or title to the Securities, except for the
exercise of due care in determining the genuineness of such Securities
and the conformance thereof with the descriptions and qualifications
appearing in the Prospectus.
4. Purchase of Units. Promptly after you make a determination to
offer Units of a Trust and you inquire as to whether we desire to
participate in such offering, we will advise you promptly as to the
number of Units which we will purchase or of our decision not to
participate in such offering. Such advice may be written or oral. The
delivery to the Sponsor of a completed Schedule A to this Agreement shall
constitute adequate written advice. Oral advice shall be binding but
shall be promptly confirmed in writing by us by means of telegraph,
telegram or other form of wire or facsimile transmission. Such written
confirmation shall contain the information requested by Schedule A to
this Agreement. You may rely on and we hereby commit on the terms and
conditions of this Agreement to purchase and pay for the number of Units
of the Trust set forth in such advice (the "Unit Commitment"). Our Unit
Commitment may be increased only by mutual agreement between us and you
at any time prior to the date as of which the Trust Agreement for the
Trust is executed (the "Date of Deposit"). We agree that you in your
sole discretion reserve the right to decrease our Unit Commitment at any
time prior to the Date of Deposit and if you so elect to make such a
decrease, you will notify us of such an election by telephone and
promptly confirm the same in writing.
The price to be paid for such Units shall be the Public Offering
Price per Unit (as defined in the Prospectus) as first determined on the
Date of Deposit or such later determination on such Date of Deposit as
you shall advise us, less the sum per Unit indicated under "Sponsor and
Underwriter Compensation" in the Prospectus. Further, each Underwriter
who underwrites that number of Units indicated under "Sponsor and
Underwriter Compensation" in the Prospectus will receive from the Sponsor
that additional compensation indicated under such section of the
Prospectus for each Unit it underwrites, providing the Trust size is in
excess of that number of Units, if any, indicated under such section of
the Prospectus. At the Date of Deposit, we will become the owner of the
Units and be entitled to the benefits (except for interest, if any,
accruing from the Date of Deposit to the First Settlement Date) as well
as the risks inherent therein. We acknowledge that those persons, if
any, named in the Prospectus under "Sponsor and Underwriter Compensation"
are Managing or Co-Managing Underwriters of the Trust, as indicated
therein, and we acknowledge that those persons specifically named therein
will receive as additional compensation those respective per Unit amounts
set forth in such section of the Prospectus.
You are authorized to retain custody of our Units until the
Registration Statement relating thereto has become effective under the
1933 Act and you shall have received payment from us for such Units.
You are authorized to file an amendment to said Registration
Statement describing the Securities and furnishing information based
thereon or relating thereto and any further amendments or supplements to
the Registration Statement or Prospectus which you may deem necessary or
advisable. We will furnish to you upon your request such information as
will be required to insure that the Registration Statement and Prospectus
are current insofar as they relate to us and we thereafter continue to
furnish you with such information as may be necessary to keep current and
correct the information previously supplied.
We understand that the Trust will also take action with respect to
the offering and sale of Units in accordance with the Blue Sky or
securities laws of certain states in which it is proposed that the Units
may be offered and sold.
5. Public Offering. You agree that you will advise us promptly
when the Registration Statement has become effective, and we agree that
when we are advised that the Units are released for public offering, we
will make a public offering thereof by means of the Prospectus under the
1933 Act, as amended, which describes the deposit of Securities and
related information. The Public Offering Price and the terms and
conditions of the public offering shall be as set forth in the Prospectus
and shall rely with respect to the offering price of the Securities upon
the determination of the Evaluator named in the Prospectus. Public
advertisement of the offering, if any, shall be made by you on behalf of
the Underwriters on such date as you shall determine. We agree that
before we use any Trust advertising material which we have created, we
will obtain your prior approval to use such advertising materials.
6. Public Offering Price. We agree that each day while this
Agreement is in effect and the evaluation of the Trust is made by the
Evaluator named in the Prospectus, we will contact you for such
evaluation and of the resultant Public Offering Price for the purpose of
the offering and sale of the respective Units to the public. We agree as
required by Section 22(d) of the 1940 Act to offer and sell our Units at
the current Public Offering Price described in the Prospectus.
7. Permitted Transactions. It is agreed that part or all of the
Units purchased by us may be sold to dealers, or other entities with whom
we can legally grant a concession or agency commission, only at the then
effective Public Offering Price, less the concession described in the
Prospectus.
From time to time prior to the termination of this Agreement, at
your Request, we will advise you of the number of our Units which remain
unsold and, at your request, we agree to deliver to you any of such
unsold Units to be sold for our account to retail accounts or, less the
concession or agency commission then effective, to dealers or others.
If prior to the termination of this Agreement, or such earlier date
as you may determine and advise us thereof in writing, you shall purchase
or contract to purchase any of our Units or any Units issued in exchange
therefor, in the open market or otherwise, or if any such Units shall be
tendered to the Trustee for redemption because not effectively placed for
investment by us, we agree to repurchase such Units at a price equal to
the total cost of such purchase, including accrued interest and
commissions, if any, and transfer taxes on redelivery. Regardless of the
amount paid on the repurchase of any such Units, it is agreed that they
may be resold by us only at the then effective Public Offering Price.
Until the termination of this Agreement, we agree that we will make
no purchase of Units other than (i) purchases provided for in this
Agreement, (ii) purchases approved by you and (iii) purchases as broker
in executing unsolicited orders.
8. Compliance With Commission Order. We hereby agree as follows:
(a) we will refund all sales charges to purchasers of Units from us or
any dealer participating in the distribution of Units who purchased such
Units from us if, within ninety days from the time that the Registration
Statement of the respective Units under the 1933 Act shall have become
effective, (i) the net worth of the trust shall be reduced to less than
20% of the principal amount of Securities originally deposited therein or
(ii) the Trust shall have been terminated; (b) you may instruct the
Trustee on the Date of Deposit that, in the event that redemption by any
Underwriters of Units constituting part of any unsold allotment of Units
shall result in the Trust having a net worth of less than 40% of the
principal amount of Securities originally deposited therein, the Trustee
shall terminate the Trust in the manner provided in the Trust Indenture
and Agreement (as defined in the Prospectus) and distribute the
Securities and other assets of the Trust pursuant to the provisions of
the Trust Indenture and Agreement; and (c) in the event that the Trust
shall have been terminated pursuant to (b) above, we will refund any
sales charges to any purchaser of such Units who purchased from us, or
purchased from a dealer participating in the distribution of such Units
who purchased such Units from us. We authorize you to charge our account
for all refunds of sales charges in respect to our Units.
