File No. 33-55893
CIK #896714
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 and Investors'
Quality Tax-Exempt Trust, Multi-Series 235
B. Name of Depositor: Van Kampen Merritt Inc.
C. Complete address of Depositor's principal executive offices:
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
D. Name and complete address of agents for service:
Chapman and Cutler Van Kampen Merritt Inc.
Attention: Mark J. Kneedy Attention: John C. Merritt, Chairman
111 W. Monroe Street One Parkview Plaza
Chicago, Illinois 60603 Oakbrook Terrace, Illinois 60181
E. Title and amount of securities being registered: 39,329* Units
F. Proposed maximum offering price to the public of the securities being
registered:
($1020 per Unit**): $40,115,580
G. Amount of filing fee, computed at one twenty-ninth of 1 percent of proposed
maximum aggregate offering
price to the public: $13,832.94 ($351.72 previously paid)
H. Approximate date of proposed sale to the public:
as soon as practicable after the Effective Date of the Registration Statement
/ X /: Check box if it is proposed that this filing will become effective on
November 8, 1994 pursuant to Rule 487.
26,219 Units registered for primary distribution.
13,110 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 and
Investors' Quality Tax-Exempt Trust
Multi-Series 235
Cross Reference Sheet
Pursuant to Rule 404(c) of Regulation C
under the Securities Act of 1933
(Form N-8B-2 Items Required by Instruction
1 as to Prospectus on Form S-6)
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
I. Organization and General Information
1. (a) Name of trust )
(b) Title of securities issued ) Prospectus Front Cover Page
2. Name and address of Depositor ) Introduction
) Summary of Essential Financial
) Information
) Trust Administration
3. Name and address of Trustee ) Introduction
) Summary of Essential Financial
) Information
) Trust Administration
4. Name and address of principal ) Underwriting
underwriter )
5. Organization of trust ) Introduction
6. Execution and termination of ) Introduction
Trust Indenture and Agreement ) Trust Administration
7. Changes of Name ) *
8. Fiscal year ) *
9. Material Litigation ) *
II. General Description of the Trust and Securities of the Trust
10. General information regarding ) Introduction
trust's securities and rights) Unitholder Explanations
of security holders ) Trust Information
) Trust Administration
11. Type of securities comprising ) Introduction
units ) Trust Information
) Trust Portfolios
12. Certain information regarding ) *
periodic payment certificates)
13. (a) Load, fees, charges and ) Introduction
expenses ) Summary of Essential Financial
) Information
) Unitholder Explanations
) Trust Information
) Trust Administration
(b) Certain information regard-) *
ing periodic payment plan)
certificates )
(c) Certain percentages ) Introduction
) Summary of Essential Financial
) Information
) Unitholder Explanations
(d) Certain other fees, ) Unitholder Explanations
expenses or charges ) Trust Administration
payable by holders )
(e) Certain profits to be ) Unitholder Explanations
received by depositor, ) Underwriting
principal underwriter, ) Notes to Portfolios
trustee or affiliated )
persons )
(f) Ratio of annual charges ) *
to income )
14. Issuance of trust's securities ) Unitholder Explanations
15. Receipt and handling of payments) *
from purchasers )
16. Acquisition and disposition of ) Introduction
underlying securities ) Unitholder Explanations
) Trust Administration
17. Withdrawal or redemption ) Unitholder Explanations
) Trust Administration
18. (a) Receipt and disposition ) Introduction
of income ) Unitholder Explanations
(b) Reinvestment of distribu- ) *
tions )
(c) Reserves or special funds ) Unitholder Explanations
) Trust Administration
(d) Schedule of distributions ) *
19. Records, accounts and reports ) Unitholder Explanations
) Trust Administration
20. Certain miscellaneous provisions) Trust Administration
of Trust Agreement )
21. Loans to security holders ) *
22. Limitations on liability ) Trust Portfolios
) Trust Administration
23. Bonding arrangements ) *
24. Other material provisions of ) *
trust indenture or agreement )
III. Organization, Personnel and Affiliated Persons of Depositor
25. Organization of Depositor ) Trust Administration
26. Fees received by Depositor ) Trust Administration
27. Business of Depositor ) Trust Administration
28. Certain information as to )
officials and affiliated ) *
persons of Depositor )
29. Companies owning securities of ) *
Depositor )
30. Controlling persons of Depositor) *
31. Compensation of Directors ) *
32. Compensation of Directors ) *
33. Compensation of Employees ) *
34. Compensation to other persons ) Unitholder Explanations
IV. Distribution and Redemption of Securities
35. Distribution of trust's ) Introduction
securities by states ) Settlement of Bonds in the Trusts
36. Suspension of sales of trust's ) *
securities )
37. Revocation of authority to ) *
distribute )
38. (a) Method of distribution )
(b) Underwriting agreements ) Unitholder Explanations
(c) Selling agreements )
39. (a) Organization of principal )
underwriter )
) Trust Administration
(b) N.A.S.D. membership by )
principal underwriter )
40. Certain fees received by ) *
principal underwriter )
41. (a) Business of principal ) Trust Administration
underwriter )
(b) Branch offices of principal) *
underwriter )
(c) Salesmen of principal ) *
underwriter )
42. Ownership of securities of the ) *
trust )
43. Certain brokerage commissions )
received by principal ) *
underwriter )
44. (a) Method of valuation ) Introduction
) Summary of Essential Financial
) Information
) Unitholder Explanations
) Trust Administration
(b) Schedule as to offering ) *
price )
(c) Variation in offering price) Unitholder Explanations
to certain persons )
45. Suspension of redemption rights) *
46. (a) Redemption valuation ) Unitholder Explanations
) Trust Administration
(b) Schedule as to redemption ) *
price )
47. Purchase and sale of interests ) Unitholder Explanations
in underlying securities ) Trust Administration
V. Information Concerning the Trustee or Custodian
48. Organization and regulation of ) Trust Administration
trustee )
49. Fees and expenses of trustee ) Summary of Essential Financial
) Information
) Trust Administration
50. Trustee's lien ) Trust Administration
VI. Information Concerning Insurance of Holders of Securities
51. Insurance of holders of trust's)
securities ) *
VII. Policy of Registrant
52. (a) Provisions of trust agree-)
ment with respect to )
replacement or elimi- ) Trust Administration
nation of portfolio )
securities )
(b) Transactions involving )
elimination of underlying) *
securities )
(c) Policy regarding substitu-) Trust Administration
tion or elimination of )
underlying securities )
(d) Fundamental policy not ) *
otherwise covered )
53. Tax Status of trust ) Trust Information
) Other Matters
VIII. Financial and Statistical Information
54. Trust's securities during ) *
last ten years )
55. )
)
56. Certain information regarding ) *
)
57. Periodic payment certificates )
58. )
59. Financial statements (Instruc- ) Other Matters
tions 1(c) to Form S-6) )
__________________________________
* Inapplicable, omitted, answer negative or not required
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This Prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any State.
Subject To Completion
November 8, 1994
Van Kampen Merritt
Insured Municipals Income Trust
and Investors' Quality Tax-Exempt Trust, Multi-Series 235
IM-IT 336
IM-IT 81st Intermediate
Colorado IM-IT 71
Michigan IM-IT 121
Missouri IM-IT 85
South Carolina Quality 77
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 six underlying separate unit investment trusts designated as Insured
Municipals Income Trust, Series 336 (the "IM-IT"), Insured Municipals
Income Trust, 81st Intermediate Series (the "IM-IT Intermediate Trust"
), Colorado Insured Municipals Income Trust, Series 71 (the "Colorado
IM-IT Trust"), Michigan Insured Municipals Income Trust, Series 121 (the
"Michigan IM-IT Trust"), Missouri Insured Municipals Income Trust,
Series 85 (the "Missouri IM-IT Trust") and South Carolina Investors'
Quality Tax-Exempt Trust, Series 77 (the "South Carolina Quality Trust"
). The various trusts are collectively referred to herein as the "
Trusts", the Colorado IM-IT, Michigan IM-IT, Missouri IM-IT and South
Carolina Quality Trusts are sometimes collectively referred to herein as the
"State Trusts", while the IM-IT, IM-IT Intermediate, Colorado IM-IT,
Michigan IM-IT and Missouri IM-IT Trusts are sometimes collectively referred
to herein as the "Insured Trusts"and the South Carolina Quality Trust
is sometimes referred to herein as the "Quality Trust". Each Trust
initially consists of delivery statements relating to contracts to purchase
securities and, thereafter, will consist of such securities as may continue to
be held (the "Bonds"or "Securities"). Such Securities are
interest-bearing obligations issued by or on behalf of municipalities and
other governmental authorities, the interest on which is, in the opinion of
recognized bond counsel to the issuing governmental authority, exempt from all
Federal income taxes under the existing law. In addition, the interest income
of each State Trust is, in the opinion of counsel, exempt to the extent
indicated from state and local taxes, when held by residents of the state
where the issuers of Bonds in such Trust are located.
"AAA"Rating for the Insured Trusts 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"on page21. Insurance obtained by an Insured
Trust applies only while Bonds are retained in such Trust while insurance
obtained on Preinsured Bonds is effective so long as such Bonds are
outstanding. The Trustee, upon the sale of a Bond insured under an insurance
policy obtained by an Insured Trust, has a right to obtain from the insurer
involved permanent insurance for such Bond upon the payment of a single
predetermined insurance premium and any expenses related thereto from the
proceeds of the sale of such Bond. Insurance relates only to the Bonds in a
Trust and not to the Units offered hereby or to the market value thereof. As a
result of such insurance, the Units of each Insured Trust have received a
rating of "AAA"by Standard & Poor's Corporation. Standard & Poor's
Corporation has indicated that this rating is not a recommendation to buy,
hold or sell Units nor does it take into account the extent to which expenses
of each Insured Trust or sales by each Insured Trust of Bonds for less than
the purchase price paid by such Trust will reduce payments to Unitholders of
the interest and principal required to be paid on such Bonds. See "
Unitholder Explanations--Insurance on the Bonds in the Insured Trusts". No
representation is made as to any insurer's ability to meet its commitments.
Public Offering Price. The Public Offering Price of the Units of each Trust
during the initial offering period is equal to the aggregate offering price of
the Securities in such Trust's portfolio and cash, if any, in the Principal
Account held or owned by such Trust Fund plus the applicable sales charge plus
Purchased Interest and accrued interest, if any. After the initial public
offering period, the secondary market Public Offering Price of each Trust will
be equal to the aggregate bid price of the Securities in such Trust and cash,
if any, in the Principal Account held or owned by such Trust Fund plus the
applicable sales charge plus Purchased Interest and accrued interest, if any.
Sales charges for the Trusts in the initial market, expressed both as a
percentage of the Public Offering Price (excluding Purchased Interest) and as
a percentage of the aggregate offering price of the Securities, are set forth
in footnote (2) under "Summary of Essential Financial Information".
For sales charges in the secondary market, see "Unitholder
Explanations--Public Offering". If the Securities in each Trust were
available for direct purchase by investors, the purchase price of the
Securities would not include the sales charge included in the Public Offering
Price of the Units. During the initial offering period, the sales charge is
reduced on a graduated scale for sales involving at least 100 Units. If Units
were available for purchase at the close of business on the day before the
Date of Deposit (except for the IM-IT as of 8:00 A.M. Central Time on the Date
of Deposit), the Public Offering Price per Unit would have been that amount
set forth in the "Summary of Essential Financial Information"for each
Trust. See "Unitholder Explanations--Public Offering".
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
Estimated Current Return and Estimated Long-Term Return. The annual Estimated
Current Return and Estimated Long-Term Return to Unitholders as of the close
of business on the day before the Date of Deposit (except for the IM-IT as of
8:00 A.M. Central Time on the Date of Deposit) were as set forth under "
Per Unit Information"for each Trust. The methods of calculating Estimated
Current Return and Estimated Long-Term Return are set forth in the footnotes
to the "Per Unit Information"for each Trust.
Objectives of The Fund. The objectives of the Fund are income exempt from
Federal income tax and, in the case of a State Trust, Federal and state income
tax (if any) and conservation of capital through an investment in diversified
portfolios of Federal and state tax-exempt obligations. There is, of course,
no guarantee that the Fund will achieve its objectives. The Fund may be an
appropriate investment vehicle for investors who desire to participate in a
portfolio of tax-exempt fixed income securities with greater diversification
than they might be able to acquire individually. In addition, securities of
the type deposited in the Fund are often not available in small amounts. Units
of the Trust are not deposits or obligations of, or guaranteed or endorsed by,
any bank and are not federally insured or otherwise protected by the Federal
Deposit Insurance Corporation, the Federal Reserve Board or any other agency
and involve investment risk, including the possible loss of principal.
Distributions. Purchasers of Units will receive distributions on a monthly
basis. See "Unitholder Explanations--Settlement of Bonds in the Trusts"
. Record dates will be the first day of each month. Distributions will be made
on the fifteenth day of the month subsequent to the respective record dates.
Market for Units. Although not obligated to do so, the Sponsor, Van Kampen
Merritt Inc., intends to, and certain of the other Underwriters may, maintain
a secondary market for the Units at prices based upon the aggregate bid prices
of the Securities in the respective Trusts plus Purchased Interest; however,
during the initial offering period such prices will be based upon the
aggregate offering prices of the Securities plus Purchased Interest. If such a
market is not maintained and no other over-the-counter market is available, a
Unitholder will be able to dispose of his Units only through redemption at
prices based upon the bid prices of the underlying Securities plus Purchased
Interest (see "Unitholder Explanations--Public Offering--Redemption of
Units"and "Unitholder Explanations--Public Offering--Market for
Units").
Reinvestment Option. Unitholders have the opportunity to have their
distributions reinvested into an open-end, management investment company as
described herein. See "Unitholder Explanations--Public
Offering--Reinvestment Option".
Risk Factors. An investment in the Trusts should be made with an understanding
of the risks associated therewith, including, among other factors, the
inability of the issuer or an insurer to pay the principal of or interest on a
bond when due, volatile interest rates, early call provisions, and changes to
the tax status of the Bonds. See "Unitholder Explanations--Settlement of
Bonds in the Trusts--Risk Factors".
<TABLE>
INSURED MUNICIPALS INCOME TRUST
AND INVESTORS' QUALITY TAX EXEMPT TRUST,
Multi-Series 235
Summary of Essential Financial Information
At the Close of Business on the day before the Date of Deposit:
November 7, 1994
(except for the IM-IT as of 8:00 A.M. Central Time
on the Date of Deposit: November 8, 1994)
Sponsor: Van Kampen Merritt Inc.
Evaluator: American Portfolio Evaluation Services
(A division of a subsidiary of the Sponsor)
Trustee: The Bank of New York
<CAPTION>
IM-IT
Intermediate Colorado
GENERAL INFORMATION IM-IT Trust IM-IT Trust
<S> <C> <C> <C>
Principal Amount (Par Value) of Securities in Trust....................... $ 9,125,000 $ 5,000,000 $ 3,025,000
Number of Units........................................................... 9,044 5,000 3,020
Fractional Undivided Interest in the Trust per Unit....................... 1/9,044 1/5,000 1/3,020
Principal Amount (Par Value) of Securities per Unit <F1>.................. $ 1,008.96 $ 1,000.00 $ 1,001.66
Public Offering Price: ...................................................
Aggregate Offering Price of Securities in Portfolio...................... $ 8,542,474 $ 4,851,210 $ 2,841,540
Aggregate Offering Price of Securities per Unit.......................... $ 944.55 $ 970.24 $ 940.91
48
Sales Charge <F2>........................................................ $ .66 $ 39.37 $ 48.47
Purchased Interest <F3>.................................................. $ 61,409 $ 44,268 $ 32,059
Purchased Interest per Unit <F3>......................................... $ 6.79 $ 8.85 $ 10.62
Public Offering Price per Unit <F3>...................................... $ 1,000.00 $ 1,018.46 $ 1,000.00
Redemption Price per Unit, including Purchased Interest <F3>.............. $ 943.63 $ 971.62 $ 943.93
Secondary Market Repurchase Price per Unit, including 951
Purchased Interest <F3>.................................................. $ .34 $ 979.09 $ 951.53
Excess of Public Offering Price per Unit Over Redemption Price per Unit... $ 56.37 $ 46.84 $ 56.07
Excess of Sponsor's Initial Repurchase Price per Unit Over Redemption
Price per Unit........................................................... $ 7.71 $ 7.47 $ 7.60
Minimum Value of the Trust under which Trust Agreement may be
terminated............................................................... $ 1,825,000 $ 1,000,000 $ 605,000
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Minimum Principal Distribution..........$1.00 per Unit
First Settlement Date...................November 16, 1994
Evaluator's Annual Supervisory Fee......Maximum of $0.25 per Unit
Evaluator's Annual Evaluation Fee<F4>...$0.30 per $1,000 principal amount of Bonds
Evaluations for purpose of sale, purchase or redemption of Units are made as
of 4:00 P.M. Eastern time on days of trading on the New York Stock Exchange
next following receipt of an order for a sale or purchase of Units or receipt
by The Bank of New York of Units tendered for redemption.
<FN>
<F1>Many unit investment trusts comprised of municipal securities issue a number
of units such that each unit represents approximately $1,000 principal amount
of underlying securities. The Sponsor, on the other hand, in determining the
number of Units for each Trust, other than IM-IT Limited Maturity, IM-IT
Intermediate and IM-IT Short Intermediate Trusts, has elected not to follow
this format but rather to provide that number of Units which will establish as
close as possible as of the Date of Deposit a Public Offering Price per Unit
of $1,000. For IM-IT Limited Maturity, IM-IT Intermediate and IM-IT Short
Intermediate Trusts, on the other hand, each unit represents $1,000 principal
amount of underlying securities in such Trust on the Date of Deposit.
<F2>Sales charges for the Trusts, expressed as a percentage of the Public Offering
Price per Unit (excluding Purchased Interest) and in parenthesis as a
percentage of the aggregate offering price of the Securities, are as follows:
an IM-IT or a State Trust - 4.9% (5.152%); an IM-IT Limited Maturity Trust -
4.3% (4.493%); an IM-IT Intermediate Trust - 3.9% (4.058%); an IM-IT Short
Intermediate Trust - 3.0% (3.093%).
<F3>Purchased Interest is a portion of the unpaid interest that has accrued on the
Bonds from the later of the last payment date on the Bonds or the date of
issuance thereof through the First Settlement Date and is included in the
calculation of the Public Offering Price. Purchased Interest will be
distributed to Unitholders as Units are redeemed or Securities mature or are
called. Anyone ordering Units for settlement after the First Settlement Date
will pay accrued interest from such date to the date of settlement (normally
five business days after order) less distributions from the Interest Account
subsequent to the First Settlement Date. For purchases settling on the First
Settlement Date, no accrued interest will be added to the Public Offering
Price other than the Purchased Interest already included therein. After the
initial offering period, the Sponsor's Repurchase Price per Unit will be
determined as described under the caption "Public Offering--Market for
Units."
<F4>Such fee is based on the outstanding principal amount of Securities in each
Trust on the Date of Deposit for the first year and as of the close of
business on January 1 for each year thereafter.
</TABLE>
<TABLE>
INSURED MUNICIPALS INCOME TRUST
AND INVESTORS' QUALITY TAX EXEMPT TRUST,
Multi-Series 235
Summary of Essential Financial Information
At the Close of Business on the day before the Date of Deposit:
November 7, 1994
(except for the IM-IT as of 8:00 A.M. Central Time
on the Date of Deposit: November 8, 1994)
Sponsor: Van Kampen Merritt Inc.
Evaluator: American Portfolio Evaluation Services
(A division of a subsidiary of the Sponsor)
Trustee: The Bank of New York
<CAPTION>
South
Michigan Missouri Carolina
GENERAL INFORMATION IM-IT Trust IM-IT Trust Quality Trust
<S> <C> <C> <C>
Principal Amount (Par Value) of Securities in Trust....................... $ 3,120,000 $ 3,105,000 $ 3,100,000
Number of Units........................................................... 3,083 3,068 3,004
Fractional Undivided Interest in the Trust per Unit....................... 1/3,083 1/3,068 1/3,004
Principal Amount (Par Value) of Securities per Unit <F1>.................. $ 1,012.00 $ 1,012.06 $ 1,031.96
Public Offering Price: ...................................................
Aggregate Offering Price of Securities in Portfolio...................... $ 2,900,659 $ 2,887,424 $ 2,826,191
Aggregate Offering Price of Securities per Unit.......................... $ 940.86 $ 941.14 $ 940.81
Sales Charge <F2>........................................................ $ 48.46 $ 48.49 $ 48.47
Purchased Interest <F3>.................................................. $ 32,912 $ 31,808 $ 32,196
Purchased Interest per Unit <F3>......................................... $ 10.68 $ 10.37 $ 10.72
Public Offering Price per Unit <F3>...................................... $ 1,000.00 $ 1,000.00 $ 1,000.00
Redemption Price per Unit, including Purchased Interest <F3>.............. $ 943.90 $ 943.92 $ 943.35
Secondary Market Repurchase Price per Unit, including
Purchased Interest <F3>.................................................. $ 951.54 $ 951.51 $ 951.53
Excess of Public Offering Price per Unit Over Redemption Price per Unit... $ 56.10 $ 56.08 $ 56.65
Excess of Sponsor's Initial Repurchase Price per Unit Over Redemption
Price per Unit........................................................... $ 7.64 $ 7.59 $ 8.18
Minimum Value of the Trust under which Trust Agreement may be
terminated............................................................... $ 624,000 $ 621,000 $ 620,000
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Minimum Principal Distribution..........$1.00 per Unit
First Settlement Date...................November 16, 1994
Evaluator's Annual Supervisory Fee......Maximum of $0.25 per Unit
Evaluator's Annual Evaluation Fee<F4>...$0.30 per $1,000 principal amount of Bonds
Evaluations for purpose of sale, purchase or redemption of Units are made as
of 4:00 P.M. Eastern time on days of trading on the New York Stock Exchange
next following receipt of an order for a sale or purchase of Units or receipt
by The Bank of New York of Units tendered for redemption.
<FN>
<F1>Many unit investment trusts comprised of municipal securities issue a number
of units such that each unit represents approximately $1,000 principal amount
of underlying securities. The Sponsor, on the other hand, in determining the
number of Units for each Trust, other than IM-IT Limited Maturity, IM-IT
Intermediate and IM-IT Short Intermediate Trusts, has elected not to follow
this format but rather to provide that number of Units which will establish as
close as possible as of the Date of Deposit a Public Offering Price per Unit
of $1,000. For IM-IT Limited Maturity, IM-IT Intermediate and IM-IT Short
Intermediate Trusts, on the other hand, each unit represents $1,000 principal
amount of underlying securities in such Trust on the Date of Deposit.
<F2>Sales charges for the Trusts, expressed as a percentage of the Public Offering
Price per Unit (excluding Purchased Interest) and in parenthesis as a
percentage of the aggregate offering price of the Securities, are as follows:
an IM-IT or a State Trust - 4.9% (5.152%); an IM-IT Limited Maturity Trust -
4.3% (4.493%); an IM-IT Intermediate Trust - 3.9% (4.058%); an IM-IT Short
Intermediate Trust - 3.0% (3.093%).
<F3>Purchased Interest is a portion of the unpaid interest that has accrued on the
Bonds from the later of the last payment date on the Bonds or the date of
issuance thereof through the First Settlement Date and is included in the
calculation of the Public Offering Price. Purchased Interest will be
distributed to Unitholders as Units are redeemed or Securities mature or are
called. Anyone ordering Units for settlement after the First Settlement Date
will pay accrued interest from such date to the date of settlement (normally
five business days after order) less distributions from the Interest Account
subsequent to the First Settlement Date. For purchases settling on the First
Settlement Date, no accrued interest will be added to the Public Offering
Price other than the Purchased Interest already included therein. After the
initial offering period, the Sponsor's Repurchase Price per Unit will be
determined as described under the caption "Public Offering--Market for
Units."
<F4>Such fee is based on the outstanding principal amount of Securities in each
Trust on the Date of Deposit for the first year and as of the close of
business on January 1 for each year thereafter.
</TABLE>
SETTLEMENT OF BONDS IN THE TRUSTS
The Fund. Insured Municipals Income Trust and Investors' Quality Tax-Exempt
Trust, Multi-Series 235 (the "Fund"), was created under the laws of
the State of New York pursuant to a Trust Indenture and Agreement (the "
Trust Agreement"), dated the Date of Deposit, among Van Kampen Merritt
Inc., as Sponsor, American Portfolio Evaluation Services, a division of Van
Kampen Merritt Investment Advisory Corp., as Evaluator, and The Bank of New
York, as Trustee.
The Fund consists of six separate portfolios of delivery statements relating
to contracts to purchase interest-bearing obligations issued by or on behalf
of states and territories of the United States, and political subdivisions and
authorities thereof, the interest on which is, in the opinion of recognized
bond counsel to the issuing authorities, excludable from gross income for
Federal income tax under existing law. All issuers of Securities in a State
Trust are located in the State for which such Trust is named or in United
States territories or possessions and their public authorities; consequently,
in the opinion of recognized bond counsel to such State issuers, the related
interest earned on such Securities is exempt to the extent indicated from
state and local taxes of such State. With the exception of the New York and
Pennsylvania Trusts, Units of such Trusts may be purchased only by residents
of the State for which such Trust is named. Units of a New York Trust may be
purchased by residents of New York, Connecticut, Florida and Massachusetts.
Units of a Pennsylvania Trust may be purchased by residents of Pennsylvania,
Connecticut, Florida, Maryland, New York, Ohio and West Virginia. Offerees in
the States of Indiana, Virginia and Washington may purchase Units of the IM-IT
and IM-IT Intermediate Trusts only. On the Date of Deposit, the Sponsor
deposited with the Trustee the aggregate principal amount of Securities in
each Trust as indicated under "General Information--Principal Amount (Par
Value) of Securities in Trust"in the "Summary of Essential Financial
Information". Such Securities consist of delivery statements relating to
contracts for the purchase of certain interest-bearing obligations and cash,
cash equivalents and/or irrevocable letters of credit issued by a financial
institution in the amount required for such purchases. Thereafter, the
Trustee, in exchange for the Securities so deposited, delivered to the Sponsor
the certificates evidencing the ownership of the number of Units in each Trust
as indicated under "Summary of Essential Financial Information."
Unless otherwise terminated as provided herein, the Trust Agreement for any
IM-IT or State Trust will terminate at the end of the calendar year prior to
the fiftieth anniversary of its execution, and the Trust Agreement for any
IM-IT Limited Maturity Trust, IM-IT Intermediate Trust or IM-IT Short
Intermediate Trust will terminate at the end of the calendar year prior to the
twentieth anniversary of its execution.
The portfolio of any IM-IT or State Trust consists of Bonds maturing
approximately 15 to 40 years from the Date of Deposit. The approximate range
of maturities from the Date of Deposit for Bonds in any IM-IT Limited Maturity
Trust, IM-IT Intermediate Trust and IM-IT Short Intermediate Trust is 12 to 15
years, 5 to 15 years and 3 to 7 years, respectively. The dollar-weighted
average maturity of the Bonds in any IM-IT Intermediate Trust and IM-IT Short
Intermediate Trust is less than or equal to 10 years and 5 years,
respectively.
Certain of the Bonds in certain of the Trusts may be "zero coupon"
bonds. See footnote (6) in "Notes to Portfolios". Zero coupon bonds
are purchased at a deep discount because the buyer receives only the right to
receive a final payment at the maturity of the bond and does not receive any
periodic interest payments. The effect of owning deep discount bonds which do
not make current interest payments (such as the zero coupon bonds) is that a
fixed yield is earned not only on the original investment but also, in effect,
on all discount earned during the life of such obligation. This implicit
reinvestment of earnings at the same rate eliminates the risk of being unable
to reinvest the income on such obligation at a rate as high as the implicit
yield on the discount obligation, but at the same time eliminates the holder's
ability to reinvest at higher rates in the future. For this reason, zero
coupon bonds are subject to substantially greater price fluctuations during
periods of changing market interest rates than are securities of comparable
quality which pay interest.
Certain of the Bonds in certain of the Trusts may have been purchased on a
"when, as and if issued"or "delayed delivery"basis. See
footnote (5) in "Notes to Portfolios". The delivery of any such
Securities may be delayed or may not occur. Interest on these Securities
begins accruing to the benefit of Unitholders on their respective dates of
delivery. To the extent any Securities are actually delivered to the Fund
after their respective expected dates of delivery, Unitholders who purchase
their Units prior to the date such Securities are actually delivered to the
Trustee would be required to adjust their tax basis in their Units for a
portion of the interest accruing on such Securities during the interval
between their purchase of Units and the actual delivery of such Securities. As
a result of any such adjustment, the Estimated Current Returns during the
first year would be slightly lower than those stated herein which would be the
returns after the first year, assuming the portfolio of a Trust and estimated
annual expenses other than that of the Trustee (which may be reduced in the
first year only) do not vary from that set forth under "Per Unit
Information"for the applicable Trust. Holders of the Units will be "
at risk"with respect to all Securities in the portfolios including "
when, as and if issued"and "delayed delivery"Securities (i.e.,
may derive either gain or loss from fluctuations in the evaluation of such
Securities) from the date they commit for Units. For a discussion of the
Sponsor's obligations in the event of the failure of any contract for the
purchase of any of the Securities and limited right to substitute other
tax-exempt bonds to replace any failed contract, see "Replacement
Bonds"below.
Each Unit initially offered represents the fractional undivided interest in
the principal and net income of a Trust indicated under "Summary of
Essential Financial Information". To the extent that any Units are
redeemed by the Trustee, the fractional undivided interest in a Trust
represented by each unredeemed Unit will increase, although the actual
interest in such Trust represented by such fraction will remain unchanged.
Units will remain outstanding until redeemed upon tender to the Trustee by
Unitholders, which may include the Sponsor or the Underwriters, or until the
termination of the Trust Agreement.
Objectives and Securities Selection. The objectives of the Fund are income
exempt from Federal income taxation and, in the case of a State Trust, Federal
and state income taxation and conservation of capital through an investment in
diversified portfolios of Federal and state tax-exempt obligations. There is,
of course, no guarantee that the Trusts will achieve their respective
objectives. The Fund may be an appropriate investment vehicle for investors
who desire to participate in a portfolio of tax-exempt fixed income securities
with greater diversification than they might be able to acquire individually.
In addition, securities of the type deposited in the Fund are often not
available in small amounts.
Insurance guaranteeing the timely payment, when due, of all principal and
interest on the Bonds in each Insured Trust has been obtained by such Trust
from either AMBAC Indemnity Corporation ("AMBAC Indemnity"), Financial
Guaranty Insurance Company ("Financial Guaranty"or "FGIC") or
a combination thereof (collectively, the "Portfolio Insurers"), or by
the issuer of such Bonds, by a prior owner of such Bonds, or by the Sponsor
prior to the deposit of such Bonds in such Trust from (1) AMBAC Indemnity or
one of its subsidiaries, American Municipal Bond Assurance Corporation ("
AMBAC") or MGIC Indemnity Corporation ("MGIC Indemnity"), (2)
Financial Guaranty, (3) Municipal Bond Investors Assurance Corporation ("
MBIA"), (4) Bond Investors Guaranty Insurance Company ("BIG"), (5)
National Union Fire Insurance Company of Pittsburgh, PA. ("National
Union"), (6) Capital Guaranty Insurance Company ("Capital Guaranty"
), (7) Capital Markets Assurance Corporation ("CapMAC") and/or (8)
Financial Security Assurance Inc. ("Financial Security"or "
FSA") (collectively, the "Preinsured Bond Insurers") (see "
Unitholder Explanations--Insurance on the Bonds in the Insured Trusts").
Insurance obtained by an Insured Trust is effective only while the Bonds thus
insured are held in such Trust. The Trustee has the right to acquire permanent
insurance from a Portfolio Insurer with respect to each Bond insured by the
respective Portfolio Insurer under a Trust portfolio insurance policy.
Insurance relating to Bonds insured by the issuer, by a prior owner of such
Bonds or by the Sponsor is effective so long as such Bonds are outstanding.
Bonds insured under a policy of insurance obtained by the issuer, by a prior
owner of such Bonds or by the Sponsor from one of the Preinsured Bond Insurers
(the "Preinsured Bonds") are not additionally insured by an Insured
Trust. No representation is made as to any insurer's ability to meet its
commitments.
Neither the Public Offering Price nor any evaluation of Units for purposes of
repurchases or redemptions reflects any element of value for the insurance
obtained by an Insured Trust, if any, unless Bonds are in default in payment
of principal or interest or in significant risk of such default. See "
Unitholder Explanations--Public Offering--Offering Price". On the other
hand, the value, if any, of Preinsured Bond insurance is reflected and
included in the market value of such Bonds.
In order for bonds to be eligible for insurance, they must have credit
characteristics which would qualify them for at least the Standard & Poor's
Corporation rating of "BBB-"or at least the Moody's Investors
Service, Inc. rating of "Baa", which in brief represent the lowest
ratings for securities of investment grade (see "Other
Matters--Description of Securities Ratings"). Insurance is not a
substitute for the basic credit of an issuer, but supplements the existing
credit and provides additional security therefor. If an issue is accepted for
insurance, a non-cancellable policy for the prompt payment of interest and
principal on the bonds, when due, is issued by the insurer. Any premium or
premiums relating to Preinsured Bond insurance is paid by the issuer, by a
prior owner of such Bonds or by the Sponsor and a monthly premium is paid by
an Insured Trust for the portfolio insurance, if any, obtained by such Trust.
The Trustee has the right to obtain permanent insurance from a Portfolio
Insurer in connection with the sale of a Bond insured under the insurance
policy obtained from the respective Portfolio Insurer by an Insured Trust upon
the payment of a single predetermined insurance premium from the proceeds of
the sale of such Bond. Accordingly, any Bond in an Insured Trust is eligible
to be sold on an insured basis. All Bonds insured by the Portfolio Insurers
and the Preinsured Bond Insurers receive a "AAA"rating by Standard &
Poor's Corporation. See "Unitholder Explanations--Insurance on the Bonds
in the Insured Trusts".
In selecting Securities for the Trusts the following facts, among others, were
considered by the Sponsor: (a) either the Standard & Poor's Corporation rating
of the Securities was in no case less than "BBB-"in the case of the
Insured Trusts and "A-"in the case of the Quality Trusts, or the
Moody's Investors Service, Inc. rating of the Securities was in no case less
than "Baa"in the case of the Insured Trusts 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 "Other
Matters--Description of Securities Ratings"), (b) the prices of the
Securities relative to other bonds of comparable quality and maturity, (c) the
diversification of Securities as to purpose of issue and location of issuer
and (d) with respect to the Insured Trusts, the availability and cost of
insurance for the prompt payment of principal and interest, when due, on the
Securities. Subsequent to the Date of Deposit, a Security may cease to be
rated or its rating may be reduced below the minimum required as of the Date
of Deposit. Neither event requires elimination of such Security from the
portfolio of a Trust but may be considered in the Sponsor's determination as
to whether or not to direct the Trustee to dispose of the Security (see "
Trust Administration--Fund Administration and Expenses--Portfolio
Administration").
To the best knowledge of the Sponsor, there is no litigation pending as of the
Date of Deposit in respect of any Securities which might reasonably be
expected to have a material adverse effect upon the Fund or any of the Trusts.
At any time after the Date of Deposit, litigation may be initiated on a
variety of grounds with respect to Securities in the Fund. Such litigation,
as, for example, suits challenging the issuance of pollution control revenue
bonds under environmental protection statutes, may affect the validity of such
Securities or the tax-free nature of the interest thereon. While the outcome
of litigation of such nature can never be entirely predicted, the Fund has
received or will receive opinions of bond counsel to the issuing authorities
of each Security on the date of issuance to the effect that such Securities
have been validly issued and that the interest thereon is exempt from Federal
income tax. In addition, other factors may arise from time to time which
potentially may impair the ability of issuers to meet obligations undertaken
with respect to the Securities.
Risk Factors. Certain of the Bonds in certain of the Trusts may be general
obligations of a governmental entity that are backed by the taxing power of
such entity. In view of this an investment in such a Trust should be made with
an understanding of the characteristics of such issuers and the risks which
such an investment may entail. All other Bonds in the Trusts are revenue bonds
payable from the income of a specific project or authority and are not
supported by the issuer's power to levy taxes. General obligation bonds are
secured by the issuer's pledge of its faith, credit and taxing power for the
payment of principal and interest. Revenue bonds, on the other hand, are
payable only from the revenues derived from a particular facility or class of
facilities or, in some cases, from the proceeds of a special excise tax or
other specific revenue source. There are, of course, variations in the
security of the different Bonds in the Fund, both within a particular
classification and between classifications, depending on numerous factors. See
"General"for each Trust.
