File No. 33-57823
CIK #896905
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 247
B. Name of Depositor: Van Kampen American Capital Distributors, Inc.
C. Complete address of Depositor's principal executive offices:
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
D. Name and complete address of agents for service:
Chapman and Cutler Van Kampen American Capital Distributors, Inc.
Attention: Mark J. Kneedy Attention: Don G. Powell, Chairman
111 W. Monroe Street One Parkview Plaza
Chicago, Illinois 60603 Oakbrook Terrace, Illinois 60181
E. Title and amount of securities being registered: 40,097* Units
F. Proposed maximum offering price to the public of the securities being
registered:
($1020 per Unit**): $40,898,940
G. Amount of filing fee, computed at one twenty-ninth of 1 percent of proposed
maximum aggregate offering
price to the public: $14,103.06 ($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
March 16, 1995 pursuant to Rule 487.
26,731 Units registered for primary distribution.
13,366 Units registered for resale by Depositor of Units previously sold
in primary distribution.
** Estimated solely for the purpose of calculating the registration fee.
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
Insured Municipals Income Trust and
Investors' Quality Tax-Exempt Trust
Multi-Series 247
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
March 16, 1995
Van Kampen American Capital
Insured Municipals Income Trust and
Investors' Quality Tax-Exempt Trust, Multi-Series 247
IM-IT 346 Florida IM-IT 90 Oklahoma IM-IT 15
IM-IT 98th Short Intermediate Missouri IM-IT 88 North Carolina Quality 81
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 346 (the "IM-IT"), Insured Municipals
Income Trust, 98th Short Intermediate Series (the "IM-IT Short
Intermediate Trust"), Florida Insured Municipals Income Trust, Series 90
(the "Florida IM-IT Trust"), Missouri Insured Municipals Income Trust,
Series 88 (the "Missouri IM-IT Trust"), Oklahoma Insured Municipals
Income Trust, Series 15 (the "Oklahoma IM-IT Trust") and North
Carolina Investors' Quality Tax-Exempt Trust, Series 81 (the "North
Carolina Quality Trust"). The various trusts are collectively referred to
herein as the "Trusts". The Florida IM-IT, Missouri IM-IT, Oklahoma
IM-IT and North Carolina Quality Trusts are sometimes collectively referred to
herein as the "State Trusts", while the IM-IT, IM-IT Short
Intermediate, Florida IM-IT, Missouri IM-IT and Oklahoma IM-IT Trusts are
sometimes collectively referred to herein as the "Insured Trusts"and
the North 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 page 22. Insurance obtained by an Insured
Trust applies only while Bonds are retained in such Trust while insurance
obtained on Preinsured Bonds is effective so long as such Bonds are
outstanding. The Trustee, upon the sale of a Bond insured under an insurance
policy obtained by an Insured Trust, has a right to obtain from the insurer
involved permanent insurance for such Bond upon the payment of a single
predetermined insurance premium and any expenses related thereto from the
proceeds of the sale of such Bond. Insurance relates only to the Bonds in a
Trust and not to the Units offered hereby or to the market value thereof. As a
result of such insurance, the Units of each Insured Trust have received a
rating of "AAA"by Standard & Poor's Ratings Group. Standard & Poor's
Ratings Group has indicated that this rating is not a recommendation to buy,
hold or sell Units nor does it take into account the extent to which expenses
of each Insured Trust or sales by each Insured Trust of Bonds for less than
the purchase price paid by such Trust will reduce payments to Unitholders of
the interest and principal required to be paid on such Bonds. See "
Unitholder Explanations--Insurance on the Bonds in the Insured Trusts". No
representation is made as to any insurer's ability to meet its commitments.
Public Offering Price. The Public Offering Price of the Units of each Trust
during the initial offering period is equal to the aggregate offering price of
the Securities in such Trust's portfolio and cash, if any, in the Principal
Account held or owned by such Trust Fund plus the applicable sales charge plus
accrued interest, if any. After the initial public offering period, the
secondary market Public Offering Price of each Trust will be equal to the
aggregate bid price of the Securities in such Trust and cash, if any, in the
Principal Account held or owned by such Trust Fund plus the applicable sales
charge plus accrued interest, if any. Sales charges for the Trusts in the
initial market, expressed both as a percentage of the Public Offering Price
and as a percentage of the aggregate offering price of the Securities, are set
forth in footnote (2) under "Summary of Essential Financial
Information". For sales charges in the secondary market, see "
Unitholder Explanations--Public Offering". If the Securities in each Trust
were available for direct purchase by investors, the purchase price of the
Securities would not include the sales charge included in the Public Offering
Price of the Units. During the initial offering period, the sales charge is
reduced on a graduated scale for sales involving at least 100 Units. If Units
were available for purchase at the close of business on the day before the
Date of Deposit (except for the 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 Returns and Estimated Long-Term Returns to Unitholders as of the close
of business on the day before the Date of Deposit (except for the IM-IT as of
8:00 A.M. Central Time on the Date of Deposit) under the monthly and
semi-annual distribution plans were as set forth under "Per Unit
Information"for each Trust. The methods of calculating Estimated Current
Return and Estimated Long-Term Return are set forth in the footnotes to the
"Per Unit Information"for each Trust.
Objectives of The Fund. The objectives of the Fund are income exempt from
Federal income tax and, in the case of a State Trust, Federal and state income
tax (if any) and conservation of capital through an investment in diversified
portfolios of Federal and state tax-exempt obligations. There is, of course,
no guarantee that the Fund will achieve its objectives. The Fund may be an
appropriate investment vehicle for investors who desire to participate in a
portfolio of tax-exempt fixed income securities with greater diversification
than they might be able to acquire individually. In addition, securities of
the type deposited in the Fund are often not available in small amounts. Units
of the Trust are not deposits or obligations of, or guaranteed or endorsed by,
any bank and are not federally insured or otherwise protected by the Federal
Deposit Insurance Corporation, the Federal Reserve Board or any other agency
and involve investment risk, including the possible loss of principal.
Distribution Options. Purchasers of Units who desire to receive distributions
on a monthly or semi-annual basis may elect to do so at the time of settlement
during the initial public offering period. See "Unitholder
Explanations--Settlement of Bonds in the Trusts--Change of Distribution
Option". The plan of distribution selected by such purchasers will remain
in effect until changed. Those indicating no choice will be deemed to have
chosen the monthly distribution plan. Record dates for monthly distributions
will be the first day of each month and record dates for semi-annual
distributions will be the first day of the months indicated under "Per
Unit Information"for the applicable Trust. Distributions will be made on
the fifteenth day of the month subsequent to the respective record dates.
Market for Units. Although not obligated to do so, the Sponsor, Van Kampen
American Capital Distributors, Inc., intends to, and certain of the other
Underwriters may, maintain a secondary market for the Units at prices based
upon the aggregate bid prices of the Securities in the respective Trusts plus
interest accrued to the date of settlement; however, during the initial
offering period such prices will be based upon the aggregate offering prices
of the Securities plus interest accrued to the date of settlement. If such a
market is not maintained and no other over-the-counter market is available, a
Unitholder will be able to dispose of his Units only through redemption at
prices based upon the bid prices of the underlying Securities plus interest
accrued to the date of settlement (see "Unitholder Explanations--Public
Offering--Redemption of Units"and "Unitholder Explanations--Public
Offering--Market for Units").
Reinvestment Option. Unitholders have the opportunity to have their
distributions reinvested into an open-end, management investment company as
described herein. See "Unitholder Explanations--Public
Offering--Reinvestment Option".
Risk Factors. An investment in the Trusts should be made with an understanding
of the risks associated therewith, including, among other factors, the
inability of the issuer or an insurer to pay the principal of or interest on a
bond when due, volatile interest rates, early call provisions, and changes to
the tax status of the Bonds. See "Unitholder Explanations--Settlement of
Bonds in the Trusts--Risk Factors".
<TABLE>
INSURED MUNICIPALS INCOME TRUST
AND INVESTORS' QUALITY TAX-EXEMPT TRUST,
Multi-Series 247
Summary of Essential Financial Information
At the Close of Business on the day before the Date of Deposit: March 15, 1995
(except for the IM-IT as of 8:00 A.M. Central Time
on the Date of Deposit: March 16, 1995)
Sponsor: Van Kampen American Capital Distributors, Inc.
Evaluator: American Portfolio Evaluation Services
(A division of a subsidiary of the Sponsor)
Trustee: The Bank of New York
<CAPTION>
IM-IT Short
Intermediate Florida
GENERAL INFORMATION IM-IT Trust IM-IT Trust
<S> <C> <C> <C>
Principal Amount (Par Value) of Securities in Trust....................... $ 9,015,000 $ 5,000,000 $ 2,985,000
Number of Units........................................................... 1/9,015 1/5,000 1/3,058
Fractional Undivided Interest in the Trust per Unit....................... 9,015 5,000 3,058
Principal Amount (Par Value) of Securities per Unit <F1>.................. $ 1,000.00 $ 1,000.00 $ 976.13
Public Offering Price: ...................................................
Aggregate Offering Price of Securities in Portfolio...................... $ 8,573,305 $ 4,969,139 $ 2,908,181
Aggregate Offering Price of Securities per Unit.......................... $ 951.00 $ 993.83 $ 951.01
Sales Charge <F2>........................................................ $ 49.00 $ 30.73 $ 48.99
Public Offering Price per Unit <F3>...................................... $ 1,000.00 $ 1,024.56 $ 1,000.00
Redemption Price per Unit <F3>............................................ $ 943.55 $ 986.12 $ 943.79
Secondary Market Repurchase Price per Unit <F3>........................... $ 951.00 $ 993.83 $ 951.01
Excess of Public Offering Price per Unit Over Redemption Price per Unit... $ 56.45 $ 38.44 $ 56.21
Excess of Sponsor's Initial Repurchase Price per Unit Over Redemption
Price per Unit........................................................... $ 7.45 $ 7.71 $ 7.22
Minimum Value of the Trust under which Trust Agreement may be
terminated............................................................... $ 1,803,000 $ 1,000,000 $ 597,000
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Minimum Principal Distribution..........$1.00 per Unit
First Settlement Date...................March 23, 1995
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 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>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. 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 247
Summary of Essential Financial Information
At the Close of Business on the day before the Date of Deposit: March 15, 1995
(except for the IM-IT as of 8:00 A.M. Central Time
on the Date of Deposit: March 16, 1995)
Sponsor: Van Kampen American Capital Distributors, Inc.
Evaluator: American Portfolio Evaluation Services
(A division of a subsidiary of the Sponsor)
Trustee: The Bank of New York
<CAPTION>
Missouri Oklahoma North Carolina
GENERAL INFORMATION IM-IT Trust IM-IT Trust Quality Trust
<S> <C> <C> <C>
Principal Amount (Par Value) of Securities in Trust....................... $ 3,375,000 $ 3,150,000 $ 3,000,000
Number of Units........................................................... 1/3,471 1/3,119 1/3,068
Fractional Undivided Interest in the Trust per Unit....................... 3,471 3,119 3,068
Principal Amount (Par Value) of Securities per Unit <F1>.................. $ 972.34 $ 1,009.94 $ 977.84
Public Offering Price: ...................................................
Aggregate Offering Price of Securities in Portfolio...................... $ 3,300,936 $ 2,966,185 $ 2,917,698
Aggregate Offering Price of Securities per Unit.......................... $ 951.00 $ 951.00 $ 951.01
Sales Charge <F2>........................................................ $ 49.00 $ 49.00 $ 48.99
Public Offering Price per Unit <F3>...................................... $ 1,000.00 $ 1,000.00 $ 1,000.00
Redemption Price per Unit <F3>............................................ $ 943.81 $ 942.99 $ 943.92
Secondary Market Repurchase Price per Unit <F3>........................... $ 951.00 $ 951.00 $ 951.01
Excess of Public Offering Price per Unit Over Redemption Price per Unit... $ 56.19 $ 57.01 $ 56.08
Excess of Sponsor's Initial Repurchase Price per Unit Over Redemption
Price per Unit........................................................... $ 7.19 $ 8.01 $ 7.09
Minimum Value of the Trust under which Trust Agreement may be
terminated............................................................... $ 675,000 $ 630,000 $ 600,000
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Minimum Principal Distribution..........$1.00 per Unit
First Settlement Date...................March 23, 1995
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 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>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. 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 247 (the "Fund"), was created under the laws of
the State of New York pursuant to a Trust Indenture and Agreement (the "
Trust Agreement"), dated the Date of Deposit, among Van Kampen American
Capital Distributors, Inc., as Sponsor, American Portfolio Evaluation
Services, a division of Van Kampen American Capital Investment Advisory Corp.,
as Evaluator, and The Bank of New York, as Trustee.
The Fund consists of 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 Illinois, Indiana, Virginia and Washington may purchase Units of
the IM-IT and the IM-IT Short 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.
The portfolios of the Trusts may consist of bonds that were acquired at a
market discount from par value at maturity. The coupon interest rates on the
discount bonds at the time they were purchased and deposited in such Trust
were lower than the current market interest rates for newly issued bonds of
comparable rating and type. If such interest rates for newly issued comparable
bonds increase, the market discount of previously issued bonds will become
greater, and if such interest rates for newly issued comparable bonds decline,
the market discount of previously issued bonds will be reduced, other things
being equal. Investors should also note that the value of bonds purchased at a
market discount will increase in value faster than bonds purchased at a market
premium if interest rates decrease. Conversely, if interest rates increase,
the value of bonds purchased at a market discount will decrease faster than
bonds purchased at a market premium. In addition, if interest rates rise, the
prepayment risk of higher yielding, premium bonds and the prepayment benefit
for lower yielding, discount bonds will be reduced. A bond purchased at a
market discount and held to maturity will have a larger portion of its total
return in the form of taxable income and capital gain and less in the form of
tax-exempt interest income than a comparable bond newly issued at current
market rates. See "Other Matters--Federal Tax Status."Market discount
attributable to interest changes does not indicate a lack of market confidence
in the issue. Neither the Sponsor nor the Trustee shall be liable in any way
for any default, failure or defect in any of the Bonds.
Certain of the Bonds in certain of the Trusts may be "zero coupon"
bonds. See footnote (6) in "Notes to Portfolios". Zero coupon bonds
are purchased at a deep discount because the buyer receives only the right to
receive a final payment at the maturity of the bond and does not receive any
periodic interest payments. The effect of owning deep discount bonds which do
not make current interest payments (such as the zero coupon bonds) is that a
fixed yield is earned not only on the original investment but also, in effect,
on all discount earned during the life of such obligation. This implicit
reinvestment of earnings at the same rate eliminates the risk of being unable
to reinvest the income on such obligation at a rate as high as the implicit
yield on the discount obligation, but at the same time eliminates the holder's
ability to reinvest at higher rates in the future. For this reason, zero
coupon bonds are subject to substantially greater price fluctuations during
periods of changing market interest rates than are securities of comparable
quality which pay interest.
Certain of the Bonds in certain of the Trusts may have been purchased on a
"when, as and if issued"or "delayed delivery"basis. See
footnote (5) in "Notes to Portfolios". The delivery of any such
Securities may be delayed or may not occur. Interest on these Securities
begins accruing to the benefit of Unitholders on their respective dates of
delivery. To the extent any Securities are actually delivered to the Fund
after their respective expected dates of delivery, Unitholders who purchase
their Units prior to the date such Securities are actually delivered to the
Trustee would be required to adjust their tax basis in their Units for a
portion of the interest accruing on such Securities during the interval
between their purchase of Units and the actual delivery of such Securities. As
a result of any such adjustment, the Estimated Current Returns during the
first year would be slightly lower than those stated herein which would be the
returns after the first year, assuming the portfolio of a Trust and estimated
annual expenses other than that of the Trustee (which may be reduced in the
first year only) do not vary from that set forth under "Per Unit
Information"for the applicable Trust. Holders of the Units will be "
at risk"with respect to all Securities in the portfolios including "
when, as and if issued"and "delayed delivery"Securities (i.e.,
may derive either gain or loss from fluctuations in the evaluation of such
Securities) from the date they commit for Units. For a discussion of the
Sponsor's obligations in the event of the failure of any contract for the
purchase of any of the Securities and limited right to substitute other
tax-exempt bonds to replace any failed contract, see "Replacement
Bonds"below.
Each Unit initially offered represents the fractional undivided interest in
the principal and net income of a Trust indicated under "Summary of
Essential Financial Information". To the extent that any Units are
redeemed by the Trustee, the fractional undivided interest in a Trust
represented by each unredeemed Unit will increase, although the actual
interest in such Trust represented by such fraction will remain unchanged.
Units will remain outstanding until redeemed upon tender to the Trustee by
Unitholders, which may include the Sponsor or the Underwriters, or until the
termination of the Trust Agreement.
Objectives and Securities Selection. The objectives of the Fund are income
exempt from Federal income taxation and, in the case of a State Trust, Federal
and state income taxation and conservation of capital through an investment in
diversified portfolios of Federal and state tax-exempt obligations. 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
Ratings Group ("Standard & Poor's") rating of "BBB-"or at
least the Moody's Investors Service, Inc. rating of "Baa", which in
brief represent the lowest ratings for securities of investment grade (see
"Other Matters--Description of Securities Ratings"). Insurance is not
a substitute for the basic credit of an issuer, but supplements the existing
credit and provides additional security therefor. If an issue is accepted for
insurance, a non-cancellable policy for the prompt payment of interest and
principal on the bonds, when due, is issued by the insurer. Any premium or
premiums relating to Preinsured Bond insurance is paid by the issuer, by a
prior owner of such Bonds or by the Sponsor and a monthly premium is paid by
an Insured Trust for the portfolio insurance, if any, obtained by such Trust.
The Trustee has the right to obtain permanent insurance from a Portfolio
Insurer in connection with the sale of a Bond insured under the insurance
policy obtained from the respective Portfolio Insurer by an Insured Trust upon
the payment of a single predetermined insurance premium from the proceeds of
the sale of such Bond. Accordingly, any Bond in an Insured Trust is eligible
to be sold on an insured basis. All Bonds insured by the Portfolio Insurers
and the Preinsured Bond Insurers receive a "AAA"rating by Standard &
Poor's. See "Unitholder Explanations--Insurance on the Bonds in the
Insured Trusts".
In selecting Securities for the Trusts the following facts, among others, were
considered by the Sponsor: (a) either the Standard & Poor's rating of the
Securities was in no case less than "BBB-"in the case of the Insured
Trusts 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 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
and accrued interest (at the coupon rate of such Failed Bonds to the date the
Failed Bonds are removed from the Fund) attributable to such Failed Bonds not
more than 30 days after such removal or such earlier time as the Trustee in
its sole discretion deems to be in the interest of the Unitholders. All such
interest paid to a Unitholder which accrued after the expected date of
settlement for purchase of his Units will be paid by the Sponsor and
accordingly will not be treated as tax-exempt income. In the event a
Replacement Bond should not be acquired by the Fund, the Estimated Net Annual
Interest Income per Unit for the affected Trust would be reduced and the
Estimated Current Return and Estimated Long-Term Return thereon might be
lowered. In addition, Unitholders should be aware that they may not be able at
the time of receipt of such principal to reinvest such proceeds in other
securities at a yield equal to or in excess of the yield which such proceeds
were earning to Unitholders in the affected Trust.
Bond Redemptions. Certain of the Bonds in certain of the Trusts may be subject
to redemption prior to their stated maturity date pursuant to sinking fund
provisions, call provisions or extraordinary optional or mandatory redemption
provisions or otherwise. A sinking fund is a reserve fund accumulated over a
period of time for retirement of debt. A callable debt obligation is one which
is subject to redemption or refunding prior to maturity at the option of the
issuer. A refunding is a method by which a debt obligation is redeemed, at or
before maturity, by the proceeds of a new debt obligation. In general, call
provisions are more likely to be exercised when the offering side valuation is
at a premium over par than when it is at a discount from par. The exercise of
redemption or call provisions will (except to the extent the proceeds of the
called Bonds are used to pay for Unit redemptions) result in the distribution
of principal and may result in a reduction in the amount of subsequent
interest distributions; it may also affect the current return on Units of the
Trust involved. Each Trust portfolio contains a listing of the sinking fund
and call provisions, if any, with respect to each of the debt obligations.
Extraordinary optional redemptions and mandatory redemptions result from the
happening of certain events. Generally, events that may permit the
extraordinary optional redemption of Bonds or may require the mandatory
redemption of Bonds include, among others: a final determination that the
interest on the Bonds is taxable; the substantial damage or destruction by
fire or other casualty of the project for which the proceeds of the Bonds were
used; an exercise by a local, state or Federal governmental unit of its power
of eminent domain to take all or substantially all of the project for which
the proceeds of the Bonds were used; changes in the economic availability of
raw materials, operating supplies or facilities or technological or other
changes which render the operation of the project for which the proceeds of
the Bonds were used uneconomic; changes in law or an administrative or
judicial decree which renders the performance of the agreement under which the
proceeds of the Bonds were made available to finance the project impossible or
which creates unreasonable burdens or which imposes excessive liabilities,
such as taxes, not imposed on the date the Bonds are issued on the issuer of
the Bonds or the user of the proceeds of the Bonds; an administrative or
judicial decree which requires the cessation of a substantial part of the
operations of the project financed with the proceeds of the Bonds; an
overestimate of the costs of the project to be financed with the proceeds of
the Bonds resulting in excess proceeds of the Bonds which may be applied to
redeem Bonds; or an underestimate of a source of funds securing the Bonds
resulting in excess funds which may be applied to redeem Bonds. The issuer of
certain Bonds in a Trust may have sold or reserved the right to sell, upon the
satisfaction of certain conditions, to third parties all or any portion of its
rights to call Bonds in accordance with the stated redemption provisions of
such Bonds. In such a case the issuer no longer has the right to call the
Bonds for redemption unless it reacquires the rights from such third party. A
third party pursuant to these rights may exercise the redemption provisions
with respect to a Bond at a time when the issuer of the Bond might not have
called a Bond for redemption had it not sold such rights. The Sponsor is
unable to predict all of the circumstances which may result in such redemption
of an issue of Bonds. See "Portfolio"for each Trust and footnote (3)
in the "Notes to Portfolios". See also the discussion of single family
mortgage and multi-family revenue bonds above for more information on the call
provisions of such bonds.
Distributions. Distributions of interest received by the Fund, pro rated on an
annual basis, will be made on a monthly basis, unless the Unitholder elects to
receive them semi-annually. The first such distribution will be in the amount
indicated under "Per Unit Information"for the applicable Trust and
will be made on the fifteenth day of the month indicated under "Initial
Distribution"therein to Unitholders of record on the first day of such
month. The first distribution of funds from the Principal Account, if any,
will be made on the first semi-annual distribution date to Unitholders of
record on the first semi-annual record date, and thereafter such distributions
will be made on a semi-annual basis, except under certain special
circumstances (see "Unitholder Explanations--Public
Offering--Distributions of Interest and Principal").
Change of Distribution Option. The plan of distribution selected by a
Unitholder will remain in effect until changed. Unitholders purchasing Units
in the secondary market will initially receive distributions in accordance
with the election of the prior owner. Unitholders may change the plan of
distribution in which they are participating. For convenience of Unitholders,
the Trustee will furnish a card for this purpose; cards may also be obtained
upon request from the Trustee. Unitholders desiring to change their plan of
distribution may so indicate on the card and return it together with their
certificate and such other documentation that the Trustee may then require, to
the Trustee. Certificates should only be sent by registered or certified mail
to minimize the possibility of their being lost or stolen. If the card and
certificate are properly presented to the Trustee, the change will become
effective as of the opening of buisness on the first day after the next
succeeding semi-annual record date and will be effective, unless further
changed, for all subsequent distributions.
Certificates. The Trustee is authorized to treat as the record owner of Units
that person who is registered as such owner on the books of the Trustee.
Ownership of Units of each Trust is evidenced by separate registered
certificates executed by the Trustee and the Sponsor. Certificates are
transferable by presentation and surrender to the Trustee properly endorsed or
accompanied by a written instrument or instruments of transfer. A Unitholder
must sign exactly as his name appears on the face of the certificate with the
signature guaranteed by a participant in the Securities Transfer Agents
Medallion Program ("STAMP") or such other signature guaranty program
in addition to, or in substitution for, STAMP, as may be accepted by the
Trustee. In certain instances the Trustee may require additional documents
such as, but not limited to, trust instruments, certificates of death,
appointments as executor or administrator or certificates of corporate
authority. Certificates will be issued in denominations of one Unit or any
multiple thereof. Certificates for Units will bear appropriate notations on
their face indicating which plan of distribution has been selected in respect
thereof. If a change in the plan of distribution is made, the existing
certificate must be surrendered to the Trustee and a new certificate will be
issued, at no charge to the Unitholder, to reflect the currently effective
plan of distribution.
Although no such charge is now made or contemplated, the Trustee may require a
Unitholder to pay a reasonable fee for each certificate re-issued (other than
as a result of a change in plan of distribution) or transferred and to pay any
governmental charge that may be imposed in connection with each such transfer
or interchange. Destroyed, stolen, mutilated or lost certificates will be
replaced upon delivery to the Trustee of satisfactory indemnity, evidence of
ownership and payment of expenses incurred. Mutilated certificates must be
surrendered to the Trustee for replacement.
ESTIMATED CURRENT RETURNS AND ESTIMATED LONG-TERM RETURNS
As of the close of business on the day before the Date of Deposit (except for
the IM-IT as of 8:00 A.M. Central Time on the Date of Deposit) the Estimated
Current Returns and the Estimated Long-Term Returns, under the monthly and
semi-annual distribution plans, were as set forth in the "Per Unit
Information"for each Trust. Estimated Current Return is calculated by
dividing the estimated net annual interest income per Unit by the Public
Offering Price. The estimated net annual interest income per Unit will vary
with changes in fees and expenses of the Trustee and the Evaluator and with
the principal prepayment, redemption, maturity, exchange or sale of Securities
while the Public Offering Price will vary with changes in the offering price
of the underlying Securities; therefore, there is no assurance that the
present Estimated Current Return will be realized in the future. Estimated
Long-Term Return is calculated using a formula which (1) takes into
consideration, and determines and factors in the relative weightings of, the
market values, yields (which takes into account the amortization of premiums
and the accretion of discounts) and estimated retirements of all of the
Securities in a Trust and (2) takes into account the expenses and sales charge
associated with each Trust Unit. Since the market values and estimated
retirements of the Securities and the expenses of a Trust will change, there
is no assurance that the present Estimated Long-Term Return will be realized
in the future. The Estimated Current Return and Estimated Long-Term Return are
expected to differ because the calculation of Estimated Long-Term Return
reflects the estimated date and amount of principal returned while the
Estimated Current Return calculation includes only net annual interest income
and Public Offering Price.
In order to acquire certain of the Securities contracted for by the Sponsor
for deposit in the Fund, it may be necessary for the Sponsor or Trustee to pay
on the settlement dates for delivery of such Securities amounts covering
accrued interest on such Securities which exceed the amounts which will be
made available through cash furnished by the Sponsor on the Date of Deposit,
which amount of cash may exceed the interest which would accrue to the First
Settlement Date. The Trustee has agreed to pay for any amounts necessary to
cover any such excess and will be reimbursed therefor, when funds become
available from interest payments on the particular Securities with respect to
which such payments may have been made. Also, since interest on any "when,
as and if issued"Securities does not begin accruing as tax-exempt
interest income to the benefit of Unitholders until their respective dates of
delivery, the Trustee may, in order to maintain (or in some cases approach)
for the Unitholders the same estimated net annual interest incomes during the
first year of the Trusts' operations as is indicated under "Per Unit
Information"for the applicable Trust, reduce its fee (and to the extent
necessary pay Trust expenses) in an amount equal to that indicated under "
Per Unit Information"for the applicable Trust.
INTEREST EARNING SCHEDULE
Calculation of Estimated Net Annual Interest Income. The estimated net annual
interest income is based on 360 days. To account for the estimated net annual
interest income per Unit in a Trust, it is necessary to use the following
information.
The beginning interest date for each Trust is March 23, 1995. The first record
date for each Trust (May 1, 1995) is 38 days from such date. The daily rates
of estimated net annual interest income per Unit accrued on a monthly basis
are $.15562, $.13015, $.15151, $.15201, $.14249 and $.14983 for the IM-IT,
IM-IT Short Intermediate, Florida IM-IT, Missouri IM-IT, Oklahoma IM-IT and
North Carolina Quality Trusts, respectively. This amounts to $5.91, $4.95,
$5.76, $5.78, $5.41 and $5.69 for the IM-IT, IM-IT Short Intermediate, Florida
IM-IT, Missouri IM-IT, Oklahoma IM-IT and North Carolina Quality Trusts,
respectively.
Utilizing the preceding information assuming the monthly payment option, the
following procedure illustrates the calculation of first year estimated net
annual interest income per Unit for the Florida IM-IT Trust:
The Florida IM-IT Trust accrues
$5.76 to the first record date plus
$45.50 which is 10 normal distributions at $4.55, and finally adding
$3.28 which has accrued from March 1, 1996 until March 23, 1996 which
completes the 360 day cycle (22 days times the daily factor)
Total $54.54 interest earned /$1,000.00 (Date of Deposit Public Offering
Price) = 5.45% Estimated Current Return as of the Date of Deposit.
ACCRUED INTEREST
Accrued interest is an accumulation of unpaid interest on securities which
generally is paid semi-annually, although the Trust accrues such interest
daily. Because of this, the Trust always has an amount of interest earned but
not yet collected by the Trustee. For this reason, with respect to sales
settling subsequent to the First Settlement Date, the Public Offering Price of
Units will have added to it the proportionate share of accrued interest to the
date of settlement. Unitholders will receive on the next distribution date of
the Trust the amount, if any, of accrued interest paid on their Units.
In an effort to reduce the amount of accrued interest which would otherwise
have to be paid by Unitholders, the Trustee will advance the amount of accrued
interest to the Sponsor as the Unitholder of record as of the First Settlement
Date. Consequently, the amount of accrued interest to be added to the Public
Offering Price of Units will include only accrued interest from the First
Settlement Date to the date of settlement, less any distributions from the
Interest Account subsequent to the First Settlement Date. See "Public
Offering--Distributions of Interest and Principal."
Because of the varying interest payment dates of the Securities, accrued
interest at any point in time will be greater than the amount of interest
actually received by a Trust and distributed to Unitholders. If a Unitholder
sells or redeems all or a portion of his Units, he will be entitled to receive
his proportionate share of the accrued interest from the purchaser of his
Units. Since the Trustee has the use of the funds held in the Interest Account
for distributions to Unitholders and since such Account is
non-interest-bearing to Unitholders, the Trustee benefits thereby.
PUBLIC OFFERING
General. Units are offered at the Public Offering Price. During the initial
offering period the Public Offering Price is based on the offering prices of
the Securities in each Trust and includes a sales charge of 4.9% of the Public
Offering Price (5.152% of the aggregate offering price of the Securities) for
an IM-IT or a State Trust, 4.3% of the Public Offering Price (4.493% of the
aggregate offering price of the Securities) for an IM-IT Limited Maturity
Trust, 3.9% of the Public Offering Price (4.058% of the aggregate offering
price of the Securities) for an IM-IT Intermediate Trust and 3.0% of the
Public Offering Price (3.093% of the aggregate offering price of the
Securities) for an IM-IT Short Intermediate Trust. After the initial public
offering period, the secondary market Public Offering Price is based on the
bid prices of the Securities in each Trust and includes a sales charge
determined in accordance with the table set forth below, which is based upon
the dollar weighted average maturity of each Trust plus in each case accrued
interest, if any. For purposes of computation, Bonds will be deemed to mature
on their expressed maturity dates unless: (a) the Bonds have been called for
redemption or funds or securities have been placed in escrow to redeem them on
an earlier call date, in which case such call date will be deemed to be the
date upon which they mature; or (b) such Bonds are subject to a "mandatory
tender", in which case such mandatory tender will be deemed to be the date
upon which they mature.
The effect of this method of sales charge computation will be that different
sales charge rates will be applied to each Trust based upon the dollar
weighted average maturity of such Trust's Portfolio, in accordance with the
following schedule:
<TABLE>
<CAPTION>
Years To Maturity Sales Charge Years To Maturity Sales Charge
<S> <C> <C> <C>
1 1.523% 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, 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>
Dollar Amount of Sales
Charge Reduction Per Unit
IM-IT,
<CAPTION>
Aggregate Number of State and
Units Purchased National Quality
Trusts Other Trusts
<S> <C> <C>
100-249 Units......... $ 4.00 $ 4.00
250-499 Units......... $ 6.00 $ 6.00
500-999 Units......... $ 14.00 $ 9.00
1,000 or more Units... $ 19.00 $ 11.00
</TABLE>
Any such reduced sales charge shall be the responsibility of the selling
Underwriter, broker, dealer or agent. The Sponsor will, however, increase the
concession or agency commission for such quantity purchases. See "Public
Offering--Unit Distribution". This reduced sales charge structure will
apply on all purchases by the same person from any one Underwriter or dealer
of units of Van Kampen American Capital-sponsored unit investment trusts which
are being offered in the initial offering period (a) on any one day (the "
Initial Purchase Date") or (b) on any day subsequent to the Initial
Purchase Date, if (1) the units purchased are of a unit investment trust
purchased on the Initial Purchase Date, and (2) the person purchasing the
units purchased a sufficient amount of units on the Initial Purchase Date to
qualify for a reduced sales charge on such date. In the event units of more
than one trust are purchased on the Initial Purchase Date, the aggregate
dollar amount of such purchases will be used to determine whether purchasers
are eligible for a reduced sales charge. Such aggregate dollar amount will be
divided by the public offering price per unit (on the day preceding the date
of purchase) of each respective trust purchased to determine the total number
of units which such amount could have purchased of each individual trust.
Purchasers must then consult the applicable trust's prospectus to determine
whether the total number of units which could have been purchased of a
specific trust would have qualified for a reduced sales charge and, if so
qualified, the amount of such reduction. Assuming a purchaser qualifies for a
sales charge reduction or reductions, to determine the applicable sales charge
reduction or reductions it is necessary to accumulate all purchases made on
the Initial Purchase Date and all purchases made in accordance with (b) above.
Units purchased in the name of the spouse of a purchaser or in the name of a
child of such purchaser under 21 years of age will be deemed for the purposes
of calculating the applicable sales charge to be additional purchases by the
purchaser. The reduced sales charges will also be applicable to a trustee or
other fiduciary purchasing securities for one or more trust estate or
fiduciary accounts. Employees of Van Kampen American Capital Distributors,
Inc. and its subsidiaries may purchase Units of the Trust at the current
Public Offering Price less the underwriting commission during the initial
offering period, and less the dealer's concession for secondary market
transactions. Registered representatives of selling Underwriters may purchase
Units of the Fund at the current Public Offering Price less the underwriting
commission during the initial offering period, and less the dealer's
concession for secondary market transactions. Registered representatives of
selling brokers, dealers, or agents may purchase Units of the Fund at the
current Public Offering Price less the dealer's concession during the initial
offering period and for secondary market transactions.
Units may be purchased in the primary or secondary market at the Public
Offering Price (for purchases which do not qualify for a sales charge
reduction for quantity purchases) less the concession the Sponsor typically
allows to brokers and dealers for purchases (see "Trust
Administration--General--Unit Distribution") by (1) investors who purchase
Units through registered investment advisers, certified financial planners and
registered broker-dealers who in each case either charge periodic fees for
financial planning, investment advisory or asset management services, or
provide such services in connection with the establishment of an investment
account for which a comprehensive "wrap fee"charge is imposed, (2)
bank trust departments investing funds over which they exercise exclusive
discretionary investment authority and that are held in a fiduciary, agency,
custodial or similar capacity, (3) any person who for at least 90 days, has
been an officer, director or bona fide employee of any firm offering Units for
sale to investors or their immediate family members (as described above) and
(4) officers and directors of bank holding companies that make Units available
directly or through subsidiaries or bank affiliates. Notwithstanding anything
to the contrary in this Prospectus, such investors, bank trust departments,
firm employees and bank holding company officers and directors who purchase
Units through this program will not receive sales charge reductions for
quantity purchases.
Offering Price. Public Offering Price of the Units will vary from the amounts
stated under "Summary of Essential Financial Information"in
accordance with fluctuations in the prices of the underlying Securities in
each Trust.
As indicated above, the price of the Units as of the date the Securities were
deposited in each Trust was determined by adding to the aggregate offering
price of the Securities of a Trust an amount equal to the applicable sales
charge expressed as a percentage of the aggregate offering price of the
Securities and dividing the sum so obtained by the number of Units
outstanding. This computation produced a gross underwriting commission equal
to such sales charge expressed as a percentage of the Public Offering Price.
Such price determination as of the close of business on the day before the
Date of Deposit (except for the 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 and dividing the sum so attained by the
number of Units then outstanding. This computation produces a gross commission
equal to such sales charge expressed as a percentage of the Public Offering
Price. For secondary market purposes such appraisal and adjustment with
respect to a Trust will be made by the Evaluator as of 4:00 P.M. Eastern time
on days in which the New York Stock Exchange is open for each day on which any
Unit of such Trust is tendered for redemption, and it shall determine the
aggregate value of any Trust as of 4:00 P.M. Eastern time on such other days
as may be necessary.
The aggregate price of the Securities in each Trust has been and will be
determined on the basis of bid prices or offering prices, as is appropriate,
(a) on the basis of current market prices for the Securities obtained from
dealers or brokers who customarily deal in bonds comparable to those held by
the Fund; (b) if such prices are not available for any particular Securities,
on the basis of current market prices for comparable bonds; (c) by causing the
value of the Securities to be determined by others engaged in the practice of
evaluation, quoting or appraising comparable bonds; or (d) by any combination
of the above. Market prices of the Securities will generally fluctuate with
changes in market interest rates. Unless Bonds are in default in payment of
principal or interest or in significant risk of such default, the Evaluator
will not attribute any value to the insurance obtained by an Insured Trust, if
any.
The Evaluator will consider in its evaluation of Bonds which are in default in
payment of principal or interest or, in the Sponsor's opinion, in significant
risk of such default (the "Defaulted Bonds") the value of the
insurance guaranteeing interest and principal payments. The value of the
insurance will be equal to the difference between (i) the market value of
Defaulted Bonds assuming the exercise of the right to obtain Permanent
Insurance (less the insurance premiums and related expenses attributable to
the purchase of Permanent Insurance) and (ii) the market value of such
Defaulted Bonds not covered by Permanent Insurance. In addition, the Evaluator
will consider the ability of the affected Portfolio Insurer to meet its
commitments under any Trust insurance policy, including the commitments to
issue Permanent Insurance. It is the position of the Sponsor that this is a
fair method of valuing the Bonds and the insurance obtained by an Insured
Trust and reflects a proper valuation method in accordance with the provisions
of the Investment Company Act of 1940.
No value has been ascribed to insurance obtained by an Insured Trust, if any,
as of the date of this Prospectus.
The initial or primary Public Offering Price of the Units is equal to the
offering price per Unit of the underlying Securities in each Trust plus the
applicable sales charge plus interest accrued but unpaid from the First
Settlement Date to the date of settlement. The secondary market Public
Offering Price is equal to the bid price per Unit of the Securities in each
Trust plus the applicable sales charge plus accrued interest. The offering
price of Securities in each Trust may be expected to average approximately
0.5%-1% more than the bid price of such Securities. On the Date of Deposit,
the offering side evaluations of the Securities in the Trusts were higher than
the bid side evaluations of such Securities by the respective amounts
indicated under footnote (5) in "Notes to Portfolios".
Although payment is normally made 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
plus accrued interest to the date of settlement less the related sales
commission. Afterward, although they are not obligated to do so, the Sponsor
intends to, and certain of the other Underwriters may, maintain a market for
the Units offered hereby and to offer continuously to purchase such Units at
prices, subject to change at any time, based upon the aggregate bid prices of
the Securities in the portfolio of each Trust plus interest accrued to the
date of settlement and plus any principal cash on hand, less any amounts
representing taxes or other governmental charges payable out of the Trust and
less any accrued Trust expenses. If the supply of Units exceeds demand or if
some other business reason warrants it, the Sponsor and/or the Underwriters
may either discontinue all purchases of Units or discontinue purchases of
Units at such prices. In the event that a market is not maintained for the
Units and the Unitholder cannot find another purchaser, a Unitholder of any
Trust desiring to dispose of his Units may be able to dispose of such Units
only by tendering them to the Trustee for redemption at the Redemption Price,
which is based upon the aggregate bid price of the Securities in the portfolio
of such Trust plus any accrued interest. The aggregate bid prices of the
underlying Securities in a Trust are expected to be less than the related
aggregate offering prices. See "Redemption of Units"below. A
Unitholder who wishes to dispose of his Units should inquire of his broker as
to current market prices in order to determine whether there is in existence
any price in excess of the Redemption Price and, if so, the amount thereof.
Distributions of Interest and Principal. Interest received by the Fund,
including that part of the proceeds of any disposition of Securities which
represents accrued interest, is credited by the Trustee to the Interest
Account for the appropriate Trust. Other receipts are credited to the
Principal Account for the appropriate Trust. Interest received by the Fund
after deduction of amounts sufficient to reimburse the Trustee, without
interest, for any amounts advanced and paid to the Sponsor as the Unitholder
of record as of the First Settlement Date (see "Public Offering--Offering
Price"above) will be distributed on or shortly after the fifteenth day of
each month on a pro rata basis to Unitholders of record of a Trust as of the
preceding record date who are entitled to distributions at that time under the
plan of distibutions chosen. All distributions will be net of applicable
expenses. The pro rata share of cash in the Principal Account of a Trust will
be computed as of the date set forth under "Per Unit Information"for
the applicable Trust, and thereafter as of the semi-annual record date, and
distributions to the Unitholders as of such record date will be made on or
shortly after the fifteenth day of such month. Proceeds received from the
disposition of any of the Securities after such record date and prior to the
following distribution date will be held in the Principal Account and not
distributed until the next distribution date. The Trustee is not required to
pay interest on funds held in any Principal or Interest Account (but may
itself earn interest thereon and therefore benefits from the use of such
funds) nor to make a distribution from the Principal Account unless the amount
available for distribution therein shall equal at least $1.00 per Unit.
However, should the amount available for distribution in the Principal Account
equal or exceed $10.00 per Unit, the Trustee will make a special distribution
from the Principal Account on the next succeeding monthly distribution date to
holders of record on the related monthly record date.
The distribution to the Unitholders of a Trust as of each record date after
the First Settlement Date will be made on the following distribution date or
shortly thereafter and shall consist of an amount substantially equal to such
portion of the Unitholder's pro rata share of the estimated net annual
interest income in the Interest Account of such Trust after deducting
estimated expenses attributable as is consistent with the distribution plan
chosen. Because interest payments are not received by the Fund at a constant
rate throughout the year, such interest distribution may be more or less than
the amount credited to such Interest Account as of the record date. For the
purpose of minimizing fluctuations in the distributions from an Interest
Account, the Trustee is authorized to advance such amounts as may be necessary
to provide interest distributions of approximately equal amounts. The Trustee
shall be reimbursed for any such advances from funds in the applicable
Interest Account on the ensuing record date. Persons who purchase Units
between a record date and a distribution date will receive their first
distribution on the second distribution date after the purchase, under the
applicable plan of distribution.
As of the first day of each month, the Trustee will deduct from the Interest
Account and, to the extent funds are not sufficient therein, from the
Principal Account, amounts necessary to pay the expenses of the Fund (as
determined on the basis set forth under "Trust Administration--Fund
Administration and Expenses"). The Trustee also may withdraw from said
Accounts such amounts, if any, as it deems necessary to establish a reserve
for any governmental charges payable out of the Fund. Amounts so withdrawn
shall not be considered a part of the Fund's assets until such time as the
Trustee shall return all or any part of such amounts to the appropriate
Accounts. In addition, the Trustee may withdraw from the Interest and
Principal Accounts such amounts as may be necessary to cover purchases of
Replacement Bonds and redemptions of Units by the Trustee.
Reinvestment Option. Unitholders of all unit investment trusts sponsored by
Van Kampen American Capital Distributors, Inc. (except Unitholders of a New
York IM-IT Trust or a New York IM-IT Intermediate Laddered Maturity Trust),
may elect to have each distribution of interest income, capital gains and/or
principal on their Units automatically reinvested in shares of any of the open
ended mutual funds (except for B shares) listed under "Trust
Administration--Sponsor"which are registered in the Unitholder's state of
residence. New York IM-IT Trust and New York IM-IT Intermediate Laddered
Maturity Trust Unitholders, other than those residing in the Commonwealth of
Massachusetts, may elect to have each distribution of interest income, capital
gains and/or principal on their Units automatically reinvested in shares of
First Investors New York Insured Tax Free Fund, Inc., a fund which invests
primarily in securities exempt from federal and New York state and city income
tax. Such mutual funds are hereinafter collectively referred to as the "
Reinvestment Funds".
Each Reinvestment Fund has investment objectives which differ in certain
respects from those of the Trusts. The prospectus relating to each
Reinvestment Fund describes the investment policies of such fund and sets
forth the procedures to follow to commence reinvestment. A Unitholder may
obtain a prospectus for the respective Reinvestment Funds from Van Kampen
American Capital Distributors, Inc. at One Parkview Plaza, Oakbrook Terrace,
Illinois 60181. Texas residents who desire to reinvest may request that a
broker-dealer registered in Texas send the prospectus relating to the
respective fund.
After becoming a participant in a reinvestment plan, each distribution of
interest income, capital gains and/or principal on the participant's Units
will, on the applicable distribution date, automatically be applied, as
directed by such person, as of such distribution date by the Trustee to
purchase shares (or fractions thereof) of the applicable Reinvestment Fund at
a net asset value as computed as of the close of trading on the New York Stock
Exchange on such date, plus a sales charge of $1.00 per $100 of reinvestment
except if the participant selects the First Investors New York Insured Tax
Free Fund, Inc., in which case the sales charge will be $1.50 per $100 of
reinvestment, or except if the participant selects the Van Kampen Merritt
Money Market Fund, the Van Kampen Merritt Tax Free Money Fund, the Van Kampen
Merritt Florida Insured Tax Free Income Fund, the Van Kampen Merritt New
Jersey Tax Free Income Fund, or the Van Kampen Merritt New York Tax Free
Income Fund, in which case no sales charge applies. A minimum of one-half of
such sales charge would be paid to Van Kampen American Capital Distributors,
Inc. for all Reinvestment Funds except First Investors New York Insured Tax
Free Fund, Inc., in which case such sales charge would be paid to First
Investors Management Company, Inc.
Confirmations of all reinvestments by a Unitholder into a Reinvestment Fund
will be mailed to the Unitholder by such Reinvestment Fund.
A participant may at any time prior to five days preceding the next succeeding
distribution date, by so notifying the Trustee in writing, elect to terminate
his or her reinvestment plan and receive future distributions of his or her
Units in cash. There will be no charge or other penalty for such termination.
Each Reinvestment Fund, its sponsor and investment adviser shall have the
right to terminate at any time the reinvestment plan relating to such fund.
Redemption of Units. A Unitholder may redeem all or a portion of his Units by
tender to the Trustee, at its Unit Investment Trust Division, 101 Barclay
Street, 20th Floor, New York, New York 10286, of the certificates representing
the Units to be redeemed, duly endorsed or accompanied by proper instruments
of transfer with signature guaranteed (or by providing satisfactory indemnity,
as in connection with lost, stolen or destroyed certificates) and by payment
of applicable governmental charges, if any. Thus, redemption of Units cannot
be effected until certificates representing such Units have been delivered to
the person seeking redemption or satisfactory indemnity provided. No
redemption fee will be charged. On the 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.
Accrued interest paid on redemption shall be withdrawn from the Interest
Account of such Trust or, if the balance therein is insufficient, from the
Principal Account of such Trust. All other amounts will be withdrawn from the
Principal Account of such Trust. The Trustee is empowered to sell underlying
Securities of a Trust in order to make funds available for redemption. Units
so redeemed shall be cancelled.