9. Substitution of Underwriters. We authorize you to arrange for
the substitution hereunder of other persons, who may include you and us,
for all or any part of the commitment of any nondefaulting Underwriter
with the consent of such Underwriter, and of any defaulting Underwriter
without the consent thereof, upon such terms and conditions as you may
deem advisable, provided that the number of Units to be purchased by us
shall not be increased without our consent and that such substitution
shall not in any way affect the liability of any defaulting Underwriter
to the other Underwriters for damages from such default, nor relieve any
other Underwriter of any obligation under this Agreement. The expenses
chargeable to the account of any defaulting Underwriter and not paid for
by it or by a person substituted for such Underwriter and any additional
losses or expenses arising from such default shall be considered to be
expenses under this Agreement and shall be charged against the accounts
of the nondefaulting Underwriters in proportion to their respective
commitments.
10. Termination. This Agreement shall terminate with respect to
each Trust which we have agreed to underwrite 30 days after the date on
which the public offering of the Units of such Trust is made in
accordance with Section 5 hereof unless sooner terminated by you,
provided that you may extend this Agreement for not more than eleven
successive periods of 30 days each upon notice to us and each of the
other Underwriters.
Notwithstanding any settlement on the termination of this Agreement,
we agree to pay our share of any amount payable on account of any claim,
demand or liability which may be asserted against the Underwriters, or
any of them, based on the claim that the Underwriters constitute an
association, unincorporated business or other separate entity and our
share of any expenses incurred by you in defending against any such
claim, demand or liability. We also agree to pay any stamp taxes which
may be assessed and paid after such settlement on account of any Units
received or sold hereunder for our account.
Notwithstanding any termination of this Agreement, no sales of the
Units shall be made by us at any time except in conformity with the
provisions of Section 22(d) of the 1940 Act.
11. Default by Other Underwriters. Default by any one or more of
the other Underwriters in respect of their several obligations under this
Agreement shall neither release you nor us from any of our respective
obligations hereunder.
12. Notices. Notices hereunder shall by deemed to have been duly
given if mailed or telegraphed to us at our address set forth below, in
the case of notices to us, or to you at your address set forth at the
head of this Agreement, in the case of notices to you.
13. Net Capital. You represent that you, and we represent that we,
are in compliance with the capital requirements of Rule 15c-3-1
promulgated by the Commission under the Securities and Exchange Act of
1934, and we may, in accordance with and pursuant to such Rule 15c-3-1,
agree to purchase the amount of Units to be purchased by you and us,
respectively, under the Agreement.
14. Miscellaneous. We confirm that we are a member in good
standing of the National Association of Securities Dealers, Inc.
We confirm that we will take reasonable steps to provide the
Preliminary Prospectus or final Prospectus to any person making written
request therefor to us and to make the Preliminary Prospectus or the
final Prospectus available to each person associated with us expected to
solicit customers' orders for the Units prior to the effective
registration date and the final Prospectus if he is expected to offer the
Units after the effective date. We understand that you will supply us
upon our request with sufficient copies of such prospectuses to comply
with the foregoing.
This Agreement is being executed by us and delivered to you in
duplicate. Upon your confirmation hereof and of agreements in identical
form with each of the other Underwriters, this Agreement shall constitute
a valid and binding contract between us.
Very truly yours,
Confirmed as of the date set Indicated below our firm name and
forth at the head of this address exactly as we wish to appear
Agreement in the Prospectus
VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC.
By____________________________ ____________________________________
Title_________________________ ____________________________________
____________________________________
Exhibit 3.1
Chapman and Cutler
111 West Monroe Street
Chicago, Illinois 60603
April 23, 1997
Van Kampen American Capital Distributors, Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
Re: Insured Municipals Income Trust, 215th Insured Multi-Series
Gentlemen:
We have served as counsel for Van Kampen American Capital
Distributors, Inc., as Sponsor and Depositor of Insured Municipals Income
Trust, 215th Insured Multi-Series (hereinafter referred to as the
"Fund"), in connection with the preparation, execution and delivery of a
Trust Agreement dated April 23, 1997 between Van Kampen American Capital
Distributors, Inc., as Depositor, American Portfolio Evaluation Services,
a division of Van Kampen American Capital Investment Advisory Corp., as
Evaluator, and The Bank of New York, as Trustee, pursuant to which the
Depositor has delivered to and deposited Bonds listed in the Schedules to
the Trust Agreement with the Trustee and pursuant to which the Trustee
has issued to or on the order of the Depositor a certificate or
certificates representing Units of fractional undivided interest in and
ownership of the several Trusts of said Fund (hereinafter referred to as
the "Units") created under said Trust Agreement.
In connection therewith, we have examined such pertinent records and
documents and matters of law as we have deemed necessary in order to
enable us to express the opinions hereinafter set forth.
Based upon the foregoing, we are of the opinion that:
1. The execution and delivery of the Trust Agreement and the
execution and issuance of certificates evidencing the Units in the
several Trusts of the Fund have been duly authorized; and
2. The certificates evidencing the Units in the several
Trusts of the Fund when duly executed and delivered by the Depositor
and the Trustee in accordance with the aforementioned Trust
Agreement, will constitute valid and binding obligations of such
Trusts and the Depositor in accordance with the terms thereof.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement (File No. 333-17213) relating to the Units
referred to above and to the use of our name and to the reference to our
firm in said Registration Statement and in the related Prospectus.