Certain of the Bonds in certain of the Trusts may be obligations which derive
their payments from mortgage loans. Certain of such housing bonds may be FHA
insured or may be single family mortgage revenue bonds issued for the purpose
of acquiring from originating financial institutions notes secured by
mortgages on residences located within the issuer's boundaries and owned by
persons of low or moderate income. In view of this an investment in such a
Trust should be made with an understanding of the characteristics of such
issuers and the risks which such an investment may entail. Mortgage loans are
generally partially or completely prepaid prior to their final maturities as a
result of events such as sale of the mortgaged premises, default, condemnation
or casualty loss. Because these bonds are subject to extraordinary mandatory
redemption in whole or in part from such prepayments of mortgage loans, a
substantial portion of such bonds will probably be redeemed prior to their
scheduled maturities or even prior to their ordinary call dates. Extraordinary
mandatory redemption without premium could also result from the failure of the
originating financial institutions to make mortgage loans in sufficient
amounts within a specified time period. Additionally, unusually high rates of
default on the underlying mortgage loans may reduce revenues available for the
payment of principal of or interest on such mortgage revenue bonds. These
bonds were issued under Section 103A of the Internal Revenue Code, which
Section contains certain requirements relating to the use of the proceeds of
such bonds in order for the interest on such bonds to retain its tax-exempt
status. In each case the issuer of the bonds has covenanted to comply with
applicable requirements and bond counsel to such issuer has issued an opinion
that the interest on the bonds is exempt from Federal income tax under
existing laws and regulations. Certain issuers of housing bonds have
considered various ways to redeem bonds they have issued prior to the stated
first redemption dates for such bonds. In connection with the housing bonds
held by the Fund, the Sponsor at the Date of Deposit is not aware that any of
the respective issuers of such Bonds are actively considering the redemption
of such Bonds prior to their respective stated initial call dates. See "
General"for each Trust.
Certain of the Bonds in certain of the Trusts may be health care revenue
bonds. In view of this an investment in such a Trust should be made with an
understanding of the characteristics of such issuers and the risks which such
an investment may entail. Ratings of bonds issued for health care facilities
are often based on feasibility studies that contain projections of occupancy
levels, revenues and expenses. A facility's gross receipts and net income
available for debt service may be affected by future events and conditions
including, among other things, demand for services and the ability of the
facility to provide the services required, physicians' confidence in the
facility, management capabilities, competition with other health care
facilities, efforts by insurers and governmental agencies to limit rates,
legislation establishing state rate-setting agencies, expenses, the cost and
possible unavailability of malpractice insurance, the funding of Medicare,
Medicaid and other similar third party payor programs, government regulation
and the termination or restriction of governmental financial assistance,
including that associated with Medicare, Medicaid and other similar third
party payor programs. Pursuant to recent Federal legislation, Medicare
reimbursements are currently calculated on a prospective basis utilizing a
single nationwide schedule of rates. Prior to such legislation Medicare
reimbursements were based on the actual costs incurred by the health facility.
The current legislation may adversely affect reimbursements to hospitals and
other facilities for services provided under the Medicare program. Such
adverse changes also may adversely affect the ratings of Securities held in
the portfolios of the Fund; however, because of the insurance obtained by each
of the Insured Trusts, the "AAA"rating of the Units of each of the
Insured Trusts would not be affected. See "General"for each Trust.
Certain of the Bonds in certain of the Trusts may be obligations of public
utility issuers, including those selling wholesale and retail electric power
and gas. In view of this an investment in such a Trust should be made with an
understanding of the characteristics of such issuers and the risks which such
an investment may entail. General problems of such issuers would include the
difficulty in financing large construction programs in an inflationary period,
the limitations on operations and increased costs and delays attributable to
environmental considerations, the difficulty of the capital market in
absorbing utility debt, the difficulty in obtaining fuel at reasonable prices
and the effect of energy conservation. All of such issuers have been
experiencing certain of these problems in varying degrees. In addition,
Federal, state and municipal governmental authorities may from time to time
review existing, and impose additional, regulations governing the licensing,
construction and operation of nuclear power plants, which may adversely affect
the ability of the issuers of certain of the Bonds in the portfolio to make
payments of principal and/or interest on such Bonds. See "General"for
each Trust.
Certain of the Bonds in certain of the Trusts may be obligations of issuers
whose revenues are derived from the sale of water and/or sewerage services. In
view of this an investment in such a Trust should be made with an
understanding of the characteristics of such issuers and the risks which such
an investment may entail. Such Bonds are generally payable from user fees. The
problems of such issuers include the ability to obtain timely and adequate
rate increases, population decline resulting in decreased user fees, the
difficulty of financing large construction programs, the limitations on
operations and increased costs and delays attributable to environmental
considerations, the increasing difficulty of obtaining or discovering new
supplies of fresh water, the effect of conservation programs and the impact of
"no-growth"zoning ordinances. All of such issuers have been
experiencing certain of these problems in varying degrees. See "
General"for each Trust.
Certain of the Bonds in certain of the Trusts may be industrial revenue bonds
("IRBs"). In view of this an investment in such a Trust should be made
with an understanding of the characteristics of such issuers and the risks
which such an investment may entail. IRBs have generally been issued under
bond resolutions pursuant to which the revenues and receipts payable under the
arrangements with the operator of a particular project have been assigned and
pledged to purchasers. In some cases, a mortgage on the underlying project may
have been granted as security for the IRBs. Regardless of the structure,
payment of IRBs is solely dependent upon the creditworthiness of the corporate
operator of the project or corporate guarantor. Corporate operators or
guarantors may be affected by many factors which may have an adverse impact on
the credit quality of the particular company or industry. These include
cyclicality of revenues and earnings, regulatory and environmental
restrictions, litigation resulting from accidents or environmentally-caused
illnesses, extensive competition and financial deterioration resulting from a
corporate restructuring pursuant to a leveraged buy-out, takeover or
otherwise. Such a restructuring may result in the operator of a project
becoming highly leveraged which may impact on such operator's creditworthiness
which in turn would have an adverse impact on the rating and/or market value
of such Bonds. Further, the possibility of such a restructuring may have an
adverse impact on the market for and consequently the value of such Bonds,
even though no actual takeover or other action is ever contemplated or
effected. See "General"for each Trust.
Certain of the Bonds in certain of the Trusts may be obligations that are
secured by lease payments of a governmental entity (hereinafter called "
lease obligations"). Lease obligations are often in the form of
certificates of participation. In view of this an investment in such a Trust
should be made with an understanding of the characteristics of such issuers
and the risks which such an investment may entail. Although the lease
obligations do not constitute general obligations of the municipality for
which the municipality's taxing power is pledged, a lease obligation is
ordinarily backed by the municipality's covenant to appropriate for and make
the payments due under the lease obligation. However, certain lease
obligations contain "non-appropriation"clauses which provide that the
municipality has no obligation to make lease payments in future years unless
money is appropriated for such purpose on a yearly basis. A governmental
entity that enters into such a lease agreement cannot obligate future
governments to appropriate for and make lease payments but covenants to take
such action as is necessary to include any lease payments due in its budgets
and to make the appropriations therefor. A governmental entity's failure to
appropriate for and to make payments under its lease obligation could result
in insufficient funds available for payment of the obligations secured
thereby. Although "non-appropriation"lease obligations are secured by
the leased property, disposition of the property in the event of foreclosure
might prove difficult. See "General"for each Trust.
Certain of the Bonds in certain of the Trusts may be obligations of issuers
which are, or which govern the operation of, schools, colleges and
universities and whose revenues are derived mainly from ad valorem taxes or
for higher education systems, from tuition, dormitory revenues, grants and
endowments. In view of this an investment in such a Trust should be made with
an understanding of the characteristics of such issuers and the risks which
such an investment may entail. General problems relating to school bonds
include litigation contesting the State constitutionality of financing public
education in part from ad valorem taxes, thereby creating a disparity in
educational funds available to schools in wealthy areas and schools in poor
areas. Litigation or legislation on this issue may affect the sources of funds
available for the payment of school bonds in the Trusts. General problems
relating to college and university obligations include the prospect of a
declining percentage of the population consisting of "college"age
individuals, possible inability to raise tuitions and fees sufficiently to
cover increased operating costs, the uncertainty of continued receipt of
Federal grants and state funding, and government legislation or regulations
which may adversely affect the revenues or costs of such issuers. All of such
issuers have been experiencing certain of these problems in varying degrees.
See "General"for each Trust.
Certain of the Bonds in certain of the Trusts may be obligations which are
payable from and secured by revenues derived from the ownership and operation
of facilities such as airports, bridges, turnpikes, port authorities,
convention centers and arenas. In view of this an investment in such a Trust
should be made with an understanding of the characteristics of such issuers
and the risks which such an investment may entail. The major portion of an
airport's gross operating income is generally derived from fees received from
signatory airlines pursuant to use agreements which consist of annual payments
for leases, occupancy of certain terminal space and service fees. Airport
operating income may therefore be affected by the ability of the airlines to
meet their obligations under the use agreements. The air transport industry is
experiencing significant variations in earnings and traffic, due to increased
competition, excess capacity, increased costs, deregulation, traffic
constraints and other factors, and several airlines are experiencing severe
financial difficulties. The Sponsor cannot predict what effect these industry
conditions may have on airport revenues which are dependent for payment on the
financial condition of the airlines and their usage of the particular airport
facility. Similarly, payment on Bonds related to other facilities is dependent
on revenues from the projects, such as user fees from ports, tolls on
turnpikes and bridges and rents from buildings. Therefore, payment may be
adversely affected by reduction in revenues due to such factors as increased
cost of maintenance, decreased use of a facility, lower cost of alternative
modes of transportation, scarcity of fuel and reduction or loss of rents. See
"General"for each Trust.
Certain of the Bonds in certain of the Trusts may be obligations which are
payable from and secured by revenues derived from the operation of resource
recovery facilities. In view of this an investment in such a Trust should be
made with an understanding of the characteristics of such issuers and the
risks which such an investment may entail. Resource recovery facilities are
designed to process solid waste, generate steam and convert steam to
electricity. Resource recovery bonds may be subject to extraordinary optional
redemption at par upon the occurrence of certain circumstances, including but
not limited to: destruction or condemnation of a project; contracts relating
to a project becoming void, unenforceable or impossible to perform; changes in
the economic availability of raw materials, operating supplies or facilities
necessary for the operation of a project or technological or other unavoidable
changes adversely affecting the operation of a project; administrative or
judicial actions which render contracts relating to the projects void,
unenforceable or impossible to perform; or impose unreasonable burdens or
excessive liabilities. The Sponsor cannot predict the causes or likelihood of
the redemption of resource recovery bonds in such a Trust prior to the stated
maturity of the Bonds. See "General"for each Trust.
Replacement Bonds. Because certain of the Securities in the Fund may from time
to time under certain circumstances be sold or redeemed or will mature in
accordance with their terms and because the proceeds from such events will be
distributed to Unitholders and will not be reinvested, no assurance can be
given that any Trust will retain for any length of time its present size and
composition. Neither the Sponsor nor the Trustee shall be liable in any way
for any default, failure or defect in any Security. In the event of a failure
to deliver any Security that has been purchased for the Fund under a contract,
including those Securities purchased on a "when, as and if issued"
basis ("Failed Bonds"), the Sponsor is authorized under the Trust
Agreement to direct the Trustee to acquire other bonds ("Replacement
Bonds") to make up the original corpus of the Fund.
The Replacement Bonds must be purchased within 20 days after delivery of the
notice of the failed contract and the purchase price (exclusive of accrued
interest) may not exceed the amount of funds reserved for the purchase of the
Failed Bonds. The Replacement Bonds (i) must be tax-exempt bonds issued by
states or territories of the United States or political subdivisions thereof
and, in the case of replacement of bonds in a State Trust, shall have the
benefit of an exemption from state taxation of interest to an extent equal to
or greater than that of the bonds they replace, (ii) must have a fixed
maturity date of at least 10 years in the case of an IM-IT or a State Trust
or, in the case of an IM-IT Limited Maturity, IM-IT Intermediate or IM-IT
Short Intermediate Trust, must have a fixed maturity date within the range 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 Corporation 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 Investors Service, Inc. and (vi) with respect to
each Insured Trust, must be insured by one of the Preinsured Bond Insurers or
be eligible for (and when acquired be insured under) the insurance obtained by
such Insured Trust. Whenever a Replacement Bond has been acquired for the
Fund, the Trustee shall, within five days thereafter, notify all Unitholders
of the affected Trust of the acquisition of the Replacement Bond and shall, on
the next monthly distribution date which is more than 30 days thereafter, make
a pro rata distribution of the amount, if any, by which the cost to the
affected Trust of the Failed Bond exceeded the cost of the Replacement Bond
plus accrued interest. Once the original corpus of a Trust is acquired, the
Trustee will have no power to vary the investment of the Trust; i.e., the
Trust will have no managerial power to take advantage of market variation to
improve a Unitholder's investment.
If the right of limited substitution described in the preceding paragraph
shall not be utilized to acquire Replacement Bonds in the event of a failed
contract, the Sponsor will refund the sales charge attributable to such Failed
Bonds to all Unitholders of the affected Trust and distribute the principal,
Purchased Interest and accrued interest (at the coupon rate of such Failed
Bonds to the date the Failed Bonds are removed from the Fund) attributable to
such Failed Bonds not more than 30 days after such removal or such earlier
time as the Trustee in its sole discretion deems to be in the interest of the
Unitholders. All such interest paid to a Unitholder which accrued after the
expected date of settlement for purchase of his Units will be paid by the
Sponsor and accordingly will not be treated as tax-exempt income. In the event
a Replacement Bond should not be acquired by the Fund, the Estimated Net
Annual Interest Income per Unit for the affected Trust would be reduced and
the Estimated Current Return and Estimated Long-Term Return thereon might be
lowered. In addition, Unitholders should be aware that they may not be able at
the time of receipt of such principal to reinvest such proceeds in other
securities at a yield equal to or in excess of the yield which such proceeds
were earning to Unitholders in the affected Trust.
Bond Redemptions. Certain of the Bonds in certain of the Trusts may be subject
to redemption prior to their stated maturity date pursuant to sinking fund
provisions, call provisions or extraordinary optional or mandatory redemption
provisions or otherwise. A sinking fund is a reserve fund accumulated over a
period of time for retirement of debt. A callable debt obligation is one which
is subject to redemption or refunding prior to maturity at the option of the
issuer. A refunding is a method by which a debt obligation is redeemed, at or
before maturity, by the proceeds of a new debt obligation. In general, call
provisions are more likely to be exercised when the offering side valuation is
at a premium over par than when it is at a discount from par. The exercise of
redemption or call provisions will (except to the extent the proceeds of the
called Bonds are used to pay for Unit redemptions) result in the distribution
of principal and may result in a reduction in the amount of subsequent
interest distributions; it may also affect the current return on Units of the
Trust involved. Each Trust portfolio contains a listing of the sinking fund
and call provisions, if any, with respect to each of the debt obligations.
Extraordinary optional redemptions and mandatory redemptions result from the
happening of certain events. Generally, events that may permit the
extraordinary optional redemption of Bonds or may require the mandatory
redemption of Bonds include, among others: a final determination that the
interest on the Bonds is taxable; the substantial damage or destruction by
fire or other casualty of the project for which the proceeds of the Bonds were
used; an exercise by a local, state or Federal governmental unit of its power
of eminent domain to take all or substantially all of the project for which
the proceeds of the Bonds were used; changes in the economic availability of
raw materials, operating supplies or facilities or technological or other
changes which render the operation of the project for which the proceeds of
the Bonds were used uneconomic; changes in law or an administrative or
judicial decree which renders the performance of the agreement under which the
proceeds of the Bonds were made available to finance the project impossible or
which creates unreasonable burdens or which imposes excessive liabilities,
such as taxes, not imposed on the date the Bonds are issued on the issuer of
the Bonds or the user of the proceeds of the Bonds; an administrative or
judicial decree which requires the cessation of a substantial part of the
operations of the project financed with the proceeds of the Bonds; an
overestimate of the costs of the project to be financed with the proceeds of
the Bonds resulting in excess proceeds of the Bonds which may be applied to
redeem Bonds; or an underestimate of a source of funds securing the Bonds
resulting in excess funds which may be applied to redeem Bonds. The issuer of
certain Bonds in a Trust may have sold or reserved the right to sell, upon the
satisfaction of certain conditions, to third parties all or any portion of its
rights to call Bonds in accordance with the stated redemption provisions of
such Bonds. In such a case the issuer no longer has the right to call the
Bonds for redemption unless it reacquires the rights from such third party. A
third party pursuant to these rights may exercise the redemption provisions
with respect to a Bond at a time when the issuer of the Bond might not have
called a Bond for redemption had it not sold such rights. The Sponsor is
unable to predict all of the circumstances which may result in such redemption
of an issue of Bonds. See "Portfolio"for each Trust and footnote (3)
in the "Notes to Portfolios". See also the discussion of single family
mortgage and multi-family revenue bonds above for more information on the call
provisions of such bonds.
Distributions. Distributions of interest received by the Fund, pro rated on an
annual basis, will be made monthly. The first such distribution will be in the
amount indicated under "Per Unit Information"for the applicable Trust
and will be made on the fifteenth day of the month indicated under "
Initial Distribution"therein to Unitholders of record on the first day of
such month. Distribution of funds from the Principal Account, if any, will
also be made monthly, except under certain special circumstances (see "
Unitholder Explanations--Public Offering--Distributions of Interest and
Principal").
Certificates. The Trustee is authorized to treat as the record owner of Units
that person who is registered as such owner on the books of the Trustee.
Ownership of Units of each Trust is evidenced by separate registered
certificates executed by the Trustee and the Sponsor. Certificates are
transferable by presentation and surrender to the Trustee properly endorsed or
accompanied by a written instrument or instruments of transfer. A Unitholder
must sign exactly as his name appears on the face of the certificate with the
signature guaranteed by a participant in the Securities Transfer Agents
Medallion Program ("STAMP") or such other signature guaranty program
in addition to, or in substitution for, STAMP, as may be accepted by the
Trustee. In certain instances the Trustee may require additional documents
such as, but not limited to, trust instruments, certificates of death,
appointments as executor or administrator or certificates of corporate
authority. Certificates will be issued in denominations of one Unit or any
multiple thereof.
Although no such charge is now made or contemplated, the Trustee may require a
Unitholder to pay a reasonable fee for each certificate re-issued (other than
as a result of a change in plan of distribution) or transferred and to pay any
governmental charge that may be imposed in connection with each such transfer
or interchange. Destroyed, stolen, mutilated or lost certificates will be
replaced upon delivery to the Trustee of satisfactory indemnity, evidence of
ownership and payment of expenses incurred. Mutilated certificates must be
surrendered to the Trustee for replacement.
ESTIMATED CURRENT RETURNS AND ESTIMATED LONG-TERM RETURNS
As of the close of business on the day before the Date of Deposit (except for
the IM-IT as of 8:00 A.M. Central Time on the Date of Deposit) the Estimated
Current Return and the Estimated Long-Term Return were as set forth in the
"Per Unit Information"for each Trust. Estimated Current Return is
calculated by dividing the estimated net annual interest income per Unit by
the Public Offering Price. The estimated net annual interest income per Unit
will vary with changes in fees and expenses of the Trustee and the Evaluator
and with the principal prepayment, redemption, maturity, exchange or sale of
Securities while the Public Offering Price will vary with changes in the
offering price of the underlying Securities and with changes in the Purchased
Interest; therefore, there is no assurance that the present Estimated Current
Return will be realized in the future. Estimated Long-Term Return is
calculated using a formula which (1) takes into consideration, and determines
and factors in the relative weightings of, the market values, yields (which
takes into account the amortization of premiums and the accretion of
discounts) and estimated retirements of all of the Securities in a Trust and
(2) takes into account the expenses and sales charge associated with each
Trust Unit. Since the market values and estimated retirements of the
Securities and the expenses of a Trust will change, there is no assurance that
the present Estimated Long-Term Return will be realized in the future. The
Estimated Current Return and Estimated Long-Term Return are expected to differ
because the calculation of Estimated Long-Term Return reflects the estimated
date and amount of principal returned while the Estimated Current Return
calculation includes only net annual interest income and Public Offering
Price.
In order to acquire certain of the Securities contracted for by the Sponsor
for deposit in the Fund, it may be necessary for the Sponsor or Trustee to pay
on the settlement dates for delivery of such Securities amounts covering
accrued interest on such Securities which exceed (1) the amounts paid by
Unitholders and (2) the amounts which will be made available through cash
furnished by the Sponsor on the Date of Deposit, which amount of cash may
exceed the interest which would accrue to the First Settlement Date. The
Trustee has agreed to pay for any amounts necessary to cover any such excess
and will be reimbursed therefor, without interest, when funds become available
from interest payments on the particular Securities with respect to which such
payments may have been made. Also, since interest on any "when, as and if
issued"Securities does not begin accruing as tax-exempt interest income
to the benefit of Unitholders until their respective dates of delivery, the
Trustee may, in order to maintain (or in some cases approach) for the
Unitholders the same estimated net annual interest incomes during the first
year of the Trusts' operations as is indicated under "Per Unit
Information"for the applicable Trust, reduce its fee (and to the extent
necessary pay Trust expenses) in an amount equal to that indicated under "
Per Unit Information"for the applicable Trust.
INTEREST EARNING SCHEDULE
Calculation of Estimated Net Annual Interest Income. The estimated net annual
interest income is based on 360 days. To account for the estimated net annual
interest income per Unit in a Trust, it is necessary to use the following
information.
The beginning interest date for each Trust is November 16, 1994. The first
record date for each Trust (December 1, 1994) is 15 days from such date. The
daily rates of estimated net annual interest income per Unit are $.17819,
$.15430, $.17008, $.17218, $.16699 and $.17282 for the IM-IT, IM-IT
Intermediate, Colorado IM-IT, Michigan IM-IT, Missouri IM-IT and South
Carolina Quality Trusts, respectively. This amounts to $2.67, $2.31, $2.55,
$2.58, $2.50 and $2.59 for the IM-IT, IM-IT Intermediate, Colorado IM-IT,
Michigan IM-IT, Missouri IM-IT and South Carolina Quality Trusts,
respectively.
Utilizing the preceding information, the following procedure illustrates the
calculation of first year estimated net annual interest income per Unit for
the Colorado IM-IT Trust:
The Colorado IM-IT Trust accrues
$2.55 to the first record date plus
$56.10 which is 11 normal distributions at $5.10, and finally adding
$2.58 which has accrued from November 1,1995 until November 16,1995 which
completes the 360 day cycle (15 days times the daily factor)
Total $61.23 interest earned /$1,000.00 (Date of Deposit Public Offering
Price) = 6.12% Estimated Current Return as of the Date of Deposit.
PURCHASED AND ACCRUED INTEREST
Purchased Interest. Purchased Interest is a portion of the unpaid interest
that has accrued on the Securities from the later of the last payment date on
the Securities or the date of issuance thereof through the First Settlement
Date and is included in the calculation of the Public Offering Price.
Purchased Interest will be distributed to Unitholders as Units are redeemed or
Securities mature or are called. See "Summary of Essential Financial
Information"for the amount of Purchased Interest per Unit for each Trust.
Purchased Interest is an element of the price Unitholders will receive in
connection with the sale or redemption of Units prior to the termination of
the Trust.
Accrued Interest. Accrued interest is an accumulation of unpaid interest on
securities which generally is paid semi-annually, although the Trust accrues
such interest daily. Because of this, the Trust always has an amount of
interest earned but not yet collected by the Trustee. For this reason, with
respect to sales settling subsequent to the First Settlement Date, the Public
Offering Price of Units will have added to it the proportionate share of
accrued interest to the date of settlement. Unitholders will receive on the
next distribution date of the Trust the amount, if any, of accrued interest
paid on their Units.
As indicated in "Purchased Interest", accrued interest as of the First
Settlement Date includes Purchased Interest. In an effort to reduce the amount
of Purchased Interest which would otherwise have to be paid by Unitholders,
the Trustee may advance a portion of such accrued interest to the Sponsor as
the Unitholder of record as of the First Settlement Date. Consequently, the
amount of accrued interest to be added to the Public Offering Price of Units
will include only accrued interest from the First Settlement Date to the date
of settlement (other than the Purchased Interest already included therein),
less any distributions from the Interest Account subsequent to the First
Settlement Date. See "Public Offering--Distributions of Interest and
Principal."
Because of the varying interest payment dates of the Securities, accrued
interest at any point in time will be greater than the amount of interest
actually received by a Trust and distributed to Unitholders. If a Unitholder
sells or redeems all or a portion of his Units, he will be entitled to receive
his proportionate share of the Purchased Interest and accrued interest from
the purchaser of his Units. Since the Trustee has the use of the funds
(including Purchased Interest) held in the Interest Account for distributions
to Unitholders and since such Account is non-interest-bearing to Unitholders,
the Trustee benefits thereby.
PUBLIC OFFERING
General. Units are offered at the Public Offering Price which includes
Purchased Interest. During the initial offering period the Public Offering
Price is based on the offering prices of the Securities in each Trust and
includes a sales charge of 4.9% of the Public Offering Price (excluding
Purchased Interest) (5.152% of the aggregate offering price of the Securities)
for an IM-IT or a State Trust, 4.3% of the Public Offering Price (excluding
Purchased Interest) (4.493% of the aggregate offering price of the Securities)
for an IM-IT Limited Maturity Trust, 3.9% of the Public Offering Price
(excluding Purchased Interest) (4.058% of the aggregate offering price of the
Securities) for an IM-IT Intermediate Trust and 3.0% of the Public Offering
Price (excluding Purchased Interest) (3.093% of the aggregate offering price
of the Securities) for an IM-IT Short Intermediate Trust. After the initial
public offering period, the secondary market Public Offering Price is based on
the bid prices of the Securities in each Trust and includes a sales charge
determined in accordance with the table set forth below, which is based upon
the dollar weighted average maturity of each Trust plus in each case Purchased
Interest 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 funds or securities have been placed in
escrow to redeem them on an earlier call date, in which case such call date
will be deemed to be the date upon which they mature; or (b) such Bonds are
subject to a "mandatory tender", in which case such mandatory tender
will be deemed to be the date upon which they mature.
The effect of this method of sales charge computation will be that different
sales charge rates will be applied to each Trust based upon the dollar
weighted average maturity of such Trust's Portfolio, in accordance with the
following schedule:
<TABLE>
<CAPTION>
Sales Charge Years To Maturity Sales Charge
Years To Maturity
<S> <C> <C> <C>
1 1.523 % 9 4.712%
2 2.041 10 4.932
3 2.564 11 4.932
4 3.199 12 4.932
5 3.842 13 5.374
6 4.058 14 5.374
7 4.275 15 5.374
8 4.493 16 to 30 6.045
</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 (excluding Purchased Interest), the sales charge on
a Trust consisting entirely of a portfolio of Bonds with 15 years to maturity
would be 5.10%. The sales 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
<S> <C> <C>
IM-IT,
Aggregate Number of State and
Units Purchased National Quality
Trusts Other Trusts
100-249 Units......... $ 4.00 $ 4.00
250-499 Units......... $ 6.00 $ 6.00
500-999 Units......... $ 14.00 $ 9.00
1,000 or more Units... $ 19.00 $ 11.00
</TABLE>
Any such reduced sales charge shall be the responsibility of the selling
Underwriter, broker, dealer or agent. The Sponsor will, however, increase the
concession or agency commission for such quantity purchases. See "Public
Offering--Unit Distribution". This reduced sales charge structure will
apply on all purchases by the same person from any one Underwriter or dealer
of units of Van Kampen Merritt-sponsored unit investment trusts which are
being offered in the initial offering period (a) on any one day (the "
Initial Purchase Date") or (b) on any day subsequent to the Initial
Purchase Date, if (1) the units purchased are of a unit investment trust
purchased on the Initial Purchase Date, and (2) the person purchasing the
units purchased a sufficient amount of units on the Initial Purchase Date to
qualify for a reduced sales charge on such date. 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 Merritt Inc. and its subsidiaries
may purchase Units of the Trust at the current Public Offering Price less the
underwriting commission during the initial offering period, and less the
dealer's concession for secondary market transactions. Registered
representatives of selling Underwriters may purchase Units of the Fund at the
current Public Offering Price less the underwriting commission during the
initial offering period, and less the dealer's concession for secondary market
transactions. Registered representatives of selling brokers, dealers, or
agents may purchase Units of the Fund at the current Public Offering Price
less the dealer's concession during the initial offering period and for
secondary market transactions.
Offering Price. Public Offering Price of the Units will vary from the amounts
stated under "Summary of Essential Financial Information"in
accordance with fluctuations in the prices of the underlying Securities in
each Trust.
As indicated above, the price of the Units as of the date the Securities were
deposited in each Trust was determined by adding to the aggregate offering
price of the Securities of a Trust an amount equal to the applicable sales
charge expressed as a percentage of the aggregate offering price of the
Securities plus Purchased Interest and dividing the sum so obtained by the
number of Units outstanding. This computation produced a gross underwriting
commission equal to such sales charge expressed as a percentage of the Public
Offering Price (excluding Purchased Interest). Such price determination as of
the close of business on the day before the Date of Deposit (except for the
IM-IT as of 8:00 A.M. Central Time on the Date of Deposit) was made on the
basis of an evaluation of the Securities in each Trust prepared by Interactive
Data Services, Inc., a firm regularly engaged in the business of evaluating,
quoting or appraising comparable securities. After the close of business on
the day before the Date of Deposit (except for the IM-IT as of 8:00 A.M.
Central Time on the Date of Deposit) and during the period of initial
offering, the Evaluator will appraise or cause to be appraised daily the value
of the underlying Securities of each Trust as of 4:00 P.M. Eastern time on
days the New York Stock Exchange is open for business and will adjust the
Public Offering Price of the Units commensurate with such appraisal. Such
Public Offering Price will be effective for all orders received at or prior to
4:00 P.M. Eastern time on each such day. Orders received by the Trustee,
Sponsor or any Underwriter for purchases, sales or redemptions after that
time, or on a day when the New York Stock Exchange is closed, will be held
until the next determination of price. For secondary market sales the Public
Offering Price per Unit will be equal to the aggregate bid price of the
Securities in the Trust plus an amount equal to the applicable secondary
market sales charge expressed as a percentage of the aggregate bid price of
the Securities plus Purchased Interest and dividing the sum so attained by the
number of Units then outstanding. This computation produces a gross commission
equal to such sales charge expressed as a percentage of the Public Offering
Price (excluding Purchased Interest). For secondary market purposes such
appraisal and adjustment with respect to a Trust will be made by the Evaluator
as of 4:00 P.M. Eastern time on days in which the New York Stock Exchange is
open for each day on which any Unit of such Trust is tendered for redemption,
and it shall determine the aggregate value of any Trust as of 4:00 P.M.
Eastern time on such other days as may be necessary.
The aggregate price of the Securities in each Trust has been and will be
determined on the basis of bid prices or offering prices, as is appropriate,
(a) on the basis of current market prices for the Securities obtained from
dealers or brokers who customarily deal in bonds comparable to those held by
the Fund; (b) if such prices are not available for any particular Securities,
on the basis of current market prices for comparable bonds; (c) by causing the
value of the Securities to be determined by others engaged in the practice of
evaluation, quoting or appraising comparable bonds; or (d) by any combination
of the above. Market prices of the Securities will generally fluctuate with
changes in market interest rates. Unless Bonds are in default in payment of
principal or interest or in significant risk of such default, the Evaluator
will not attribute any value to the insurance obtained by an Insured Trust, if
any.
The Evaluator will consider in its evaluation of Bonds which are in default in
payment of principal or interest or, in the Sponsor's opinion, in significant
risk of such default (the "Defaulted Bonds") the value of the
insurance guaranteeing interest and principal payments. The value of the
insurance will be equal to the difference between (i) the market value of
Defaulted Bonds assuming the exercise of the right to obtain Permanent
Insurance (less the insurance premiums and related expenses attributable to
the purchase of Permanent Insurance) and (ii) the market value of such
Defaulted Bonds not covered by Permanent Insurance. In addition, the Evaluator
will consider the ability of the affected Portfolio Insurer to meet its
commitments under any Trust insurance policy, including the commitments to
issue Permanent Insurance. It is the position of the Sponsor that this is a
fair method of valuing the Bonds and the insurance obtained by an Insured
Trust and reflects a proper valuation method in accordance with the provisions
of the Investment Company Act of 1940.
No value has been ascribed to insurance obtained by an Insured Trust, if any,
as of the date of this Prospectus.
The initial or primary Public Offering Price of the Units is equal to the
offering price per Unit of the underlying Securities in each Trust plus the
applicable sales charge plus Purchased Interest and interest accrued but
unpaid from the First Settlement Date to the date of settlement. The secondary
market Public Offering Price is equal to the bid price per Unit of the
Securities in each Trust plus the applicable sales charge plus Purchased
Interest and accrued interest. The offering price of Securities in each Trust
may be expected to average approximately 0.5%-1% more than the bid price of
such Securities. On the Date of Deposit, the offering side evaluations of the
Securities in the Trusts were higher than the bid side evaluations of such
Securities by the respective amounts indicated under footnote (5) in "
Notes to Portfolios".
Although payment is normally made five business days following the order for
purchase, payment may be made prior thereto. A person will become the owner of
Units on the date of settlement provided payment has been received. Cash, if
any, made available to the Sponsor prior to the date of settlement for the
purchase of Units may be used in the Sponsor's business and may be deemed to
be a benefit to the Sponsor, subject to the limitations of the Securities
Exchange Act of 1934. Delivery of certificates representing Units so ordered
will be made five business days following such order or shortly thereafter.
See "Redemption of Units" below for information regarding the ability
to redeem Units ordered for purchase.
Market for Units. During the initial public offering period, the Sponsor
and/or certain of the Underwriters intend to offer to purchase Units at a
price equivalent to the Public Offering Price which is based upon the
aggregate offering price per Unit of the underlying Securities in each Trust
and the amount of Purchased Interest for each Trust plus accrued interest to
the date of settlement less the related sales commission. Afterward, although
they are not obligated to do so, the Sponsor intends to, and certain of the
other Underwriters may, maintain a market for the Units offered hereby and to
offer continuously to purchase such Units at prices, subject to change at any
time, based upon the aggregate bid prices of the Securities in the portfolio
of each Trust plus Purchased Interest plus interest accrued to the date of
settlement and plus any principal cash on hand, less any amounts representing
taxes or other governmental charges payable out of the Trust and less any
accrued Trust expenses. If the supply of Units exceeds demand or if some other
business reason warrants it, the Sponsor and/or the Underwriters may either
discontinue all purchases of Units or discontinue purchases of Units at such
prices. In the event that a market is not maintained for the Units and the
Unitholder cannot find another purchaser, a Unitholder of any Trust desiring
to dispose of his Units may be able to dispose of such Units only by tendering
them to the Trustee for redemption at the Redemption Price, which is based
upon the aggregate bid price of the Securities in the portfolio of such Trust
plus Purchased Interest and any accrued interest. The aggregate bid prices of
the underlying Securities in a Trust are expected to be less than the related
aggregate offering prices. See "Redemption of Units" below. A
Unitholder who wishes to dispose of his Units should inquire of his broker as
to current market prices in order to determine whether there is in existence
any price in excess of the Redemption Price and, if so, the amount thereof.
Distributions of Interest and Principal. Interest received by the Fund,
including that part of the proceeds of any disposition of Securities which
represents Purchased Interest and/or accrued interest, is credited by the
Trustee to the Interest Account for the appropriate Trust. Other receipts are
credited to the Principal Account for the appropriate Trust. Interest received
by the Fund after deduction of amounts sufficient to reimburse the Trustee,
without interest, for any amounts advanced and paid to the Sponsor as the
Unitholder of record as of the First Settlement Date (see "Public
Offering--Offering Price"above) will be distributed on or shortly after
the fifteenth day of each month on a pro rata basis to Unitholders of record
of a Trust as of the preceding record date who are entitled to distributions
at that time. All distributions will be net of applicable expenses. The pro
rata share of cash in the Principal Account of a Trust will be computed as of
the date set forth under "Per Unit Information"for the applicable
Trust, and thereafter as of the record date, and distributions to the
Unitholders as of such record date will be made on or shortly after the
fifteenth day of such month. Proceeds received from the disposition of any of
the Securities after such record date and prior to the following distribution
date will be held in the Principal Account and not distributed until the next
distribution date. The Trustee is not required to pay interest on funds held
in any Principal or Interest Account (but may itself earn interest thereon and
therefore benefits from the use of such funds) nor to make a distribution from
the Principal Account unless the amount available for distribution therein
shall equal at least $1.00 per Unit.