The Redemption Price per Unit (as well as the secondary market Public Offering
Price) will be determined on the basis of the bid price of the Securities in
each Trust, while the initial and primary Public Offering Price of Units will
be determined on the basis of the offering price of the Securities in each
Trust, as of 4:00 P.M. Eastern time on days of trading on the New York Stock
Exchange on the date any such determination is made. On the Date of Deposit
the Public Offering Price per Unit (which is based on the offering prices of
the Bonds in each Trust and includes the sales charge) exceeded the value at
which Units could have been redeemed (based upon the current bid prices of the
Securities in such Trust) by the amount shown under "Summary of Essential
Financial Information". While the Trustee has the power to determine the
Redemption Price per Unit when Units are tendered for redemption, such
authority has been delegated to the Evaluator which determines the price per
Unit on a daily basis. The Redemption Price per Unit is the pro rata share of
each Unit in each Trust on the basis of (i) the cash on hand in such Trust or
moneys in the process of being collected, (ii) the value of the Securities in
such Trust based on the bid prices of the Securities therein, except for cases
in which the value of insurance has been included and (iii) interest accrued
thereon, less (a) amounts representing taxes or other governmental charges
payable out of such Trust and (b) the accrued expenses of such Trust. The
Evaluator may determine the value of the Securities in each Trust by employing
any of the methods set forth in "Public Offering--Offering Price". In
determining the Redemption Price per Unit no value will be assigned to the
portfolio insurance maintained on the Bonds in an Insured Trust unless such
Bonds are in default in payment of principal or interest or in significant
risk of such default. For a description of the situations in which the
Evaluator may value the insurance obtained by the Insured Trusts, see "
Public Offering--Offering Price"above.
The price at which Units may be redeemed could be less than the price paid by
the Unitholder and may be less than the par value of the Securities
represented by the Units so redeemed. As stated above, the Trustee may sell
Securities to cover redemptions. When Securities are sold, the size and
diversity of the affected Trust will be reduced. Such sales may be required at
a time when Securities would not otherwise be sold and might result in lower
prices than might otherwise be realized.
The right of redemption may be suspended and payment postponed for any period
during which the New York Stock Exchange is closed, other than for customary
weekend and holiday closings, or during which the Securities and Exchange
Commission determines that trading on that Exchange is restricted or an
emergency exists, as a result of which disposal or evaluation of the
Securities in the Trusts is not reasonably practicable, or for such other
periods as the Securities and Exchange Commission may by order permit. Under
certain extreme circumstances the Sponsor may apply to the Securities and
Exchange Commission for an order permitting a full or partial suspension of
the right of Unitholders to redeem their Units.
Reports Provided. The Trustee shall furnish Unitholders of a Trust in
connection with each distribution a statement of the amount of interest and
the amount of other receipts (received since the preceding distribution), if
any, being distributed expressed in each case as a dollar amount representing
the pro rata share of each Unit of a Trust outstanding. For as long as the
Trustee deems it to be in the best interests of the Unitholders, the accounts
of each Trust shall be audited, not less frequently than annually, by
independent certified public accountants and the report of such accountants
shall be furnished by the Trustee to Unitholders of such Trusts upon request.
Within a reasonable period of time after the end of each calendar year, the
Trustee shall furnish to each person who at any time during the calendar year
was a registered Unitholder of a Trust a statement (i) as to the Interest
Account: interest received (including amounts representing interest received
upon any disposition of Securities) and the percentage of such interest by
states in which the issuers of the Securities are located, deductions for
applicable taxes and for fees and expenses of such Trust, for purchases of
Replacement Bonds and for redemptions of Units, if any, and the balance
remaining after such distributions and deductions, expressed in each case both
as a total dollar amount and as a dollar amount representing the pro rata
share of each Unit outstanding on the last business day of such calendar year;
(ii) as to the Principal Account: the dates of disposition of any Securities
and the net proceeds received therefrom (excluding any portion representing
accrued interest), the amount paid for purchases of Replacement Bonds and for
redemptions of Units, if any, deductions for payment of applicable taxes and
fees and expenses of the Trustee, the amount of "when issued"interest
treated as a return of capital, if any, and the balance remaining after such
distributions and deductions expressed both as a total dollar amount and as a
dollar amount representing the pro rata share of each Unit outstanding on the
last business day of such calendar year; (iii) a list of the Securities held
and the number of Units outstanding on the last business day of such calendar
year; (iv) the Redemption Price per Unit based upon the last computation
thereof made during such calendar year; and (v) amounts actually distributed
during such calendar year from the Interest and Principal Accounts, separately
stated, expressed both as total dollar amounts and as dollar amounts
representing the pro rata share of each Unit outstanding.
In order to comply with Federal and state tax reporting requirements,
Unitholders will be furnished, upon request to the Trustee, evaluations of the
Securities in a Trust furnished to it by the Evaluator.
Each distribution statement of a Trust will reflect pertinent information in
respect of the other plan of distribution so that Unitholders may be informed
regarding the results of such other plan of distribution.
INSURANCE ON THE BONDS IN THE INSURED TRUSTS
Insurance has been obtained by each Insured Trust or by the issuer of such
Bonds, or by a prior owner of such Bonds, or by the Sponsor prior to the
deposit of such Bonds in a Trust guaranteeing prompt payment of interest and
principal, when due, in respect of the Bonds in such Trust. See "
Unitholder Explanations--Settlement of Bonds in the Trusts--Objectives and
Securities Selection". An insurance policy obtained by an Insured Trust,
if any, is non-cancellable and will continue in force so long as such Trust is
in existence, the respective Portfolio Insurer referred to below is still in
business and the Bonds described in such policy continue to be held by such
Trust (see "Portfolio"for the respective Insured Trust). Any
portfolio insurance premium for an Insured Trust, which is an obligation of
such Trust, is paid by each Trust on a monthly basis. Non-payment of premiums
on a policy obtained by an Insured Trust will not result in the cancellation
of insurance but will force the insurer to take action against the Trustee to
recover premium payments due it. The Trustee in turn will be entitled to
recover such payments from such Trust. Premium rates for each issue of Bonds
protected by a policy obtained by an Insured Trust, if any, are fixed for the
life of the Trust. The premium for any Preinsured Bond insurance has been paid
by such issuer, by a prior owner of such Bonds or the Sponsor and any such
policy or policies are non-cancellable and will continue in force so long as
the Bonds so insured are outstanding and the respective Preinsured Bond
Insurer remains in business. If the provider of an original issuance insurance
policy is unable to meet its obligations under such policy or if the rating
assigned to the claims-paying ability of any such insurer deteriorates, the
Portfolio Insurers have no obligation to insure any issue adversely affected
by either of the above described events.
The aforementioned portfolio insurance obtained by an Insured Trust, if any,
guarantees the timely payment of principal and interest on the Bonds as they
fall due. For the purposes of insurance obtained by an Insured Trust, "
when due"generally means the stated maturity date for the payment of
principal and interest. However, in the event (a) an issuer of a Bond defaults
in the payment of principal or interest on such Bond, (b) such issuer enters
into a bankruptcy proceeding or (c) the maturity of such Bond is accelerated,
the affected Portfolio Insurer has the option, in its sole discretion, after
receiving notice of the earliest to occur of such a default, bankruptcy
proceeding or acceleration to pay the outstanding principal amount of such
Bond plus accrued interest to the date of such payment and thereby retire the
Bond from the affected Trust prior to such Bond's stated maturity date. The
insurance does not guarantee the market value of the Bonds or the value of the
Units. Insurance obtained by an Insured Trust, if any, is only effective as to
Bonds owned by and held in such Trust. In the event of a sale of any such Bond
by the Trustee, such insurance terminates as to such Bond on the date of sale.
Pursuant to an irrevocable commitment of the Portfolio Insurers, the Trustee,
upon the sale of a Bond covered under a portfolio insurance policy obtained by
an Insured Trust, has the right to obtain permanent insurance with respect to
such Bond (i.e., insurance to maturity of the Bonds regardless of the identity
of the holder thereof) (the "Permanent Insurance") upon the payment of
a single predetermined insurance premium and any expenses related thereto from
the proceeds of the sale of such Bond. Accordingly, any Bond in an Insured
Trust is eligible to be sold on an insured basis. It is expected that the
Trustee would exercise the right to obtain Permanent Insurance only if upon
such exercise the affected Trust would receive net proceeds (sale of Bond
proceeds less the insurance premium and related expenses attributable to the
Permanent Insurance) from such sale in excess of the sale proceeds if such
Bonds were sold on an uninsured basis. The insurance premium with respect to
each Bond eligible for Permanent Insurance would be determined based upon the
insurability of each Bond as of the Date of Deposit and would not be increased
or decreased for any change in the creditworthiness of each Bond.
The Sponsor believes that the Permanent Insurance option provides an advantage
to an Insured Trust in that each Bond insured by a Trust insurance policy may
be sold out of the affected Trust with the benefits of the insurance attaching
thereto. Thus, the value of the insurance, if any, at the time of sale, can be
realized in the market value of the Bond so sold (which is not the case in
connection with any value attributable to an Insured Trust's portfolio
insurance). See "Public Offering--Offering Price". Because any such
insurance value may be realized in the market value of the Bond upon the sale
thereof upon exercise of the Permanent Insurance option, the Sponsor
anticipates that (a) in the event an Insured Trust were to be comprised of a
substantial percentage of Bonds in default or significant risk of default, it
is much less likely that such Trust would need at some point in time to seek a
suspension of redemptions of Units than if such Trust were to have no such
option (see "Public Offering--Redemption of Units") and (b) at the
time of termination of an Insured Trust, if such Trust were holding defaulted
Bonds or Bonds in significant risk of default such Trust would not need to
hold such Bonds until their respective maturities in order to realize the
benefits of such Trust's portfolio insurance (see "Trust
Administration--Amendment or Termination").
Except as indicated below, insurance obtained by an Insured Trust has no
effect on the price or redemption value of Units. It is the present intention
of the Evaluator to attribute a value for such insurance (including the right
to obtain Permanent Insurance) for the purpose of computing the price or
redemption value of Units if the Bonds covered by such insurance are in
default in payment of principal or interest or in significant risk of such
default. The value of the insurance will be the difference between (i) the
market value of a Bond which is in default in payment of principal or interest
or in significant risk of such default assuming the exercise of the right to
obtain Permanent Insurance (less the insurance premium and related expenses
attributable to the purchase of Permanent Insurance) and (ii) the market value
of such Bonds not covered by Permanent Insurance. See "Public
Offering--Offering Price". It is also the present intention of the Trustee
not to sell such Bonds to effect redemptions or for any other reason but
rather to retain them in the portfolio because value attributable to the
insurance cannot be realized upon sale. See "Public Offering--Offering
Price"herein for a more complete description of an Insured Trust's method
of valuing defaulted Bonds and Bonds which have a significant risk of default.
Insurance obtained by the issuer of a Bond is effective so long as such Bond
is outstanding. Therefore, any such insurance may be considered to represent
an element of market value in regard to the Bonds thus insured, but the exact
effect, if any, of this insurance on such market value cannot be predicted.
The portfolio insurance policy or policies obtained by an Insured Trust, if
any, with respect to the Bonds in such Trust were issued by one or more of the
Portfolio Insurers. Any other Preinsured Bond insurance policy (or commitment
therefor) was issued by one of the Preinsured Bond Insurers. See "
Unitholder Explanations--Settlement of Bonds in the Trusts--Objectives and
Securities Selection".
AMBAC Indemnity Corporation ("AMBAC Indemnity") is a
Wisconsin-domiciled stock insurance corporation regulated by the Office of the
Commissioner of Insurance of the State of Wisconsin and licensed to do
business in 50 states, the District of Columbia and the Commonwealth of Puerto
Rico, with admitted assets of approximately $1,988,000,000 (unaudited) and
statutory capital of approximately $1,148,000,000 (unaudited) as of March 31,
1994. Statutory capital consists of AMBAC Indemnity's policyholders' surplus
and statutory contingency reserve. AMBAC Indemnity is a wholly owned
subsidiary of AMBAC Inc., a 100% publicly-held company. Moody's Investors
Service, Inc. and Standard & Poor's have both assigned a triple-A
claims-paying ability rating to AMBAC Indemnity.
Copies of its financial statements prepared in accordance with statutory
accounting standards are available from AMBAC Indemnity. The address of AMBAC
Indemnity's administrative offices and its telephone number are One State
Street Plaza, 17th Floor, New York, New York, 10004 and (212) 668-0340.
AMBAC Indemnity has entered into quota share reinsurance agreements under
which a percentage of the insurance underwritten pursuant to certain municipal
bond insurance programs of AMBAC Indemnity has been and will be assumed by a
number of foreign and domestic unaffiliated reinsurers.
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 September 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 rates all new issues insured by MBIA "AAA"Prime
Grade.
The Moody's Investors Service, Inc. rating of MBIA should be evaluated
independently of the Standard & Poor's rating of MBIA. No application has been
made to any other rating agency in order to obtain additional ratings on the
Bonds. The ratings reflect the respective rating agency's current assessment
of the creditworthiness of MBIA and its ability to pay claims on its policies
of insurance. Any further explanation as to the significance of the above
ratings may be obtained only from the applicable rating agency.
The above ratings are not recommendations to buy, sell or hold the Bonds, and
such ratings may be subject to revision or withdrawal at any time by the
rating agencies. Any downward revision or withdrawal of either or both ratings
may have an adverse effect on the market price of the Bonds.
Financial Guaranty Insurance Company ("Financial Guaranty"or "
FGIC") is a wholly-owned subsidiary of FGIC Corporation (the "
Corporation"), a Delaware holding company. The Corporation is a
wholly-owned subsidiary of General Electric Capital Corporation ("GECC"
). Neither the Corporation nor GECC is obligated to pay the debts of or the
claims against Financial Guaranty. Financial Guaranty is domiciled in the
State of New York and is subject to regulation by the State of New York
Insurance Department. As of 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, Nippon
Investors Service Inc., Duff & Phelps Inc. and Australian Ratings Pty. Ltd.
Such ratings reflect only the views of the respective rating agencies, are not
recommendations to buy, sell or hold securities and are subject to revision or
withdrawal at any time by such rating agencies.
Capital Guaranty Insurance Company ("Capital Guaranty") is a "
Aaa/AAA"rated monoline stock insurance company incorporated in the State
of Maryland, and is a wholly owned subsidiary of Capital Guaranty Corporation,
a Maryland insurance holding company. Capital Guaranty Corporation is a
publicly owned company whose shares are traded on the New York Stock Exchange.
Capital Guaranty is authorized to provide insurance in all 50 states, the
District of Columbia 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 September 30, 1994, Capital Guaranty had more than $14.6 billion in
net exposure outstanding (excluding defeased issues). The total statutory
policyholders' surplus and contingency reserve of Capital Guaranty was
$193,194,000 (unaudited), and the total admitted assets were $293,036,690
(unaudited) as reported to the Insurance Department of the State of Maryland
as of September 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, "
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 Policies 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 has assigned to the Units of each Insured Trust its "
AAA"investment rating. See "Description of Securities Ratings".
The obtaining of this rating by an Insured Trust should not be construed as an
approval of the offering of the Units by Standard & Poor's or as a guarantee
of the market value of such Trust or of the Units.
On the date of this Prospectus, the Estimated Current Returns on the
Securities in the Missouri IM-IT Trust and Oklahoma IM-IT Trust were 5.47% and
5.13%, respectively, based on the monthly plan of distribution after payment
of the insurance premium or premiums payable by each Trust, while the
Estimated Long-Term Returns on such Trusts were 5.46% and 5.17%, respectively.
The Estimated Current Returns on identical portfolios without the insurance
obtained by the above mentioned Trusts would have been 5.48% and 5.16%,
respectively, based on the monthly plan of distribution on such date, while
the Estimated Long-Term Returns on identical portfolios without the insurance
obtained by the above mentioned Trusts would have been 5.46% and 5.20%,
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 "AAA"rating
and yet at the same time to have the protection of insurance of prompt payment
of interest and principal, when due, on the Bonds. There is, of course, no
certainty that this result will be achieved. Preinsured Bonds in an Insured
Trust (all of which are rated "AAA"by Standard & Poor's) may or may
not have a higher yield than uninsured bonds rated "AAA"by Standard &
Poor's. In selecting such Bonds for an Insured Trust, the Sponsor has applied
the criteria hereinbefore described.
In the event of nonpayment of interest or principal, when due, in respect of a
Bond, AMBAC Indemnity shall make such payment not later than 30 days and
Financial Guaranty shall make such payment within one business day after the
respective insurer has been notified that such nonpayment has occurred or is
threatened (but not earlier than the date such payment is due). The insurer,
as regards any payment it may make, will succeed to the rights of the Trustee
in respect thereof. All policies issued by the Portfolio Insurers and the
Preinsured Bond Insurers are substantially identical insofar as obligations to
an Insured Trust are concerned.
The Internal Revenue Service has issued a letter ruling which holds in effect
that insurance proceeds representing maturing interest on defaulted municipal
obligations paid to holders of insured bonds, under policy provisions
substantially identical to the policies described herein, will be excludable
from Federal gross income under Section 103(a)(1) of the Internal Revenue Code
to the same extent as if such payments were made by the issuer of the
municipal obligations. Holders of Units in an Insured Trust should discuss
with their tax advisers the degree of reliance which they may place on this
letter ruling. However, Chapman and Cutler, counsel for the Sponsor, has given
an opinion to the effect such payment of proceeds would be excludable from
Federal gross income if, and to the same extent as, such interest would have
been so excludable if paid by the issuer of the defaulted obligations. See
"Other Matters--Federal Tax Status".
Each Portfolio Insurer is subject to regulation by the department of insurance
in the state in which it is qualified to do business. Such regulation,
however, is no guarantee that each Portfolio Insurer will be able to perform
on its contract of insurance in the event a claim should be made thereunder at
some time in the future. At the date hereof, it is reported that no claims
have been submitted or are expected to be submitted to any of the Portfolio
Insurers which would materially impair the ability of any such company to meet
its commitment pursuant to any contract of bond or portfolio insurance.
The information relating to each Portfolio Insurer has been furnished by such
companies. The financial information with respect to each Portfolio Insurer
appears in reports filed with state insurance regulatory authorities and is
subject to audit and review by such authorities. No representation is made
herein as to the accuracy or adequacy of such information or as to the absence
of material adverse changes in such information subsequent to the dates
thereof.
The Bonds in the Insured Trusts are insured as follows:
<TABLE>
<CAPTION>
Bonds insured Bonds insured
under AMBAC under Financial
Trust Indemnity Guaranty Preinsured
portfolio insurance portfolio insurance Bonds Total
<S> <C> <C> <C> <C>
IM-IT...................... -- -- 100% 100%
IM-IT Short Intermediate... -- -- 100% 100%
Florida IM-IT.............. -- -- 100% 100%
Missouri IM-IT............. 3% -- 97% 100%
Oklahoma IM-IT............. 26% -- 74% 100%
</TABLE>
The breakdown of the Preinsured Bonds is as follows: IM-IT--AMBAC Indemnity
43%, Financial Guaranty 6%, MBIA 40% and CapMAC 11%; IM-IT Short Intermediate
Trust--AMBAC Indemnity 47%, Financial Guaranty 15%, MBIA 23% and CapMAC 15%;
Florida IM-IT Trust--AMBAC Indemnity 23%, Financial Guaranty 40% and MBIA 37%;
Missouri IM-IT Trust--Capital Guaranty 26%, Financial Guaranty 15%, MBIA 41%
and FSA 15%; Oklahoma IM-IT Trust--Financial Guaranty 25%, MBIA 24% and FSA
25%.
IM-IT
General. The IM-IT consists of 13 issues of Securities. Two of the Bonds in
the IM-IT are general obligations of the governmental entities issuing them
and are backed by the taxing power thereof. The remaining issues are payable
from the income of a specific project or authority and are not supported by
the issuer's power to levy taxes. These issues are divided by purpose of
issues (and percentage of principal amount to total IM-IT) as follows: Health
Care, 3 (23%); Public Building, 2 (17%); Retail Electric/Gas, 2 (16%); General
Obligations, 2 (12%); Higher Education, 1 (11%); Water and Sewer, 1 (8%);
Public Education, 1 (7%) and Multi-Family Mortgage Revenue, 1 (6%). No Bond
issue has received a provisional rating. The dollar weighted average maturity
of the Bonds in the Trust is 28 years.
Tax Status. For a discussion of the Federal tax status of income earned on
IM-IT Trust Units, see "Other Matters--Federal Tax Status".
<TABLE>
<CAPTION>
<S> <C> <C>
Semi-
Per Unit Information: Monthly Annual
Calculation of Estimated Net Annual Unit Income <F1>:
Estimated Annual Interest Income per Unit................................. $ 58.14 $ 58.14
Less: Estimated Annual Expense per Unit <F2>.............................. $ 2.11 $ 1.65
Less: Annual Premium on Portfolio Insurance per Unit...................... -- --
Estimated Net Annual Interest Income per Unit............................. $ 56.03 $ 56.49
Calculation of Estimated Interest Earnings per Unit:
Estimated Net Annual Interest Income per Unit............................. $ 56.03 $ 56.49
Divided by 12 and 2, respectively......................................... $ 4.67 $ 28.25
Estimated Daily Rate of Net Interest Accrual per Unit...................... $ .15562 $ .15690
Estimated Current Return Based on Public Offering Price <F1><F3><F4><F5>... 5.60% 5.65%
Estimated Long-Term Return <F3><F4><F5>.................................... 5.64% 5.68%
Estimated Initial Monthly Distribution (May 1995).......................... $ 5.91
Estimated Initial Semi-annual Distribution (June 1995)..................... $ 10.67
Estimated Normal Distribution per Unit <F5>................................ $ 4.67 $ 28.25
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Trustee's Annual Fee <F1>...... $.91 and $.51 per $1,000 principal amount of Bonds, respectively, for those portions of the IM-IT
Trust under the monthly and semi-annual distribution plans
Record and Computation Dates... FIRST day of the month as follows: monthly--each month; semi-annual--June and December
Distribution Dates............. FIFTEENTH day of the month as follows: monthly--each month; semi-annual--June
and December commencing May 15, 1995
<FN>
<F1>During the first year the Trustee will reduce its fee by approximately $.17
per Unit (which amount is the estimated interest to be earned per Unit prior
to the expected delivery dates for the "when, as and if issued"Bonds
included in this Trust). Should such estimated interest exceed such amount,
the Trustee will reduce its fee up to its annual fee. After the first year,
the Trustee's fee will be that amount indicated above. Estimated Annual
Interest Income per Unit will be increased to $58.31. Estimated Annual Expense
per Unit (excluding insurance) will be increased to $2.28 and $1.82 under the
monthly and semi-annual distribution plans, respectively; and Estimated Net
Annual Interest Income per Unit will remain the same as shown. See "
Estimated Current Returns and Estimated Long-Term Returns."
<F2>Excluding insurance costs. The Estimated Annual Expenses are expected to
fluctuate periodically (see "Trust Administration--Fund Administration and
Expenses--Miscellaneous Expenses").
<F3>The Estimated Current Returns and Estimated Long-Term Returns are increased
for transactions entitled to a reduced sales charge. See "Unitholder
Explanations--Public Offering--General".
<F4>The Estimated Current Returns are calculated by dividing the Estimated Net
Annual Interest Income per Unit by the Public Offering Price. The Estimated
Net Annual Interest Income per Unit will vary with changes in fees and
expenses of the Trustee and the Evaluator and with the principal prepayment,
redemption, maturity, exchange or sale of Securities while the Public Offering
Price will vary with changes in the offering price of the underlying
Securities; therefore, there is no assurance that the present Estimated
Current Returns indicated above will be realized in the future. The Estimated
Long-Term Returns are calculated using a formula which (1) takes into
consideration, and determines and factors in the relative weightings of, the
market values, yields (which takes into account the amortization of premiums
and the accretion of discounts) and estimated retirements of all of the
Securities in the Trust and (2) takes into account the expenses and sales
charge associated with each Trust Unit. Since the market values and estimated
retirements of the Securities and the expenses of the Trust will change, there
is no assurance that the present Estimated Long-Term Returns as indicated
above will be realized in the future. The Estimated Current Returns and
Estimated Long-Term Returns are expected to differ because the calculation of
the Estimated Long-Term Return reflects the estimated date and amount of
principal returned while the Estimated Current Return calculation includes
only net annual interest income and Public Offering Price.
<F5>These figures are based on estimated per Unit cash flows. Estimated cash flows
will vary with changes in fees and expenses, with changes in current interest
rates and with the principal prepayment, redemption, maturity, call, exchange
or sale of the underlying Securities. The estimated cash flows for this Series
are set forth under "Estimated Cash Flows to Unitholders".
</TABLE>
<TABLE>
INSURED MUNICIPALS INCOME TRUST SERIES 346
(IM-IT AND QUALITY MULTI-SERIES 247)
PORTFOLIO As of March 16, 1995
<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>
$ 1,000,000 California Statewide Communities Development Authority,
Certificates of Participation (Good Samaritan Health
System Issue) CapMAC Insured 2004 @ 102
#6.25% Due 5/1/2014...................................... AAA 2007 @ 100 S.F. $ 1,005,000
675,000 Metropolitan School District of Steuben County, Middle
School Building Corporation, First Mortgage Bonds,
Series 1995 (Steuben County, Indiana) MBIA Insured 2005 @ 102
#6.375% Due 7/15/2016.................................... AAA 2009 @ 100 S.F. 694,204
750,000 Covington Water District, King County, Washington, Water
Improvement and Refunding Revenue Bonds, Series 1995 2005 @ 100
(AMBAC Indemnity Insured)** #6.05% Due 3/1/2020.......... AAA 2016 @ 100 S.F. 744,210
400,000 Wisconsin Public Power Incorporated System, Power Supply
System Revenue Bonds, Series 1993A (AMBAC Indemnity
Insured) 2003 @ 102
#5.25% Due 7/1/2021...................................... AAA 2015 @ 100 S.F. 350,660
500,000 Metropolitan Pier and Exposition Authority (Illinois)
McCormick Place Expansion Project Revenue Bonds, Series
1992A (AMBAC Indemnity Insured)
#6.50% Due 6/15/2022..................................... AAA 2003 @ 102 509,895
500,000 Lehigh County General Purpose Authority (Pennsylvania)
Hospital Revenue Bonds (Lehigh Valley Hospital, Inc.)
Series 1994A (MBIA Insured) 2004 @ 102
#6.25% Due 7/1/2022...................................... AAA 2017 @ 100 S.F. 504,445
425,000 Montour School District (Allegheny County, Pennsylvania)
General Obligation Bonds, Series 1993 (MBIA Insured)
#0.00% Due 1/1/2023...................................... AAA 77,341<F6>
565,000 New Hampshire Higher Educational and Health Facilities
Authority, Hospital Revenue Bonds, Mary Hitchcock
Memorial Hospital Issue, Series 1994 (FGIC Insured) 2004 @ 102
#5.75% Due 8/15/2023..................................... AAA 2015 @ 100 S.F. 530,456
700,000 Regional Transportation Authority, Cook, DuPage, Kane,
Lake, McHenry and Will Counties, Illinois, General
Obligation Bonds, Series 1994A (AMBAC Indemnity
Insured) 2004 @ 102
#6.25% Due 6/1/2024...................................... AAA 2018 @ 100 S.F. 706,209
1,000,000 San Diego State University, California, Student Union
Revenue Bonds, Series B (MBIA Insured) 2004 @ 102
#6.125% Due 11/1/2024.................................... AAA 2018 @ 100 S.F. 997,500
1,000,000 Rhode Island Convention Center Authority, Revenue Bonds,
Series 1993A (AMBAC Indemnity Insured) 2003 @ 102
#5.75% Due 5/15/2027..................................... AAA 2021 @ 100 S.F. 935,970
500,000 Michigan Housing Development Authority, Limited
Obligation Multi-Family Revenue Refunding Bonds, Series
1995A (GNMA Collateralized Program-Parc Pointe
Apartments) AMBAC Indemnity Insured 2005 @ 102
6.60% Due 4/1/2030....................................... AAA 2016 @ 100 S.F. 517,125
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>
$ 1,000,000 Pollution Control Financing Authority of Salem County
(New Jersey) Pollution Control Revenue Refunding Bonds,
Series 1994C (Public Service Electric and Gas Company
Project) MBIA Insured
6.20% Due 8/1/2030....................................... AAA 2004 @ 102 $ 1,000,290
$ 9,015,000 $ 8,573,305
</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".
IM-IT SHORT INTERMEDIATE TRUST
General. The IM-IT Short Intermediate Trust consists of 9 issues of
Securities. Three of the Bonds in the IM-IT Short Intermediate Trust are
general obligations of the governmental entities issuing them and are backed
by the taxing power thereof. The remaining issues are payable from the income
of a specific project or authority and are not supported by the issuer's power
to levy taxes. These issues are divided by purpose of issues (and percentage
of principal amount to total IM-IT Short Intermediate Trust) as follows:
Public Building, 2 (31%); General Obligations, 3 (24%); Retail Electric/Gas, 1
(15%); General Purpose, 1 (11%); Transportation, 1 (11%) and Health Care, 1
(8%). No Bond issue has received a provisional rating. All of the obligations
in the IM-IT Short Intermediate Trust mature within 3-7 years of the Date of
Deposit. The dollar weighted average maturity of the Bonds in the Trust is 4.9
years.
Tax Status. For a discussion of the Federal tax status of income earned on
IM-IT Short Intermediate Trust Units, see "Other Matters--Federal Tax
Status".
<TABLE>
<CAPTION>
<S> <C> <C>
Semi-
Per Unit Information: Monthly Annual
Calculation of Estimated Net Annual Unit Income <F1>:
Estimated Annual Interest Income per Unit................................. $ 48.98 $ 48.98
Less: Estimated Annual Expense per Unit <F2>.............................. $ 2.12 $ 1.66
Less: Annual Premium on Portfolio Insurance per Unit...................... -- --
Estimated Net Annual Interest Income per Unit............................. $ 46.86 $ 47.32
Calculation of Estimated Interest Earnings per Unit:
Estimated Net Annual Interest Income per Unit............................. $ 46.86 $ 47.32
Divided by 12 and 2, respectively......................................... $ 3.91 $ 23.66
Estimated Daily Rate of Net Interest Accrual per Unit...................... $ .13015 $ .13142
Estimated Current Return Based on Public Offering Price <F1><F3><F4><F5>... 4.57% 4.62%
Estimated Long-Term Return <F3><F4><F5>.................................... 4.69% 4.74%
Estimated Initial Monthly Distribution (May 1995).......................... $ 4.95
Estimated Initial Semi-annual Distribution (June 1995)..................... $ 8.93
Estimated Normal Distribution per Unit <F5>................................ $ 3.91 $ 23.66
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Trustee's Annual Fee <F1>...... $.91 and $.51 per $1,000 principal amount of Bonds, respectively, for those portions of the IM-IT
Short Intermediate Trust under the monthly and semi-annual distribution plans
Record and Computation Dates... FIRST day of the month as follows: monthly--each month; semi-annual--June and December
Distribution Dates............. FIFTEENTH day of the month as follows: monthly--each month; semi-annual--June
and December commencing May 15, 1995
<FN>
<F1>During the first year the Trustee will reduce its fee by approximately $.15
per Unit (which amount is the estimated interest to be earned per Unit prior
to the expected delivery dates for the "when, as and if issued"Bonds
included in this Trust). Should such estimated interest exceed such amount,
the Trustee will reduce its fee up to its annual fee. After the first year,
the Trustee's fee will be that amount indicated above. Estimated Annual
Interest Income per Unit will be increased to $49.13. Estimated Annual Expense
per Unit (excluding insurance) will be increased to $2.27 and $1.81 under the
monthly and semi-annual distribution plans, respectively; and Estimated Net
Annual Interest Income per Unit will remain the same as shown. See "
Estimated Current Returns and Estimated Long-Term Returns."
<F2>Excluding insurance costs. The Estimated Annual Expenses are expected to
fluctuate periodically (see "Trust Administration--Fund Administration and
Expenses--Miscellaneous Expenses").
<F3>The Estimated Current Returns and Estimated Long-Term Returns are increased
for transactions entitled to a reduced sales charge. See "Unitholder
Explanations--Public Offering--General".
<F4>The Estimated Current Returns are calculated by dividing the Estimated Net
Annual Interest Income per Unit by the Public Offering Price. The Estimated
Net Annual Interest Income per Unit will vary with changes in fees and
expenses of the Trustee and the Evaluator and with the principal prepayment,
redemption, maturity, exchange or sale of Securities while the Public Offering
Price will vary with changes in the offering price of the underlying
Securities; therefore, there is no assurance that the present Estimated
Current Returns indicated above will be realized in the future. The Estimated
Long-Term Returns are calculated using a formula which (1) takes into
consideration, and determines and factors in the relative weightings of, the
market values, yields (which takes into account the amortization of premiums
and the accretion of discounts) and estimated retirements of all of the
Securities in the Trust and (2) takes into account the expenses and sales
charge associated with each Trust Unit. Since the market values and estimated
retirements of the Securities and the expenses of the Trust will change, there
is no assurance that the present Estimated Long-Term Returns as indicated
above will be realized in the future. The Estimated Current Returns and
Estimated Long-Term Returns are expected to differ because the calculation of
the Estimated Long-Term Return reflects the estimated date and amount of
principal returned while the Estimated Current Return calculation includes
only net annual interest income and Public Offering Price.
<F5>These figures are based on estimated per Unit cash flows. Estimated cash flows
will vary with changes in fees and expenses, with changes in current interest
rates and with the principal prepayment, redemption, maturity, call, exchange
or sale of the underlying Securities. The estimated cash flows for this Series
are set forth under "Estimated Cash Flows to Unitholders".
</TABLE>
<TABLE>
INSURED MUNICIPALS INCOME TRUST98TH
SHORT INTERMEDIATE SERIES (IM-IT AND QUALITY MULTI-SERIES 247)
PORTFOLIO As of March 16, 1995
<CAPTION>
Offering
Price To
IM-IT Short
Aggregate Name of Issuer, Title, Interest Rate andMaturity Date of either Redemption Intermediate
Principal<F1> Bonds Deposited orBonds Contracted for<F1><F5> Rating<F2> Feature<F3> Trust<F4>
<S> <C> <C> <C> <C>
$ 525,000 Kentucky Turnpike Authority, Economic Development Road and Revenue
Refunding Bonds (Revitalization Projects) Series 1993 (AMBAC
Indemnity Insured)
4.80% Due 7/1/1999.................................................. AAA $ 521,939
560,000 State of Connecticut, Special Assessment Unemployment Compensation
Advance Fund Revenue Bonds, Series 1993A (AMBAC Indemnity Insured)
#4.50% Due 11/15/1999............................................... AAA 548,319
800,000 State Public Works Board of California, Lease Revenue Refunding
Bonds (Department of Corrections) Series 1993A, Various State
Prisons (AMBAC Indemnity Insured)
#4.50% Due 12/1/1999................................................ AAA 784,768
750,000 District of Columbia (Washington, D.C.) Unlimited Tax-General
Obligation Bonds, Series 1993C (CapMAC Insured)
#5.10% Due 12/1/1999................................................ AAA 745,057
465,000 City of Chicago, Illinois, General Obligation Bonds, Project Series
1995 (AMBAC Indemnity Insured)
215M-5.30% Due 1/1/2000............................................. AAA 217,137
250M-5.45% Due 1/1/2001............................................. AAA 253,378
750,000 City of Austin, Texas, Combined Utility Systems Revenue Refunding
Bonds, Series 1993A (FGIC Insured)
#4.875% Due 5/15/2000............................................... AAA 743,535
750,000 Riverside Regional Jail Authority, Virginia, Jail Facility Revenue
Bonds, Series 1995 (MBIA Insured)**
5.20% Due 7/1/2000.................................................. AAA 754,462
400,000 Allegheny County Hospital Development Authority (Commonwealth of
Pennsylvania) Hospital Revenue Bonds (Allegheny General Hospital
Project) Series 1995A (MBIA Insured)
#5.10% Due 9/1/2000................................................. AAA 400,544
$ 5,000,000 $ 4,969,139
</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".
FLORIDA IM-IT TRUST
General. The Florida IM-IT Trust consists of 10 issues of Securities. One of
the Bonds in the Florida IM-IT Trust is a general obligation of the
governmental entity issuing it and is backed by the taxing power thereof. The
remaining issues are payable from the income of a specific project or
authority and are not supported by the issuer's power to levy taxes. These
issues are divided by purpose of issues (and percentage of principal amount to
total Florida IM-IT Trust) as follows: General Purpose, 3 (29%); Public
Building, 1 (17%); Retail Electric/Gas, 1 (17%); Water and Sewer, 1 (17%);
Wholesale Electric, 2 (9%); Transportation, 1 (7%) and General Obligations, 1
(4%). No Bond issue has received a provisional rating.
Risk Factors. Florida's economy has in the past been highly dependent on the
construction industry and construction related manufacturing. This dependency
has declined in recent years and continues to do so as a result of continued
diversification of the State's economy. For example, in 1980 total contract
construction employment as a share of total non-farm employment was just over
seven percent and in 1993 the share had edged downward to five percent. This
trend is expected to continue as Florida's economy continues to diversify.
Florida, nevertheless, has a dynamic construction industry with single and
multi-family housing starts accounting for 8.5% of total U.S. housing starts
in 1993 while the State's population is 5.3% of the U.S. total population.
Florida's housing starts since 1980 have represented an average of 11.0% of
the U.S.'s total annual starts, and since 1980 total housing starts have
averaged 156,450 a year.
A driving force behind the State's construction industry has been the State's
rapid rate of population growth. Although Florida currently is the fourth most
populous state (with an estimated population of 13.4 million), its annual
population growth is now projected to decline as the number of people moving
into the State is expected to hover near the mid 250,000 range annually
throughout the 1990s. This population trend should provide fuel for business
and home builders to keep construction activity lively in Florida for some
time to come. However, other factors do influence the level of construction in
the State. For example, Federal tax reform in 1986 and other changes to the
Federal income tax code have eliminated tax deductions for owners of two or
more residential real estate properties and have lengthened depreciation
schedules on investment and commercial properties. Economic growth and
existing supplies of homes also contribute to the level of construction
activity in the State.
Since 1980, the State's job creation rate is almost twice the rate for the
nation as a whole, and its growth rate in new non-agricultural jobs is the
fastest of the 11 most populous states and second only to California in the
total number of new jobs created. Contributing to the State's rapid rate of
growth in employment and income is international trade. Since 1980, the
State's unemployment rate has generally been below that of the U.S. In recent
years, however, as the State's economic growth has slowed from its previous
highs, the State's unemployment rate has tracked above the national average.
The average in Florida since 1980 has been 6.5% while the national average is
7.1%. According to the U.S. Department of Commerce, the Florida Department of
Labor and Employment Security, and the Florida Consensus Economic Estimating
Conference (together the "Organization") the State's unemployment rate
was 8.2% during 1992. As of January, 1994, the Organization estimates that the
unemployment rate will be 6.7% for 1993-94 and 6.1% in 1994-95.
The rate of job creation in Florida's manufacturing sector has exceeded that
of the U.S. From the beginning of 1980 through 1993, the State added over
50,100 new manufacturing jobs, an 11.7% increase. During the same period,
national manufacturing employment declined ten out of the fourteen years, for
a loss of 2,977,000 jobs.
Total non-farm employment in Florida is expected to increase 2.7% in 1993-94
and rise 3.8% in 1994-95. Trade and services, the two largest figures, account
for more than half of the total non-farm employment. Employment in the service
sectors should experience an increase of 3.9% in 1993-94, while growing 4.9%
in 1994-95. Trade is expected to expand 2.2% in 1994 and 3.4% in 1995. The
service sector is now the State's largest employment category.
Tourism is one of Florida's most important industries. Approximately 41.1
million tourists visited the State in 1993, as reported by the Florida
Department of Commence. In terms of business activities and state tax
revenues, tourists in Florida in 1993 represented an estimated 4.5 million
additional residents. Visitors to the State tend to arrive equally by air and
car. The State's tourism industry over the years has become more
sophisticated, attracting visitors year-round and, to a degree, reducing its
seasonality. Tourist arrivals are expected to decline by almost two percent
this year, but are expected to recover next year with 5.0% growth. By the end
of the State's current fiscal year, 41.0 million domestic and international
tourists are expected to have visited the State. In 1994-95, tourist arrivals
should approximate 43.0 million.
The State's per capita personal income in 1992 of $19,711 was slightly below
the national average of $20,105 and significantly ahead of that for the
southeast United States, which was $17,296. Real personal income in the State
is estimated to increase 5.5% in 1993-94 and 4.7% in 1994-95. By the end of
1994-95, real personal income per capita in the State is projected to average
6.7% higher than its 1992-93 level.
Compared to other states, Florida has a proportionately greater retirement age
population which comprises 18.3% (as of April 1, 1991) of the State's
population and is forecast to grow at an average annual rate of over 1.96%
through the 1990s. Thus, property income (dividends, interest, and rent) and
transfer payments (Social Security and pension benefits, among other sources
of income) are a relatively more important source of income. For example,
Florida's total wages and salaries and other labor income in 1993 was 62% of
total income, while a similar figure for the nation for 1992 was 72.0%.
Transfer payments are typically less sensitive to the business cycle than
employment income and, therefore, act as stabilizing forces in weak economic
periods. While many of the U.S.'s senior citizens choose the State as their
place of retirement, the State is also recognized as attracting a significant
number of working age people. Since 1982, the prime working age population
(18-44) has grown at an average annual rate of 3.3%.
In fiscal year 1991-92, approximately 64% of the State's total direct revenue
to its three operating funds was derived from State taxes, with federal grants
and other special revenue accounting for the balance. State sales and use tax,
corporate income tax, and beverage tax amounted to 68%, 7% and 5%,
respectively, of total receipts by the General Revenue Fund during fiscal year
1991-92. In that same year, expenditures for education, health and welfare,
and public safety amounted to 53%, 30% and 13.3%, respectively, of total
expenditures from the General Revenue Fund.
Hurricane Andrew left some parts of south Florida devastated. Post-Hurricane
Andrew clean up and rebuilding have changed the outlook for the State's
economy. Single and multi-family housing starts in 1993-94 are projected to
reach a combined level of 118,000, increasing to 134,300 next year. Lingering
recessionary effects on consumers and tight credit are two of the reasons for
relatively slow core construction activity, as well as lingering effects from
the 1986 tax reform legislation discussed above. However, construction is one
of the sectors most severely affected by Hurricane Andrew. Low interest rates
and pent up demand combined with improved consumer confidence should lead to
improved housing starts. The construction figures above include additional
housing starts as a result of destruction by Hurricane Andrew. Total
construction expenditures are forecasted to increase 15.6% this year and
increase 13.3% next year.
The State Constitution and statutes mandate that the State budget, as a whole,
and each separate fund within the State budget, be kept in balance from
currently available revenues each fiscal year. If the Governor or Comptroller
believes a deficit will occur in any State fund, by statute, he must certify
his opinion to the Administrative Commission, which then is authorized to
reduce all State agency budgets and releases by a sufficient amount to prevent
a deficit in any fund. Additionally, the State Constitution prohibits issuance
of State obligations to fund State operations.
Estimated fiscal year 1993-94 General Revenue plus Working Capital funds
available total $13,582.7 million, an 8.4% increase over 1992-93. This
reflects a transfer of $190 million, out of an estimated $220.0 million in
non-recurring revenue due to Andrew, to a hurricane relief trust fund. Of the
total General Revenue plus Working Capital funds available to the State,
$12,943.5 million of that is Estimated Revenues (excluding the Andrew impact)
which represents an increase of 7.3% over the previous year's Estimated
Revenues. With effective General Revenues plus Working Capital Fund
appropriations at $13,276.9 million, unencumbered reserves at the end of
1993-94 are estimated at $302.8 million. Estimated, fiscal year 1994-95
General Revenue plus Working Capital and Budget Stabilization funds available
total $14,573.7 million, a 7.3% increase over 1993-94. This amount reflects a
transfer of $159.00 million in non-recurring revenue due to Hurricane Andrew,
to a hurricane relief trust fund. The $13,860.8 million in Estimated Revenues
(excluding the Hurricane Andrew impact) represent an increase of 7.1% over the
previous year's Estimated Revenues. The massive effort to rebuild and replace
destroyed or damaged property in the wake of Andrew is responsible for the
substantial positive revenue impacts shown here. Most of the impact is in the
increase in the State's sales tax.
In fiscal year 1992-93, approximately 62% of the State's total direct revenue
to its three operating funds were derived from State taxes, with Federal
grants and other special revenue accounting for the balance. State sales and
use tax, corporate income tax, intangible personal property tax, and beverage
tax amounted to 68%, 7%, 4%, and 4%, respectively, of total General Revenue
Funds available during fiscal 1992-93. In that same year, expenditures for
education, health and welfare, and public safety amounted to approximately
49%, 30%, and 11%, respectively, of total expenditures from the General
Revenue Fund.
The State's sales and use tax (6%) currently accounts for the State's single
largest source of tax receipts. Slightly less than 10% of the State's sales
and use tax is designated for local governments and is distributed to the
respective counties in which collected for such use by such counties and the
municipalities therein. In addition to this distribution, local governments
may (by referendum) assess a 0.5% or a 1.0% discretionary sales tax within
their county. Proceeds from this local option sales tax are earmarked for
funding local infrastructure programs and acquiring land for public recreation
or conservation or protection of natural resources as provided under Florida
law. Certain charter counties have other taxing powers in addition, and
non-consolidated counties with a population in excess of 800,000 may levy a
local option sales tax to fund indigent health care. It alone cannot exceed
0.5% and when combined with the infrastructure surtax cannot exceed 1.0%. For
the fiscal year ended June 30, 1993, sales and use tax receipts (exclusive of
the tax on gasoline and special fuels) totalled $9,426.0 million, an increase
of 12.5% over fiscal year 1991-92.
The second largest source of State tax receipts is the tax on motor fuels.
However, these revenues are almost entirely dedicated trust funds for specific
purposes and are not included in the State's General Revenue Fund.
The State imposes an alcoholic beverage wholesale tax (excise tax) on beer,
wine, and liquor. This tax is one of the State's major tax sources, with
revenues totalling $442.2 million in fiscal year ending June 30, 1993.
Alcoholic beverage tax receipts declined 1.6% over the previous year. The
revenues collected from this tax are deposited into the State's General
Revenue Fund.
The State imposes a corporate income tax. All receipts of the corporate income
tax are credited to the General Revenue Fund. For the fiscal year ended June
30, 1993, receipts from this source were $846.6 million, an increase of 5.6%
from fiscal year 1991-92.
The State imposes a documentary stamp tax on deeds and other documents
relating to realty, corporate shares, bonds, certificates of indebtedness,
promissory notes, wage assignments, and retail charge accounts. The
documentary stamp tax collections totaled $639.0 million during fiscal year
1992-93, a 27.0% increase from the previous fiscal year. Beginning in fiscal
year 1992-93, 71.29% of these taxes are to be deposited to the General Revenue
Fund.
The State imposes a gross receipts tax on electric, natural gas, and
telecommunications services. All gross receipts utilities tax collections are
credited to the State's Public Education Capital Outlay and Debt Service Trust
Fund. In fiscal year 1992-93, this amounted to $447.9 million.
The State imposes an intangible personal property tax on stocks, bonds,
including bonds secured by liens in Florida real property, notes, governmental
leaseholds, and certain other intangibles not secured by a lien on Florida
real property. The annual rate of tax is 2 mils. Second, the State imposes a
non-recurring 2 mil tax on mortgages and other obligations secured by liens on
Florida real property. In fiscal year 1992-93, total intangible personal
property tax collections were $783.4 million, a 33% increase over the prior
year. Of the tax proceeds, 66.5% are distributed to the General Revenue Fund.
The State began its own lottery in 1988. State law requires that lottery
revenues be distributed 50% to the public in prizes, 38% for use in enhancing
education, and the balance, 12.0% for costs of administering the lottery.
Fiscal year 1992-93 lottery ticket sales totalled $2.13 billion, providing
education with $810.4 million.
The State's severance tax applies to oil, gas, and sulphur production, as well
as the severance of phosphate rock and other solid minerals. Total collections
from severance taxes total $64.5 million during fiscal year 1992-93, down 4.0%
from the previous year. Currently, 60.0% of this amount is transferred to the
General Revenue Fund.
The State has continuously been dependent on the highly cyclical construction
and construction related manufacturing industries. While that dependency has
decreased, the State is still somewhat at the mercy of the construction and
construction related manufacturing industries. The construction industry is
driven to a great extent by the State's rapid growth in population. There can
be no assurance that population growth will in fact continue throughout the
1990's in which case there could be an adverse impact on the State's economy
through the loss of construction and construction related manufacturing jobs.
Also, while interest rates remain low currently, an increase in interest rates
could significantly adversely impact the financing of new construction within
the State, thereby adversely impacting unemployment and other economic factors
within the State. In addition, available commercial office space has tended to
remain high over the past few years. So long as this glut of commercial rental
space continues, construction of this type of space will likely continue to
remain slow.