Respectfully submitted,
Chapman and Cutler
MJK/slm
Exhibit 3.2
Chapman and Cutler
111 West Monroe Street
Chicago, Illinois 60603
April 23, 1997
Van Kampen American Capital Distributors, Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
The Bank of New York
101 Barclay Street
New York, New York 10286
Re: Insured Municipals Income Trust, 215th Insured Multi-Series
Gentlemen:
We have acted as counsel for Van Kampen American Capital
Distributors, Inc., Depositor of Insured Municipals Income Trust, 215th
Insured Multi-Series (the "Fund"), in connection with the issuance of
Units of fractional undivided interest in the several trusts of said Fund
(the "Trusts") under a Trust Agreement dated April 23, 1997 (the
"Indenture") between Van Kampen American Capital Distributors, Inc., as
Depositor, American Portfolio Evaluation Services, a division of Van
Kampen American Capital Investment Advisory Corp., as Evaluator, and The
Bank of New York, as Trustee.
In this connection, we have examined the Registration Statement, the
form of Prospectus proposed to be filed with the Securities and Exchange
Commission, the Indenture and such other instruments and documents as we
have deemed pertinent. For purposes of the following opinions, it is
assumed that each asset of the Trusts is debt the interest on which is
excluded from gross income for federal income tax purposes.
Based upon the foregoing and upon an investigation of such matters
of law as we consider to be applicable, we are of the opinion that, under
existing Federal income tax law:
(i) Each Trust is not an association taxable as a corporation
but will be governed by the provisions of subchapter J (relating to
trusts) of Chapter 1, Internal Revenue Code of 1986 (the "Code").
(ii) Each Unitholder will be considered as owning a pro rata
share of each asset of the respective Trust in the proportion that
the number of Units of such Trust held by him bears to the total
number of Units outstanding of such Trust. Under subpart E,
subchapter J of chapter 1 of the Code, income of each Trust will be
treated as income of each Unitholder of the respective Trust in the
proportion described, and an item of Trust income will have the same
character in the hands of a Unitholder as it would have in the hands
of the Trustee. Accordingly, to the extent that the income of a
Trust consists of interest and original issue discount excludable
from gross income under Section 103 of the Code, such income will be
excludable from Federal gross income of the Unitholders, except in
the case of a Unitholder who is a substantial user (or a person
related to such user) of a facility financed through issuance of any
industrial development bonds or certain private activity bonds held
by the respective Trust. In the case of such Unitholder (and no
other) interest received with respect to his Units attributable to
such industrial development bonds or such private activity bonds is
includable in his gross income. In the case of certain
corporations, interest on the Bonds is included in computing the
alternative minimum tax pursuant to Section 56(c) of the Code, the
environmental tax (the "Superfund Tax") imposed by Section 59A of
the Code, and the branch profits tax imposed by Section 884 of the
Code with respect to U.S. branches of foreign corporations. Under
current Code provisions, the Superfund Tax does not apply to tax
years beginning on or after January 1, 1996. Legislative proposals
have been made that would extend the Superfund Tax.
(iii) Gain or loss will be recognized to a Unitholder upon
redemption or sale of his Units. Such gain or loss is measured by
comparing the proceeds of such redemption or sale with the adjusted
basis of the Units represented by his Certificate. If a Bond is
acquired with accrued interest, that portion of the price paid for
the accrued interest is added to the tax basis of the Bond. When
this accrued interest is received, it is treated as a return of
capital and reduces the tax basis of the Bond. If a Bond is
purchased for a premium, the amount of the premium is added to the
tax basis of the Bond. Bond premium is amortized over the remaining
term of the Bond, and the tax basis of the Bond is reduced each tax
year by the amount of the premium amortized in that tax year.
Accordingly, 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
before the date the Trust acquired ownership of the Bonds (and the
amount of this reduction may exceed the amount of accrued interest
paid to the seller) and, consequently, such Unitholders may have an
increase in taxable gain or reduction in capital loss upon the
disposition of such Units. In addition, such basis will be
increased by the Unitholder's aliquot share of the accrued original
issue discount (and market discount, if the Unitholder elects to
include market discount in income as it accrues) with respect to
each Bond held by the Trust with respect to which there was original
issue discount at the time the Bond was issued (or which was
purchased with market discount) and reduced by the annual
amortization of bond premium, if any, on Bonds held by the Trust.
(iv) If the Trustee disposes of a Trust asset (whether by sale,
payment on maturity, redemption or otherwise) gain or loss is
recognized to the Unitholder and the amount thereof is measured by
comparing the Unitholder's aliquot share of the total proceeds from
the transaction with his basis for his fractional interest in the
asset disposed of. Such basis is ascertained by apportioning the
tax basis for his Units among each of the Trust assets (as of the
date on which his Units were acquired) ratably according to their
values as of the valuation date nearest the date on which he
purchased such Units. A Unitholder's basis in his Units and of his
fractional interest in each Trust asset must be reduced by the
amount of his aliquot share of accrued interest received by the
Trust, if any, on Bonds delivered after the Unitholders pay for
their Units to the extent that such interest accrued on the Bonds
before the date the Trust acquired ownership of the Bonds (and the
amount of this reduction may exceed the amount of accrued interest
paid to the seller), must be reduced by the annual amortization of
bond premium, if any, on Bonds held by the Trust and must be
increased by the Unitholder's share of the accrued original issue
discount (and market discount, if the Unitholder elects to include
market discount in income as it accrues) with respect to each Bond
which, at the time the Bond was issued, had original issue discount
(or which was purchased with market discount).
(v) In the case of any Bond held by the Trust where the
"stated redemption price at maturity" exceeds the "issue price",
such excess shall be original issue discount. With respect to each
Unitholder, upon the purchase of his Units subsequent to the
original issuance of Bonds held by the Trust, Section 1272(a)(7) of
the Code provides for a reduction in the accrued "daily portion" of
such original issue discount upon the purchase of a Bond subsequent
to the Bond's original issue, under certain circumstances. In the
case of any Bond held by the Trust the interest on which is
excludable from gross income under Section 103 of the Code, any
original issue discount which accrues with respect thereto will be
treated as interest which is excludable from gross income under
Section 103 of the Code.
(vi) We have examined the Municipal Bond Unit Investment Trust
Insurance Policies, if any, issued to certain of the Trusts on the
Date of Deposit by AMBAC Indemnity Corporation, Financial Guaranty
Insurance Corporation or a combination thereof. Each such policy,
or a combination of such policies, insures all bonds held by the
Trustee for that particular Trust (other than bonds described in
paragraph (vii)) against default in the prompt payment of principal
and interest. In our opinion, any amount paid under each said
policy, or a combination of said policies, which represents maturing
interest on defaulted obligations held by the Trustee will be
excludable from Federal gross income if, and to the same extent as,
such interest would have been so excludable if paid in 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 bonds, rather than the insurer,
will pay debt service on the bonds. Paragraph (ii) of this opinion
is accordingly applicable to insurance proceeds representing
maturing interest.