The distribution to the Unitholders of a Trust as of each record date after
the First Settlement Date will be made on the following distribution date or
shortly thereafter and shall consist of an amount substantially equal to such
portion of the Unitholder's pro rata share of the estimated net Annual
interest Income in the Interest Account of such Trust after deducting
estimated expenses. Because interest payments are not received by the Fund at
a constant rate throughout the year, such interest distribution may be more or
less than the amount credited to such Interest Account as of the record date.
For the purpose of minimizing fluctuations in the distributions from an
Interest Account, the Trustee is authorized to advance such amounts as may be
necessary to provide interest distributions of approximately equal amounts.
The Trustee shall be reimbursed, without interest, for any such advances from
funds in the applicable Interest Account on the ensuing record date. Persons
who purchase Units between a record date and a distribution date will receive
their first distribution on the second distribution date after the purchase.
As of the first day of each month, the Trustee will deduct from the Interest
Account and, to the extent funds are not sufficient therein, from the
Principal Account, amounts necessary to pay the expenses of the Fund (as
determined on the basis set forth under "Trust Administration--Fund
Administration and Expenses"). The Trustee also may withdraw from said
Accounts such amounts, if any, as it deems necessary to establish a reserve
for any governmental charges payable out of the Fund. Amounts so withdrawn
shall not be considered a part of the Fund's assets until such time as the
Trustee shall return all or any part of such amounts to the appropriate
Accounts. In addition, the Trustee may withdraw from the Interest and
Principal Accounts such amounts as may be necessary to cover purchases of
Replacement Bonds and redemptions of Units by the Trustee.
Reinvestment Option. Unitholders of all unit investment trusts sponsored by
Van Kampen Merritt Inc. (except Unitholders of a New York IM-IT Trust or a New
York IM-IT Intermediate Laddered Maturity Trust), may elect to have each
distribution of interest income, capital gains and/or principal on their Units
automatically reinvested in shares of any of the open ended mutual funds
(except for B shares) listed under "Trust Administration--Sponsor"
which are registered in the Unitholder's state of residence. New York IM-IT
Trust and New York IM-IT Intermediate Laddered Maturity Trust Unitholders,
other than those residing in the Commonwealth of Massachusetts, may elect to
have each distribution of interest income, capital gains and/or principal on
their Units automatically reinvested in shares of First Investors New York
Insured Tax Free Fund, Inc., a fund which invests primarily in securities
exempt from federal and New York state and city income tax. Such mutual funds
are hereinafter collectively referred to as the "Reinvestment Funds".
Each Reinvestment Fund has investment objectives which differ in certain
respects from those of the Trusts. The prospectus relating to each
Reinvestment Fund describes the investment policies of such fund and sets
forth the procedures to follow to commence reinvestment. A Unitholder may
obtain a prospectus for the respective Reinvestment Funds from Van Kampen
Merritt Inc. at One Parkview Plaza, Oakbrook Terrace, Illinois 60181. Texas
residents who desire to reinvest may request that a broker-dealer registered
in Texas send the prospectus relating to the respective fund.
After becoming a participant in a reinvestment plan, each distribution of
interest income, capital gains and/or principal on the participant's Units
will, on the applicable distribution date, automatically be applied, as
directed by such person, as of such distribution date by the Trustee to
purchase shares (or fractions thereof) of the applicable Reinvestment Fund at
a net asset value as computed as of the close of trading on the New York Stock
Exchange on such date, plus a sales charge of $1.00 per $100 of reinvestment
except if the participant selects the First Investors New York Insured Tax
Free Fund, Inc., in which case the sales charge will be $1.50 per $100 of
reinvestment, or except if the participant selects the Van Kampen Merritt
Money Market Fund or the Van Kampen Merritt Tax Free Money Fund in which case
no sales charge applies. A minimum of one-half of such sales charge would be
paid to Van Kampen Merritt Inc. for all Reinvestment Funds except First
Investors New York Insured Tax Free Fund, Inc., in which case such sales
charge would be paid to First Investors Management Company, Inc.
Confirmations of all reinvestments by a Unitholder into a Reinvestment Fund
will be mailed to the Unitholder by such Reinvestment Fund.
A participant may at any time prior to five days preceding the next succeeding
distribution date, by so notifying the Trustee in writing, elect to terminate
his or her reinvestment plan and receive future distributions of his or her
Units in cash. There will be no charge or other penalty for such termination.
Each Reinvestment Fund, its sponsor and investment adviser shall have the
right to terminate at any time the reinvestment plan relating to such fund.
Redemption of Units. A Unitholder may redeem all or a portion of his Units by
tender to the Trustee, at its Unit Investment Trust Division, 101 Barclay
Street, 20th Floor, New York, New York 10286, of the certificates representing
the Units to be redeemed, duly endorsed or accompanied by proper instruments
of transfer with signature guaranteed (or by providing satisfactory indemnity,
as in connection with lost, stolen or destroyed certificates) and by payment
of applicable governmental charges, if any. Thus, redemption of Units cannot
be effected until certificates representing such Units have been delivered to
the person seeking redemption or satisfactory indemnity provided. No
redemption fee will be charged. On the seventh calendar day following such
tender, or if the seventh calendar day is not a business day, on the first
business day prior thereto, the Unitholder will be entitled to receive in cash
an amount for each Unit equal to the Redemption Price per Unit next computed
after receipt by the Trustee of such tender of Units. The "date of
tender"is deemed to be the date on which Units are received by the
Trustee, except that as regards Units received after 4:00 P.M. Eastern time on
days of trading on the New York Stock Exchange, the date of tender is the next
day on which such Exchange is open for trading and such Units will be deemed
to have been tendered to the Trustee on such day for redemption at the
Redemption Price computed on that day.
Under regulations issued by the Internal Revenue Service, the Trustee will be
required to withhold a specified percentage of the principal amount of a Unit
redemption if the Trustee has not been furnished the redeeming Unitholder's
tax identification number in the manner required by such regulations. Any
amount so withheld is transmitted to the Internal Revenue Service and may be
recovered by the Unitholder only when filing a return. Under normal
circumstances the Trustee obtains the Unitholder's tax identification number
from the selling broker. However, at any time a Unitholder elects to tender
Units for redemption, such Unitholder should provide a tax identification
number to the Trustee in order to avoid this possible "back-up
withholding"in the event the Trustee has not been previously provided
such number.
Purchased Interest and accrued interest paid on redemption shall be withdrawn
from the Interest Account of such Trust or, if the balance therein is
insufficient, from the Principal Account of such Trust. All other amounts will
be withdrawn from the Principal Account of such Trust. The Trustee is
empowered to sell underlying Securities of a Trust in order to make funds
available for redemption. Units so redeemed shall be cancelled.
The Redemption Price per Unit (as well as the secondary market Public Offering
Price) will be determined on the basis of the bid price of the Securities in
each Trust, while the initial and primary Public Offering Price of Units will
be determined on the basis of the offering price of the Securities in each
Trust, as of 4:00 P.M. Eastern time on days of trading on the New York Stock
Exchange on the date any such determination is made. On the Date of Deposit
the Public Offering Price per Unit (which is based on the offering prices of
the Bonds and Purchased Interest in each Trust and includes the sales charge)
exceeded the value at which Units could have been redeemed (based upon the
current bid prices of the Securities and Purchased Interest in such Trust) by
the amount shown under "Summary of Essential Financial Information".
While the Trustee has the power to determine the Redemption Price per Unit
when Units are tendered for redemption, such authority has been delegated to
the Evaluator which determines the price per Unit on a daily basis. The
Redemption Price per Unit is the pro rata share of each Unit in each Trust on
the basis of (i) the cash on hand in such Trust or moneys in the process of
being collected, (ii) the value of the Securities in such Trust based on the
bid prices of the Securities therein, except for cases in which the value of
insurance has been included, (iii) Purchased Interest for each Trust and (iv)
interest accrued thereon, less (a) amounts representing taxes or other
governmental charges payable out of such Trust and (b) the accrued expenses of
such Trust. The Evaluator may determine the value of the Securities in each
Trust by employing any of the methods set forth in "Public
Offering--Offering Price". In determining the Redemption Price per Unit no
value will be assigned to the portfolio insurance maintained on the Bonds in
an Insured Trust unless such Bonds are in default in payment of principal or
interest or in significant risk of such default. For a description of the
situations in which the Evaluator may value the insurance obtained by the
Insured Trusts, see "Public Offering--Offering Price"above.
The price at which Units may be redeemed could be less than the price paid by
the Unitholder and may be less than the par value of the Securities
represented by the Units so redeemed. As stated above, the Trustee may sell
Securities to cover redemptions. When Securities are sold, the size and
diversity of the affected Trust will be reduced. Such sales may be required at
a time when Securities would not otherwise be sold and might result in lower
prices than might otherwise be realized.
The right of redemption may be suspended and payment postponed for any period
during which the New York Stock Exchange is closed, other than for customary
weekend and holiday closings, or during which the Securities and Exchange
Commission determines that trading on that Exchange is restricted or an
emergency exists, as a result of which disposal or evaluation of the
Securities in the Trusts is not reasonably practicable, or for such other
periods as the Securities and Exchange Commission may by order permit. Under
certain extreme circumstances the Sponsor may apply to the Securities and
Exchange Commission for an order permitting a full or partial suspension of
the right of Unitholders to redeem their Units.
Reports Provided. The Trustee shall furnish Unitholders of a Trust in
connection with each distribution a statement of the amount of interest and
the amount of other receipts (received since the preceding distribution), if
any, being distributed expressed in each case as a dollar amount representing
the pro rata share of each Unit of a Trust outstanding. For as long as the
Trustee deems it to be in the best interests of the Unitholders, the accounts
of each Trust shall be audited, not less frequently than annually, by
independent certified public accountants and the report of such accountants
shall be furnished by the Trustee to Unitholders of such Trusts upon request.
Within a reasonable period of time after the end of each calendar year, the
Trustee shall furnish to each person who at any time during the calendar year
was a registered Unitholder of a Trust a statement (i) as to the Interest
Account: interest received (including amounts representing interest received
upon any disposition of Securities) and the percentage of such interest by
states in which the issuers of the Securities are located, the amount of
Purchased Interest, deductions for applicable taxes and for fees and expenses
of such Trust, for purchases of Replacement Bonds and for redemptions of
Units, if any, and the balance remaining after such distributions and
deductions, expressed in each case both as a total dollar amount and as a
dollar amount representing the pro rata share of each Unit outstanding on the
last business day of such calendar year; (ii) as to the Principal Account: the
dates of disposition of any Securities and the net proceeds received therefrom
(excluding any portion representing accrued interest), the amount paid for
purchases of Replacement Bonds and for redemptions of Units, if any,
deductions for payment of applicable taxes and fees and expenses of the
Trustee, the amount of "when issued"interest treated as a return of
capital, if any, and the balance remaining after such distributions and
deductions expressed both as a total dollar amount and as a dollar amount
representing the pro rata share of each Unit outstanding on the last business
day of such calendar year; (iii) a list of the Securities held and the number
of Units outstanding on the last business day of such calendar year; (iv) the
Redemption Price per Unit based upon the last computation thereof made during
such calendar year; and (v) amounts actually distributed during such calendar
year from the Interest and Principal Accounts, separately stated, expressed
both as total dollar amounts and as dollar amounts representing the pro rata
share of each Unit outstanding.
In order to comply with Federal and state tax reporting requirements,
Unitholders will be furnished, upon request to the Trustee, evaluations of the
Securities in a Trust furnished to it by the Evaluator.
INSURANCE ON THE BONDS IN THE INSURED TRUSTS
Insurance has been obtained by each Insured Trust or by the issuer of such
Bonds, or by a prior owner of such Bonds, or by the Sponsor prior to the
deposit of such Bonds in a Trust guaranteeing prompt payment of interest and
principal, when due, in respect of the Bonds in such Trust. See "
Unitholder Explanations--Settlement of Bonds in the Trusts--Objectives and
Securities Selection". An insurance policy obtained by an Insured Trust,
if any, is non-cancellable and will continue in force so long as such Trust is
in existence, the respective Portfolio Insurer referred to below is still in
business and the Bonds described in such policy continue to be held by such
Trust (see "Portfolio"for the respective Insured Trust). Any
portfolio insurance premium for an Insured Trust, which is an obligation of
such Trust, is paid by each Trust on a monthly basis. Non-payment of premiums
on a policy obtained by an Insured Trust will not result in the cancellation
of insurance but will force the insurer to take action against the Trustee to
recover premium payments due it. The Trustee in turn will be entitled to
recover such payments from such Trust. Premium rates for each issue of Bonds
protected by a policy obtained by an Insured Trust, if any, are fixed for the
life of the Trust. The premium for any Preinsured Bond insurance has been paid
by such issuer, by a prior owner of such Bonds or the Sponsor and any such
policy or policies are non-cancellable and will continue in force so long as
the Bonds so insured are outstanding and the respective Preinsured Bond
Insurer remains in business. If the provider of an original issuance insurance
policy is unable to meet its obligations under such policy or if the rating
assigned to the claims-paying ability of any such insurer deteriorates, the
Portfolio Insurers have no obligation to insure any issue adversely affected
by either of the above described events.
The aforementioned portfolio insurance obtained by an Insured Trust, if any,
guarantees the timely payment of principal and interest on the Bonds as they
fall due. For the purposes of insurance obtained by an Insured Trust, "
when due"generally means the stated maturity date for the payment of
principal and interest. However, in the event (a) an issuer of a Bond defaults
in the payment of principal or interest on such Bond, (b) such issuer enters
into a bankruptcy proceeding or (c) the maturity of such Bond is accelerated,
the affected Portfolio Insurer has the option, in its sole discretion, after
receiving notice of the earliest to occur of such a default, bankruptcy
proceeding or acceleration to pay the outstanding principal amount of such
Bond plus accrued interest to the date of such payment and thereby retire the
Bond from the affected Trust prior to such Bond's stated maturity date. The
insurance does not guarantee the market value of the Bonds or the value of the
Units. Insurance obtained by an Insured Trust, if any, is only effective as to
Bonds owned by and held in such Trust. In the event of a sale of any such Bond
by the Trustee, such insurance terminates as to such Bond on the date of sale.
Pursuant to an irrevocable commitment of the Portfolio Insurers, the Trustee,
upon the sale of a Bond covered under a portfolio insurance policy obtained by
an Insured Trust, has the right to obtain permanent insurance with respect to
such Bond (i.e., insurance to maturity of the Bonds regardless of the identity
of the holder thereof) (the "Permanent Insurance") upon the payment of
a single predetermined insurance premium and any expenses related thereto from
the proceeds of the sale of such Bond. Accordingly, any Bond in an Insured
Trust is eligible to be sold on an insured basis. It is expected that the
Trustee would exercise the right to obtain Permanent Insurance only if upon
such exercise the affected Trust would receive net proceeds (sale of Bond
proceeds less the insurance premium and related expenses attributable to the
Permanent Insurance) from such sale in excess of the sale proceeds if such
Bonds were sold on an uninsured basis. The insurance premium with respect to
each Bond eligible for Permanent Insurance would be determined based upon the
insurability of each Bond as of the Date of Deposit and would not be increased
or decreased for any change in the creditworthiness of each Bond.
The Sponsor believes that the Permanent Insurance option provides an advantage
to an Insured Trust in that each Bond insured by a Trust insurance policy may
be sold out of the affected Trust with the benefits of the insurance attaching
thereto. Thus, the value of the insurance, if any, at the time of sale, can be
realized in the market value of the Bond so sold (which is not the case in
connection with any value attributable to an Insured Trust's portfolio
insurance). See "Public Offering--Offering Price". Because any such
insurance value may be realized in the market value of the Bond upon the sale
thereof upon exercise of the Permanent Insurance option, the Sponsor
anticipates that (a) in the event an Insured Trust were to be comprised of a
substantial percentage of Bonds in default or significant risk of default, it
is much less likely that such Trust would need at some point in time to seek a
suspension of redemptions of Units than if such Trust were to have no such
option (see "Public Offering--Redemption of Units") and (b) at the
time of termination of an Insured Trust, if such Trust were holding defaulted
Bonds or Bonds in significant risk of default such Trust would not need to
hold such Bonds until their respective maturities in order to realize the
benefits of such Trust's portfolio insurance (see "Trust
Administration--Amendment or Termination").
Except as indicated below, insurance obtained by an Insured Trust has no
effect on the price or redemption value of Units. It is the present intention
of the Evaluator to attribute a value for such insurance (including the right
to obtain Permanent Insurance) for the purpose of computing the price or
redemption value of Units if the Bonds covered by such insurance are in
default in payment of principal or interest or in significant risk of such
default. The value of the insurance will be the difference between (i) the
market value of a Bond which is in default in payment of principal or interest
or in significant risk of such default assuming the exercise of the right to
obtain Permanent Insurance (less the insurance premium and related expenses
attributable to the purchase of Permanent Insurance) and (ii) the market value
of such Bonds not covered by Permanent Insurance. See "Public
Offering--Offering Price". It is also the present intention of the Trustee
not to sell such Bonds to effect redemptions or for any other reason but
rather to retain them in the portfolio because value attributable to the
insurance cannot be realized upon sale. See "Public Offering--Offering
Price"herein for a more complete description of an Insured Trust's method
of valuing defaulted Bonds and Bonds which have a significant risk of default.
Insurance obtained by the issuer of a Bond is effective so long as such Bond
is outstanding. Therefore, any such insurance may be considered to represent
an element of market value in regard to the Bonds thus insured, but the exact
effect, if any, of this insurance on such market value cannot be predicted.
The portfolio insurance policy or policies obtained by an Insured Trust, if
any, with respect to the Bonds in such Trust were issued by one or more of the
Portfolio Insurers. Any other Preinsured Bond insurance policy (or commitment
therefor) was issued by one of the Preinsured Bond Insurers. See "
Unitholder Explanations--Settlement of Bonds in the Trusts--Objectives and
Securities Selection".
AMBAC Indemnity Corporation ("AMBAC Indemnity") is a
Wisconsin-domiciled stock insurance corporation regulated by the Office of the
Commissioner of Insurance of the State of Wisconsin and licensed to do
business in 50 states, the District of Columbia and the Commonwealth of Puerto
Rico, with admitted assets of approximately $1,988,000,000 (unaudited) and
statutory capital of approximately $1,148,000,000 (unaudited) as of March 31,
1994. Statutory capital consists of AMBAC Indemnity's policyholders' surplus
and statutory contingency reserve. AMBAC Indemnity is a wholly owned
subsidiary of AMBAC Inc., a 100% publicly-held company. Moody's Investors
Service, Inc. and Standard & Poor's Corporation have both assigned a triple-A
claims-paying ability rating to AMBAC Indemnity.
Copies of its financial statements prepared in accordance with statutory
accounting standards are available from AMBAC Indemnity. The address of AMBAC
Indemnity's administrative offices and its telephone number are One State
Street Plaza, 17th Floor, New York, New York, 10004 and (212) 668-0340.
AMBAC Indemnity has entered into quota share reinsurance agreements under
which a percentage of the insurance underwritten pursuant to certain municipal
bond insurance programs of AMBAC Indemnity has been and will be assumed by a
number of foreign and domestic unaffiliated reinsurers.
Municipal Bond Investors Assurance Corporation ("MBIA") is the
principal operating subsidiary of MBIA Inc., a New York Stock Exchange listed
company. MBIA Inc. is not obligated to pay the debts of or claims against
MBIA. MBIA is a limited liability corporation rather than a several liability
association. MBIA is domiciled in the State of New York and licensed to do
business in all fifty states, the District of Columbia and the Commonwealth of
Puerto Rico. As of June 30, 1994 MBIA had admitted assets of $3.3 billion
(unaudited), total liabilities of $2.2 billion (unaudited), and total capital
and surplus of $1.1 billion (unaudited) determined in accordance with
statutory accounting practices prescribed or permitted by insurance regulatory
authorities. Copies of MBIA's year end financial statements prepared in
accordance with statutory accounting practices are available from MBIA. The
address of MBIA is 113 King Street, Armonk, New York 10504.
Effective December 31, 1989, MBIA Inc. acquired Bond Investors Group, Inc. On
January 5, 1990, MBIA acquired all of the outstanding stock of Bond Investors
Group, Inc., the parent of Bond Investors Guaranty Insurance Company (BIG),
now known as MBIA Insurance Corp. of Illinois. Through a reinsurance
agreement, BIG has ceded all of its net insured risks, as well as its unearned
premium and contingency reserves, to MBIA and MBIA has reinsured BIG's net
outstanding exposure.
Moody's Investors Service, Inc. rates all bond issues insured by MBIA "
Aaa"and short term loans "MIG 1,"both designated to be of the
highest quality.
Standard & Poor's Corporation rates all new issues insured by MBIA "
AAA"Prime Grade.
The Moody's Investors Service, Inc. rating of MBIA should be evaluated
independently of the Standard & Poor's Corporation rating of MBIA. No
application has been made to any other rating agency in order to obtain
additional ratings on the Bonds. The ratings reflect the respective rating
agency's current assessment of the creditworthiness of MBIA and its ability to
pay claims on its policies of insurance. Any further explanation as to the
significance of the above ratings may be obtained only from the applicable
rating agency.
The above ratings are not recommendations to buy, sell or hold the Bonds, and
such ratings may be subject to revision or withdrawal at any time by the
rating agencies. Any downward revision or withdrawal of either or both ratings
may have an adverse effect on the market price of the Bonds.
Financial Guaranty Insurance Company ("Financial Guaranty"or "
FGIC") is a wholly-owned subsidiary of FGIC Corporation (the "
Corporation"), a Delaware holding company. The Corporation is a
wholly-owned subsidiary of General Electric Capital Corporation ("GECC"
). Neither the Corporation nor GECC is obligated to pay the debts of or the
claims against Financial Guaranty. Financial Guaranty is domiciled in the
State of New York and is subject to regulation by the State of New York
Insurance Department. As of September 30, 1994, the total capital and surplus
of Financial Guaranty was approximately $871,000,000. Copies of Financial
Guaranty's financial statements, prepared on the basis of statutory accounting
principles, and the Corporation's financial statements, prepared on the basis
of generally accepted accounting principles, may be obtained by writing to
Financial Guaranty at 115 Broadway, New York, New York 10006, Attention:
Communications Department, telephone number: (212) 312-3000 or to the New York
State Insurance Department at 160 West Broadway, 18th Floor, New York, New
York 10013, Attention: Property Companies Bureau, telephone number: (212)
621-0389.
In addition, Financial Guaranty Insurance Company is currently licensed to
write insurance in all 50 states and the District of Columbia.
Financial Security Assurance, Inc. ("Financial Security"or "
FSA") is a monoline insurance company incorporated on March 16, 1984 under
the laws of the State of New York. The operations of Financial Security
commenced on July 25, 1985, and Financial Security received its New York State
insurance license on September 23, 1985. Financial Security and its two wholly
owned subsidiaries are licensed to engage in the financial guaranty insurance
business in 49 states, the District of Columbia and Puerto Rico.
Financial Security and its subsidiaries are engaged exclusively in the
business of writing financial guaranty insurance, principally in respect of
asset-backed and other collateralized securities offered in domestic and
foreign markets. Financial Security and its subsidiaries also write financial
guaranty insurance in respect of municipal and other obligations and reinsure
financial guaranty insurance policies written by other leading insurance
companies. In general, financial guaranty insurance consists of the issuance
of a guaranty of scheduled payments of an issuer's securities, thereby
enhancing the credit rating of those securities, in consideration for payment
of a premium to the insurer.
Financial Security is approximately 91.6% owned by U S WEST, Inc. and 8.4%
owned by The Tokio Marine and Fire Insurance Co., Ltd. ("Tokio Marine"
). Neither U S WEST, Inc. nor Tokio Marine is obligated to pay the debts of or
the claims against Financial Security. Financial Security is domiciled in the
State of New York and is subject to regulation by the State of New York
Insurance Department. As of March 31, 1993, the total policyholders' surplus
and contingency reserves and the total unearned premium reserve, respectively,
of Financial Security and its consolidated subsidiaries were, in accordance
with generally accepted accounting principles, approximately $479,110,000
(unaudited) and $220,078,000 (unaudited), and the total shareholders' equity
and the total unearned premium reserve, respectively, of Financial Security
and its consolidated subsidiaries were, in accordance with generally accepted
accounting principles, approximately $628,119,000 (unaudited) and $202,493,000
(unaudited). Copies of Financial Security's financial statements may be
obtained by writing to Financial Security at 350 Park Avenue, New York, New
York, 10022, Attention: Communications Department. Its telephone number is
(212) 826-0100.
Pursuant to an intercompany agreement, liabilities on financial guaranty
insurance written by Financial Security or either of its subsidiaries are
reinsured among such companies on an agreed-upon percentage substantially
proportional to their respective capital, surplus and reserves, subject to
applicable statutory risk limitations. In addition, Financial Security
reinsures a portion of its liabilities under certain of its financial guaranty
insurance policies with unaffiliated reinsurers under various quota share
treaties and on a transaction-by-transaction basis. Such reinsurance is
utilized by Financial Security as a risk management device and to comply with
certain statutory and rating agency requirements; it does not alter or limit
Financial Security's obligations under any financial guaranty insurance
policy.
Financial Security's claims-paying ability is rated "Aaa"by Moody's
Investors Service, Inc., and "AAA"by Standard & Poor's Corporation,
Nippon Investors Service Inc., Duff & Phelps Inc. and Australian Ratings Pty.
Ltd. Such ratings reflect only the views of the respective rating agencies,
are not recommendations to buy, sell or hold securities and are subject to
revision or withdrawal at any time by such rating agencies.
Capital Guaranty Insurance Company ("Capital Guaranty") is a "
Aaa/AAA"rated monoline stock insurance company incorporated in the State
of Maryland, and is a wholly owned subsidiary of Capital Guaranty Corporation,
a Maryland insurance holding company. Capital Guaranty Corporation is a
publicly owned company whose shares are traded on the New York Stock Exchange.
Capital Guaranty is authorized to provide insurance in 49 states, the District
of Columbia and three U.S. territories. Capital Guaranty focuses on insuring
municipal securities and our policies guaranty the timely payment of principal
and interest when due for payment on new issue and secondary market issue
municipal bond transactions. Capital Guaranty's claims-paying ability is rated
"Triple-A"by both Moody's and Standard & Poor's.
As of June 30, 1994, Capital Guaranty had more than $13.7 billion in net
exposure outstanding (excluding deferred issues). The total statutory
policyholders' surplus and contingency reserve of Capital Guaranty was
$89,917,075 (unaudited), and the total admitted assets were $286,825,253
(unaudited) as reported to the Insurance Department of the State of Maryland
as of June 30, 1994. Financial statements for Capital Guaranty Insurance
Company, that have been prepared in accordance with statutory insurance
accounting standards, are available upon request. The address of Capital
Guaranty's headquarters and its telephone number are Steuart Tower, 22nd
Floor, One Market Plaza, San Francisco, CA 94105-1413 and (415) 995-8000.
CapMAC is a New York-domiciled monoline stock insurance company which engages
only in the business of financial guarantee and surety insurance. CapMAC is
licensed in 50 states in addition to the District of Columbia, the
Commonwealth of Puerto Rico and the territory of Guam. CapMAC insures
structured asset-backed, corporate, municipal and other financial obligations
in the domestic and foreign capital markets. CapMAC may also provide financial
guarantee reinsurance for structured asset-backed, corporate and municipal
obligations written by other major insurance companies.
CapMAC's claims-paying ability is rated "Aaa"by Moody's Investors
Service, Inc. ("Moody's"), "AAA"by Standard & Poor's
Corporation ("Standard & Poor's"), "AAA"by Duff & Phelps,
Inc. ("Duff & Phelps") and "AAA"by Nippon Investors Inc. Such
ratings reflect only the views of the respective rating agencies, are not
recommendations to buy, sell or hold securities and are subject to revision or
withdrawal at any time by such rating agencies.
CapMAC is wholly owned by CapMAC Holdings Inc. ("Holdings"), a company
that is owned by a group of institutional and other investors, including
CapMAC's management and employees.
Neither Holdings nor any of its stockholders is obligated to pay any claims
under any policy issued by CapMAC or any debts of CapMAC or to make additional
capital contributions.
CapMAC is regulated by the Superintendent of Insurance of the State of New
York. In addition, CapMAC is subject to regulation by the insurance
departments of the other jurisdictions in which it is licensed. CapMAC is
subject to periodic regulatory examinations by the same regulatory
authorities.
CapMAC is bound by insurance laws and regulations regarding capital transfers,
limitations upon dividends, investment of assets, changes in control,
transactions with affiliates and consolidations and acquisitions. The amount
of exposure per risk that CapMAC may retain, after giving effect to
reinsurance, collateral or other security, is also regulated. Statutory and
regulatory accounting practices may prescribe appropriate rates at which
premiums are earned and the levels of reserves required. In addition, various
insurance laws restrict the incurrence of debt, regulate permissible
investments of reserves, capital and surplus, and govern the form of policies.
CapMAC's obligations under the Policy(s) may be reinsured. Such reinsurance
does not relieve CapMAC of any of its obligations under the Policy(s).
THE POLICY IS NOT COVERED BY THE PROPERTY/CASUALTY INSURANCE SECURITY FUND
SPECIFIED IN ARTICLE 76 OF THE NEW YORK INSURANCE LAW.
As of December 31, 1993 and 1992, CapMAC had qualified statutory capital
(which consists of policyholders' surplus and contingency reserve) of
approximately $168 million and $163 million, respectively, and had not
incurred any debt obligations. Article 69 of the New York State Insurance Law
requires CapMAC to establish and maintain the contingency reserve, which is
available to cover claims under policies issued by CapMAC.
In addition to its qualified statutory capital and other reinsurance available
to pay claims under its policies, CapMAC has entered into a Stop Loss
Reinsurance Agreement (the "Stop Loss Agreement") with Winterthur
Swiss Insurance Company (the "Reinsurer"), which is rated AAA by
Standard & Poor's and Aaa by Moody's, pursuant to which the Reinsurer will be
required to pay any losses incurred by CapMAC during the term of the Stop Loss
Agreement on the policies covered under the Stop Loss Agreement in excess of a
specified amount of losses incurred by CapMAC under such policies (such
specified amount initially being $100 million and increasing annually by an
amount equal to 66 2/3% of the increase in CapMAC's statutory capital and
surplus) up to an aggregate limit payable under the Stop Loss Agreement of $50
million. The Stop Loss Agreement has a term of seven years, is extendable for
one-year periods and is subject to early termination upon the occurrence of
certain events.
CapMAC also has available a $100,000,000 standby corporate liquidity facility
(the "Liquidity Facility") provided by a syndicate of banks rated
A1+/P1 by Standard & Poor's and Moody's, respectively. The Liquidity Facility
is currently scheduled to expire in June 1997 and may be extended from time to
time. Under the Liquidity Facility CapMAC will be able, subject to satisfying
certain conditions, to borrow funds from time to time in order to enable it to
fund any claim payments or payments made in settlement or mitigation of claims
payments under its policies, including the Policy.
Copies of CapMAC's financial statements prepared in accordance with statutory
accounting standards, which differ from generally accepted accounting
principles, and filed with the Insurance Department of the State of New York
are available upon request. CapMAC is located at 885 Third Avenue, New York,
New York 10022, and its telephone number is (212) 755-1155.
In order to be in an Insured Trust, Bonds must be insured by one of the
Preinsured Bond Insurers or be eligible for the insurance being obtained by
such Trust. In determining eligibility for insurance, the Preinsured Bond
Insurers, AMBAC Indemnity and Financial Guaranty have applied their own
standards which correspond generally to the standards they normally use in
establishing the insurability of new issues of municipal bonds and which are
not necessarily the criteria used in the selection of Bonds by the Sponsor. To
the extent the standards of the Preinsured Bond Insurers, AMBAC Indemnity and
Financial Guaranty are more restrictive than those of the Sponsor, the
previously stated Trust investment criteria have been limited with respect to
the Bonds. This decision is made prior to the Date of Deposit, as debt
obligations not eligible for insurance are not deposited in an Insured Trust.
Thus, all of the Bonds in the portfolios of the Insured Trusts in the Fund are
insured either by the respective Trust or by the issuer of the Bonds, by a
prior owner of such Bonds or by the Sponsor prior to the deposit of such Bonds
in a Trust.
Because the Bonds are insured by one of the Portfolio Insurers or one of the
Preinsured Bond Insurers as to the timely payment of principal and interest,
when due, and on the basis of the various reinsurance agreements in effect,
Standard & Poor's Corporation has assigned to the Units of each Insured Trust
its "AAA"investment rating. See "Description of Securities
Ratings". The obtaining of this rating by an Insured Trust should not be
construed as an approval of the offering of the Units by Standard & Poor's
Corporation or as a guarantee of the market value of such Trust or of the
Units.
On the date of this Prospectus, the Estimated Current Returns on the
Securities in the IM-IT and Colorado IM-IT Trust were 6.42% and 6.12%,
respectively, after payment of the insurance premium or premiums payable by
each Trust, while the Estimated Long-Term Returns on such Trusts were 6.48%
and 6.21%, respectively. The Estimated Current Returns on identical portfolios
without the insurance obtained by the above mentioned Trusts would have been
6.43% and 6.16%, respectively, on such date, while the Estimated Long-Term
Returns on identical portfolios without the insurance obtained by the above
mentioned Trusts would have been 6.49% and 6.25%, respectively.
An objective of portfolio insurance obtained by an Insured Trust is to obtain
a higher yield on the portfolio of such Trust than would be available if all
the Securities in such portfolio had Standard & Poor's Corporation "
AAA"rating and yet at the same time to have the protection of insurance
of prompt payment of interest and principal, when due, on the Bonds. There is,
of course, no certainty that this result will be achieved. Preinsured Bonds in
an Insured Trust (all of which are rated "AAA"by Standard & Poor's
Corporation) may or may not have a higher yield than uninsured bonds rated
"AAA"by Standard & Poor's Corporation. In selecting such Bonds for an
Insured Trust, the Sponsor has applied the criteria hereinbefore described.
In the event of nonpayment of interest or principal, when due, in respect of a
Bond, AMBAC Indemnity shall make such payment not later than 30 days and
Financial Guaranty shall make such payment within one business day after the
respective insurer has been notified that such nonpayment has occurred or is
threatened (but not earlier than the date such payment is due). The insurer,
as regards any payment it may make, will succeed to the rights of the Trustee
in respect thereof. All policies issued by the Portfolio Insurers and the
Preinsured Bond Insurers are substantially identical insofar as obligations to
an Insured Trust are concerned.
The Internal Revenue Service has issued a letter ruling which holds in effect
that insurance proceeds representing maturing interest on defaulted municipal
obligations paid to holders of insured bonds, under policy provisions
substantially identical to the policies described herein, will be excludable
from Federal gross income under Section 103(a)(1) of the Internal Revenue Code
to the same extent as if such payments were made by the issuer of the
municipal obligations. Holders of Units in an Insured Trust should discuss
with their tax advisers the degree of reliance which they may place on this
letter ruling. However, Chapman and Cutler, counsel for the Sponsor, has given
an opinion to the effect such payment of proceeds would be excludable from
Federal gross income if, and to the same extent as, such interest would have
been so excludable if paid by the issuer of the defaulted obligations. See
"Other Matters--Federal Tax Status".
Each Portfolio Insurer is subject to regulation by the department of insurance
in the state in which it is qualified to do business. Such regulation,
however, is no guarantee that each Portfolio Insurer will be able to perform
on its contract of insurance in the event a claim should be made thereunder at
some time in the future. At the date hereof, it is reported that no claims
have been submitted or are expected to be submitted to any of the Portfolio
Insurers which would materially impair the ability of any such company to meet
its commitment pursuant to any contract of bond or portfolio insurance.
The information relating to each Portfolio Insurer has been furnished by such
companies. The financial information with respect to each Portfolio Insurer
appears in reports filed with state insurance regulatory authorities and is
subject to audit and review by such authorities. No representation is made
herein as to the accuracy or adequacy of such information or as to the absence
of material adverse changes in such information subsequent to the dates
thereof.
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................ 8% -- 92% 100%
IM-IT Intermediate... -- -- 100% 100%
Colorado IM-IT....... 31% -- 69% 100%
Michigan IM-IT....... -- -- 100% 100%
Missouri IM-IT....... -- -- 100% 100%
</TABLE>
The breakdown of the Preinsured Bonds is as follows: IM-IT--AMBAC 6%, MBIA
64%, FSA 11% and CapMAC 11%; IM-IT Intermediate Trust--AMBAC Indemnity 19%,
Capital Guaranty 10%, Financial Guaranty 33% and MBIA 38%; Colorado IM-IT
Trust--AMBAC Indemnity 30%, Financial Guaranty 20%, MBIA 16% and FSA 3%;
Michigan IM-IT Trust--AMBAC Indemnity 19%, Financial Guaranty 33%, MBIA 32%
and FSA 16%; Missouri IM-IT Trust--AMBAC Indemnity 16%, Financial Guaranty 29%
and MBIA 55%.