At the end of fiscal 1993, approximately $5.61 billion in principal amount of
debt secured by the full faith and credit of the State was outstanding. In
addition, since July 1, 1993, the State issued about $1.13 billion in
principal amount of full faith and credit bonds.
The State Constitution and statutes mandate that the State budget, as a whole,
and each separate fund within the State budget, be kept in balance from
currently available revenues each fiscal year. If the Governor or Comptroller
believe a deficit will occur in any State fund, by statute, he must certify
his opinion to the Administrative Commission, which then is authorized to
reduce all State agency budgets and releases by a sufficient amount to prevent
a deficit in any fund. Additionally, the State Constitution prohibits issuance
of State obligations to fund State operations.
Currently under litigation are several issues relating to State actions or
State taxes that put at risk substantial amounts of General Revenue Fund
monies. Accordingly, there is no assurance that any of such matters,
individually or in the aggregate, will not have a material adverse affect on
Florida's financial position.
Florida law provides preferential tax treatment to insurers who maintain a
home office in the State. Certain insurers challenged the constitutionality of
this tax preference and sought a refund of taxes paid. Recently, the State
Supreme Court ruled in favor of the State. This case and others, along with
pending refund claims, total about $150 million.
The State imposes a $295 fee on the issuance of certificates of title for
motor vehicles previously titled outside the State. The State has been sued by
plaintiffs alleging that this fee violates the Commerce Clause of the U.S.
Constitution. The Circuit Court in which the case was filed has granted
summary judgment for the plaintiffs and has enjoined further collection of the
impact fee and has ordered refunds to all those who have paid the fee since
the collection of the fee went into effect. The State has appealed the lower
Court's decision and an automatic stay has been granted to the State allowing
it to continue to collect the fee. The potential refund exposure to the State
if it should lose the case may be in excess of $100 million.
Florida maintains a bond rating of Aa and AA from Moody's Investors Service
and Standard & Poor's, respectively, on the majority of its general obligation
bonds, although the rating of a particular series of revenue bonds relates
primarily to the project, facility, or other revenue sources from which such
series derives funds for repayment. While these ratings and some of the
information presented above indicate that Florida is in satisfactory economic
health, there can be no assurance that there will not be a decline in economic
conditions or that particular Municipal Obligations purchased by the Fund will
not be adversely affected by any such changes.
The sources for the information presented above include official statements
and financial statements of the State of Florida. While the Sponsor has not
independently verified this information, the Sponsor has no reason to believe
that the information is not correct in all material respects.
Tax Status. For a discussion of the Federal tax status of income earned on
Florida IM-IT Trust units, see "Other Matters--Federal Tax Status".
The Bonds were accompanied by opinions of Bond Counsel to the respective
issuers thereof to the effect that the Bonds were exempt from the Florida
intangibles tax. Neither the Sponsor nor its counsel have independently
reviewed such opinions or examined the Bonds to be deposited in and held by
the Florida IM-IT Trust and have assumed the correctness as of the date of
deposit of the opinions of Bond Counsel.
In the opinion of Chapman and Cutler, counsel to the Sponsor, under existing
law:
For Florida state income tax purposes, the Florida IM-IT Trust will not be
subject to the Florida income tax imposed by Chapter 220, Florida Statutes. In
addition, Florida does not impose any income taxes at the local level.
Because Florida does not impose an income tax on individuals, non-corporate
Unitholders residing in Florida will not be subject to any Florida income
taxation on income realized by the Florida IM-IT Trust. Any amounts paid to
the Florida IM-IT Trust or to non-corporate Unitholders residing in Florida
under an insurance policy issued to the Florida IM-IT Trust or the Sponsor
which represent maturing interest on defaulted obligations held by the Trustee
will not be subject to the Florida income tax imposed by Chapter 220, Florida
Statutes to the extent not included in gross income for Federal income tax
purposes.
Corporate Unitholders with commercial domiciles in Florida will be subject to
Florida income or franchise taxation on income realized by the Florida IM-IT
Trust and on payments of interest pursuant to any insurance policy. Other
corporate Unitholders will be subject to Florida income or franchise taxation
on income realized by the Florida IM-IT Trust (or on payments of interest
pursuant to any insurance policy) only to the extent that the income realized
does not constitute "non-business income"as defined by Chapter 220.
Units will be subject to Florida estate tax only if held by Florida residents.
However, the Florida estate tax is limited to the amount of the credit for
state death taxes provided for in Section 2011 of the Internal Revenue Code.
Neither the Bonds nor the Units will be subject to the Florida ad valorem
property tax, the Florida intangibles personal property tax or Florida sales
or use tax.
<TABLE>
<CAPTION>
Semi-
<S> <C> <C>
Per Unit Information:
Monthly Annual
Calculation of Estimated Net Annual Unit Income <F1>:
Estimated Annual Interest Income per Unit................................. $ 56.39 $ 56.39
Less: Estimated Annual Expense per Unit <F2>.............................. $ 1.85 $ 1.40
Less: Annual Premium on Portfolio Insurance per Unit...................... -- --
Estimated Net Annual Interest Income per Unit............................. $ 54.54 $ 54.99
Calculation of Estimated Interest Earnings per Unit:
Estimated Net Annual Interest Income per Unit............................. $ 54.54 $ 54.99
Divided by 12 and 2, respectively......................................... $ 4.55 $ 27.50
Estimated Daily Rate of Net Interest Accrual per Unit...................... $ .15151 $ .15276
Estimated Current Return Based on Public Offering Price <F1><F3><F4><F5>... 5.45% 5.50%
Estimated Long-Term Return <F3><F4><F5>.................................... 5.47% 5.51%
Estimated Initial Monthly Distribution (May 1995).......................... $ 5.76
Estimated Initial Semi-annual Distribution (July 1995)..................... $ 14.96
Estimated Normal Distribution per Unit <F5>................................ $ 4.55 $ 27.50
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Trustee's Annual Fee <F1>...... $.91 and $.51 per $1,000 principal amount of Bonds, respectively, for those portions of the
Florida IM-IT Trust under the monthly and semi-annual distribution plans
Record and Computation Dates... FIRST day of the month as follows: monthly--each month; semi-annual--January and July
Distribution Dates............. FIFTEENTH day of the month as follows: monthly--each month; semi-annual--
January and July commencing May 15, 1995
<FN>
<F1>During the first year the Trustee will reduce its fee by approximately $.69
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 $57.08. Estimated Annual Expense
per Unit (excluding insurance) will be increased to $2.54 and $2.09 under the
monthly and semi-annual distribution plans, respectively; and Estimated Net
Annual Interest Income per Unit will remain the same as shown. See "
Estimated Current Returns and Estimated Long-Term Returns."
<F2>Excluding insurance costs. The Estimated Annual Expenses are expected to
fluctuate periodically (see "Trust Administration--Fund Administration and
Expenses--Miscellaneous Expenses").
<F3>The Estimated Current Returns and Estimated Long-Term Returns are increased
for transactions entitled to a reduced sales charge. See "Unitholder
Explanations--Public Offering--General".
<F4>The Estimated Current Returns are calculated by dividing the Estimated Net
Annual Interest Income per Unit by the Public Offering Price. The Estimated
Net Annual Interest Income per Unit will vary with changes in fees and
expenses of the Trustee and the Evaluator and with the principal prepayment,
redemption, maturity, exchange or sale of Securities while the Public Offering
Price will vary with changes in the offering price of the underlying
Securities; therefore, there is no assurance that the present Estimated
Current Returns indicated above will be realized in the future. The Estimated
Long-Term Returns are calculated using a formula which (1) takes into
consideration, and determines and factors in the relative weightings of, the
market values, yields (which takes into account the amortization of premiums
and the accretion of discounts) and estimated retirements of all of the
Securities in the Trust and (2) takes into account the expenses and sales
charge associated with each Trust Unit. Since the market values and estimated
retirements of the Securities and the expenses of the Trust will change, there
is no assurance that the present Estimated Long-Term Returns as indicated
above will be realized in the future. The Estimated Current Returns and
Estimated Long-Term Returns are expected to differ because the calculation of
the Estimated Long-Term Return reflects the estimated date and amount of
principal returned while the Estimated Current Return calculation includes
only net annual interest income and Public Offering Price.
<F5>These figures are based on estimated per Unit cash flows. Estimated cash flows
will vary with changes in fees and expenses, with changes in current interest
rates and with the principal prepayment, redemption, maturity, call, exchange
or sale of the underlying Securities. The estimated cash flows for this Series
are set forth under "Estimated Cash Flows to Unitholders".
</TABLE>
<TABLE>
FLORIDA INSURED MUNICIPALS INCOME TRUST
SERIES 90 (IM-IT AND QUALITY MULTI-SERIES 247)
PORTFOLIO As of March 16, 1995
<CAPTION>
Offering
Price To
Aggregate Name of Issuer, Title, Interest Rate andMaturity Date of Redemption Florida
Principal<F1> either Bonds Deposited orBonds Contracted for<F1><F5> Rating<F2> Feature<F3> IM-IT Trust<F4>
<S> <C> <C> <C> <C>
$ 20,000 Orange County, Florida, Public Facilities Revenue Bonds,
Series 1994A (AMBAC Indemnity Insured)
#0.00% Due 10/1/2017....................................... AAA $ 5,186<F6>
100,000 Plant City, Florida, Utility System Revenue Refunding and
Improvement Bonds (MBIA Insured) 2004 @ 101
#6.00% Due 10/1/2020....................................... AAA 2016 @ 100 S.F. 100,500
225,000 Orlando and Orange Counties Expressway Authority, Florida,
Expressway Revenue Refunding Senior Lien Bonds, Series
1993 (FGIC Insured) 2003 @ 102
#5.25% Due 7/1/2023........................................ AAA 2019 @ 100 S.F. 202,423
115,000 North Miami Beach, Florida, Unlimited Tax-General
Obligation Bonds, Series 1994 (FGIC Insured) 2004 @ 102
#6.30% Due2/1/2024......................................... AAA 2015 @ 100 S.F. 118,288
500,000 Port St. Lucie, Florida, Utility System Revenue Bonds,
Series 1994 (FGIC Insured) 2004 @ 100
#6.00% Due 9/1/2024........................................ AAA 2015 @ 100 S.F. 502,500
350,000 Orange County, Florida, Public Service Tax Revenue Bonds
(FGIC Insured) 2005 @ 102
#6.00% Due 10/1/2024....................................... AAA 2013 @ 100 S.F. 349,346
500,000 Orange County, Florida, Tourist Development Tax Revenue
Refunding Bonds, Series 1994B (MBIA Insured) 2004 @ 102
#6.00% Due 10/1/2024....................................... AAA 2020 @ 100 S.F. 499,065
500,000 City of Jacksonville, Florida, Capital Improvement Revenue
Bonds, Series 1995, Gator Bowl Project (AMBAC Indemnity
Insured)** 2005 @ 101
#5.875% Due 10/1/2025...................................... AAA 2016 @100 S.F. 490,375
175,000 Florida Municipal Power Agency, Revenue Refunding Bonds
(Stanton II Project) Series 1993 (AMBAC Indemnity Insured) 2003 @ 100
#4.50% Due 10/1/2027....................................... AAA 2017 @ 100 S.F. 137,488
500,000 Hillsborough County Industrial Development Authority,
Florida, Pollution Control Revenue Refunding Bonds (Tampa
Electric County Project) Series 1994(MBIA Insured)
6.25% Due 12/1/2034........................................ AAA 2004 @ 102 503,010
$ 2,985,000 $ 2,908,181
</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 8 issues of Securities. Two of
the Bonds in the Missouri IM-IT Trust are general obligations of the
governmental entities issuing them and are backed by the taxing power thereof.
The remaining issues are payable from the income of a specific project or
authority and are not supported by the issuer's power to levy taxes. These
issues are divided by purpose of issues (and percentage of principal amount to
total Missouri IM-IT Trust) as follows: General Obligations, 2 (29%); Water
and Sewer, 2 (27%); Health Care, 1 (15%); Multi-Family Mortgage Revenue, 1
(15%); Public Education, 1 (11%) and Escrowed to Maturity, 1 (3%). 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.
Although the June 1993 revenue estimate had been revised downward by $27.5
million, the State budget for Fiscal Year 1993 remained balanced due primarily
to delayed spending for desegregation capital projects. The downward revision
in revenues was considered necessary because of weak economic performance, and
more importantly an economic outlook for the second half of Fiscal Year 1993
which projected slower growth than was anticipated in June 1992.
For Fiscal Year 1994, the majority of revenues for the State of Missouri will
be obtained from individual income taxes (53.1%), sales and use taxes (30.0%),
corporate income taxes (5.9%) and county foreign insurance taxes (3.0%). Major
expenditures for Fiscal Year 1994 include elementary and secondary education
(30.6%), human services (25.4%), higher education (14.8%) and desegregation
(8.9%).
The Fiscal Year 1994 budget balances resources and obligations based on the
consensus revenue and refund estimate and an opening balance resulting from
continued withholdings and delayed spending for desegregation capital
projects. The total general revenue operating budget for Fiscal Year 1994
exclusive of desegregation is $3,844.6 million. The court-ordered
desegregation estimate in $377.7 million, an increase of $30.7 million over
the revised Fiscal Year 1993 estimate.
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. According to the United
States Bureau of Labor Statistics, the 1992 unemployment rate in Missouri was
5.7% and the 1993 rate was 6.4%. Although not strictly comparable, the
preliminary seasonally adjusted rate for May of 1994 was 5.0%. 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>
Semi-
Monthly Annual
<S> <C> <C>
Per Unit Information:
Calculation of Estimated Net Annual Unit Income:
Estimated Annual Interest Income per Unit............................. $ 57.30 $ 57.30
Less: Estimated Annual Expense per Unit <F1>.......................... $ 2.55 $ 2.08
Less: Annual Premium on Portfolio Insurance per Unit.................. $ .03 $ .03
Estimated Net Annual Interest Income per Unit......................... $ 54.72 $ 55.19
Calculation of Estimated Interest Earnings per Unit:
Estimated Net Annual Interest Income per Unit......................... $ 54.72 $ 55.19
Divided by 12 and 2, respectively..................................... $ 4.56 $ 27.60
Estimated Daily Rate of Net Interest Accrual per Unit.................. $ .15201 $ .15331
Estimated Current Return Based on Public Offering Price <F2><F3><F4>... 5.47% 5.52%
Estimated Long-Term Return <F2><F3><F4>................................ 5.46% 5.51%
Estimated Initial Monthly Distribution (May 1995)..................... $ 5.78
Estimated Initial Semi-annual Distribution (July 1995)................. $ 15.02
Estimated Normal Distribution per Unit <F4>............................ $ 4.56 $ 27.60
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Trustee's Annual Fee........... $.91 and $.51 per $1,000 principal amount of Bonds, respectively, for those portions of the
Missouri IM-IT Trust under the monthly and semi-annual distribution plans
Record and Computation Dates... FIRST day of the month as follows: monthly--each month; semi-annual--January and July
Distribution Dates............. FIFTEENTH day of the month as follows: monthly--each month; semi-annual--
January and July commencing May 15, 1995
<FN>
<F1>Excluding insurance costs. The Estimated Annual Expenses are expected to
fluctuate periodically (see "Trust Administration--Fund Administration and
Expenses--Miscellaneous Expenses").
<F2>The Estimated Current Returns and Estimated Long-Term Returns are increased
for transactions entitled to a reduced sales charge. See "Unitholder
Explanations--Public Offering--General".
<F3>The Estimated Current Returns are calculated by dividing the Estimated Net
Annual Interest Income per Unit by the Public Offering Price. The Estimated
Net Annual Interest Income per Unit will vary with changes in fees and
expenses of the Trustee and the Evaluator and with the principal prepayment,
redemption, maturity, exchange or sale of Securities while the Public Offering
Price will vary with changes in the offering price of the underlying
Securities; therefore, there is no assurance that the present Estimated
Current Returns indicated above will be realized in the future. The Estimated
Long-Term Returns are calculated using a formula which (1) takes into
consideration, and determines and factors in the relative weightings of, the
market values, yields (which takes into account the amortization of premiums
and the accretion of discounts) and estimated retirements of all of the
Securities in the Trust and (2) takes into account the expenses and sales
charge associated with each Trust Unit. Since the market values and estimated
retirements of the Securities and the expenses of the Trust will change, there
is no assurance that the present Estimated Long-Term Returns as indicated
above will be realized in the future. The Estimated Current Returns and
Estimated Long-Term Returns are expected to differ because the calculation of
the Estimated Long-Term Return reflects the estimated date and amount of
principal returned while the Estimated Current Return calculation includes
only net annual interest income and Public Offering Price.
<F4>These figures are based on estimated per Unit cash flows. Estimated cash flows
will vary with changes in fees and expenses, with changes in current interest
rates and with the principal prepayment, redemption, maturity, call, exchange
or sale of the underlying Securities. The estimated cash flows for this Series
are set forth under "Estimated Cash Flows to Unitholders".
</TABLE>
<TABLE>
MISSOURI INSURED MUNICIPALS INCOME TRUST
SERIES 88
(IM-IT AND QUALITY MULTI-SERIES 247)
PORTFOLIO As of March 16, 1995
<CAPTION>
Offering
Price To
Aggregate Name of Issuer, Title, Interest Rate andMaturity Date of Redemption Missouri
Principal<F1> either Bonds Deposited orBonds Contracted for<F1><F5> Rating<F2> Feature<F3> IM-IT Trust<F4>
<S> <C> <C> <C> <C>
$ 500,000 Excelsior Springs 40 School District of Excelsior Springs,
Missouri, General Obligation Refunding Bonds, Series 1995
(Capital Guaranty Insured) 2004 @ 100
#6.00% Due 3/1/2014........................................ AAA 2010 @ 100 S.F. $ 505,910
500,000 Lincoln County R-III School District (Troy, Missouri)
General Obligation Bonds, Series 1994 (MBIA Insured) 2005 @ 100
#6.10% Due 3/1/2014........................................ AAA 2010 @ 100 S.F. 509,345
500,000 The City of St. Louis, Missouri, Water Revenue Refunding
and Improvement Bonds, Series 1994 (FGIC Insured) 2004 @ 102
#6.00% Due 7/1/2014....................................... AAA 2010 @ 100 S.F. 506,520
375,000 Grain Valley, Missouri, School District Building
Corporation, Leasehold Revenue Bonds, Grain Valley R-V
School District of Jackson County, Missouri, Series 1995
(Capital Guaranty Insured) 2004 @ 100
#6.10% Due 3/1/2015........................................ AAA 2010 @ 100 S.F. 382,009
100,000 Greene County, Missouri, Single Family Mortgage Revenue
Bonds, Series 1984 (Escrowed to Maturity)
#0.00% Due 3/1/2016........................................ A 2005 @ 100 S.F. 27,105<F6>
400,000 Public Water Supply District No. 2 of Jefferson County,
Missouri, Water Supply System Refunding Revenue Bonds,
Series 1992 (MBIA Insured) 2003 @ 102
#6.10% Due 1/1/2017........................................ AAA 2007 @ 100 S.F. 407,832
500,000 Missouri Health and Educational Facilities Authority,
Health Facilities Revenue Bonds (St. Luke's Health
System) Series 1993 (MBIA Insured) 2003 @ 102
#5.125% Due 11/15/2019..................................... AAA 2014 @ 100 S.F. 441,810
500,000 Industrial Development Authority of the City of
Springfield, Missouri, Multi-Family Mortgage Revenue
Refunding Bonds (The Montclair Project) SCA Realty,
Series 1994A (FSA Insured) 2005 @ 102
7.10% Due 1/1/2030......................................... AAA 2001 @ 100 S.F. 520,405
$ 3,375,000 $ 3,300,936
</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".
OKLAHOMA IM-IT TRUST
General. The Oklahoma IM-IT Trust consists of 4 issues of Securities. One of
the Bonds in the Oklahoma IM-IT Trust is a general obligation of the
governmental entity issuing it and is backed by the taxing power thereof. The
remaining issues are payable from the income of a specific project or
authority and are not supported by the issuer's power to levy taxes. These
issues are divided by purpose of issues (and percentage of principal amount to
total Oklahoma IM-IT Trust) as follows: Retail Electric/Gas, 2 (51%); General
Obligations, 1 (25%) and Transportation, 1 (24%). No Bond issue has received a
provisional rating.
Risk Factors. Investors in the Oklahoma IM-IT Trust should consider that the
economy of the State has been experiencing difficulties as a result of an
economic recession largely attributable to a decline in the agricultural
industry and a rapid decline that was experienced in the early and mid 1980s
in the energy industry which have, in turn, caused declines in the real estate
industry, the banking industry and most other sectors of the State's economy.
Continued low levels of economic activity, another decline in oil and gas
production prices, low growth in the State's major industries or private or
public financial difficulties could adversely affect Bonds in the Portfolio
and consequently the value of Units in the Oklahoma IM-IT Trust.
Governmental expense budgeting provisions in Oklahoma are conservative,
basically requiring a balanced budget each fiscal year unless a debt is
approved by a vote of the people providing for the collection of a direct
annual tax to pay the debt. Certain limited exceptions include: deficiency
certificates issued in the discretion of the Governor (however, the deficiency
certificates may not exceed $500,000 in any fiscal year); and debts to repel
invasion, suppress insurrection or to defend the State in the event of war.
To ensure a balanced annual budget, the State Constitution provides procedures
for certification by the State Board of Equalization of revenues received in
the previous fiscal year and amounts available for appropriation based on a
determination of revenues to be received by the State in the General Revenue
Fund in the next ensuing fiscal year.
Beginning July 1, 1985, surplus funds were to be placed in a Constitutional
Reserve Fund until the Reserve Fund equals 10% of the General Revenue Fund
certification for the preceding fiscal year.
The foregoing information constitutes only a brief summary of some of the
financial difficulties which may impact certain issuers of Bonds and does not
purport to be a complete or exhaustive description of all adverse conditions
to which the issuers in the Oklahoma IM-IT Trust are subject. Additionally,
many factors including national economic, social and environmental policies
and conditions, which are not within the control of the issuers of Bonds,
could 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 Bonds, the market value or
marketability of the Bonds or the ability of the respective issuers of the
Bonds acquired by the Oklahoma 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
Oklahoma IM-IT Trust Units, see "Other Matters--Federal Tax Status".
The assets of the Oklahoma IM-IT Trust will consist of interest-bearing
obligations issued by or on behalf of the State of Oklahoma (the "
State") or counties, municipalities, authorities or political subdivisions
thereof (the "Oklahoma Bonds") or by the Commonwealth of Puerto Rico,
Guam and the United States Virgin Islands (the "Possession Bonds")
(collectively, the "Bonds"). At the respective times of issuance of
the Oklahoma Bonds, certain, but not necessarily all, of the issues of the
Oklahoma Bonds may have been accompanied by an opinion of bond counsel to the
respective issuing authorities that interest on such Oklahoma Bonds (the "
Oklahoma Tax-Exempt Bonds") are exempt from the income tax imposed by the
State of Oklahoma that is applicable to individuals and corporations (the "
Oklahoma State Income Tax"). The Trust may include Oklahoma Bonds the
interest on which is subject to the Oklahoma State Income Tax (the "
Oklahoma Taxable Bonds"). See "Portfolio"which indicates by
footnote which Oklahoma Bonds are Oklahoma Tax-Exempt Bonds (all other
Oklahoma Bonds included in the portfolio are Oklahoma Taxable Bonds).
Neither the Sponsor nor its counsel has independently examined the Bonds to be
deposited in and held in the 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 Oklahoma Tax-Exempt Bonds, if
received directly by a Unitholder, would be exempt from the Oklahoma State
Income Tax. At the respective times of issuance of the Bonds, opinions
relating to the validity thereof and to the exemption of interest thereon from
Federal income tax were rendered by bond counsel to the respective issuing
authorities. In addition, with respect to the Oklahoma Tax-Exempt Bonds, bond
counsel to the issuing authorities rendered opinions as to the exemption of
interest from the Oklahoma State Income Tax. Neither the Sponsor nor its
counsel has made any review for the Trust of the proceedings relating to the
issuance of the Bonds or of the bases for the opinions rendered in connection
therewith. The opinion set forth below does not address the taxation of
persons other than full time residents of Oklahoma.
In the opinion of Chapman and Cutler, Special Counsel to the Fund for Oklahoma
tax matters, under existing laws as of the date of this Prospectus and based
upon the assumptions set forth above:
(1) For Oklahoma State Income Tax purposes, the Trust is not an association
taxable as a corporation, each Unitholder of the Trust will be treated as the
owner of a pro rata portion of the Trust and the income of such portion of the
Trust will be treated as the income of the Unitholder.
(2) Interest paid and original issue discount, if any, on the Bonds which
would be exempt from the Oklahoma State Income Tax if received directly by a
Unitholder will be exempt from the Oklahoma State Income Tax when received by
the Trust and distributed to such Unitholder. A Unitholder's pro rata portion
of any interest paid and original issue discount, if any, on the Bonds which
would be subject to the Oklahoma State Income Tax if received directly by a
Unitholder, including, for example interest paid and original issue discount,
if any, on the Oklahoma Taxable Bonds, will be taxable to such Unitholder for
Oklahoma State Income Tax purposes when received by the Trust.
(3) To the extent that interest paid and original issue discount, if any,
derived from the 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. \xa4 745, 48 U.S.C. \xa4 1423a, and 48 U.S.C. \xa4 1403, such interest
paid and original issue discount, if any, will not be subject to the Oklahoma
State Income Tax.
(4) Each Unitholder of the Trust will recognize gain or loss for Oklahoma
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 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) Although no opinion is expressed herein, we have been informally advised
by the Oklahoma Tax Commission that any insurance proceeds paid under policies
which represent maturing interest on defaulted obligations which are
excludable from gross income for Federal income tax purposes should be
excludable from the Oklahoma State Income Tax to the same extent as such
interest would have been if paid by the issuer of such Bonds held by the
Trust.
(6) The Oklahoma 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) Although no opinion is expressed herein, we have been informally advised
by the Oklahoma Tax Commission that the Trust, in part because of its status
as a "grantor trust"for Federal income tax purposes, should not be
subject to the Oklahoma state franchise tax.
The scope of this opinion is expressly limited to the matters set forth
herein, and we express no other opinions of law with respect to the state or
local taxation of the Trust, the purchase, ownership or disposition of Units
or the Unitholders under Oklahoma law.
<TABLE>
<CAPTION>
Semi-
Monthly Annual
<S> <C> <C>
Per Unit Information:
Calculation of Estimated Net Annual Unit Income:
Estimated Annual Interest Income per Unit............................. $ 54.02 $ 54.02
Less: Estimated Annual Expense per Unit <F1>.......................... $ 2.46 $ 2.04
Less: Annual Premium on Portfolio Insurance per Unit.................. $ .26 $ .26
Estimated Net Annual Interest Income per Unit......................... $ 51.30 $ 51.72
Calculation of Estimated Interest Earnings per Unit:
Estimated Net Annual Interest Income per Unit......................... $ 51.30 $ 51.72
Divided by 12 and 2, respectively..................................... $ 4.28 $ 25.86
Estimated Daily Rate of Net Interest Accrual per Unit.................. $ .14249 $ .14367
Estimated Current Return Based on Public Offering Price <F2><F3><F4>... 5.13% 5.17%
Estimated Long-Term Return <F2><F3><F4>................................ 5.17% 5.22%
Estimated Initial Monthly Distribution (May 1995)...................... $ 5.41
Estimated Initial Semi-annual Distribution (July 1995)................. $ 14.07
Estimated Normal Distribution per Unit <F4>............................ $ 4.28 $ 25.86
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Trustee's Annual Fee........... $.91 and $.51 per $1,000 principal amount of Bonds, respectively, for those portions of the
Oklahoma IM-IT Trust under the monthly and semi-annual distribution plans
Record and Computation Dates... FIRST day of the month as follows: monthly--each month; semi-annual--January and July
Distribution Dates............. FIFTEENTH day of the month as follows: monthly--each month; semi-annual--
January and July commencing May 15, 1995
<FN>
<F1>Excluding insurance costs. The Estimated Annual Expenses are expected to
fluctuate periodically (see "Trust Administration--Fund Administration and
Expenses--Miscellaneous Expenses").
<F2>The Estimated Current Returns and Estimated Long-Term Returns are increased
for transactions entitled to a reduced sales charge. See "Unitholder
Explanations--Public Offering--General".
<F3>The Estimated Current Returns are calculated by dividing the Estimated Net
Annual Interest Income per Unit by the Public Offering Price. The Estimated
Net Annual Interest Income per Unit will vary with changes in fees and
expenses of the Trustee and the Evaluator and with the principal prepayment,
redemption, maturity, exchange or sale of Securities while the Public Offering
Price will vary with changes in the offering price of the underlying
Securities; therefore, there is no assurance that the present Estimated
Current Returns indicated above will be realized in the future. The Estimated
Long-Term Returns are calculated using a formula which (1) takes into
consideration, and determines and factors in the relative weightings of, the
market values, yields (which takes into account the amortization of premiums
and the accretion of discounts) and estimated retirements of all of the
Securities in the Trust and (2) takes into account the expenses and sales
charge associated with each Trust Unit. Since the market values and estimated
retirements of the Securities and the expenses of the Trust will change, there
is no assurance that the present Estimated Long-Term Returns as indicated
above will be realized in the future. The Estimated Current Returns and
Estimated Long-Term Returns are expected to differ because the calculation of
the Estimated Long-Term Return reflects the estimated date and amount of
principal returned while the Estimated Current Return calculation includes
only net annual interest income and Public Offering Price.
<F4>These figures are based on estimated per Unit cash flows. Estimated cash flows
will vary with changes in fees and expenses, with changes in current interest
rates and with the principal prepayment, redemption, maturity, call, exchange
or sale of the underlying Securities. The estimated cash flows for this Series
are set forth under "Estimated Cash Flows to Unitholders".
</TABLE>
<TABLE>
OKLAHOMA INSURED MUNICIPALS INCOME TRUST SERIES 15
(IM-IT AND QUALITY MULTI-SERIES 247)
PORTFOLIO As of March 16, 1995
<CAPTION>
Offering
Name of Issuer, Title, Interest Rate and Price To
Aggregate Maturity Date of either Bonds Deposited or Redemption Oklahoma
Principal<F1> Bonds Contracted for<F1><F5> Rating<F2> Feature<F3> IM-IT Trust<F4>
<S> <C> <C> <C> <C>
/$ 800,000 Grand River Dam Authority, Oklahoma, Revenue Bonds, Refunding
Series 1993 (FSA Insured)
#5.50% Due 6/1/2009............................................. AAA $ 784,696
/ 800,000 State of Oklahoma, General Obligation Bonds, Oklahoma Building
Bonds, Series 1992A 2003 @ 102
5.20% Due 7/15/2016.............................................. AA 2014 @ 100 S.F. 764,392
/ 750,000 Oklahoma Turnpike Authority, Subordinated Turnpike Revenue
Bonds, Series 1992C (MBIA Insured) 2002 @ 102
#6.25% Due 1/1/2022.............................................. AAA 2016 @ 100 S.F. 773,033
/ 800,000 Oklahoma Municipal Power Authority, Power Supply System
Revenue Bonds, Series 1994A (FGIC Insured) 2008 @ 102
#4.50% Due 1/1/2028.............................................. AAA 2023 @ 100 S.F. 644,064
$ 3,150,000 $ 2,966,185
</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".
/ In the opinion of the Bond Issuer's legal counsel, as of the date of issuance
of such Bonds, the interest income generated by such Bonds is exempt from
Federal and Oklahoma state income taxes.
For an explanation of the footnotes used on this page, see "Notes to
Portfolios".
NORTH CAROLINA QUALITY TRUST
General. The North Carolina Quality Trust consists of 8 issues of Securities.
One of the Bonds in the North Carolina Quality Trust is a general obligation
of the governmental entity issuing it and is backed by the taxing power
thereof. The remaining issues are payable from the income of a specific
project or authority and are not supported by the issuer's power to levy
taxes. These issues are divided by purpose of issues (and percentage of
principal amount to total North Carolina Quality Trust) as follows:
Certificates of Participation, 3 (35%); Wholesale Electric, 2 (33%); Health
Care, 2 (22%) and General Obligations, 1 (10%). No Bond issue has received a
provisional rating.
Risk Factors. See Portfolio for a list of the Debt Obligations included in the
North Carolina Trust. The portions of the following discussion regarding the
financial condition of the State government may not be relevant to general
obligation or revenue bonds issued by political subdivisions of the State.
Those portions and the sections which follow regarding the economy of the
State, are included for the purpose of providing information about general
economic conditions that may or may not affect issuers of the North Carolina
obligations. None of the information is relevant to any Puerto Rico or Guam
Debt Obligations which may be iincluded in the Portfolio of the North Carolina
Trust.
General obligations of a city, town or county in North Carolina are payable
from the general revenues of the entity, including ad valorem tax revenues on
property within the jurisdiction. Revenue bonds issued by North Carolina
political subdivisions include (1) revenue bonds payable exclusively from
revenue-producing governmental enterprises and (2) industrial revenue bonds,
college and hospital revenue bonds and other "private activity bonds"
which are essentially non-governmental debt issues and which are payable
exclusively by private entities such as non-profit organizations and business
concerns of all sizes. State and local governments have no obligation to
provide for payment of such private activity bonds and in many cases would be
legally prohibited from doing so. The value of such private activity bonds may
be affected by a wide variety of factors relevant to particular localities or
industries, including economic developments outside of North Carolina.
Section 23-48 of the North Carolina General Statutes appears to permit any
city, town, school district, county or other taxing district to avail itself
of the provisions of Chapter 9 of the United States Bankruptcy Code, but only
with the consent of the Local Government Commission of the State and of the
holders of such percentage or percentages of the indebtedness of the issuer as
may be required by the Bankruptcy Code (if any such consent is required).
Thus, although limitations apply, in certain circumstances political
subdivisions might be able to seek the protection of the Bankruptcy Code.
State Budget and Revenues. The North Carolina State Constitution requires that
the total expenditures of the State for the fiscal period covered by each
budget not exceed the total of receipts during the fiscal period and the
surplus remaining in the State Treasury at the beginning of the period. The
State's fiscal year runs from July 1st through June 30th.
In 1990 and 1991, the State had difficulty meeting its budget projections. The
General Assembly responded by enacting a number of new taxes and fees to
generate additional revenue and reduced allowable departmental operating
expenditures and continuation funding. The spending reductions were based on
recommendations from the Governor, the Government Performance Audit Committee
and selected reductions identified by the General Assembly.
The State, like the nation, has experienced economic recovery since 1991.
Apparently due to both increased tax and fee revenue and the previously
enacted spending reductions, the State had a budget surplus of approximately
$887 million at the end of fiscal 1993-94. After review of the 1994-95
continuation budget adopted in 1993, the General Assembly approved spending
expansion funds, in part to restore certain employee salaries to budgeted
levels, which amounts had been deferred to balance the budgets in 1989-1993,
and to authorize funding for new initiatives for economic development,
education, human services and environmental programs. (The cutback in funding
for infrastructure and social development projects had been cited by agencies
rating State obligations, following the 1991 reductions, as cause for concern
about the long-term consequences of those reductions on the economy of the
State and the State's fiscal prospects).
Based on projected growth in State tax and fee revenues, the General Fund
balance forecast for the end of the 1994-95 fiscal year is approximately $310
million.
It is unclear what effect these developments at the State level may have on
the value of the Debt Obligations in the North Carolina Trust.
The State is subject to claims by classes of plaintiffs asserting a right to a
refund of taxes paid under State statutes that allegedly discriminated against
federal retirees and armed services personnel in a manner that was
unconstitutional based on the decision by the United States Supreme Court in a
1989 Michigan case involving a similar law, Davis v. Michigan Department of
Treasury ("Davis"). At the time of that decision, State income tax law
exempted retirement income paid by North Carolina State and local governments
but did not exempt retirement income paid by the federal government to its
former employees. Also, State tax law at the time provided a deduction for
certain income earned by members of the North Carolina National Guard, but did
not provide a similar deduction for members of the federal armed services.
Following the Davis decision the North Carolina legislature amended the tax
laws to provide identical retirement income exclusions for former state and
federal employees (effective for 1989), and repealed the deduction given to
members of the State National Guard. In addition, the amendments authorized a
special tax credit for federal retirees equal to the taxes paid on their
nonexcluded federal pensions in 1988 (to be taken over a three year period
beginning with returns for 1990).
Subsequent to Davis, the North Carolina plaintiffs brought an action in
federal court against the North Carolina Department of Revenue and certain
officials of the State alleging that the collection of the taxes under the
prior North Carolina tax statutes was prohibited by the state and federal
constitutions, and also violated civil rights protections under 42 U.S.C. \xa4
1983, a federal statute prohibiting discriminatory taxation of the
compensation of certain federal employees (4 U.S.C. \xa4 111), and the
principle of intergovernmental tax immunity. The plaintiffs sought injunctive
relief requiring the State to provide refunds of the illegally collected taxes
paid on federal retirement or military pay for the years 1985-88 (covering the
asserted 3 year limitations period), plus interest. Swanson, et al. v. Powers,
et al. (United States District Court for the Eastern District of North
Carolina, No. 89-282-CIV-5-H) ("Swanson Federal"). The individual
plaintiffs in Swanson Federal also brought an action in North Carolina state
court seeking refunds of the illegal taxes. Swanson, et al. v. State of North
Carolina, et al. (Wake County, North Carolina Superior Court, No. 90 CVS 3127)
("Swanson State").
The amounts claimed by federal retirees in the Swanson actions have not been
precisely calculated. Plaintiffs have asserted that the plaintiff class
contains about 100,000 taxpayers; the State estimated that as of June 30,
1994, the claims (including interest) would then aggregate approximately $280
million.
In 1991, the North Carolina Supreme Court in Swanson State affirmed a decision
in favor of the State, holding that the U.S. Supreme Court decision in Davis
was not to have retroactive effect. Review was granted by the United States
supreme Court and the case subsequently was remanded to the North Carolina
Supreme Court for reconsideration in light of the U.S. Supreme Court's 1993
holding in Harper v. Virginia Dept. of Taxation ("Harper"). In Harper,
which also involved the disparate income tax treatment of retired state and
federal employees and the question of retroactive application of Davis, the
U.S. Supreme Court held that the Commonwealth of Virginia must provide "
meaningful backward-looking relief"to the plaintiffs if the Commonwealth
did not have a predeprivation process adequate to satisfy due process
requirements. Harper was remanded to the Supreme Court of Virginia to
determine whether a remedy was required and, if so, what form it would take.
Similarly, Swanson State was remanded for reconsideration of whether the North
Carolina tax laws satisfied the due process requirements of the federal
constitution and, if not, what remedy was to be provided by the State.
On remand, the North Carolina Supreme Court held in early 1994 that the
plaintiffs in Swanson State were procedurally barred from recovering refunds
because they did not comply with the State's statutory postpayment refund
demand procedure. The plaintiffs contended unsuccessfully that the postpayment
demand requirement did not meet the requirements of the federal constitution,
in light of the Harper decision, for "meaningful backward-looking
relief". Plaintiffs in Swanson State have petitioned the U.S. Supreme
Court for review of the most recent North Carolina Supreme Court decision. In
December 1994, the Court denied certiorari to the Swanson State plaintiffs. At
the same time the Court issued a decision in Reich v. Collins, a Georgia case
involving similar claims, finding for the plaintiff taxpayers, but the effect
of the Reich decision on the claims of the Swanson State plaintiffs is
uncertain. It is yet undetermined whether North Carolina offers
pre-deprivation procedures (payment and protest within a specified time
period) or post-deprivation remedies (tax credits especially tailored to these
claims) adequate to satisfy constitutional requirements, and plaintiffs in
Swanson State have petitioned the North Carolina Supreme Court for a rehearing
of its last decision in the case.
Following Harper, the plaintiffs in Swanson Federal again requested an
injunction requiring refunds. (Although the federal and state cases are
independent, the refund claims apparently would lead to only a single recovery
of taxes deemed unlawfully collected.) In May 1994, the U.S. District Court
granted the State's motion to dismiss all but one claim made by the
plaintiffs, declaring that those claims were precluded by the 1994 North
Carolina Supreme Court decision in Swanson State. Plaintiffs in Swanson
Federal asserted that relief should have been granted because of the effect of
the federal District Court's 1990 opinion in Swanson Federal denying the
defendants' motion that the federal Tax Injunction Act precluded the
plaintiffs' claims, in which the court found that the statutory post-payment
remedy for refund of unlawful taxes was no "plain, speedy and
efficient", as required by that law, Swanson Federal, 1990 WL 545, 761
(E.D.N.C.), rev'd, 937 F.2d 965 (1991), cert. denied, U.S., 112 S. Ct.
871 (1992). In its May 1994 decision, the federal court rejected that
assertion and held that its finding regarding the federal Tax Injunction Act
was jurisdictional only and was not a determination that the statutory remedy
violated the due process clause.
The plaintiffs' claim that was not dismissed with prejudice in the recent
District Court order asserts that the State continued an unlawful
discrimination, contrary to the requirements of 4 U.S.C. \xa4 111 and the
doctrine of intergovernmental tax immunity, by increasing benefits to State
retirees (in order to offset the effect of the deletion of the preferential
State retirement income exemption) as part of the bill that equalized the
income exclusion of State and federal retirement payments. The claim is based
on a holding of similar effect in Sheehy v. Public Employees Retirement Div.,
864 P. 2d 762 (Mont. 1993). In its May 1994 order, the District Court allowed
the plaintiffs to dismiss the Sheehy claim without prejudice. Therefore,
plaintiffs could assert those claims in another action; apparently, the relief
would require providing federal retirees with tax refunds or other payments
equal to the allegedly discriminatory payments made to State retirees since
1989.The court noted that those claims will be subject to the statutory
post-deprivation procedural requirements, and that a challenge to the legality
of the remedial statute would be precluded under the scope of the court's
order dismissing the other claims. However, the court granted plaintiffs'
motion to dismiss the Sheehy claims without prejudice because the record did
not show whether the plaintiffs had complied with statutory requirements. The
plaintiffs in Swanson State have appealed the District Court decision to the
United States Court of Appeals and a hearing is scheduled for March 1995.
Several states involved in similar suits have reached settlements. Expressions
of interest in settlement of the claims in Swanson by both the plaintiffs and
State officials have been reported in the press, but no prediction can be made
of the likelihood or amount of settlement. Although the recent improvements in
the economy and fiscal condition of the State might better enable the State to
satisfy an adverse decision without significant consequences to the State's
fiscal condition or governmental functions, because the amount of the
potential liability has not been fixed and because of the potential that
adverse fiscal or economic developments could cause a more negative result on
the State if a large amount must be paid, no assurance can be given that the
impact of the Swanson cases, if the plaintiffs ultimately succeed, will not
have an adverse impact on the Debt Obligations.
State and local government retirees also filed a class action suit in 1990 as
a result of the repeal of the income tax exemptions for state and local
government retirement benefits. The original suit was dismissed after the
North Carolina Supreme Court ruled in 1991 that the plaintiffs had failed to
comply with state law requirements for challenging unconstitutional taxes and
the United States Supreme Court denied review. In 1992, many of the same
plaintiffs filed a new lawsuit alleging essentially the same claims, including
breach of contract, unconstitutional impairment of contract rights by the
State in taxing benefits that were allegedly promised to be tax-exempt and
violation of several state constitutional provisions. The North Carolina
Attorney General's office estimates that the amount in controversy is
approximately $40-45 million annually for the tax years 1989 through 1992. The
case is now pending in state court.
Other litigation against the State include the following. None of the cases,
in the reported opinion of the Department of the Treasurer, would have a
material adverse affect on the State's ability to meet its obligations.
Leandro et al. v. State of North Carolina and State Board of Education - In
May, 1994 students and boards of education in five counties in the State filed
suit in state court requesting a declaration that the public education system
of North Carolina, including its system of funding, violates the State
constitution by failing to provide adequate or substantially equal educational
opportunities and denying due process of law and violates various statutes
relating to public education. The suit is similar to a number of suits in
other states, some of which resulted in holdings that the respective systems
of public education funding were unconstitutional under the applicable state
law. The defendants in such suit have filed a motion to dismiss, but no answer
to the complaint, and no pretrial discovery has taken place.
Francisco Case - In August, 1994 a class action lawsuit was filed in state
court against the Superintendent of Public Instruction and the State Board of
Education on behalf of a class of parents and their children who are
characterized as limited English proficient. The complaint alleges that the
State has failed to provide funding for the education of these students and
has failed to supervise local school systems in administering programs for
them. The complaint does not allege an amount in controversy, but asks the
Court to order the defendants to fund a comprehensive program to ensure equal
educational opportunities for children with limited English proficiency.
Faulkenburg v. Teachers' and State Employees' Retirement System, Peeve v.
Teachers' and State Employees' Retirement System, and Woodard v. Local
Governmental Employees' Retirement System - Plaintiffs are disability retirees
who brought class actions in state court challenging changes in the formula
for payment of disability retirement benefits and claiming impairment of
contract rights, breach of fiduciary duty, violation of other federal
constitutional rights, and violation of state constitutional and statutory
rights. The State estimates that the cost in damages and higher prospective
benefit payments to plaintiffs and class members would probably amount to $50
million or more in Faulkenburg, $50 million or more in Peele, and $15 million
or more in Woodward, all ultimately payable, at least initially, from the
retirement system funds. Upon review in Faulkenburg, the North Carolina Court
of Appeals and Supreme Court have held that claims made in Faulkenburg
substantially similar to those in Peele and Woodward, for breach of fiduciary
duty and violation of federal constitutional rights brought under the federal
Civil Rights Act either do not state a cause of action or are otherwise barred
by the statute of limitations. In 1994 plaintiffs took voluntary dismissals of
their claims for impairment of contract rights in violation of the United
States Constitution and filed new actions in federal court asserting the same
claims along with claims for violation of constitutional rights in the
taxation of retirement benefits. The remaining state court claims in all cases
are scheduled to be heard in North Carolina in October, 1994.
Fulton Case - The State's intangible personal property tax levied on certain
shares of stock has been challenged by the plaintiff on grounds that it
violates the Commerce Clause of the United States Constitution by
discriminating against stock issued by corporations that do all or part of
their business outside the State. The plaintiff in the action is a North
Carolina corporation that does all or part of its business outside the State.
The plaintiff seeks to invalidate the tax in its entirety and to recover tax
paid on the value of its shares in other corporations. The North Carolina
Court of Appeals invalidated the taxable percentage deduction and excised it
from the statute beginning with the 1994 tax year. The effect of this ruling
is to increase collections by rendering all stock taxable on 100% of its
value. The State and the plaintiff have sought further appellate review, and
the case is pending before the North Carolina Supreme Court. Net collections
from the tax for the fiscal year ended June 30, 1993 amounted to $120.6
million.
General. The population of the State has increased 13% from 1980, from
5,880,095 to 6,647,351 as reported by the 1990 federal census and the State
rose from twelfth to tenth in population. The State's estimate of population
as of June 30, 1994 is 7,023,663. Notwithstanding its rank in population size,
North Carolina is primarily a rural state, having only five municipalities
with populations in excess of 100,000.
The labor force has undergone significant change during recent years as the
State has moved from an agricultural to a service and goods producing economy.
Those persons displaced by farm mechanization and farm consolidations have, in
large measure, sought and found employment in other pursuits. Due to the wide
dispersion of non-agricultural employment, the people have been able to
maintain, to a large extent, their rural habitation practices. During the
period 1980 to 1994, the State labor force grew about 25% (from 2,855,200 to
3,560,000). Per capita income during the period 1980 to 1993 grew from $7,999
to $18,702, an increase of 133.8%.
The current economic profile of the State consists of a combination of
industry, agriculture and tourism. As of June 1994, the State was reported to
rank tenth among the states in non-agricultural employment and eighth in
manufacturing employment. Employment indicators have varied somewhat in the
annual periods since June of 1990, but have demonstrated an upward trend since
1991. The following table reflects the fluctuations in certain key employment
categories.
<TABLE>
<CAPTION>
Category (All Seasonally Adjusted) June 1990 June 1991 June 1992 June 1993 June 1994
<S> <C> <C> <C> <C> <C>
Civilian Labor Force 3,312,000 3,228,000 3,495,000 3,504,000 3,560,000
Nonagricultural Employment 3,129,000 3,059,000 3,135,000 3,203,400 3,358,700
Goods Producing Occupations (mining,
construction and manufacturing) 1,023,100 973,600 980,800 993,600 1,021,500
Service Occupations 2,106,300 2,085,400 2,154,200 2,209,800 2,337,200
Wholesale/Retail Occupations 732,500 704,100 715,100 723,200 749,000
Government Employees 496,400 496,700 513,400 515,400 554,600
Miscellaneous Services 587,300 596,300 638,300 676,900 731,900
Agricultural Employment 58,900 88,700 102,800 88,400 53,000
</TABLE>
The seasonally adjusted unemployment rate in January 1995 was estimated to be
3.8% of the labor force (down from 4.0% in January 1994), as compared with
5.7% nationwide (down from 6.7% in January 1994).