(vii) Certain Bonds in the portfolios of certain of the Trusts
have been insured by the issuers thereof against default in the
prompt payment of principal and interest (the "Insured Bonds").
Insurance has been obtained for such Bonds, or, in the case of a
commitment, the Bonds will be ultimately insured under the terms of
such an insurance policy, which are designated as issuer insured
Bonds on the portfolio pages of the respective Trusts in the
Prospectus for the Fund, by the issuer of such Bonds. Insurance on
Insured Bonds is effective so long as such Bonds remain outstanding.
For each of these Insured Bonds, we have been advised that the
aggregate principal amount of such Insured Bonds listed on the
portfolio page for the respective Trust was acquired by the
applicable Trust and are part of the series of such Insured Bonds
listed in the aggregate principal amount. Based upon the assumption
that the Insured Bonds acquired by the applicable Trust are part of
the series covered by an insurance policy or, in the case of a
commitment, will be ultimately insured under the terms of such an
insurance policy, it is our opinion that any amounts received by the
applicable Trust representing maturing interest on such Insured
Bonds will be excludable from Federal gross income if, and to the
same extent as, such interest would have been so excludable if paid
in normal course by the issuer 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 Insured Bonds, rather than the insurer, will
pay debt service on the Insured Bonds. Paragraph (ii) of this
opinion is accordingly applicable to such payment.
Sections 1288 and 1272 of the Code provide a complex set of rules
governing the accrual of original issue discount. These rules provide
that original issue discount accrues either on the basis of a constant
compound interest rate or ratably over the term of the Bond, depending on
the date the Bond was issued. In addition, special rules apply if the
purchase price of a Bond exceeds the original issue price plus the amount
of original issue discount which would have previously accrued based upon
its issue price (its "adjusted issue price"). The application of these
rules will also vary depending on the value of the Bonds on the date a
Unitholder acquires his Units, and the price the Unitholder pays for his
Units.
Because the Trusts do not include any "private activity" bonds
within the meaning of Section 141 of the Code issued on or after
August 8, 1986, none of the Trust Funds' interest income shall be treated
as an item of tax preference when computing the alternative minimum tax.
In the case of corporations, for taxable years beginning after
December 31, 1986, the alternative minimum tax and the Superfund Tax
depend upon the corporation's alternative minimum taxable income ("AMTI")
which is the corporation's taxable income with certain adjustments.
Pursuant to Section 56(c) of the Code, one of the adjustment items
used in computing AMTI and the Superfund Tax of a corporation (other than
an S Corporation, Regulated Investment Company, Real Estate Investment
Trust or REMIC) for taxable years beginning after 1989, is an amount
equal to 75% of the excess of such corporation's "adjusted current
earnings" over an amount equal to its AMTI (before such adjustment item
and the alternative tax net operating loss deduction). "Adjusted current
earnings" includes all tax-exempt interest, including interest on all
Bonds in the Trust, and tax-exempt original issue discount. Under
current Code provisions, the Superfund Tax does not apply to tax years
beginning on or after January 1, 1996. Legislative proposals have been
made that would extend the Superfund Tax.
Effective for tax returns filed after December 31, 1987, all
taxpayers are required to disclose to the Internal Revenue Service the
amount of tax-exempt interest earned during the year.
Section 265 of the Code provides for a reduction in each taxable
year of 100 percent of the otherwise deductible interest on indebtedness
incurred or continued by financial institutions, to which either
Section 585 or Section 593 of the Code applies, to purchase or carry
obligations acquired after August 7, 1986, the interest on which is
exempt from Federal income taxes for such taxable year. Under rules
prescribed by Section 265, the amount of interest otherwise deductible by
such financial institutions in any taxable year which is deemed to be
attributable to tax-exempt obligations acquired after August 7, 1986,
will generally be the amount that bears the same ratio to the interest
deduction otherwise allowable (determined without regard to Section 265)
to the taxpayer for the taxable year as the taxpayer's average adjusted
basis (within the meaning of Section 1016) of tax-exempt obligations
acquired after August 7, 1986, bears to such average adjusted basis for
all assets of the taxpayer. The U.S. Treasury Department has proposed
extending the financial institution rules to all corporations.
We also call attention to the fact that, under Section 265 of the
Code, interest on indebtedness incurred or continued to purchase or carry
Units is not deductible for Federal income tax purposes. Under rules
used by the Internal Revenue Service for determining when borrowed funds
are considered used for the purpose of purchasing or carrying particular
assets, the purchase of Units may be considered to have been made with
borrowed funds even though the borrowed funds are not directly traceable
to the purchase of Units. However, these rules generally do not apply to
interest paid on indebtedness incurred for expenditures of a personal
nature such as a mortgage incurred to purchase or improve a personal
residence.
"The Revenue Reconciliation Act of 1993" (the "Tax Act") subjects
tax-exempt bonds to the market discount rules of the Code effective for
bonds purchased after April 30, 1993. In general, market discount is the
amount (if any) by which the stated redemption price at maturity exceeds
an investor's purchase price (except to the extent that such difference,
if any, is attributable to original issue discount not yet accrued)
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.
We have also examined certain laws of the State of Florida, to
determine their applicability to the Florida IM-IT (the "Florida Trust")
being created as part of the Fund and to the holders of Units in the
Florida Trust who are residents of the State of Florida. "Non-Corporate
Unitholder" means a Unitholder of the Florida Trust who is an individual
not subject to the Florida state income tax on corporations under
Chapter 220, Florida Statutes and "Corporate Unitholder" means a
Unitholder of the Florida Trusts that is a corporation, bank or savings
association or other entity subject to the Florida state income tax on
corporations or franchise tax imposed on banks or savings associations
under Chapter 220, Florida Statutes.