IM-IT
General. The IM-IT consists of 11 issues of Securities. None of the Bonds in
the IM-IT 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 located in 8 states or
territories, divided by purpose of issues (and percentage of principal amount
to total IM-IT) as follows: Health Care, 2 (18%); Industrial Revenue, 1 (12%);
General Purpose, 1 (11%); Higher Education, 1 (11%); Multi-Family Mortgage
Revenue, 1 (11%); Retail Electric/Gas, 1 (11%); Transportation, 1 (11%);
Single Family Mortgage Revenue, 1 (8%) and Public Building, 2 (7%). No Bond
issue has received a provisional rating. The dollar weighted average maturity
of the Bonds in the Trust is 30 years.
Tax Status. For a discussion of the Federal tax status of income earned on
IM-IT Units, see "Other Matters--Federal Tax Status".
<TABLE>
<CAPTION>
Per Unit Information:
<S> <C>
Calculation of Estimated Net Annual Unit Income <F1>:
Estimated Annual Interest Income per Unit.................................... $ 65.74
Less: Estimated Annual Expense per Unit <F2>................................. $ 1.49
Less: Annual Premium on Portfolio Insurance per Unit......................... $ .10
Estimated Net Annual Interest Income per Unit................................ $ 64.15
Calculation of Estimated Interest Earnings Per Unit:
Estimated Net Annual Interest Income per Unit................................ $ 64.15
Divided by 12................................................................ $ 5.35
Estimated Daily Rate of Net Interest Accrual per Unit......................... $ .17819
Estimated Current Return Based on Public Offering Price <F1><F3><F4><F5>...... 6.42%
Estimated Long-Term Return <F3><F4><F5>....................................... 6.48%
Initial Distribution (December 1994).......................................... $ 2.67
Estimated Normal Distribution per Unit <F5>................................... $ 5.35
Purchased Interest <F6>....................................................... $ 6.79
Trustee's Annual Fee <F1>..........$.98 per $1,000 principal amount of Bonds
Record and Computation Dates.......FIRST day of each month
Distribution Dates.................FIFTEENTH day of each month commencing December 15, 1994
<FN>
<F1>During the first year the Trustee will reduce its fee by approximately $.36
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 $66.10. Estimated Annual Expense
per Unit (excluding insurance) will be increased to $1.85; and estimated net
annual interest income per Unit will remain the same as shown. See "
Estimated Current Returns and Estimated Long-Term Returns."Based on the
outstanding principal amount of Securities as of the Date of Deposit, the
Trustee's annual fee would be $8,943.
<F2>Excluding insurance costs.
<F3>The Estimated Current Return and Estimated Long-Term Return are increased for
transactions entitled to a reduced sales charge. See "Unitholder
Explanations--Public Offering--General".
<F4>The Estimated Current Return is calculated by dividing the estimated net
annual interest income per Unit by the Public Offering Price. The estimated
net annual interest income per Unit will vary with changes in fees and
expenses of the Trustee and the Evaluator and with the principal prepayment,
redemption, maturity, exchange or sale of Securities while the Public Offering
Price will vary with changes in the offering price of the underlying
Securities and with changes in the Purchased Interest; therefore, there is no
assurance that the present Estimated Current Return indicated above will be
realized in the future. The Estimated Long-Term Return is calculated using a
formula which (1) takes into consideration, and determines and factors in the
relative weightings of, the market values, yields (which takes into account
the amortization of premiums and the accretion of discounts) and estimated
retirements of all of the Securities in the Trust and (2) takes into account
the expenses and sales charge associated with each Trust Unit. Since the
market values and estimated retirements of the Securities and the expenses of
the Trust will change, there is no assurance that the present Estimated
Long-Term Return as indicated above will be realized in the future. The
Estimated Current Return and Estimated Long-Term Return are expected to differ
because the calculation of the Estimated Long-Term Return reflects the
estimated date and amount of principal returned while the Estimated Current
Return calculation includes only net annual interest income and Public
Offering Price.
<F5>These figures are based on estimated per Unit cash flows. Estimated cash flows
will vary with changes in fees and expenses, with changes in current interest
rates and with the principal prepayment, redemption, maturity, call, exchange
or sale of the underlying Securities. The estimated cash flows for this Series
are set forth under "Estimated Cash Flows to Unitholders".
<F6>See "Unitholder Explanations--Purchased and Accrued Interest".
</TABLE>
<TABLE>
INSURED MUNICIPALS INCOME TRUST
SERIES 336 (IM-IT AND QUALITY MULTI-SERIES 235)
PORTFOLIO As of November 8, 1994
<CAPTION>
Offering
Aggregate Name of Issuer, Title, Interest Rate andMaturity Date of Redemption Price To
Principal<F1> either Bonds Deposited orBonds Contracted for<F1><F5> Rating<F2> Feature<F3> IM-IT<F4>
<S> <C> <C> <C> <C> <C>
$ 1,000,000 New Jersey Health Care Facilities Financing Authority,
Revenue Bonds, The General Hospital Center at Passaic,
Inc. Obligated Group Issue, Series 1994 (FSA Insured)** 2004 @ 102
6.75% Due 7/1/2019 ..................................... AAA 2015 @ 100 S.F. $ 970,070
1,000,000 Metropolitan Atlanta Rapid Transit Authority, Georgia,
Sales Tax Revenue Bonds (Second Indenture Series) Series 2004 @ 102
1994A (MBIA Insured) #6.90% Due 7/1/2020 ............ AAA 2017 @ 100 S.F. 981,430
175,000 Metropolitan Pier and Exposition Authority (Illinois)
McCormick Place Expansion Project Refunding Bonds, Series
1994A (MBIA Insured) #0.00% Due 6/15/2022 ............ AAA 24,586 <F6>
1,000,000 Rhode Island Depositors Economic Protection Corporation,
Special Obligation Refunding Bonds, Series 1993A (CapMAC
Insured) 6.375% Due 8/1/2022 .......................... AAA 911,940
1,100,000 Illinois Development Finance Authority, Pollution Control
Revenue Refunding Bonds (Illinois Power Company Project)
Series 1994A (MBIA Insured) #5.70% Due 2/1/2024 ...... AAA 2004 @ 102 892,606
600,000 Harris County Health Facilities Development Corporation,
Texas, Hospital Revenue Bonds (Herman Hospital) Series 2004 @ 101
1994 (MBIA Insured) #6.375% Due 10/1/2024 ............ AAA 2018 @ 100 S.F. 542,490
500,000 Rhode Island Port Authority and Economic Development
Corporation (Shepard Building Project) Tax-Exempt Revenue
Bonds, Series 1994B (AMBAC Indemnity Insured) #6.75% Due 2004 @ 102
6/1/2025 ................................................ AAA 2016 @ 100 S.F. 477,775
1,000,000 Coastal Carolina University, South Carolina, Revenue Bonds, 2004 @ 102
Series 1994 (MBIA Insured)** #6.875% Due 6/1/2026 .... AAA 2020 @ 100 S.F. 989,150
1,000,000 Baltimore County, Maryland, Mortgage Revenue Refunding
Bonds (FHA Insured Mortgage Loan-Old Orchard Apartments
Project) Series 1994A (MBIA Insured)** 7.125% Due 2004 @ 102
1/1/2027 ................................................ AAA 2016 @ 100 S.F. 1,005,000
750,000 Pueblo County, Colorado, Single Family Mortgage Revenue
Refunding Bonds (GNMA and FNMA Mortgage-Backed Securities 2004 @ 102
Program) Series 1994A 7.05% Due 11/1/2027 ............. AAA 2019 @ 100 S.F. 748,957
1,000,000 Pollution Control Financing Authority of Cape May County,
New Jersey, Pollution Control Revenue Refunding Bonds
(Atlantic City Electric Company Project) Series 1994B
(MBIA Insured)** #7.00% Due 11/1/2029 ................. AAA 2004 @ 102 998,470
$ 9,125,000 $ 8,542,474
</TABLE>
All of the Bonds in the portfolio are insured by either one of the Preinsured
Bond Insurers (as indicated in the Bond name) or under the portfolio insurance
policy obtained by the Trust from AMBAC Indemnity. See "Unitholder
Explanations--Insurance on the Bonds in the Insured Trusts".
For an explanation of the footnotes used on this page, see "Notes to
Portfolios".
IM-IT INTERMEDIATE TRUST
General. The IM-IT Intermediate Trust consists of 10 issues of Securities.
Four of the Bonds in the IM-IT Intermediate Trust are general obligations of
the governmental entities issuing them and are backed by the taxing power
thereof. The remaining issues are payable from the income of specific project
or authority and are not supported by the issuer's power to levy taxes. These
issues are located in 9 states or territories, divided by purpose of issues
(and percentage of principal amount to total IM-IT Intermediate Trust) as
follows: Health Care, 2 (30%); General Obligations, 4 (26%); Airport, 1 (15%);
General Purpose, 1 (10%); Water and Sewer, 1 (10%) and Public Building, 1
(9%). No Bond issue has received a provisional rating. All of the obligations
in the IM-IT Intermediate Trust mature within 5-15 years of the Date of
Deposit. The dollar weighted average maturity of the Bonds in the Trust is 9.7
years.
Tax Status. For a discussion of the Federal tax status of income earned on
IM-IT Units, see "Other Matters--Federal Tax Status".
<TABLE>
<CAPTION>
Per Unit Information:
<S> <C>
Calculation of Estimated Net Annual Unit Income <F1>:
Estimated Annual Interest Income per Unit.................................... $ 57.05
Less: Estimated Annual Expense per Unit <F2>................................. $ 1.50
Less: Annual Premium on Portfolio Insurance per Unit......................... --
Estimated Net Annual Interest Income per Unit................................ $ 55.55
Calculation of Estimated Interest Earnings Per Unit:
Estimated Net Annual Interest Income per Unit................................ $ 55.55
Divided by 12................................................................ $ 4.63
Estimated Daily Rate of Net Interest Accrual per Unit......................... $ .15430
Estimated Current Return Based on Public Offering Price <F1><F3><F4><F5>...... 5.45%
Estimated Long-Term Return <F3><F4><F5>....................................... 5.68%
Initial Distribution (December 1994).......................................... $ 2.31
Estimated Normal Distribution per Unit <F5>................................... $ 4.63
Purchased Interest <F6>....................................................... $ 8.85
Trustee's Annual Fee <F1>..........$.98 per $1,000 principal amount of Bonds
Record and Computation Dates.......FIRST day of each month
Distribution Dates.................FIFTEENTH day of each month commencing December 15, 1994
<FN>
<F1>During the first year the Trustee will reduce its fee by approximately $.43
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 $57.48. Estimated Annual Expense
per Unit (excluding insurance) will be increased to $1.93; and estimated net
annual interest income per Unit will remain the same as shown. See "
Estimated Current Returns and Estimated Long-Term Returns."Based on the
outstanding principal amount of Securities as of the Date of Deposit, the
Trustee's annual fee would be $4,900.
<F2>Excluding insurance costs.
<F3>The Estimated Current Return and Estimated Long-Term Return are increased for
transactions entitled to a reduced sales charge. See "Unitholder
Explanations--Public Offering--General".
<F4>The Estimated Current Return is calculated by dividing the estimated net
annual interest income per Unit by the Public Offering Price. The estimated
net annual interest income per Unit will vary with changes in fees and
expenses of the Trustee and the Evaluator and with the principal prepayment,
redemption, maturity, exchange or sale of Securities while the Public Offering
Price will vary with changes in the offering price of the underlying
Securities and with changes in the Purchased Interest; therefore, there is no
assurance that the present Estimated Current Return indicated above will be
realized in the future. The Estimated Long-Term Return is calculated using a
formula which (1) takes into consideration, and determines and factors in the
relative weightings of, the market values, yields (which takes into account
the amortization of premiums and the accretion of discounts) and estimated
retirements of all of the Securities in the Trust and (2) takes into account
the expenses and sales charge associated with each Trust Unit. Since the
market values and estimated retirements of the Securities and the expenses of
the Trust will change, there is no assurance that the present Estimated
Long-Term Return as indicated above will be realized in the future. The
Estimated Current Return and Estimated Long-Term Return are expected to differ
because the calculation of the Estimated Long-Term Return reflects the
estimated date and amount of principal returned while the Estimated Current
Return calculation includes only net annual interest income and Public
Offering Price.
<F5>These figures are based on estimated per Unit cash flows. Estimated cash flows
will vary with changes in fees and expenses, with changes in current interest
rates and with the principal prepayment, redemption, maturity, call, exchange
or sale of the underlying Securities. The estimated cash flows for this Series
are set forth under "Estimated Cash Flows to Unitholders".
<F6>See "Unitholder Explanations--Purchased and Accrued Interest".
</TABLE>
<TABLE>
INSURED MUNICIPALS INCOME TRUST
81ST INTERMEDIATE SERIES (IM-IT AND QUALITY MULTI-SERIES 235)
PORTFOLIO As November 8, 1994
<CAPTION>
Offering
Price To
IM-IT
Aggregate Name of Issuer, Title, Interest Rate andMaturity Date of Redemption Intermediate
Principal<F1> either Bonds Deposited orBonds Contracted for<F1><F5> Rating<F2> Feature<F3> Trust<F4>
<S> <C> <C> <C> <C> <C>
$ 500,000 Kansas City Municipal Assistance Corporation (Missouri)
Leasehold Revenue Improvement Bonds, Series 1994B (Citywide
Infrastructure Project) Capital Guaranty Insured #5.90% Due
3/1/2004 ................................................... AAA $ 494,805
500,000 New Jersey Wastewater Treatment Trust, Wastewater Treatment
Insured Revenue Bonds, Series 1994B (FGIC Insured) #5.80% Due
4/1/2004 ................................................... AAA 491,245
100,000 Texas Public Finance Authority, State of Texas, General
Obligation Refunding Bonds (Superconducting Super Collider
Project) Series 1992C (FGIC Insured) #0.00% Due 4/1/2004 . AAA 56,014 <F6>
300,000 District of Columbia (Washington, D.C.) Unlimited Tax-General
Obligation Refunding Bonds, Series 1993A (FGIC Insured)
#5.80% Due 6/1/2004 ........................................ AAA 291,498
400,000 District of Columbia (Washington, D.C.) Unlimited Tax-General
Obligation Refunding Bonds, Series 1993B (MBIA Insured)
#5.20% Due 6/1/2004 ........................................ AAA 363,996
450,000 Rhode Island Port Authority and Economic Development
Corporation (Shepard Building Project) Tax-Exempt Revenue
Bonds, Series 1994B (AMBAC Indemnity Insured) #6.10% Due
6/1/2004 ................................................... AAA 448,452
500,000 Baldwin County, Alabama, General Obligation Warrants, Series
1994 (AMBAC Indemnity Insured)** #5.95% Due 8/1/2004 ...... AAA 496,375
750,000 Wisconsin Health and Educational Facilities Authority, Revenue
Bonds (Wheaton Franciscan Services, Inc.) Series 1993 (MBIA
Insured) #5.80% Due 8/15/2004 ............................. AAA 730,958
750,000 Washington Health Care Facilities Authority, Revenue Bonds
(Sisters of Providence) Refunding Series 1994 (FGIC Insured)**
#6.00% Due 10/1/2004 ...................................... AAA 741,772
750,000 City of Chicago (Illinois) O'Hare International Airport,
General Airport Second Lien Revenue Refunding Bonds, Series
1994A (MBIA Insured)** #6.00% Due 1/1/2005 ............... AAA 736,095
$ 5,000,000 $ 4,851,210
</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
ExplanationsInsurance on the Bonds in the Insured Trusts".
For an explanation of the footnotes used on this page, see "Notes to
Portfolios".
COLORADO IM-IT TRUST
General. The Colorado IM-IT Trust consists of 8 issues of Securities. One of
the Bonds in the Colorado IM-IT Trust is a general obligation of the
governmental entities 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 divided by purpose of issues (and percentage of principal amount to
total Colorado IM-IT Trust) as follows: General Purpose, 1 (17%); Retail
Electric/Gas, 1 (17%); Single Family Mortgage Revenue, 1 (17%); General
Obligations, 1 (16%); Multi-Family Mortgage Revenue, 1 (14%); Health Care, 1
(13%); Public Building, 1 (3%) and Transportation, 1 (3%). No Bond issue has
received a provisional rating.
Risk Factors. The State Constitution requires that expenditures for any fiscal
year not exceed revenues for such fiscal year. By statute, the amount of
General Fund revenues available for appropriation is based upon revenue
estimates which, together with other available resources, must exceed annual
appropriations by the amount of the unappropriated reserve (the "
Unappropriated Reserve"). The Unappropriated Reserve requirement for
fiscal year 1991, 1992 and 1993 was set at 3%. For fiscal year 1992 and
thereafter, General Fund appropriations are also limited by statute to an
amount equal to the cost of performing certain required reappraisals of
taxable property plus an amount equal to the lesser of (i) five percent of
Colorado personal income or (ii) 106% of the total General Fund appropriations
for the previous fiscal year. This restriction does not apply to any General
Fund appropriations which are required as a result of a new federal law, a
final state or federal court order or moneys derived from the increase in the
rate or amount of any tax or fee approved by a majority of the registered
electors of the State voting at any general election. In addition, the
statutory limit on the level of General Fund appropriations may be exceeded
for a given fiscal year upon the declaration of a State fiscal emergency by
the State General Assembly.
The 1991 fiscal year end fund balance was $16.3 million, which was $62.8
million below the 3% Unappropriated Reserve requirement. As of the end of the
1992 fiscal year, the fund balance was $133.3 million, which was $49.1 million
over the 3% Unappropriated Reserve requirement. Based on June 20, 1993
estimates, the 1993 fiscal year ending fund balance is expected to be $281.8
million, or $189.7 million over the 3% required Unappropriated Reserve.
On November 3, 1992, voters in Colorado approved a constitutional amendment
(the "Amendment") which, in general, became effective December 31,
1992, and which could restrict the ability of the State and local governments
to increase revenues and impose taxes. The Amendment applies to the State and
all local governments, including home rule entities ("Districts").
Enterprises, defined as government-owned businesses authorized to issue
revenue bonds and receiving under 10% of annual revenue in grants from all
Colorado state and local governments combined, are excluded from the
provisions of the Amendment.
The provisions of the Amendment are unclear and will probably require judicial
interpretation. Among other provisions, beginning November 4, 1992, the
Amendment requires voter approval prior to tax increases, creation of debt, or
mill levy or valuation for assessment ratio increases. The Amendment also
limits increases in government spending and property tax revenues to specified
percentages. The Amendment requires that District property tax revenues yield
no more than the prior year's revenues adjusted for inflation, voter approved
changes and (except with regard to school districts) local growth in property
values according to a formula set forth in the Amendment. School districts are
allowed to adjust tax levies for changes in student enrollment. Pursuant to
the Amendment, local government spending is to be limited by the same formula
as the limitation for property tax revenues. The Amendment limits increases in
expenditures from the State general fund and program revenues (cash funds) to
the growth in inflation plus the percentage change in State population in the
prior calendar year. The basis for initial spending and revenue limits are
fiscal year 1992 spending and 1991 property taxes collected in 1992. The basis
for spending and revenue limits for fiscal year 1994 and later years will be
the prior fiscal year's spending and property taxes collected in the prior
calendar year. Debt service changes, reductions and voter-approved revenue
changes are excluded from the calculation basis. The Amendment also prohibits
new or increased real property transfer tax rates, new State real property
taxes and local District income taxes.
According to the Colorado Economic Perspective, Fourth Quarter, FY 1992-93,
June 20, 1993 (the "Economic Report"), inflation for 1992 was 3.7% and
population grew at the rate of 2.7% in Colorado. Accordingly, under the
Amendment, increases in State expenditures during the 1994 fiscal year will be
limited to 6.4% over expenditures during the 1993 fiscal year. The 1993 fiscal
year is the base year for calculating the limitation for the 1994 fiscal year.
For the 1993 fiscal year, the Office of State Planning and Budgeting estimates
that general fund revenues will total $3,341.7 million and that program
revenues (cash funds) will total $1,753.4 million, or total estimated base
revenues of $5,095.1 million. Expenditures for the 1994 fiscal year,
therefore, cannot exceed $5,421.2 million. However, the 1994 fiscal year
general fund and program revenues (cash funds) are projected to be only
$5,220.4 million, or $200.8 million less than expenditures allowed under the
spending limitation.
There is also a statutory restriction on the amount of annual increases in
taxes that the various taxing jurisdictions in Colorado can levy without
electoral approval. This restriction does not apply to taxes levied to pay
general obligation debt.
As the State experienced revenue shortfalls in the mid-1980s, it adopted
various measures, including impoundment of funds by the Governor, reduction of
appropriations by the General Assembly, a temporary increase in the sales tax,
deferral of certain tax reductions and inter-fund borrowings. On a GAAP basis,
the State had unrestricted General Fund balances at June 30 of approximately
$100.3 million in fiscal year 1988, $134.4 million in fiscal year 1989, $116.6
million in fiscal year 1990, $16.3 million in fiscal year 1991 and $133.3
million in fiscal year 1992. The fiscal year 1993 unrestricted general fund is
currently estimated to be $281.8 million.
For fiscal year 1992, the following tax categories generated the following
respective revenue percentages of the State's $2,995.8 million total gross
receipts: individual income taxes represented 53.7% of gross fiscal year 1992
receipts; excise taxes represented 33.4% of gross fiscal year 1992 receipts;
and corporate income taxes represented 3.7% of gross fiscal year 1992
receipts. The final budget for fiscal year 1993 projects general fund revenues
of approximately $3,341.7 million and appropriations of approximately $3,046.7
million. The percentages of general fund revenue generated by type of tax for
fiscal year 1993 are not expected to be significantly different from fiscal
year 1992 percentages.
Under its constitution, the State of Colorado is not permitted to issue
general obligation bonds secured by the full faith and credit of the State.
However, certain agencies and instrumentalities of the State are authorized to
issue bonds secured by revenues from specific projects and activities. The
State enters into certain lease transactions which are subject to annual
renewal at the option of the State. In addition, the State is authorized to
issue short-term revenue anticipation notes. Local governmental units in the
State are also authorized to incur indebtedness. The major source of financing
for such local government indebtedness is an ad valorem property tax. In
addition, in order to finance public projects, local governments in the State
can issue revenue bonds payable from the revenues of a utility or enterprise
or from the proceeds of an excise tax, or assessment bonds payable from
special assessments. Colorado local governments can also finance public
projects through leases which are subject to annual appropriation at the
option of the local government. Local governments in Colorado also issue tax
anticipation notes. The Amendment requires prior voter approval for the
creation of any multiple fiscal year debt or other financial obligation
whatsoever, except for refundings at a lower rate or obligations of an
enterprise.
Based on data published by the State of Colorado, Office of State Planning and
Budgeting as presented in the Economic Report, over 50% of non-agricultural
employment in Colorado in 1992 was concentrated in the retail and wholesale
trade and service sectors, reflecting the importance of tourism to the State's
economy and of Denver as a regional economic and transportation hub. The
government and manufacturing sectors followed as the fourth and fifth largest
employment sectors in the State, representing approximately 18.3% and 11.5%,
respectively, of non-agricultural employment in the State in 1992.
According to the Economic Report, during the first quarter of 1993, 45,900 net
new jobs were generated in the Colorado economy, an increase of 24.4% over the
first quarter of 1992. However, the unemployment rate rose from an average of
5.5% during the first quarter of 1992 to 5.8% during the first quarter of
1993. Total retail sales increased by 9.8% during the first quarter of 1993 as
compared to the same period in 1992.
Personal income rose 6.6% in Colorado during 1992 and 5.5% in 1991. In 1992,
Colorado was the twelfth fastest growing state in terms of personal income
growth. However, because of heavy migration into the state and a large
increase in low-paying retail sector jobs, per capita personal income in
Colorado increased by only 3.8% in 1992, 0.1% below the increase in per capita
personal income for the nation as a whole.
Economic conditions in the State may have continuing effects on other
governmental units within the State (including issuers of the Bonds in the
Colorado IM-IT Trust), which, to varying degrees, have also experienced
reduced revenues as a result of recessionary conditions and other factors.
Tax Status. For a discussion of the Federal tax status of income earned on
Colorado IM-IT Trust Units, see "Other Matters--Federal Tax Status".
Neither the Sponsor nor its counsel have independently examined the Bonds to
be deposited in and held in the Trust. However, although Chapman and Cutler
expresses no opinion with respect to the issuance of the Bonds, in rendering
its opinion expressed herein, it has assumed that: (i) the Bonds were validly
issued, (ii) the interest thereon is excludable from gross income for federal
income tax purposes, and (iii) interest on the Bonds, if received directly by
a Unitholder, would be exempt from the income tax imposed by the State that is
applicable to individuals and corporations (the "State Income Tax").
This opinion does not address the taxation of persons other than full time
residents of Colorado.
In the opinion of Chapman and Cutler, counsel to the Sponsor, under existing
Colorado law:
Because Colorado income tax law is based upon the Federal law, the Colorado
IM-IT Trust is not an association taxable as a corporation for purposes of
Colorado income taxation.
With respect to Colorado Unitholders, in view of the relationship between
Federal and Colorado tax computations described above:
Each Colorado Unitholder will be treated as owning a pro rata share of each
asset of the Colorado IM-IT Trust for Colorado income tax purposes in the
proportion that the number of Units of such Trust held by the Unitholder bears
to the total number of outstanding Units of the Colorado IM-IT Trust, and the
income of the Colorado IM-IT Trust will therefore be treated as the income of
each Colorado Unitholder under Colorado law in the proportion described;
Interest on Bonds that would not be includable in income for Colorado income
tax purposes when paid directly to a Colorado Unitholder will be exempt from
Colorado income taxation when received by the Colorado IM-IT Trust and
attributed to such Colorado Unitholder and when distributed to such Colorado
Unitholder;
Any proceeds paid under an insurance policy or policies issued to the Colorado
IM-IT Trust with respect to the Bonds in the Colorado IM-IT Trust which
represent maturing interest on defaulted obligations held by the Trustee will
be excludable from Colorado adjusted gross income if, and to the same extent
as, such interest would have been so excludable if paid in the normal course
by the issuer of the defaulted obligations;
Any proceeds paid under individual policies obtained by issuers of Bonds in
the Colorado IM-IT Trust which represent maturing interest on defaulted
obligations held by the Trustee will not be includable in income for Colorado
income tax purposes if, and to the same extent as, such interest would not
have been so includable if paid in the normal course by the issuer of the
defaulted obligations;
Each Colorado Unitholder will realize taxable gain or loss when the Colorado
IM-IT Trust disposes of a Bond (whether by sale, exchange, redemption, or
payment at maturity) or when the Colorado Unitholder redeems or sells Units at
a price that differs from original cost as adjusted for amortization of bond
discount or premium and other basis adjustments (including any basis reduction
that may be required to reflect a Colorado Unitholder's share of interest, if
any, accruing on Bonds during the interval between the Colorado Unitholder's
settlement date and the date such Bonds are delivered to the Colorado IM-IT
Trust, if later);
Tax cost reduction requirements relating to amortization of bond premium may,
under some circumstances, result in Colorado Unitholders realizing taxable
gain when their Units are sold or redeemed for an amount equal to or less than
their original cost; and
If interest on indebtedness incurred or continued by a Colorado Unitholder to
purchase Units in the Colorado IM-IT Trust is not deductible for federal
income tax purposes, it also will be non-deductible for Colorado income tax
purposes.
Unitholders should be aware that all tax-exempt interest, including their
share of interest on the Bonds paid to the Colorado IM-IT Trust, is taken into
account for purposes of determining eligibility for the Colorado Property Tax/
Rent/Heat Rebate.
<TABLE>
<CAPTION>
Per Unit Information:
<S> <C>
Calculation of Estimated Net Annual Unit Income:
Estimated Annual Interest Income per Unit .............................$ 63.69
Less: Estimated Annual Expense per Unit <F1> ..........................$ 2.08
Less: Annual Premium on Portfolio Insurance per Unit ..................$ .38
Estimated Net Annual Interest Income per Unit .........................$ 61.23
Calculation of Estimated Interest Earnings Per Unit:
Estimated Net Annual Interest Income per Unit .........................$ 61.23
Divided by 12..........................................................$ 5.10
Estimated Daily Rate of Net Interest Accrual per Unit ..................$ .17008
Estimated Current Return Based on Public Offering Price <F2><F3><F4>.... 6.12%
Estimated Long-Term Return <F2><F3><F4> ................................ 6.21%
Initial Distribution (December 1994)....................................$ 2.55
Estimated Normal Distribution per Unit <F4> ............................$ 5.10
Purchased Interest <F5>.................................................$ 10.62
Trustee's Annual Fee.................$.98 per $1,000 principal amount of Bonds
Record and Computation Dates.........FIRST day of each month
Distribution Dates ..................FIFTEENTH day of each month commencing
December 15, 1994.
<FN>
<F1>Excluding insurance costs.
<F2>The Estimated Current Return and Estimated Long-Term Return are increased for
transactions entitled to a reduced sales charge. See "Unitholder
Explanations--Public Offering--General".
<F3>The Estimated Current Return is calculated by dividing the estimated net
annual interest income per Unit by the Public Offering Price. The estimated
net annual interest income per Unit will vary with changes in fees and
expenses of the Trustee and the Evaluator and with the principal prepayment,
redemption, maturity, exchange or sale of Securities while the Public Offering
Price will vary with changes in the offering price of the underlying
Securities and with changes in the Purchased Interest; therefore, there is no
assurance that the present Estimated Current Return indicated above will be
realized in the future. The Estimated Long-Term Return is calculated using a
formula which (1) takes into consideration, and determines and factors in the
relative weightings of, the market values, yields (which takes into account
the amortization of premiums and the accretion of discounts) and estimated
retirements of all of the Securities in the Trust and (2) takes into account
the expenses and sales charge associated with each Trust Unit. Since the
market values and estimated retirements of the Securities and the expenses of
the Trust will change, there is no assurance that the present Estimated
Long-Term Return as indicated above will be realized in the future. The
Estimated Current Return and Estimated Long-Term Return are expected to differ
because the calculation of the Estimated Long-Term Return reflects the
estimated date and amount of principal returned while the Estimated Current
Return calculation includes only net annual interest income and Public
Offering Price.
<F4>These figures are based on estimated per Unit cash flows. Estimated cash flows
will vary with changes in fees and expenses, with changes in current interest
rates and with the principal prepayment, redemption, maturity, call, exchange
or sale of the underlying Securities. The estimated cash flows for this Series
are set forth under "Estimated Cash Flows to Unitholders".
<F5>See "Unitholder Explanations--Purchased and Accrued Interest".
</TABLE>
<TABLE>
COLORADO INSURED MUNICIPALS INCOME TRUST
SERIES 71 (IM-IT AND QUALITY MULTI-SERIES 235)
PORTFOLIO As of November 8, 1994
<CAPTION>
Offering
Price To
Colorado
Aggregate Name of Issuer, Title, Interest Rate andMaturity Date of either Redemption IM-IT
Principal<F1> Bonds Deposited orBonds Contracted for<F1><F5> Rating<F2> Feature<F3> Trust<F4>
<S> <C> <C> <C> <C>
$ 100,000 Auraria Higher Education Center, State of Colorado, Parking
Facilities System Refunding Revenue Bonds, Series 1993 (FSA 2003 @ 101
Insured) 5.30% Due 4/1/2012 .................................... AAA 2009 @ 100 S.F. $ 83,684
100,000 Regional Transportation District (Colorado) Sales Tax Revenue
Refunding and Improvement Bonds, Series 1992 (FGIC Insured) 2002 @ 101
#6.25% Due 11/1/2012 ............................................ AAA 2007 @ 100 S.F. 95,836
500,000 Garfield, Pitkin and Eagle Counties, Colorado, School District
No.1 (Roarink Forks) Unlimited Tax-General Obligation Bonds, 2004 @ 101
Series 1994 (MBIA Insured) 6.60% Due 12/15/2014 ................ AAA 2009 @ 100 S.F. 494,830
500,000 City of Arvada, Colorado, Sales and Use Tax Refunding and
Improvement Revenue Bonds, Series 1992 (FGIC Insured) #6.25% 2002 @ 100
Due 12/1/2017 ................................................... AAA 2013 @ 100 S.F. 473,460
500,000 City of Colorado Springs, Colorado, Utilities System Refunding
Revenue Bonds, Series 1992A (AMBAC Indemnity Insured) #6.125% 2002 @ 100
Due 11/15/2020 .................................................. AAA 2019 @ 100 S.F. 458,765
400,000 University of Colorado Hospital Authority, Hospital Revenue
Bonds, Series 1992A (AMBAC Indemnity Insured) #6.40% Due 2002 @ 102
11/15/2022 ...................................................... AAA 2013 @ 100 S.F. 373,628
500,000 Pueblo County, Colorado, Single Family Mortgage Revenue
Refunding Bonds (GNMA and FNMA Mortgage-Backed Securities 2004 @ 102
Program) Series 1994A 7.05% Due 11/1/2027 ...................... AAA 2019 @ 100 S.F. 501,205
425,000 Colorado Housing and Finance Authority, Multi-Family Housing
Insured Mortgage Revenue Bonds, Series 1993A 5.90% Due 2003 @ 102
10/1/2029 ....................................................... AA 2004 @ 100 S.F. 360,132
$ 3,025,000 $ 2,841,540
</TABLE>
All of the Bonds in the portfolio are insured either by one of the Preinsured
Bond Insurers (as indicated in the Bond name) or under the portfolio insurance
policy obtained by the Trust from AMBAC Indemnity. See "Unitholder
Explanations--Insurance on the Bonds in the Insured Trusts".
For an explanation of the footnotes used on this page, see "Notes to
Portfolios".
MICHIGAN IM-IT TRUST
General. The Michigan IM-IT Trust consists of 8 issues of Securities. Three of
the Bonds in the Michigan 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 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 Michigan IM-IT Trust) as follows: General Obligations, 3 (33%);
Multi-Family Mortgage Revenue, 2 (32%); Health Care, 1 (16%); Transportation,
1 (16%) and General Purpose, 1 (3%). No Bond issue has received a provisional
rating.
Risk Factors. Investors should be aware that the economy of the State of
Michigan has, in the past, proven to be cyclical, due primarily to the fact
that the leading sector of the State's economy is the manufacturing of durable
goods. While the State's efforts to diversify its economy have proven
successful, as reflected by the fact that the share of employment in the State
in the durable goods sector has fallen from 33.1 percent in 1960 to 17.9
percent in 1990, durable goods manufacturing still represents a sizable
portion of the State's economy. As a result, any substantial national economic
downturn is likely to have an adverse effect on the economy of the State and
on the revenues of the State and some of its local governmental units.
In May 1986, Moody's Investors Service raised the State's general obligation
bond rating to "A1". In October 1989, Standard & Poor's Corporation
raised its rating on the State's general obligation bonds to "AA".
The State's economy could continue to be affected by changes in the auto
industry, notably consolidation and plant closings resulting from competitive
pressures and over-capacity. Such actions could adversely affect State
revenues and the financial impact on the local units of government in the
areas in which plants are closed could be more severe.
General Motors Corporation has announced the scheduled closing of several of
its plants in Michigan in 1993 and 1994. The impact these closures will have
on the State's revenues and expenditures is not currently known. The impact on
the financial condition of the municipalities in which the plants are located
may be more severe than the impact on the State itself.
In recent years, the State has reported its financial results in accordance
with generally accepted accounting principles. For each of the five fiscal
years ending with the fiscal year ended September 30, 1989, the State reported
positive year-end General Fund balances and positive cash balances in the
combined General Fund/School Aid Fund. For the fiscal years ending September
30, 1990 and 1991, the State reported negative year-end General Fund Balances
of $310.4 million and $169.4 million, respectively, but ended the 1992 fiscal
year with its general fund in balance and ended the 1993 fiscal year with a
small general fund surplus. A positive cash balance in the combined General
Fund/School Aid Fund was recorded at September 30, 1990. In the 1991 through
1993 fiscal years the State experienced deteriorating cash balances which
necessitated short term borrowing and the deferral of certain scheduled cash
payments. The State borrowed $900 million for cash flow purposes in the 1993
fiscal year, which was repaid on September 30, 1993. The State's Budget
Stabilization Fund received a $283 million transfer from the General Fund in
the 1993 State fiscal year, bringing the fund balance to $303 million at
September 30, 1993.