As of 1993, the State was tenth in the nation in gross agricultural income of
which nearly the entire amount (approximately $5.3 billion) was from
commodities. According to the State Commissioner of Agriculture, in 1993, the
State ranked first in the nation in the production of flue-cured tobacco,
total tobacco, turkeys and sweet potatoes; second in the value of poultry and
eggs, hog production, trout and the production of cucumbers for pickles;
fourth in commercial broilers, blueberries and peanuts; sixth in burley
tobacco and net farm income.
The diversity of agriculture in North Carolina and a continuing push in
marketing efforts have protected farm income from some of the wide variations
that have been experienced in other states where most of the agricultural
economy is dependent on a small number of agricultural commodities. North
Carolina is the third most diversified agricultural state in the nation.
Tobacco production is the leading source of agricultural income in the State,
accounting for 20% of gross agricultural income. Tobacco farming in North
Carolina has been and is expected to continue to be affected by major Federal
legislation and regulatory measures regarding tobacco production and marketing
and by international competition. Measures adverse to tobacco farming could
have negative effects on farm income and the North Carolina economy generally.
The poultry industry provides nearly 34% of gross agricultural income. The
pork industry has been expanding and accounted for 17% of gross agricultural
income in 1993.
The number of farms has been decreasing; in 1994 there were approximately
58,000 farms in the State (down from approximately 72,000 in 1987, a decrease
of about 19% in seven years). However, a strong agribusiness sector also
supports farmers with farm inputs (fertilizer, insecticide, pesticide and farm
machinery) and processing of commodities produced by farmers (vegetable
canning and cigarette manufacturing).
The State Department of Commerce, Travel and Tourism Division reports that in
1993 more than $8.3 billion was spent on tourism in the State. The Department
estimates that two-thirds of total expenditures came from out-of-state
travelers, and that approximately 250,000 people were employed in
tourism-related jobs.
Bond Ratings. Currently, Moody's rates North Carolina general obligation bonds
as Aaa and Standard & Poor's rates such bonds as AAA. Standard & Poor's also
reaffirmed its stable outlook for the State in January 1994.
Standard & Poor's reports that North Carolina's rating reflects the State's
strong economic characteristics, sound financial performance, and low debt
levels.
The Sponsor believes the information summarized above describes some of the
more significant events relating to the North Carolina Trust. The sources of
this information are the official statements of issuers located in North
Carolina, State agencies, publicly available documents, publications of rating
agencies and statements by, or news reports of statements by State officials
and employees and by rating agencies. The Sponsor and its counsel have not
independently verified any of the information contained in the official
statements and other sources and counsel have not expressed any opinion
regarding the completeness or materiality of any matters contained in this
Prospectus other than the tax opinions set forth below under North Carolina
Taxes.
Tax Status. For a discussion of the Federal tax status of income earned on
North Carolina Quality Trust Units, see "Other Matters--Federal Tax
Status". The portfolio of the North Carolina Quality Trust consists of
bonds issued by the State of North Carolina or municipalities, authorities or
political subdivisions thereof (the "Bonds").
In the opinion of Hunton & Williams, special counsel to the Fund for North
Carolina tax matters, under existing North Carolina law:
Upon the establishing of the North Carolina Quality Trust and the Units
thereunder:
(1)The North Carolina Quality Trust is not an "association"taxable as
a corporation under North Carolina law with the result that income of the
North Carolina Quality Trust will be deemed to be income of the Unitholders.
(2)Interest on the Bonds that is exempt from North Carolina income tax when
received by the North Carolina Quality Trust will retain its tax-exempt status
when received by the Unitholders.
(3)Unitholders will realize a taxable event when the North Carolina Quality
Trust disposes of a Bond (whether by sale, exchange, redemption or payment at
maturity) or when a Unitholder redeems or sells his Units (or any of them),
and taxable gains for Federal income tax purposes may result in gain taxable
as ordinary income for North Carolina income tax purposes. However, when a
Bond has been issued under an act of the North Carolina General Assembly that
provides that all income from such Bond, including any profit made from the
sale thereof, shall be free from all taxation by the State of North Carolina,
any such profit received by the North Carolina Quality Trust will retain its
tax-exempt status in the hands of the Unitholders.
(4)Unitholders must amortize their proportionate shares of any premium on a
Bond. Amortization for each taxable year is accomplished by lowering the
Unitholder's basis (as adjusted) in his Units with no deduction against gross
income for the year.
(5)The Units are exempt from the North Carolina tax on intangible personal
property so long as the corpus of the North Carolina Quality Trust remains
composed entirely of Bonds or, pending distribution, amounts received on the
sale, redemption or maturity of the Bonds and the Trustee periodically
supplies to the North Carolina Department of Revenue at such times as required
by the Department of Revenue a complete description of the North Carolina
Quality Trust and also the name, description and value of the obligations held
in the corpus of the North Carolina Quality Trust.
The opinion of Hunton & Williams is based, in part, on the opinion of Chapman
and Cutler regarding Federal tax status.
<TABLE>
<CAPTION>
Semi-
Monthly Annual
<S> <C> <C>
Per Unit Information:
Calculation of Estimated Net Annual Unit Income:
Estimated Annual Interest Income per Unit............................. $ 56.38 $ 56.38
Less: Estimated Annual Expense per Unit............................... $ 2.44 $ 1.99
Estimated Net Annual Interest Income per Unit......................... $ 53.94 $ 54.39
Calculation of Estimated Interest Earnings per Unit:
Estimated Net Annual Interest Income per Unit......................... $ 53.94 $ 54.39
Divided by 12 and 2, respectively..................................... $ 4.50 $ 27.20
Estimated Daily Rate of Net Interest Accrual per Unit.................. $ .14983 $ .15108
Estimated Current Return Based on Public Offering Price <F2><F3><F4>... 5.39% 5.44%
Estimated Long-Term Return <F2><F3><F4>................................ 5.41% 5.45%
Estimated Initial Monthly Distribution (May 1995)...................... $ 5.69
Estimated Initial Semi-annual Distribution (May 1995).................. $ 5.74
Estimated Normal Distribution per Unit <F4>............................ $ 4.50 $ 27.20
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Trustee's Annual Fee........... $.91 and $.51 per $1,000 principal amount of Bonds, respectively, for those portions of the North
Carolina Quality Trust under the monthly and semi-annual distribution plans
Record and Computation Dates... FIRST day of the month as follows: monthly--each month; semi-annual--May and November
Distribution Dates............. FIFTEENTH day of the month as follows: monthly--each month; semi-annual--May
and November commencing May 15, 1995
<FN>
<F1>The estimated annual expenses are expected to fluctuate periodically (see "
Trust Administration--Fund Administration and Expenses--Miscellaneous
Expenses").
<F2>The Estimated Current Returns and Estimated Long-Term Returns are increased
for transactions entitled to a reduced sales charge. See "Unitholder
Explanations--Public Offering--General".
<F3>The Estimated Current Returns are calculated by dividing the Estimated Net
Annual Interest Income per Unit by the Public Offering Price. The Estimated
Net Annual Interest Income per Unit will vary with changes in fees and
expenses of the Trustee and the Evaluator and with the principal prepayment,
redemption, maturity, exchange or sale of Securities while the Public Offering
Price will vary with changes in the offering price of the underlying
Securities; therefore, there is no assurance that the present Estimated
Current Returns indicated above will be realized in the future. The Estimated
Long-Term Returns are calculated using a formula which (1) takes into
consideration, and determines and factors in the relative weightings of, the
market values, yields (which takes into account the amortization of premiums
and the accretion of discounts) and estimated retirements of all of the
Securities in the Trust and (2) takes into account the expenses and sales
charge associated with each Trust Unit. Since the market values and estimated
retirements of the Securities and the expenses of the Trust will change, there
is no assurance that the present Estimated Long-Term Returns as indicated
above will be realized in the future. The Estimated Current Returns and
Estimated Long-Term Returns are expected to differ because the calculation of
the Estimated Long-Term Return reflects the estimated date and amount of
principal returned while the Estimated Current Return calculation includes
only net annual interest income and Public Offering Price.
<F4>These figures are based on estimated per Unit cash flows. Estimated cash flows
will vary with changes in fees and expenses, with changes in current interest
rates and with the principal prepayment, redemption, maturity, call, exchange
or sale of the underlying Securities. The estimated cash flows for this Series
are set forth under "Estimated Cash Flows to Unitholders".
</TABLE>
<TABLE>
NORTH CAROLINA INVESTORS' QUALITY TAX-EXEMPT TRUST SERIES 81
(IM-IT AND QUALITY MULTI-SERIES 247)
PORTFOLIO As of March 16, 1995
<CAPTION>
Offering
Price To
North
Carolina
Aggregate Name of Issuer, Title, Interest Rate andMaturity Date of Standard Rating<F2> Redemption Quality
Principal<F1> either Bonds Deposited orBonds Contracted for<F1><F5> & Poor's Moody's Feature<F3> Trust<F4>
<S> <C> <C> <C> <C> <C>
$ 300,000 North Carolina Capital Improvement General Obligation
Bonds, Series 1994A
4.75% Due 2/1/2013....................................... AAA Aaa 2004 @ 102 $ 266,787
North Carolina Eastern Municipal Power Agency, Power
500,000 System Revenue Bonds, Refunding Series 1993B (FGIC
Insured) 2003 @ 100
#5.50% Due 1/1/2017...................................... AAA Aaa 2015 @ 100 S.F. 469,715
500,000 North Carolina Medical Care Commission, Hospital
Revenue Bonds (Rex Hospital) Series 1993 2003 @ 102
#6.25% Due 6/1/2017...................................... A+ A1 2011 @ 100 S.F. 508,075
400,000 Rutherford County, North Carolina, Certificates of
Participation, Public Facilities Project, Series 1994
(FGIC Insured) 2004 @ 102
#6.20% Due 6/1/2018...................................... AAA Aaa 2014 @ 100 S.F. 411,684
400,000 Cumberland County, North Carolina, Certificates of
Participation, Civic Center Project, Series 1995A
(AMBAC Indemnity Insured) 2004 @ 102
#6.40% Due 12/1/2019..................................... AAA Aaa 2014 @ 100 S.F. 418,676
500,000 North Carolina Municipal Power Agency No. 1, Catawba
Electric Revenue Refunding Bonds, Series 1992 (MBIA
Insured) 2003 @ 100
#5.75% Due 1/1/2020...................................... AAA Aaa 2019 @ 100 S.F. 483,110
250,000 City of Charlotte, North Carolina, Refunding
Certificates of Participation (Convention Facility
Project) Series 1993C (AMBAC Indemnity Insured) 2003 @ 102
#5.25% Due 12/1/2020..................................... AAA Aaa 2014 @ 100 S.F. 228,335
150,000 Wake County, North Carolina, Hospital System Revenue
Crossover Refunding Bonds, Series 1993 (MBIA Insured) 2003 @ 102
#5.125% Due 10/1/2026.................................... AAA Aaa 2017 @ 100 S.F. 131,316
$ 3,000,000 $ 2,917,698
</TABLE>
For an explanation of the footnotes used on this page, see "Notes to
Portfolios".
As of the Date of Deposit: March 16, 1995
(1)All Securities are represented by "regular way"or "when
issued"contracts for the performance of which an irrevocable letter of
credit, obtained from an affiliate of the Trustee, has been deposited with the
Trustee. At the Date of Deposit, Securities may have been delivered to the
Sponsor pursuant to certain of these contracts; the Sponsor has assigned to
the Trustee all of its right, title and interest in and to such Securities.
Contracts to acquire Securities were entered into during the period from
August 17,1994 to March 16,1995. These Securities have expected settlement
dates ranging from March 16,1995 to April 19,1995 (see "Unitholder
Explanations").
(2)All ratings are by Standard & Poor's unless otherwise indicated. "*"
indicates that the rating of the Bond is by Moody's Investors Service, Inc.
The ratings represent the latest published ratings by the respective ratings
agency or, if not published, represent private letter ratings or those ratings
expected to be published by the respective ratings agency. "Y"
indicates that such rating is contingent upon physical receipt by the
respective ratings agency of a policy of insurance obtained by the issuer of
the bonds involved and issued by the Preinsured Bond Insurer named in the
bond's title. A commitment for insurance in connection with these bonds has
been issued by the Preinsured Bond Insurer named in the bond's title. "
N/R"indicates that the applicable rating service did not provide a rating
for that particular Security. For a brief description of the rating symbols
and their related meanings, see "Other Matters--Description of Securities
Ratings".
(3)There is shown under this heading the year in which each issue of Bonds is
initially or currently callable and the call price for that year. Each issue
of Bonds continues to be callable at declining prices thereafter (but not
below par value) except for original issue discount bonds which are redeemable
at prices based on the issue price plus the amount of original issue discount
accreted to redemption date plus, if applicable, some premium, the amount of
which will decline in subsequent years. "S.F."indicates a sinking
fund is established with respect to an issue of Bonds. Redemption pursuant to
call provisions generally will, and redemption pursuant to sinking fund
provisions may, occur at times when the redeemed bonds have an offering side
valuation which represents a premium over par. Certain Bonds may be subject to
redemption without premium prior to the date shown pursuant to extraordinary
optional or mandatory redemptions if certain events occur. Single family
mortgage revenue bonds and housing authority bonds are most likely to be
called subject to such provisions, but other bonds may have similar call
features. Notwithstanding any provisions to the contrary, certain bond issuers
have in the past and others may in the future attempt to redeem Bonds prior to
their initially scheduled call dates and at prices which do not include any
premiums. For a general discussion of certain of these events, see "
Unitholder Explanations--Bond Redemptions". To the extent that the
Securities were deposited in a Trust at a price higher than the price at which
they are redeemed, this will represent a loss of capital when compared with
the original Public Offering Price of the Units. Conversely, to the extent
that the Bonds were acquired at a price lower than the redemption price, this
will represent an increase in capital when compared with the original Public
Offering Price of the Units. Distributions will generally be reduced by the
amount of the income which would otherwise have been paid with respect to
redeemed Securities and there will be distributed to Unitholders the principal
amount and any premium received on such redemption. The Estimated Current
Return and Estimated Long-Term Return in this event may be affected by such
redemptions. For the Federal tax effect on Unitholders of such redemptions and
resultant distributions, see paragraph (2) under "Other Matters--Federal
Tax Status".
(4)Evaluation of Securities is made on the basis of current offering prices
for the Securities. The offering prices are greater than the current bid
prices of the Securities which is the basis on which Unit value is determined
for purposes of redemption of Units (see "Unitholder Explanations--Public
Offering--Offering Price").
(5)Other information regarding the Bonds in each Trust, as of the Date of
Deposit, is as follows:
<TABLE>
<CAPTION>
Annual
Annual Profit Interest Bid Side
Trust Insurance Cost to (Loss) to Income to Evaluation of
Cost Sponsor Sponsor Trust Bonds
<S> <C> <C> <C> <C> <C>
IM-IT...................... $ -- $ 8,483,257 $ 90,048 $ 525,644 $ 8,506,094
IM-IT Short Intermediate... $ -- $ 4,941,848 $ 27,291 $ 245,633 $ 4,930,606
Florida IM-IT.............. $ -- $ 2,865,037 $ 43,144 $ 174,558 $ 2,886,116
Missouri IM-IT............. $ 100 $ 3,233,375 $ 67,561 $ 198,900 $ 3,275,949
Oklahoma IM-IT............. $ 800 $ 2,936,067 $ 30,118 $ 168,475 $ 2,941,195
North Carolina Quality..... $ -- $ 2,869,208 $ 48,490 $ 172,963 $ 2,895,938
</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...................... 8% 12 days
IM-IT Short Intermediate... 15% 7 days
Florida IM-IT.............. 17% 26 days
Missouri IM-IT............. -- --
Oklahoma IM-IT............. -- --
North Carolina Quality..... -- --
</TABLE>
On the Date of Deposit, the offering side evaluations of the Securities in the
IM-IT , IM-IT Short Intermediate , Florida IM-IT , Missouri IM-IT , Oklahoma
IM-IT and North Carolina Quality Trusts were higher than the bid side
evaluations of such Securities by 0.75%, 0.77%, 0.74%, 0.74%, 0.79% and 0.73%,
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 5%, 1% and 3% of the aggregate
principal amount of the Securities in the IM-IT, Florida IM-IT Trust and
Missouri IM-IT Trust, respectively, are "zero coupon"bonds.
Underwriting. The Underwriters named below have severally purchased Units in
the following respective amounts from the Sponsor.
<TABLE>
<CAPTION>
Name IM-IT
Address Units
<S> <C> <C>
Van Kampen American Capital Dist., Inc. One Parkview Plaza, Oakbrook Terrace, Illinois 60181 2,265
A.G. Edwards & Sons, Inc. One North Jefferson Avenue, St. Louis, Missouri 63103 2,000
Southwest Securities Inc. 1201 Elm Street, Suite 4300, Dallas, Texas 75270 1,000
Edward D. Jones & Co. 201 Progress Parkway, Maryland Heights, Missouri 63043 500
B.C. Ziegler and Company 215 North Main Street, West Bend, Wisconsin 53095 300
Advest, Inc. 280 Trumbull Street, Hartford, Connecticut 06103 250
J.C. Bradford & Co. 330 Commerce Street, Nashville, Tennessee 37201 250
Dean Witter Reynolds, Incorporated 2 World Trade Center, 59th Floor, New York, New York 10048 250
J.J.B. Hilliard, W.L. Lyons, Inc. 501 South Fourth Street, Louisville, Kentucky 40202 250
William R. Hough & Company 100 Second Avenue South, 8th Floor, St. Petersburg, Florida 33701 250
Principal Financial Securities, Inc. Fountain Place, 1445 Ross Avenue, Suite 2300, Dallas, Texas 75201 250
Stifel, Nicolaus & Company, Incorporated 500 North Broadway, St. Louis, Missouri 63102 250
Robert W. Baird & Co. Inc. 777 East Wisconsin Avenue, Milwaukee, Wisconsin 53202 100
Fidelity Capital Markets 164 Northern Avenue, Boston, Massachusetts 02215 100
Gruntal & Co., Incorporated 14 Wall Street, New York, New York 10005 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
Oppenheimer & Co., Inc. World Financial Center, 8th Floor, New York, New York 10281 100
Pershing DIV of DLJ Secs Corp. One Pershing Plaza, 7th Floor, Jersey City, New Jersey 07399 100
Prudential Securities Inc. 1 New York Plaza, 14th Floor, New York, New York 10292-2014 100
Rauscher Pierce Refsnes, Inc. Plaza of the Americas, 2500 North Tower, Dallas, Texas 75201 100
Raymond James & Associates, Inc. 880 Carillon Parkway, St. Petersburg, Florida 33733 100
Roosevelt & Cross Inc. 20 Exchange Place, New York, New York 10005 100
Smith Barney Inc. 388 Greenwich Street, 23rd Floor, New York, New York 10013 100
9,015
</TABLE>
<TABLE>
<CAPTION>
IM-IT Short
Intermediate
Name Trust
Address Units
<S> <C> <C>
Van Kampen American Capital Dist., Inc. One Parkview Plaza, Oakbrook Terrace, Illinois 60181 3,750
Prudential Securities Inc. 1 New York Plaza, 14th Floor, New York, New York 10292-2014 500
Dean Witter Reynolds, Incorporated 2 World Trade Center, 59th Floor, New York, New York 10048 250
A.G. Edwards & Sons, Inc. One North Jefferson Avenue, St. Louis, Missouri 63103 100
Fidelity Capital Markets 164 Northern Avenue, Boston, Massachusetts 02215 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
Southwest Securities Inc. 1201 Elm Street, Suite 4300, Dallas, Texas 75270 100
5,000
</TABLE>
<TABLE>
<CAPTION>
Florida
Name IM-IT Trust
Address Units
<S> <C> <C>
Van Kampen American Capital Dist., Inc. One Parkview Plaza, Oakbrook Terrace, Illinois 60181 1,008
A.G. Edwards & Sons, Inc. One North Jefferson Avenue, St. Louis, Missouri 63103 1,000
Gruntal & Co., Incorporated 14 Wall Street, New York, New York 10005 500
B.C. Ziegler and Company 215 North Main Street, West Bend, Wisconsin 53095 150
J W Charles Inc 980 North Federal Highway, Suite 210, Boca Raton, Florida 33432 100
Dean Witter Reynolds, Incorporated 2 World Trade Center, 59th Floor, New York, New York 10048 100
First Miami Securities 20660 West Dixie Highway, North Miami Beach, Florida 33180 100
Prudential Securities Inc. 1 New York Plaza, 14th Floor, New York, New York 10292-2014 100
3,058
</TABLE>
<TABLE>
<CAPTION>
Missouri
Name IM-IT Trust
Address Units
<S> <C> <C>
A.G. Edwards & Sons, Inc. One North Jefferson Avenue, St. Louis, Missouri 63103 1,000
Van Kampen American Capital Dist., Inc. One Parkview Plaza, Oakbrook Terrace, Illinois 60181 471
Stifel, Nicolaus & Company, Incorporated 500 North Broadway, St. Louis, Missouri 63102 350
B.C. Christopher, Division of Fahnestock 4717 Grand Avenue, Kansas City, Missouri 64112 250
Gruntal & Co., Incorporated 14 Wall Street, New York, New York 10005 250
Huntleigh Securities Corporation 222 South Central, 3rd Floor, St. Louis, Missouri 63105 250
Edward D. Jones & Co. 201 Progress Parkway, Maryland Heights, Missouri 63043 250
Smith Barney Inc. 388 Greenwich Street, 23rd Floor, New York, New York 10013 250
Dean Witter Reynolds, Incorporated 2 World Trade Center, 59th Floor, New York, New York 10048 100
Prudential Securities Inc. 1 New York Plaza, 14th Floor, New York, New York 10292-2014 100
Roney & Co. One Griswold, Detroit, Michigan 48226 100
B.C. Ziegler and Company 215 North Main Street, West Bend, Wisconsin 53095 100
3,471
</TABLE>
<TABLE>
<CAPTION>
Oklahoma
Name IM-IT Trust
Address Units
<S> <C> <C>
Van Kampen American Capital Dist., Inc. One Parkview Plaza, Oakbrook Terrace, Illinois 60181 2,519
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
Smith Barney Inc. 388 Greenwich Street, 23rd Floor, New York, New York 10013 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
3,119
</TABLE>
<TABLE>
<CAPTION>
North Carolina
Name Quality Trust
Address Units
<S> <C> <C>
Van Kampen American Capital Dist., Inc. One Parkview Plaza, Oakbrook Terrace, Illinois 60181 2,418
Edward D. Jones & Co. 201 Progress Parkway, Maryland Heights, Missouri 63043 150
Dean Witter Reynolds, Incorporated 2 World Trade Center, 59th Floor, New York, New York 10048 100
Fidelity Capital Markets 164 Northern Avenue, Boston, Massachusetts 02215 100
Gruntal & Co., Incorporated 14 Wall Street, New York, New York 10005 100
Prudential Securities Inc. 1 New York Plaza, 14th Floor, New York, New York 10292-2014 100
Wheat, First Securities, Inc. River Front Plaza, 901 East Byrd Street, Richmond, Virginia 23219 100
3,068
</TABLE>
Units may also be sold to broker-dealers and others at prices representing the
per Unit concession or agency commission stated under "Trust
Administration--General--Unit Distribution". However, resales of Units by
such broker-dealers and others to the public will be made at the Public
Offering Price described in the Prospectus. The Sponsor reserves the right to
reject, in whole or in part, any order for the purchase of Units and the right
to change the amount of the concession or agency commission from time to time.
In addition to any other benefits the Underwriters may realize from the sale
of the Units of the Fund, the Agreement Among Underwriters provides that the
Sponsor will share on a pro rata basis among those Underwriters who underwrite
at least 250 Units 50% of the aggregate gain, if any, represented by the
difference between the Sponsor's cost of the Securities in connection with
their acquisition and the evaluation thereof on the Date of Deposit less
deductions for certain accrued interest and certain other costs. See "
Trust Administration--General--Sponsor and Underwriter Compensation"and
"Portfolio"for the applicable Trust.
Underwriters and broker-dealers of the Trusts, banks and/or others are
eligible to participate in a program in which such firms receive from the
Sponsor a nominal award for each of their representatives who have sold a
minimum number of units of unit investment trusts created by the Sponsor
during a specified time period. In addition, at various times the Sponsor may
implement other programs under which the sales forces of Underwriters,
brokers, dealers, banks and/or others may be eligible to win other nominal
awards for certain sales efforts, or under which the Sponsor will reallow to
any such Underwriters, brokers, dealers, banks and/or others that sponsor
sales contests or recognition programs conforming to criteria established by
the Sponsor, or participate in sales programs sponsored by the Sponsor, an
amount not exceeding the total applicable sales charges on the sales generated
by such persons at the public offering price during such programs. Also, the
Sponsor in its discretion may from time to time pursuant to objective criteria
established by the Sponsor pay fees to qualifying underwriters, brokers,
dealers, banks or others for certain services or activities which are
primarily intended to result in sales of Units of the Trusts. Such payments
are made by the Sponsor out of its own assets, and not out of the assets of
the Trusts. These programs will not change the price Unitholders pay for their
Units or the amount that the Trusts will receive from the Units sold.
Approximately every eighteen months the Sponsor holds a business seminar which
is open to Underwriters that sell units of trusts it sponsors. The Sponsor
pays substantially all costs associated with the seminar, excluding
Underwriter travel costs. Each Underwriter is invited to send a certain number
of representatives based on the gross number of units such firm underwrites
during a designated time period.
FUND ADMINISTRATION AND EXPENSES
Sponsor. Van Kampen American Capital Distributors, Inc., a Delaware
corporation, is the Sponsor of the Trust. Van Kampen American Capital
Distributors, Inc. is primarily owned by Clayton, Dubilier & Rice, Inc., a New
York-based private investment firm. Van Kampen American Capital Distributors,
Inc. management owns a significant minority equity position. Effective
December 20, 1994, the parent of Van Kampen Merritt Inc. acquired American
Capital Management & Research, Inc. As a result, Van Kampen Merritt Inc., has
changed its name to Van Kampen American Capital Distributors, Inc. Van Kampen
American Capital Distributors, Inc. specializes in the underwriting and
distribution of unit investment trusts and mutual funds. The Sponsor is a
member of the National Association of Securities Dealers, Inc. and has offices
at One Parkview Plaza, Oakbrook Terrace, Illinois 60181, (708) 684-6000 and
2800 Post Oak Boulevard, Houston, Texas, 77056, (713) 993-0500. It maintains a
branch office in Philadelphia and has regional representatives in Atlanta,
Dallas, Los Angeles, New York, San Francisco, Seattle and Tampa. As of
December 31, 1994 the total stockholders' equity of Van Kampen Merritt Inc.
was $117,357,000 (audited). (This paragraph relates only to the Sponsor and
not to the Insured Municipals Income Trust 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 December 31, 1994, and without giving effect to the merger, the Sponsor
and its affiliates managed or supervised approximately $33.7 billion of
investment products, of which over $22.8 billion is invested in municipal
securities. The Sponsor and its affiliates managed $21.8 billion of assets,
consisting of $7.3 billion for 20 open end mutual funds, $8.3 billion for 34
closed-end funds and $5.2 billion for 75 institutional accounts. The Sponsor
has also deposited approximately $26 billion of unit investment trusts. Based
on cumulative assets deposited, the Sponsor believes that it is the largest
sponsor of insured municipal unit investment trusts, primarily through the
success of its Insured Municipals Income Trust(R)or the IM-IT(R)trust.
The Sponsor also provides surveillance and evaluation services at cost for
approximately $13 billion of unit investment trust assets outstanding. Since
1976, the Sponsor has serviced over one million retail investor accounts,
opened through retail distribution firms. Van Kampen American Capital
Distributors, Inc. is the sponsor of the various series of the trusts listed
below 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>
Insured Municipals Income Trust..................................... Tax-exempt income by investing in insured municipal securities
Double tax-exemption for California residents by investing in
California Insured Municipals Income Trust.......................... insured California municipal securities
Double and in certain cases triple tax-exemption for New York
residents by investing in insured New York municipal
New York Insured Municipals Income Trust............................ securities
Double and in certain cases triple tax-exemption for
Pennsylvania residents by investing in insured Pennsylvania
Pennsylvania Insured Municipals Income Trust........................ municipal securities
Insured Municipals Income Trust, Insured Multi-Series
(Premium Bond Series, National, Limited Maturity, Intermediate,
Short Intermediate, Discount, Alabama, Arizona, Arkansas,
California, California Intermediate, California Intermediate
Laddered Maturity, California Premium, Colorado, Connecticut,
Florida, Florida Intermediate, Florida Intermediate Laddered
Maturity, Georgia, Louisiana, Massachusetts, Massachusetts
Premium, Michigan, Michigan Intermediate, Michigan
Intermediate Laddered Maturity, Michigan Premium, Minnesota,
Missouri, Missouri Intermediate Laddered Maturity, Missouri
Premium, New Jersey, New Jersey Intermediate Laddered
Maturity, New Mexico, New York, New York Intermediate, New Tax-exempt income by investing in insured municipal
York Intermediate Laddered Maturity, New York Limited securities; all issuers of bonds in a state trust are located
Maturity, Ohio, Ohio Intermediate, Ohio Intermediate Laddered in such state or in territories or possessions of the United
Maturity, Ohio Premium, Oklahoma, Pennsylvania, Pennsylvania States-- providing exemptions from all state income tax for
Intermediate, Pennsylvania Intermediate Laddered Maturity, residents of such state (except for the Oklahoma IM-IT Trust
Pennsylvania Premium, Tennessee, Texas, Texas Intermediate where a portion of the income of the Trust may be subject to
Laddered Maturity, Washington, West Virginia)...................... the Oklahoma state income tax)
Insured Tax Free Bond Trust......................................... Tax-exempt income by investing in insured municipal securities
Tax-exempt income by investing in insured municipal
securities; all issuers of bonds in a state trust are located
Insured Tax Free Bond Trust, Insured Multi-Series in such state--providing exemptions from state income tax for
(National Limited Maturity, New York).............................. residents of such state
Investors' Quality Tax-Exempt Trust................................. Tax-exempt income by investing in municipal securities
Investors' Quality Tax-Exempt Trust, Multi-Series
(National, National AMT, Intermediate, Alabama, Arizona,
Arkansas, California, Colorado, Connecticut, Delaware, Tax-exempt income by investing in municipal securities; all
Florida, Georgia, Hawaii, Kansas, Kentucky, Maine, Maryland, issuers of bonds in a state trust are located in such state
Massachusetts, Michigan, Minnesota, Missouri, Nebraska, or in territories or possessions of the United
New Jersey, New York, North Carolina, Ohio, Oregon, States--providing exemptions from state income tax for
Pennsylvania, South Carolina, Virginia)............................ residents of such state
Tax-exempt income for investors not subject to the
alternative minimum tax by investing in municipal securities,
some or all of which are subject to the Federal alternative
Investors' Quality Municipals Trust, AMT Series......................minimum tax
Investors' Corporate Income Trust....................................Taxable income by investing in corporate bonds
Taxable income by investing in government-backed GNMA
Investors' Governmental Securities--Income Trust.................... securities
High current income through an investment in a diversified
portfolio of foreign currency denominated corporate debt
Van Kampen Merritt International Bond Income Trust...................obligations
High current income consistent with preservation of capital
through a diversified investment in a fixed portfolio of
insured, long-term or intermediate-term corporate debt
Van Kampen Merritt Insured Income Trust..............................securities
High current income consistent with preservation of capital
through a diversified investment in a fixed portfolio of
insured, long-term or intermediate-term corporate debt
Van Kampen American Capital Insured Income Trust.....................securities
High dividend income and capital appreciation by investing in
Van Kampen Merritt Utility Income Trust..............................common stock of electric utilities
Provide the potential for capital appreciation and income by
investing in a portfolio of actively traded, New York Stock
Exchange listed equity securities which are components of the
Van Kampen Merritt Select Equity Trust...............................Dow Jones Industrial Average*
Protect Unitholders' capital and provide the potential for
capital appreciation and income by investing a portion of its
portfolio in "zero coupon"U.S. Treasury obligations
and the remainder of the trust's portfolio in the identical
Van Kampen Merritt Select Equity and Treasury Trust..................equity securities which comprise the Select Equity Trust
Provide the potential for capital appreciation and income by
investing in a portfolio of actively traded, New York Stock
Exchange listed equity securities which are components of the
Van Kampen Merritt Blue Chip Opportunity Trust.......................Dow Jones Industrial Average*
Protect Unitholders' capital and provide the potential for
capital appreciation and income by investing a portion of its
portfolio in "zero coupon"U.S. Treasury obligations
and the remainder of the trust's portfolio in actively
traded, New York Stock Exchange listed equity securities
Van Kampen Merritt Blue Chip Opportunity and which at the time of the creation of the trust were
Treasury Trust......................................................components of the Dow Jones Industrial Average*
High current income consistent with preservation of capital
through a diversified investment in a fixed portfolio
primarily consisting of Brady Bonds of emerging market
countries that have restructured sovereign debt pursuant to
Van Kampen Merritt Emerging Markets Income Trust.....................the framework of the Brady Plan
Provide the potential for capital appreciation and income
consistent with the preservation of invested capital, by
investing in a portfolio of equity securities which provide
Van Kampen Merritt Global Telecommunications Trust...................equipment for or services to the telecommunications industry
Provide the potential for capital appreciation and income
consistent with the preservation of invested capital, by
investing in a portfolio of equity securities diversified
Van Kampen Merritt Global Energy Trust...............................within the energy industry
Provide an above average total return through a combination
of potential capital appreciation and dividend income,
consistent with preservation of invested capital, by
investing in a portfolio of common stocks of the ten
Strategic Ten Trust companies in a recognized stock exchange index having the
(United States, United Kingdom, and Hong Kong Portfolios)...........highest dividend yields
Provide the potential for capital appreciation and income
consistent with the preservation of invested capital, by
investing in a portfolio of equity securities diversified
Van Kampen Merritt Brand Name Equity Trust...........................within the non-durable consumer products industry
</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 of current income exempt from Federal income tax and Florida
intangible personal property taxes consistent with preservation of
Van Kampen Merritt Florida Insured Tax Free Income Fund....capital
High level of current income exempt from Federal income tax and New
Van Kampen Merritt New Jersey Tax Free Income Fund.........Jersey gross income tax consistent with preservation of capital
High level of current income exempt from Federal as well as New York
State and New York City income taxes, consistent with preservation of
Van Kampen Merritt New York Tax Free Income Fund...........capital
To provide shareholders current income while also seeking to provide
Van Kampen Merritt Balanced Fund...........................capital growth
</TABLE>
<TABLE>
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 grade
Van Kampen Merritt Municipal Income Trust...................municipal securities
High current income exempt from Federal and California income taxes
with safety of principal by investing in a diversified portfolio of
Van Kampen Merritt California Municipal Trust...............investment grade California municipal securities
High current income while seeking to preserve shareholders' capital by
investing in a diversified portfolio of high yield fixed income
Van Kampen Merritt Intermediate Term High Income Trust......securities
High current income while seeking to preserve shareholders' capital by
investing in a diversified portfolio of high yield fixed income
Van Kampen Merritt Limited Term High Income Trust...........securities
High current income, consistent with preservation of capital by
Van Kampen Merritt Prime Rate Income Trust..................investing in interests in floating or variable rate senior loans
High current income exempt from Federal income tax, consistent with
Van Kampen Merritt Investment Grade Municipal Trust.........preservation of capital
High level of current income exempt from Federal income tax,
Van Kampen Merritt Municipal Trust..........................consistent with preservation of capital
High current income exempt from Federal and California income taxes
with safety of principal by investing in a diversified portfolio of
Van Kampen Merritt California Quality Municipal Trust.......investment grade California municipal securities
High current income exempt from Federal income taxes and Florida
intangible personal property taxes with safety of principal by
investing in a diversified portfolio of investment grade Florida
Van Kampen Merritt Florida Quality Municipal Trust..........municipal securities
High current income exempt from Federal as well as New York State and
New York City income taxes with safety of principal by investing in a
Van Kampen Merritt New York Quality Municipal Trust.........diversified portfolio of investment grade New York municipal securities
High current income exempt from Federal and Ohio income taxes with
safety of principal by investing in a diversified portfolio of
Van Kampen Merritt Ohio Quality Municipal Trust.............investment grade Ohio municipal securities
High current income exempt from Federal and Pennsylvania income taxes
with safety of principal by investing in a diversified portfolio of
Van Kampen Merritt Pennsylvania Quality Municipal Trust.....investment grade Pennsylvania municipal securities
High level of current income exempt from Federal income tax,
Van Kampen Merritt Trust for Investment Grade Municipals....consistent with preservation of capital
High level of current income exempt from Federal income tax,
consistent with preservation of capital by investing in a diversified
portfolio of municipal securities which are covered by insurance with
Van Kampen Merritt Trust for Insured Municipals.............respect to timely payment of principal and interest
High level of current income exempt from Federal and California income
Van Kampen Merritt Trust for Investment Grade CA taxes, consistent with preservation of capital by investing in a
Municipals.................................................diversified portfolio of California municipal securities
High level of current income exempt from Federal income taxes,
consistent with preservation of capital. The Fund also seeks to offer
Van Kampen Merritt Trust for Investment Grade FL its Shareholders the opportunity to own securities exempt from Florida
Municipals.................................................intangible personal property taxes
Van Kampen Merritt Trust for Investment Grade NJ
Municipals High level of current income exempt from Federal income taxes and New
..........................................................Jersey gross income taxes, consistent with preservation of capital
High level of current income exempt from Federal as well as from New
Van Kampen Merritt Trust for Investment Grade NY York State and New York City income taxes, consistent with
Municipals.................................................preservation of capital
High level of current income exempt from Federal and Pennsylvania
Van Kampen Merritt Trust for Investment Grade PA income taxes and, where possible under local law, local income and
Municipals.................................................property taxes, consistent with preservation of capital
High level of current income exempt from Federal income tax,
consistent with preservation of capital by investing in a diversified
Van Kampen Merritt Municipal Opportunity Trust..............portfolio of municipal securities
High level of current income exempt from Federal income tax,
consistent with preservation of capital by investing in a diversified
Van Kampen Merritt Advantage Municipal Income Trust.........portfolio of municipal securities
High level of current income exempt from Federal and Pennsylvania
Van Kampen Merritt Advantage Pennsylvania Municipal income taxes and, where possible under local law, local income and
Income Trust...............................................property taxes, consistent with preservation of capital
Provide common shareholders with a high level of current income exempt
Van Kampen Merritt Strategic Sector Municipal Trust.........from Federal income taxes, consistent with preservation of capital
High level of current income exempt from Federal income taxes,
Van Kampen Merritt Value Municipal Income Trust.............consistent with preservation of capital
Van Kampen Merritt California Value Municipal High level of current income exempt from Federal and California income
Income Trust...............................................taxes, consistent with preservation of capital
High level of current income exempt from Federal income taxes and
Van Kampen Merritt Massachusetts Value Municipal Massachusetts personal income taxes, consistent with preservation of
Income Trust..............................................capital
Van Kampen Merritt New Jersey Value Municipal High level of current income exempt from Federal income taxes and New
Income Trust...............................................Jersey gross income tax, consistent with preservation of capital
High level of current income exempt from Federal as well as New York
Van Kampen Merritt New York Value Municipal State and New York City income taxes, consistent with preservation of
Income Trust...............................................capital
Van Kampen Merritt Ohio Value Municipal Income High level of current income exempt from Federal and Ohio income
Trust......................................................taxes, consistent with preservation of capital
Van Kampen Merritt Pennsylvania Value Municipal High level of current income exempt from Federal and Pennsylvania
Income Trust..............................................income taxes, consistent with preservation of capital
High level of current income exempt from Federal income tax,
Van Kampen Merritt Municipal Opportunity Trust II...........consistent with preservation of capital
High level of current income exempt from Federal income tax,
consistent with preservation of capital. The Fund seeks to offer its
common shareholders the opportunity to own securities exempt from
Van Kampen Merritt Florida Municipal Opportunity Trust .....Florida intangible personal property taxes
Provide common shareholders with a high level of current income exempt
Van Kampen Merritt Advantage Municipal Income Trust II......from Federal income tax, consistent with preservation of capital
To provide common shareholders with a high level of current income
Van Kampen Merritt Select Sector Municipal Trust............exempt from Federal income tax, consistent with preservation of capital
</TABLE>
If the Sponsor shall fail to perform any of its duties under the Trust
Agreement or become incapable of acting or become bankrupt or its affairs are
taken over by public authorities, then the Trustee may (i) appoint a successor
Sponsor at rates of compensation deemed by the Trustee to be reasonable and
not exceeding amounts prescribed by the Securities and Exchange Commission,
(ii) terminate the Trust Agreement and liquidate the Fund as provided therein
or (iii) continue to act as Trustee without terminating the Trust Agreement.
All costs and expenses incurred in creating and establishing the Fund,
including the cost of the initial preparation, printing and execution of the
Trust Agreement and the certificates, legal and accounting expenses,
advertising and selling expenses, expenses of the Trustee, initial evaluation
fees and other out-of-pocket expenses have been borne by the Sponsor at no
cost to the Fund.
Compensation of Sponsor and Evaluator. The Sponsor will not receive any fees
in connection with its activities relating to the Fund. However, American
Portfolio Evaluation Services, a division of Van Kampen American Capital
Investment Advisory Corp., which is a wholly-owned subsidiary corporation of
the Sponsor, will receive an annual supervisory fee as indicated under "
Summary of Essential Financial Information"for providing portfolio
supervisory services for the Fund. Such fee (which is based on the number of
Units outstanding in each Trust on January 1 of each year) may exceed the
actual costs of providing such supervisory services for this Fund, but at no
time will the total amount received for portfolio supervisory services
rendered to Insured Municipals Income Trust 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. After the first year such fee will
be computed at $.51 per $1,000 principal amount of Securities for that portion
of each Trust under the semi-annual distribution plan and $.91 per $1,000
principal amount of Securities for that portion of each Trust under the
monthly distribution plan. Based on the size of the Trust on the Date of
Deposit and assuming all Unitholders had chosen the semi-annual distribution
plan, the Trustee's estimated annual fees for ordinary recurring services
would initially amount to $4,598, $2,550, $1,522, $1,721, $1,607 and $1,530
for the IM-IT, IM-IT Short Intermediate, Florida IM-IT, Missouri IM-IT,
Oklahoma IM-IT and North Carolina Quality Trusts, respectively. Assuming in
the alternative that all Unitholders had elected the monthly distribution plan
such fees would have initially amount to $8,204, $4,550, $2,716, $3,071,
$2,867 and $2,730 for the above mentioned Trusts, respectively. The Trustee's
fees are payable monthly on or before the fifteenth day of each month from the
Interest Account of each Trust to the extent funds are available and then from
the Principal Account of each Trust, with such payments being based on each
Trust's portion of such expenses. Since the Trustee has the use of the funds
being held in the Principal and Interest Accounts for future distributions,
payment of expenses and redemptions and since such Accounts are non-interest
bearing to Unitholders, the Trustee benefits thereby. Part of the Trustee's
compensation for its services to each Trust is expected to result from the use
of these funds. Such fees may be increased without approval of the Unitholders
by amounts not exceeding proportionate increases under the category "All
Services Less Rent of Shelter"in the Consumer Price Index published by
the United States Department of Labor or, if such category is no longer
published, in a comparable category. The Trustee's fees will not be increased
in future years in order to make up any reduction in the Trustee's fees
described under "Per Unit Information"for the applicable Trust. For a
discussion of the services rendered by the Trustee pursuant to its obligations
under the Trust Agreement, see "Unitholder Explanations--Public
Offering--Reports Provided"and "Trustee"above.
Portfolio Administration. The Trustee is empowered to sell, for the purpose
of redeeming Units tendered by any Unitholder, and for the payment of expenses
for which funds may not be available, such of the Bonds designated by the
Evaluator as the Trustee in its sole discretion may deem necessary. The
Evaluator, in designating such Securities, will consider a variety of factors,
including (a) interest rates, (b) market value and (c) marketability. 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, (g) expenditures incurred in contacting
Unitholders upon termination of the Trusts and (h) costs incurred to reimburse
the Trustee for advancing funds to the Trusts to meet scheduled distributions
(which costs may be adjusted periodically in response to fluctuations in
short-term interest rates).
The fees and expenses set forth herein are payable out of the Trusts. When
such fees and expenses are paid by or owing to the Trustee, they are secured
by a lien on the portfolio or portfolios of the applicable Trust or Trusts. If
the balances in the Interest and Principal Accounts are insufficient to
provide for amounts payable by the Fund, the Trustee has the power to sell
Securities to pay such amounts.
GENERAL
Amendment or Termination. The Sponsor and the Trustee have the power to amend
the Trust Agreement without the consent of any of the Unitholders when such an
amendment is (a) to cure an ambiguity or to correct or supplement any
provision of the Trust Agreement which may be defective or inconsistent with
any other provision contained therein or (b) to make such other provisions as
shall not adversely affect the interest of the Unitholders (as determined in
good faith by the Sponsor and the Trustee), provided that the Trust Agreement
may not be amended to increase the number of Units issuable thereunder or to
permit the deposit or acquisition of securities either in addition to or in
substitution for any of the Securities initially deposited in the Fund, except
for the substitution of certain refunding securities for such Securities. In
the event of any amendment, the Trustee is obligated to notify promptly all
Unitholders of the substance of such amendment.
A Trust may be terminated at any time by consent of Unitholders of 51% of the
Units of such Trust then outstanding or by the Trustee when the value of such
Trust, as shown by any semi-annual evaluation, is less than that indicated
under "Summary of Essential Financial Information". A Trust will be
liquidated by the Trustee in the event that a sufficient number of Units not
yet sold are tendered for redemption by the Underwriters, including the
Sponsor, so that the net worth of such Trust would be reduced to less than 40%
of the initial principal amount of such Trust. If a Trust is liquidated
because of the redemption of unsold Units by the Underwriters, the Sponsor
will refund to each purchaser of Units the entire sales charge paid by such
purchaser. The Trust Agreement provides that each Trust shall terminate upon
the redemption, sale or other disposition of the last Security held in such
Trust, but in no event shall it continue beyond the end of the year preceding
the fiftieth anniversary of the Trust Agreement in the case of 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 interest accrued but
unpaid from the First Settlement Date to the date of settlement as described
above under "Unitholder Explanations--Accrued Interest". Upon the
completion of the initial offering, Units repurchased in the secondary market,
if any, may be offered by this Prospectus at the secondary Public Offering
Price plus interest accrued to the date of settlement in the manner described.
The Sponsor intends to qualify the Units for sale in a number of states.
Broker-dealers or others will be allowed a concession or agency commission in
connection with the distribution of Units during the initial offering period
of $20.00 per Unit for less than 100 Units, $22.00 per Unit for any single
transaction of 100 to 249 Units, $21.50 per Unit for any single transaction of
250 to 499 Units, $24.50 per Unit for any single transaction of 500 to 999
Units and $24.00 per Unit for any single transaction of 1,000 or more Units of
an IM-IT Short Intermediate Trust and 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 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. In connection with quantity sales to purchasers of any
IM-IT Short Intermediate Trust the Underwriters will receive from the Sponsor
commissions totalling $23.00 per Unit for any single transaction of 100 to 249
Units, $23.00 per Unit for any single transaction to 250 to 499 Units, $24.75
per Unit for any single transaction of 500 to 999 Units and $24.00 per Unit
for any single transaction of 1,000 or more Units. 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 Financial Securities, 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 Financial Securities, 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
Oklahoma IM-IT Trust (who underwrite 15% of the Trust 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 Oklahoma 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, Florida, Missouri and Oklahoma tax law have been passed
upon by Chapman and Cutler, 111 West Monroe Street, Chicago, Illinois 60603,
as counsel for the Sponsor. Hunton & Williams has acted as special counsel to
the Fund for North 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 LLP, independent certified
public accountants, as set forth in their report in this prospectus, and are
included herein in reliance upon the authority of said firm as experts in
accounting and auditing.