Although we express no opinion with respect thereto, in rendering
the opinion expressed herein, we have assumed that the Bonds were validly
issued by the State of Florida or its instrumentalities or
municipalities. Based on the foregoing, it is our opinion that:
(a) Neither the Florida Trust nor Non-Corporate Unitholders
will be subject to the Florida income tax imposed by Chapter 220,
Florida Statutes. Therefore, any amounts paid to the Florida Trust
or Non-Corporate Unitholders under an insurance policy issued to the
Florida Trust, the Issuers, the Underwriters, or the Sponsors
thereof, or others, which represent maturing interest on defaulted
obligations held by the Trustee will not be subject to the Florida
income tax imposed by Chapter 220, Florida Statutes.
(b) Corporate Unitholders will be subject to Florida income or
franchise taxation under Chapter 220, Florida Statutes (1) on
interest received by the Trust, (2) on payments of interest pursuant
to any insurance policy, (3) on gain realized when Bonds are sold,
redeemed or paid at maturity or when insurance payments with respect
to principal are received by the Trust and (4) on gain on the sale
or redemption of Units, to the extent such items are allocable to
Florida under Chapter 220, Florida statutes. In the case of
Corporate Unitholders that have a commercial domicile in Florida 100
percent of the items of income described in clauses (1) through (4)
of the immediately preceding sentence will be allocable to Florida
to the extent that such income constitutes "nonbusiness income."
(c) Even if interest on indebtedness incurred or continued by
a Unitholder to purchase Units in the Trust is not deductible for
Federal income tax purposes, it will reduce interest income on the
Bonds which is reportable by Corporate Unitholders for Florida
income tax purposes.
(d) Trust Units held by a Florida resident will be includible
in the resident's estate for Florida estate tax purposes, but if
such estate is not subject to the Federal estate tax, the estate
will not be subject to the Florida estate tax. The Florida estate
tax is limited to the amount of the credit for state death taxes
provided for in section 2011 of the Code, less estate taxes paid to
states other than Florida.
(e) Neither the Bonds nor the Units will be subject to the
Florida ad valorem tax, the Florida intangible personal property tax
or the Florida sales or use tax.
Chapman and Cutler has expressed no opinion with respect to taxation
under any other provision of Florida law. Ownership of the Units may
result in collateral Florida tax consequences to certain taxpayers.
Prospective investors should consult their tax advisors as to the
applicability of any such collateral consequence.
We have also examined certain laws of the State of Georgia (the
"State"), to determine their applicability to the Georgia IM-IT Trust
(the "Georgia Trust") being created as part of the Fund and to the
holders of Units in the Georgia Trust who are residents of the State of
Georgia ("Unitholders"). The assets of the Georgia Trust will consist of
interest-bearing obligations issued by or on behalf of the State or
counties, municipalities, authorities or political subdivisions thereof
(the "Georgia Bonds"). Distributions of interest on the Georgia Bonds
received by the Georgia Trust will be made monthly unless a Unitholder
elects to receive them semi-annually. Although we express no opinion
with respect thereto, in rendering the opinion expressed herein, we have
assumed that the Georgia Bonds were validly issued by the State or its
instrumentalities or municipalities, as the case may be. Based on the
foregoing, and review and consideration of existing State laws, it is our
opinion, and we herewith advise you, as follows:
(a) For purposes of income taxation by the State or any of its
counties or municipalities:
(1) The Georgia Trust is not an association taxable as a
corporation and each Unitholder of the Georgia Trust will be
treated as the owner of a pro-rata portion of the Georgia
Trust, and the income of the Georgia Trust will therefore be
treated as the income of the Unitholder;
(2) Interest on the Georgia Bonds which is excludable
from gross income for federal income tax purposes when received
by the Georgia Trust will be exempt from Georgia income
taxation and therefore will not be includible in the income of
the Unitholder for income tax purposes when distributed by the
Georgia Trust and received by the Unitholders;
(3) Each Unitholder of the Georgia Trust will recognize
gain or loss for income tax purposes if the Trustee disposes of
a Georgia Bond (whether by sale, exchange, payment on maturity,
retirement or otherwise) or if the Unitholder redeems or sells
Units of the Georgia Trust to the extent that such transaction
results in a recognized gain or loss for federal income tax
purposes;
(4) Due to the amortization of bond premium and the basis
adjustments required by the Internal Revenue Code, a
Unitholder, under some circumstances, may realize taxable gain
when his or her Units are sold or redeemed prior to the
maturity of Georgia Bonds held by the Georgia Trust for an
amount less than or equal to such Units' original cost;
(5) In the case of Georgia Bonds issued before March 11,
1987 with original issue discount, the amount of gain or loss
recognized for income tax purposes upon such sale or redemption
of Georgia Bonds or Units may differ from the amount recognized
for federal income tax purposes because original issue discount
on such Georgia Bonds may accrue on a ratable basis under
Georgia law; and
(6) Interest on indebtedness incurred by a Unitholder to
purchase or carry Units in the Georgia Trust and Trustee fees
and related expenses incurred by the Georgia Trust which are
not deductible for federal income tax purposes are also not
deductible under Georgia law.
(b) Units of the Georgia Trust are not subject to sales or use
taxation by the State or any political subdivision thereof;
(c) Georgia Bonds are not subject to sales or use taxation by
the State or any political subdivision thereof; and
(d) In the case of Trusts for which an insurance policy or
policies with respect to the payment of principal and interest on
the Georgia Bonds has been obtained by the Depositor, any proceeds
paid under such policy or policies issued to the Georgia Trust, if
any, with respect to the Georgia Bonds in the Georgia Trust which
represent maturing interest on defaulted obligations held by the
Trustee will be exempt from State income taxes if, and to the same
extent as, such interest would have been so exempt if paid by the
issuer of the defaulted obligations provided that, at the time such
policies are purchased, the amounts paid for such policies are
reasonable, customary and consistent with the reasonable expectation
that the issuer of the Georgia Bonds, rather than the insurer, will
pay debt service on the Georgia Bonds. Paragraph a(2) of this
opinion is accordingly applicable to policy proceeds representing
maturing interest.
We have not examined any of the Georgia Bonds to be deposited and
held in the Georgia Trust or the proceedings for the issuance thereof or
the opinions of bond counsel with respect thereto, and therefore express
no opinion as to the exemption from State income taxes of interest on the
Georgia Bonds if received directly by a Unitholder.