The Michigan Constitution of 1963 limits the amount of total revenues of the
State raised from taxes and certain other sources to a level for each fiscal
year equal to a percentage of the State's personal income for the prior
calendar year. In the event that the State's total revenues exceeds the limit
by 1 percent or more, the Michigan Constitution of 1963 requires that the
excess be refunded to taxpayers.
On March 15, 1994, Michigan voters approved a school finance reform amendment
to the State's Constitution which, among other things, increases the State
sales tax rate from 4% to 6% and places a cap on property assessment increases
for all property taxes. Such approval triggers the effectiveness of
legislation under which the State's income tax rate will be cut from 4.6% to
4.4%, some property taxes will be reduced and school funding will be provided
from a combination of property taxes and state revenues, some of which will be
provided from other new or increased State taxes. The legislation also
contains other proposals that may reduce or alter the revenues of local units
of government, and tax increment bonds could be particularly affected. While
the ultimate impact of the constitutional amendment and related legislation
cannot yet be accurately predicted, investors should be alert to the potential
effect of such measures upon the operations and revenues of Michigan local
units of government.
Although all or most of the Bonds in the Michigan IM-IT Trust are revenue
obligations or general obligations of local governments or authorities rather
than general obligations of the State of Michigan itself, there can be no
assurance that any financial difficulties the State may experience will not
adversely affect the market value or marketability of the Bonds or the ability
of the respective obligors to pay interest on or principal of the Bonds,
particularly in view of the dependency of local governments and other
authorities upon State aid and reimbursement programs and, in the case of
bonds issued by the State Building Authority, the dependency of the State
Building Authority on the receipt of rental payments from the State to meet
debt service requirements upon such bonds. In the 1991 fiscal year, the State
deferred certain scheduled cash payments to municipalities, school districts,
universities and community colleges. While such deferrals were made up at
specified later dates, similar future deferrals could have an adverse impact
on the cash position of some local governmental units. Additionally, the State
reduced revenue sharing payments to municipalities below that level provided
under formulas by $10.9 million in the 1991 fiscal year, up $34.4 million in
the 1992 fiscal year, $45.5 million in the 1993 fiscal year and $64.6 million
(budgeted) in the 1994 fiscal year.
The Michigan IM-IT Trust may contain general obligation bonds of local units
of government pledging the full faith and credit of the local unit which are
payable from the levy of ad valorem taxes on taxable property within the
jurisdiction of the local unit. Such bonds issued prior to December 22, 1978,
or issued after December 22, 1978 with the approval of the electors of the
local unit, are payable from property taxes levied without limitation as to
rate or amount. With respect to bonds issued after December 22, 1978, and
which were not approved by the electors of the local unit, the tax levy of the
local unit for debt service purposes is subject to constitutional, statutory
and charter tax rate limitations. In addition, several major industrial
corporations have instituted challenges of their ad valorem property tax
assessments in a number of local municipal units in the State. If successful,
such challenges could have an adverse impact on the ad valorem tax bases of
such units which could adversely affect their ability to raise funds for
operation and debt service requirements.
Tax Status. For a discussion of the Federal tax status of income earned on
Michigan IM-IT Trust Units, see "Other Matters--Federal Tax Status".
In the opinion of Miller, Canfield, Paddock and Stone, special counsel to the
Fund for Michigan tax matters, under existing Michigan law:
The Michigan IM-IT Trust and the owners of Units will be treated for purposes
of the Michigan income tax laws and the Single Business Tax in substantially
the same manner as they are for purposes of the Federal income tax laws, as
currently enacted. Accordingly, we have relied upon the opinion of Messrs.
Chapman and Cutler as to the applicability of Federal income tax under the
Internal Revenue Code of 1986 to the Michigan IM-IT Trust and the Holders of
Units.
Under the income tax laws of the State of Michigan, the Michigan IM-IT Trust
is not an association taxable as a corporation; the income of the Michigan
IM-IT Trust will be treated as the income of the Unitholders and be deemed to
have been received by them when received by the Michigan IM-IT Trust. Interest
on the underlying Bonds which is exempt from tax under these laws when
received by Michigan IM-IT Trust will retain its status as tax exempt interest
to the Unitholders.
For purposes of the foregoing Michigan tax laws, each Unitholder will be
considered to have received his pro rata share of Bond interest when it is
received by the Michigan IM-IT Trust, and each Unitholder will have a taxable
event when the Michigan IM-IT Trust disposes of a Bond (whether by sale,
exchange, redemption or payment at maturity) or when the Unitholder redeems or
sells his Certificate to the extent the transaction constitutes a taxable
event for Federal income tax purposes. The tax cost of each unit to a
Unitholder will be established and allocated for purposes of these Michigan
tax laws in the same manner as such cost is established and allocated for
Federal income tax purposes.
Under the Michigan Intangibles Tax, the Michigan IM-IT Trust is not taxable
and the pro rata ownership of the underlying Bonds, as well as the interest
thereon, will be exempt to the Unitholders to the extent the Michigan IM-IT
Trust consists of obligations of the State of Michigan or its political
subdivisions or municipalities, or of obligations of possessions of the United
States.
The Michigan Single Business Tax replaced the tax on corporate and financial
institution income under the Michigan Income Tax, and the Intangible Tax with
respect to those intangibles of persons subject to the Single Business Tax the
income from which would be considered in computing the Single Business Tax.
Persons are subject to the Single Business Tax only if they are engaged in
"business activity", as defined in the Act. Under the Single Business
Tax, both interest received by the Michigan IM-IT Trust on the underlying
Bonds and any amount distributed from the Michigan IM-IT Trust to a
Unitholder, if not included in determining taxable income for Federal income
tax purposes, is also not included in the adjusted tax base upon which the
Single Business Tax is computed, of either the Michigan IM-IT Trust or the
Unitholders. If the Michigan IM-IT Trust or the Unitholders have a taxable
event for Federal income tax purposes when the Michigan IM-IT Trust disposes
of a Bond (whether by sale, exchange, redemption or payment at maturity) or
the Unitholder redeems or sells his Certificate, an amount equal to any gain
realized from such taxable event which was included in the computation of
taxable income for Federal income tax purposes (plus an amount equal to any
capital gain of an individual realized in connection with such event but
excluded in computing that individual's Federal taxable income) will be
included in the tax base against which, after allocation, apportionment and
other adjustments, the Single Business Tax is computed. The tax base will be
reduced by an amount equal to any capital loss realized from such a taxable
event, whether or not the capital loss was deducted in computing Federal
taxable income in the year the loss occurred. Unitholders should consult their
tax advisor as to their status under Michigan law.
Any proceeds paid under an insurance policy issued to the Trustee of the
Trust, or paid under individual policies obtained by issuers of Bonds, which,
when received by the Unitholders, represent maturing interest on defaulted
obligations held by the Trustee, will be excludable from the Michigan income
tax laws and the Single Business Tax if, and to the same extent as, such
interest would have been so excludable if paid by the issuer of the defaulted
obligations. While treatment under the Michigan Intangibles Tax is not
premised upon the characterization of such proceeds under the Internal Revenue
Code, the Michigan Department of Treasury should adopt the same approach as
under the Michigan income tax laws and the Single Business Tax.
As the Tax Reform Act of 1986 eliminates the capital gain deduction for tax
years beginning after December 31, 1986, the federal adjusted gross income,
the computation base for the Michigan Income Tax, of a Unitholder will be
increased accordingly to the extent such capital gains are realized when the
Michigan IM-IT Trust disposes of a Bond or when the Unitholder redeems or
sells a Unit, to the extent such transaction constitutes a taxable event for
Federal income tax purposes.
<TABLE>
<CAPTION>
Per Unit Information:
<S> <C>
Calculation of Estimated Net Annual Unit Income <F1>:
Estimated Annual Interest Income per Unit.................................... $ 64.02
Less: Estimated Annual Expense per Unit <F2>................................. $ 2.04
Less: Annual Premium on Portfolio Insurance per Unit......................... --
Estimated Net Annual Interest Income per Unit................................ $ 61.98
Calculation of Estimated Interest Earnings Per Unit:
Estimated Net Annual Interest Income per Unit................................ $ 61.98
Divided by 12................................................................ $ 5.17
Estimated Daily Rate of Net Interest Accrual per Unit......................... $ .17218
Estimated Current Return Based on Public Offering Price <F1><F3><F4><F5>...... 6.20%
Estimated Long-Term Return <F3><F4><F5>....................................... 6.29%
Initial Distribution (December 1994).......................................... $ 2.58
Estimated Normal Distribution per Unit <F5>................................... $ 5.17
Purchased Interest <F6>....................................................... $ 10.68
Trustee's Annual Fee <F1>.............$.98 per $1,000 principal amount of Bonds
Record and Computation Dates..........FIRST day of each month FIFTEENTH day of each
month commencing December 15, 1994.
<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 $64.05. Estimated Annual Expense
per Unit (excluding insurance) will be increased to $2.07; and estimated net
annual interest income per Unit will remain the same as shown. See "
Estimated Current Returns and Estimated Long-Term Returns."Based on the
outstanding principal amount of Securities as of the Date of Deposit, the
Trustee's annual fee would be $3,058.
<F2>Excluding insurance costs.
<F3>The Estimated Current Return and Estimated Long-Term Return are increased for
transactions entitled to a reduced sales charge. See "Unitholder
Explanations--Public Offering--General".
<F4>The Estimated Current Return is calculated by dividing the estimated net
annual interest income per Unit by the Public Offering Price. The estimated
net annual interest income per Unit will vary with changes in fees and
expenses of the Trustee and the Evaluator and with the principal prepayment,
redemption, maturity, exchange or sale of Securities while the Public Offering
Price will vary with changes in the offering price of the underlying
Securities and with changes in the Purchased Interest; therefore, there is no
assurance that the present Estimated Current Return indicated above will be
realized in the future. The Estimated Long-Term Return is calculated using a
formula which (1) takes into consideration, and determines and factors in the
relative weightings of, the market values, yields (which takes into account
the amortization of premiums and the accretion of discounts) and estimated
retirements of all of the Securities in the Trust and (2) takes into account
the expenses and sales charge associated with each Trust Unit. Since the
market values and estimated retirements of the Securities and the expenses of
the Trust will change, there is no assurance that the present Estimated
Long-Term Return as indicated above will be realized in the future. The
Estimated Current Return and Estimated Long-Term Return are expected to differ
because the calculation of the Estimated Long-Term Return reflects the
estimated date and amount of principal returned while the Estimated Current
Return calculation includes only net annual interest income and Public
Offering Price.
<F5>These figures are based on estimated per Unit cash flows. Estimated cash flows
will vary with changes in fees and expenses, with changes in current interest
rates and with the principal prepayment, redemption, maturity, call, exchange
or sale of the underlying Securities. The estimated cash flows for this Series
are set forth under "Estimated Cash Flows to Unitholders".
<F6>See "Unitholder Explanations--Purchased and Accrued Interest".
</TABLE>
<TABLE>
MICHIGAN INSURED MUNICIPALS INCOME TRUST
SERIES 121 (IM-IT AND QUALITY MULTI-SERIES 235)
PORTFOLIO As of November 8, 1994
<CAPTION>
Offering
Price To
Aggregate Name of Issuer, Title, Interest Rate andMaturity Date of either Redemption Michigan
Principal<F1> Bonds Deposited orBonds Contracted for<F1><F5> Rating<F2> Feature<F3> IM-IT Trust<F4>
<S> <C> <C> <C> <C>
$ 500,000 Michigan State Housing Development Authority, Limited
Obligation Revenue Bonds (Parkway Meadows Project) Series 1991 2002 @ 103
(FSA Insured) 6.85% Due 10/15/2018 ............................. AAA 2007 @ 100 S.F. $ 496,670
100,000 Huron Valley School District, Counties of Oakland and
Livingston, State of Michigan, 1993 Refunding Bonds (General 2003 @ 102
Obligation-Unlimited Tax) FGIC Insured #6.125% Due 5/1/2020 .... AAA 2013 @ 100 S.F. 90,710
500,000 State of Michigan, State Trunk Line Fund Bonds, Series 1994A 2004 @ 102
(FGIC Insured) #5.75% Due 11/15/2020 ........................... AAA 2017 @ 100 S.F. 430,780
100,000 Economic Development Corporation of the County of Gratiot,
Michigan, Limited Obligation Economic Development Revenue
Refunding Bonds (Michigan Masonic Home Project) Series 1993 2003 @ 102
(AMBAC Indemnity Insured) #5.00% Due 11/15/2020 ................ AAA 2015 @ 100 S.F. 74,337
500,000 City of Farmington Hills, Hospital Finance Authority, Hospital
Revenue Bonds (Botsford General Hospital) Series 1992A (MBIA 2002 @ 102
Insured) #6.50% Due 2/15/2022 .................................. AAA 2012 @ 100 S.F. 475,300
500,000 Michigan State Housing Development Authority, Rental Housing
Revenue Bonds, Series 1993A (AMBAC Indemnity Insured) 5.90% Due 2003 @ 102
4/1/2023 ........................................................ AAA 2018 @ 100 S.F. 435,020
500,000 Grand Ledge Public Schools, Counties of Eaton, Clinton and
Ionia, State of Michigan, 1994 School Building and Site Bonds
(General Obligation-Unlimited Tax) MBIA Insured #6.60% Due 2004 @ 102
5/1/2024 ........................................................ AAA 2015 @ 100 S.F. 483,655
420,000 Wayland Union School District, Counties of Allegan, Barry and
Kent, State of Michigan, 1994 School Building and Site Bonds
(General Obligation-Unlimited Tax) FGIC Insured** #6.75% Due 2005 @ 101
5/1/2024 ........................................................ AAA 2015 @ 100 S.F. 414,187
$ 3,120,000 $ 2,900,659
</TABLE>
All of the Bonds in the portfolio are insured by one of the Preinsured Bond
Insurers as indicated in the Bond name. See "Unitholder
Explanations--Insurance on the Bonds in the Insured Trusts".
For an explanation of the footnotes used on this page, see "Notes to
Portfolios".
MISSOURI IM-IT TRUST
General. The Missouri IM-IT Trust consists of 9 issues of Securities. None of
the Bonds in the Missouri 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 Missouri IM-IT Trust) as follows: Health Care, 3 (35%); Public Building,
2 (20%); Wholesale Electric, 1 (17%); Certificates of Participation, 1 (16%)
and Water and Sewer, 2 (12%). No Bond issue has received a provisional rating.
Risk Factors. The following discussion regarding constitutional limitations
and the economy of the State of Missouri is included for the purpose of
providing general information that may or may not affect issuers of the Bonds
in Missouri.
In November 1981, the voters of Missouri adopted a tax limitation amendment to
the constitution of the State of Missouri (the "Amendment"). The
Amendment prohibits increases in local taxes, licenses, or fees by political
subdivisions without approval of the voters of such political subdivision. The
Amendment also limits the growth in revenues and expenditures of the State to
the rate of growth in the total personal income of the citizens of Missouri.
The limitation may be exceeded if the General Assembly declares an emergency
by a two-thirds vote. The Amendment did not limit revenue growth at the state
level in fiscal 1982 through 1988 with the exception of fiscal 1984.
Management Report No. 85-20, which was issued on March 5, 1985 by State
Auditor Margaret Kelly, indicates that state revenues exceeded the allowable
increase by $30.52 million in fiscal 1984, and a taxpayer lawsuit has been
filed pursuant to the Amendment seeking a refund of the revenues in excess of
the limit.
The economy of Missouri is diverse and includes manufacturing, retail and
wholesale trade, services, agriculture, tourism and mining. In recent years,
growth in the wholesale and retail trade had offset the more slowly growing
manufacturing and agricultural sectors of the economy. In 1991, the
unemployment rate in Missouri was 6.6%, and according to preliminary
seasonally adjusted figures, the rate dropped to 5.4% in December 1992. There
can be no assurance that the general economic conditions or the financial
circumstances of Missouri or its political subdivisions will not adversely
affect the market value of the Bonds or the ability of the obligor to pay debt
service on such Bonds.
Currently, Moody's Investors Service rates Missouri general obligation bonds
"Aaa"and Standard & Poor's Corporation rates Missouri general
obligation bonds "AAA". Although these ratings indicate that the State
of Missouri is in relatively good economic health, there can be, of course, no
assurance that this will continue or that particular bond issues may not be
adversely affected by changes in the State or local economic or political
conditions.
The foregoing information constitutes only a brief summary of some of the
general factors which may impact certain issuers of Bonds and does not purport
to be a complete or exhaustive description of all adverse conditions to which
the issuers of obligations held by the Missouri IM-IT Trust are subject.
Additionally, many factors including national economic, social and
environmental policies and conditions, which are not within the control of the
issuers of the 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. The Sponsor is unable to predict whether or
to what extent such factors or other factors may affect the issuers of the
Bonds, the market value or marketability of the Bonds or the ability of the
respective issuers of the Bonds acquired by the Missouri IM-IT Trust to pay
interest on or principal of the Bonds.
Tax Status. For a discussion of the Federal tax status of income earned on
Missouri IM-IT Trust Units, see "Other Matters--Federal Tax Status".
The assets of the Missouri IM-IT Trust will consist of debt obligations issued
by or on behalf of the State of Missouri (the "State") or counties,
municipalities, authorities or political subdivisions thereof (the "
Missouri Bonds") or by the Commonwealth of Puerto Rico, Guam and the
United States Virgin Islands (the "Possession Bonds") (collectively,
the "Bonds").
Neither the Sponsor nor its counsel have independently examined the Bonds to
be deposited in and held in the Missouri IM-IT Trust. However, although no
opinion is expressed herein regarding such matters, it is assumed that: (i)
the Bonds were validly issued, (ii) the interest thereon is excludable from
gross income for Federal income tax purposes and (iii) interest on the
Missouri Bonds, if received directly by a Unitholder, would be exempt from the
Missouri income tax applicable to individuals and corporations ("Missouri
state income tax"). The opinion set forth below does not address the
taxation of persons other than full time residents of Missouri.
In the opinion of Chapman and Cutler, counsel to the Sponsor under existing
law:
(1) The Missouri IM-IT Trust is not an association taxable as a corporation
for Missouri income tax purposes, and each Unitholder of the Missouri IM-IT
Trust will be treated as the owner of a pro rata portion of the Missouri IM-IT
Trust and the income of such portion of the Missouri IM-IT Trust will be
treated as the income of the Unitholder for Missouri state income tax
purposes.
(2) Interest paid and original issue discount, if any, on the Bonds which
would be exempt from the Missouri state income tax if received directly by a
Unitholder will be exempt from the Missouri state income tax when received by
the Missouri IM-IT Trust and distributed to such Unitholder; however, no
opinion is expressed herein regarding taxation of interest paid and original
issue discount, if any, on the Bonds received by the Missouri IM-IT Trust and
distributed to Unitholders under any other tax imposed pursuant to Missouri
law, including but not limited to the franchise tax imposed on financial
institutions pursuant to Chapter 148 of the Missouri Statutes.
(3) To the extent that interest paid and original issue discount, if any,
derived from the Missouri IM-IT Trust by a Unitholder with respect to
Possession Bonds is excludable from gross income for Federal income tax
purposes pursuant to 48 U.S.C. (Section)745, 48 U.S.C. (Section)1423a, and 48
U.S.C. (Section)1403, such interest paid and original issue discount, if any,
will not be subject to the Missouri state income tax; however, no opinion is
expressed herein regarding taxation of interest paid and original issue
discount, if any, on the Bonds received by the Missouri IM-IT Trust and
distributed to Unitholders under any other tax imposed pursuant to Missouri
law, including but not limited to the franchise tax imposed on financial
institutions pursuant to Chapter 148 of the Missouri Statutes.
(4) Each Unitholder of the Missouri IM-IT Trust will recognize gain or loss
for Missouri state income tax purposes if the Trustee disposes of a bond
(whether by redemption, sale, or otherwise) or if the Unitholder redeems or
sells Units of the Missouri IM-IT Trust to the extent that such a transaction
results in a recognized gain or loss to such Unitholder for Federal income tax
purposes. 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 equal to their original cost.
(5) Any insurance proceeds paid under policies which represent maturing
interest on defaulted obligations which are excludable from gross income for
Federal income tax purposes will be excludable from the Missouri state income
tax to the same extent as such interest would have been paid by the issuer of
such Bonds held by the Missouri IM-IT Trust; however, no opinion is expressed
herein regarding taxation of interest paid and original issue discount, if
any, on the Bonds received by the Missouri IM-IT Trust and distributed to
Unitholders under any other tax imposed pursuant to Missouri law, including
but not limited to the franchise tax imposed on financial institutions
pursuant to Chapter 148 of the Missouri Statutes.
(6) The Missouri state income tax does not permit a deduction of interest
paid or incurred on indebtedness incurred or continued to purchase or carry
Units in the Trust, the interest on which is exempt from such Tax.
(7) The Missouri IM-IT Trust will not be subject to the Kansas City,
Missouri Earnings and Profits Tax and each Unitholder's share of income of the
Bonds held by the Missouri IM-IT Trust will not generally be subject to the
Kansas City, Missouri Earnings and Profits Tax or the City of St. Louis
Earnings Tax (except in the case of certain Unitholders, including
corporations, otherwise subject to the St. Louis City Earnings Tax).
<TABLE>
<CAPTION>
Per Unit Information:
<S> <C>
Calculation of Estimated Net Annual Unit Income <F1>:
Estimated Annual Interest Income per Unit ................................$ 62.18
Less: Estimated Annual Expense per Unit <F2> .............................$ 2.06
Less: Annual Premium on Portfolio Insurance per Unit ................. --
Estimated Net Annual Interest Income per Unit ............................$ 60.12
Calculation of Estimated Interest Earnings Per Unit:
Estimated Net Annual Interest Income per Unit ............................$ 60.12
Divided by 12.............................................................$ 5.01
Estimated Daily Rate of Net Interest Accrual per Unit .....................$ .16699
Estimated Current Return Based on Public Offering Price <F1><F3><F4><F5>... 6.01%
Estimated Long-Term Return <F3><F4><F5> ................................... 6.16%
Initial Distribution (December 1994).......................................$ 2.50
Estimated Normal Distribution per Unit <F5> ...............................$ 5.01
Purchased Interest <F6>....................................................$ 10.37
Trustee's Annual Fee <F1>............$.98 per $1,000 principal amount of Bonds
Record and Computation Dates.........FIRST day of each month
Distribution Dates...................FIFTEENTH day of each month commencing December
15, 1994.
<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 $62.21. Estimated Annual Expense
per Unit (excluding insurance) will be increased to $2.09; and estimated net
annual interest income per Unit will remain the same as shown. See "
Estimated Current Returns and Estimated Long-Term Returns."Based on the
outstanding principal amount of Securities as of the Date of Deposit, the
Trustee's annual fee would be $3,043.
<F2>Excluding insurance costs.
<F3>The Estimated Current Return and Estimated Long-Term Return are increased for
transactions entitled to a reduced sales charge. See "Unitholder
Explanations--Public Offering--General".
<F4>The Estimated Current Return is calculated by dividing the estimated net
annual interest income per Unit by the Public Offering Price. The estimated
net annual interest income per Unit will vary with changes in fees and
expenses of the Trustee and the Evaluator and with the principal prepayment,
redemption, maturity, exchange or sale of Securities while the Public Offering
Price will vary with changes in the offering price of the underlying
Securities and with changes in the Purchased Interest; therefore, there is no
assurance that the present Estimated Current Return indicated above will be
realized in the future. The Estimated Long-Term Return is calculated using a
formula which (1) takes into consideration, and determines and factors in the
relative weightings of, the market values, yields (which takes into account
the amortization of premiums and the accretion of discounts) and estimated
retirements of all of the Securities in the Trust and (2) takes into account
the expenses and sales charge associated with each Trust Unit. Since the
market values and estimated retirements of the Securities and the expenses of
the Trust will change, there is no assurance that the present Estimated
Long-Term Return as indicated above will be realized in the future. The
Estimated Current Return and Estimated Long-Term Return are expected to differ
because the calculation of the Estimated Long-Term Return reflects the
estimated date and amount of principal returned while the Estimated Current
Return calculation includes only net annual interest income and Public
Offering Price.
<F5>These figures are based on estimated per Unit cash flows. Estimated cash flows
will vary with changes in fees and expenses, with changes in current interest
rates and with the principal prepayment, redemption, maturity, call, exchange
or sale of the underlying Securities. The estimated cash flows for this Series
are set forth under "Estimated Cash Flows to Unitholders".
<F6>See "Unitholder Explanations--Purchased and Accrued Interest".
</TABLE>
<TABLE>
MISSOURI INSURED MUNICIPALS INCOME TRUST
SERIES 85 (IM-IT AND QUALITY MULTI-SERIES 235)
PORTFOLIO As of November 8, 1994
<CAPTION>
Offering
Price To
Aggregate Name of Issuer, Title, Interest Rate andMaturity Date of either Redemption Missouri
Principal<F1> Bonds Deposited orBonds Contracted for<F1><F5> Rating<F2> Feature<F3> IM-IT Trust<F4>
<S> <C> <C> <C> <C>
$ 125,000 City of Liberty, Missouri, Waterworks Refunding and Improvement
Revenue Bonds, Series 1992B (MBIA Insured) 6.30% Due 10/1/2012 2002 @ 100
AAA 2009 @ 100 S.F. $ 120,448
500,000 The Junior College District of Metropolitan Kansas City,
Missouri, Lease Certificates of Participation (Northland Human
Services Center and Independence Campus Projects) Series 1993C 2003 @ 101
(FGIC Insured) #5.60% Due 7/1/2013 .......................... AAA 2007 @ 100 S.F. 437,230
125,000 St. Louis Municipal Finance Corporation II, Leasehold Revenue
Improvement Bonds, Series 1994 (City of St. Louis, Missouri,
Lessee) Civil Courts Building Project (FGIC Insured) #5.75% Due 2004 @ 102
8/1/2013 ..................................................... AAA 2007 @ 100 S.F. 111,831
500,000 Health and Educational Facilities Authority of the State of
Missouri, Health Facilities Revenue Bonds (BJC Health System)
Series 1994A (MBIA Insured)** 6.75% Due 5/15/2014 .......... AAA 502,500
260,000 The City of St. Louis, Missouri, Water Revenue Refunding and
Improvement Bonds, Series 1994 (FGIC Insured) #6.00% Due 2004 @ 102
7/1/2014 ..................................................... AAA 2010 @ 100 S.F. 241,561
350,000 Health and Educational Facilities Authority of the State of
Missouri, Health Facilities Refunding Revenue Bonds (SSM Health 2002 @ 102
Care) Series 1992AA (MBIA Insured) #6.25% Due 6/1/2016 ..... AAA 2011 @ 100 S.F. 329,252
500,000 Kansas City Municipal Assistance Corporation (Missouri)
Leasehold Improvement Revenue Bonds, Series 1991B (H. Roe
Bartle Convention Center Project) AMBAC Indemnity Insured 2001 @ 100
#6.00% Due 4/15/2020 ......................................... AAA 2016 @ 100 S.F. 452,220
225,000 Missouri Health and Educational Facilities Authority, Health
Facilities Revenue Bonds (Health Midwest) Series 1992B (MBIA 2002 @ 102
Insured) #6.25% Due 2/15/2022 ............................... AAA 2013 @ 100 S.F. 209,531
520,000 City of Sikeston, Missouri, Electric System Revenue Refunding 2002 @ 102
Bonds, Series 1992 (MBIA Insured) #6.25% Due 6/1/2022 ....... AAA 2013 @ 100 S.F. 482,851
$ 3,105,000 $ 2,887,424
</TABLE>
All of the Bonds in the portfolio are insured by one of the Preinsured Bond
Insurers as indicated in the Bond name. See "Unitholder
Explanations--Insurance on the Bonds in the Insured Trusts".
For an explanation of the footnotes used on this page, see "Notes to
Portfolios".
SOUTH CAROLINA QUALITY TRUST
General. The South Carolina Quality Trust consists of 9 issues of Securities.
None of the Bonds in the South Carolina 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 South Carolina Quality Trust) as follows: Health Care, 2 (26%); Retail
Electric/Gas, 2 (19%); General Purpose, 1 (16%); Higher Education, 1 (16%);
Certificates of Participation, 1 (8%); Water and Sewer, 1 (8%) and Public
Education, 1 (7%). No Bond issue has received a provisional or conditional
rating.
Risk Factors. Although all of the Bonds in the South Carolina Quality Trust
are revenue obligations or general obligations of local governments or
authorities rather than general obligations of the State of South Carolina
itself, there can be no assurance that any financial difficulties the State
may experience will not adversely affect the market value or marketability of
the Bonds or the ability of the respective obligors to pay interest on or
principal of the Bonds. The information regarding the financial condition of
the State is included for the purpose of providing information about general
economic conditions that may affect issuers of the Bonds in South Carolina.
From the early 1920's to the present time, the State's economy has been
dominated by the textile industry with over one out of every three
manufacturing workers directly or indirectly related to the textile industry.
While the textile industry is still the major industrial employer in the
State, since 1950 the State's economy has undergone a gradual transition. The
economic base of the State has diversified as the trade and service sectors
developed and with the added development of the durable goods manufacturing
industries, South Carolina's economy now resembles more closely that of the
United States.
In South Carolina in 1992, personal income grew at an average annual rate of
5.9%. During the same period the nation's income grew 6.1% and the Southeast
grew 6.5%. Over the last five (5) years (1987-1992) personal income in South
Carolina rose at a compounded annual rate of 7.0%, outpacing the nation and
the Southeast with income growth rates of 6.2% and 6.8%, respectively, in the
same period. During the first nine months in 1993, personal income in South
Carolina rose 5.7% while the rate of increase in the U.S. for the same period
was 5.2%.
Monthly unemployment rates in the State have equalled or been below comparable
national rates for the nation during 1993. The rate for December, 1993, was 7%
compared to the 6.4% national rate.
The State Constitution requires the General Assembly to provide a balanced
budget and requires that if there be a deficit, such deficit shall be provided
for in the succeeding fiscal year. The State Constitution also provides that
the State Budget and Control Board may, if a deficit appears likely, effect
such reductions in appropriations as may be necessary to prevent a deficit. At
the November 6, 1984 general election there was approved a constitutional
amendment providing that annual increases in State appropriations may not
exceed the average growth rate of the economy of the State and that the annual
increase in the number of State employees may not exceed the average growth of
population of the State. The State Constitution also establishes a General
Reserve Fund to be maintained in an amount equal to 4% of General Fund revenue
for the latest fiscal year. Despite the efforts of the State Budget and
Control Board, deficits were experienced in each of the fiscal years ended
June 30, 1981, June 30, 1982, June 30, 1985 and June 30, 1986. All deficits
have been funded out of the General Reserve Fund. For the fiscal years ending
June 30, 1983 and 1984, the State had cash surpluses. As of June 30, 1985 the
balance in the General Reserve Fund was $89,100,000.
In 1993 the General Assembly provided that beginning with appropriations for
fiscal year 1994-1995, appropriations in the annual general appropriations act
may not exceed the base revenue estimate. The base revenue estimate is defined
as the lesser of (i) the total of recurring general fund revenues collected in
the latest completed fiscal year before the General Assembly first considers
the annual general appropriations bill plus an increase of seventy-five
percent of the difference between the general fund revenue estimate of the
Board of Economic Advisors for the upcoming fiscal year and the actual revenue
collections from the latest completed fiscal year; or (ii) the Board of
Economic Advisors general fund revenue estimate for the upcoming fiscal year.
At its July, 1985 meeting the State Budget and Control Board, acting upon
advice that a shortfall in General Fund revenues for the fiscal year ending
June 30, 1985 might develop, froze all supplemental appropriations pending the
final accounting of the General Fund for fiscal year 1985. On August 8, 1985,
the Office of the Comptroller General advised the State Budget and Control
Board that General Fund expenditures for the fiscal year ended June 30, 1985
did exceed General Fund revenues by $11,936,636. Obedient to the
constitutional mandate that a casual deficit shall be provided for in the
succeeding fiscal year, the State Budget and Control Board delayed certain
hiring and capital improvements scheduled to be made in fiscal year 1986 in an
amount sufficient to meet the fiscal year 1985 budget shortfall. In January of
the fiscal year ended June 30, 1986 the State Budget and Control Board was
advised of a possible shortfall of $46,346,968. The Board immediately reduced
State agency appropriations by the amount of the anticipated shortfall.
Notwithstanding this action, at the end of fiscal year 1986, it became
apparent that a shortfall would result. In August of 1986, the State Budget
and Control Board voted to fund the deficit by transferring $37,353,272 from
the General Reserve Fund to the General Fund, bringing the balance in the
General Reserve Fund to $51.8 million.
At the November 5, 1986 meeting of the Budget and Control Board, the Board of
Economic Advisors advised that it had reduced its revenue estimate for the
current fiscal year by $87,434,452. As required by the provisions of the
Capital Expenditure Fund, the Board applied $27,714,661 budgeted for this fund
to the anticipated shortfall. This action left a remaining shortfall of
$59,719,791 which the Budget and Control Board funded by imposing a 2.6% cut
in expenditures. In a February, 1987 meeting of the Board, a further cut in
expenditures of 0.8% was ordered.
After net downward revisions of $122 million in estimated revenues during the
year, the actual revenue collections exceeded the final estimate of $37
million, resulting in a surplus for the fiscal year ending June 30, 1987, of
$20.5 million. The General Reserve Fund received $6.6 million during the year
in accordance with the Appropriation Act, and $17 million of the year-end
surplus was transferred to the General Reserve Fund, bringing the balance in
the General Reserve Fund to $75.4 million at June 30, 1987.
On August 5, 1988, it was announced that for the fiscal year ending June 30,
1988, the Budgetary General Fund had a surplus of $107.5 million. The surplus
resulted from a $117.3 million excess of revenues over expenditures. The State
will use $52.6 million of the surplus to fund supplemental appropriations,
$28.3 million to fund the Capital Reserve, and $20.5 million for an early
buy-out of a school bus lease agreement. The General Assembly will decide how
the State will spend the remaining $6.1 million.
The General Reserve Fund received $25.1 million during the 1987-88 fiscal year
in accordance with the Appropriation Act. During the year, the General
Assembly reduced the required funding of the General Reserve Fund from 4% to
3% of the latest completed fiscal year's actual revenue. The General Assembly
used $14.4 million of the resulting excess to fund the 1987-1988 Supplemental
Appropriation Act, leaving $86.1 million in the General Reserve Fund at June
30, 1988. The full-funding amount at that date, however, was only $80.8
million. In accordance with the 1988-1989 Appropriation Act, the excess of
$5.3 million will help fund 1988-1989 appropriations.
At the November 8, 1988 general election there was approved a constitutional
amendment reducing from 4% to 3% the amount of General Fund revenue which must
be kept in the General Reserve Fund, and removing the provisions requiring a
special vote to adjust this percentage. The amendment also created a Capital
Reserve Fund equal to 2% of General Fund revenue. Before March 1 of each year,
the Capital Reserve Fund must be used to offset mid-year budget reductions
before mandating cuts in operating appropriations, and after March 1, the
Capital Reserve Fund may be appropriated by a special vote in separate
legislation by the General Assembly to finance in cash previously authorized
capital improvement bond projects, retire bond principal or interest on bonds
previously issued, and for capital improvements or other nonrecurring purposes
which must be ranked in order of priority of expenditure. Monies in the
Capital Reserve Fund not appropriated or any appropriation for a particular
project or item which has been reduced due to application of the monies to
year-end deficit, must go back to the General Fund.
For the fiscal year ended June 30, 1989, the State had a surplus of
$129,788,135. At June 30, 1989, the balance in the General Reserve Fund was
$87,999,428.
Because of anticipated revenue shortfalls for the fiscal year 1989-1990, the
State Budget and Control Board committed $42.4 million of the $58.7 million
Capital Reserve Fund in April, 1990. Lack of sufficient funding at year end
resulted in an additional use of $4.5 million from the Capital Reserve Fund.
After the above reductions, the State had a fiscal year 1989-1990 surplus of
$13,159,892 which was used to fund supplemental appropriations of $1,325,000
and the Capital Reserve Fund at $11,834,892. At June 30, 1990, the balance in
the General Reserve Fund was $94,114,351.
During 1990-91 fiscal year, the State Budget and Control Board has approved
mid-year budget changes in November of 1990 and again in February of 1991, to
offset lower revenue estimates. Those changes included committing the Capital
Reserve Fund appropriation ($62,742,901) and reducing agency appropriations in
an additional amount necessary to offset (together with automatic expenditure
reductions that are tied to revenue levels) what would otherwise be a
projected deficit of approximately $132.6 million. On May 14 and May 21, 1991,
the Budget and Control Board, responding to April revenue figures and
unofficial estimates indicating an additional shortfall of $30 to $50 million,
ordered an immediate freeze on all personnel activities, from hiring to
promotions; a freeze on purchasing, with limited exceptions; and an indefinite
halt to new contracts and contract renewals. The Board also asked the General
Assembly for the power to furlough government workers periodically during the
next fiscal year.