FEDERAL TAX STATUS
In the opinion of Chapman and Cutler, counsel for the Sponsor, under existing
law:
(1)Each Trust is not an association taxable as a corporation for Federal
income tax purposes and interest and accrued original issue discount on Bonds
which is excludable from gross income under the Internal Revenue Code of 1986
(the "Code") will retain its status when distributed to Unitholders
subject to the alternative minimum tax, an additional tax on branches of
foreign corporations and the environmental tax (the "Superfund Tax"),
as noted below;
(2)Each Unitholder is considered to be the owner of a pro rata portion of the
respective Trust under subpart E, subchapter J of chapter 1 of the Code and
will have a taxable event when such Trust disposes of a Bond, or when the
Unitholder redeems or sells his Units. Unitholders must reduce the tax basis
of their Units for their share of accrued interest received by the respective
Trust, if any, on Bonds delivered after the Unitholders pay for their Units to
the extent that such interest accrued on such Bonds during the period from the
Unitholder's settlement date to the date such Bonds are delivered to the
respective Trust and, consequently, such Unitholders may have an increase in
taxable gain or reduction in capital loss upon the disposition of such Units.
Gain or loss upon the sale or redemption of Units is measured by comparing the
proceeds of such sale or redemption with the adjusted basis of the Units. If
the Trustee disposes of Bonds (whether by sale, payment on maturity,
redemption or otherwise), gain or loss is recognized to the Unitholder. The
amount of any such gain or loss is measured by comparing the Unitholder's pro
rata share of the total proceeds from such disposition with the Unitholder's
basis for his or her fractional interest in the asset disposed of. In the case
of a Unitholder who purchases Units, such basis (before adjustment for earned
original issue discount and amortized bond premium, if any) is determined by
apportioning the cost of the Units among each of the Trust assets ratably
according to value as of the date of acquisition of the Units. The tax cost
reduction requirements of the Code relating to amortization of bond premium
may, under some circumstances, result in the Unitholder realizing a taxable
gain when his Units are sold or redeemed for an amount equal to his original
cost;
(3)Any proceeds paid under an insurance policy or policies dated the Date of
Deposit, issued to an Insured Trust by AMBAC Indemnity, Financial Guaranty or
a combination thereof with respect to the Bonds which represent maturing
interest on defaulted obligations held by the Trustee will be excludable from
Federal gross income if, and to the same extent as, such interest would have
been so excludable if paid by the issuer of the defaulted obligations provided
that, at the time such policies are purchased, the amounts paid for such
policies are reasonable, customary and consistent with the reasonable
expectation that the issuer of the obligations, rather than the insurer, will
pay debt service on the obligations; and
(4)Any proceeds paid under individual policies obtained by issuers of Bonds
which represent maturing interest on defaulted obligations held by the Trustee
will be excludable from Federal gross income if, and to the same extent as,
such interest would have been excludable if paid in the normal course by the
issuer of the defaulted obligations provided that, at the time such policies
are purchased, the amounts paid for such policies are reasonable, customary
and consistent with the reasonable expectation that the issuer of the
obligations, rather than the insurer, will pay debt service on the
obligations.
Sections 1288 and 1272 of the Code provide a complex set of rules governing
the accrual of original issue discount. These rules provide that original
issue discount accrues either on the basis of a constant compound interest
rate or ratably over the term of the Bond, depending on the date the Bond was
issued. In addition, special rules apply if the purchase price of a Bond
exceeds the original issue price plus the amount of original issue discount
which would have previously accrued based upon its issue price (its "
adjusted issue price") to prior owners. The application of these rules
will also vary depending on the value of the Bond on the date a Unitholder
acquires his Units and the price the Unitholder pays for his Units. Investors
with questions regarding these Code sections should consult with their tax
advisers.
"The Revenue Reconciliation Act of 1993"(the "Tax Act")
subjects tax-exempt bonds to the market discount rules of the Code effective
for bonds purchased after April 30, 1993. In general, market discount is the
amount (if any) by which the stated redemption price at maturity exceeds an
investor's purchase price (except to the extent that such difference, if any,
is attributable to original issue discount not yet accrued), subject to a
statutory de minimis rule. Market discount can arise based on the price a
Trust pays for Bonds or the price a Unitholder pays for his or her Units.
Under the Tax Act, accretion of market discount is taxable as ordinary income;
under prior law the accretion had been treated as capital gain. Market
discount that accretes while a Trust holds a Bond would be recognized as
ordinary income by the Unitholders when principal payments are received on the
Bond, upon sale or at redemption (including early redemption), or upon the
sale or redemption of his or her Units, unless a Unitholder elects to include
market discount in taxable income as it accrues. The market discount rules are
complex and Unitholders should consult their tax advisers regarding these
rules and their application.
In the case of certain corporations, the alternative minimum tax and the
Superfund Tax for taxable years beginning after December 31, 1986 depends upon
the corporation's alternative minimum taxable income, which is the
corporation's taxable income with certain adjustments. One of the adjustment
items used in computing the alternative minimum taxable income and the
Superfund Tax of a corporation (other than an S Corporation, Regulated
Investment Company, Real Estate Investment Trust, or REMIC) is an amount equal
to 75% of the excess of such corporation's "adjusted current earnings"
over an amount equal to its alternative minimum taxable income (before such
adjustment item and the alternative tax net operating loss deduction). "
Adjusted current earnings"includes all tax exempt interest, including
interest on all of the Bonds in the Fund. Unitholders are urged to consult
their tax advisers with respect to the particular tax consequences to them
including the corporate alternative minimum tax, the Superfund Tax and the
branch profits tax imposed by Section 884 of the Code.
Counsel for the Sponsor has also advised that under Section 265 of the Code,
interest on indebtedness incurred or continued to purchase or carry Units of a
Trust is not deductible for Federal income tax purposes. The Internal Revenue
Service has taken the position that such indebtedness need not be directly
traceable to the purchase or carrying of Units (however, these rules generally
do not apply to interest paid on indebtedness incurred to purchase or improve
a personal residence). Also, under Section 265 of the Code, certain financial
institutions that acquire Units would generally not be able to deduct any of
the interest expense attributable to ownership of such Units. Investors with
questions regarding this issue should consult with their tax advisers.
In the case of certain of the Bonds in the Fund, the opinions of bond counsel
indicate that interest on such Bonds received by a "substantial user"
of the facilities being financed with the proceeds of these Bonds, or persons
related thereto, for periods while such Bonds are held by such a user or
related person, will not be excludible from Federal gross income, although
interest on such Bonds received by others would be excludible from Federal
gross income. "Substantial user"and "related person"are
defined under U.S. Treasury Regulations. Any person who believes that he or
she may be a "substantial user"or a "related person"as so
defined should contact his or her tax adviser.
In the opinion of Tanner Propp & Farber, special counsel to the Fund for New
York tax matters, under existing law, the Fund and each Trust are not
associations taxable as corporations and the income of each Trust will be
treated as the income of the Unitholders under the income tax laws of the
State and City of New York.
All statements of law in the Prospectus concerning exclusion from gross income
for Federal, state or other tax purposes are the opinions of counsel and are
to be so construed.
At the respective times of issuance of the Bonds, opinions relating to the
validity thereof and to the exclusion of interest thereon from Federal gross
income are rendered by bond counsel to the respective issuing authorities.
Neither the Sponsor nor Chapman and Cutler has made any special review for the
Fund of the proceedings relating to the issuance of the Bonds or of the basis
for such opinions.
In the case of corporations, the alternative tax rate applicable to long-term
capital gains is 35%, effective for long-term capital gains realized in
taxable years beginning on or after January 1, 1993. For taxpayers other than
corporations, net capital gains are subject to a maximum marginal stated tax
rate of 28%. However, it should be noted that legislative proposals are
introduced from time to time that affect tax rates and could affect relative
differences at which ordinary income and capital gains are taxed. Under the
Code, taxpayers must disclose to the Internal Revenue Service the amount of
tax-exempt interest earned during the year.
Section 86 of the Code, in general, provides that 50% of Social Security
benefits are includible in gross income to the extent that the sum of "
modified adjusted gross income"plus 50% of the Social Security benefits
received exceeds a "base amount". The base amount is $25,000 for
unmarried taxpayers, $32,000 for married taxpayers filing a joint return and
zero for married taxpayers who do not live apart at all times during the
taxable year and who file separate returns. Modified adjusted gross income is
adjusted gross income determined without regard to certain otherwise allowable
deductions and exclusions from gross income and by including tax-exempt
interest. To the extent that Social Security benefits are includible in gross
income, they will be treated as any other item of gross income.
In addition, under the Tax Act, for taxable years beginning after December 31,
1993, up to 85% of Social Security benefits are includible in gross income to
the extent that the sum of "modified adjusted gross income"plus 50%
of Social Security benefits received exceeds an "adjusted base amount."
The adjusted base amount is $34,000 for unmarried taxpayers, $44,000 for
married taxpayers filing a joint return, and zero for married taxpayers who do
not live apart at all times during the taxable year and who file separate
returns.
Although tax-exempt interest is included in modified adjusted gross income
solely for the purpose of determining what portion, if any, of Social Security
benefits will be included in gross income, no tax-exempt interest, including
that received from a Trust, will be subject to tax. A taxpayer whose adjusted
gross income already exceeds the base amount or the adjusted base amount must
include 50% or 85%, respectively, of his Social Security benefits in gross
income whether or not he receives any tax-exempt interest. A taxpayer whose
modified adjusted gross income (after inclusion of tax-exempt interest) does
not exceed the base amount need not include any Social Security benefits in
gross income.
For a discussion of the state tax status of income earned on Units of a Trust,
see "Tax Status"for the applicable Trust. Except as noted therein,
the exemption of interest on state and local obligations for Federal income
tax purposes discussed above does not necessarily result in exemption under
the income or other tax laws of any State or City. The laws of the several
States vary with respect to the taxation of such obligations.
DESCRIPTION OF SECURITIES RATINGS
Standard & Poor's Ratings Group. A Standard & Poor's Ratings Group ("
Standard & Poor's") corporate or municipal bond rating is a current
assessment of the creditworthiness of an obligor with respect to a specific
debt obligation. This assessment of creditworthiness may take into
consideration obligors such as guarantors, insurers or lessees.
The bond rating is not a recommendation to purchase or sell a security,
inasmuch as it does not comment as to market price.
The ratings are based on current information furnished to Standard & Poor's by
the issuer and obtained by Standard & Poor's from other sources it considers
reliable. The ratings may be changed, suspended or withdrawn as a result of
changes in, or unavailability of, such information.
The ratings are based, in varying degrees, on the following considerations:
I. Likelihood of default--capacity and willingness of the obligor as to the
timely payment of interest and repayment of principal in accordance with the
terms of the obligation.
II. Nature of and provisions of the obligation.
III. Protection afforded by, and relative position of, the obligation in the
event of bankruptcy, reorganization or other arrangements under the laws of
bankruptcy and other laws affecting creditors' rights.
AAA--This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.
AA--Bonds rated AA also qualify as high-quality debt obligations. Capacity to
pay principal and interest is very strong, and in the majority of instances
they differ from AAA issues only in small degree.
A--Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions.
BBB--Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay interest and repay
principal for debt in this category than in higher rated categories.
Plus (+) or Minus (-): To provide more detailed indications of credit quality,
the ratings from "AA"to "BBB"may be modified by the addition
of a plus or minus sign to show relative standing within the major rating
categories.
Provisional Ratings: A provisional rating ("p") assumes the successful
completion of the project being financed by the issuance of the bonds being
rated and indicates that payment of debt service requirements is largely or
entirely dependent upon the successful and timely completion of the project.
This rating, however, while addressing credit quality subsequent to
completion, makes no comment on the likelihood of, or the risk of default upon
failure of, such completion. Accordingly, the investor should exercise his own
judgment with respect to such likelihood and risk.
Moody's Investors Service, Inc. A brief description of the applicable Moody's
Investors Service, Inc. ("Moody's") rating symbols and their meanings
follows:
Aaa--Bonds which are rated Aaa are judged to be the best quality. They carry
the smallest degree of investment risk and are generally referred to as "
gilt edge". Interest payments are protected by a large, or by an
exceptionally stable, margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such issues.
With the occasional exception of oversupply in a few specific instances, the
safety of obligations of this class is so absolute that their market value is
affected solely by money market fluctuations.
Aa--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuations of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities. These Aa bonds are high grade, their market value virtually immune
to all but money market influences, with the occasional exception of
oversupply in a few specific instances.
A--Bonds which are rated A possess many favorable investment attributes and
are to be considered as higher medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may
be present which suggest a susceptibility to impairment sometime in the
future. The market value of A-rated bonds may be influenced to some degree by
credit circumstances during a sustained period of depressed business
conditions. During periods of normalcy, bonds of this quality frequently move
in parallel with Aaa and Aa obligations, with the occasional exception of
oversupply in a few specific instances.
Baa--Bonds which are rated Baa are considered as medium grade obligations;
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Moody's bond rating symbols may contain numerical modifiers of a generic
rating classification. The modifier 1 indicates that the bond ranks at the
high end of its category; the modifier 2 indicates a mid-range ranking; and
the modifier 3 indicates that the issue ranks in the lower end of its generic
rating category.
Con--Bonds for which the security depends upon the completion of some act or
the fulfillment of some condition are rated conditionally. These are bonds
secured by (a) earnings of projects under construction, (b) earnings of
projects unseasoned in operating experience, (c) rentals which begin when
facilities are completed, or (d) payments to which some other limiting
condition attaches. Parenthetical rating denotes probable credit stature upon
completion of construction or elimination of basis of condition.
As published by the rating companies.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors of Van Kampen American Capital Distributors, Inc.
and the Unitholders of Insured Municipals Income Trust and Investors' Quality
Tax-Exempt Trust, Multi-Series 247 (IM-IT, IM-IT Short Intermediate, Florida
IM-IT, Missouri IM-IT, Oklahoma IM-IT and North 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 247 (IM-IT, IM-IT Short Intermediate, Florida
IM-IT, Missouri IM-IT, Oklahoma IM-IT and North Carolina Quality Trusts) as of
March 16, 1995. The statements of condition and portfolios are the
responsibility of the Sponsor. Our responsibility is to express an opinion on
such financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of irrevocable letters of credit deposited to
purchase tax-exempt securities by correspondence with the Trustee. An audit
also includes assessing the accounting principles used and significant
estimates made by the Sponsor, as well as evaluating the overall financial
statement presentation. We believe our audit provides a reasonable basis for
our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Insured Municipals Income
Trust and Investors' Quality Tax-Exempt Trust, Multi-Series 247 (IM-IT, IM-IT
Short Intermediate, Florida IM-IT, Missouri IM-IT, Oklahoma IM-IT and North
Carolina Quality Trusts) as of March 16, 1995, in conformity with generally
accepted accounting principles.
Chicago, Illinois GRANT THORNTON LLP
March 16, 1995
<TABLE>
INSURED MUNICIPALS INCOME TRUST
and
INVESTORS' QUALITY TAX-EXEMPT TRUST
MULTI-SERIES 247
Statements of Condition
As of March 16, 1995
<CAPTION>
IM-IT Short
INVESTMENT IN SECURITIES Intermediate Florida
IM-IT Trust IM-IT Trust
<S> <C> <C> <C>
Contracts to purchase tax-exempt securities <F1><F2><F4>... $ 8,573,305 $ 4,969,139 $ 2,908,181
Accrued interest to the First Settlement Date <F1><F4>..... 118,673 55,959 38,584
Total...................................................... $ 8,691,978 $ 5,025,098 $ 2,946,765
LIABILITY AND INTEREST OF UNITHOLDERS
Liability-- ...............................................
Accrued interest payable to Sponsor <F1><F4> $ 118,673 $ 55,959 $ 38,584
Interest of Unitholders-- .................................
Cost to investors <F3>..................................... 9,015,000 5,122,800 3,058,000
Less: Gross underwriting commission <F3>................... 441,695 153,661 149,819
Net interest to Unitholders <F1><F3><F4>................... 8,573,305 4,969,139 2,908,181
Total...................................................... $ 8,691,978 $ 5,025,098 $ 2,946,765
<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:
Accrued
Principal Offering Interest to
Amount of Amount of Price of Expected
Letter of Bonds Under Bonds Under Delivery
Credit Contracts Contracts Dates
IM-IT............................ $ 8,690,185 $ 9,015,000 $ 8,573,305 $ 116,880
IM-IT Short Intermediate Trust... $ 5,023,280 $ 5,000,000 $ 4,969,139 $ 54,141
Florida IM-IT Trust.............. $ 2,946,958 $ 2,985,000 $ 2,908,181 $ 38,777
<F2>Insurance coverage providing for timely payment, when due, of all principal
and interest on the Bonds in the Insured Trusts has been obtained either by
such Trusts, by a prior owner of the Bonds, by the Sponsor prior to the
deposit of such Bonds or by the issuers of the Bonds involved. Such insurance
does not guarantee the market value of the Bonds or the value of the Units.
The insurance obtained by the Insured Trusts is effective only while Bonds
thus insured are held in such Trusts. Neither the bid nor offering prices of
the underlying Bonds or of the Units, absent situations in which bonds are in
default in payment of principal or interest or in significant risk of such
default, include value, if any, attributable to the insurance obtained by such
Trusts.
<F3>The aggregate public offering price (exclusive of interest) and the aggregate
sales charge are computed on the bases set forth under "Unitholder
Explanations--Public Offering--Offering Price"and "Trust
Administration--General--Sponsor and Underwriter Profits"and assume all
single transactions involve less than 100 Units. For single transactions
involving 100 or more Units, the sales charge is reduced (see "Unitholder
Explanations--Public Offering--General") resulting in an equal reduction
in both the Cost to investors and the Gross underwriting commission while the
Net interest to Unitholders remains unchanged.
<F4>The Trustee will advance to the Trust the amount of net interest accrued to
March 23, 1995, the First Settlement Date, for distribution to the Sponsor as
the Unitholder of record as of the First Settlement Date.
</TABLE>
<TABLE>
INSURED MUNICIPALS INCOME TRUST
and
INVESTORS' QUALITY TAX-EXEMPT TRUST
MULTI-SERIES 247
Statements of Condition (Continued)
As of
March 16, 1995
<CAPTION>
INVESTMENT IN SECURITIES Missouri Oklahoma North Carolina
IM-IT Trust IM-IT Trust Quality Trust
<S> <C> <C> <C>
Contracts to purchase tax-exempt securities <F1><F2><F4>... $ 3,300,936 $ 2,966,185 $ 2,917,698
Accrued interest to the First Settlement Date <F1><F4>..... 31,777 40,424 45,896
Total...................................................... $ 3,332,713 $ 3,006,609 $ 2,963,594
LIABILITY AND INTEREST OF UNITHOLDERS
Liability-- ...............................................
Accrued interest payable to Sponsor <F1><F4> $ 31,777 $ 40,424 $ 45,896
Interest of Unitholders-- .................................
Cost to investors <F3>..................................... 3,471,000 3,119,000 3,068,000
Less: Gross underwriting commission <F3>................... 170,064 152,815 150,302
Net interest to Unitholders <F1><F3><F4>................... 3,300,936 2,966,185 2,917,698
Total...................................................... $ 3,332,713 $ 3,006,609 $ 2,963,594
<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:
Accrued
Principal Offering Interest to
Amount of Amount of Price of Expected
Letter of Bonds Under Bonds Under Delivery
Credit Contracts Contracts Dates
Missouri IM-IT Trust........... $ 3,328,845 $ 3,375,000 $ 3,300,936 $ 27,909
Oklahoma IM-IT Trust........... $ 3,003,570 $ 3,150,000 $ 2,966,185 $ 37,385
North Carolina Quality Trust... $ 2,960,231 $ 3,000,000 $ 2,917,698 $ 42,533
<F2>Insurance coverage providing for timely payment, when due, of all principal
and interest on the Bonds in the Insured Trusts has been obtained either by
such Trusts, by a prior owner of the Bonds, by the Sponsor prior to the
deposit of such Bonds or by the issuers of the Bonds involved. Such insurance
does not guarantee the market value of the Bonds or the value of the Units.
The insurance obtained by the Insured Trusts is effective only while Bonds
thus insured are held in such Trusts. Neither the bid nor offering prices of
the underlying Bonds or of the Units, absent situations in which bonds are in
default in payment of principal or interest or in significant risk of such
default, include value, if any, attributable to the insurance obtained by such
Trusts.
<F3>The aggregate public offering price (exclusive of interest) and the aggregate
sales charge are computed on the bases set forth under "Unitholder
Explanations--Public Offering--Offering Price"and "Trust
Administration--General--Sponsor and Underwriter Profits"and assume all
single transactions involve less than 100 Units. For single transactions
involving 100 or more Units, the sales charge is reduced (see "Unitholder
Explanations--Public Offering--General") resulting in an equal reduction
in both the Cost to investors and the Gross underwriting commission while the
Net interest to Unitholders remains unchanged.
<F4>The Trustee will advance to the Trust the amount of net interest accrued to
March 23, 1995, the First Settlement Date, for distribution to the Sponsor as
the Unitholder of record as of the First Settlement Date.
</TABLE>
EQUIVALENT TAXABLE ESTIMATED CURRENT RETURN TABLES
As of the date of this prospectus, the following tables show the approximate
taxable estimated current returns for individuals that are equivalent to
tax-exempt estimated current returns under combined Federal and State taxes
(where applicable) using the published Federal and State tax rates (where
applicable) scheduled to be in effect in 1995. They incorporate increased tax
rates for higher income taxpayers that were included in the Revenue
Reconciliation Act of 1993. These tables illustrate approximately what you
would have to earn on taxable investments to equal the tax-exempt estimated
current return in your income tax bracket. For cases in which more than one
State bracket falls within a Federal bracket, the highest State bracket is
combined with the Federal bracket. The combined State and Federal tax rates
shown reflect the fact that State tax payments are currently deductible for
Federal tax purposes. The tables do not show the approximate taxable estimated
current returns for individuals that are subject to the alternative minimum
tax. The taxable equivalent estimated current returns may be somewhat higher
than the equivalent returns indicated in the following tables for those
individuals who have adjusted gross incomes in excess of $114,700. The tables
do not reflect the effect of limitations on itemized deductions and the
deduction for personal exemptions. They were designed to phase out certain
benefits of these deductions for higher income taxpayers. These limitations,
in effect, raise the marginal maximum Federal tax rate to approximately 44
percent for taxpayers filing a joint return and entitled to four personal
exemptions and to approximately 41 percent for taxpayers filing a single
return entitled to only one personal exemption. These limitations are subject
to certain maximums, which depend on the number of exemptions claimed and the
total amount of the taxpayer's itemized deductions. For example, the
limitation on itemized deductions will not cause a taxpayer to lose more than
80% of his allowable itemized deductions, with certain exceptions. See "
Other Matters--Federal Tax Status"for a more detailed discussion of
recent Federal tax legislation, including a discussion of provisions affecting
corporations.
IM-IT
<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 - 23.35 $ 0 - 39.00 15% 6.47% 7.06% 7.65% 8.24% 8.82% 9.41% 10.00%
23.35 - 56.55 39.00 - 94.25 28 7.64 8.33 9.03 9.72 10.42 11.11 11.81
56.55 - 117.95 94.25 - 143.60 31 7.97 8.70 9.42 10.14 10.87 11.59 12.32
117.95 - 256.50 143.60 - 256.50 36 8.59 9.38 10.16 10.94 11.72 12.50 13.28
Over 256.50 Over 256.50 39.6 9.11 9.93 10.76 11.59 12.42 13.25 14.07
</TABLE>
SHORT INTERMEDIATE
<TABLE>
<CAPTION>
Taxable Income ($1,000's) Tax-Exempt Estimated Current Return
Single Joint Tax
Return Return Bracket 4 1/2% 5% 5 1/2% 6% 6 1/2% 7% 7 1/2%
Equivalent Taxable Estimated Current Return
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0 - 23.35 $ 0 - 39.00 15% 5.29% 5.88% 6.47% 7.06% 7.65% 8.24% 8.82%
23.35 - 56.55 39.00 - 94.25 28 6.25 6.94 7.64 8.33 9.03 9.72 10.42
56.55 - 117.95 94.25 - 143.60 31 6.52 7.25 7.97 8.70 9.42 10.14 10.87
117.95 - 256.50 143.60 - 256.50 36 7.03 7.81 8.59 9.38 10.16 10.94 11.72
Over 256.50 Over 256.50 39.6 7.45 8.28 9.11 9.93 10.76 11.59 12.42
</TABLE>
FLORIDA
<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 - 23.35 $ 0 - 39.00 15% 5.88% 6.47% 7.06% 7.65% 8.24% 8.82% 9.41%
23.35 - 56.55 39.00 - 94.25 28 6.94 7.64 8.33 9.03 9.72 10.42 11.11
56.55 - 117.95 94.25 - 143.60 31 7.25 7.97 8.70 9.42 10.14 10.87 11.59
117.95 - 256.50 143.60 - 256.50 36 7.81 8.59 9.38 10.16 10.94 11.72 12.50
Over 256.50 Over 256.50 39.6 8.28 9.11 9.93 10.76 11.59 12.42 13.25
</TABLE>
* The State of Florida imposes no income tax on individuals; accordingly, the
table reflects only the exemption from Federal income taxes. The table does
not reflect the exemption of Units of the Florida Trust from the State's
intangible tax; accordingly, Florida residents subject to such tax would need
a somewhat higher taxable estimated current return than those shown to equal
the tax-exempt estimated current return of the Florida Trust.
MISSOURI
<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 - 23.35 $ 0 - 39.00 19.4% 6.20% 6.82% 7.44% 8.06% 8.68% 9.31% 9.93%
23.35 - 56.55 39.00 - 94.25 32.3 7.39 8.12 8.86 9.60 10.34 11.08 11.82
56.55 - 117.95 94.25 - 143.60 35.1 7.70 8.47 9.24 10.02 10.79 11.56 12.33
117.95 - 256.50 143.60 - 256.50 39.8 8.31 9.14 9.97 10.80 11.63 12.46 13.29
Over 256.50 Over 256.50 43.2 8.80 9.68 10.56 11.44 12.32 13.20 14.08
</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 limited
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.
OKLAHOMA
<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 - 23.35 $ 0 - 39.00 21% 6.33% 6.96% 7.59% 8.23% 8.86% 9.49% 10.13%
23.35 - 56.55 39.00 - 94.25 33 7.46 8.21 8.96 9.70 10.45 11.19 11.94
56.55 - 117.95 94.25 - 143.60 35.8 7.79 8.57 9.35 10.12 10.90 11.68 12.46
117.95 - 256.50 143.60 - 256.50 40.5 8.40 9.24 10.08 10.92 11.76 12.61 13.45
Over 256.50 Over 256.50 43.8 8.90 9.79 10.68 11.57 12.46 13.35 14.23
</TABLE>
* The combined Federal and State tax rate provided for the Oklahoma IM-IT
Trust takes into account the fact that all of the annual income of the Trust
generated by the Bonds in the Oklahoma IM-IT Trust is exempt from the Oklahoma
state income tax. The table does not reflect the fact that Oklahoma taxpayers
have the option of not deducting Federal income tax liability for Oklahoma tax
purposes. If an Oklahoma tax payer chooses this option, the taxpayer may be
taxed at a rate lower than the rate shown in the above table.
NORTH CAROLINA
<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 - 23.35 $ 0 - 39.00 21% 6.33% 6.96% 7.59% 8.23% 8.86% 9.49% 10.13%
23.35 - 56.55 39.00 - 94.25 33 7.46 8.21 8.96 9.70 10.45 11.19 11.94
56.55 - 117.95 94.25 - 143.60 36.4 7.86 8.65 9.43 10.22 11.01 11.79 12.58
117.95 - 256.50 143.60 - 256.50 41 8.47 9.32 10.17 11.02 11.86 12.71 13.56
Over 256.50 Over 256.50 44.3 8.98 9.87 10.77 11.67 12.57 13.46 14.36
</TABLE>
* Combined State and Federal tax bracket was computed giving no effect to the
North Carolina tax on intangible personal property. Units in the Trust are not
subject to such tax; therefore, equivalent taxable estimated current returns
would be greater than the equivalent taxable estimated current returns
indicated in the table when compared to obligations subject to the North
Carolina tax on intangible personal property.
A comparison of tax-free and equivalent taxable estimated current returns with
the returns on various taxable investments is one element to consider in
making an investment decision. The Sponsor may from time to time in its
advertising and sales materials compare the then current estimated returns on
the Trusts and returns over specified periods on other similar Van Kampen
American Capital sponsored unit investment trusts with returns on taxable
investments such as corporate or U.S. Government bonds, bank CDs and money
market accounts or money market funds, each of which has investment
characteristics that may differ from those of the Trusts. U.S. Government
bonds, for example, are backed by the full faith and credit of the U.S.
Government and bank CDs and money market accounts are insured by an agency of
the federal government. Money market accounts and money market funds provide
stability of principal, but pay interest at rates that vary with the condition
of the short-term debt market. The investment characteristics of the Trusts
are described more fully elsewhere in this Prospectus.
ESTIMATED CASH FLOWS TO UNITHOLDERS
The tables below set forth the per Unit estimated monthly and semi-annual
distributions of interest and principal to Unitholders. The tables assume no
changes in expenses, no changes in the current interest rates, no exchanges,
redemptions, sales or prepayments of the underlying Securities prior to
maturity or expected retirement date and the receipt of principal upon
maturity or expected retirement date. To the extent the foregoing assumptions
change actual distributions will vary.
IM-IT
Monthly
<TABLE>
<CAPTION>
Estimated Estimated Estimated
Distribution Dates Interest Principal Total
(Each Month) Distribution Distribution Distribution
<S> <C> <C> <C> <C> <C> <C>
May 1995 $ 5.91 $ 5.91
June 1995 - June 2005 4.67 4.67
July 2005 4.53 $ 55.46 59.99
August 2005 - April 2006 4.42 4.42
May 2006 4.42 110.92 115.34
June 2006 3.85 77.65 81.50
July 2006 3.45 55.47 58.92
August 2006 3.17 110.92 114.09
September 2006 - March 2007 2.61 2.61
April 2007 2.61 55.47 58.08
May 2007 - July 2007 2.31 2.31
August 2007 2.10 74.87 76.97
September 2007 - February 2020 1.92 1.92
March 2020 1.92 83.20 85.12
April 2020 - June 2021 1.51 1.51
July 2021 1.51 44.37 45.88
August 2021 - December 2022 1.32 1.32
January 2023 1.32 47.14 48.46
February 2023 - August 2023 1.32 1.32
September 2023 1.17 62.67 63.84
October 2023 - October 2024 1.03 1.03
November 2024 1.03 110.93 111.96
December 2024 - May 2027 .47 .47
June 2027 .20 110.93 111.13
</TABLE>
IM-IT (Continued)
Semi-annual
<TABLE>
<CAPTION>
Distribution Dates Estimated Estimated Estimated
(Each June and December Interest Principal Total
Unless Otherwise Indicated) Distribution Distribution Distribution
<S> <C> <C> <C> <C> <C> <C>
June 1995 $ 10.67 $ 10.67
December 1995 - June 2005 28.25 28.25
July 2005 $ 55.46 55.46
December 2005 26.84 26.84
May 2006 110.92 110.92
June 2006 26.15 77.65 103.80
July 2006 55.47 55.47
August 2006 110.92 110.92
December 2006 17.21 17.21
April 2007 55.47 55.47
June 2007 15.19 15.19
August 2007 74.87 74.87
December 2007 12.21 12.21
June 2008 - December 2019 11.63 11.63
March 2020 83.20 83.20
June 2020 10.39 10.39
December 2020 - June 2021 9.15 9.15
July 2021 44.37 44.37
December 2021 8.19 8.19
June 2022 - December 2022 8.00 8.00
January 2023 47.14 47.14
June 2023 8.02 8.02
September 2023 62.67 62.67
December 2023 6.98 6.98
June 2024 6.25 6.25
November 2024 110.93 110.93
December 2024 5.69 5.69
June 2025 - December 2026 2.89 2.89
June 2027 2.61 110.93 113.54
</TABLE>
IM-IT Short Intermediate Trust
Monthly
<TABLE>
<CAPTION>
Estimated Estimated Estimated
Distribution Dates Interest Principal Total
(Each Month) Distribution Distribution Distribution
<S> <C> <C> <C> <C> <C> <C>
May 1995 $ 4.95 $ 4.95
June 1995 - June 1999 3.91 3.91
July 1999 3.91 $ 105.00 108.91
August 1999 - November 1999 3.53 3.53
December 1999 3.31 422.00 425.31
January 2000 1.91 43.00 44.91
February 2000 - May 2000 1.73 1.73
June 2000 1.41 150.00 151.41
July 2000 1.13 150.00 151.13
August 2000 .50 .50
September 2000 .50 80.00 80.50
October 2000 - December 2000 .17 .17
January 2001 .17 50.00 50.17
</TABLE>
Semi-annual
<TABLE>
<CAPTION>
Distribution Dates Estimated Estimated Estimated
(Each June and December Interest Principal Total
Unless Otherwise Indicated) Distribution Distribution Distribution
<S> <C> <C> <C> <C> <C> <C>
June 1995 $ 8.93 $ 8.93
December 1995 - June 1999 23.66 23.66
July 1999 $ 105.00 105.00
December 1999 21.54 422.00 443.54
January 2000 43.00 43.00
June 2000 10.36 150.00 160.36
July 2000 150.00 150.00
September 2000 80.00 80.00
December 2000 2.69 2.69
January 2001 .17 50.00 50.17
</TABLE>
Florida IM-IT Trust
Monthly
<TABLE>
<CAPTION>
Estimated Estimated Estimated
Distribution Dates Interest Principal Total
(Each Month) Distribution Distribution Distribution
<S> <C> <C> <C> <C> <C> <C>
May 1995 $ 5.76 $ 5.76
June 1995 - August 2004 4.55 4.55
September 2004 4.55 $ 163.50 168.05
October 2004 - September 2005 3.79 3.79
October 2005 3.79 32.70 36.49
November 2005 - January 2006 3.63 3.63
February 2006 3.63 37.61 41.24
March 2006 - November 2006 3.44 3.44
December 2006 3.44 163.50 166.94
January 2007 - December 2017 2.60 2.60
January 2018 2.60 6.54 9.14
February 2018 - June 2023 2.60 2.60
July 2023 2.60 73.58 76.18
August 2023 - September 2024 2.29 2.29
October 2024 2.29 277.96 280.25
November 2024 - September 2025 .93 .93
October 2025 .93 163.51 164.44
November 2025 - September 2027 .14 .14
October 2027 .14 57.22 57.36
</TABLE>
Semi-annual
<TABLE>
<CAPTION>
Distribution Dates Estimated Estimated Estimated
(Each January and July Interest Principal Total
Unless Otherwise Indicated) Distribution Distribution Distribution
<S> <C> <C> <C> <C> <C> <C>
July 1995 $ 14.96 $ 14.96
January 1996 - July 2004 27.50 27.50
September 2004 $ 163.50 163.50
January 2005 24.46 24.46
July 2005 22.94 22.94
October 2005 32.70 32.70
January 2006 22.46 22.46
February 2006 37.61 37.61
July 2006 21.00 21.00
December 2006 163.50 163.50
January 2007 19.96 19.96
July 2007 - July 2017 15.76 15.76
January 2018 15.76 6.54 22.30
July 2018 - January 2023 15.76 15.76
July 2023 15.76 73.58 89.34
January 2024 - July 2024 13.86 13.86
October 2024 277.96 277.96
January 2025 9.75 9.75
July 2025 5.63 5.63
October 2025 163.51 163.51
January 2026 3.27 3.27
July 2026 - July 2027 .90 .90
October 2027 .45 57.22 57.67
</TABLE>
Missouri IM-IT Trust
Monthly
<TABLE>
<CAPTION>
Estimated Estimated Estimated
Distribution Dates Interest Principal Total
(Each Month) Distribution Distribution Distribution
<S> <C> <C> <C> <C> <C> <C>
May 1995 $ 5.78 $ 5.78
June 1995 - February 2004 4.56 4.56
March 2004 4.56 $ 252.08 256.64
April 2004 - December 2004 3.37 3.37
January 2005 3.37 115.24 118.61
February 2005 2.79 2.79
March 2005 2.79 144.06 146.85
April 2005 - June 2006 2.08 2.08
July 2006 2.08 144.05 146.13
August 2006 - December 2006 1.37 1.37
January 2007 1.37 144.05 145.42
February 2007 - February 2016 .53 .53
March 2016 .53 28.81 29.34
April 2016 - November 2019 .53 .53
December 2019 .22 144.05 144.27
</TABLE>
Semi-annual
<TABLE>
<CAPTION>
Distribution Dates Estimated Estimated Estimated
(Each January and July Interest Principal Total
Unless Otherwise Indicated) Distribution Distribution Distribution
<S> <C> <C> <C> <C> <C> <C>
July 1995 $ 15.02 $ 15.02
January 1996 - January 2004 27.60 27.60
March 2004 $ 252.08 252.08
July 2004 22.79 22.79
January 2005 20.39 115.24 135.63
March 2005 144.06 144.06
July 2005 14.03 14.03
January 2006 12.58 12.58
July 2006 12.58 144.05 156.63
January 2007 8.32 144.05 152.37
July 2007 - January 2016 3.29 3.29
March 2016 28.81 28.81
July 2016 3.28 3.28
January 2017 - July 2019 3.27 3.27
December 2019 2.42 144.05 146.47
</TABLE>
Oklahoma IM-IT Trust
Monthly
<TABLE>
<CAPTION>
Estimated Estimated Estimated
Distribution Dates Interest Principal Total
(Each Month) Distribution Distribution Distribution
<S> <C> <C> <C> <C> <C> <C>
May 1995 $ 5.41 $ 5.41
June 1995 - June 2004 4.28 4.28
July 2004 4.28 $ 240.46 244.74
August 2004 - May 2009 3.09 3.09
June 2009 3.09 256.49 259.58
July 2009 - July 2016 1.94 1.94
August 2016 1.37 256.49 257.86
September 2016 - December 2027 .87 .87
January 2028 .87 256.49 257.36
</TABLE>
Semi-annual
<TABLE>
<CAPTION>
Distribution Dates Estimated Estimated Estimated
(Each January and July Interest Principal Total
Unless Otherwise Indicated) Distribution Distribution Distribution
<S> <C> <C> <C> <C> <C> <C>
July 1995 $ 14.07 $ 14.07
January 1996 - January 2004 25.86 25.86
July 2004 25.86 $ 240.46 266.32
January 2005 - January 2009 18.69 18.69
June 2009 256.49 256.49
July 2009 17.53 17.53
January 2010 - July 2016 11.74 11.74
August 2016 256.49 256.49
January 2017 5.80 5.80
July 2017 - July 2027 5.30 5.30
January 2028 5.30 256.49 261.79
</TABLE>
North Carolina Quality Trust
Monthly
<TABLE>
<CAPTION>
Estimated Estimated Estimated
Distribution Dates Interest Principal Total
(Each Month) Distribution Distribution Distribution
<S> <C> <C> <C> <C> <C> <C>
May 1995 $ 5.69 $ 5.69
June 1995 - May 2005 4.50 4.50
June 2005 4.50 $ 162.96 167.46
July 2005 - May 2006 3.70 3.70
June 2006 3.70 130.38 134.08
July 2006 - November 2006 3.04 3.04
December 2006 3.04 130.37 133.41
January 2007 - January 2013 2.36 2.36
February 2013 2.36 97.79 100.15
March 2013 - December 2016 1.98 1.98
January 2017 1.98 162.97 164.95
February 2017 - December 2019 1.25 1.25
January 2020 1.25 162.97 164.22
February 2020 - November 2020 .49 .49
December 2020 .49 81.49 81.98
January 2021 - September 2026 .14 .14
October 2026 .14 48.89 49.03
</TABLE>
Semi-annual
<TABLE>
<CAPTION>
Distribution Dates Estimated Estimated Estimated
(Each May and November Interest Principal Total
Unless Otherwise Indicated) Distribution Distribution Distribution
<S> <C> <C> <C> <C> <C> <C>
May 1995 $ 5.74 $ 5.74
November 1995 - May 2005 27.20 27.20
June 2005 $ 162.97 162.97
November 2005 23.21 23.21
May 2006 22.41 22.41
June 2006 130.38 130.38
November 2006 19.09 19.09
December 2006 130.37 130.37
May 2007 14.99 14.99
November 2007 - November 2012 14.31 14.31
February 2013 97.79 97.79
May 2013 13.16 13.16
November 2013 - November 2016 12.02 12.02
January 2017 162.97 162.97
May 2017 9.08 9.08
November 2017 - November 2019 7.61 7.61
January 2020 162.97 162.97
May 2020 4.53 4.53
November 2020 2.99 2.99
December 2020 81.49 81.49
May 2021 1.23 1.23
November 2021 - May 2026 .88 .88
October 2026 .73 48.89 49.62
</TABLE>
No person is authorized to give any information or to make any representations
not contained in this Prospectus; and any information or representation not
contained herein must not be relied upon as having been authorized by the
Fund, the Sponsor or the Underwriters. This Prospectus does not constitute an
offer to sell, or a solicitation of an offer to buy, securities in any state
to any person to whom it is not lawful to make such offer in such state.
<TABLE>
<CAPTION>
Title
Page
<S> <C>
INTRODUCTION 2
SUMMARY OF ESSENTIAL FINANCIAL INFORMATION 3
UNITHOLDER EXPLANATIONS 7
Settlement of Bonds in the Trusts 7
The Fund 7
Objectives and Securities Selection 8
Risk Factors 9
Replacement Bonds 12
Bond Redemptions 13
Distributions 13
Change of Distribution Option 13
Certificates 14
Estimated Current Returns and Estimated Long-Term Returns 14
Interest Earning Schedule 15
Calculation of Estimated Net Annual Interest Income 15
Accrued Interest 15
Public Offering 15
General 15
Offering Price 17
Market for Units 18
Distributions of Interest and Principal 19
Reinvestment Option 19
Redemption of Units 20
Reports Provided 21
Insurance on the Bonds in the Insured Trusts 22
IM-IT 28
IM-IT SHORT INTERMEDIATE TRUST 32
FLORIDA IM-IT TRUST 35
MISSOURI IM-IT TRUST 41
OKLAHOMA IM-IT TRUST 45
NORTH CAROLINA QUALITY TRUST 49
NOTES TO PORTFOLIOS 56
UNDERWRITING 58
TRUST ADMINISTRATION 61
Fund Administration and Expenses 61
Sponsor 61
Compensation of Sponsor and Evaluator 65
Trustee 65
Trustee's Fee 66
Portfolio Administration 66
Sponsor Purchases of Units 67
Insurance Premiums 67
Miscellaneous Expenses 67
General 68
Amendment or Termination 68
Limitation on Liabilities 68
Unit Distribution 69
Sponsor and Underwriter Compensation 69
OTHER MATTERS 70
Legal Opinions 70
Independent Certified Public Accountants 70
FEDERAL TAX STATUS 71
DESCRIPTION OF SECURITIES RATINGS 74
REPORT OF INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS 75
STATEMENTS OF CONDITION 76
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.
PROSPECTUS
March 16, 1995
Insured Municipals
Income Trust
and
Investors' Quality Tax-
Exempt Trust,
Multi-Series 247
IM-IT 346
IM-IT 98th Short Intermediate
Florida IM-IT 90
Missouri IM-IT 88
Oklahoma IM-IT 15
North Carolina Quality 81
A Wealth of Knowledge A Knowledge of Wealthsm
VAN KAMPEN AMERICAN CAPITAL
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
2800 Post Oak Boulevard
Houston, Texas 77056
Please retain this Prospectus for future reference.
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.
1.1.1 Copy of Standard Terms and Conditions of Trust.
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,
Florida, Missouri and Oklahoma 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 North
Carolina residents of Units of the North Carolina Quality Trust.
4.1 Consent of Interactive Data Services, Inc.
4.2 Consent of Standard & Poor's Ratings Group with respect to the
Insured Trusts.
4.3 Consent of Grant Thornton LLP.
4.4 Financial Data Schedule.
Signatures
The Registrant, Insured Municipals Income Trust and Investors'
Quality Tax-Exempt Trust, Multi-Series 247, 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 247 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 16th day of March, 1995.
Insured Municipals Income Trust and
Investors' Quality Tax-Exempt
Trust, Multi-Series 247
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 March 16, 1995.
Signature Title
Don G. Powell Chairman and Chief Executive )
Officer )
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 with
the Registration Statement on From S-6 of Insured Municipals Income
Trust, 170th Insured Multi-Series (File No. 33-55891) and the same are
hereby incorporated herein by this reference.
Exhibit 1.1
Insured Municipals Income Trust and
Investors' Quality Tax-Exempt Trust
Multi-Series 247
Trust Agreement
Dated: March 16, 1995
This Trust Agreement between Van Kampen American Capital
Distributors, Inc., as Depositor, American Portfolio Evaluation Services,
a division of Van Kampen American Capital Investment Advisory Corp., as
Evaluator, and The Bank of New York, as Trustee, sets forth certain
provisions in full and incorporates other provisions by reference to the
document entitled "Standard Terms and Conditions of Trust For Van Kampen
American Capital Distributors, Inc. Tax-Exempt Trust, Dated March 16,
1995" (herein called the "Standard Terms and Conditions of Trust"), and
such provisions as are set forth in full and such provisions as are
incorporated by reference constitute a single instrument. All references
herein to Articles and Sections are to Articles and Sections of the
Standard Terms and Conditions of Trust.
Witnesseth That:
In consideration of the premises and of the mutual agreements herein
contained, the Depositor and the Trustee agree as follows:
Part I
Standard Terms and Conditions of Trust
Subject to the provisions of Part II hereof, all the provisions
contained in the Standard Terms and Conditions of Trust are herein
incorporated by reference in their entirety and shall be deemed to be a
part of this instrument as fully and to the same extent as though said
provisions had been set forth in full in this instrument.
Part II
Special Terms and Conditions of Trust
The following special terms and conditions are hereby agreed to:
(a) The Bonds defined in Section 1.01(4), listed in the
Schedules hereto, have been deposited in the Trusts under this Trust
Agreement.
(b) The fractional undivided interest in and ownership of the
various Trusts represented by each Unit thereof is the amount set
forth under "Summary of Essential Financial Information-Fractional
Undivided Interest in the Trust per Unit" in the Prospectus.
(c) The approximate amounts, if any, which the Trustee shall
be required to advance out of its own funds and cause to be paid to
the Depositor pursuant to Section 3.05 shall be the amount per Unit
that the Trustee agreed to reduce its fee or pay Trust expenses set
forth in the footnotes to the "Per Unit Information" for each Trust
in the Prospectus times the number of units in such Trust referred
to in Part II (b) of this Trust Agreement.
(d) The First General Record Date and the amount of the second
distribution of funds from the Interest Account of each Trust shall
be the record date for the Interest Account and the amount set forth
under "Per Unit Information" for each Trust in the Prospectus.
(e) The First Settlement Date shall be the date set forth
under "Summary of Essential Financial Information-First Settlement
Date" in the Prospectus.
(f) Any monies held to purchase "when issued" bonds will be
held in noninterest bearing accounts.
(g) The Evaluation Time for purpose of sale, purchase or
redemption of Units shall be 4:00 P.M. Eastern time.
(h) As set forth in Section 3.05, the Record Dates and
Distribution Dates for each Trust are those dates set forth in the
section entitled "Per Unit Information" for each Trust as appears in
the Prospectus.
(i) As set forth in Section 3.15, the Evaluator's Annual
Supervisory Fee shall be that amount set forth in "Summary of
Essential Financial Information-Evaluator's Annual Supervisory Fee"
in the Prospectus.
(j) As set forth in Section 4.03, the Evaluator's Annual
Evaluation Fee shall be that amount, and computed on that basis, set
forth in "Summary of Essential Financial Information-Evaluator's
Annual Evaluation Fee" in the Prospectus.
(k) the Trustee's annual compensation as set forth under
Section 6.04, under each distribution plan shall be that amount as
specified in the Prospectus under the section entitled "Per Unit
Information" for each Trust.
In Witness Whereof, Van Kampen American Capital Distributors, Inc.
has caused this Trust Agreement to be executed by one of its Vice
Presidents or Assistant Vice Presidents and its corporate seal to be
hereto affixed and attested by its Secretary or one of its Vice
Presidents or Assistant Secretaries, American Portfolio Evaluation
Services, a division of Van Kampen American Capital Investment Advisory
Corp., has caused this Trust Indenture and Agreement to be executed by
its President or one of its Vice Presidents and its corporate seal to be
hereto affixed and attested to by its Secretary, its Assistant Secretary
or one of its Assistant Vice Presidents and The Bank of New York, has
caused this Trust Agreement to be executed by one of its Vice Presidents
and its corporate seal to be hereto affixed and attested to by one of its
Vice Presidents, Assistant Vice Presidents or Assistant Treasurers; all
as of the day, month and year first above written.