Very truly yours,
Chapman and Cutler
MJK/slm
Exhibit 3.3
Kroll & Tract LLP
520 Madison Avenue
New York, New York 10022-4235
April 23, 1997
Insured Municipals Income Trust,
215th Insured Multi-Series
c/o The Bank of New York,
As Trustee
101 Barclay Street, 17 West
New York, New York 10286
Dear Sirs:
We have acted as special counsel for the Insured Municipals Income Trust,
215th Insured Multi-Series (the "Fund") consisting of Insured Municipals
Income Trust, Series 388, California Insured Municipals Income Trust, Series
165, Florida Insured Municipals Income Trust, Series 114 and Georgia Insured
Municipals Income Trust, Series 84 (individually the "Trusts" and in the
aggregate "Trusts") for the purposes of determining the applicability of
certain New York taxes under the circumstances hereinafter described.
The Fund is created pursuant to a Trust Agreement (the "Indenture"),
dated as of today (the "Date of Deposit") among Van Kampen American Capital
Distributors, Inc. (the "Depositor"), 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 "Trustee"). As described
in the prospectus relating to the Fund dated today to be filed as an amendment
to a registration statement previously filed with the Securities and Exchange
Commission (File No. 333-17213) under the Securities Act of 1933, as amended
(the "Prospectus" and the "Registration Statement"), the objectives of the
Fund are the generation of income exempt from Federal taxation and as regards
the Trusts denominated with a state name exempt from income tax, if any, of
the State denominated in the name of that Trust to the extent indicated in the
Prospectus. No opinion is expressed herein with regard to the Federal or
State (other than New York) tax aspects of the bonds, the Fund, the Trusts,
units of each Trust (the "Units"), or any interest, gains or losses in respect
thereof.
As more fully set forth in the Indenture and in the Prospectus, the
activities of the Trustee will include the following:
On the Date of Deposit, the Depositor will deposit with the Trustee with
respect to each Trust, the total principal amount of interest bearing
obligations and/or contracts for the purchase thereof together with an
irrevocable letter of credit in the amount required for the purchase price and
accrued interest, if any, along with an insurance policy purchased by the
Depositor evidencing the insurance guaranteeing the timely payment of
principal and interest of some of the obligations comprising the corpus of the
Trusts other than those obligations the timely payment of principal and
interest of which are guaranteed by an insurance policy purchased by the
issuer thereof or a prior owner, which may include the Depositor prior to the
Date of Deposit, all as more fully set forth in the Prospectus and the
Registration Statement with respect to each Trust.
We understand that with respect to the obligations described in the
preceding paragraph all insurance policies, whether purchased by the
Depositor, the issuer or a prior owner, provide, or will provide, that the
amount paid by the insurer in respect of any bond may not exceed the amount of
principal and interest due on the bond and such payment will in no event
relieve the issuer from its continuing obligation to pay such defaulted
principal and interest in accordance with the terms of the obligation.
The Trustee will not participate in the selection of the obligations to
be deposited in the Fund, and, upon the receipt thereof, will deliver to the
Depositor a registered certificate for the number of Units representing the
entire corpus of each Trust as more fully set forth in the Prospectus and the
Registration Statement. The Units, which are represented by certificates (the
"Certificates"), will be offered to the public by the Prospectus upon the
effectiveness of the Registration Statement.
The duties of the Trustee, which are ministerial in nature, will consist
primarily of crediting the appropriate accounts with interest received by each
Trust and with the proceeds from the disposition of obligations held in each
Trust and the distribution of such interest and proceeds to the Unit holders
of that Trust. The Trustee will also maintain records of the registered
holders of Certificates representing an interest in each Trust and administer
the redemption of Units by such Certificate holders and may perform certain
administrative functions with respect to an automatic investment option.
Generally, obligations held in the Fund may be removed therefrom by the
Trustee only upon redemption prior to their stated maturity, at the direction
of the Depositor in the event of an advance refunding or upon the occurrence
of certain other specified events which adversely affect the sound investment
character of the Fund, such as default by the issuer in payment of interest or
principal on the obligation and no provision for payment is made therefor
either pursuant to the portfolio insurance or otherwise and the Depositor
fails to instruct the Trustee, within thirty (30) days after notification, to
hold such obligation.
Prior to the termination of the Fund, the Trustee is not empowered to,
and we assume will not, sell Bonds, except from a list furnished by the
Depositor and only for the purposes of redeeming Units tendered to it and of
paying expenses for which funds are not available. The Trustee does not have
the power to vary the investment of any Unit holder in the Fund, and under no
circumstances may the proceeds of sale of any obligations held by the Fund be
used to purchase new obligations to be held therein.
Article 9-A of the New York Tax Law imposes a franchise tax on business
corporations, and, for purposes of that Article, Section 208(1) defines the
term "corporation" to include, among other things, "any business conducted by
a trustee or trustees wherein interest or ownership is evidenced by
certificate or other written instrument."
The Regulations promulgated under Section 208 provide as follows:
A business conducted by a trustee or trustees in which
interest or ownership is evidenced by certificate or other
written instrument includes, but is not limited to, an
association commonly referred to as a "business trust" or
"Massachusetts trust". In determining whether a trustee
or trustees are conducting a business, the form of the
agreement is of significance but is not controlling. The
actual activities of the trustee or trustees, not their
purposes and powers, will be regarded as decisive factors
in determining whether a trust is subject to tax under
Article 9-A. The mere investment of funds and the
collection of income therefrom, with incidental
replacement of securities and reinvestment of funds, does
not constitute the conduct of a business in the case of a
business conducted by a trustee or trustees. 20 NYCRR 1-
2.5(b)(2) (July 11, 1990).
New York cases dealing with the question of whether a trust will be
subject to the franchise tax have also delineated the general rule that where
a trustee merely invests funds and collects and distributes the income
therefrom, the trust is not engaged in business and is not subject to the
franchise tax. Burrell v. Lynch, 274 A.D. 347, 84 N.Y.S.2d 171 (3rd Dept.
1948), order resettled, 274 A.D. 1083, 85 N.Y.S.2d 705 (3rd Dept. 1949).
In an opinion of the Attorney General of the State of New York, 47 N.Y.