In the past, the State's budgetary accounting principles allowed revenue to be
recorded only when the State received the related cash. On July 30, 1991, the
Budget and Control Board approved a change in this principle for sales tax
revenue beginning with the fiscal year ended June 30, 1991. The Board's
resolution requires that sales taxes collected by merchants in June and
received by the State in July be reported as revenue in June rather than in
July. This change resulted in a $5.2 million decrease in reported 1990-91
sales tax revenue and a one-time $83.1 million addition to fund balance. The
one-time adjustment increases the fund balance to the level it would be if the
new principle had been in effect in years before 1990-91. Following such
action, the year-end balance in the General Reserve Fund was $33.4 million.
At its July 30, 1991, meeting the Budget and Control Board also took action
with respect to the 1991-92 fiscal year. On July 26, 1991, the Board of
Economic Advisors advised the Budget and Control Board that it projected a
revenue shortfall of $148 million for the fiscal year 1991-92 budget of $3.581
billion. In response, the Budget and Control Board eliminated the two percent
(2%) Capital Reserve Fund appropriation of $65.9 million and reduced other
expenditures across the board by three percent (3%). On February 10, 1992, the
Board of Economic Advisers advised the Budget and Control Board that it had
revised its estimate of revenues for the current fiscal year downward by an
additional $55 million. At its February 11, 1992 meeting, the Budget and
Control Board responded by imposing an additional one percent (1%) across the
board reduction of expenditures (except with respect to approximately $10
million for certain agencies). At its February 13, 1992 meeting, the Budget
and Control Board restored a portion of the one percent (1%) reduction to four
(4) education-related agencies totalling approximately $5.7 million. These
expenditure reduction measures, when coupled with revenue increases projected
by the Budget and Control Board, resulted in an estimated balance of
approximately $1.4 million in the General Fund for the fiscal year 1991-92.
Despite such actions, expenditures exceeded revenues by $38.2 million and, as
required by the South Carolina Constitution, such amount was withdrawn from
the General Reserve Fund to cover the shortfall.
Responding to these recurrent operating deficits, Standard & Poor's Corp. has
placed the State's AAA-rated general obligation debt on its CreditWatch, and
on January 29, 1993, this rating was reduced to AA+.
On August 22, 1992, the Budget and Control Board adopted a plan to reduce
appropriations under the 1992 Appropriations Act because of revenue shortfall
projections of approximately $200 million for the 1992-93 fiscal year. These
reductions were based on the rate of growth in each agency's budget over the
past year. On September 15, 1992, the Supreme Court of South Carolina enjoined
the Budget and Control Board from implementing its proposed plan for budget
reductions on the grounds that the Board had authority to make budget
reductions only across the board based on total appropriations. In response to
this decision, the Board instituted a 4% across the board reduction. On
November 10, 1992, the Budget and Control Board permanently reduced the $88.1
million in appropriations which were set aside on September 15, 1992. This
action along with improved actual revenue collections created a budgetary
surplus of approximately $101 million.
Prospective investors should study with care the portfolio of Bonds in the
South Carolina Quality Trust and should consult with their investment advisers
as to the merits of particular issues in the portfolio.
Tax Status. For a discussion of the Federal tax status of income earned on
South Carolina Quality Trust Units, see "Other Matters--Federal Tax
Status".
In the opinion of Sinkler & Boyd, special counsel to the Fund for South
Carolina tax matters, under existing South Carolina law:
By the provision of paragraph (j) of Section 3 of Article 10 of the South
Carolina Constitution (revised 1977) intangible personal property is
specifically exempted from any and all ad valorem taxation.
Pursuant to the provisions of Section 12-1-60 the interest of all bonds, notes
or certificates of indebtedness issued by or on behalf of the State of South
Carolina and any authority, agency, department or institution of the State and
all counties, school districts, municipalities, divisions and subdivisions of
the State and all agencies thereof are exempt from income taxes and that the
exemption so granted extends to all recipients of interest paid thereon
through the Trust. (This opinion does not extend to so-called 63-20
obligations.)
The income of the Trust would be treated as income to each Unitholder of the
Trust in the proportion that the number of Units of the Trust held by the
Unitholder bears to the total number of Units of the Trust outstanding. For
this reason, interest derived by the Trust that would not be includable in
income for South Carolina income tax purposes when paid directly to a South
Carolina Unitholder will be exempt from South Carolina income taxation when
received by the Trust and attributed to such South Carolina Unitholder.
Each Unitholder will recognize gain or loss for South Carolina state income
tax purposes if the Trustee disposes of a Bond (whether by sale, payment on
maturity, retirement or otherwise) or if the Unitholder redeems or sells his
Unit.
The Trust would be regarded, under South Carolina law, as a common trust fund
and therefore not subject to taxation under any income tax law of South
Carolina.
The above described opinion of Sinkler & Boyd has been concurred in by an
informal ruling of the South Carolina Tax Commission pursuant to Section
12-3-170 of the South Carolina Code.
<TABLE>
<CAPTION>
Per Unit Information:
<S> <C>
Calculation of Estimated Net Annual Unit Income <F1>:
Estimated Annual Interest Income per Unit .............................$ 64.25
Less: Estimated Annual Expense per Unit ...............................$ 2.03
Estimated Net Annual Interest Income per Unit .........................$ 62.22
Calculation of Estimated Interest Earnings Per Unit:
Estimated Net Annual Interest Income per Unit .........................$ 62.22
Divided by 12..........................................................$ 5.19
Estimated Daily Rate of Net Interest Accrual per Unit ..................$ .17282
Estimated Current Return Based on Public Offering Price <F1><F2><F3><F4> 6.22%
Estimated Long-Term Return <F2><F3><F4> ................................ 6.38%
Initial Distribution (December 1994)....................................$ 2.59
Estimated Normal Distribution per Unit <F4> ............................$ 5.19
Purchased Interest <F5>.................................................$ 10.72
Trustee's Annual Fee <F1>...............$.98 per $1,000 principal amount of Bonds
Record and Computation Dates............FIRST day of each month
Distribution Dates .....................FIFTEENTH day of each month commencing December
15, 1994.
<FN>
<F1>During the first year the Trustee will reduce its fee by approximately $.06
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 $64.31. Estimated Annual Expense
per Unit (excluding insurance) will be increased to $2.09; and estimated net
annual interest income per Unit will remain the same as shown. See "
Estimated Current Returns and Estimated Long-Term Returns."Based on the
outstanding principal amount of Securities as of the Date of Deposit, the
Trustee's annual fee would be $3,038.
<F2>The Estimated Current Return and Estimated Long-Term Return are increased for
transactions entitled to a reduced sales charge. See "Unitholder
Explanations--Public Offering--General".
<F3>The Estimated Current Return is calculated by dividing the estimated net
annual interest income per Unit by the Public Offering Price. The estimated
net annual interest income per Unit will vary with changes in fees and
expenses of the Trustee and the Evaluator and with the principal prepayment,
redemption, maturity, exchange or sale of Securities while the Public Offering
Price will vary with changes in the offering price of the underlying
Securities and with changes in the Purchased Interest; therefore, there is no
assurance that the present Estimated Current Return indicated above will be
realized in the future. The Estimated Long-Term Return is calculated using a
formula which (1) takes into consideration, and determines and factors in the
relative weightings of, the market values, yields (which takes into account
the amortization of premiums and the accretion of discounts) and estimated
retirements of all of the Securities in the Trust and (2) takes into account
the expenses and sales charge associated with each Trust Unit. Since the
market values and estimated retirements of the Securities and the expenses of
the Trust will change, there is no assurance that the present Estimated
Long-Term Return as indicated above will be realized in the future. The
Estimated Current Return and Estimated Long-Term Return are expected to differ
because the calculation of the Estimated Long-Term Return reflects the
estimated date and amount of principal returned while the Estimated Current
Return calculation includes only net annual interest income and Public
Offering Price.
<F4>These figures are based on estimated per Unit cash flows. Estimated cash flows
will vary with changes in fees and expenses, with changes in current interest
rates and with the principal prepayment, redemption, maturity, call, exchange
or sale of the underlying Securities. The estimated cash flows for this Series
are set forth under "Estimated Cash Flows to Unitholders".
<F5>See "Unitholder Explanations--Purchased and Accrued Interest".
</TABLE>
<TABLE>
SOUTH CAROLINA INVESTORS' QUALITY TAX-EXEMPT TRUST
SERIES 77 (IM-IT AND QUALITY MULTI-SERIES 235)
PORTFOLIO As of November 8, 1994
<CAPTION>
Offering
Price To
South
Carolina
Quality
Trust<F4>
Name of Issuer, Title, Interest Rate andMaturity Date
of either Bonds Deposited orBonds Contracted
for<F1><F5>
Aggregate Redemption
Principal<F1> Rating<F2> Feature<F3>
Standard
& Poor's Moody's
<S> <C> <C> <C> <C> <C>
$ 210,000 Orangeburg County, South Carolina, School District
No.001 (MBIA Insured) #6.15% Due 3/1/2012 ............. AAA Aaa 2004 @ 102 $ 195,458
250,000 Grand Strand Water and Sewer Authority, South
Carolina, Waterworks and Sewer System Revenue Bonds,
Refunding Series 1992 (MBIA Insured) #6.375% Due
6/1/2012 ............................................... AAA Aaa 2008 @ 100 S.F. 241,087
100,000 Oconee County, South Carolina, Pollution Control
Revenue Refunding Bonds (Duke Power Company Project)
Series 1993 5.80% Due 4/1/2014 ........................ AA- Aa2 2003 @ 102 87,867
240,000 City of North Charleston, South Carolina, North
Charleston Public Facilities Corporation, Certificates
of Participation (North Charleston Coliseum Capital
Improvement Project) Series 1992 (FGIC Insured) 2003 @ 102
#6.00% Due 1/1/2016 .................................... AAA Aaa 2012 @ 100 S.F. 215,969
500,000 Greenwood County, South Carolina, Hospital Facilities
Revenue Bonds (Self Memorial Hospital) Series 1993 2003 @ 102
(MBIA Insured)** #5.875% Due 10/1/2017 ................ AAA Aaa 2008 @ 100 S.F. 432,255
300,000 Greenville Hospital System, South Carolina, Board of
Trustees, Hospital Facilities Revenue Bonds, Series
1990 #6.00% Due 5/1/2020 .............................. AA- N/R 2018 @ 100 S.F. 262,875
500,000 Piedmont Municipal Power Agency, South Carolina,
Electric Revenue Bonds, Refunding Series 1992 #6.375% 2003 @ 102
Due 1/1/2025 ........................................... A- A 2023 @ 100 S.F. 452,455
500,000 Coastal Carolina University, South Carolina, Revenue
Bonds, Series 1994 (MBIA Insured)** #6.875% Due 2004 @ 102
6/1/2026 ............................................... AAA Aaa 2020 @ 100 S.F. 496,130
500,000 South Carolina State Public Service Authority, Revenue
Bonds, Series B (AMBAC Indemnity Insured) #6.10% Due 2002 @ 102
7/1/2027 ............................................... AAA Aaa 2021 @ 100 S.F. 442,095
$ 3,100,000 $ 2,826,191
</TABLE>
For an explanation of the footnotes used on this page, see "Notes to
Portfolios".
NOTES TO PORTFOLIOS:As of the Date of Deposit: November 8, 1994
(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
August 24,1994 to November 7,1994. These Securities have expected settlement
dates ranging from November 8,1994 to November 29,1994 (see "Unitholder
Explanations").
(2)All ratings are by Standard & Poor's Corporation unless otherwise
indicated. "*"indicates that the rating of the Bond is by Moody's
Investors Service, Inc. The ratings represent the latest published ratings by
the respective ratings agency or, if not published, represent private letter
ratings or those ratings expected to be published by the respective ratings
agency. "Y"indicates that such rating is contingent upon physical
receipt by the respective ratings agency of a policy of insurance obtained by
the issuer of the bonds involved and issued by the Preinsured Bond Insurer
named in the bond's title. A commitment for insurance in connection with these
bonds has been issued by the Preinsured Bond Insurer named in the bond's
title. "N/R"indicates that the applicable rating service did not
provide a rating for that particular Security. For a brief description of the
rating symbols and their related meanings, see "Other Matters--Description
of Securities Ratings".
(3)There is shown under this heading the year in which each issue of Bonds is
initially or currently callable and the call price for that year. Each issue
of Bonds continues to be callable at declining prices thereafter (but not
below par value) except for original issue discount bonds which are redeemable
at prices based on the issue price plus the amount of original issue discount
accreted to redemption date plus, if applicable, some premium, the amount of
which will decline in subsequent years. "S.F."indicates a sinking
fund is established with respect to an issue of Bonds. Redemption pursuant to
call provisions generally will, and redemption pursuant to sinking fund
provisions may, occur at times when the redeemed bonds have an offering side
valuation which represents a premium over par. Certain Bonds may be subject to
redemption without premium prior to the date shown pursuant to extraordinary
optional or mandatory redemptions if certain events occur. Single family
mortgage revenue bonds and housing authority bonds are most likely to be
called subject to such provisions, but other bonds may have similar call
features. Notwithstanding any provisions to the contrary, certain bond issuers
have in the past and others may in the future attempt to redeem Bonds prior to
their initially scheduled call dates and at prices which do not include any
premiums. For a general discussion of certain of these events, see "
Unitholder Explanations--Bond Redemptions". To the extent that the
Securities were deposited in a Trust at a price higher than the price at which
they are redeemed, this will represent a loss of capital when compared with
the original Public Offering Price of the Units. Conversely, to the extent
that the Bonds were acquired at a price lower than the redemption price, this
will represent an increase in capital when compared with the original Public
Offering Price of the Units. Distributions will generally be reduced by the
amount of the income which would otherwise have been paid with respect to
redeemed Securities and there will be distributed to Unitholders the principal
amount and any premium received on such redemption. The Estimated Current
Return and Estimated Long-Term Return in this event may be affected by such
redemptions. For the Federal tax effect on Unitholders of such redemptions and
resultant distributions, see paragraph (2) under "Other Matters--Federal
Tax Status".
(4)Evaluation of Securities is made on the basis of current offering prices
for the Securities. The offering prices are greater than the current bid
prices of the Securities which is the basis on which Unit value is determined
for purposes of redemption of Units (see "Unitholder Explanations--Public
Offering--Offering Price").
(5)Other information regarding the Bonds in each Trust, as of the Date of
Deposit, is as follows:
<TABLE>
<CAPTION>
Annual
Annual Profit Interest Bid Side
Trust Insurance Cost to (Loss) to Income to Evaluation of
Cost Sponsor Sponsor Trust Bonds
<S> <C> <C> <C> <C> <C>
IM-IT.................... $ 900 $ 8,529,802 $ 12,672 $ 597,825 $ 8,472,781
IM-IT Intermediate....... $ -- $ 4,874,773 $ ( 23,563) $ 287,400 $ 4,813,813
Colorado IM-IT........... $ 1,153 $ 2,823,657 $ 17,883 $ 192,350 $ 2,818,625
Michigan IM-IT........... $ -- $ 2,893,412 $ 7,247 $ 197,475 $ 2,877,128
Missouri IM-IT........... $ -- $ 2,883,907 $ 3,517 $ 190,850 $ 2,864,137
South Carolina Quality... $ -- $ 2,811,505 $ 14,686 $ 193,178 $ 2,801,613
</TABLE>
The Sponsor may have entered into contracts which hedge interest rate
fluctuations on certain Bonds in certain Portfolios. The cost of any such
contracts and the corresponding gain or loss is included in the Cost to
Sponsor. Certain Securities in the Fund, if any, marked by a double asterisk
(**), have been purchased on a "when, as and if issued"or "
delayed delivery"basis. Interest on these Securities begins accruing to
the benefit of Unitholders on their respective dates of delivery. Delivery is
expected to take place at various dates after the First Settlement Date as
follows:
<TABLE>
<CAPTION>
Percent of
Trust Aggregate Principal Range of Days Subsequent
Amount to First Settlement Date
<S> <C> <C>
IM-IT.................... 44% 1 to 9 days
IM-IT Intermediate....... 40% 1 to 13 days
Colorado IM-IT........... -- --
Michigan IM-IT........... 13% 1 day
Missouri IM-IT........... 16% 1 day
South Carolina Quality... 32% 1 day
</TABLE>
On the Date of Deposit, the offering side evaluations of the Securities in the
IM-IT, IM-IT Intermediate, Colorado IM-IT, Michigan IM-IT, Missouri IM-IT and
South Carolina Quality Trusts were higher than the bid side evaluations of
such Securities by 0.76%, 0.75%, 0.76%, 0.75%, 0.75% and 0.79%, respectively,
of the aggregate principal amounts of such Securities.
"#"indicates that such Bond was issued at an original issue discount.
The tax effect of Bonds issued at an original issue discount is described in
"Other Matters--Federal Tax Status".
(6)This Bond has been purchased at a deep discount from the par value because
there is little or no stated interest income thereon. Bonds which pay no
interest are normally described as "zero coupon"bonds. Over the life
of bonds purchased at a deep discount the value of such bonds will increase
such that upon maturity the holders of such bonds will receive 100% of the
principal amount thereof. Approximately 2% of the aggregate principal amount
of the Securities in each of the IM-IT and IM-IT Intermediate Trusts are "
zero coupon"bonds.
Underwriting. The Underwriters named below have severally purchased Units in
the following respective amounts from the Sponsor.
<TABLE>
<CAPTION>
Name IM-IT
Address Units
<S> <C> <C>
Van Kampen Merritt Inc. One Parkview Plaza, Oakbrook Terrace, Illinois 60181 6,144
A.G. Edwards & Sons, Inc. One North Jefferson Avenue, St. Louis, Missouri 63103 1,000
Edward D. Jones & Co. 201 Progress Parkway, Maryland Heights, Missouri 63043 250
B.C. Ziegler and Company 215 North Main Street, West Bend, Wisconsin 53095 250
Advest, Inc. 280 Trumbull Street, 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
Fidelity Capital Markets
A Division of National Financial
Services Corporation 161 Devonshire Street D4, Boston, Massachusetts 02110 100
Gruntal & Co., Incorporated 14 Wall Street, New York, New York 10005 100
J.J.B. Hilliard, W.L. Lyons, Inc. 501 South Fourth Street, Louisville, Kentucky 40202 100
Kemper Securities, Inc. 77 West Wacker Drive, 28th Floor, Chicago, Illinois 60601 100
Linsco/Private Ledger Financial Services,
Inc. 155 Federal Street, 15th Floor, Boston, Massachusetts 02110 100
Mabon Securities Corp. One Liberty Plaza, 165 Broadway, New York, New York 10006 100
Principal Financial Securities, Inc. Fountain Place, 1445 Ross Avenue, Suite 2300, Dallas, Texas 75201 100
Prudential Securities Inc. 32 Old Slip, 16th Floor, Financial Square, New York,
Unit Investment Trust Dept. New York 10292 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
Stifel, Nicolaus & Company, Incorporated 500 North Broadway, St. Louis, Missouri 63102 100
9,044
</TABLE>
<TABLE>
<CAPTION>
IM-IT
Intermediate
Name Trust
Address Units
<S> <C> <C>
Van Kampen Merritt Inc. One Parkview Plaza, Oakbrook Terrace, Illinois 60181 4,500
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
Prudential Securities Inc. 32 Old Slip, 16th Floor, Financial Square, New York,
Unit Investment Trust Dept. New York 10292 100
Southwest Securities Inc. 1201 Elm Street, Suite 4300, Dallas, Texas 75270 100
5,000
</TABLE>
<TABLE>
<CAPTION>
Colorado
Name IM-IT Trust
Address Units
<S> <C> <C>
Van Kampen Merritt 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. 32 Old Slip, 16th Floor, Financial Square, New York,
Unit Investment Trust Dept. New York 10292 100
Smith Barney Inc. 2 World Trade Center, 101st Floor, New York, New York 10048 100
3,020
</TABLE>
<TABLE>
<CAPTION>
Michigan
Name IM-IT Trust
Address Units
<S> <C> <C>
Van Kampen Merritt Inc. One Parkview Plaza, Oakbrook Terrace, Illinois 60181 1,483
First of Michigan Corporation 100 Renaissance Center, 26th Floor, Detroit, Michigan 48243 1,000
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
Edward D. Jones & Co. 201 Progress Parkway, Maryland Heights, Missouri 63043 100
Prudential Securities Inc. 32 Old Slip, 16th Floor, Financial Square, New York,
Unit Investment Trust Dept. New York 10292 100
Roney & Co. One Griswold, Detroit, Michigan 48226 100
Smith Barney Inc. 2 World Trade Center, 101st Floor, New York, New York 10048 100
3,083
</TABLE>
<TABLE>
<CAPTION>
Missouri
Name IM-IT Trust
Address Units
<S> <C> <C>
Van Kampen Merritt Inc. One Parkview Plaza, Oakbrook Terrace, Illinois 60181 1,168
Huntleigh Securities Corporation 222 South Central, 3rd Floor, St. Louis, Missouri 63105 1,000
Advest, Inc. 280 Trumbull Street, Hartford, Connecticut 06103 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
Prudential Securities Inc. 32 Old Slip, 16th Floor, Financial Square, New York,
Unit Investment Trust Dept. New York 10292 100
Smith Barney Inc. 2 World Trade Center, 101st Floor, New York, New York 10048 100
Stifel, Nicolaus & Company, Incorporated 500 North Broadway, St. Louis, Missouri 63102 100
B.C. Ziegler and Company 215 North Main Street, West Bend, Wisconsin 53095 100
3,068
</TABLE>
<TABLE>
<CAPTION>
South
Carolina
Name Quality Trust
Address Units
<S> <C> <C>
Van Kampen Merritt Inc. One Parkview Plaza, Oakbrook Terrace, Illinois 60181 2,804
J.C. Bradford & Co. 330 Commerce Street, Nashville, Tennessee 37201 100
Dean Witter Reynolds, Incorporated 2 World Trade Center, 59th Floor, New York, New York 10048 100
3,004
</TABLE>
Units may also be sold to broker-dealers and others at prices representing the
per Unit concession or agency commission stated under "Trust
Administration--General--Unit Distribution". However, resales of Units by
such broker-dealers and others to the public will be made at the Public
Offering Price described in the Prospectus. The Sponsor reserves the right to
reject, in whole or in part, any order for the purchase of Units and the right
to change the amount of the concession or agency commission from time to time.
In addition to any other benefits the Underwriters may realize from the sale
of the Units of the Fund, the Agreement Among Underwriters provides that the
Sponsor will share on a pro rata basis among those Underwriters who underwrite
at least 250 Units 50% of the aggregate gain, if any, represented by the
difference between the Sponsor's cost of the Securities in connection with
their acquisition and the evaluation thereof on the Date of Deposit less
deductions for certain accrued interest and certain other costs. See "
Trust Administration--General--Sponsor and Underwriter Compensation"and
"Portfolio"for the applicable Trust.
Underwriters and broker-dealers of the Trusts, banks and/or others are
eligible to participate in a program in which such firms receive from the
Sponsor a nominal award for each of their representatives who have sold a
minimum number of units of unit investment trusts created by the Sponsor
during a specified time period. In addition, at various times the Sponsor may
implement other programs under which the sales forces of Underwriters,
brokers, dealers, banks and/or others may be eligible to win other nominal
awards for certain sales efforts, or under which the Sponsor will reallow to
any such Underwriters, brokers, dealers, banks and/or others that sponsor
sales contests or recognition programs conforming to criteria established by
the Sponsor, or participate in sales programs sponsored by the Sponsor, an
amount not exceeding the total applicable sales charges on the sales generated
by such persons at the public offering price during such programs. Also, the
Sponsor in its discretion may from time to time pursuant to objective criteria
established by the Sponsor pay fees to qualifying underwriters, brokers,
dealers, banks or others for certain services or activities which are
primarily intended to result in sales of Units of the Trusts. Such payments
are made by the Sponsor out of its own assets, and not out of the assets of
the Trusts. These programs will not change the price Unitholders pay for their
Units or the amount that the Trusts will receive from the Units sold.
Approximately every eighteen months the Sponsor holds a business seminar which
is open to Underwriters that sell units of trusts it sponsors. The Sponsor
pays substantially all costs associated with the seminar, excluding
Underwriter travel costs. Each Underwriter is invited to send a certain number
of representatives based on the gross number of units such firm underwrites
during a designated time period.
FUND ADMINISTRATION AND EXPENSES
Sponsor. Van Kampen Merritt Inc., a Delaware corporation, is the Sponsor of
the Trust. Van Kampen Merritt Inc. is primarily owned by Clayton, Dubilier &
Rice, Inc., a New York-based private investment firm. Van Kampen Merritt Inc.
management owns a significant minority equity position. Van Kampen Merritt
Inc. specializes in the underwriting and distribution of unit investment
trusts and mutual funds. The Sponsor is a member of the National Association
of Securities Dealers, Inc. and has its principal office at One Parkview
Plaza, Oakbrook Terrace, Illinois 60181, (708) 684-6000. It maintains a branch
office in Philadelphia and has regional representatives in Atlanta, Dallas,
Los Angeles, New York, San Francisco, Seattle and Tampa. As of December 31,
1993 the total stockholders' equity of Van Kampen Merritt Inc. was
$122,167,000 (audited). (This paragraph relates only to the Sponsor and not to
the Insured Municipals Income Trust and Investors' Quality Tax-Exempt Trust or
to any Multi-Series thereof or to any other Underwriter. The information is
included herein only for the purpose of informing investors as to the
financial responsibility of the Sponsor and its ability to carry out its
contractual obligations. More detailed financial information will be made
available by the Sponsor upon request.)
As of September 30, 1994, the Sponsor and its affiliates managed or supervised
approximately $35.4 billion of investment products, of which over $23 billion
is invested in municipal securities. The Sponsor and its affiliates managed
$22 billion of assets, consisting of $7.7 billion for 20 open end mutual
funds, $8.0 billion for 34 closed-end funds and $6.1 billion for 65
institutional accounts. The Sponsor has also deposited approximately $24.5
billion of unit investment trusts. Based on cumulative assets deposited, the
Sponsor believes that it is the largest sponsor of insured municipal unit
investment trusts, primarily through the success of its Insured Municipals
Income Trust(R)or the IM-IT(R)trust. The Sponsor also provides
surveillance and evaluation services at cost for approximately $13 billion of
unit investment trust assets outstanding. Since 1976, the Sponsor has serviced
over one million retail investor accounts, opened through retail distribution
firms. Van Kampen Merritt Inc. is the sponsor of the various series of the
trusts listed below and the distributor of the mutual funds and closed-end
funds listed below. Unitholders may only invest in the trusts, mutual funds
and closed-end funds which are registered for sale in the state of residence
of such Unitholder. In order for a Unitholder to invest in the trusts, mutual
funds and closed-end funds listed below, such Unitholder must obtain a
prospectus relating to the trust or fund involved. A prospectus is the only
means by which an offer can be delivered to investors.
<TABLE>
Name of Trust
Trust Investment Objective
<CAPTION>
<S> <C>
Tax-exempt income by investing in insured municipal
Insured Municipals Income Trust...................................... securities
Double tax-exemption for California residents by investing
California Insured Municipals Income Trust........................... in insured California municipal securities
Double and in certain cases triple tax-exemption for New
York residents by investing in insured New York municipal
New York Insured Municipals Income Trust............................. securities
Double and in certain cases triple tax-exemption for
Pennsylvania residents by investing in insured Pennsylvania
Pennsylvania Insured Municipals Income Trust......................... municipal securities
Insured Municipals Income Trust, Insured Multi-Series
(Premium Bond Series, National, Limited Maturity,
Intermediate, Short Intermediate, Discount, Alabama, Arizona,
Arkansas, California, California Intermediate, California
Intermediate Laddered Maturity, California Premium, Colorado,
Connecticut, Florida, Florida Intermediate, Florida Intermediate
Laddered Maturity, Georgia, Louisiana, Massachusetts,
Massachusetts Premium, Michigan, Michigan Intermediate,
Michigan Intermediate Laddered Maturity, Michigan Premium,
Minnesota, Missouri, Missouri Intermediate Laddered Maturity,
Missouri Premium, New Jersey, New Jersey Intermediate
Laddered Maturity, New Mexico, New York, New York
Intermediate, New York Intermediate Laddered Maturity, New Tax-exempt income by investing in insured municipal
York Limited Maturity, Ohio, Ohio Intermediate, Ohio securities; all issuers of bonds in a state trust are
Intermediate Laddered Maturity, Ohio Premium, Oklahoma, located in such state or in territories or possessions of
Pennsylvania, Pennsylvania Intermediate, Pennsylvania the United States-- providing exemptions from all state
Intermediate Laddered Maturity, Pennsylvania Premium, income tax for residents of such state (except for the
Tennessee, Texas, Texas Intermediate Laddered Maturity, Oklahoma IM-IT Trust where a portion of the income of the
Washington, West Virginia).......................................... Trust is subject to the Oklahoma state income tax)
Tax-exempt income by investing in insured municipal
Insured Tax Free Bond Trust.......................................... securities
Tax-exempt income by investing in insured municipal
securities; all issuers of bonds in a state trust are
Insured Tax Free Bond Trust, Insured Multi-Series located in such state--providing exemptions from state
(National Limited Maturity, New York)............................... income tax for residents of such state
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Investors' Quality Tax-Exempt Trust.............................. Tax-exempt income by investing in municipal securities
Investors' Quality Tax-Exempt Trust, Multi-Series
(National, National AMT, Intermediate, Alabama, Arizona,
Arkansas, California, Colorado, Connecticut, Delaware,
Florida, Georgia, Hawaii, Kansas, Kentucky, Maine, Maryland, Tax-exempt income by investing in municipal securities; all
Massachusetts, Michigan, Minnesota, Missouri, Nebraska, issuers of bonds in a state trust are located in such state or
New Jersey, New York, North Carolina, Ohio, Oregon, in territories or possessions of the United States--providing
Pennsylvania, South Carolina, Virginia)......................... exemptions from state income tax for residents of such state
Tax-exempt income for investors not subject to the alternative
minimum tax by investing in municipal securities, some or all of
Investors' Quality Municipals Trust, AMT Series...................which are subject to the Federal alternative minimum tax
Investors' Corporate Income Trust.................................Taxable income by investing in corporate bonds
Investors' Governmental Securities--Income Trust................. Taxable income by investing in government-backed GNMA securities
High current income through an investment in a diversified
portfolio of foreign currency denominated corporate debt
Van Kampen Merritt International Bond Income Trust................obligations
High current income consistent with preservation of capital
through a diversified investment in a fixed portfolio of
Van Kampen Merritt Insured Income Trust...........................insured, long-term or intermediate-term corporate debt securities
High dividend income and capital appreciation by investing in
Van Kampen Merritt Utility Income Trust...........................common stock of electric utilities
Provide the potential for capital appreciation and income by
investing in a portfolio of actively traded, New York Stock
Exchange listed equity securities which are components of the
Van Kampen Merritt Blue Chip Opportunity Trust....................Dow Jones Industrial Average*
Protect Unitholders' capital and provide the potential for
capital appreciation and income by investing a portion of its
portfolio in "zero coupon"U.S. Treasury obligations and
the remainder of the trust's portfolio in actively traded, New
York Stock Exchange listed equity securities which at the time
Van Kampen Merritt Blue Chip Opportunity and of the creation of the trust were components of the Dow Jones
Treasury Trust...................................................Industrial Average*
High current income consistent with preservation of capital
through a diversified investment in a fixed portfolio primarily
consisting of Brady Bonds of emerging market countries that have
restructured sovereign debt pursuant to the framework of the
Van Kampen Merritt Emerging Markets Income Trust..................Brady Plan
Provide the potential for capital appreciation and income
consistent with the preservation of invested capital, by
investing in a portfolio of equity securities which provide
Van Kampen Merritt Global Telecommunications Trust................equipment for or services to the telecommunications industry
Provide the potential for capital appreciation and income
consistent with the preservation of invested capital, by
investing in a portfolio of equity securities diversified within
Van Kampen Merritt Global Energy Trust............................the energy industry
Provide an above average total return through a combination of
potential capital appreciation and dividend income, consistent
with preservation of invested capital, by investing in a
Strategic Ten Trust portfolio of common stocks of the ten companies in a recognized
(United States, United Kingdom, and Hong Kong Portfolios)........stock exchange index having the highest dividend yields
Provide the potential for capital appreciation and income
consistent with the preservation of invested capital, by
investing in a portfolio of equity securities diversified within
Van Kampen Merritt Brand Name Equity Trust........................the non-durable consumer products industry
</TABLE>
*The Dow Jones Industrial Average is the property of Dow Jones & Company, Inc.
Dow Jones & Company, Inc. has not granted to the Trust or the Sponsor a
license to use the Dow Jones Industrial Average.
<TABLE>
Name of Mutual Fund
Fund Investment Objective
<CAPTION>
<S> <C>
Van Kampen Merritt U.S. Government Fund....................High current income by investing in U.S. Government securities
High current income exempt from Federal income taxes by investing in
Van Kampen Merritt Insured Tax Free Income Fund............insured municipal securities
High level of current income exempt from Federal income tax, consistent
Van Kampen Merritt Municipal Income Fund...................with preservation of capital
High current income exempt from Federal income taxes by investing in
Van Kampen Merritt Tax Free High Income Fund...............medium and lower grade municipal securities
High current income exempt from Federal and California income taxes by
Van Kampen Merritt California Insured Tax Free Fund........investing in insured California municipal securities
Provide a high level of current income by investing in medium and lower
grade domestic and foreign government and corporate debt securities.
Van Kampen Merritt High Yield Fund.........................The Fund will seek capital appreciation as a secondary objective
Long-term growth of both capital and dividend income by investing in
Van Kampen Merritt Growth and Income Fund..................dividend paying common stocks
High current income exempt from Federal and Pennsylvania state and
local income taxes by investing in medium and lower grade Pennsylvania
Van Kampen Merritt Pennsylvania Tax Free Income Fund.......municipal securities
High current income by investing in a broad range of money market
Van Kampen Merritt Money Market Fund.......................instruments that will mature within twelve months
High current income exempt from Federal income taxes by investing in a
broad range of municipal securities that will mature within twelve
Van Kampen Merritt Tax Free Money Fund.....................months
High current income by investing in a global portfolio of high quality
debt securities denominated in various currencies having remaining
Van Kampen Merritt Short-Term Global Income Fund...........maturities of not more than three years
High level of current income with a relatively stable net asset value
Van Kampen Merritt Adjustable Rate U.S. Government Fund....investing in U.S. Government securities
High level of current income exempt from Federal income tax, consistent
Van Kampen Merritt Limited Term Municipal Income Fund......with preservation of capital
Provide capital appreciation and current income by investing in a
diversified portfolio of common stocks and income securities issued by
Van Kampen Merritt Utility Fund............................companies engaged in the utilities industry
Provide shareholders with high current income. The Fund will seek
Van Kampen Merritt Strategic Income Fund...................capital appreciation as a secondary objective
High level current income exempt from Federal income tax and Florida
intangible personal property taxes consistent with preservation of
Van Kampen Merritt Florida Insured Tax Free Income Fund....capital
High level of current income exempt from Federal income tax and New
Van Kampen Merritt New Jersey Tax Free Income Fund.........Jersey gross income tax consistent with preservation of capital
High level of current income exempt from Federal as well as New York
State and New York City income taxes, consistent with preservation of
Van Kampen Merritt New York Income Fund....................capital
</TABLE>
<TABLE>
Name of Closed-end Fund
Fund Investment Objective
<CAPTION>
<S> <C>
High current income exempt from Federal income taxes with safety of
principal by investing in a diversified portfolio of investment
Van Kampen Merritt Municipal Income Trust......................grade municipal securities
High current income exempt from Federal and California income taxes
with safety of principal by investing in a diversified portfolio of
Van Kampen Merritt California Municipal Trust..................investment grade California municipal securities
High current income while seeking to preserve shareholders' capital
by investing in a diversified portfolio of high yield fixed income
Van Kampen Merritt Intermediate Term High Income Trust.........securities
High current income while seeking to preserve shareholders' capital
by investing in a diversified portfolio of high yield fixed income
Van Kampen Merritt Limited Term High Income Trust..............securities
High current income, consistent with preservation of capital by
Van Kampen Merritt Prime Rate Income Trust.....................investing in interests in floating or variable rate senior loans....