VAN KAMPEN AMERICAN CAPITAL
DISTRIBUTORS, INC., Depositor
By Sandra A. Waterworth
Vice President
[Seal]
Attest:
By Gina M. Scumaci
Assistant Secretary
American Portfolio Evaluation
Services a division of Van Kampen
American Capital Investment
Advisory Corp.
By Dennis J. McDonnell
President
[Seal]
Attest:
By Scott E. Martin
Secretary
The Bank Of New York
By Jeffrey Bieselin
Vice President
[Seal]
Attest:
By Norbert Loney
Assistant Treasurer
Schedules to Trust Agreement
Securities Initially Deposited
Insured Municipals Income Trust and
Investors' Quality Tax-Exempt Trust
Multi-Series 247
(Note: Incorporated herein and made a part hereof as indicated below
are the corresponding "Portfolios" of each of the Trusts as set
forth in the Prospectus.)
Exhibit 1.1.1
Standard Terms and Conditions of Trust
for
Van Kampen American Capital Distributors, Inc.
Tax-Exempt Trusts
Dated: March 16, 1995
(including Insured Municipals Income Trust,
174th Insured Multi-Series and Subsequent Series
and Insured Municipals Income Trust and
Investors' Quality Tax-Exempt Trust
Multi-Series 247 and Subsequent Series)
among
Van Kampen American Capital Distributors, Inc.
Depositor
and
American Portfolio Evaluation Services
(a division of Van Kampen American
Capital Investment Advisory Corp.)
Evaluator
and
The Bank of New York
Trustee
Standard Terms and Conditions of Trust
for
Van Kampen American Capital Distributors, Inc.
Tax-Exempt Trusts
Dated March 16, 1995
Table of Contents
Page
Preambles 1
Form of Certificates 2
Form of Assignment 2
Form of Assignment 3
Article I Definitions 3
Section 1.01.Definitions 3
Article II Deposit of Bonds; Acceptance of Trust; Separate
Trusts; Form and Issuance of Units: Portfolio
Insurance 6
Section 2.01.Deposit of Bonds 6
Section 2.02.Acceptance of Trust 6
Section 2.03.Issue of Units 6
Section 2.04.Separate Trusts 7
Section 2.05.Form of Certificates 7
Section 2.06.Portfolio Insurance for the IM-IT Trusts 7
Article III Administration of Fund 9
Section 3.01.Initial Cost 9
Section 3.02.Interest Account 9
Section 3.03.Principal Account 9
Section 3.04.Reserve Account 10
Section 3.05.Distributions 10
Section 3.06.Distribution Statements 13
Section 3.07.Sale of Bonds 14
Section 3.08.Refunding Bonds 16
Section 3.09.Bond Counsel 16
Section 3.10.Notice and Sale by Trustee 17
Section 3.11.Trustee Not Required to Amortize 17
Section 3.12.Liability of Depositor 17
Section 3.13.Notice to Depositor 17
Section 3.14.Limited Replacement of Special Bonds 17
Section 3.15.Compensation of Evaluator for Supervisory
Services 19
Article IV Evaluation of Bonds; Evaluator 20
Section 4.01.Evaluation of Bonds 20
Section 4.02.Information for Unitholders 20
Section 4.03.Compensation of Evaluator 20
Section 4.04.Liability of Evaluator 21
Section 4.05.Resignation and Removal of Evaluator; Successor 21
Article V Evaluation, Redemption, Purchase, Transfer,
Interchange or Replacement of Units 22
Section 5.01.Evaluation 22
Section 5.02.Redemptions by Trustee; Purchases by Depositor 23
Section 5.03.Transfer or Interchange of Units 25
Section 5.04.Certificates Mutilated, Destroyed, Stolen or
Lost 26
Article VI Trustee 27
Section 6.01.General Definition of Trustee's Liabilities,
Rights and Duties 27
Section 6.02.Books, Records and Reports 29
Section 6.03.Indenture and List of Bonds on File 30
Section 6.04.Compensation 30
Section 6.05.Removal and Resignation of Trustee; Successor 31
Section 6.06.Qualifications of Trustee 32
Article VII Rights of Unitholders 32
Section 7.01.Beneficiaries of Trust 32
Section 7.02.Rights, Terms and Conditions 32
Article VIII Additional Covenants; Miscellaneous Provisions 33
Section 8.01.Amendments 33
Section 8.02.Termination 34
Section 8.03.Construction 35
Section 8.04.Registration of Units 36
Section 8.05.Written Notice 36
Section 8.06.Severability 36
Section 8.07.Dissolution of Depositor Not to Terminate 36
Execution 37
Van Kampen American Capital Distributors, Inc.
Tax-Exempt Trusts
Dated: March 16, 1995
These Standard Terms and Conditions of Trust dated March 9, 1995 are
executed by Van Kampen American Capital Distributors, Inc., as Depositor,
The Bank of New York, as Trustee, American Portfolio Evaluation Services
(a division of Van Kampen American Capital Investment Advisory Corp.), as
Evaluator.
Preambles Witnesseth that:
In consideration of the premises and of the mutual agreements herein
contained, the Depositor, the Trustee and the Evaluator agree as follows:
Introduction
These Standard Terms and Conditions of Trust dated March 9, 1995
shall be applicable to Insured Municipals Income Trust, 174th Insured
Multi-Series and all subsequent Series and Insured Municipals Income
Trust and Investors' Quality Tax-Exempt Trust, Multi-Series 247 and all
subsequent Series established on or after the date of effectiveness
hereof, as provided in this paragraph. For Insured Municipals Income
Trust, 174th Insured Multi-Series and subsequent Series and Insured
Municipals Income Trust and Investors' Quality Tax-Exempt Trust, Multi-
Series 247 and all subsequent Series established on or after the date of
effectiveness hereof to which these Standard Terms and Conditions of
Trust dated March 9, 1995 are to be applicable, the Depositor, the
Trustee and the Evaluator shall execute a Trust Agreement incorporating
by reference these Standard Terms and Conditions of Trust dated March 9,
1995 and designating any exclusion from or exception to such
incorporation by reference for the purposes of that Series or variation
of the terms hereof for the purposes of that Series and specifying for
that Series (i) the Bonds deposited in the various Trusts and the number
of Units delivered by the Trustee in exchange for the Bonds pursuant to
Section 2.03, (ii) the fractional undivided interest in the respective
Trusts represented by each Unit, (iii) the First Settlement Date,
(iv) the First General Record Date, if any, (v) the Record and
Distribution Dates specific to each plan of distribution and (vi) the
amount of the Trustee advancement with respect to any "when-issued" Bonds
deposited in the Fund.
Form of CertificatesWhereas, the form of the Certificates in the
respective Trusts shall be substantially as follows:
No.
Units
____________Certificate of Ownership____________Form of Assignment
-evidencing-
An Undivided Interest
-in-
_______________________________
Plan of Distribution:
Monthly
Semi-Annual
This is to certify that ______________________________ is the owner
and registered holder of this Certificate evidencing the ownership of
_______________________________ unit(s) of fractional undivided interest
in the above-named Trust created pursuant to the Indenture, a copy of
which is available at the office of the Trustee. This Certificate is
issued under and is subject to the terms, provisions and conditions of
the Indenture to which the Holder of this Certificate by virtue of the
acceptance hereof assents and is bound, a summary of which Indenture is
contained in the Prospectus relating to the Trust. This Certificate is
transferable and interchangeable by the registered owner in person or by
his duly authorized attorney at the Trustee's office upon surrender of
this Certificate properly endorsed or accompanied by a written instrument
of transfer and any other documents that the Trustee may require for
transfer, in form satisfactory to the Trustee and payment of the fees and
expenses provided in the Indenture.
Witness the facsimile signature of a duly authorized officer of the
Sponsor and the manual signature of an authorized signatory of the
Trustee.
Dated:
Van Kampen American Capital The Bank of New York,
Distributors, Inc. Trustee
Depositor
By _____________________ By _____________________
Chairman Authorized Signatory
Form of Assignment
For Value Received _____________________ hereby sells, assigns and
transfers unto
_________________________________________________________________________
(please insert social security or other identifying number of assignee)
the within Certificate and does hereby irrevocably constitute and appoint
____________________________________________ attorney, to transfer the
within Certificate on the books of the Trustee, with full power of
substitution in the premises.
Dated: _______________
The signature(s) to this assignment
must correspond with the name(s) as
written upon the face of the
certificate without alteration or
enlargement or any change whatever.
Signature guarantee should be made
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.
Signature Guaranteed
__________________________
Now Therefore, in consideration of the premises and of the mutual
agreements herein contained the Depositor and the Evaluator and the
Trustee agree as follows:
Article I Definitions Article I
Definitions;
Section 1.01. Definitions. Whenever used in this Indenture the
following words and phrases, unless the context clearly indicates
otherwise, shall have the following meanings:
(1) "Depositor" shall mean Van Kampen American Capital
Distributors, Inc. and its successors in interest, or any successor
depositor appointed as hereinafter provided.
(2) "Evaluator" shall mean American Portfolio Evaluation
Services (a division of Van Kampen American Capital Investment
Advisory Corp.) and its successors in interest, or any successor
evaluator appointed as hereinafter provided.
(3) "Trustee" shall mean The Bank of New York, or any
successor trustee appointed as hereinafter provided or any entity
which acquires all or a substantial part of the unit investment
trust division of The Bank of New York.
(4) "Bonds" shall mean such of the interest bearing tax-exempt
obligations, including delivery statements relating to "when-issued"
and/or "regular way" contracts, if any, for the purchase of certain
bonds and certified or bank check or checks or letter of credit or
letters of credit sufficient in amount or availability required for
such purchase, deposited in irrevocable trust and listed in all
Schedules of the Trust Agreement, and any obligations received in
exchange, substitution or replacement for such obligations pursuant
to Sections 3.08 and 3.14 hereof, as may from time to time continue
to be held as a part of the Trusts.
(5) "Certificate" shall mean any one of the certificates
executed by the Trustee and the Depositor evidencing ownership of an
undivided fractional interest in a Trust.
(6) "Unitholder" shall mean the registered holder of any Unit,
whether or not in certificated form, as recorded on the books of the
Trustee, his legal representatives and heirs and the successors of
any corporation, partnership or other legal entity which is a
registered holder of any Unit and as such shall be deemed a
beneficiary of the Trusts created by this Indenture to the extent of
his or her pro rata share thereof.
(7) "Contract Bonds" shall mean Bonds which are to be acquired
by the Fund pursuant to contracts, including (i) Bonds listed in
Schedule A to the Trust Agreement and (ii) Bonds which the Depositor
has contracted to purchase for the Fund pursuant to Section 3.14
hereof.
(8) "Trust" or "Trusts" shall mean the separate trust or
trusts, created by this Indenture, the Bonds constituting the
portfolios of which are listed in the various separate Schedules
attached hereto. "IM-IT Trust" shall mean a Trust in the Fund which
has obtained Insurance, as such term is defined in Section 1.01(11),
or which is comprised entirely of Pre-Insured Bonds, as such term is
defined in Section 1.01(11). The various series of Insured
Municipals Income Trust, Limited Maturity, Insured Municipals Income
Trust, Intermediate, Insured Municipals Income Trust, Short
Intermediate and Investors' Quality Tax-Exempt Trust, Intermediate
may also be referred to herein as the "IM-IT Limited Maturity
Trust," the "IM-IT Intermediate Trust," the "IM-IT Short
Intermediate Trust" and the "Quality Intermediate Trust,"
respectively. "Quality Trust" shall mean a Trust in the Fund which
has not obtained Insurance, as such term is defined in
Section 1.01(11).
(9) "Trust Fund" or "Fund" shall mean the collective Trusts
created by the Trust Agreement, which shall consist of the Bonds
held pursuant and subject to the Indenture together with all
undistributed interest received or accrued thereon, any
undistributed cash realized from the sale, redemption, liquidation,
or maturity thereof or the proceeds of insurance received in respect
thereof. Such amounts as may be on deposit in any Reserve Account
hereinafter established shall be excluded from the Trust Fund.
(10) "Trust Agreement" shall mean the Trust Agreement for the
particular series of the Fund into which these Standard Terms and
Conditions are incorporated.
(11) "Insurance" shall mean one or more contracts or policies
of insurance obtained by certain Trusts of the Fund guaranteeing the
payment when due of the principal of and interest on the Bonds held
pursuant and subject to this Indenture, together with the proceeds,
if any, thereof payable to or received by the Trustee for the
benefit of such Trusts and the Unitholders thereof except that
Insurance shall not include those Bonds held pursuant and subject to
this Indenture which are insured by individual policies of insurance
issued by AMBAC Indemnity Corporation, Municipal Bond Investors
Assurance Corporation, Financial Guaranty Insurance Company,
Financial Security Assurance, Inc., Capital Guarantee Insurance
Company and/or Capital Markets Assurance Corporation (collectively,
the "Issuer Insurers") which have been obtained by the issuers of
such Bonds (the "Pre-Insured Bonds").
(12) "Insurer" shall mean AMBAC Indemnity Corporation or
Financial Guaranty Insurance Company, their successors and assigns,
each having its principal office in New York, New York, one or both
of which have issued a contract or policy of insurance obtained by
certain Trusts of the Fund protecting such Trusts and the
Unitholders thereof against nonpayment when due of the principal of
and interest on any Bond (except for Pre-Insured Bonds) held by the
Trustee as part of such Trust.
(13) "Units" in respect of any Trust shall mean the fractional
undivided interest in and ownership of the Trust equal initially to
the fraction of the respective Trust specified in Part II of the
Trust Agreement, the denominator of which shall be decreased by the
number of any such Units redeemed as provided in Section 5.02.
(14) "Indenture" shall mean these Standard Terms and Conditions
of Trust as originally executed or, if amended as hereinafter
provided, as so amended, together with the Trust Agreement creating
a particular series of the Fund.
(15) "Business Day" shall mean any day other than a Sunday or,
in the City of New York, a legal holiday or a day on which banking
institutions are authorized by law to close.
(16) "Prospectus" shall mean (a) the prospectus relating to the
Trust Fund filed with the Securities and Exchange Commission
pursuant to Rule 497(b) under the Securities Act of 1933, as
amended, and dated the date of the Trust Agreement or (b) if any
post effective amendment to such prospectus shall have been
subsequently made effective under the Securities Act of 1933, as
amended, such post effective amendment thereto.
(17) Words importing singular number shall include the plural
number in each case and vice versa, and words importing persons
shall include corporations and associations, as well as natural
persons.
(18) The words "herein," "hereby," "herewith," "hereof,"
"hereinafter," "hereunder," "hereinabove," "hereafter," "heretofore"
and similar words or phrases of reference and association shall
refer to this Indenture in its entirety.
"Article II Deposit of Bonds Acceptance of Trust; Separate Trusts;
Form and Issuance of Units: Portfolio Insurance";Article II
Deposit of Bonds; Acceptance of Trust; Separate Trusts;
Form and Issuance of Units; Portfolio Insurance
Section 2.01. Deposit of Bonds. The Depositor, on the date of the
Trust Agreement, has deposited with the Trustee in trust the Bonds listed
in the Schedules attached to this Indenture in bearer form or duly
endorsed in blank or accompanied by all necessary instruments of
assignment and transfer in proper form to be held, managed and applied by
the Trustee as herein provided. The Depositor shall deliver the Bonds
listed on said Schedules to the Trustee which were not actually delivered
concurrently with the execution and delivery of the Trust Agreement
within 90 days after said execution and delivery, or if the contract to
buy such Bond between the Depositor and seller is terminated by the
seller thereof for any reason beyond the control of the Depositor, the
Depositor shall forthwith take the remedial action specified in
Section 3.14.
Section 2.02. Acceptance of Trust. The Trustee hereby accepts the
trusts herein created for the use and benefit of the Unitholders in the
Trusts, subject to the terms and conditions of this Indenture.
Section 2.03. Issue of Units. (a) The Trustee hereby acknowledges
receipt of the deposit of the Securities listed in the Schedules to the
Trust Agreement and referred to in Section 2.01 hereof and,
simultaneously with the receipt of said deposit, has recorded on its book
the ownership, by the Depositor or such other person or persons as may be
indicated by the Depositor, of the aggregate number of Units specified in
the Trust Agreement and has delivered, or on the order of the Depositor
will deliver, in exchange for such Securities, documentation evidencing
the ownership of the number of Units specified and, if such Units are
represented by a Certificate, such Certificate substantially in the form
above recited, representing the ownership of those Units.
(b) Under the terms and conditions of the Indenture and the Trust
Agreement and at such times as are permitted by the Trustee, Units may
also be held in uncertificated form. Units will be held in
uncertificated form only if a Unitholder requests that his or her Units
be so held. The Trustee shall, at the request of the holder of any Units
held in uncertificated form, issue a new Certificate to evidence such
Units and at such time make an appropriate notation in the registration
books of the Trustee. Certificates, if requested, will be issued in
denominations of one Unit, or any whole multiple thereof, subject to the
Trust Fund's minimum investment requirements. Thereafter, Units may
again be held in uncertificated form by surrendering such Certificate to
the Trustee for cancellation. At such time, an appropriate notation will
be made in the registration book of the Trustee to indicate that the
Units formerly evidenced by such cancelled Certificate are Units held in
uncertificated form. The rights set forth in this Indenture of any
holder of Units held in uncertificated form or of Units represented by a
Certificate shall be the same of those of any other Unitholder.
Section 2.04. Separate Trusts. The Trusts created by this Indenture
are separate and distinct trusts for all purposes and the assets of one
trust may not be commingled with the assets of any other nor shall the
expenses of any Trust be charged against the other. The Certificates
representing the ownership of an undivided fractional interest in one
Trust shall not be exchangeable for Certificates representing the
ownership of an undivided fractional interest in any other.
Section 2.05. Form of Certificates. Each Certificate referred to in
Section 2.03 is, and each Certificate hereafter issued shall be, in
substantially the form hereinabove recited, numbered serially for
identification, in fully registered form, transferable only on the books
of the Trustee as herein provided, executed manually by an authorized
officer of the Trustee and in facsimile by the Chairman, President or one
of the Vice Presidents of the Depositor and dated the date of execution
and delivery by the Trustee.
Section 2.06. Portfolio Insurance for the IM-IT Trusts. Concurrently
with the delivery to the Trustee of the Bonds listed in the Schedules
attached to this Indenture, the Insurer has delivered to and deposited
with the Trustee for each of the IM-IT Trusts of the Fund the Insurance
to protect such Trusts of the Fund and the Unitholders thereof against
nonpayment of principal and interest, when due, on any Bond or Bonds
(except for Pre-Insured Bonds) held by the Trustee in the portfolios of
such Trusts of the Fund.; The Trustee shall take all action deemed
necessary or advisable in connection with the Insurance to continue the
Insurance in full force and effect and shall pay all premiums due
thereon, including the initial premium, all in such manner as in its sole
discretion shall appear to result in the most protection and least
expense to the IM-IT Trusts of the Fund.
The Insurance may not be cancelled by the Insurer. However, as of
each computation day the Trustee shall make the deduction and payment of
premiums prescribed in Section 3.05(c) of this Indenture in order to
continue in force the coverage thus provided. The Insurer's right to the
payment of premiums from funds held by the Trustee in accordance with the
terms of the policy is absolute (except when payment is withheld in good
faith by the Trustee in the event of a dispute over the amount thereof),
but no failure on the part of the Trustee to make such payment of premium
or installment thereof to the Insurer shall result in a cancellation of
the Insurance or otherwise affect the right of any Unitholder under the
policy to have any amounts of principal and interest paid by the Insurer
to the Trustee to be held as part of the IM-IT Trusts of the Fund when
the same are not paid when due by the issuer of a Bond or Bonds held by
the Trustee as part of such Trusts of the Fund.
With each payment of premium or installment thereof, the Trustee
shall notify the Insurer of all Bonds (except Pre-Insured Bonds) which
during the expiring premium period were redeemed from or sold by the IM-
IT Trusts of the Fund.
At all times during the existence of the IM-IT Trusts of the Fund
the Insurance policy shall provide for payment by the Insurer to the
Trustee of any amounts of principal and interest due, but not paid, by
the issuer of a Bond insured by the Insurance. The Trustee shall
promptly notify the Insurer of any nonpayment or threatened nonpayment of
principal or interest and the Insurer shall within 30 days after receipt
of such notice make payment to the Trustee of all amounts of principal
and interest at that time due, but not paid.
Payments of principal and interest assumed by the Insurer shall be
made as required by the related Bond or Bonds, except in the event of a
sale of any such Bond or Bonds by the Trustee under Section 3.07, 5.02 or
6.04, or a termination of this Indenture and the IM-IT Trusts of the Fund
created hereby under Section 8.02, prior to the final maturity of such
Bond or Bonds, in each of which events, upon notice from the Trustee, the
Insurer shall promptly make payment of the accrued interest on such Bond
or Bonds to the Trustee and shall be relieved of further obligation to
the Trustee thereon.
Upon the making of any payment referred to in the preceding
paragraphs, the Insurer shall succeed to the rights of the Trustee under
the Bond or Bonds involved to the extent of the payments made at that
time, or any time subsequent thereto, and shall continue to make all
payments required by the terms of such Bond or Bonds to the extent that
funds are not provided therefor by the issuer thereof. Upon the payment
of any amounts by the Insurer, occasioned by the nonpayment thereof by
the issuer, the Trustee shall execute and deliver to the Insurer any
receipt, instrument or document required to evidence the right of the
Insurer in the Bond or Bonds involved to payment of principal and/or
interest thereon to the extent of the payments made by the Insurer to the
Trustee.
With respect to Pre-Insured Bonds in the respective Trusts of the
Fund, the Trustee shall promptly notify the Issuer Insurer of any
nonpayment of principal or interest on such Pre-Insured Bonds and if the
Issuer Insurer should fail to make payment to the Trustee within 30 days
after receipt of such notice, the Trustee shall take all action against
the Issuer Insurer and/or the issuer deemed necessary to collect all
amounts of principal and interest at that time due, but not collected.
Article III Administration of Fund Article III
Administration of Fund
Section 3.01. Initial Cost. The cost of the initial preparation,
printing and execution of the Certificates and this Indenture, the
initial fees of the Trustee and the Trustee's counsel, the initial fee of
an evaluator and other reasonable expenses in connection therewith shall
be paid by the Depositor, provided, however, that the liability on the
part of the Depositor for such initial costs, fees and expenses shall not
include any fees, costs or other expenses incurred in connection herewith
after the execution of this Indenture and the deposit referred to in
Section 2.01.
Section 3.02. Interest Account. The Trustee shall collect the interest
on the Bonds in each Trust as such becomes payable (including all
interest accrued but unpaid prior to the date of deposit of the Bonds in
trust and including that part of the proceeds of the sale, liquidation,
redemption or maturity of any Bonds or insurance thereon which represents
accrued interest thereon) and credit such interest to a separate account
for each Trust to be known as the "Interest Account."
Section 3.03. Principal Account. (a) The Bonds in each Trust and all
moneys (except moneys held by the Trustee pursuant to subsection
(b) hereof) other than amounts credited to the Interest Account, received
by the Trustee in respect of the Bonds in each Trust, including insurance
thereon, if any, shall be credited to a separate account for each Trust
to be known as the "Principal Account."
(b) Moneys and/or irrevocable letters of credit required to
purchase Contract Bonds or deposited to secure such purchases are hereby
declared to be held specially by the Trustee for such purchases and shall
not be deemed to be part of the Principal Account of the applicable Trust
until (i) the Depositor fails to timely purchase a Contract Bond and has
not given the Failed Contract Notice (as defined in Section 3.14) at
which time the moneys and/or letters of credit attributable to the
Contract Bond not purchased by the Depositor shall be credited to the
Principal Account; or (ii) the Depositor has given the Trustee the Failed
Contract Notice at which time the moneys and/or letters of credit
attributable to failed contracts referred to in such Notice shall be
credited to the Principal Account; provided, however, that if the
Depositor also notifies the Trustee in the Failed Contract Notice that it
has purchased or entered into a contract to purchase a New Bond (as
defined in Section 3.14), the Trustee shall not credit such moneys and/or
letters of credit to the Principal Account unless the New Bond shall also
have failed or is not delivered by the Depositor within two business days
after the settlement date of such New Bond, in which event the Trustee
shall forthwith credit such moneys and/or letters of credit to the
Principal Account. The Trustee shall in any case forthwith credit to the
Principal Account, and/or cause the Depositor to deposit in the Principal
Account, the difference, if any, between the purchase price of the failed
Contract Bond and the purchase price of the New Bond, together with any
sales charge and accrued interest applicable to such difference and
distribute such moneys to Unitholders pursuant to Section 3.05.
The Trustee shall give prompt written notice to the Depositor and
the Evaluator of all amounts credited to or withdrawn from a Principal
Account and the balance in such Account after giving effect to such
credit or withdrawal.
Section 3.04. Reserve Account. From time to time the Trustee shall
withdraw from the cash on deposit in an Interest Account or Principal
Account of the appropriate Trust such amounts as it, in its sole
discretion, shall deem requisite to establish a reserve for any
applicable taxes or other governmental charges that may be payable out of
such Trust. Such amounts so withdrawn shall be credited to a separate
account which shall be known as the "Reserve Account." The Trustee shall
not be required to distribute to the Unitholders any of the amounts in
the Reserve Account; provided, however, that if it shall, in its sole
discretion, determine that such amounts are no longer necessary for
payment of any applicable taxes or other governmental charges, then it
shall promptly deposit such amounts in the account from which withdrawn
or if such Trust shall have terminated or shall be in the process of
termination, the Trustee shall distribute same in accordance with
Section 8.02 (d) and (e) to each Unitholder such holder's interest in the
Reserve Account.
Section 3.05. Distributions. The Trustee, as of the "First Settlement
Date," as defined in Part II of the Trust Agreement, shall advance from
its own funds and shall pay to the Unitholders of the respective Trusts
then of record the amount of interest accrued on the Bonds deposited in
the respective Trusts. The Trustee shall also advance from its own funds
and pay the appropriate persons the amount specified in Part II of the
Trust Agreement, which amount represents interest which accrues on any
"when issued" Bonds deposited in the respective Trusts from the date
stated in the preceding sentence to the respective dates of delivery to
the respective Trusts of any of such Bonds. The Trustee shall be
entitled to reimbursement for such advancement from interest received by
the respective Trusts before any further distributions shall be made from
the Interest Account to Unitholders of the respective Trusts. Subsequent
distributions shall be made as hereinafter provided.
The second distribution of funds from the Interest Accounts of the
respective Trusts shall be made on the applicable "Record Dates" of each
Trust as defined in Part II of the Trust Agreement.
As of the first day of each month of each year commencing with the
first monthly Record Date, the Trustee shall, with respect to each Trust:
(a) deduct from the Interest Account or, to the extent funds
are not available in such Account, from the Principal Account and
pay to itself individually the amounts that it is at the time
entitled to receive pursuant to Section 6.04;
(b) deduct from the Interest Account, or, to the extent funds
are not available in such Account, from the Principal Account and
pay to the Evaluator the amount that it is at the time entitled to
receive pursuant to Section 4.03;
(c) with respect to the IM-IT Trusts, deduct from the Interest
Account, or, to the extent funds are not available in such Account,
from the Principal Account and pay to the Insurer the amount of any
premium to which it is at the time entitled to receive pursuant to
Section 2.06.;
(d) deduct from the Interest Account, or to the extent funds
are not available in such Account, from the Principal Account and
pay to the Evaluator the amount that it is entitled to receive
pursuant to Section 3.15; and
(e) deduct from the Interest Account, or, to the extent funds
are not available in such Account, from the Principal Account and
pay to bond counsel, as hereinafter provided for, an amount equal to
unpaid fees and expenses, if any, of such bond counsel pursuant to
Section 3.09 as certified to by the Depositor.
On or shortly after the semi-annual distribution date for each Trust
(the "Semi-Annual Distribution Date"), as specified in Part II of the
Trust Agreement, the Trustee shall, with respect to each Trust,
distribute by mail to or upon the order of each Unitholder of record of
such Trust as of the close of business on the preceding Record Date at
the post office address appearing on the registration books of the
Trustee such Unitholder's pro rata share of the balance of the Interest
Account calculated as of the Record Date for such semi-annual payment on
the basis of one-half of the estimated annual interest income to such
Trust for the ensuing twelve months, after deduction of the estimated
costs and expenses of such Trust to be incurred during the twelve month
period for which the interest income has been estimated.
In lieu of the semi-annual distributions of interest provided above,
a Unitholder may receive payments from the Interest Account, represented
by the Units in a Certificate, monthly.
Unitholders desiring to receive semi-annual distributions and who
purchase their Units prior to the Record Date for the first monthly
distribution may elect at the time of purchase to receive distributions
on a semi-annual basis by notice to the Trustee. Such notice shall be
effective with respect to subsequent distributions until changed by
further notice to the Trustee. Unless a Unitholder elects a semi-annual
option, such Unitholders will receive distributions monthly. Each year
the Trustee will furnish each Unitholder a card to be returned to the
Trustee if the Unitholder wishes to change his plan of distribution.
Those wishing to change shall so indicate on the card and return it to
the Trustee and accompany the card by the surrender of the Unit to which
it relates. Changes may be made only as herein provided and will become
effective as of opening of business on the day after the next succeeding
semi-annual Record Date and such distributions will continue until
further notice.
For monthly distributions the share of the balance in the Interest
Account to be distributed to a Unitholder shall be computed periodically
and distribution made as provided herein on or shortly after the
fifteenth day of each month to the Unitholder of record on the first day
of the related month (the "Record Date"). Such computation shall be made
on the basis of one-twelfth of the estimated annual interest income to
the related Trust for the ensuing twelve months for the account of
Unitholders who will receive monthly distributions, after deduction of
the estimated costs and expenses to be incurred on behalf of such
Unitholders during the twelve month period for which such interest income
has been estimated.
To the extent practicable, the Trustee shall allocate the expenses
of each Trust among Units of such Trust, giving effect within each Trust
to differences in administrative and operational cost among those who
have chosen to receive distributions monthly or semi-annually.
In the event the amount on deposit in the Interest Account of a
Trust is not sufficient for the payment of the amount of interest to be
distributed to Unitholders on the bases of the aforesaid computations,
the Trustee may advance its own funds and cause to be deposited in and
credited to such Interest Account such amounts as may be required to
permit payment of the monthly or semi-annual interest distribution to be
made as aforesaid and shall be entitled to be reimbursed out of interest
received by such Trust subsequent to the date of such advance.
Distributions of Unitholders who are participating in one of the optional
plans for distribution of interest shall not be affected because of
advancements by the Trustee for the purpose of equalizing distributions
to Unitholders participating in a different plan.
Distributions of amounts represented by the cash balance in the
Principal Account for each Trust shall be computed as of the semi-annual
Record Dates of each year occurring subsequent to the date of the First
General Record Date. On the fifteenth day of each month as of which such
computation is made, or within a reasonable period of time thereafter,
the Trustee shall distribute by mail to each Unitholder of record of such
Trust at the close of business on the date of computation (the "Record
Date") at his post office address such holder's pro rata share of the
cash balance of the Principal Account as thus computed. The Trustee
shall not be required to make a distribution from the Principal Account
unless the cash balance on deposit therein available for distribution
shall be sufficient to distribute at least $1.00 per Unit. However,
should the amount available for distribution in the Principal Account
equal or exceed $10.00 per Unit, the Trustee will make a special
distribution from the Principal Account on the next succeeding monthly
distribution date to holders of record on the related monthly record
date.
If the Depositor (i) fails to replace any failed Special Bond (as
defined in Section 3.14) or (ii) is unable or fails to enter into any
contract for the purchase of any New Bond in accordance with
Section 3.14, the Trustee shall distribute to all Unitholders of the
related Trust the principal, accrued interest and sales charge
attributable to such Special Bonds at the next monthly distribution date
which is more than thirty days after the expiration of the Purchase
Period (as defined in Section 3.14) or at such earlier time or in such
manner as the Trustee in its sole discretion deems to be in the best
interest of the Unitholders of the related Trust.
If any contract for a New Bond in replacement of a Special Bond
shall fail, the Trustee shall distribute the principal, accrued interest
and sales charge attributable to the Special Bond to the Unitholders of
the related Trust at the next monthly distribution date which is more
than thirty days after the date on which the contract in respect of such
New Bond failed or at such earlier time or in such earlier manner as the
Trustee in its sole discretion determines to be in the best interest of
the Unitholders of the related Trust.
If, at the end of the Purchase Period, less than all moneys
attributable to a failed Special Bond have been applied or allocated by
the Trustee pursuant to a contract to purchase New Bonds, the Trustee
shall distribute the remaining moneys to Unitholders of the related Trust
at the next monthly distribution date which is more than thirty days
after the end of the Purchase Period or at such earlier time thereafter
as the Trustee in its sole discretion deems to be in the best interest of
the Unitholders of the related Trust.
The amounts to be so distributed to each Unitholder of a Trust shall
be that pro rata share of the cash balance of the Interest and Principal
Accounts of such Trust, computed as set forth above, as shall be
represented by the Units evidenced by the outstanding Certificate or
Certificates registered in the name of such Unitholder.
In the computation of each such share, fractions of less than one
cent shall be omitted. After any such distribution provided for above,
any cash balance remaining in an Interest Account or Principal Account of
a Trust shall be held in the same manner as other amounts subsequently
deposited in each of such accounts, respectively.
For the purpose of distributions as herein provided, the holders of
record on the registration books of the Trustee at the close of business
on each Record Date shall be conclusively entitled to such distribution,
and no liability shall attach to the Trustee by reason of payment to any
such registered Unitholder of record. Nothing herein shall be construed
to prevent the payment of amounts from the Interest Account and the
Principal Account of a Trust to individual Unitholders by means of one
check, draft or other proper instrument, provided that the appropriate
statement of such distribution shall be furnished therewith as provided
in Section 3.06 hereof.
Section 3.06. Distribution Statements. With each distribution from the
Interest or Principal Accounts of a Trust the Trustee shall set forth,
either in the instrument by means of which payment of such distribution
is made or in an accompanying statement, the amount being distributed
from each such account and, if from the Interest Account, the amount of
accrued interest (uncollected and not available for distribution) on the
record date for such distribution, each expressed as a dollar amount per
Unit.
Within a reasonable period of time after the last business day of
each calendar year, the Trustee shall furnish to each person who at any
time during such calendar year was a Unitholder of a Trust a statement
setting forth, with respect to such calendar year:
(A) as to the Interest Account:
(1) the amount of interest received on the Bonds,
(2) the amounts paid for purchases of New Bonds pursuant
to Section 3.14 and for redemptions pursuant to Section 5.02,
(3) the deductions for applicable taxes and fees and
expenses of the Trustee and bond counsel, and
(4) the balance remaining after such distributions and
deductions, expressed both as a total dollar amount and as a
dollar amount per Unit outstanding on the last business day of
such calendar year;
(B) as to the Principal Account:
(1) the dates of the sale, maturity, liquidation or
redemption of any of the Bonds and the net proceeds received
therefrom, excluding any portion thereof credited to the
Interest Account,
(2) the amount paid for purchases of New Bonds pursuant
to Section 3.14 and for redemptions pursuant to Section 5.02,
(3) the deductions for payment of applicable taxes and
fees and expenses of the Trustee and bond counsel, and
(4) the balance remaining after such distributions and
deductions, expressed both as a total dollar amount and as a
dollar amount per Unit outstanding on the last business day of
such calendar year;
(C) the following information:
(1) a list of the Bonds as of the last business day of
such calendar year,
(2) the number of Units outstanding on the last business
day of such calendar year,
(3) the Unit Value based on the last evaluation of such
Trust made during such calendar year, and
(4) the 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 per Unit outstanding on the record dates for each plan
of distribution.
Section 3.07. Sale of Bonds. If necessary, in order to maintain the
investment character of a Trust, the Depositor may direct the Trustee to
sell or liquidate Bonds at such price and time and in such manner as
shall be determined by the Depositor, provided that the Depositor has
determined that any one or more of the following conditions exist:
(a) that there has been a default on such Bonds in the payment
of principal or interest, or both, when due and payable;
(b) that any action or proceeding has been instituted in law
or equity seeking to restrain or enjoin the payment of principal or
interest on any such Bonds, attacking the constitutionality of any
enabling legislation or alleging and seeking to have judicially
determined the illegality of the issuing body or the constitution of
its governing body or officers, the illegality, irregularity or
omission of any necessary acts or proceedings preliminary to the
issuance of such Bonds, or seeking to restrain or enjoin the
performance by the officers or employees of any such issuing body of
any improper or illegal act in connection with the administration of
funds necessary for debt service on such Bonds or otherwise; or that
there exists any other legal question or impediment affecting such
Bonds or the payment of debt service on the same;
(c) that there has occurred any breach of covenant or warranty
in any resolution, ordinance, trust indenture or other document,
which would adversely affect either immediately or contingently the
payment of debt service on such Bonds, or their general credit
standing, or otherwise impair the sound investment character of such
Bonds;
(d) that there has been a default in the payment of principal
of or interest on any other outstanding obligations of an issuer or
guarantor of such Bonds;
(e) that in the case of revenue Bonds, the revenues and income
of the facility or project or other special funds expressly charged
and pledged for debt service on any such Bonds shall fall
substantially below the estimated revenues or income calculated by
the engineers or other proper officials charged with the
acquisition, construction or operation of such facility or project,
so that, in the opinion of the Depositor, the retention of such
Bonds would be detrimental to the sound investment character of such
Trust and to the interest of the Unitholders;
(f) that the price of any such Bonds had declined to such an
extent, or such other market or credit factor exists, so that in the
opinion of the Depositor the retention of such Bonds would be
detrimental to such Trust and to the interest of the Unitholders;
(g) that such Bonds are the subject of an advanced refunding.
For the purposes of this Section 3.07(g), "an advanced refunding"
shall mean when refunding bonds are issued and the proceeds thereof
are deposited in irrevocable trust to retire the Bonds on or before
their redemption date; or
(h) that as of any Record Date any of the Bonds are scheduled
to be redeemed and paid prior to the next succeeding monthly
Distribution Date; provided, however, that as the result of such
redemption the Trustee will receive funds in an amount sufficient to
enable the Trustee to include in the next distribution from the
Principal Account at least $1.00 per Unit.
If the Trust is an IM-IT Trust, the Depositor shall also consider whether
any Insurance that may be applicable to the Bonds cannot be relied upon
to provide the principal and interest protections intended to be afforded
by such Insurance.
In the event the Depositor has directed the Trustee to sell a Bond
from an IM-IT Trust, the Trustee shall exercise its right to purchase a
policy providing for permanent insurance (a "Permanent Insurance Policy")
if the Depositor determines that such purchase and payment of related
premium will result in a net realization for the IM-IT Trust greater than
would the sale of the Bond without the purchase of a Permanent Insurance
Policy with respect to such Bond and shall pay an amount equal to the
premium payable for such Permanent Insurance Policy to the Insurer at the
time and in the manner required by such Permanent Insurance Policy. Such
premium shall be payable only from the sale of such Bonds.
Upon receipt of such direction from the Depositor, upon which the
Trustee shall rely, the Trustee shall proceed to sell or liquidate the
specified Bonds in accordance with such direction; provided, however,
that the Trustee shall not sell or liquidate any Bonds upon receipt of a
direction from the Depositor that it has determined that the conditions
in subdivision (h) above exist, unless the Trustee shall receive on
account of such sale or liquidation the full principal amount of such
Bonds, plus the premium, if any, and the interest accrued and to accrue
thereon to the date of the redemption of such Bonds.
The Trustee shall not be liable or responsible in any way for
depreciation or loss incurred by reason of any sale made pursuant to any
such direction or by reason of the failure of the Depositor to give any
such direction, and in the absence of such direction the Trustee shall
have no duty to sell or liquidate any Bonds under this Section 3.07
except to the extent otherwise required by Section 3.10 of this
Indenture.
Section 3.08. Refunding Bonds. In the event that an offer shall be
made by an obligor of any of the Bonds in a Trust to issue new
obligations in exchange and substitution for any issue of Bonds pursuant
to a plan for the refunding or refinancing of such Bonds, the Depositor
shall instruct the Trustee in writing to reject such offer and either to
hold or sell such Bonds, except that if (1) the issuer is in default with
respect to such Bonds or (2) in the opinion of the Depositor, given in
writing to the Trustee, the issuer will probably default with respect to
such Bonds in the reasonably foreseeable future, the Depositor shall
instruct the Trustee in writing to accept or reject such offer or take
any other action with respect thereto as the Depositor may deem proper.
Any obligation so received in exchange shall be deposited hereunder and
shall be subject to the terms and conditions of this Indenture to the
same extent as the Bonds originally deposited hereunder. Within five days
after such deposit, notice of such exchange and deposit shall be given by
the Trustee to each Unitholder of such Trust, including an identification
of the Bonds eliminated and the bonds substituted therefor.
Section 3.09. Bond Counsel. The Depositor may employ from time to time
as it may deem necessary a firm of municipal bond attorneys for any legal
services that may be required in connection with the disposition of
underlying bonds pursuant to Section 3.07 or the substitution of any
securities for underlying bonds as the result of any refunding permitted
under Section 3.08. The fees and expenses of such bond counsel shall be
paid by the Trustee from the Interest and Principal Accounts of the
appropriate Trust as provided for in Section 3.05(e) hereof.
Section 3.10. Notice and Sale by Trustee. If at any time the principal
of or interest on any of the Bonds shall be in default and not paid or
provision for payment thereof shall not have been duly made within thirty
days, either pursuant to the Insurance [if any] or otherwise, the Trustee
shall notify the Depositor thereof. If within thirty days after such
notification the Depositor has not given any instruction to sell or to
hold or has not taken any other action in connection with such Bonds, the
Trustee may in its discretion sell such Bonds forthwith, and the Trustee
shall not be liable or responsible in any way for depreciation or loss
incurred by reason of such sale.
Section 3.11. Trustee Not Required to Amortize. Nothing in this
Indenture, or otherwise, shall be construed to require the Trustee to
make any adjustments between the Interest and Principal Accounts of any
Trust by reason of any premium or discount in respect of any of the
Bonds.
Section 3.12. Liability of Depositor. The Depositor shall be under no
liability to the Unitholders for any action taken or for refraining from
the taking of any action in good faith pursuant to this Indenture or for
errors in judgment, but shall be liable only for its own wilful
misfeasance, bad faith or gross negligence in the performance of its
duties or by reason of its reckless disregard of its obligations and
duties hereunder. The Depositor may rely in good faith on any paper,
order, notice, list, affidavit, receipt, opinion, endorsement,
assignment, draft or any other document of any kind prima facie properly
executed and submitted to it by the Trustee, bond counsel or any other
persons pursuant to this Indenture and in furtherance of its duties.
Section 3.13. Notice to Depositor. In the event that the Trustee shall
have been notified at any time of any action to be taken or proposed to
be taken by holders of the Bonds (including but not limited to the making
of any demand, direction, request, giving of any notice, consent or
waiver or the voting with respect to any amendment or supplement to any
indenture, resolution, agreement or other instrument under or pursuant to
which the Bonds have been issued), the Trustee shall promptly notify the
Depositor and shall thereupon take such action or refrain from taking any
action as the Depositor shall in writing direct; provided, however, that
if the Depositor shall not within five business days of the giving of
such notice to the Depositor direct the Trustee to take or refrain from
taking any action, the Trustee shall take such action as it, in its sole
discretion, shall deem advisable. Neither the Depositor nor the Trustee
shall be liable to any person for any action or failure to take action
with respect to this Section 3.13.
Section 3.14. Limited Replacement of Special Bonds. If any contract in
respect of Contract Bonds other than a contract to purchase a New Bond
(as defined below), including those purchased on a when, as and if issued
basis, shall have failed due to any occurrence, act or event beyond the
control of the Depositor or the Trustee (such failed Contract Bonds being
herein called the "Special Bonds"), the Depositor shall notify the
Trustee (such notice being herein called the "Failed Contract Notice") of
its inability to deliver the failed Special Bond to the Trustee after it
is notified that the Special Bond will not be delivered by the seller
thereof to the Depositor. Prior to, or simultaneously with, giving the
Trustee the Failed Contract Notice, or within a maximum of twenty days
after giving such Notice (such twenty day period being herein called the
"Purchase Period"), the Depositor shall, if possible, purchase or enter
into the contract, if any, to purchase an obligation to be held as a Bond
hereunder (herein called the "New Bond") as part of the appropriate Trust
in replacement of the failed Special Bond, subject to the satisfaction of
all of the following conditions in the case of each purchase or contract
to purchase:
(a) The New Bonds (i) shall be tax exempt bonds issued by
states or territories of the United States or political subdivisions
thereof and, in the case of a State Trust, shall have the benefit of
an exemption from taxation of interest to an extent equal to or
greater than that of the Bonds they replace, (ii) shall have a fixed
maturity date (whether or not entitled to the benefits of any
sinking, redemption, purchase or similar fund) not less than ten
years after the date of purchase, except in the case of an IM-IT
Limited Maturity Trust, IM-IT Intermediate Trust, IM-IT Short
Intermediate Trust or Quality Intermediate Trust, in which New Bonds
shall have a fixed maturity date within 12-15 years, 5-15 years, 3-7
years, and 5-15 years, respectively, of the Date of Deposit of such
trust, (iii) must be purchased at a price that results in a current
return as of the Date of Deposit at least equal to that of the
Special Bonds they replace, (iv) must be purchased at a price that
results in a yield to maturity of the Date of Deposit at least equal
to that of the Special Bonds they replace and (v) shall be payable
as to principal and interest in United States currency.
(b) Each New Bond shall be rated at least "BBB-" or better in
the case of the IM-IT 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 IM-IT Trusts or "A" or better in the case of the
Quality Trusts by Moody's Investors Service, Inc. or comparably
rated by any other nationally recognized credit rating service
rating debt obligations which shall be designated by the Depositor
and shall be satisfactory to the Trustee.
(c) The purchase price of the New Bonds (exclusive of accrued
interest) shall not exceed the principal attributable to the Special
Bonds.
(d) With respect to the IM-IT Trusts, each New Bond is a Pre-
Insured Bond or is acceptable to the Insurer to be included under
the respective IM-IT Trust's Insurance and will be so included upon
acquisition by the Trust.
(e) The Depositor shall furnish a notice to the Trustee (which
may be part of the Failed Contract Notice) in respect of the New
Bond purchased or to be purchased that shall (i) identify the New
Bonds, (ii) state that the contract to purchase, if any, entered
into by the Depositor is satisfactory in form and substance, and
(iii) state that the foregoing conditions of clauses (a) through (d)
have been satisfied with respect to the New Bonds.
Notwithstanding anything to the contrary in this Section 3.14, no
substitution of Replacement Bonds will be made without an opinion of
counsel that such substitution will not adversely affect the federal
income tax status of the related State Trust, if such Replacement Bonds
when added to all previously purchased Replacement Bonds in the related
Trust exceed 15% of the principal amount of Bonds initially deposited in
the related Trust.
Upon satisfaction of the foregoing conditions with respect to any
New Bond, the Depositor shall pay the purchase price for the New Bond
from its own resources or, if the Trustee has credited any moneys and/or
letters of credit attributable to the failed Special Bond to the
Principal Account of the related Trust, the Trustee shall pay the
purchase price of the New Bond upon directions from the Depositor from
the moneys and/or letters of credit so credited to such Principal
Account. If the Depositor has paid the purchase price, and, in addition,
the Trustee has credited moneys of the Depositor to the Principal Account
of the related Trust, the Trustee shall forthwith return to the Depositor
the portion of such moneys that is not properly distributable to
Unitholders of such Trust pursuant to Section 3.05.
Whenever a New Bond is acquired by the Depositor pursuant to the
provisions of this Section 3.14, the Trustee shall, within five days
thereafter, mail to all Unitholders of such Trust notices of such
acquisition, including an identification of the failed Special Bonds and
the New Bonds acquired. The purchase price of the New Bonds shall be
paid out of the principal attributable to the failed Special Bonds. The
Trustee shall not be liable or responsible in any way for depreciation or
loss incurred by reason of any purchase made pursuant to any such
directions and in the absence of such directions the Trustee shall have
no duty to purchase any New Bonds under this Indenture. The Depositor
shall not be liable for any failure to instruct the Trustee to purchase
any New Bonds or for errors of judgment in respect of this Section 3.14;
provided, however, that this provision shall not protect the Depositor
against any liability to which it would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of
its duties or by reason of its reckless disregard of its obligations and
duties hereunder.