Att'y. Gen. Rep. 213 (Nov. 24, 1942), it was held that where the trustee of an
unincorporated investment trust was without authority to reinvest amounts
received upon the sales of securities and could dispose of securities making
up the trust only upon the happening of certain specified events or the
existence of certain specified conditions, the trust was not subject to the
franchise tax.
In the instant situation, the Trustee is not empowered to, and we assume
will not, sell obligations contained in the corpus of the Fund and reinvest
the proceeds therefrom. Further, the power to sell such obligations is
limited to circumstances in which the creditworthiness or soundness of the
obligation is in question or in which cash is needed to pay redeeming Unit
holders or to pay expenses, or where the Fund is liquidated pursuant to the
termination of the Indenture. Only in circumstances in which the issuer of an
obligation attempts to refinance it can the Trustee exchange an obligation for
a new security. In substance, the Trustee will merely collect and distribute
income and will not reinvest any income or proceeds, and the Trustee has no
power to vary the investment of any Unit holder in the Fund.
Under Subpart E of Part I, Subchapter J of Chapter 1 of the Internal
Revenue Code of 1986, as amended (the "Code"), the grantor of a trust will be
deemed to be the owner of the trust under certain circumstances, and therefore
taxable on his proportionate interest in the income thereof. Where this
Federal tax rule applies, the income attributed to the grantor will also be
income to him for New York income tax purposes. (See TSB-M-78(9) (C),
New York Department of Taxation and Finance, June 23, 1978).
By letter, dated today, Messrs. Chapman and Cutler, counsel for the
Depositor, rendered their opinion that each Unit holder of a Trust will be
considered as owning a share of each asset of that Trust in the proportion
that the number of Units held by such holder bears to the total number of
Units outstanding and the income of a Trust will be treated as the income of
each Unit holder of that Trust in said proportion pursuant to Subpart E of
Part I, Subchapter J of Chapter 1 of the Code.
Based on the foregoing and on the opinion of Messrs. Chapman and Cutler,
counsel for the Depositor, dated today, upon which we specifically rely, we
are of the opinion that under existing laws, rulings, and court decisions
interpreting the laws of the State and City of New York:
1. Each Trust will not constitute an association taxable as a
corporation under New York law, and, accordingly, will not be subject to tax
on its income under the New York State franchise tax or the New York City
general corporation tax.
2. The income of each Trust will be treated as the income of the Unit
holders under the income tax laws of the State and City of New York.
3. Unit holders who are not residents of the State of New York are not
subject to the income tax law thereof with respect to any interest or gain
derived from the Fund or any gain from the sale or other disposition of the
Units, except to the extent that such interest or gain is from property
employed in a business, trade, profession or occupation carried on in the
State of New York.
In addition, we are of the opinion no New York State stock transfer tax
will be payable in respect of any transfer of the Certificates by reason of
the exemption contained in paragraph (a) of Subdivision 8 of Section 270 of
the New York Tax Law.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement relating to the Units and to the use of our name and
the reference to our firm in the Registration Statement and in the Prospectus.
Very truly yours,
Kroll & Tract LLP
MNS:hbm
Exhibit 3.4
Orrick, Herrington & Sutcliffe
Old Federal Reserve Bank Building
400 Sansome Street
San Francisco, California 94111
April 23, 1997
The Bank of New York
through its Wall Street Trust Division
101 Barclay Street
New York, New York 10286
Re: California Insured Municipals Income Trust, Series 165
Dear Sirs:
We have acted as special California counsel for Van Kampen American
Capital Distributors, Inc., as Sponsor and Depositor of California
Insured Municipals Income Trust, Series 165, (the "Fund"), in connection
with the issuance under the Trust Indenture and Agreement dated April 23,
1997, among Van Kampen American Capital Distributors, Inc., as Sponsor
and Depositor, American Portfolio Evaluation Services, a division of Van
Kampen American Capital Investment Advisory Corp., as Evaluator, and The
Bank of New York through its Wall Street Trust division, as Trustee, of
3,706 Units of fractional undivided interest in the Fund (the "Units")
in exchange for certain bonds, as well as "regular-way" and "when-issued"
contracts for the purchase of bonds (such bonds and contracts are
hereinafter referred to collectively as the "Securities").
In connection therewith, we have examined such corporate records,
certificates and other documents and such questions of law as we have
deemed necessary or appropriate for the purpose of this opinion, and, on
the basis of such examination, and upon existing provisions of the
Revenue and Taxation Code of the State of California, we are of the
opinion that:
1. The Fund is not an association taxable as a corporation
and the income of the Fund will be treated as the income of the
certificateholders under the income tax laws of California.
2. Amounts treated as interest on the underlying securities
which are exempt from tax under California personal income tax and
property tax laws when received by the Fund will, under such laws,
retain their status as tax-exempt interest when distributed to
certificateholders. However, interest on the underlying securities
attributed to a certificateholder which is a corporation subject to
the California franchise tax laws may be includable in its gross
income for purposes of determining its California franchise tax.
3. Under California income tax law, each certificateholder in
the Fund will have a taxable event when the Fund disposes of a
security (whether by sale, exchange, redemption, or payment at
maturity) or when the certificateholder redeems or sells Units.
Because of the requirement that tax cost basis be reduced to reflect
amortization of bond premium, under some circumstances a
certificateholder may realize taxable gain when Units are sold or
redeemed for an amount equal to, or less than, their original cost.
The total tax cost of each Unit to a certificateholder is allocated
among each of the bond issues held in the Fund (in accordance with
the proportion of the Fund comprised by each bond issue) in order to
determine his per unit tax cost for each bond issue; and the tax
cost reduction requirements relating to amortization of bond premium
will apply separately to the per unit cost of each bond issue.
Certificateholders' bases in their Units, and the bases for their
fractional interest in each Fund asset, may have to be adjusted for
their pro rata share of accrued interest received, if any, on
securities delivered after the certificateholders' respective
settlement dates.
4. Under the California personal property tax laws, bonds
(including the Securities) or any interest therein is exempt from
such tax.
5. Any proceeds paid under the insurance policy issued to the
Trustee of the fund with respect to the Securities which represent
maturing interest on defaulted obligations held by the Trustee will
be exempt from California personal income tax if, and to the same
extent as, such interest would have been so exempt if paid by the
issuer of the defaulted obligations.