High current income exempt from Federal income tax, consistent with
Van Kampen Merritt Investment Grade Municipal Trust............preservation of capital
High level of current income exempt from Federal income tax,
Van Kampen Merritt Municipal Trust.............................consistent with preservation of capital
High current income exempt from Federal and California income taxes
with safety of principal by investing in a diversified portfolio of
Van Kampen Merritt California Quality Municipal Trust..........investment grade California municipal securities
High current income exempt from Federal income taxes and Florida
intangible personal property taxes with safety of principal by
investing in a diversified portfolio of investment grade Florida
Van Kampen Merritt Florida Quality Municipal Trust.............municipal securities
High current income exempt from Federal as well as New York State
and New York City income taxes with safety of principal by
investing in a diversified portfolio of investment grade New York
Van Kampen Merritt New York Quality Municipal Trust............municipal securities
High current income exempt from Federal and Ohio income taxes with
safety of principal by investing in a diversified portfolio of
Van Kampen Merritt Ohio Quality Municipal Trust................investment grade Ohio municipal securities
High current income exempt from Federal and Pennsylvania income
taxes with safety of principal by investing in a diversified
Van Kampen Merritt Pennsylvania Quality Municipal Trust........portfolio of investment grade Pennsylvania municipal securities
High level of current income exempt from Federal income tax,
Van Kampen Merritt Trust for Investment Grade Municipals.......consistent with preservation of capital
High level of current income exempt from Federal income tax,
consistent with preservation of capital by investing in a
diversified portfolio of municipal securities which are covered by
Van Kampen Merritt Trust for Insured Municipals................insurance with respect to timely payment of principal and interest.
High level of current income exempt from Federal and California
income taxes, consistent with preservation of capital by investing
Van Kampen Merritt Trust for Investment Grade CA Municipals....in a diversified portfolio of California municipal securities
High level of current income exempt from Federal income taxes,
consistent with preservation of capital. The Fund also seeks to
offer its Shareholders the opportunity to own securities exempt
Van Kampen Merritt Trust for Investment Grade FL Municipals....from Florida intangible personal property taxes
High level of current income exempt from Federal income taxes and
Van Kampen Merritt Trust for Investment Grade NJ Municipals New Jersey gross income taxes, consistent with preservation of
.............................................................capital
High level of current income exempt from Federal as well as from
New York State and New York City income taxes, consistent with
Van Kampen Merritt Trust for Investment Grade NY Municipals....preservation of capital
High level of current income exempt from Federal and Pennsylvania
income taxes and, where possible under local law, local income and
Van Kampen Merritt Trust for Investment Grade PA Municipals....property taxes, consistent with preservation of capital
High level of current income exempt from Federal income tax,
consistent with preservation of capital by investing in a
Van Kampen Merritt Municipal Opportunity Trust.................diversified portfolio of municipal securities
High level of current income exempt from Federal income tax,
consistent with preservation of capital by investing in a
Van Kampen Merritt Advantage Municipal Income Trust............diversified portfolio of municipal securities
High level of current income exempt from Federal and Pennsylvania
Van Kampen Merritt Advantage Pennsylvania Municipal income taxes and, where possible under local law, local income and
Income Trust..................................................property taxes, consistent with preservation of capital
Provide common shareholders with a high level of current income
exempt from Federal income taxes, consistent with preservation of
Van Kampen Merritt Strategic Sector Municipal Trust............capital
High level of current income exempt from Federal income taxes,
Van Kampen Merritt Value Municipal Income Trust................consistent with preservation of capital
Van Kampen Merritt California Value Municipal High level of current income exempt from Federal and California
Income Trust..................................................income taxes, consistent with preservation of capital
High level of current income exempt from Federal income taxes and
Van Kampen Merritt Massachusetts Value Municipal Massachusetts personal income taxes, consistent with preservation
Income Trust.................................................of capital
Van Kampen Merritt New Jersey Value Municipal High level of current income exempt from Federal income taxes and
Income Trust..................................................New Jersey gross income tax, consistent with preservation of capital
High level of current income exempt from Federal as well as New
Van Kampen Merritt New York Value Municipal York State and New York City income taxes, consistent with
Income Trust..................................................preservation of capital
Van Kampen Merritt Ohio Value Municipal Income High level of current income exempt from Federal and Ohio income
Trust.........................................................taxes, consistent with preservation of capital
Van Kampen Merritt Pennsylvania Value Municipal High level of current income exempt from Federal and Pennsylvania
Income Trust.................................................income taxes, consistent with preservation of capital
High level of current income exempt from Federal income tax,
Van Kampen Merritt Municipal Opportunity Trust II..............consistent with preservation of capital
High level of current income exempt from Federal income tax,
consistent with preservation of capital. The Fund seeks to offer
its common shareholders the opportunity to own securities exempt
Van Kampen Merritt Florida Municipal Opportunity Trust ........from Florida intangible personal property taxes
Provide common shareholders with a high level of current income
exempt from Federal income tax, consistent with preservation of
Van Kampen Merritt Advantage Municipal Income Trust II.........capital
To provide common shareholders with a high level of current income
exempt from Federal income tax, consistent with preservation of
Van Kampen Merritt Select Sector Municipal Trust...............capital
</TABLE>
If the Sponsor shall fail to perform any of its duties under the Trust
Agreement or become incapable of acting or become bankrupt or its affairs are
taken over by public authorities, then the Trustee may (i) appoint a successor
Sponsor at rates of compensation deemed by the Trustee to be reasonable and
not exceeding amounts prescribed by the Securities and Exchange Commission,
(ii) terminate the Trust Agreement and liquidate the Fund as provided therein
or (iii) continue to act as Trustee without terminating the Trust Agreement.
All costs and expenses incurred in creating and establishing the Fund,
including the cost of the initial preparation, printing and execution of the
Trust Agreement and the certificates, legal and accounting expenses,
advertising and selling expenses, expenses of the Trustee, initial evaluation
fees and other out-of-pocket expenses have been borne by the Sponsor at no
cost to the Fund.
Compensation of Sponsor and Evaluator. The Sponsor will not receive any fees
in connection with its activities relating to the Fund. However, American
Portfolio Evaluation Services, a division of Van Kampen Merritt Investment
Advisory Corp., which is a wholly-owned subsidiary corporation of the Sponsor,
will receive an annual supervisory fee as indicated under "Summary of
Essential Financial Information"for providing portfolio supervisory
services for the Fund. Such fee (which is based on the number of Units
outstanding in each Trust on January 1 of each year) may exceed the actual
costs of providing such supervisory services for this Fund, but at no time
will the total amount received for portfolio supervisory services rendered to
Insured Municipals Income Trust and Investors' Quality Tax-Exempt Trust,
Multi-Series 1 and subsequent series and to any other unit investment trusts
sponsored by the Sponsor for which the Evaluator provides portfolio
supervisory services in any calendar year exceed the aggregate cost to the
Evaluator of supplying such services in such year. In addition, the Evaluator
shall receive an annual evaluation fee as indicated under "Summary of
Essential Financial Information"for regularly evaluating each Trust's
portfolio. Both of the foregoing fees may be increased without approval of the
Unitholders by amounts not exceeding proportionate increases under the
category "All Services Less Rent of Shelter"in the Consumer Price
Index published by the United States Department of Labor or, if such category
is no longer published, in a comparable category. The Sponsor and the
Underwriters will receive sales commissions and may realize other profits (or
losses) in connection with the sale of Units and the deposit of the Securities
as described under "General--Sponsor and Underwriter Compensation"
below.
Trustee. The Trustee is The Bank of New York, a trust company organized under
the laws of New York. The Bank of New York has its offices at 101 Barclay
Street, New York, New York 10286 (800) 221-7668. The Bank of New York is
subject to supervision and examination by the Superintendent of Banks of the
State of New York and the Board of Governors of the Federal Reserve System,
and its deposits are insured by the Federal Deposit Insurance Corporation to
the extent permitted by law.
The duties of the Trustee are primarily ministerial in nature. It did not
participate in the selection of Bonds for the portfolios of any of the Trusts.
In accordance with the Trust Agreement, the Trustee shall keep proper books of
record and account of all transactions at its office for the Fund. Such
records shall include the name and address of, and the certificates issued by
the Fund to, every Unitholder of the Fund. Such books and records shall be
open to inspection by any Unitholder at all reasonable times during the usual
business hours. The Trustee shall make such annual or other reports as may
from time to time be required under any applicable state or Federal statute,
rule or regulation (see "Unitholder Explanations--Public Offering--Reports
Provided"). The Trustee is required to keep a certified copy or duplicate
original of the Trust Agreement on file in its office available for inspection
at all reasonable times during the usual business hours by any Unitholder,
together with a current list of the Securities held in the Fund.
Under the Trust Agreement, the Trustee or any successor trustee may resign and
be discharged of the trusts created by the Trust Agreement by executing an
instrument in writing and filing the same with the Sponsor. The Trustee or
successor trustee must mail a copy of the notice of resignation to all Fund
Unitholders then of record, not less than 60 days before the date specified in
such notice when such resignation is to take effect. The Sponsor upon
receiving notice of such resignation is obligated to appoint a successor
trustee promptly. If, upon such resignation, no successor trustee has been
appointed and has accepted the appointment within 30 days after notification,
the retiring Trustee may apply to a court of competent jurisdiction for the
appointment of a successor. The Sponsor may remove the Trustee and appoint a
successor trustee as provided in the Trust Agreement at any time with or
without cause. Notice of such removal and appointment shall be mailed to each
Unitholder by the Sponsor. Upon execution of a written acceptance of such
appointment by such successor trustee, all the rights, powers, duties and
obligations of the original trustee shall vest in the successor. The
resignation or removal of a Trustee becomes effective only when the successor
trustee accepts its appointment as such or when a court of competent
jurisdiction appoints a successor trustee.
Any corporation into which a Trustee may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which a Trustee shall be a party, shall be the successor trustee. The Trustee
must be a banking corporation organized under the laws of the United States or
any state and having at all times an aggregate capital, surplus and undivided
profits of not less than $5,000,000.
Trustee's Fee. For its services the Trustee will receive a fee based on the
aggregate outstanding principal amount of Securities in each Trust as of the
opening of business on January 2 and July 2 of each year as set forth under
"Per Unit Information"for the applicable Trust. During the first year
the Trustee may agree to reduce its fee (and to the extent necessary pay
miscellaneous expenses of a Trust) as stated under "Per Unit
Information"for the applicable Trust. The Trustee's fees are payable
monthly on or before the fifteenth day of each month from the Interest Account
of each Trust to the extent funds are available and then from the Principal
Account of each Trust, with such payments being based on each Trust's portion
of such expenses. Since the Trustee has the use of the funds being held in the
Principal and Interest Accounts for future distributions, payment of expenses
and redemptions and since such Accounts are non-interest bearing to
Unitholders, the Trustee benefits thereby. Part of the Trustee's compensation
for its services to each Trust is expected to result from the use of these
funds. Such fees may be increased without approval of the Unitholders by
amounts not exceeding proportionate increases under the category "All
Services Less Rent of Shelter"in the Consumer Price Index published by
the United States Department of Labor or, if such category is no longer
published, in a comparable category. The Trustee's fees will not be increased
in future years in order to make up any reduction in the Trustee's fees
described under "Per Unit Information"for the applicable Trust. For a
discussion of the services rendered by the Trustee pursuant to its obligations
under the Trust Agreement, see "Unitholder Explanations--Public
Offering--Reports Provided"and "Trustee"above.
Portfolio Administration. The Trustee is empowered to sell, for the purpose
of redeeming Units tendered by any Unitholder, and for the payment of expenses
for which funds may not be available, such of the Bonds designated by the
Evaluator as the Trustee in its sole discretion may deem necessary. The
Evaluator, in designating such Securities, will consider a variety of factors,
including (a) interest rates, (b) market value and (c) marketability. 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"regarding the
substitution of Replacement Bonds for Failed Bonds, the acquisition by the
Fund of any securities other than the Securities initially deposited is not
permitted.
If any default in the payment of principal or interest on any Security occurs
and no provision for payment is made therefor within 30 days, the Trustee is
required to notify the Sponsor thereof. If the Sponsor fails to instruct the
Trustee to sell or to hold such Security within 30 days after notification by
the Trustee to the Sponsor of such default, the Trustee may in its discretion
sell the defaulted Security and not be liable for any depreciation or loss
thereby incurred.
Sponsor Purchases of Units. The Trustee shall notify the Sponsor of any tender
of Units for redemption. If the Sponsor's bid in the secondary market at that
time equals or exceeds the Redemption Price per Unit, it may purchase such
Units by notifying the Trustee before the close of business on the second
succeeding business day and by making payment therefor to the Unitholder not
later than the day on which the Units would otherwise have been redeemed by
the Trustee. Units held by the Sponsor may be tendered to the Trustee for
redemption as any other Units.
The offering price of any Units acquired by the Sponsor will be in accord with
the Public Offering Price described in the then currently effective prospectus
describing such Units. Any profit resulting from the resale of such Units will
belong to the Sponsor which likewise will bear any loss resulting from a lower
offering or Redemption Price subsequent to its acquisition of such Units.
Insurance Premiums. The cost of the portfolio insurance obtained by the
respective Trusts, if any, is that amount shown in footnote (5) in "Notes
to Portfolios", so long as such Trust retains the Bonds. Premiums, which
are obligations of each Insured Trust, are payable monthly by the Trustee on
behalf of the respective Trust. As Bonds in the portfolio of an Insured Trust
are redeemed by their respective issuers or are sold by the Trustee, the
amount of the premium will be reduced in respect of those Bonds no longer
owned by and held in such Trust. If the Trustee exercises the right to obtain
permanent insurance, the premiums payable for such permanent insurance will be
paid solely from the proceeds of the sale of the related Bonds. The premiums
for such permanent insurance with respect to each Bond will decline over the
life of the Bond. A Trust does not incur any expense for Preinsured Bond
insurance, since the premium or premiums for such insurance have been paid by
the issuer or the Sponsor prior to the deposit of such Preinsured Bonds in a
Trust. Preinsured Bonds are not additionally insured by an Insured Trust.
Miscellaneous Expenses. The following additional charges are or may be
incurred by the Trusts: (a) fees of the Trustee for extraordinary services,
(b) expenses of the Trustee (including legal and auditing expenses) and of
counsel designated by the Sponsor, (c) various governmental charges, (d)
expenses and costs of any action taken by the Trustee to protect the Trusts
and the rights and interests of Unitholders, (e) indemnification of the
Trustee for any loss, liability or expenses incurred by it in the
administration of the Fund without negligence, bad faith or willful misconduct
on its part, (f) any special custodial fees payable in connection with the
sale of any of the Bonds in a Trust and (g) expenditures incurred in
contacting Unitholders upon termination of the Trusts.
The fees and expenses set forth herein are payable out of the Trusts. When
such fees and expenses are paid by or owing to the Trustee, they are secured
by a lien on the portfolio or portfolios of the applicable Trust or Trusts. If
the balances in the Interest and Principal Accounts are insufficient to
provide for amounts payable by the Fund, the Trustee has the power to sell
Securities to pay such amounts.
GENERAL
Amendment or Termination. The Sponsor and the Trustee have the power to amend
the Trust Agreement without the consent of any of the Unitholders when such an
amendment is (a) to cure an ambiguity or to correct or supplement any
provision of the Trust Agreement which may be defective or inconsistent with
any other provision contained therein or (b) to make such other provisions as
shall not adversely affect the interest of the Unitholders (as determined in
good faith by the Sponsor and the Trustee), provided that the Trust Agreement
may not be amended to increase the number of Units issuable thereunder or to
permit the deposit or acquisition of securities either in addition to or in
substitution for any of the Securities initially deposited in the Fund, except
for the substitution of certain refunding securities for such Securities. In
the event of any amendment, the Trustee is obligated to notify promptly all
Unitholders of the substance of such amendment.
A Trust may be terminated at any time by consent of Unitholders of 51% of the
Units of such Trust then outstanding or by the Trustee when the value of such
Trust, as shown by any semi-annual evaluation, is less than that indicated
under "Summary of Essential Financial Information". A Trust will be
liquidated by the Trustee in the event that a sufficient number of Units not
yet sold are tendered for redemption by the Underwriters, including the
Sponsor, 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 or a
State 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 and IM-IT Short Intermediate Trusts. In the event of termination
of the Fund or any Trust, written notice thereof will be sent by the Trustee
to each Unitholder of such Trust at his address appearing on the registration
books of the Fund maintained by the Trustee. Within a reasonable time
thereafter the Trustee shall liquidate any Securities then held in such Trust
and shall deduct from the funds of such Trust any accrued costs, expenses or
indemnities provided by the Trust Agreement, including estimated compensation
of the Trustee and costs of liquidation and any amounts required as a reserve
to provide for payment of any applicable taxes or other governmental charges.
The sale of Securities in the Trust upon termination may result in a lower
amount than might otherwise be realized if such sale were not required at such
time. For this reason, among others, the amount realized by a Unitholder upon
termination may be less than the principal amount or par amount of Securities
represented by the Units held by such Unitholder. The Trustee shall then
distribute to each Unitholder his share of the balance of the Interest and
Principal Accounts. With such distribution the Unitholder shall be furnished a
final distribution statement of the amount distributable. At such time as the
Trustee in its sole discretion shall determine that any amounts held in
reserve are no longer necessary, it shall make distribution thereof to
Unitholders in the same manner.
Notwithstanding the foregoing, in connection with final distributions to
Unitholders of an Insured Trust, it should be noted that because the portfolio
insurance obtained by an Insured Trust is applicable only while Bonds so
insured are held by such Trust, the price to be received by such Trust upon
the disposition of any such Bond which is in default, by reason of nonpayment
of principal or interest, will not reflect any value based on such insurance.
Therefore, in connection with any liquidation, it shall not be necessary for
the Trustee to, and the Trustee does not currently intend to, dispose of any
Bond or Bonds if retention of such Bond or Bonds, until due, shall be deemed
to be in the best interest of Unitholders, including, but not limited to,
situations in which a Bond or Bonds so insured are in default and situations
in which a Bond or Bonds so insured have deteriorated market prices resulting
from a significant risk of default. Since the Preinsured Bonds will reflect
the value of the related insurance, it is the present intention of the Sponsor
not to direct the Trustee to hold any of such Preinsured Bonds after the date
of termination. All proceeds received, less applicable expenses, from
insurance on defaulted Bonds not disposed of at the date of termination will
ultimately be distributed to Unitholders of record as of such date of
termination as soon as practicable after the date such defaulted Bond or Bonds
become due and applicable insurance proceeds have been received by the
Trustee.
Limitation on Liabilities. The Sponsor, the Evaluator and the Trustee shall be
under no liability to Unitholders for taking any action or for refraining from
taking any action in good faith pursuant to the Trust Agreement, or for errors
in judgment, but shall be liable only for their own willful misfeasance, bad
faith or gross negligence in the performance of their duties or by reason of
their reckless disregard of their obligations and duties hereunder. The
Trustee shall not be liable for depreciation or loss incurred by reason of the
sale by the Trustee of any of the Securities. In the event of the failure of
the Sponsor to act under the Trust Agreement, the Trustee may act thereunder
and shall not be liable for any action taken by it in good faith under the
Trust Agreement.
The Trustee shall not be liable for any taxes or other governmental charges
imposed upon or in respect of the Securities or upon the interest thereon or
upon it as Trustee under the Trust Agreement or upon or in respect of the Fund
which the Trustee may be required to pay under any present or future law of
the United States of America or of any other taxing authority having
jurisdiction. In addition, the Trust Agreement contains other customary
provisions limiting the liability of the Trustee.
The Trustee, Sponsor and Unitholders may rely on any evaluation furnished by
the Evaluator and shall have no responsibility for the accuracy thereof.
Determinations by the Evaluator under the Trust Agreement shall be made in
good faith upon the basis of the best information available to it; provided,
however, that the Evaluator shall be under no liability to the Trustee,
Sponsor or Unitholders for errors in judgment. This provision shall not
protect the Evaluator in any case of willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations and duties.
Unit Distribution. During the initial offering period, Units will be
distributed to the public by Underwriters, broker-dealers and others (see "
Underwriting") at the Public Offering Price, plus Purchased Interest, plus
interest accrued but unpaid from the First Settlement Date to the date of
settlement as described above under "Unitholder Explanations--Purchased
and Accrued Interest--Accrued Interest". Upon the completion of the
initial offering, Units repurchased in the secondary market, if any, may be
offered by this Prospectus at the secondary Public Offering Price, plus
Purchased Interest plus interest accrued to the date of settlement in the
manner described.
The Sponsor intends to qualify the Units for sale in a number of states.
Broker-dealers or others will be allowed a concession or agency commission in
connection with the distribution of Units during the initial offering period
of $25.00 per Unit for less than 100 Units, $29.00 per Unit for any single
transaction of 100 to 249 Units, $28.50 per Unit for any single transaction of
250 to 499 Units, $31.50 per Unit for any single transaction of 500 to 999
Units and $31.00 per Unit for any single transaction of 1,000 or more Units of
an IM-IT Intermediate Trust, in the case of an IM-IT or a State Trust $30.00
per Unit for less than 100 Units, $36.00 per Unit for any single transaction
of 100 to 249 Units, $38.00 per Unit for any single transaction of 250 to 499
Units, $39.00 per Unit for any single transaction of 500 to 999 Units and
$39.00 per Unit for any single transaction of 1,000 or more Units, provided
that such Units are acquired either from the Sponsor (in the case of dealer
transactions) or through the Sponsor (in the case of transactions involving
brokers or others). The increased concession or agency commission is a result
of the discount given to purchasers for quantity purchases. See "
Unitholder Explanations--Public Offering--General". Certain commercial
banks are making Units of the Fund available to their customers on an agency
basis. A portion of the sales charge paid by these customers (equal to the
agency commission referred to above) is retained by or remitted to the banks.
Under the Glass-Steagall Act, banks are prohibited from underwriting Units of
the Fund; however, the Glass-Steagall Act does permit certain agency
transactions and the banking regulators have not indicated that these
particular agency transactions are not permitted under such Act. In addition,
state securities laws on this issue may differ from the interpretations of
federal law expressed herein and banks and financial institutions may be
required to register as dealers pursuant to state law. Any quantity discount
(see "Unitholder Explanations--Public Offering--General") provided to
investors will be borne by the selling dealer or agent. For secondary market
transactions, such concession or agency commission will amount to 70% of the
applicable sales charge as determined using the table found in "Unitholder
Explanations--Public Offering".
To facilitate the handling of transactions during the initial offering period,
sales of Units shall normally be limited to transactions involving a minimum
of five Units. Further purchases may be made in multiples of one Unit. The
minimum purchase in the secondary market will be one Unit.
The Sponsor reserves the right to reject, in whole or in part, any order for
the purchase of Units and to change the amount of the concession or agency
commission to dealers and others from time to time. See "Underwriting".
Sponsor and Underwriter Compensation. The Underwriters will receive a gross
sales commission equal to that percentage of the Public Offering Price of the
Units (excluding Purchased Interest) as indicated under "Unitholder
Explanations--Public Offering--Offering Price"less any reduced sales
charges for quantity purchases as described under "Unitholder
Explanations--Public Offering--General".
The Sponsor will receive from the Underwriters the excess of such gross sales
commission over $35.00, $29.00, $27.00, $22.00 and $35.00 per Unit of any
Quality, IM-IT Limited Maturity, IM-IT Intermediate, IM-IT Short Intermediate
and other Insured Trusts, respectively, as of the Date of Deposit. In
connection with quantity sales to purchasers of any IM-IT or State Trust the
Underwriters will receive from the Sponsor commissions totalling $37.00 per
Unit for any single transaction of 100 to 249 Units, $39.00 per Unit for any
single transaction of 250 to 499 Units, $40.00 per Unit for any single
transaction of 500 to 999 Units and $39.00 per Unit for any single transaction
of 1,000 or more Units. A. G. Edwards & Sons, Inc. ("Edwards"), which
acts as a Managing Underwriter of Units of the various series of the IM-IT,
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 it underwrites.
Also, if The Principal/Eppler, Guerin & Turner, Inc. commits (on the Date of
Deposit) to underwrite a total of 4,000 or more Units of this series of the
IM-IT, any other series of the IM-IT and/or any series of Texas Insured
Municipals Income Trust during any calendar month, then The Principal/Eppler,
Guerin & Turner, Inc. will receive an additional $1.00 per Unit for each of
the Units of such Trust it commits to underwrite in said month. In addition,
the Sponsor will receive from the Managing Underwriters of the Michigan IM-IT
Trust (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 Michigan IM-IT Trust will receive an additional $2.00 per each
such Unit. See "Unitholder Explanations--Public Offering--General."
Further, each Underwriter who underwrites 1,000 or more Units in any Trust
will receive additional compensation from the Sponsor of $1.00 for each Unit
it underwrites. In addition, the Sponsor and certain of the Underwriters will
realize a profit or the Sponsor will sustain a loss, as the case may be, as a
result of the difference between the price paid for the Securities by the
Sponsor and the cost of such Securities to a Trust (which is based on the
determination by Interactive Data Services, Inc. of the aggregate offering
price of the underlying Securities in such Trust on the Date of Deposit). See
"Underwriting"and "Portfolio"for the applicable Trust and
"Notes to Portfolios". The Sponsor and the Underwriters may also
realize profits or sustain losses with respect to Securities deposited in each
Trust which were acquired by the Sponsor from underwriting syndicates of which
they were members. The Sponsor has participated as sole underwriter or as
manager or as a member of the underwriting syndicates from which none of the
aggregate principal amount of the Securities in the portfolios of the Fund
were acquired. The Underwriters may further realize additional profit or loss
during the initial offering period as a result of the possible fluctuations in
the market value of the Securities in each Trust after the Date of Deposit,
since all proceeds received from purchasers of Units (excluding dealer
concessions or agency commissions allowed, if any) will be retained by the
Underwriters. Affiliates of an Underwriter are entitled to the same dealer
concessions or agency commissions that are available to the Underwriter.
As stated under "Unitholder Explanations--Public Offering--Market for
Units", the Sponsor intends to, and certain of the other Underwriters may,
maintain a secondary market for the Units of the Fund. In so maintaining a
market, such person or persons will also realize profits or sustain losses in
the amount of any difference between the price at which Units are purchased
and the price at which Units are resold (which price is based on the bid
prices of the Securities in such Trust and includes a sales charge). In
addition, such person or persons will also realize profits or sustain losses
resulting from a redemption of such repurchased Units at a price above or
below the purchase price for such Units, respectively.
OTHER MATTERS
Legal Opinions. The legality of the Units offered hereby and certain matters
relating to Federal, Colorado and Missouri tax law have been passed upon by
Chapman and Cutler, 111 West Monroe Street, Chicago, Illinois 60603, as
counsel for the Sponsor. Miller, Canfield, Paddock and Stone has acted as
special counsel to the Fund for Michigan tax matters. Sinkler & Boyd has acted
as special counsel to the Fund for South Carolina tax matters. Tanner Propp &
Farber has acted as counsel for the Trustee and as special counsel to the Fund
for New York tax matters. None of the special counsel for the Fund has
expressed any opinion regarding the completeness or materiality of any matters
contained in this Prospectus other than the tax opinion set forth under "
Tax Status"relating to the Trust for which it has provided an opinion.
Independent Certified Public Accountants. The statements of condition and the
related securities portfolios at the Date of Deposit included in this
Prospectus have been audited by Grant Thornton, independent certified public
accountants, as set forth in their report in this prospectus, and are included
herein in reliance upon the authority of said firm as experts in accounting
and auditing.
FEDERAL TAX STATUS
In the opinion of Chapman and Cutler, counsel for the Sponsor, under existing
law:
(1)Each Trust is not an association taxable as a corporation for Federal
income tax purposes and interest and accrued original issue discount on Bonds
which is excludable from gross income under the Internal Revenue Code of 1986
(the "Code") will retain its status when distributed to Unitholders,
except to the extent such interest is subject to the alternative minimum tax,
an additional tax on branches of foreign corporations and the environmental
tax (the "Superfund Tax"), as noted below;
(2)Each Unitholder is considered to be the owner of a pro rata portion of the
respective Trust under subpart E, subchapter J of chapter 1 of the Code and
will have a taxable event when such Trust disposes of a Bond, or when the
Unitholder redeems or sells his Units. Unitholders must reduce the tax basis
of their Units for their share of accrued interest received by the respective
Trust, if any, on Bonds delivered after the Unitholders pay for their Units to
the extent that such interest accrued on such Bonds during the period from the
Unitholder's settlement date to the date such Bonds are delivered to the
respective Trust and, consequently, such Unitholders may have an increase in
taxable gain or reduction in capital loss upon the disposition of such Units.
Gain or loss upon the sale or redemption of Units is measured by comparing the
proceeds of such sale or redemption with the adjusted basis of the Units. If
the Trustee disposes of Bonds (whether by sale, payment on maturity,
redemption or otherwise), gain or loss is recognized to the Unitholder. The
amount of any such gain or loss is measured by comparing the Unitholder's pro
rata share of the total proceeds from such disposition with the Unitholder's
basis for his or her fractional interest in the asset disposed of. In the case
of a Unitholder who purchases Units, such basis (before adjustment for earned
original issue discount and amortized bond premium, if any) is determined by
apportioning the cost of the Units among each of the Trust assets ratably
according to value as of the date of acquisition of the Units. The tax cost
reduction requirements of the Code relating to amortization of bond premium
may, under some circumstances, result in the Unitholder realizing a taxable
gain when his Units are sold or redeemed for an amount equal to his original
cost;
(3)Any proceeds paid under an insurance policy or policies dated the Date of
Deposit, issued to an Insured Trust by AMBAC Indemnity, Financial Guaranty or
a combination thereof with respect to the Bonds which represent maturing
interest on defaulted obligations held by the Trustee will be excludable from
Federal gross income if, and to the same extent as, such interest would have
been so excludable if paid by the issuer of the defaulted obligations provided
that, at the time such policies are purchased, the amounts paid for such
policies are reasonable, customary and consistent with the reasonable
expectation that the issuer of the obligations, rather than the insurer, will
pay debt service on the obligations; and
(4)Any proceeds paid under individual policies obtained by issuers of Bonds
which represent maturing interest on defaulted obligations held by the Trustee
will be excludable from Federal gross income if, and to the same extent as,
such interest would have been excludable if paid in the normal course by the
issuer of the defaulted obligations provided that, at the time such policies
are purchased, the amounts paid for such policies are reasonable, customary
and consistent with the reasonable expectation that the issuer of the
obligations, rather than the insurer, will pay debt service on the
obligations.
Sections 1288 and 1272 of the Code provide a complex set of rules governing
the accrual of original issue discount. These rules provide that original
issue discount accrues either on the basis of a constant compound interest
rate or ratably over the term of the Bond, depending on the date the Bond was
issued. In addition, special rules apply if the purchase price of a Bond
exceeds the original issue price plus the amount of original issue discount
which would have previously accrued based upon its issue price (its "
adjusted issue price") to prior owners. The application of these rules
will also vary depending on the value of the Bond on the date a Unitholder
acquires his Units and the price the Unitholder pays for his Units. Investors
with questions regarding these Code sections should consult with their tax
advisers.
"The Revenue Reconciliation Act of 1993"(the "Tax Act")
subjects tax-exempt bonds to the market discount rules of the Code effective
for bonds purchased after April 30, 1993. In general, market discount is the
amount (if any) by which the stated redemption price at maturity exceeds an
investor's purchase price (except to the extent that such difference, if any,
is attributable to original issue discount not yet accrued). Market discount
can arise based on the price a Trust pays for Bonds or the price a Unitholder
pays for his or her Units. Under the Tax Act, accretion of market discount is
taxable as ordinary income; under prior law the accretion had been treated as
capital gain. Market discount that accretes while a Trust holds a Bond would
be recognized as ordinary income by the Unitholders when principal payments
are received on the Bond, upon sale or at redemption (including early
redemption), or upon the sale or redemption of his or her Units, unless a
Unitholder elects to include market discount in taxable income as it accrues.
The market discount rules are complex and Unitholders should consult their tax
advisers regarding these rules and their application.
In the case of certain corporations, the alternative minimum tax and the
Superfund Tax for taxable years beginning after December 31, 1986 depends upon
the corporation's alternative minimum taxable income, which is the
corporation's taxable income with certain adjustments. One of the adjustment
items used in computing the alternative minimum taxable income and the
Superfund Tax of a corporation (other than an S Corporation, Regulated
Investment Company, Real Estate Investment Trust, or REMIC) is an amount equal
to 75% of the excess of such corporation's "adjusted current earnings"
over an amount equal to its alternative minimum taxable income (before such
adjustment item and the alternative tax net operating loss deduction). "
Adjusted current earnings"includes all tax exempt interest, including
interest on all of the Bonds in the Fund. Unitholders are urged to consult
their tax advisers with respect to the particular tax consequences to them
including the corporate alternative minimum tax, the Superfund Tax and the
branch profits tax imposed by Section 884 of the Code.
Counsel for the Sponsor has also advised that under Section 265 of the Code,
interest on indebtedness incurred or continued to purchase or carry Units of a
Trust is not deductible for Federal income tax purposes. The Internal Revenue
Service has taken the position that such indebtedness need not be directly
traceable to the purchase or carrying of Units (however, these rules generally
do not apply to interest paid on indebtedness incurred to purchase or improve
a personal residence). Also, under Section 265 of the Code, certain financial
institutions that acquire Units would generally not be able to deduct any of
the interest expense attributable to ownership of such Units. Investors with
questions regarding this issue should consult with their tax advisers.
In the case of certain of the Bonds in the Fund, the opinions of bond counsel
indicate that interest on such Bonds received by a "substantial user"
of the facilities being financed with the proceeds of these Bonds, or persons
related thereto, for periods while such Bonds are held by such a user or
related person, will not be excludible from Federal gross income, although
interest on such Bonds received by others would be excludible from Federal
gross income. "Substantial user"and "related person"are
defined under U.S. Treasury Regulations. Any person who believes that he or
she may be a "substantial user"or a "related person"as so
defined should contact his or her tax adviser.
In the opinion of Tanner Propp & Farber, special counsel to the Fund for New
York tax matters, under existing law, the Fund and each Trust are not
associations taxable as corporations and the income of each Trust will be
treated as the income of the Unitholders under the income tax laws of the
State and City of New York.
All statements of law in the Prospectus concerning exclusion from gross income
for Federal, state or other tax purposes are the opinions of counsel and are
to be so construed.
At the respective times of issuance of the Bonds, opinions relating to the
validity thereof and to the exclusion of interest thereon from Federal gross
income are rendered by bond counsel to the respective issuing authorities.
Neither the Sponsor nor Chapman and Cutler has made any special review for the
Fund of the proceedings relating to the issuance of the Bonds or of the basis
for such opinions.
In the case of corporations, the alternative tax rate applicable to long-term
capital gains is 35%, effective for long-term capital gains realized in
taxable years beginning on or after January 1, 1993. For taxpayers other than
corporations, net capital gains are subject to a maximum marginal stated tax
rate of 28%. However, it should be noted that legislative proposals are
introduced from time to time that affect tax rates and could affect relative
differences at which ordinary income and capital gains are taxed. Under the
Code, taxpayers must disclose to the Internal Revenue Service the amount of
tax-exempt interest earned during the year.
Section 86 of the Code, in general, provides that 50% of Social Security
benefits are includible in gross income to the extent that the sum of "
modified adjusted gross income"plus 50% of the Social Security benefits
received exceeds a "base amount". The base amount is $25,000 for
unmarried taxpayers, $32,000 for married taxpayers filing a joint return and
zero for married taxpayers who do not live apart at all times during the
taxable year and who file separate returns. Modified adjusted gross income is
adjusted gross income determined without regard to certain otherwise allowable
deductions and exclusions from gross income and by including tax-exempt
interest. To the extent that Social Security benefits are includible in gross
income, they will be treated as any other item of gross income.
In addition, under the Tax Act, for taxable years beginning after December 31,
1993, up to 85% of Social Security benefits are includible in gross income to
the extent that the sum of "modified adjusted gross income"plus 50%
of Social Security benefits received exceeds an "adjusted base amount."
The adjusted base amount is $34,000 for unmarried taxpayers, $44,000 for
married taxpayers filing a joint return, and zero for married taxpayers who do
not live apart at all times during the taxable year and who file separate
returns.
Although tax-exempt interest is included in modified adjusted gross income
solely for the purpose of determining what portion, if any, of Social Security
benefits will be included in gross income, no tax-exempt interest, including
that received from a Trust, will be subject to tax. A taxpayer whose adjusted
gross income already exceeds the base amount or the adjusted base amount must
include 50% or 85%, respectively, of his Social Security benefits in gross
income whether or not he receives any tax-exempt interest. A taxpayer whose
modified adjusted gross income (after inclusion of tax-exempt interest) does
not exceed the base amount need not include any Social Security benefits in
gross income.