Section 3.15. Compensation of Evaluator for Supervisory Services. As
compensation for providing supervisory portfolio services under this
Indenture, the Evaluator shall receive against a statement or statements
therefor submitted to the Trustee monthly or annually an aggregate annual
fee as set forth in Part II of the Trust Agreement. However, in no event
shall such compensation when combined with all compensation received from
other unit investment trusts of which Van Kampen American Capital
Distributors, Inc. is Sponsor for providing such supervisory services in
any calendar year exceed the aggregate cost to the Evaluator for
providing such services. Such compensation may, from time to time, be
adjusted provided that the total adjustment upward does not, at the time
of such adjustment, exceed the percentage of the total increase, after
the date hereof, in consumer prices for services as measured by the
United States Department of Labor Consumer Price Index entitled "All
Services Less Rent of Shelter" or similar index, if such index should no
longer be published. The consent or concurrence of any Unitholder
hereunder shall not be required for any such adjustment or increase.
Such compensation shall be charged by the Trustee, upon receipt of
invoice therefor from the Evaluator, against the applicable Interest and
Principal Accounts on or before the Distribution Date on which such
period terminates. If the cash balance in the Interest and Principal
Accounts shall be insufficient to provide for amounts payable pursuant to
this Section 3.15, the Trustee shall have the power to sell (i) Bonds
from the current list of Bonds designated to be sold pursuant to
Section 5.02 hereof, or (ii) if no such Bonds have been so designated,
such Bonds as the Trustee may see fit to sell in its own discretion, and
to apply the proceeds of any such sale in payment of the amounts payable
pursuant to this Section 3.15. Any moneys payable to the Evaluator
pursuant to this Section 3.15 shall be secured by a prior lien on the
Fund except that no such lien shall be prior to any lien in favor of the
Trustee under the provisions of Section 6.04.
"Article IV Evaluation of Bonds Evaluator";Article IV
Evaluation of Bonds; Evaluator
Section 4.01. Evaluation of Bonds. The Evaluator shall determine
separately and promptly furnish to the Trustee and the Depositor upon
request the value of each issue of Bonds in each Trust (treating separate
maturities of Bonds as separate issues) as of the time specified in
Part II of the Trust Agreement on days of trading on the New York Stock
Exchange on the bid side of the market on the days on which an evaluation
of the Trust Fund is required by Section 5.01 and, in addition, as of the
time specified in Part II of the Trust Agreement on days of trading on
the New York Stock Exchange on the bid side of the market if a secondary
market for the Units is maintained, such additional evaluation being made
on any day desired by the Trustee or deemed necessary by the Depositor.
Such evaluations shall be made (i) on the basis of current bid prices for
the Bonds, (ii) if bids are not available for the Bonds, on the basis of
current bid prices for comparable bonds, (iii) by causing the value of
the Bonds to be determined by others engaged in the practice of
evaluation, quoting or appraising comparable bonds, or (iv) by any
combination of the above. For each evaluation, the Evaluator shall also
determine and furnish to the Trustee and the Depositor the aggregate of
(a) the value of all Bonds in each Trust on the basis of such evaluation
and (b) on the basis of the information furnished to the Evaluator by the
Trustee pursuant to Section 3.03, the amount of cash then held in the
Principal Account relating to such Trust which was received by the
Trustee after the Record Date preceding such determination less any
amounts held in the Principal Account relating to such Trust for
distribution to Unitholders on a subsequent Distribution Date when a
Record Date occurs four business days or less after such determination.
For the purposes of the foregoing, the Evaluator may obtain current bid
prices for the Bonds in each Trust from investment dealers or brokers
(including the Depositor) that customarily deal in municipal bonds.
Section 4.02. Information for Unitholders. For the purpose of
permitting Unitholders to satisfy any reporting requirements of
applicable Federal or State tax law, the Evaluator shall make available
to the Trustee and the Trustee shall transmit to any Unitholder upon
request any determinations made by it pursuant to Section 4.01.
Section 4.03. Compensation of Evaluator. As compensation for its
services hereunder, the Evaluator shall receive against a statement
therefor submitted to the Trustee an annual fee, payable in monthly
installments, as set forth in Part II of the Trust Agreement. The
Evaluator's compensation for any year shall be computed on the basis set
forth in Part II of the Trust Agreement and shall be apportioned among
the respective plans of distribution. Such compensation may, from time
to time, be adjusted provided that the total adjustment upward does not,
at the time of such adjustment, exceed the percentage of the total
increase, after the date hereof, in consumer prices for services as
measured by the United States Department of Labor Consumer Price Index
entitled "All Services Less Rent of Shelter" or similar index, if such
index shall no longer be published. The consent or concurrence of any
Unitholder hereunder shall not be required for any such adjustment or
increase. Such compensation shall be charged by the Trustee, upon
receipt of invoice therefor from the Evaluator, against the Interest and
Principal Accounts of the respective Trusts on or before the Distribution
Date on which such period terminates. If the cash balances in the
Interest and Principal Accounts of any Trust shall be insufficient to
provide for amounts payable pursuant to this Section 4.03, the Trustee
shall have the power to sell (i) Bonds of such Trust from the Bonds
designated to be sold pursuant to Section 5.02 hereof, or (ii) if no such
Bonds have been so designated, such Bonds of such Trust as the Trustee
may see fit to sell in its own discretion, and to apply the proceeds of
any such sale in payment of the amounts payable pursuant to this
Section 4.03. Any moneys payable to the Evaluator pursuant to this
Section 4.03 shall be secured by a prior lien on such Trust except that
no such lien shall be prior to any lien in favor of the Trustee under the
provisions of Section 6.04.
Section 4.04. Liability of Evaluator. The Trustee, the Depositor and
the Unitholders may rely on any evaluation furnished by the Evaluator and
shall have no responsibility for the accuracy thereof. The
determinations made by the Evaluator hereunder shall be made in good
faith upon the basis of the best information available to it. The
Evaluator shall be under no liability to the Trustee, the Depositor or
the Unitholders for errors in judgment provided, however, that this
provision shall not protect the Evaluator against any liability to which
it would otherwise be subject by reason of willful misfeasance, bad faith
or gross negligence in the performance of its duties or by reason of its
reckless disregard of its obligations and duties hereunder.
'Section 4.05. Resignation and Removal of Evaluator; Successor'.
(a) The Evaluator may resign and be discharged hereunder, by executing an
instrument in writing resigning as Evaluator and filing the same with the
Depositor and the Trustee, not less than 60 days before the date
specified in such instrument when, subject to Section 4.05(e), such
resignation is to take effect. Upon receiving such notice of
resignation, the Depositor and the Trustee shall use their best efforts
to appoint a successor evaluator having qualifications and at a rate of
compensation satisfactory to the Depositor and the Trustee. Such
appointment shall be made by written instrument executed by the Depositor
and Trustee, in duplicate, one copy of which shall be delivered to the
resigning Evaluator and one copy to the successor evaluator. The
Depositor or the Trustee may remove the Evaluator at any time upon 30
days' written notice and appoint a successor evaluator having
qualifications and at a rate of compensation satisfactory to the
Depositor and the Trustee. Such appointment shall be made by written
instrument executed by the Depositor and the Trustee, in duplicate, one
copy of which shall be delivered to the Evaluator so removed and one copy
to the successor evaluator. Notice of such resignation or removal and
appointment of a successor evaluator shall be mailed by the Trustee to
each Unitholder then of record.
(b) Any successor evaluator appointed hereunder shall execute,
acknowledge and deliver to the Depositor and the Trustee an instrument
accepting such appointment hereunder, and such successor evaluator
without any further act, deed or conveyance shall become vested with all
the rights, powers, duties and obligations of its predecessor hereunder
with like effect as if originally named Evaluator herein and shall be
bound by all the terms and conditions of this Indenture.
(c) In case at any time the Evaluator shall resign and no successor
evaluator shall have been appointed and have accepted appointment within
30 days after notice of resignation has been received by the Depositor
and the Trustee, the Evaluator may forthwith apply to a court of
competent jurisdiction for the appointment of a successor evaluator.
Such court may thereupon after such notice, if any, as it may deem proper
and prescribe, appoint a successor evaluator.
(d) Any corporation into which the Evaluator hereunder may be
merged or with which it may be consolidated, or any corporation resulting
from any merger or consolidation to which the Evaluator hereunder shall
be a party, shall be the successor evaluator under this Indenture without
the execution or filing of any paper, instrument or further act to be
done on the part of the parties hereto, anything herein, or in any
agreement relating to such merger or consolidation, by which the
Evaluator may seek to retain certain powers, rights and privileges
theretofore obtaining for any period of time following such merger or
consolidation, to the contrary notwithstanding.
(e) Any resignation or removal of the Evaluator and appointment of
a successor evaluator pursuant to this Section shall become effective
upon acceptance of appointment by the successor evaluator as provided in
subsection (b) hereof.
Article V Evaluation, Redemption, Purchase, Transfer, Interchange or
Replacement of Units Article V
Evaluation, Redemption, Purchase, Transfer,
Interchange or Replacement of Units
Section 5.01. Evaluation. The Trustee shall make an evaluation of each
Trust as of the time specified in Part II of the Trust Agreement on days
of trading on the New York Stock Exchange (i) on the day on which any
Unit of such Trust is tendered for redemption and (ii) on any other day
desired by the Trustee or requested by the Depositor. Such evaluations
shall take into account and itemize separately (1) the cash on hand in
the respective Trusts of the Fund (other than cash declared held in trust
to cover contracts to purchase bonds) or moneys in the process of being
collected from matured interest coupons or bonds matured or called for
redemption prior to maturity, (2) the value of each issue of the Bonds in
the respective Trusts of the Fund as last determined by the Evaluator
pursuant to Section 4.01, and (3) interest accrued thereon not subject to
collection and distribution. For each such evaluation there shall be
deducted from the sum of the above (i) amounts representing any
applicable taxes or governmental charges payable out of the respective
Trusts of the Fund and for which no deductions shall have previously been
made for the purpose of addition to the Reserve Account of such Trust,
(ii) amounts representing accrued expenses of the respective Trusts of
the Fund including but not limited to unpaid fees and expenses of the
Trustee, the Evaluator, the Depositor and bond counsel, in each case as
reported by the Trustee to the Depositor on or prior to the date of
evaluation, and (iii) cash held for distribution to Unitholders of record
of such Trust as of a date prior to the evaluation then being made. The
value of the pro rata share of each Unit of such Trust determined on the
basis of any such evaluation shall be referred to herein as the "Unit
Value."
The Trustee shall make an evaluation of the Bonds deposited in each
Trust as of the time said Bonds are deposited under this Indenture. Such
evaluation shall be made on the same basis as set forth in Section 4.01,
except that it shall be based upon the offering prices of the Bonds. The
Trustee, in lieu of making the evaluation required hereby, may use an
evaluation prepared by the Evaluator and/or by any other recognized
evaluator including Interactive Data Services, Inc. and in so doing shall
not be liable or responsible, under any circumstances whatsoever, for the
accuracy or correctness thereof, or for any error or omission therein.
The Trustee's determination of the offering price of the Bonds on the
date of deposit determined as herein provided shall be included in the
Schedules attached to the Trust Agreement.
'Section 5.02. Redemptions by Trustee; Purchases by Depositor'. Any
Unit tendered for redemption by a Unitholder or his duly authorized
attorney to the Trustee at its Unit Investment Trust Division office at
101 Barclay Street, New York, New York 10286 whether in the form of a
Certificate or in uncertificated form tendered by means of an appropriate
request for redemption in form approved by the Trustee shall be redeemed
by the Trustee on the seventh calendar day following the day on which
tender for redemption is made, provided that if such day of redemption is
not a business day, then such Unit shall be redeemed on the first
business day prior thereto (being herein called the "Redemption Date").
Subject to payment by such Unitholder of any tax or other governmental
charges which may be imposed thereon, such redemption is to be made by
payment on the Redemption Date of cash equivalent to the Unit Value,
determined by the Trustee as of the close of trading on the New York
Stock Exchange, on the date of tender; provided that accrued interest is
paid to the Redemption Date, multiplied by the number of Units
represented by such Certificate (herein called the "Redemption Price").
Units received for redemption by the Trustee on any day after that time
specified in Part II of the Trust Agreement on days of trading on the New
York Stock Exchange will be held by the Trustee until the next day on
which the New York Stock Exchange is open for trading and will be deemed
to have been tendered on such day for redemption at the Redemption Price
computed on that day. Units will be deemed to be "tendered" to the
Trustee when the Trustee is in physical receipt of the Certificate or
Certificates representing such Units in the form and with such
documentation as is required to accomplish transfers of Units pursuant to
Section 5.03 hereof.
The Trustee may in its discretion, and shall when so directed by the
Depositor, suspend the right of redemption for Units of a Trust or
postpone the date of payment of the Redemption Price therefor for more
than seven calendar days following the day on which tender for redemption
is made (1) for any period during which the New York Stock Exchange is
closed other than customary weekend and holiday closings or during which
trading on the New York Stock Exchange is restricted; (2) for any period
during which an emergency exists as a result of which disposal by such
Trust of the Bonds is not reasonably practicable or it is not reasonably
practicable fairly to determine in accordance herewith the value of the
Bonds; or (3) for such other period as the Securities and Exchange
Commission may by order permit, and shall not be liable to any person or
in any way for any loss or damage which may result from any such
suspension or postponement.
Not later than the close of business on the day of tender of a Unit
or Units for redemption by a Unitholder other than the Depositor, the
Trustee shall notify the Depositor of such tender. The Depositor shall
have the right to purchase such Unit or Units by notifying the Trustee of
its election to make such purchase as soon as practicable thereafter but
in no event subsequent to the close of business on the second business
day after the day on which such Unit or Units were tendered for
redemption. Such purchase shall be made by payment for such Unit or
Units by the Depositor to the Unitholder not later than the close of
business on the Redemption Date of an amount not less than the Redemption
Price which would otherwise be payable by the Trustee to such Unitholder.
Any Unit or Units so purchased by the Depositor may at the option of
the Depositor be tendered to the Trustee for redemption at the Unit
Investment Trust Division office of the Trustee in the manner provided in
the first paragraph of this Section 5.02.
If the Depositor does not elect to purchase any Unit or Units of a
Trust tendered to the Trustee for redemption, or if a Unit or Units are
being tendered by the Depositor for redemption, that portion of the
Redemption Price which represents interest shall be withdrawn from the
Interest Account of such Trust to the extent available. The balance paid
on any redemption, including accrued interest, if any, shall be withdrawn
from the Principal Account of such Trust to the extent that funds are
available for such purpose. If such available balance shall be
insufficient, the Trustee shall sell such of the Bonds held in such
Trust, currently designated for such purposes by the Evaluator, as the
Trustee in its sole discretion shall deem necessary. In the event that
funds are withdrawn from such Principal Account for payment of accrued
interest, such Principal Account shall be reimbursed for such funds so
withdrawn when sufficient funds are next available in such Interest
Account.
The Evaluator shall designate the Bonds held in each Trust to be
sold for the purpose of redemption of Units of each Trust tendered for
redemption and not purchased by the Depositor, and for payment of
expenses hereunder, provided that if the Evaluator shall for any reason
fail to designate a Bond or Bonds for such purpose the Trustee, in its
sole discretion, may designate Bonds for such purposes. The net proceeds
of any sales of Bonds representing principal shall be credited to the
Principal Account of such Trust and the proceeds of such sales
representing accrued interest shall be credited to the Interest Account
of such Trust. With respect to the IM-IT Trusts, the Evaluator shall
also designate on such list of Bonds designated to be sold, the Bonds
upon the sale of which the Trustee shall obtain permanent insurance (the
"Permanent Insurance") from an Insurer, provided that if the Evaluator
shall for any reason fail to make such designation, the Trustee in its
sole discretion shall make such designation if it deems such designation
to be in the best interests of Unitholders. The Trustee is hereby
authorized to pay and shall pay out of the proceeds of the sale of the
Bonds which are covered by Permanent Insurance any premium for such
Permanent Insurance and the net proceeds after such deduction shall be
credited to the Principal and Interest Account as described above.
The Trustee shall not be liable or responsible in any way for
depreciation or loss incurred by reason of any sale of Bonds made
pursuant to this Section 5.02. Certificates evidencing Units redeemed
pursuant to this Section 5.02 shall be cancelled by the Trustee and the
Unit or Units evidenced by such Certificates shall be terminated by such
redemptions.
Certificates evidencing Units redeemed pursuant to this Section 5.02
shall be cancelled by the Trustee and the Unit or Units evidenced by such
Certificates shall be terminated by such redemptions. In the event that
a Certificate shall be tendered representing a number of Units greater
than those requested to be redeemed by the Unitholder, the Trustee shall
issue to such Unitholder, unless such Unitholder requests such Units be
uncertificated, upon payment of any tax or charges of the character
referred to in the second paragraph of Section 5.03, a new Certificate
evidencing the Units representing the balance of the Certificate so
tendered and not redeemed.
Section 5.03. Transfer or Interchange of Units. Units will be held in
certificated form unless the Unitholder requests in writing to have such
Units be held in uncertificated form. Units may be transferred by the
registered holder thereof by presentation and surrender of such Units and
Certificates, if issued, at the Unit Investment Trust Division office of
the Trustee, properly endorsed or accompanied by a written instrument or
instruments of transfer in form satisfactory to the Trustee and executed
by the Unitholder or his authorized attorney, whereupon new Units or a
new registered Certificate or Certificates for the same number of Units
of the same Trust executed by the Trustee and the Depositor will be
issued in exchange and substitution therefor and Units surrendered shall
be cancelled by the Trustee. The registered holder of any Unit may
transfer such Unit by the presentation of transfer instructions and
Certificates, if issued, to the Trustee at the Unit Investment Trust
Division office of the Trustee accompanied by such documents as the
Trustee deems necessary to evidence the authority of the person making
such transfer and executed by the registered holder or his authorized
attorney, whereupon the Trustee shall make proper notification of such
transfer on the registration books of the Trustee. Unitholders holding
their Units in uncertificated form may at any time request the Trustee to
issue Certificates for such Units and Unitholders holding Certificates
may at any time request that their Units be held in uncertificated form.
The Trustee shall, upon receipt of such request in form satisfactory to
it, accompanied by Certificates, if any, issue such Certificates, or
cancel such Certificate and make such appropriate notations on its books,
as may be requested by such Unitholder; provided that the Trustee is
entitled to specify the minimum denomination of any Certificate issued.
Certificates issued pursuant to this Indenture are interchangeable for
one or more other Certificates in an equal aggregate number of Units of
the same Trust and all Certificates issued shall be issued in
denominations of one Unit or any multiple thereof as may be requested by
the Unitholder. The Trustee may deem and treat the person in whose name
any Certificate shall be registered upon the books of the Trustee as the
owner of such Certificate for all purposes hereunder and the Trustee
shall not be affected by any notice to the contrary, nor be liable to any
person or in any way for so deeming and treating the person in whose name
any Certificate shall be so registered.
A sum sufficient to pay any tax or other governmental charge that
may be imposed in connection with any such transfer or interchange shall
be paid by the Unitholder to the Trustee. The Trustee may require a
Unitholder to pay a reasonable fee which the Trustee in its sole
discretion shall determine for each new Certificate issued on any such
transfer or interchange.
All Certificates cancelled pursuant to this Indenture shall be
disposed of by the Trustee without liability on its part.
Section 5.04. Certificates Mutilated, Destroyed, Stolen or Lost. In
case any Certificate shall become mutilated or be destroyed, stolen or
lost, the Trustee shall execute and deliver a new Certificate in exchange
and substitution therefor upon the holder's furnishing the Trustee with
proper identification and satisfactory indemnity, complying with such
other reasonable regulations and conditions as the Trustee may prescribe
and paying such expenses as the Trustee may incur. Any mutilated
Certificate shall be duly surrendered and cancelled before any new
Certificate shall be issued in exchange and substitution therefor. Upon
the issuance of any new Certificate a sum sufficient to pay any tax or
other governmental charge and the fees and expenses of the Trustee may be
imposed. Any such new Certificate issued pursuant to this Section shall
constitute complete and indefeasible evidence of ownership in the
respective Trusts of the Fund, as if originally issued, whether or not
the lost, stolen or destroyed Certificate shall be found at any time.
In the event the related Trust has terminated or is in the process
of termination, the Trustee may, instead of issuing a new Certificate in
exchange and substitution for any Certificate which shall have become
mutilated or shall have been destroyed, stolen or lost, make the
distributions in respect of such mutilated, destroyed, stolen or lost
Certificate (without surrender thereof except in the case of a mutilated
Certificate) as provided in Section 8.02 hereof if the Trustee is
furnished with such security or indemnity as it may require to save it
harmless, and in the case of destruction, loss or theft of a Certificate,
evidence to the satisfaction of the Trustee of the destruction, loss or
theft of such Certificate and of the ownership thereof.
Article VI Trustee Article VI
Trustee
Section 6.01. General Definition of Trustee's Liabilities, Rights and
Duties. The Trustee shall in its discretion undertake such action as it
may deem necessary at any and all times to protect each Trust and the
rights and interests of the Unitholders thereof pursuant to the terms of
this Indenture, provided, however, that the expenses and costs of such
actions, undertakings or proceedings shall be reimbursable to the Trustee
from the Interest and Principal Accounts of such Trust and the payment of
such costs and expenses shall be secured by a prior lien on such Trust.
In addition to and notwithstanding the other duties, rights,
privileges and liabilities of the Trustee as otherwise set forth the
liabilities of the Trustee are further defined as follows:
(a) all moneys deposited with or received by the Trustee
hereunder related to a Trust shall be held by it without interest in
trust as part of such Trust or the Reserve Account of such Trust
until required to be disbursed in accordance with the provisions of
this Indenture and such moneys will be segregated by separate
recordation on the trust ledger of the Trustee so long as such
practice preserves a valid preference under applicable law, or if
such preference is not so preserved, the Trustee shall handle such
moneys in such other manner as shall constitute the segregation and
holding thereof in trust within the meaning of the Investment
Company Act of 1940;
(b) the Trustee shall be under no liability for any action
taken in good faith on any appraisal, paper, order, list, demand,
request, consent, affidavit, notice, opinion, direction, evaluation,
endorsement, assignment, resolution, draft or other document whether
or not of the same kind prima facie properly executed, or for the
disposition of moneys, Bonds or certificates pursuant to this
Indenture, or in respect of any evaluation which it is required to
make or is required or permitted to have made by others under this
Indenture or otherwise, except by reason of its own negligence, lack
of good faith or wilful misconduct, provided that the Trustee shall
not in any event be liable or responsible for any evaluation made by
the Evaluator. The Trustee may construe any of the provisions of
this Indenture, insofar as the same may appear to be ambiguous or
inconsistent with any other provisions hereof, and any construction
of any such provisions hereof by the Trustee in good faith shall be
binding upon the parties hereto;
(c) the Trustee shall not be responsible for or in respect of
the recitals herein, the validity or sufficiency of this Indenture
or for the due execution hereof by the Depositor, or for the form,
character, genuineness, sufficiency, value or validity of any Bonds
(except that the Trustee shall be responsible for the exercise of
due care in determining the genuineness of Bonds delivered to it
pursuant to contracts for the purchase of such Bonds) or for or in
respect of the validity or sufficiency of the Certificates (except
for the due execution thereof by the Trustee) or of the due
execution thereof by the Depositor, or for the payment by the
Insurer, if any, of amounts due under, or the performance by the
Insurer of its obligations in accordance with, the Insurance, and
the Trustee shall in no event assume or incur any liability, duty,
or obligation to any Unitholder or the Depositor other than as
expressly provided for herein. The Trustee shall not be responsible
for or in respect of the validity of any signature by or on behalf
of the Depositor;
(d) the Trustee shall not be under any obligation to appear
in, prosecute or defend any action, which in its opinion may involve
it in expense or liability, unless as often as required by the
Trustee, it shall be furnished with reasonable security and
indemnity against such expense or liability, and any pecuniary cost
of the Trustee from such actions shall be deductible from and a
charge against the Interest and Principal Accounts of the affected
Trust or Trusts;
(e) the Trustee may employ agents, attorneys, accountants and
auditors and shall not be answerable for the default or misconduct
of any such agents, attorneys, accountants or auditors if such
agents, attorneys, accountants or auditors shall have been selected
with reasonable care. The Trustee shall be fully protected in
respect of any action under this Indenture taken, or suffered, in
good faith by the Trustee, in accordance with the opinion of its
counsel. The fees and expenses charged by such agents, attorneys,
accountants or auditors shall constitute an expense of the Trustee
reimbursable from the Interest and Principal Accounts of the
affected Trust or Trusts as set forth in Section 6.04 hereof;
(f) if at any time the Depositor shall fail to undertake or
perform any of the duties which by the terms of this Indenture are
required by it to be undertaken or performed, or such Depositor
shall become incapable of acting or shall be adjudged a bankrupt or
insolvent, or a receiver of such Depositor or of its property shall
be appointed, or any public officer shall take charge or control of
such Depositor or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, then in any such case,
the Trustee may: (1) appoint a successor depositor who shall act
hereunder in all respects in place of such Depositor which successor
shall be satisfactory to the Trustee, and which may be compensated
at rates deemed by the Trustee to be reasonable under the
circumstances, by deduction ratably from the Interest Accounts of
the affected Trusts or, to the extent funds are not available in
such Account, from the Principal Accounts of the affected Trusts but
no such deduction shall be made exceeding such reasonable amount as
the Securities and Exchange Commission may prescribe in accordance
with Section 26(a)(2)(C) of the Investment Company Act of 1940, or
(2) terminate and liquidate the affected Trust in the manner
provided in Section 8.02;
(g) if (i) the value of any Trust as shown by any evaluation
by the Trustee pursuant to Section 5.01 hereof shall be less than
20% of the aggregate principal amount of Bonds initially deposited
in such Trust or (ii) by reason of the aggregate redemption of Units
of any Trust by the Depositor and/or one or more underwriters not
theretofore sold constituting more than 60% of the number of Units
of such Trust initially authorized and the net worth of any Trust is
reduced to less than 40% of the aggregate principal amount of Bonds
initially deposited in such Trust, the Trustee may in its
discretion, and shall when so directed by the Depositor, terminate
this Indenture and the trust created hereby insofar as they relate
to such Trust and liquidate such Trust, all in the manner provided
in Section 8.02;
(h) in no event shall the Trustee be liable for any taxes or
other governmental charges imposed upon or in respect of the Bonds
or upon the interest thereon or upon it as Trustee hereunder or upon
or in respect of any Trust which it 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 the premises. For all
such taxes and charges and for any expenses, including counsel fees,
which the Trustee may sustain or incur with respect to such taxes or
charges, the Trustee shall be reimbursed and indemnified out of the
Interest and Principal Accounts of the affected Trust, and the
payment of such amounts so paid by the Trustee shall be secured by a
prior lien on such Trust;
(i) no payment to a Depositor or to any principal underwriter
(as defined in the Investment Company Act of 1940) for any Trust or
to any affiliated person (as so defined) or agent of a Depositor or
such underwriter shall be allowed as an expense except for payment
of such reasonable amounts as the Securities and Exchange Commission
may prescribe as compensation for performing bookkeeping and other
administrative services of a character normally performed by the
Trustee; and
(j) the Trustee except by reason of its own negligence or
wilful misconduct shall not be liable for any action taken or
suffered to be taken by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred
upon it by this Indenture.
Section 6.02. Books, Records and Reports. The Trustee shall keep
proper books of record and account of all the transactions of each Trust
under this Indenture at its corporate trust office including a record of
the name and address of, and the Certificates issued by each Trust and
held by, every Unitholder, and such books and records of each Trust shall
be open to inspection by any Unitholder of such Trust at all reasonable
times during the usual business hours.
Unless the Depositor determines that such an audit is not required,
the account of each Trust shall be audited not less than annually by
independent public accountants designated from time to time by the
Depositor and reports of such accountants shall be furnished by the
Trustee, upon request, to Unitholders. The Trustee, however, in
connection with any such audits shall not be obligated to use Trust
assets to pay for such audits in excess of the amounts indicated in the
Prospectus relating to such Trust.
To the extent permitted under the Investment Company Act of 1940 as
evidenced by an opinion of counsel to the Depositor, the Trustee shall
pay, or reimburse to the Depositor or others, the costs of the
preparation of documents and information with respect to a Trust required
by law or regulation in connection with the maintenance of a secondary
market in units of such Trust. Such costs may include but are not
limited to accounting and legal fees, blue sky registration and filing
fees, printing expenses and other reasonable expenses related to
documents required under Federal and state securities laws. Such costs
shall be a Trust expense and the Trustee shall not be obligated to
advance any of its own funds to make such payments.
The Trustee shall make such annual or other reports as may from time
to time be required under any applicable state or federal statute or rule
or regulation thereunder.
Section 6.03. Indenture and List of Bonds on File. The Trustee shall
keep a certified copy or duplicate original of this Indenture on file at
its corporate trust office available for inspection at all reasonable
times during the usual business hours by any Unitholder, together with a
current list of the Bonds in each Trust.
Section 6.04. Compensation. For services performed under this
Indenture the Trustee shall be paid under each plan of distribution an
amount per annum as set forth in Part II of the Trust Agreement. The
Trustee's compensation shall be computed on the basis of the greatest
amount of such principal amount of Bonds in such Trust at any time during
the period with respect to which such compensation is being computed and
shall be apportioned among the respective plans of distribution in effect
as of January 1 next preceding such computation. The Trustee may from
time to time adjust its compensation as set forth above provided that
total adjustment upward does not, at the time of such adjustment, exceed
the percentage of the total increase, after the date hereof, in consumer
prices for services as measured by the United States Department of Labor
Consumer Price Index entitled "All Services Less Rent of Shelter" or
similar index, if such index should no longer be published. In addition,
the Trustee's fee may be periodically adjusted in response to
fluctuations in short-term interest rates (reflecting the cost to the
Trustee of advancing funds to the Trust to meet scheduled distributions).
The consent or concurrence of any Unitholder hereunder shall not be
required for any such adjustment or increase. Such compensation shall be
charged by the Trustee against the Interest and Principal Accounts of
each Trust on or before the distribution date on which such period
terminates; provided, however, that such compensation shall be deemed to
provide only for the usual, normal and proper functions undertaken as
Trustee pursuant to this Indenture. The Trustee shall charge the
Interest and Principal Accounts of each Trust for any and all expenses
and disbursements incurred hereunder, including legal and auditing
expenses, and for any extraordinary services performed by the Trustee
hereunder relating to such Trust.
The Trustee shall be indemnified ratably by the affected Trusts and
held harmless against any loss or liability accruing to it without gross
negligence, bad faith or wilful misconduct on its part, arising out of or
in connection with the acceptance or administration of the trust,
including the costs and expenses (including counsel fees) of defending
itself against any claim of liability in the premises. If the cash
balances in the Interest and Principal Accounts of the affected Trust
shall be insufficient to provide for amounts payable pursuant to this
Section 6.04, the Trustee shall have the power to sell (i) Bonds of the
affected Trust from the Bonds designated to be sold pursuant to
Section 5.02 hereof, or (ii) if no such Bonds have been so designated,
such Bonds of the affected Trust as the Trustee may see fit to sell in
its own discretion, and to apply the proceeds of any such sale in payment
of the amounts payable pursuant to this Section 6.04.
The Trustee shall not be liable or responsible in any way for
depreciation or loss incurred by reason of any sale of Bonds made
pursuant to this Section 6.04. Any moneys payable to the Trustee
pursuant to this Section shall be secured by a prior lien on the affected
Trust.
'Section 6.05. Removal and Resignation of Trustee; Successor'. The
following provisions shall provide for the removal and resignation of the
Trustee and the appointment of any successor trustee:
(a) the Trustee or any trustee or trustees hereafter appointed
may resign and be discharged of the Trusts created by this
Indenture, by executing an instrument in writing resigning as
Trustee of such Trusts and filing same with the Depositor and
mailing a copy of a notice of resignation to all Unitholders then of
record, not less than sixty days before the date specified in such
instrument when, subject to Section 6.05(e), such resignation is to
take effect. Upon receiving such notice of resignation, the
Depositor shall promptly appoint a successor trustee as hereinafter
provided, by written instrument, in duplicate, one copy of which
shall be delivered to the resigning Trustee and one copy to the
successor trustee. The Depositor may at any time remove the
Trustee, with or without cause, and appoint a successor trustee by
written instrument, in duplicate, one copy of which shall be
delivered to the Trustee so removed and one copy to the successor
trustee. Notice of such resignation or removal of a trustee and
appointment of a successor trustee shall be mailed by the successor
trustee, promptly after its acceptance of such appointment, to each
Unitholder then of record;
(b) any successor trustee appointed hereunder shall execute,
acknowledge and deliver to the Depositor and to the retiring Trustee
an instrument accepting such appointment hereunder, and such
successor trustee without any further act, deed or conveyance shall
become vested with all the rights, powers, duties and obligations of
its predecessor hereunder with like effect as if originally named
Trustee herein and shall be bound by all the terms and conditions of
this Indenture. Upon the request of such successor trustee, the
Depositor and the retiring Trustee shall, upon payment of any
amounts due the retiring Trustee, or provision therefor to the
satisfaction of such retiring Trustee, execute and deliver an
instrument acknowledged by it transferring to such successor trustee
all the rights and powers of the retiring Trustee; and the retiring
Trustee shall transfer, deliver and pay over to the successor
trustee all Bonds and moneys at the time held by it hereunder,
together with all necessary instruments of transfer and assignment
or other documents properly executed necessary to effect such
transfer and such of the records or copies thereof maintained by the
retiring Trustee in the administration hereof as may be requested by
the successor trustee, and shall thereupon be discharged from all
duties and responsibilities under this Indenture;
(c) in case at any time the Trustee shall resign and no
successor trustee shall have been appointed and have accepted
appointment within thirty days after notice of resignation has been
received by the Depositor, the retiring Trustee may forthwith apply
to a court of competent jurisdiction for the appointment of a
successor trustee. Such court may thereupon, after such notice, if
any, as it may deem proper and prescribe, appoint a successor
trustee;
(d) any entity into which any trustee hereunder may be merged
or with which it may be consolidated, or any entity resulting from
any merger or consolidation to which any trustee hereunder shall be
a party, shall be the successor trustee under this Indenture without
the execution or filing of any paper, instrument or further act to
be done on the part of the parties hereto, anything herein, or in
any agreement relating to such merger or consolidation, by which any
such trustee may seek to retain certain powers, rights and
privileges theretofore obtaining for any period of time following
such merger or consolidation to the contrary notwithstanding; and
(e) any resignation or removal of the Trustee and appointment
of a successor trustee pursuant to this Section shall become
effective upon acceptance of appointment by the successor trustee as
provided in subsection (b) hereof.
Section 6.06. Qualifications of Trustee. The Trustee shall be a
corporation organized and doing business under the laws of the United
States or any state thereof, which is authorized under such laws to
exercise corporate trust powers and having at all times an aggregate
capital, surplus, and undivided profits of not less than $5,000,000.
Article VII Rights of Unitholders Article VII
Rights of Unitholders
Section 7.01. Beneficiaries of Trust. By the purchase and acceptance
or other lawful delivery and acceptance of any Unit, whether certificated
or not, of a Trust the Unitholder shall be deemed to be a beneficiary of
such Trust created by this Indenture and vested with all right, title and
interest in such Trust to the extent of the Unit or Units set forth and
evidenced by such Certificate or held in uncertificated form, subject to
the terms and conditions of this Indenture and of such Certificate.
Section 7.02. Rights, Terms and Conditions. In addition to the other
rights and powers set forth in the other provisions and conditions of
this Indenture the Unitholders shall have the following rights and powers
and shall be subject to the following terms and conditions:
(a) a Unitholder may at any time prior to the Trustee's close
of business as of the date on which the Trust is terminated tender
his Units or his Certificate(s) if held in certificated form
(including any temporary Certificate or other evidence of ownership
of Units of such Trust, issued by the Trustee or the Depositor) to
the Trustee for redemption in accordance with Section 5.02;
(b) the death or incapacity of any Unitholder shall not
operate to terminate this Indenture or the Trust to which the
Certificate relates nor entitle his legal representatives or heirs
to claim an accounting or to take any action or proceeding in any
court of competent jurisdiction for a partition or winding up of the
Fund or the related Trust, nor otherwise affect the rights,
obligations and liabilities of the parties hereto or any of them.
Each Unitholder expressly waives any right he may have under any
rule of law, or the provisions of any statute, or otherwise, to
require the Trustee at any time to account, in any manner other than
as expressly provided in this Indenture, in respect of the Bonds or
moneys from time to time received, held and applied by the Trustee
hereunder; and
(c) no Unitholder shall have any right to vote or in any
manner otherwise control the operation and management of the Fund,
or the obligations of the parties hereto, nor shall anything herein
set forth, or contained in the terms of the Certificates which may
have been issued, be construed so as to constitute the Unitholders
from time to time as partners or members of an association; nor
shall any Unitholder ever be under any liability to any third
persons by reason of any action taken by the parties to this
Indenture, or any other cause whatsoever.
"Article VIII Additional Covenants Miscellaneous Provisions";Article
VIII
Additional Covenants; Miscellaneous Provisions
Section 8.01. Amendments. (a) This Indenture may be amended from time
to time by the parties hereto or their respective successors, without the
consent of any of the Unitholders, (i) to cure any ambiguity or to
correct or supplement any provision contained hereon which may be
defective or inconsistent with any other provision contained herein; or
(ii) to make such other provision in regard to matters or questions
arising hereunder as shall not adversely affect the interests of the
Unitholders; provided, however, that the parties hereto may not amend
this Indenture so as to (1) increase the number of Units issuable
hereunder above the maximum number set forth in Section 2.03 of this
Indenture except as provided in Section 5.04 hereof or such lesser amount
as may be outstanding at any time during the term of this Indenture or
(2) permit the deposit or acquisition hereunder of interest-bearing
obligations or other securities either in addition to or in substitution
for any of the Bonds.
(b) Except for the amendments, changes or modifications as provided
in Section 8.01(a) hereof, neither the parties hereto nor their
respective successors shall consent to any other amendment, change or
modification of this Indenture without the giving of notice and the
obtaining of the approval or consent of Unitholders representing at least
51% of the Units then outstanding of the affected Trust. Nothing
contained in this Section 8.01(b) shall permit, or be construed as
permitting, a reduction of the aggregate percentage of Units the holders
of which are required to consent to any amendment, change or modification
of this Indenture without the consent of the Unitholders of all of the
Units then outstanding of the affected Trust and in no event may any
amendment be made which would (1) alter the rights to the Unitholders as
against each other, (2) provide the Trustee with the power to engage in
business or investment activities other than as specifically provided in
this Indenture or (3) adversely affect the characterization of the Trust
as a grantor trust for federal income tax purposes.
(c) Promptly after the execution of any such amendment the Trustee
shall furnish written notification to all then outstanding Unitholders of
the substance of such amendment.
Section 8.02. Termination. This Indenture and each Trust created
hereby shall terminate upon the maturity, redemption, sale or other
disposition as the case may be of the last Bond held in such Trust unless
sooner terminated as hereinbefore specified and may be terminated at any
time by the written consent of Unitholders representing 51% of the then
outstanding Units of such Trust; provided, that in no event shall any
Trust continue beyond the end of the calendar year preceding the fiftieth
anniversary of the execution of this Indenture except for an IM-IT
Limited Maturity Trust, IM-IT Intermediate Trust, IM-IT Short
Intermediate Trust or Quality Intermediate Trust which in no event shall
continue beyond the end of the calendar year preceding the twentieth
anniversary of the execution of this Indenture (the respective "Mandatory
Termination Date"); and provided further that in connection with any such
liquidation it shall not be necessary for the Trustee to dispose of any
Bond or Bonds of such Trusts if retention of such Bond or Bonds, until
due, shall be deemed to be in the best interests of Unitholders,
including, but not limited to, situations in which a Bond or Bonds
insured by the Insurance, if any, are in default, situations in which a
Bond or Bonds insured by the Insurance reflect a deteriorated market
price resulting from a fear of default and situations in which a Bond or
Bonds mature after the Mandatory Termination Date. The Depositor and
Trustee will observe the procedures described in Section 5.02 with
respect to the purchase of Permanent Insurance in connection with the
liquidation of Bonds of an Insured Trust.
Written notice of any termination, specifying the time or times at
which the Unitholders of such Trust may surrender their Certificates for
cancellation shall be given by the Trustee to each such Unitholder at his
address appearing on the registration books of the Trustee. Within a
reasonable period of time after such termination of a Trust the Trustee
shall fully liquidate the Bonds of such Trust then held, if any, and
shall:
(a) deduct from the Interest Account of such Trust or, to the
extent that funds are not available in such Account, from the
Principal Account of such Trust and pay to itself individually an
amount equal to the sum of (1) its accrued compensation for its
ordinary recurring services in connection with such Trust, (2) any
compensation due it for its extraordinary services in connection
with such Trust and (3) any costs, expenses or indemnities in
connection with such Trust as provided herein;
(b) deduct from the Interest Account of such Trust or, to the
extent that funds are not available in such Account, from the
Principal Account of such Trust and pay accrued and unpaid fees of
the Evaluator, Depositor and bond counsel in connection with such
Trust, if any;
(c) deduct from the Interest Account of such Trust or the
Principal Account of such Trust any amounts which may be required to
be deposited in the Reserve Account of such Trust to provide for
payment of any applicable taxes or other governmental charges and
any other amounts which may be required to meet expenses incurred
under this Indenture in connection with such Trust;
(d) distribute to each Unitholder of such Trust, against
surrender for cancellation of all of each Unitholder's Certificate
or Certificates, if issued, such holder's pro rata share of the
balance of the Interest Account of such Trust;
(e) distribute to each Unitholder of such Trust, against
surrender for cancellation of all of each Unitholder's Certificate
or Certificates, if issued, such holder's pro rata share of the
balance of the Principal Account of such Trust; and
(f) together with such distribution to each Unitholder as
provided for in (d) and (e), furnish to each such Unitholder a final
distribution statement as of the date of the computation of the
amount distributable to Unitholders, setting forth the data and
information in substantially the form and manner provided for in
Section 3.06 hereof.
The amounts to be so distributed to each Unitholder shall be that
pro rata share of the balance of the total Interest and Principal
Accounts of such Trust as shall be represented by the Units therein
evidenced by the outstanding Certificate or Certificates held of record
by such Unitholder.
The Trustee shall be under no liability with respect to moneys held
by it in the Interest, Reserve and Principal Accounts of a Trust upon
termination except to hold the same in trust without interest until
disposed of in accordance with the terms of this Indenture.
In the event that all of the Unitholders of such Trust shall not
surrender their Certificates for cancellation within six months after the
time specified in the above-mentioned written notice, the Trustee shall
give a second written notice to the remaining Unitholders to surrender
their Certificates for cancellation and receive the liquidation
distribution with respect thereto. If within one year after the second
notice all the Certificates shall not have been surrendered for
cancellation, the Trustee may take steps, or may appoint an agent to take
appropriate steps, to contact the remaining Unitholders concerning
surrender of their Certificates and the cost thereof shall be paid out of
the moneys and other assets which remain in the Trust hereunder.
Section 8.03. Construction. This Indenture is executed and delivered
in the State of New York, and all laws or rules of construction of such
State shall govern the rights of the parties hereto and the Unitholders
and the interpretation of the provisions hereof.
Section 8.04. Registration of Units. The Depositor agrees and
undertakes on its own part to register the Units with the Securities and
Exchange Commission or other applicable governmental agency, federal or
state, pursuant to applicable federal or state statutes, if such
registration shall be required, and to do all things that may be
necessary or required to comply with this provision during the term of
the Fund created hereunder, and the Trustee shall incur no liability or
be under any obligation for expenses in connection therewith.
Section 8.05. Written Notice. Any notice, demand, direction or
instruction to be given to the Depositor or the Evaluator hereunder shall
be in writing and shall be duly given if mailed or delivered to the
Depositor at One Parkview Plaza, Oakbrook Terrace, Illinois 60181, or at
such other address as shall be specified by the Depositor or the
Evaluator to the other parties hereto in writing.
Any notice, demand, direction or instruction to be given to the
Trustee hereunder shall be in writing and shall be duly given if mailed
or delivered to the corporate trust office of the Trustee at 101 Barclay
Street, New York, New York 10286, Attention: Unit Investment Trust
Division, or at such other address as shall be specified by the Trustee
to the other parties hereto in writing.
Any notice, demand, direction or instruction to be given to the
Evaluator shall be in writing and shall be duly given if mailed or
delivered to the Evaluator at One Parkview Plaza, Oakbrook Terrace,
Illinois 60181 or at such other address as shall be specified by the
Evaluator to the other parties hereto in writing.
Any notice to be given to the Unitholders shall be duly given if
mailed or delivered to each Unitholder at the address of such holder
appearing on the registration books of the Trustee.
Section 8.06. Severability. If any one or more of the covenants,
agreements, provisions or terms of this Indenture shall be held contrary
to any express provision of law or contrary to policy of express law,
though not expressly prohibited, or against public policy, or shall for
any reason whatsoever be held invalid, then such covenants, agreements,
provisions or terms shall be deemed severable from the remaining
covenants, agreements, provisions or terms of this Indenture and shall in
no way affect the validity or enforceability of the other provisions of
this Indenture or of the Certificates or the rights of the holders
thereof.
Section 8.07. Dissolution of Depositor Not to Terminate. The
dissolution of the Depositor from or for any cause whatsoever shall not
operate to terminate this Indenture or the Fund insofar as the duties and
obligations of the Trustee are concerned.
In Witness Whereof, Van Kampen American Capital Distributors, Inc.
has caused this Trust Indenture and Agreement to be executed by one of
its Vice Presidents or Assistant Vice Presidents, American Portfolio
Evaluation Services has caused this Trust Indenture and Agreement to be
executed by its President or one of its Vice Presidents and The Bank of
New York has caused this Trust Indenture and Agreement to be executed by
one of its Vice Presidents; all as of the day, month and year first above
written.
Execution
Van Kampen American Capital
Distributors, Inc., Depositor
By Sandra A. Waterworth
Vice President
American Portfolio Evaluation
Services, Evaluator
By Dennis J. McDonnell
President
The Bank of New York, Trustee
By Jeffrey Bieselin
Vice President
Exhibit 1.4
AMBAC Indemnity Corporation
AMBAC c/o CT Corporation Systems
Municipal Bond Investment 44 East Mifflin Street
Trust Insurance Policy Madison, Wisconsin 53703
Administrative Office:
One State Street Plaza
New York, New York 10004
AMBAC Indemnity Corporation (AMBAC) A Wisconsin Stock Insurance Company
Agrees to Guarantee
Insured Municipals Income Trust and Investors Quality
Tax Exempt Trust, Combined Multi Series 247
(Missouri Insured Municipals Income Trust, Series 88
Van Kampen American Capital Distributors, Inc.
("Investment Trust") the insured, the payment of that portion of the
principal of and interest on each of the Bonds which shall be due during
the Policy Period but is unpaid by reason of Nonpayment by the Issuer, in
consideration of the insurance premium paid and subject to the terms and
conditions contained herein or added hereto.
Policy No. FE013786 Policy Date: March 16, 1995
Trustee: The Bank of New York
101 Barclay Street, 17flW
New York, New York 10286
In Witness Whereof, the Insurer has caused this Policy to be affixed
with a facsimile of its corporate seal and to be signed by its duly
authorized officers in facsimile to become effective as its original seal
and signatures and binding upon the Insurer by virtue of the
countersignature of its duly authorized representative.
P. Lassiter
President@AMBAC Indemnity Corporation
Stephen D. Cooke
Secretary
/w/Nancy Davila
Authorized Representative@
AMBAC Indemnity Corporation
AMBAC c/o CT Corporation Systems
Municipal Bond Investment 44 East Mifflin Street
Trust Insurance Policy Madison, Wisconsin 53703
Administrative Office:
One State Street Plaza
New York, New York 10004
AMBAC Indemnity Corporation (AMBAC) A Wisconsin Stock Insurance Company
Agrees to Guarantee
Insured Municipals Income Trust and Investors Quality
Tax Exempt Trust, Combined Multi Series 247
(Oklahoma Insured Municipals Income Trust, Series 15
Van Kampen American Capital Distributors, Inc.
("Investment Trust") the insured, the payment of that portion of the
principal of and interest on each of the Bonds which shall be due during
the Policy Period but is unpaid by reason of Nonpayment by the Issuer, in
consideration of the insurance premium paid and subject to the terms and
conditions contained herein or added hereto.