6. Under Section 17280(b)(2) of the California Revenue and
Taxation Code, interest on indebtedness incurred or continued to
purchase or carry Units of the Trust is not deductible for the
purposes of the California personal income tax. While there
presently is no California authority interpreting this provision,
Section 17280(b)(2) directs the California Franchise Tax Board to
prescribe regulations determining the proper allocation and
apportionment of interest costs for this purpose. The Franchise Tax
Board has not yet proposed or prescribed such regulations. In
interpreting the generally similar Federal provision, the Internal
Revenue Service has taken the position that such indebtedness need
not be directly traceable to the purchase or carrying of Units
(although the Service has not contended that a deduction for
interest on indebtedness incurred to purchase or improve a personal
residence or to purchase goods or services for personal consumption
will be disallowed). In the absence of conflicting regulations or
other California authority, the California Franchise Tax Board
generally has interpreted California statutory tax provisions in
accord with Internal Revenue Service interpretations of similar
Federal provisions.
Opinions relating to the validity of securities and the exemption of
interest thereon from State of California income tax are rendered by bond
counsel to the issuing authority at the time securities are issued and we
have relied solely upon such opinions, or, as to securities not yet
delivered, forms of such opinions contained in official statements
relating to such securities. Except in certain instances in which we
acted as bond counsel to issuers of securities, and as such made a review
of proceedings relating to the issuance of certain securities at the time
of their issuance, we have not made any review of proceedings relating to
the issuance of securities or the bases of bond counsels' opinions.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement (SEC No. 333-17213) relating to the Units referred
to above and to the use of our name and to the reference to our firm in
said Registration Statement and in the related Prospectus.
Very truly yours,
Orrick, Herrington & Sutcliffe
Exhibit 4.1
Interactive Data
14 West Street
New York, NY 10005
April 22, 1997
Van Kampen American Capital Distributors, Inc.
One Parkview Plaza
Oakbrook Terrace, IL 60181
Re: Insured Municipals Income Trust, 215th Insured Multi-Series
(A Unit Investment Trust) Registered Under the Securities Act of
1933 File No. 333-17213
Gentlemen:
We have examined the Registration Statement for the above captioned
Fund.
We hereby consent to the reference in the Prospectus and Registration
Statement for the above captioned Fund to Interactive Data Corporation, as
the Evaluator, and to the use of the obligations prepared by us which are
referred to in such Prospectus and Statement.
You are authorized to file copies of this letter with the Securities
and Exchange Commission.
Very truly yours,
James Perry
Vice President
Exhibit 4.2
Standard & Poor's
A division of The McGraw-Hill Companies, Inc.
25 Broadway
New York, New York 10004-1064
Van Kampen American Capital
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
Re: Insured Municipals Income Trust, 215th Insured Multi-Series - consisting
of: Insured Municipals Income Trust, Series 388;
California Insured Municipals Income Trust, Series 165;
Florida Insured Municipals Income Trust, Series 114 and
Georgia Insured Municipals Income Trust, Series 84
Pursuant to your request for a Standard & Poor's rating on the units of
the above-captioned trust, SEC #333-17213, we have reviewed the information
presented to us and have assigned a 'AAA' rating to the units of the trust and
a 'AAA' rating to the securities contained in the trust for as long as they
remain in the trust. The ratings are direct reflections, of the portfolio of
the trust, which will be composed solely of securities covered by bond
insurance policies that insure against default in the payment of principal and
interest on the securities so long as they remain in the trust. Since such
policies have been issued by one or more insurance companies which have been
assigned a 'AAA' claims paying ability rating by S&P, S&P has assigned a 'AAA'
rating to the units of the trust and to the securities contained in the trust
for as long as they remain in the trust.
Standard & Poor's will maintain surveillance on the "AAA" Rating Until
May 23, 1998. On this date, the rating will be automatically withdrawn by
Standard & Poor's unless a post effective letter is requested by the trust.
You have permission to use the name of Standard & Poor's Corporation and
the above-assigned ratings in connection with your dissemination of
information relating to these units, provided that it is understood that the
ratings are not "market" ratings nor recommendations to buy, hold, or sell the
units of the trust or the securities contained in the trust. Further, it
should be understood the rating on the units does not take into account the
extent to which fund expenses or portfolio asset sales for less than the
fund's purchase price will reduce payment to the unit holders of the interest
and principal required to be paid on the portfolio assets. S&P reserves the
right to advise its own clients, subscribers, and the public of the ratings.
S&P relies on the sponsor and its counsel, accountants, and other experts for
the accuracy and completeness of the information submitted in connection with
the ratings. S&P does not independently verify the truth or accuracy of any
such information.
This letter evidences our consent to the use of the name of Standard &
Poor's Corporation in connection with the rating assigned to the units in the
registration statement or prospectus relating to the units or the trust.
However, this letter should not be construed as a consent by us, within the
meaning of Section 7 of the Securities Act of 1933, to the use of the name of
Standard & Poor's Corporation in connection with the ratings assigned to the
securities contained in the trust. You are hereby authorized to file a copy
of this letter with the Securities and Exchange Commission.
Please be certain to send us three copies of your final prospectus as
soon as it becomes available. Should we not receive them within a reasonable
time after the closing or should they not conform to the representations made
to us, we reserve the right to withdraw the rating.
We are pleased to have had the opportunity to be of service to you. If
we can be of further help, please do not hesitate to call upon us.
Sincerely,
Sanford B. Bragg
Managing Director
Exhibit 4.3
Independent Certified Public Accountants' Consent
We have issued our report dated April 23, 1997 on the statements of
condition and related bond portfolios of Insured Municipals Income Trust,
215th Insured Multi-Series (IM-IT, California IM-IT, Florida IM-IT and
Georgia IM-IT Trusts) as of April 23, 1997 contained in the Registration
Statement on Form S-6 and Prospectus. We consent to the use of our
report in the Registration Statement and Prospectus and to the use of our
name as it appears under the caption "Trust Administration-Independent
Certified Public Accountants" in Part II of the Prospectus.
Grant Thornton LLP
Chicago, Illinois
April 23, 1997
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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