For a discussion of the state tax status of income earned on Units of a Trust,
see "Tax Status"for the applicable Trust. Except as noted therein,
the exemption of interest on state and local obligations for Federal income
tax purposes discussed above does not necessarily result in exemption under
the income or other tax laws of any State or City. The laws of the several
States vary with respect to the taxation of such obligations.
DESCRIPTION OF SECURITIES RATINGS
Standard & Poor's Corporation. A Standard & Poor's Corporation ("Standard
& Poor's") corporate or municipal bond rating is a current assessment of
the creditworthiness of an obligor with respect to a specific debt obligation.
This assessment of creditworthiness may take into consideration obligors such
as guarantors, insurers or lessees.
The bond rating is not a recommendation to purchase or sell a security,
inasmuch as it does not comment as to market price.
The ratings are based on current information furnished to Standard & Poor's by
the issuer and obtained by Standard & Poor's from other sources it considers
reliable. The ratings may be changed, suspended or withdrawn as a result of
changes in, or unavailability of, such information.
The ratings are based, in varying degrees, on the following considerations:
I. Likelihood of default--capacity and willingness of the obligor as to the
timely payment of interest and repayment of principal in accordance with the
terms of the obligation.
II. Nature of and provisions of the obligation.
III. Protection afforded by, and relative position of, the obligation in the
event of bankruptcy, reorganization or other arrangements under the laws of
bankruptcy and other laws affecting creditors' rights.
AAA--This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.
AA--Bonds rated AA also qualify as high-quality debt obligations. Capacity to
pay principal and interest is very strong, and in the majority of instances
they differ from AAA issues only in small degree.
A--Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions.
BBB--Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay interest and repay
principal for debt in this category than in higher rated categories.
Plus (+) or Minus (-): To provide more detailed indications of credit quality,
the ratings from "AA"to "BBB"may be modified by the addition
of a plus or minus sign to show relative standing within the major rating
categories.
Provisional Ratings: A provisional rating ("p") assumes the successful
completion of the project being financed by the issuance of the bonds being
rated and indicates that payment of debt service requirements is largely or
entirely dependent upon the successful and timely completion of the project.
This rating, however, while addressing credit quality subsequent to
completion, makes no comment on the likelihood of, or the risk of default upon
failure of, such completion. Accordingly, the investor should exercise his own
judgment with respect to such likelihood and risk.
Moody's Investors Service, Inc. A brief description of the applicable Moody's
Investors Service, Inc. ("Moody's") rating symbols and their meanings
follows:
Aaa--Bonds which are rated Aaa are judged to be the best quality. They carry
the smallest degree of investment risk and are generally referred to as "
gilt edge". Interest payments are protected by a large, or by an
exceptionally stable, margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such issues.
With the occasional exception of oversupply in a few specific instances, the
safety of obligations of this class is so absolute that their market value is
affected solely by money market fluctuations.
Aa--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuations of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in 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.
As published by the rating companies.
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.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors of Van Kampen Merritt Inc. and the Unitholders of
Insured Municipals Income Trust and Investors' Quality Tax-Exempt Trust,
Multi-Series 235 (IM-IT, IM-IT Intermediate, Colorado IM-IT, Michigan IM-IT,
Missouri IM-IT and South Carolina Quality Trusts):
We have audited the accompanying statements of condition and the related
portfolios of Insured Municipals Income Trust and Investors' Quality
Tax-Exempt Trust, Multi-Series 235 (IM-IT, IM-IT Intermediate, Colorado IM-IT,
Michigan IM-IT, Missouri IM-IT and South Carolina Quality Trusts) as of
November 8, 1994. The statements of condition and portfolios are the
responsibility of the Sponsor. Our responsibility is to express an opinion on
such financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of irrevocable letters of credit deposited to
purchase tax-exempt securities by correspondence with the Trustee. An audit
also includes assessing the accounting principles used and significant
estimates made by the Sponsor, as well as evaluating the overall financial
statement presentation. We believe our audit provides a reasonable basis for
our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Insured Municipals Income
Trust and Investors' Quality Tax-Exempt Trust, Multi-Series 235 (IM-IT, IM-IT
Intermediate, Colorado IM-IT, Michigan IM-IT, Missouri IM-IT and South
Carolina Quality Trusts) as of November 8, 1994, in conformity with generally
accepted accounting principles.
Chicago, Illinois GRANT THORNTON
November 8, 1994
<TABLE>
INSURED MUNICIPALS INCOME TRUST
and
INVESTORS' QUALITY TAX-EXEMPT TRUST
MULTI-SERIES 235
Statements of Condition
As of November 8, 1994
<CAPTION>
IM-IT
INVESTMENT IN SECURITIES Intermediate Colorado
IM-IT Trust IM-IT Trust
<S> <C> <C> <C>
Contracts to purchase tax-exempt securities <F1><F2><F4>... $ 8,542,474 $ 4,851,210 $ 2,841,540
Accrued interest to the First Settlement Date <F1><F4>..... 61,409 44,268 50,959
Total...................................................... $ 8,603,883 $ 4,895,478 $ 2,892,499
LIABILITY AND INTEREST OF UNITHOLDERS
Liability-- ...............................................
Accrued interest payable to Sponsor <F1><F4> $ -- $ -- $ 18,900
Interest of Unitholders-- .................................
Cost to investors <F3>..................................... 9,044,000 5,092,300 3,020,000
Less: Gross underwriting commission <F3> 440,117 196,822 146,401
Net interest to Unitholders <F1><F3><F4>................... 8,603,883 4,895,478 2,873,599
Total...................................................... $ 8,603,883 $ 4,895,478 $ 2,892,499
<FN>
<F1>The aggregate value of the Securities listed under "Portfolio"for
each Trust herein, and their cost to such Trust are the same. The value of the
Securities is determined by Interactive Data Services, Inc. on the bases set
forth under "Unitholder Explanations--Public Offering--Offering Price"
. The contracts to purchase tax-exempt Securities are collateralized by
irrevocable letters of credit which have been deposited with the Trustee in
and for the following amounts:
</TABLE>
<TABLE>
<CAPTION>
Accrued
Principal Interest to
Amount of Offering Price Expected
Amount of Bonds Under of Bonds Under Delivery
Letter of Credit Contracts Contracts Dates
<S> <C> <C> <C> <C>
IM-IT.......................$ 8,604,193 $ 9,125,000 $ 8,542,474 $ 61,719
IM-IT Intermediate Trust....$ 4,894,393 $ 5,000,000 $ 4,851,210 $ 43,183
Colorado IM-IT Trust........$ 2,890,058 $ 3,025,000 $ 2,841,540 $ 48,518
<F2>Insurance coverage providing for timely payment, when due, of all principal
and interest on the Bonds in the Insured Trusts has been obtained either by
such Trusts, by a prior owner of the Bonds, by the Sponsor prior to the
deposit of such Bonds or by the issuers of the Bonds involved. Such insurance
does not guarantee the market value of the Bonds or the value of the Units.
The insurance obtained by the Insured Trusts is effective only while Bonds
thus insured are held in such Trusts. Neither the bid nor offering prices of
the underlying Bonds or of the Units, absent situations in which bonds are in
default in payment of principal or interest or in significant risk of such
default, include value, if any, attributable to the insurance obtained by such
Trusts.
<F3>The aggregate public offering price (exclusive of interest) and the aggregate
sales charge are computed on the bases set forth under "Unitholder
Explanations--Public Offering--Offering Price"and "Trust
Administration--General--Sponsor and Underwriter Profits"and assume all
single transactions involve less than 100 Units. For single transactions
involving 100 or more Units, the sales charge is reduced (see "Unitholder
Explanations--Public Offering--General") resulting in an equal reduction
in both the Cost to investors and the Gross underwriting commission while the
Net interest to Unitholders remains unchanged.
<F4>Accrued interest on the underlying Securities represents the interest accrued
as of the First Settlement Date from the later of the last payment date on the
Securities or the date of issuance thereof. The Trustee may advance to the
Trust a portion of the accrued interest on the underlying Securities for
distribution to the Sponsor as the Unitholder of record as of the First
Settlement Date. A portion of the accrued interest ("Purchased
Interest") on the underlying Securities, as indicated under "Summary
of Essential Financial Information", is payable by investors and is
included in the Public Offering Price. Purchased Interest is the difference
between Accrued interest to the First Settlement Date and Accrued interest
payable to Sponsor.
</TABLE>
<TABLE>
INSURED MUNICIPALS INCOME TRUST
and
INVESTORS' QUALITY TAX-EXEMPT TRUST
MULTI-SERIES 235
Statements of Condition (Continued)
As of November 8, 1994
<CAPTION>
South
INVESTMENT IN SECURITIES Michigan Missouri Carolina
IM-IT Trust IM-IT Trust Quality Trust
<S> <C> <C> <C>
Contracts to purchase tax-exempt securities <F1><F2><F4>... $ 2,900,659 $ 2,887,424 $ 2,826,191
Accrued interest to the First Settlement Date <F1><F4>..... 36,924 53,397 44,289
Total...................................................... $ 2,937,583 $ 2,940,821 $ 2,870,480
LIABILITY AND INTEREST OF UNITHOLDERS
Liability-- ...............................................
Accrued interest payable to Sponsor <F1><F4> $ 4,012 $ 21,589 $ 12,093
Interest of Unitholders-- .................................
Cost to investors <F3>..................................... 3,083,000 3,068,000 3,004,000
Less: Gross underwriting commission <F3> 149,429 148,768 145,613
Net interest to Unitholders <F1><F3><F4>................... 2,933,571 2,919,232 2,858,387
Total...................................................... $ 2,937,583 $ 2,940,821 $ 2,870,480
<FN>
<F1>The aggregate value of the Securities listed under "Portfolio"for
each Trust herein, and their cost to such Trust are the same. The value of the
Securities is determined by Interactive Data Services, Inc. on the bases set
forth under "Unitholder Explanations--Public Offering--Offering Price"
. The contracts to purchase tax-exempt Securities are collateralized by
irrevocable letters of credit which have been deposited with the Trustee in
and for the following amounts:
</TABLE>
<TABLE>
<CAPTION>
Accrued
Principal Interest to
Amount of Offering Price Expected
Amount of Bonds Under of Bonds Under Delivery
Letter of Credit Contracts Contracts Dates
<S> <C> <C> <C> <C>
Michigan IM-IT Trust............$ 2,934,836 $ 3,120,000 $ 2,900,659 $ 34,177
Missouri IM-IT Trust........... $ 2,938,334 $ 3,105,000 $ 2,887,424 $ 50,910
South Carolina Quality Trust... $ 2,869,123 $ 3,100,000 $ 2,826,191 $ 42,932
<FN>
<F2> Insurance coverage providing for timely payment, when due, of all principal
and interest on the Bonds in the Insured Trusts has been obtained either by
such Trusts, by a prior owner of the Bonds, by the Sponsor prior to the
deposit of such Bonds or by the issuers of the Bonds involved. Such insurance
does not guarantee the market value of the Bonds or the value of the Units.
The insurance obtained by the Insured Trusts is effective only while Bonds
thus insured are held in such Trusts. Neither the bid nor offering prices of
the underlying Bonds or of the Units, absent situations in which bonds are in
default in payment of principal or interest or in significant risk of such
default, include value, if any, attributable to the insurance obtained by such
Trusts.
<F3> The aggregate public offering price (exclusive of interest) and the aggregate
sales charge are computed on the bases set forth under "Unitholder
Explanations--Public Offering--Offering Price"and "Trust
Administration--General--Sponsor and Underwriter Profits"and assume all
single transactions involve less than 100 Units. For single transactions
involving 100 or more Units, the sales charge is reduced (see "Unitholder
Explanations--Public Offering--General") resulting in an equal reduction
in both the Cost to investors and the Gross underwriting commission while the
Net interest to Unitholders remains unchanged.
<F4> Accrued interest on the underlying Securities represents the interest accrued
as of the First Settlement Date from the later of the last payment date on the
Securities or the date of issuance thereof. The Trustee may advance to the
Trust a portion of the accrued interest on the underlying Securities for
distribution to the Sponsor as the Unitholder of record as of the First
Settlement Date. A portion of the accrued interest ("Purchased
Interest") on the underlying Securities, as indicated under "Summary
of Essential Financial Information", is payable by investors and is
included in the Public Offering Price. Purchased Interest is the difference
between Accrued interest to the First Settlement Date and Accrued interest
payable to Sponsor.
</TABLE>
EQUIVALENT TAXABLE ESTIMATED CURRENT RETURN TABLES
As of the date of this prospectus, the following tables show the approximate
taxable estimated current returns for individuals that are equivalent to
tax-exempt estimated current returns under combined Federal and State taxes
(where applicable) using the published Federal and State tax rates (where
applicable) scheduled to be in effect in 1994. They incorporate increased tax
rates for higher income taxpayers that were included in the Revenue
Reconciliation Act of 1993. These tables illustrate approximately what you
would have to earn on taxable investments to equal the tax-exempt estimated
current return in your income tax bracket. For cases in which more than one
State bracket falls within a Federal bracket, the highest State bracket is
combined with the Federal bracket. The combined State and Federal tax rates
shown reflect the fact that State tax payments are currently deductible for
Federal tax purposes. The tables do not show the approximate taxable estimated
current returns for individuals that are subject to the alternative minimum
tax. The taxable equivalent estimated current returns may be somewhat higher
than the equivalent returns indicated in the following tables for those
individuals who have adjusted gross incomes in excess of $111,800. The tables
do not reflect the effect of limitations on itemized deductions and the
deduction for personal exemptions. They were designed to phase out certain
benefits of these deductions for higher income taxpayers. These limitations,
in effect, raise the marginal maximum Federal tax rate to approximately 44
percent for taxpayers filing a joint return and entitled to four personal
exemptions and to approximately 41 percent for taxpayers filing a single
return entitled to only one personal exemption. These limitations are subject
to certain maximums, which depend on the number of exemptions claimed and the
total amount of the taxpayer's itemized deductions. For example, the
limitation on itemized deductions will not cause a taxpayer to lose more than
80% of his allowable itemized deductions, with certain exceptions. See "
Other Matters--Federal Tax Status"for a more detailed discussion of
recent Federal tax legislation, including a discussion of provisions affecting
corporations.
IM-IT
<TABLE>
<CAPTION>
Taxable Income ($1,000's) Tax-Exempt Estimated Current Return
Single Joint Tax
Return Return Bracket 6% 6 1/2% 7% 7 1/2% 8% 8 1/2% 9%
Equivalent Taxable Estimated Current Return
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0 - 22.80 $ 0 - 38.00 15% 7.06% 7.65% 8.24% 8.82% 9.41% 10.00% 10.59%
22.80 - 55.10 38.00 - 91.90 28 8.33 9.03 9.72 10.42 11.11 11.81 12.50
55.10 - 115.00 91.90 - 140.00 31 8.70 9.42 10.14 10.87 11.59 12.32 13.04
115.00 - 250.00 140.00 - 250.00 36 9.38 10.16 10.94 11.72 12.50 13.28 14.06
Over 250.00 Over 250.00 39.6 9.93 10.76 11.59 12.42 13.25 14.07 14.90
</TABLE>
INTERMEDIATE
<TABLE>
<CAPTION>
Taxable Income ($1,000's) Tax-Exempt Estimated Current Return
Single Joint Tax
Return Return Bracket 5% 5 1/2% 6% 6 1/2% 7% 7 1/2% 8%
Equivalent Taxable Estimated Current Return
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0 - 22.80 $ 0 - 38.00 15% 5.88% 6.47% 7.06% 7.65% 8.24% 8.82% 9.41%
22.80 - 55.10 38.00 - 91.90 28 6.94 7.64 8.33 9.03 9.72 10.42 11.11
55.10 - 115.00 91.90 - 140.00 31 7.25 7.97 8.70 9.42 10.14 10.87 11.59
115.00 - 250.00 140.00 - 250.00 36 7.81 8.59 9.38 10.16 10.94 11.72 12.50
Over 250.00 Over 250.00 39.6 8.28 9.11 9.93 10.76 11.59 12.42 13.25
</TABLE>
COLORADO
<TABLE>
<CAPTION>
Taxable Income ($1,000's) Tax-Exempt Estimated Current Return
Single Joint Tax
Return Return Bracket 5 1/2% 6% 6 1/2% 7% 7 1/2% 8% 8 1/2%
Equivalent Taxable Estimated Current Return
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0 - 22.80 $ 0 - 38.00 19.3% 6.82% 7.43% 8.05% 8.67% 9.29% 9.91% 10.53%
22.80 - 55.10 38.00 - 91.90 31.6 8.04 8.77 9.50 10.23 10.96 11.70 12.43
55.10 - 115.00 91.90 - 140.00 34.5 8.40 9.16 9.92 10.69 11.45 12.21 12.98
115.00 - 250.00 140.00 - 250.00 39.2 9.05 9.87 10.69 11.51 12.34 13.16 13.98
Over 250.00 Over 250.00 42.6 9.58 10.45 11.32 12.20 13.07 13.94 14.81
</TABLE>
MICHIGAN
<TABLE>
<CAPTION>
Taxable Income ($1,000's) Tax-Exempt Estimated Current Return
Single Joint Tax
Return Return Bracket* 6 1/2% 7% 7 1/2% 8% 8 1/2% 9% 9 1/2%
Equivalent Taxable Estimated Current Return
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0 - 22.80 $ 0 - 38.00 21.8% 7.67% 8.31% 8.95% 9.59% 10.23% 10.87% 11.51%
22.80 - 55.10 38.00 - 91.90 33.7 9.05 9.80 10.56 11.31 12.07 12.82 13.57
55.10 - 115.00 91.90 - 140.00 36.5 9.45 10.24 11.02 11.81 12.60 13.39 14.17
115.00 - 250.00 140.00 - 250.00 41.1 10.19 11.04 11.88 12.73 13.58 14.43 15.28
Over 250.00 Over 250.00 44.4 10.79 11.69 12.59 13.49 14.39 15.29 16.19
</TABLE>
*The combined State and Federal tax bracket is computed utilizing a 4.47%
state personal income tax rate which is a weighted average rate that takes
into account a change in tax rates which was recently approved by Michigan
voters and a 3.5% tax on intangible income.
MISSOURI
<TABLE>
<CAPTION>
Taxable Income ($1,000's) Tax-Exempt Estimated Current Return
Single Joint Tax
Return Return Bracket* 5 1/2% 6% 6 1/2% 7% 7 1/2% 8% 8 1/2%
Equivalent Taxable Estimated Current Return
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0 - 22.80 $ 0 - 38.00 19.4% 6.82% 7.44% 8.06% 8.68% 9.31% 9.93% 10.55%
22.80 - 55.10 38.00 - 91.90 32.3 8.12 8.86 9.60 10.34 11.08 11.82 12.56
55.10 - 115.00 91.90 - 140.00 35.1 8.47 9.24 10.02 10.79 11.56 12.33 13.10
115.00 - 250.00 140.00 - 250.00 39.8 9.14 9.97 10.80 11.63 12.46 13.29 14.12
Over 250.00 Over 250.00 43.2 9.68 10.56 11.44 12.32 13.20 14.08 14.96
</TABLE>
*The combined State and Federal tax bracket is computed by taking into account
the deductibility of State tax in determining Federal tax and the recently
enacted limitations on the deductibility of Federal tax in determining State
tax. Specifically, the deduction allowed for Federal income tax liability may
not exceed $5,000 and $10,000 for single and joint taxpayers respectively.
Accordingly, the combined tax bracket reflects cross-deductibility of each tax
determining the other only for levels of income corresponding to the 15%
Federal tax bracket.
SOUTH CAROLINA
<TABLE>
<CAPTION>
Taxable Income ($1,000's) Tax-Exempt Estimated Current Return
Single Joint Tax
Return Return Bracket 6% 6 1/2% 7% 7 1/2% 8% 8 1/2% 9%
Equivalent Taxable Estimated Current Return
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0 - 22.80 $ 0 - 38.00 21% 7.59% 8.23% 8.86% 9.49% 10.13% 10.76% 11.39%
22.80 - 55.10 38.00 - 91.90 33 8.96 9.70 10.45 11.19 11.94 12.69 13.43
55.10 - 115.00 91.90 - 140.00 35.8 9.35 10.12 10.90 11.68 12.46 13.24 14.02
115.00 - 250.00 140.00 - 250.00 40.5 10.08 10.92 11.76 12.61 13.45 14.29 15.13
Over 250.00 Over 250.00 43.8 10.68 11.57 12.46 13.35 14.23 15.12 16.01
</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
Merritt sponsored unit investment trusts with returns on taxable investments
such as corporate or U.S. Government bonds, bank CDs and money market accounts
or money market funds, each of which has investment characteristics that may
differ from those of the Trusts. U.S. Government bonds, for example, are
backed by the full faith and credit of the U.S. Government and bank CDs and
money market accounts are insured by an agency of the federal government.
Money market accounts and money market funds provide stability of principal,
but pay interest at rates that vary with the condition of the short-term debt
market. The investment characteristics of the Trusts are described more fully
elsewhere in this Prospectus.
ESTIMATED CASH FLOWS TO UNITHOLDERS
The tables below set forth the per Unit estimated distributions of interest,
principal and rebates of Purchased Interest to Unitholders. The tables assume
no changes in expenses, no changes in the current interest rates, no
exchanges, redemptions, sales or prepayments of the underlying Securities
prior to maturity or expected retirement date and the receipt of principal
upon maturity or expected retirement date. To the extent the foregoing
assumptions change actual distributions will vary.
IM-IT
Monthly
<TABLE>
<CAPTION>
Estimated
Estimated Estimated Purchased Estimated
Distribution Dates Interest Principal Interest Total
(Each Month) Distribution Distribution Rebate Distribution
<S> <C> <C> <C> <C> <C> <C> <C>
December 1994 $ 2.67 $ 2.67
January 1995 - June 2006 5.35 5.35
July 2006 5.35 $ 110.57 $ .81 116.73
August 2006 - June 2019 4.70 4.70
July 2019 4.70 110.57 .77 116.04
August 2019 - June 2020 4.09 4.09
July 2020 4.09 110.57 .78 115.44
August 2020 - June 2022 3.47 3.47
July 2022 3.47 19.35 22.82
August 2022 3.47 110.57 .72 114.76
September 2022 - January 2024 2.89 2.89
February 2024 2.89 121.62 .71 125.22
March 2024 - September 2024 2.33 2.33
October 2024 2.33 66.35 .43 69.11
November 2024 - May 2025 1.98 1.98
June 2025 1.98 55.28 .38 57.64
July 2025 - May 2026 1.68 1.68
June 2026 1.68 110.57 .79 113.04
July 2026 - October 2027 1.06 1.06
November 2027 1.06 82.93 .60 84.59
December 2027 - October 2029 .59 .59
November 2029 .59 110.57 .80 111.96
</TABLE>
IM-IT Intermediate Trust
Monthly
<TABLE>
<CAPTION>
Estimated
Estimated Estimated Purchased Estimated
Distribution Dates Interest Principal Interest Total
(Each Month) Distribution Distribution Rebate Distribution
<S> <C> <C> <C> <C> <C> <C> <C>
December 1994 $ 2.31 $ 2.31
January 1995 - February 2004 4.63 4.63
March 2004 4.63 $ 100.00 $ .91 105.54
April 2004 4.15 120.00 .89 125.04
May 2004 3.68 3.68
June 2004 3.68 230.00 2.02 235.70
July 2004 2.61 2.61
August 2004 2.61 100.00 .92 103.53
September 2004 1.74 150.00 1.34 153.08
October 2004 1.41 150.00 1.39 152.80
November 2004 - December 2004 .68 .68
January 2005 .68 150.00 1.38 152.06
</TABLE>
Colorado IM-IT Trust
Monthly
<TABLE>
<CAPTION>
Estimated
Estimated Estimated Purchased Estimated
Distribution Dates Interest Principal Interest Total
(Each Month) Distribution Distribution Rebate Distribution
<S> <C> <C> <C> <C> <C> <C> <C>
December 1994 $ 2.55 $ 2.55
January 1995 - October 2006 5.10 5.10
November 2006 5.10 $ 165.56 $ 1.95 172.61
December 2006 - March 2012 4.16 4.16
April 2012 4.16 33.11 .29 37.56
May 2012 - October 2012 4.02 4.02
November 2012 4.02 33.11 .35 37.48
December 2012 - December 2014 3.85 3.85
January 2015 3.38 165.57 1.82 170.77
February 2015 - November 2017 2.96 2.96
December 2017 2.96 165.56 1.72 170.24
January 2018 - November 2020 2.11 2.11
December 2020 1.67 165.56 1.69 168.92
January 2021 - November 2022 1.29 1.29
December 2022 .92 132.45 1.41 134.78
January 2023 - September 2029 .60 .60
October 2029 .60 140.73 1.39 142.72
</TABLE>
Michigan IM-IT Trust
Monthly
<TABLE>
<CAPTION>
Estimated
Estimated Estimated Purchased Estimated
Distribution Dates Interest Principal Interest Total
(Each Month) Distribution Distribution Rebate Distribution
<S> <C> <C> <C> <C> <C> <C> <C>
December 1994 $ 2.58 $ 2.58
January 1995 - October 2018 5.17 5.17
November 2018 4.68 $ 162.17 $ 1.85 168.70
December 2018 - April 2020 4.26 4.26
May 2020 4.26 32.44 .33 37.03
June 2020 - November 2020 4.09 4.09
December 2020 3.62 194.62 1.83 200.07
January 2021 - February 2022 3.20 3.20
March 2022 2.74 162.18 1.76 166.68
April 2022 - March 2023 2.34 2.34
April 2023 2.34 162.18 1.59 166.11
May 2023 - April 2024 1.56 1.56
May 2024 1.56 298.41 3.32 303.29
</TABLE>
Missouri IM-IT Trust
Monthly
<TABLE>
<CAPTION>
Estimated
Estimated Estimated Purchased Estimated
Distribution Dates Interest Principal Interest Total
(Each Month) Distribution Distribution Rebate Distribution
<S> <C> <C> <C> <C> <C> <C> <C>
December 1994 $ 2.50 $ 2.50
January 1995 - September 2012 5.01 5.01
October 2012 5.01 $ 40.74 $ .43 46.18
November 2012 - June 2013 4.80 4.80
July 2013 4.80 162.97 1.52 169.29
August 2013 4.06 40.74 .39 45.19
September 2013 - May 2014 3.87 3.87
June 2014 3.39 162.98 1.83 168.20
July 2014 2.97 84.74 .85 88.56
August 2014 - May 2016 2.55 2.55
June 2016 2.55 114.08 1.19 117.82
July 2016 - April 2020 1.97 1.97
May 2020 1.54 162.98 1.63 166.15
June 2020 - February 2022 1.17 1.17
March 2022 .97 73.33 .76 75.06
April 2022 - May 2022 .80 .80
June 2022 .80 169.49 1.77 172.06
</TABLE>
South Carolina Quality Trust
Monthly
<TABLE>
<CAPTION>
Estimated
Estimated Estimated Purchased Estimated
Distribution Dates Interest Principal Interest Total
(Each Month) Distribution Distribution Rebate Distribution
<S> <C> <C> <C> <C> <C> <C> <C>
December 1994 $ 2.59 $ 2.59
January 1995 - February 2012 5.19 5.19
March 2012 5.19 $ 69.90 $ .71 75.80
April 2012 - May 2012 4.83 4.83
June 2012 4.83 83.22 .88 88.93
July 2012 - March 2014 4.40 4.40
April 2014 4.40 33.29 .32 38.01
May 2014 - December 2015 4.24 4.24
January 2016 4.24 79.90 .80 84.94
February 2016 - September 2017 3.85 3.85
October 2017 3.85 166.44 1.63 171.92
November 2017 - April 2020 3.06 3.06
May 2020 3.06 99.87 1.00 103.93
June 2020 - December 2024 2.57 2.57
January 2025 2.57 166.44 1.77 170.78
February 2025 - May 2026 1.70 1.70
June 2026 1.70 166.45 1.91 170.06
July 2026 - June 2027 .76 .76
July 2027 .76 166.44 1.69 168.89
</TABLE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
No person is authorized to give any information or to make any representations
not contained in this Prospectus; and any information or representation not
contained herein must not be relied upon as having been authorized by the
Fund, the Sponsor or the Underwriters. This Prospectus does not constitute an
offer to sell, or a solicitation of an offer to buy, securities in any state
to any person to whom it is not lawful to make such offer in such state.
<TABLE>
<CAPTION>
Title Page
<S> <C>
INTRODUCTION 2
SUMMARY OF ESSENTIAL FINANCIAL INFORMATION 3
UNITHOLDER EXPLANATIONS 7
Settlement of Bonds in the Trusts 7
The Fund 7
Objectives and Securities Selection 8
Risk Factors 9
Replacement Bonds 12
Bond Redemptions 12
Distributions 13
Certificates 13
Estimated Current Returns and Estimated Long-Term Returns 13
Interest Earning Schedule 14
Calculation of Estimated Net Annual Interest Income 14
Purchased and Accrued Interest 14
Purchased Interest 14
Accrued Interest 15
Public Offering 15
General 15
Offering Price 17
Market for Units 18
Distributions of Interest and Principal 18
Reinvestment Option 19
Redemption of Units 19
Reports Provided 20
Insurance on the Bonds in the Insured Trusts 21
IM-IT TRUST 28
IM-IT INTERMEDIATE TRUST 31
COLORADO IM-IT TRUST 34
MICHIGAN IM-IT TRUST 39
MISSOURI IM-IT TRUST 44
SOUTH CAROLINA QUALITY TRUST 48
NOTES TO PORTFOLIOS 54
UNDERWRITING 56
TRUST ADMINISTRATION 59
Fund Administration and Expenses 59
Sponsor 59
Compensation of Sponsor and Evaluator 63
Trustee 63
Trustee's Fee 64
Portfolio Administration 64
Sponsor Purchases of Units 65
Insurance Premiums 65
Miscellaneous Expenses 65
General 65
Amendment or Termination 65
Limitation on Liabilities 66
Unit Distribution 67
Sponsor and Underwriter Compensation 67
OTHER MATTERS 68
Legal Opinions 68
Independent Certified Public Accountants 68
FEDERAL TAX STATUS 68
DESCRIPTION OF SECURITIES RATINGS 72
REPORT OF INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS 73
STATEMENTS OF CONDITION 74
EQUIVALENT TAXABLE ESTIMATED CURRENT RETURN TABLES 78
ESTIMATED CASH FLOWS TO UNITHOLDERS 81
</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.
(R)denotes a registered trademark of Van Kampen Merritt Inc.
PROSPECTUS
November 8, 1994
Insured Municipals Income Trust
and
Investors' Quality Tax-Exempt Trust,
Multi-Series 235
IM-IT 336
IM-IT 81st Intermediate
Colorado IM-IT 71
Michigan IM-IT 121
Missouri IM-IT 85
South Carolina Quality 77
Van Kampen Merritt (R)
Investing with a sense of direction (R)
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
Mellon Bank Center
1735 Market Street, Suite 1300
Philadelphia, Pennsylvania 19103
Please retain this Prospectus for future reference.
Contents of Registration Statement
This Amendment of Registration Statement comprises the following papers
and documents:
The facing sheet and the Cross-Reference sheet
The Prospectus and the signatures
The consents of independent public accountants, ratings services
and legal counsel
The following exhibits:
1.1 Copy of Trust Agreement.
1.4 Copy of Municipal Bond Investment Trust Insurance Policy issued
by AMBAC Indemnity Corporation Company and/or Financial Guaranty
Insurance Company for each Insured Trust.
1.5 Form of Master Agreement Among Underwriters.
3.1 Opinion and consent of counsel as to legality of securities being
registered.
3.2 Opinion of counsel as to the Federal, Colorado and Missouri 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 Michigan
residents of Units of the Michigan IM-IT Trust.
3.5 Opinion and consent of counsel as to income tax status to South
Carolina residents of Units of the South Carolina IM-IT Trust.
4.1 Consent of Interactive Data Services, Inc.
4.2 Consent of Standard & Poor's Corporation with respect to the
Insured Trusts.
4.3 Consent of Grant Thornton.
4.4 Financial Data Schedule.
Signatures
The Registrant, Insured Municipals Income Trust and Investors'
Quality Tax-Exempt Trust, Multi-Series 235, hereby identifies Insured
Municipals Income Trust and Investors' Quality Tax-Exempt Trust, Multi-
Series 189 and Multi-Series 213 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 and Investors' Quality Tax-
Exempt Trust, Multi-Series 235 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 8th day of November, 1994.
Insured Municipals Income Trust and
Investors' Quality Tax-Exempt
Trust, Multi-Series 235
By Van Kampen Merritt Inc.
By Sandra A. Waterworth
Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below by the
following persons, in the capacities indicated on November 8, 1994.
Signature Title
John C. Merritt Chairman, Chief Executive )
Officer and Director )
William R. Rybak Senior Vice President and )
Chief Financial Officer )
Ronald A. Nyberg Director )
William R. Molinari Director )
Sandra A. Waterworth
(Attorney-in-fact*)
* A copy of each of the related powers of attorney was
filed with the Securities and Exchange Commission in connection with
the Registration Statement on Form S-6 of Insured Municipals Income
Trust and Investors' Quality Tax-Exempt Trust, Multi-Series 203 (File
No. 33-65744) and the same are hereby incorporated herein by this
reference.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This report reflects current period taken from 487 on November 8, 1994 it is
unaudited
</LEGEND>
<SERIES>
<NUMBER> 336
<NAME> Insured Municipals Income Trust
<CAPTION>
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> AUG-31-1995
<PERIOD-START> NOV-08-1994
<PERIOD-END> NOV-08-1994
<INVESTMENTS-AT-COST> 8542474
<INVESTMENTS-AT-VALUE> 8542474
<RECEIVABLES> 61409
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 8603883
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 8603883
<SHARES-COMMON-STOCK> 9044
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 951
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This report reflects the current period taken from 487 on November 8, 1994 it is
unaudited
</LEGEND>
<SERIES>
<NUMBER> 81
<NAME> IM-IT Intermediate
<CAPTION>
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> AUG-31-1995
<PERIOD-START> NOV-08-1994
<PERIOD-END> NOV-08-1994
<INVESTMENTS-AT-COST> 4851210
<INVESTMENTS-AT-VALUE> 4851210
<RECEIVABLES> 44268
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 4895478
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4895478
<SHARES-COMMON-STOCK> 5000
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 979
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This report reflects the current period taken from 487 on November 8, 1994 it is
unaudited
</LEGEND>
<SERIES>
<NUMBER> 71
<NAME> Colorado IM-IT
<CAPTION>
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> AUG-31-1995
<PERIOD-START> NOV-08-1994
<PERIOD-END> NOV-08-1994
<INVESTMENTS-AT-COST> 2841540
<INVESTMENTS-AT-VALUE> 2841540
<RECEIVABLES> 50959
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2892499
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 18900
<TOTAL-LIABILITIES> 18900
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2873599
<SHARES-COMMON-STOCK> 3020
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 952
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This report reflects the current period taken from 487 on November 8, 1994 it is
unaudited
</LEGEND>
<SERIES>
<NUMBER> 121
<NAME> Michigan IM-IT
<CAPTION>
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> AUG-31-1995
<PERIOD-START> NOV-08-1994
<PERIOD-END> NOV-08-1994
<INVESTMENTS-AT-COST> 2900659
<INVESTMENTS-AT-VALUE> 2900659
<RECEIVABLES> 36924
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2937583
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4012
<TOTAL-LIABILITIES> 4012
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2933571
<SHARES-COMMON-STOCK> 3083
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 952
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This report reflects the current period taken from 487 on November 8, 1994 it is
unaudited
</LEGEND>
<SERIES>
<NUMBER> 85
<NAME> Missouri IM-IT
<CAPTION>
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> AUG-31-1995
<PERIOD-START> NOV-08-1994
<PERIOD-END> NOV-08-1994
<INVESTMENTS-AT-COST> 2887424
<INVESTMENTS-AT-VALUE> 2887424
<RECEIVABLES> 53397
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2940821
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 21589
<TOTAL-LIABILITIES> 21589
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2919232
<SHARES-COMMON-STOCK> 3068
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 952
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This report reflects the current period taken from 487 on November 8, 1994 it is
unaudited
</LEGEND>
<SERIES>
<NUMBER> 77
<NAME> South Carolina Quality
<CAPTION>
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> AUG-31-1995
<PERIOD-START> NOV-08-1994
<PERIOD-END> NOV-08-1994
<INVESTMENTS-AT-COST> 2826191
<INVESTMENTS-AT-VALUE> 2826191
<RECEIVABLES> 44289
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2870480
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 12093
<TOTAL-LIABILITIES> 12093
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2858387
<SHARES-COMMON-STOCK> 3004
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 952
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