Policy No. FE013777 Policy Date: March 16, 1995
Trustee: The Bank of New York
101 Barclay Street, 17flW
New York, New York 10286
In Witness Whereof, the Insurer has caused this Policy to be affixed
with a facsimile of its corporate seal and to be signed by its duly
authorized officers in facsimile to become effective as its original seal
and signatures and binding upon the Insurer by virtue of the
countersignature of its duly authorized representative.
P. Lassiter
President@AMBAC Indemnity Corporation
Stephen D. Cooke
Secretary
/w/Nancy Davila
Authorized Representative@
1. Definitions
(a) "Policy" is this policy of insurance and all applications and
schedules for Municipal Bond Investment Trust Insurance relating hereto,
all of which are hereby incorporated by reference herein.
(b) "Bonds" are the specific securities covered by this Policy and
are identified and described in the Schedule attached hereto and hereby
made a part hereof.
(c) "Issuer" is each respective issuer, identified in the Schedule,
of the Bonds.
(d) "Investment Trust" is the entity represented to have an
insurable interest in the Bonds insured under this Policy, identified on
the face of this Policy.
(e) "Trustee" is the Trustee of the Investment Trust, or any
successor Trustee thereto or Co-Trustee therewith.
(f) "Sponsor" is the firm or entity responsible for creating the
Investment Trust and thereafter performing the services to it required of
its sponsor, or any successor Sponsor thereof or Co-Sponsor therewith.
(g) "Insured Instrument" is any instrument evidencing all or any
part of the principal or of interest on a Bond which is Due for Payment.
(h) "Policy Period" is the period during which this Policy of
insurance is effective. The Policy Period commences at 12:01 A.M.
(i) "Premium Installment Period" is the period for which
installments of the annual insurance premium are payable monthly,
quarterly or semiannually, as determined initially for the Investment
Trust.
(j) "Nonpayment" is the failure of an Issuer to provide sufficient
funds to the payment agent for payment in full of all principal and
interest on a Bond which is Due for Payment.
(k) "Due for Payment," when referring to principal of a Bond (or
Insured Instrument evidencing such principal), is when the stated
maturity date has been reached, and does not refer to any earlier date on
which payment is due by reason of call for redemption, acceleration or
other advancement of maturity; and when referring to interest on a Bond
(or Insured Instrument evidencing such interest), is when the stated date
for payment has been reached.
(l) "Bond Proceedings" are the legal proceedings by which each of
the Bonds has been authorized, issued or secured, including the governing
statutes, the pertinent resolutions and ordinances of the Issuer, and any
trust indenture, mortgage, lease agreement or other contract relating to
the Bond or its security.
2. Noncancellability and Termination-Refunds of Premium
This Policy cannot be cancelled by AMBAC. The insurance provided by
this Policy shall remain in force throughout the Policy period. This
Policy provides for payment to the Trustee as a result of Nonpayment of
the Bonds. In the event the Trustee sells any of the Bonds, then this
Policy shall be terminated as to any such Bond on the date of said sale,
and AMBAC shall not have any liability under t his Policy on account of
Nonpayment of any such Bond occurring thereafter. This Policy shall be
terminated as to any Bond which AMBAC has been notified by the Sponsor or
by the Trustee has been redeemed from or sold by the Investment Trust, or
was not deposited by the Sponsor, or the contract to purchase which has
failed, on the date such notice is received by AMBAC, and AMBAC shall not
have any liability under this Policy on account of Nonpayment of any such
Bond occurring thereafter. When AMBAC is notified by the Trustee or the
Sponsor that any of the Bonds have been redeemed or sold from the
Investment Trust, or were not deposited into it, or a contract to
purchase any such Bonds has failed, a refund of any prepaid premium
thereof shall be made to the Investment Trust or the Sponsor, as the case
may be. Such notification to AMBAC must specify the amount of Bonds
affected, identify each by its Item Number in an Application identified
by its date and designate the date of such disposal or failure.
3. Payment by Insurer-Amount, When and How Payable
(a) Amount-Payment by AMBAC of the aggregate of the face amount of
all Insured Instruments of the Investment Trust as to which there has
been a Nonpayment, reduced by the aggregate of: (i) the amount which the
Issuer shall have provided for payment of Insured Instruments by the time
of Nonpayment; and (ii) the amount which has been received from any other
source to pay Insured Instruments; such payment shall fully discharge
AMBAC from any further liability on account of the Nonpayment.
(b) When Payable-The payment due the Investment Trust shall be made
not later than thirty days after notice from the Trustee is received by
AMBAC that Nonpayment has occurred, but not earlier than the date on
which the Insured Instruments are Due for Payment.
(c) How Payable-The payment due the Investment Trust shall be paid
by AMBAC in exchange for delivery of Insured Instruments, not less in
face amount than the amount of the payment, in bearer form, free and
clear of all liens and encumbrances and uncancelled. In cases where an
Insured Instrument is issuable only in a form whereby principal is
payable to registered holders or their assigns, AMBAC shall pay principal
only upon presentation and surrender of the unpaid Insured Instrument,
uncancelled and free of any adverse claim, together with an instrument of
assignment, in satisfactory form, so as to permit ownership of such
Insured Instrument to be registered in the name of AMBAC or its nominee.
In cases where an Insured Instrument is issuable only in a form whereby
interest is payable to registered holders or their assigns, AMBAC shall
pay interest only upon presentation of proof that the claimant is the
person entitled to the pa shall pay interest only upon presentation of
proof that the claimant is the person entitled to the payment of interest
on the Insured Instrument and delivery of an instrument of assignment, in
satisfactory form, transferring to AMBAC all rights under such Insured
Instrument to receive the interest in respect of which the insurance
payment was made.
4. Rights of AMBAC
(a) Subrogation-When AMBAC has made payment with respect to an
Insured Instrument, it shall be subrogated to all of the rights to
payment of the Investment Trust thereon or in relation thereto to the
extent of such payment.
(b) Vesting of Rights and Powers-When AMBAC has made the payment
due to the Investment Trust as described in Condition 3, and until the
full amount of such payment has been recovered, AMBAC shall be vested
with all of the Investment Trust's options, votes, rights, powers and the
like under the Bond Proceedings. AMBAC shall not be liable to the
Investment Trust for any loss or damage resulting from the exercise of or
failure to exercise any of such options, votes, rights, powers and the
like.
(c) Exercise of Rights and Powers-AMBAC may, in its absolute
discretion, exercise or fail to exercise any option, vote, right, power
or the like it may have as holder or registered owner of an Insured
Instrument with respect to which it has made payment. AMBAC shall not be
liable to the Investment Trust for any loss or damage resulting therefrom
(d) Securing of Rights-The Trustee shall execute and deliver
instruments and do whatever else is necessary to secure the foregoing
rights for AMBAC, and will do nothing to prejudice them.
5. Payment of Insurance Premium Installments
The Trustee shall pay, when due, successively, the full amount of
each installment of the insurance premium. Each installment of the
insurance premium is due on or before the last day of the expiring
Premium Installment Period.
If AMBAC has not received such payment on or before such last day,
it shall give notice to the Sponsor to that effect. Such installment
shall be deemed to have been paid when due if AMBAC receives such payment
within ten days after it has given such notice.
The Trustee shall, with each payment, notify AMBAC of all Bonds
which, during the expiring Premium Installment period, were redeemed from
or sold by the Investment Trust, or the contract to purchase which
failed, or which have not been deposited by the Sponsor. Such
notification to AMBAC must specify the amounts of Bonds affected and
identify each by its Item Number in an Application identified by date.
No such notice need be given as to Bonds with respect to which AMBAC has
previously been notified to the same effect.
6. Where Notice is Given
All submissions, designations, payments, notices, reports and other
data or documents required to be submitted shall be mailed to AMBAC at
its administrative office, or to the Investment Trust at its address
shown on the face of this Policy or such other address as it shall
designate.
7. Waiver of Conditions
No permission affecting this insurance shall exist, or waiver of any
condition be valid, unless expressed in writing added hereto. Each of
the conditions of this Policy is hereby made severable, and waiver of one
condition is not a waiver of any other condition.
8. Suite
No suit or action on this Policy for the recovery of any amount
shall be sustained in any court of law or equity unless all of the
conditions of this Policy shall have been complied with (unless
specifically waived by AMBAC in writing) and unless commended within two
years after a Nonpayment.
9. Conflict of Laws
Any provision of this Policy which is on conflict with the laws of
the jurisdiction in which it is effective is hereby amended to conform
with the minimum requirements of such laws.
AMBAC AMBAC Indemnity Corporation
c/o CT Corporation Systems
Schedule of Bonds (a part of 44 East Mifflin Street
the Application and Policy) Madison, Wisconsin 53703
Administrative Office:
One State Street Plaza
New York, New York 10004
Insured Municipals Income Trust and Investors Quality
Tax Exempt Trust, Combined Multi Series 247
(Oklahoma Insured Municipals Income Trust , Series 15)
Date of Application: March 16, 1995
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Item Par Full Name Purpose of Date Annual Initial
No. Value of Issuer Bonds Interest of Maturity Premium Annual
Rate Bonds Date Rate Premium
1. $800M State of General Obligation Bonds, 5.200% 04/15/93 07/15/16 .1000% $800.00
Oklahoma Oklahoma Building Bonds,
Series 1992A (SMIP Option
Premium Rate: .60%)
</TABLE>
AMBAC AMBAC Indemnity Corporation
c/o CT Corporation Systems
Schedule of Bonds (a part of 44 East Mifflin Street
the Application and Policy) Madison, Wisconsin 53703
Administrative Office:
One State Street Plaza
New York, New York 10004
Insured Municipals Income Trust and Investors Quality
Tax Exempt Trust, Combined Multi Series 247
(Missouri Insured Municipals Income Trust , Series 88)
Date of Application: March 16, 1995
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Item Par Full Name Purpose of Date Annual Initial
No. Value of Issuer Bonds Interest of Maturity Premium Annual
Rate Bonds Date Rate Premium
1. $100M Green County Single Family Mortgage 0.000% 09/01/84 03/01/16 .1000% $100.00
Missouri Revenue Bonds, Series 1984
(Escrowed to Maturity) (SMIP
Option Premium Rate: .60%)
</TABLE>
* Premium attributable to the original insured
amount of each Item of Bonds.
Exhibit 1.5
Dated: June 1, 1992
Master Agreement Among Underwriters
For Unit Investment Trusts Sponsored by
Van Kampen American Capital Distributors, Inc.
Van Kampen American Capital Distributors, Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
Gentlemen:
1. The Trust. We understand that you, Van Kampen American Capital
Distributors, Inc. (the "Sponsor"), are entering into this agreement (the
"Agreement") in counterparts with us and other firms who may be
underwriters for issues of various series of unit investment trusts for
which you will act as Sponsor. This Agreement shall apply to any
offering after May 1, 1992 of units of fractional undivided interest in
such various series unit investment trusts in which we elect to act as an
underwriter (underwriters with respect to each such trust being
hereinafter called "Underwriters") after receipt of a notice from you
stating the name and size of the trust and that our participation as an
Underwriter in the proposed offering shall be subject to the provisions
of this Agreement. The issuer of the units of fractional undivided
interests in a series of a unit investment trust offered in any offering
of units made pursuant to this Agreement is hereinafter referred to as
the "Trust" and the reference to "Trust" in this Agreement applies only
to such Trust, and such units of such Trust offered are hereinafter
called the "Units". Each Trust is or will be registered as a "unit
investment trust" under the Investment Company Act of 1940 (the "1940
Act") by appropriate filings with the Securities and Exchange Commission
(the "Commission"). Additionally, each Trust is or will be registered
with the Commission under the Securities Act of 1933 (the "1933 Act") on
Form S-6 or its successor forms, including a proposed form of prospectus
(the "Preliminary Prospectus").
The registration statement as finally amended and revised at the
time it becomes effective is herein referred to as the "Registration
Statement" and the related prospectus is herein referred to as the
"Prospectus", except that if the prospectus filed by the Trust pursuant
to Rule 424(b) under the 1933 Act shall differ from the prospectus on
file at the time the Registration Statement shall become effective, the
term "Prospectus" shall refer to the prospectus filed pursuant to Rule
424(b) from and after the date on which it shall have been filed.
The following provisions of this Agreement shall apply separately to
each individual offering of Units by a Trust.
We understand that as of the date upon which we have agreed to
underwrite Units of the Trust the Commission shall not have issued any
order preventing or restraining the use of any Preliminary Prospectus
and, further, that each Preliminary Prospectus shall conform in all
material respects to the requirements of the 1933 Act and the Rules and
Regulations thereunder and, as of its date, shall not include any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements therein not misleading; and when the Registration
Statement becomes effective, it and the Prospectus, and any amendments or
supplements thereto, will contain all statements that are required to be
stated therein in accordance with the 1933 Act and the Rules and
Regulations thereunder and will in all material respects conform to the
requirements of the 1933 Act and the Rules and Regulations thereunder,
and neither the Registration Statement nor the Prospectus, nor any
amendment or supplement thereto, will contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading;
provided, however, that you make no representation or warranty as to
information contained in or omitted from any Preliminary Prospectus, the
Registration Statement, the Prospectus or any such amendment or
supplement, in reliance upon and in conformity with, written information
furnished to you by or on behalf of any Underwriter specifically for use
in the preparation thereof.
2. Designation and Authority of Representative. You are hereby
authorized to act as our representative (the "Representative") in
connection with all matters to which this Agreement relates and to take
the action provided herein to be taken by you as you may otherwise deem
necessary or advisable. We understand that we have no obligations under
this Agreement with respect to any Trust in which we choose not to
participate as an Underwriter.
You will be under no liability to us for any act or omission except
for obligations expressly assumed by you herein and no obligations on
your part will be implied or inferred herefrom. The rights and
liabilities of the respective parties hereto are several and not joint,
and nothing herein or hereunder will constitute then a partnership,
association or separate entity.
3. Profit or Loss in Acquisition of Securities. It is understood
that the acquisition of securities (the "Securities") for deposit in the
portfolio of the Trust shall be at your cost and risk. We acknowledge
that you will share with us any net deposit profits in the amounts and to
the extent, if any, indicated under "Sponsor and Underwriter
Compensation" in the Prospectus. For the purposes of determining the
number of Units underwritten, we understand that we will be credited for
that number of Units set forth opposite our name in the section entitled
"Underwriting" in the prospectus.
We agree that you shall have no liability (as Representative or
otherwise) with respect to the issue form, validity, legality,
enforceability, value of, or title to the Securities, except for the
exercise of due care in determining the genuineness of such Securities
and the conformance thereof with the descriptions and qualifications
appearing in the Prospectus.
4. Purchase of Units. Promptly after you make a determination to
offer Units of a Trust and you inquire as to whether we desire to
participate in such offering, we will advise you promptly as to the
number of Units which we will purchase or of our decision not to
participate in such offering. Such advice may be written or oral. The
delivery to the Sponsor of a completed Schedule A to this Agreement shall
constitute adequate written advice. Oral advice shall be binding but
shall be promptly confirmed in writing by us by means of telegraph,
telegram or other form of wire or facsimile transmission. Such written
confirmation shall contain the information requested by Schedule A to
this Agreement. You may rely on and we hereby commit on the terms and
conditions of this Agreement to purchase and pay for the number of Units
of the Trust set forth in such advice (the "Unit Commitment"). Our Unit
Commitment may be increased only by mutual agreement between us and you
at any time prior to the date as of which the Trust Agreement for the
Trust is executed (the "Date of Deposit"). We agree that you in your
sole discretion reserve the right to decrease our Unit Commitment at any
time prior to the Date of Deposit and if you so elect to make such a
decrease, you will notify us of such an election by telephone and
promptly confirm the same in writing.
The price to be paid for such Units shall be the Public Offering
Price per Unit (as defined in the Prospectus) as first determined on the
Date of Deposit or such later determination on such Date of Deposit as
you shall advise us, less the sum per Unit indicated under "Sponsor and
Underwriter Compensation" in the Prospectus. Further, each Underwriter
who underwrites that number of Units indicated under "Sponsor and
Underwriter Compensation" in the Prospectus will receive from the Sponsor
that additional compensation indicated under such section of the
Prospectus for each Unit it underwrites, providing the Trust size is in
excess of that number of Units, if any, indicated under such section of
the Prospectus. At the Date of Deposit, we will become the owner of the
Units and be entitled to the benefits (except for interest, if any,
accruing from the Date of Deposit to the First Settlement Date) as well
as the risks inherent therein. We acknowledge that those persons, if
any, named in the Prospectus under "Sponsor and Underwriter Compensation"
are Managing or Co-Managing Underwriters of the Trust, as indicated
therein, and we acknowledge that those persons specifically named therein
will receive as additional compensation those respective per Unit amounts
set forth in such section of the Prospectus.
You are authorized to retain custody of our Units until the
Registration Statement relating thereto has become effective under the
1933 Act and you shall have received payment from us for such Units.
You are authorized to file an amendment to said Registration
Statement describing the Securities and furnishing information based
thereon or relating thereto and any further amendments or supplements to
the Registration Statement or Prospectus which you may deem necessary or
advisable. We will furnish to you upon your request such information as
will be required to insure that the Registration Statement and Prospectus
are current insofar as they relate to us and we thereafter continue to
furnish you with such information as may be necessary to keep current and
correct the information previously supplied.
We understand that the Trust will also take action with respect to
the offering and sale of Units in accordance with the Blue Sky or
securities laws of certain states in which it is proposed that the Units
may be offered and sold.
5. Public Offering. You agree that you will advise us promptly
when the Registration Statement has become effective, and we agree that
when we are advised that the Units are released for public offering, we
will make a public offering thereof by means of the Prospectus under the
1933 Act, as amended, which describes the deposit of Securities and
related information. The Public Offering Price and the terms and
conditions of the public offering shall be as set forth in the Prospectus
and shall rely with respect to the offering price of the Securities upon
the determination of the Evaluator named in the Prospectus. Public
advertisement of the offering, if any, shall be made by you on behalf of
the Underwriters on such date as you shall determine. We agree that
before we use any Trust advertising material which we have created, we
will obtain your prior approval to use such advertising materials.
6. Public Offering Price. We agree that each day while this
Agreement is in effect and the evaluation of the Trust is made by the
Evaluator named in the Prospectus, we will contact you for such
evaluation and of the resultant Public Offering Price for the purpose of
the offering and sale of the respective Units to the public. We agree as
required by Section 22(d) of the 1940 Act to offer and sell our Units at
the current Public Offering Price described in the Prospectus.
7. Permitted Transactions. It is agreed that part or all of the
Units purchased by us may be sold to dealers, or other entities with whom
we can legally grant a concession or agency commission, only at the then
effective Public Offering Price, less the concession described in the
Prospectus.
From time to time prior to the termination of this Agreement, at
your Request, we will advise you of the number of our Units which remain
unsold and, at your request, we agree to deliver to you any of such
unsold Units to be sold for our account to retail accounts or, less the
concession or agency commission then effective, to dealers or others.
If prior to the termination of this Agreement, or such earlier date
as you may determine and advise us thereof in writing, you shall purchase
or contract to purchase any of our Units or any Units issued in exchange
therefor, in the open market or otherwise, or if any such Units shall be
tendered to the Trustee for redemption because not effectively placed for
investment by us, we agree to repurchase such Units at a price equal to
the total cost of such purchase, including accrued interest and
commissions, if any, and transfer taxes on redelivery. Regardless of the
amount paid on the repurchase of any such Units, it is agreed that they
may be resold by us only at the then effective Public Offering Price.
Until the termination of this Agreement, we agree that we will make
no purchase of Units other than (i) purchases provided for in this
Agreement, (ii) purchases approved by you and (iii) purchases as broker
in executing unsolicited orders.
8. Compliance With Commission Order. We hereby agree as follows:
(a) we will refund all sales charges to purchasers of Units from us or
any dealer participating in the distribution of Units who purchased such
Units from us if, within ninety days from the time that the Registration
Statement of the respective Units under the 1933 Act shall have become
effective, (i) the net worth of the trust shall be reduced to less than
20% of the principal amount of Securities originally deposited therein or
(ii) the Trust shall have been terminated; (b) you may instruct the
Trustee on the Date of Deposit that, in the event that redemption by any
Underwriters of Units constituting part of any unsold allotment of Units
shall result in the Trust having a net worth of less than 40% of the
principal amount of Securities originally deposited therein, the Trustee
shall terminate the Trust in the manner provided in the Trust Indenture
and Agreement (as defined in the Prospectus) and distribute the
Securities and other assets of the Trust pursuant to the provisions of
the Trust Indenture and Agreement; and (c) in the event that the Trust
shall have been terminated pursuant to (b) above, we will refund any
sales charges to any purchaser of such Units who purchased from us, or
purchased from a dealer participating in the distribution of such Units
who purchased such Units from us. We authorize you to charge our account
for all refunds of sales charges in respect to our Units.
9. Substitution of Underwriters. We authorize you to arrange for
the substitution hereunder of other persons, who may include you and us,
for all or any part of the commitment of any nondefaulting Underwriter
with the consent of such Underwriter, and of any defaulting Underwriter
without the consent thereof, upon such terms and conditions as you may
deem advisable, provided that the number of Units to be purchased by us
shall not be increased without our consent and that such substitution
shall not in any way affect the liability of any defaulting Underwriter
to the other Underwriters for damages from such default, nor relieve any
other Underwriter of any obligation under this Agreement. The expenses
chargeable to the account of any defaulting Underwriter and not paid for
by it or by a person substituted for such Underwriter and any additional
losses or expenses arising from such default shall be considered to be
expenses under this Agreement and shall be charged against the accounts
of the nondefaulting Underwriters in proportion to their respective
commitments.
10. Termination. This Agreement shall terminate with respect to
each Trust which we have agreed to underwrite 30 days after the date on
which the public offering of the Units of such Trust is made in
accordance with Section 5 hereof unless sooner terminated by you,
provided that you may extend this Agreement for not more than eleven
successive periods of 30 days each upon notice to us and each of the
other Underwriters.
Notwithstanding any settlement on the termination of this Agreement,
we agree to pay our share of any amount payable on account of any claim,
demand or liability which may be asserted against the Underwriters, or
any of them, based on the claim that the Underwriters constitute an
association, unincorporated business or other separate entity and our
share of any expenses incurred by you in defending against any such
claim, demand or liability. We also agree to pay any stamp taxes which
may be assessed and paid after such settlement on account of any Units
received or sold hereunder for our account.
Notwithstanding any termination of this Agreement, no sales of the
Units shall be made by us at any time except in conformity with the
provisions of Section 22(d) of the 1940 Act.
11. Default by Other Underwriters. Default by any one or more of
the other Underwriters in respect of their several obligations under this
Agreement shall neither release you nor us from any of our respective
obligations hereunder.
12. Notices. Notices hereunder shall by deemed to have been duly
given if mailed or telegraphed to us at our address set forth below, in
the case of notices to us, or to you at your address set forth at the
head of this Agreement, in the case of notices to you.
13. Net Capital. You represent that you, and we represent that we,
are in compliance with the capital requirements of Rule 15c-3-1
promulgated by the Commission under the Securities and Exchange Act of
1934, and we may, in accordance with and pursuant to such Rule 15c-3-1,
agree to purchase the amount of Units to be purchased by you and us,
respectively, under the Agreement.
14. Miscellaneous. We confirm that we are a member in good
standing of the National Association of Securities Dealers, Inc.
We confirm that we will take reasonable steps to provide the
Preliminary Prospectus or final Prospectus to any person making written
request therefor to us and to make the Preliminary Prospectus or the
final Prospectus available to each person associated with us expected to
solicit customers' orders for the Units prior to the effective
registration date and the final Prospectus if he is expected to offer the
Units after the effective date. We understand that you will supply us
upon our request with sufficient copies of such prospectuses to comply
with the foregoing.
This Agreement is being executed by us and delivered to you in
duplicate. Upon your confirmation hereof and of agreements in identical
form with each of the other Underwriters, this Agreement shall constitute
a valid and binding contract between us.
Very truly yours,
Confirmed as of the date set Indicated below our firm
forth at the head of this name and address exactly as
Agreement we wish to appear in the
Prospectus
VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC.
By____________________________ ____________________________________
Title__________________________ ____________________________________
____________________________________
Exhibit 3.1
Chapman and Cutler
111 West Monroe Street
Chicago, Illinois 60603
March 16, 1995
Van Kampen American Capital Distributors, Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
Re: Insured Municipals Income Trust and Investors' Quality
Tax-Exempt Trust, Multi-Series 247
Gentlemen:
We have served as counsel for Van Kampen American Capital
Distributors, Inc., Sponsor and Depositor of Insured Municipals Income
Trust and Investors' Quality Tax-Exempt Trust, Multi-Series 247
(hereinafter referred to as the "Fund"), in connection with the
preparation, execution and delivery of a Trust Agreement dated March 16,
1995 between Van Kampen American Capital Distributors, Inc., as
Depositor, American Portfolio Evaluation Services, a division of Van
Kampen American Capital Investment Advisory Corp., as Evaluator, and The
Bank of New York, as Trustee, pursuant to which the Depositor has
delivered to and deposited Bonds listed in the Schedules to the Trust
Agreement with the Trustee and pursuant to which the Trustee has issued
to or on the order of the Depositor a certificate or certificates
representing Units of fractional undivided interest in and ownership of
the several Trusts of said Fund (hereinafter referred to as the "Units")
created under said Trust Agreement.
In connection therewith, we have examined such pertinent records and
documents and matters of law as we have deemed necessary in order to
enable us to express the opinions hereinafter set forth.
Based upon the foregoing, we are of the opinion that:
1. The execution and delivery of the Trust Agreement and the
execution and issuance of certificates evidencing the Units in the
several Trusts of the Fund have been duly authorized; and
2. The certificates evidencing the Units in the several
Trusts of the Fund when duly executed and delivered by the Depositor
and the Trustee in accordance with the aforementioned Trust
Agreement, will constitute valid and binding obligations of such
Trusts and the Depositor in accordance with the terms thereof.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement (File No. 33-57823) relating to the Units referred
to above and to the use of our name and to the reference to our firm in
said Registration Statement and in the related Prospectus.
Respectfully submitted,
Chapman and Cutler
MJK/cjw
Exhibit 3.2
Chapman and Cutler
111 West Monroe Street
Chicago, Illinois 60603
March 16, 1995
Van Kampen American Capital Distributors, Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
The Bank of New York
Unit Investment Trust Division
101 Barclay Street
New York, New York 10286
Re: Insured Municipals Income Trust and Investors' Quality
Tax-Exempt Trust, Multi-Series 247
______________________________________________
Gentlemen:
We have acted as counsel for Van Kampen American Capital
Distributors, Inc., Depositor of Insured Municipals Income Trust and
Investors' Quality Tax-Exempt Trust, Multi-Series 247 (the "Fund"), in
connection with the issuance of Units of fractional undivided interest in
the several Trusts of said Fund under a Trust Agreement dated March 16,
1995 (the "Indenture") between Van Kampen American Capital Distributors,
Inc., as Depositor, American Portfolio Evaluation Services, a division of
Van Kampen American Capital Investment Advisory Corp., as Evaluator, and
The Bank of New York, as Trustee.
In this connection, we have examined the Registration Statement, the
form of Prospectus proposed to be filed with the Securities and Exchange
Commission, the Indenture and such other instruments and documents as we
have deemed pertinent.
Based upon the foregoing and upon an investigation of such matters
of law as we consider to be applicable, we are of the opinion that, under
existing Federal income tax law:
(i) Each Trust is not an association taxable as a corporation
but will be governed by the provisions of subchapter J (relating to
trusts) of chapter 1, Internal Revenue Code of 1986 (the "Code").
(ii) Each Unitholder will be considered as owning a pro rata
share of each asset of the respective Trust in the proportion that
the number of Units of such Trust held by him bears to the total
number of Units outstanding of such Trust. Under subpart E,
subchapter J of chapter 1 of the Code, income of each Trust will be
treated as income of each Unitholder of the respective Trust in the
proportion described, and an item of Trust income will have the same
character in the hands of a Unitholder as it would have in the hands
of the Trustee. Accordingly, to the extent that the income of a
Trust consists of interest excludable from gross income under
Section 103 of the Code, such income will be excludable from Federal
gross income of the Unitholders, except in the case of a Unitholder
who is a substantial user (or a person related to such user) of a
facility financed through issuance of any industrial development
bonds or certain private activity bonds held by the respective
Trust. In the case of such Unitholder (and no other) interest
received with respect to his Units attributable to such industrial
development bonds or such private activity bonds is includable in
his gross income. In the case of certain corporations, interest on
the Bonds is included in computing the alternative minimum tax
pursuant to Section 56(c) of the Code, the environmental tax (the
"Superfund Tax") imposed by Section 59A of the Code, and the branch
profits tax imposed by Section 884 of the Code with respect to U.S.
branches of foreign corporations.
(iii) Gain or loss will be recognized to a Unitholder upon
redemption or sale of his Units. Such gain or loss is measured by
comparing the proceeds of such redemption or sale with the adjusted
basis of the Units represented by his Certificate. Before
adjustment, such basis would normally be cost if the Unitholder had
acquired his Units by purchase, plus his aliquot share of advances
by the Trustee to the Trust to pay interest on Bonds delivered after
the Unitholder's settlement date to the extent that such interest
accrued on the Bonds during the period from the Unitholder's
settlement date to the date such Bonds are delivered to the
respective Trust, but only to the extent that such advances are to
be repaid to the Trustee out of interest received by such Trust with
respect to such Bonds. In addition, such basis will be increased by
the Unitholder's aliquot share of the accrued original issue
discount with respect to each Bond held by the Trust with respect to
which there was an original issue discount at the time the Bond was
issued and reduced by the annual amortization of bond premium, if
any, on Bonds held by the Trust.
(iv) If the Trustee disposes of a Trust asset (whether by sale,
payment on maturity, redemption or otherwise) gain or loss is
recognized to the Unitholder and the amount thereof is measured by
comparing the Unitholder's aliquot share of the total proceeds from
the transaction with his basis for his fractional interest in the
asset disposed of. Such basis is ascertained by apportioning the
tax basis for his Units among each of the Trust assets (as of the
date on which his Units were acquired) ratably according to their
values as of the valuation date nearest the date on which he
purchased such Units. A Unitholder's basis in his Units and of his
fractional interest in each Trust asset must be reduced by the
amount of his aliquot share of interest received by the Trust, if
any, on Bonds delivered after the Unitholder's settlement date to
the extent that such interest accrued on the Bonds during the period
from the Unitholder's settlement date to the date such Bonds are
delivered to the Trust, must be reduced by the annual amortization
of bond premium, if any, on Bonds held by the Trust and must be
increased by the Unitholder's share of the accrued original issue
discount with respect to each Bond which, at the time the Bond was
issued, had original issue discount.
(v) In the case of any Bond held by the Trust where the
"stated redemption price at maturity" exceeds the "issue price",
such excess shall be original issue discount. With respect to each
Unitholder, upon the purchase of his Units subsequent to the
original issuance of Bonds held by the Trust, Section 1272(a)(7) of
the Code provides for a reduction in the accrued "daily portion" of
such original issue discount upon the purchase of a Bond subsequent
to the Bond's original issue, under certain circumstances. In the
case of any Bond held by the Trust the interest on which is
excludable from gross income under Section 103 of the Code, any
original issue discount which accrues with respect thereto will be
treated as interest which is excludable from gross income under
Section 103 of the Code.
(vi) We have examined the Municipal Bond Unit Investment Trust
Insurance policies, if any, issued to certain of the Trusts on the
Date of Deposit by AMBAC Indemnity Corporation, Financial Guaranty
Insurance Corporation or a combination thereof. Each such policy,
or a combination of such policies, insures all bonds held by the
Trustee for that particular Trust (other than bonds described in
paragraph (vii)) against default in the prompt payment of principal
and interest. In our opinion, any amount paid under each said
policy, or a combination of said policies, which represents maturing
interest on defaulted obligations held by the Trustee will be
excludable from federal gross income if, and to the same extent as,
such interest would have been so excludable if paid by the issuer of
the defaulted bonds provided that, at the time such policies are
purchased, the amounts paid for such policies are reasonable,
customary and consistent with the reasonable expectation that the
issuer of the bonds, rather than the insurer, will pay debt service
on the bonds. Paragraph (ii) of this opinion is accordingly
applicable to insurance proceeds representing maturing interest.
(vii) Certain bonds in the portfolios of certain of the Insured
Trusts have been insured by the issuers thereof against default in
the prompt payment of principal and interest. Insurance has been
obtained for such bonds, or, in the case of a commitment, the bonds
will be ultimately insured under the terms of such an insurance
policy, which are designated as issuer insured bonds on the
portfolio pages of the respective Trusts in the prospectus for the
Fund, by the issuer of such bonds. Insurance obtained by the issuer
is effective so long as such bonds remain outstanding. For each of
these bonds, we have been advised that the aggregate principal
amount of such bonds listed on the portfolio page for the respective
Trust was acquired by the applicable Trust and are part of the
series of such bonds listed on the portfolio page for the respective
Trust in the aggregate principal amount listed on the portfolio page
for the respective Trust. Based upon the assumption that the bonds
acquired by the applicable Trust are part of the series covered by
an insurance policy or, in the case of a commitment, will be
ultimately insured under the terms of such an insurance policy, it
is our opinion that any amounts received by the applicable Trust
representing maturing interest on such bonds will be excludable from
federal gross income if, and to the same extent as, such interest
would have been so excludable if paid in normal course by the Issuer
notwithstanding the source of the payment is from policy proceeds.
Paragraph (ii) of this opinion is accordingly applicable to such
payment.
Sections 1288 and 1272 of the Code provide a complex set of rules
governing the accrual of original issue discount. These rules provide
that original issue discount accrues either on the basis of a constant
compound interest rate or ratably over the term of the Bond, depending on
the date the Bond was issued. In addition, special rules apply if the
purchase price of a Bond exceeds the original issue price plus the amount
of original issue discount which 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.
Because the Trusts do not include any "private activity" bonds
within the meaning of Section 141 of the Code issued on or after August
15, 1986, none of the Trust Fund's interest income shall be treated as an
item of tax preference when computing the alternative minimum tax. In
the case of corporations, for taxable years beginning after December 31,
1986, the alternative minimum tax and the Superfund Tax depend upon the
corporation's taxable income with certain adjustments.
Pursuant to Section 56(c) of the Code, one of the adjustment items
used in computing alternative minimum taxable income ("AMTI") and the
Superfund Tax of a corporation (other than an S corporation, Regulated
Investment Company, Real Estate Investment Trust or REMIC) for taxable
years beginning after 1989, is an amount equal to 75% of the excess of
such corporation's "adjusted current earnings" over an amount equal to
its AMTI (before such adjustment item and the alternative tax net
operating loss deduction). "Adjusted current earnings" includes, all tax-
exempt interest, including interest on all Bonds in the Trust, and tax-
exempt original issue discount.
Effective for tax returns filed after December 31, 1987, all
taxpayers are required to disclose to the Internal Revenue Service the
amount of tax-exempt interest earned during the year.
Section 265 of the Code provides for a reduction in each taxable
year of 100 percent of the otherwise deductible interest on indebtedness
incurred or continued by financial institutions, to which either Section
585 or Section 593 of the Code applies, to purchase or carry obligations
acquired after August 7, 1986, the interest on which is exempt from
Federal income taxes for such taxable year. Under rules prescribed by
Section 265, the amount of interest otherwise deductible by such
financial institutions in any taxable year which is deemed to be
attributable to tax-exempt obligations acquired after August 7, 1986,
will be the amount that bears the same ratio to the interest deduction
otherwise allowable (determined without regard to Section 265) to the
taxpayer for the taxable year as the taxpayer's average adjusted basis
(within the meaning of Section 1016) of tax-exempt obligations acquired
after August 7, 1986, bears to such average adjusted basis for all assets
of the taxpayer, unless such financial institution can otherwise
establish, under regulations, to be prescribed by the Secretary of the
Treasury, the amount of interest on indebtedness incurred or continued to
purchase or carry such obligations.
We also call attention to the fact that, under Section 265 of the
Code, interest on indebtedness incurred or continued to purchase or carry
Units is not deductible for Federal income tax purposes. Under rules
used by the Internal Revenue Service for determining when borrowed funds
are considered used for the purpose of purchasing or carrying particular
assets, the purchase of Units may be considered to have been made with
borrowed funds even though the borrowed funds are not directly traceable
to the purchase of Units. However, these rules generally do not apply to
interest paid on indebtedness incurred for expenditures of a personal
nature such as a mortgage incurred to purchase or improve a personal
residence.
"The Revenue Reconciliation Act of 1993" (the "Tax Act") subjects
tax-exempt bonds to the market discount rules of the Code effective for
bonds purchased after April 30, 1993. In general, market discount is the
amount (if any) by which the stated redemption price at maturity exceeds
an investor's purchase price (except to the extent that such difference,
if any, is attributable to original issue discount not yet accrued).
Market discount can arise based on the price a Trust pays for Bonds or
the price a Unitholder pays for his or her Units. Under the Tax Act,
accretion of market discount is taxable as ordinary income; under prior
law, the accretion had been treated as capital gain. Market discount
that accretes while a Trust holds a Bond would be recognized as ordinary
income by the Unitholders when principal payments are received on the
Bond, upon sale or at redemption (including early redemption), or upon
the sale or redemption of his or her Units, unless a Unitholder elects to
include market discount in taxable income as it accrues.
We have also examined certain laws of the State of Florida, to
determine their applicability to the Florida IM-IT 90 Trust (the "Florida
Trust") being created as part of the Fund and to the holders of Units in
the Florida Trust who are residents of the State of Florida. "Non-
Corporate Unitholder" means a Unitholder of the Florida Trust who is an
individual not subject to the Florida state income tax on corporations
under Chapter 220, Florida Statutes and "Corporate Unitholder" means a
Unitholder of the Florida Trusts that is a corporation, bank or savings
association subject to the Florida state income tax on corporations or
franchise tax imposed on banks or savings associations under Chapter 220,
Florida Statutes.
Although we express no opinion with respect thereto, in rendering
the opinion expressed herein, we have assumed that the Bonds were validly
issued by the State of Florida or its instrumentalities or
municipalities. Based on the foregoing, it is our opinion that:
(a) Neither the Florida Trust nor Non-Corporate Unitholders
will be subject to the Florida income tax imposed by Chapter 220,
Florida Statutes. Therefore, any amounts paid to the Florida Trusts
or Non-Corporate Unitholders under an insurance policy issued to the
Florida Trusts, the Issuers, the Underwriters, or the Sponsors
thereof, or others, which represent maturing interest on defaulted
obligations held by the Trustee will not be subject to the Florida
income tax imposed by Chapter 220, Florida Statutes to the extent
excludable from gross income for federal income tax purposes.
(b) Corporate Unitholders will be subject to Florida income or
franchise taxation under Chapter 220, Florida Statutes (1) on
interest received by the Trust, (2) on payments of interest pursuant
to any insurance policy, (3) on gain realized when Bonds are sold,
redeemed or paid at maturity or when insurance payments with respect
to principal are received by the Trust and (4) on gain on the sale
or redemption of Units, to the extent allocable to Florida as
"adjusted federal income." Corporate Unitholders that have a
commercial domicile in Florida will also be subject to Florida
income or franchise taxation on 100 percent of the items of income
described in clauses (1) through (4) of the immediately preceding
sentence to the extent that such income constitutes "nonbusiness
income."
(c) Even if interest on indebtedness incurred or continued by
a Unitholder to purchase Units in the Trust is not deductible for
Federal income tax purposes, it will reduce interest income on the
Bonds which is reportable by Corporate Unitholders for Florida
income tax purposes.
(d) Trust Units held by a Florida resident will be includible
in the resident's estate for Florida estate tax purposes, but if
such estate is not subject to the Federal estate tax, the estate
will not be subject to the Florida estate tax. The Florida estate
tax is limited to the amount of the credit for state death taxes
provided for in section 2011 of the Code, less estate taxes paid to
states other than Florida.
(e) Neither the Bonds nor the Units will be subject to the
Florida ad valorem tax, the Florida intangible personal property tax
or Florida sales or use tax.
We have also examined the income tax law of the State of Missouri,
which is based upon the Federal law, to determine its applicability to
the Insured Missouri Trust (the "Missouri Trust") being created as part
of the Fund and to the holders of Units in the Missouri Trust who are
residents of the State of Missouri ("Missouri Unitholders").
The assets of the Trust will consist of interest-bearing 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").
Although we express no opinion with respect to the issuance of the
Bonds, in rendering our opinion expressed herein, we have assumed that:
(i) the Bonds were validly issued, (ii) the interest thereon is
excludible from gross income for federal income tax purposes, (iii)
interest on the Bonds, if received directly by a Unitholder, would be
exempt from the income tax imposed by the State of Missouri that is
applicable to individuals and corporations (the "Missouri State Income
Tax"). This opinion does not address the taxation of persons other than
full time residents of Missouri.
Based on the foregoing, and based on review and consideration of
existing laws of the State as of this date, it is our opinion, and we
herewith advise you, as follows:
(1) The Missouri Trust is not an association taxable as a
corporation for Missouri income tax purposes, and each Unitholder of
the Missouri Trust will be treated as the owner of a pro rata
portion of the Trust and the income of such portion of the 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 Trust and distributed
to such Unitholder; however, no opinion is expressed herein
regarding the Missouri 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 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. 745, 48 U.S.C.
1423a, and 48 U.S.C. 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 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 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 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
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
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 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 Missouri Trust, the interest on
which is exempt from such Tax.
(7) The Missouri 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 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).
Units may be subject to the Missouri Estate Tax. We have not
examined any of the Bonds to be deposited and held in the Missouri Trust
or the proceedings for the issuance thereof or the opinions of bonds
counsel with respect thereto, and therefore express no opinion as to the
exemption from the Missouri State Income Tax of interest on the Missouri
Bonds if received directly by a Unitholder.
We have also examined the income tax law of the State of Oklahoma to
determine its applicability to the Oklahoma IM-IT Trust (the "Oklahoma IM-
IT Trust") being created as a part of the Fund and to the holders of the
Units in the Oklahoma IM-IT Trust who are residents of the State of
Oklahoma ("Oklahoma Unitholders").
The assets of the Oklahoma IM-IT Trust will consist of interest-
bearing obligations issued by or on behalf of the State of Oklahoma (the
"State") or counties, municipalities, authorities or political
subdivisions thereof (the "Oklahoma Bonds") or by the Commonwealth of
Puerto Rico, Guam and the United States Virgin Islands (the "Possession
Bonds") (collectively, the "Bonds"). At the respective times of issuance
of the Oklahoma Bonds, certain, but not necessarily all, of the issues of
the Oklahoma Bonds may have been accompanied by an opinion of bond
counsel to the respective issuing authorities that interest on such
Oklahoma Bonds (the "Oklahoma Tax-Exempt Bonds") are exempt from the
income tax imposed by the State of Oklahoma that is applicable to
individuals and corporations (the "Oklahoma State Income Tax"). The
Oklahoma IM-IT Trust may include Oklahoma Bonds the interest on which is
subject to the Oklahoma State Income Tax (the "Oklahoma Taxable Bonds").
Although we express no opinion with respect to the issuance of the
Bonds, in rendering our opinion expressed herein, we have assumed that:
(i) the Bonds were validly issued, (ii) the interest thereon is
excludable from gross income for federal income tax purposes and (iii)
interest on the Oklahoma Tax-Exempt Bonds, if received directly by a Unit
holder, would be exempt from the Oklahoma State Income Tax. At the
respective times of issuance of the Bonds, opinions relating to the
validity thereof and to the exemption of interest thereon from federal
income tax were rendered by bond counsel to the respective issuing
authorities. In addition, with respect to the Oklahoma Tax-Exempt Bonds,
bond counsel to the issuing authorities rendered opinions as to the
exemption of interest from the Oklahoma State Income Tax. We have not
made any review for the Trust of the proceedings relating to the issuance
of the Bonds or of the bases for the opinions rendered in connection
therewith. This opinion does not address the taxation of persons other
than full time residents of Oklahoma.
Based on the foregoing, and based on review and consideration of
existing laws of the State as of this date, it is our opinion, and we
herewith advise you, as follows:
(1) For Oklahoma State Income Tax purposes, the Oklahoma IM-IT
Trust is not an association taxable as a corporation, each
Unitholder of the Oklahoma IM-IT Trust will be treated as the owner
of a pro rata portion of the Oklahoma IM-IT Trust and the income of
such portion of the Oklahoma IM-IT Trust will be treated as the
income of the Unitholder.
(2) Interest paid and original issue discount, if any, on the
Bonds which would be exempt from the Oklahoma State Income Tax if
received directly by a Unitholder will be exempt from the Oklahoma
State Income Tax when received by the Oklahoma IM-IT Trust and
distributed to such Unitholder.
A Unitholder's pro rata portion of any interest paid and
original issue discount, if any, on the Bonds which would be subject
to the Oklahoma State Income Tax if received directly by a
Unitholder, including, for example, interest paid and original issue
discount, if any, on the Oklahoma Taxable Bonds, will be taxable to
such Unitholder for Oklahoma State Income Tax purposes when received
by the Oklahoma IM-IT Trust.
(3) To the extent that interest paid and original issue
discount, if any, derived from the Oklahoma 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. 475,
48 U.S.C. 1423A, and 48 U.S.C. 1403, such interest paid and
original discount, if any, will not be subject to the Oklahoma State
Income Tax.
(4) Each Unitholder of the Oklahoma IM-IT Trust will recognize
gain or loss for Oklahoma 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 Oklahoma 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) Although no opinion is expressed herein, we have been
informally advised by the Oklahoma Tax Commission that any insurance
proceeds paid under policies which represent maturing interest on
defaulted obligations which are excludable from gross income for
federal income tax purposes should be excludable from Oklahoma State
Income Tax to the same extent as such interest would have been if
paid by the issuer of such Bonds held by the Oklahoma IM-IT Trust.
(6) The Oklahoma 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 Oklahoma IM-IT Trust the interest
on which is exempt from such tax.
(7) Although no opinion is expressed herein, we have been
informally advised by the Oklahoma Tax Commission that the Oklahoma
IM-IT Trust, in part because of its status as a "grantor trust" for
federal income tax purposes, should not be subject to the Oklahoma
state franchise tax.
The scope of this opinion is expressly limited to the matters set
forth herein, and we express no other opinions of law with respect to the
state or local taxation of the Oklahoma IM-IT Trust, the purchase,
ownership or disposition of Units or the Unitholders under Oklahoma law.
We have not examined any of the Bonds to be deposited and held in
the Oklahoma IM-IT Trust or the proceedings for the issuance thereof or
the opinions of bond counsel with respect thereto, and therefore express
no opinion as to the exemption from either the Oklahoma State Income Tax
or the Oklahoma Minimum Tax of interest on the Oklahoma Bonds if received
directly by a Unitholder.
Very truly yours,
Chapman and Cutler
MJK/cjw
Exhibit 3.3
Tanner Propp & Farber
99 Park Avenue
New York, New York 10016
March 16, 1995
Insured Municipals Income Trust and
Investors' Quality Tax-Exempt Trust,
Multi-Series 247
c/o The Bank of New York,
As Trustee
101 Barclay Street, 17 West
New York, New York 10286
Dear Sirs:
We have acted as special counsel for the Insured Municipals Income
Trust and Investors' Quality Tax-Exempt Trust, Multi-Series 247 (the
"Fund") consisting of Insured Municipals Income Trust, Series 346,
Insured Municipals Income Trust, Short Intermediate Series 98, Florida
Insured Municipals Income Trust, Series 90, Missouri Insured Municipals
Income Trust, Series 88, Oklahoma Insured Municipals Income Trust, Series
15 and North Carolina Investors' Quality Tax-Exempt Trust, Series 81 and
(in the aggregate the "Trusts" and individually "Trusts") for the purpose
of determining the applicability of certain New York taxes under the
circumstances hereinafter described.
The Fund is created pursuant to a Trust Agreement (the
"Indenture"), dated as of today (the "Date of Deposit") among Van Kampen
American Capital Distributors, Inc. (the "Depositor"), American Portfolio
Evaluation Services, a division of Van Kampen American Capital Investment
Advisory Corp., as Evaluator, and The Bank of New York as Trustee (the
"Trustee"). As described in the prospectus relating to the Fund dated
today to be filed as an amendment to a registration statement previously
filed with the Securities and Exchange Commission (file number 33-57823)
under the Securities Act of 1933, as amended (the "Prospectus"), the
objectives of the Fund are the generation of income exempt from Federal
taxation and as regards each Trust denominated with the name of a state
exempt from income tax, if any, of the denominated in the name of that
Trust to the extent indicated in the Prospectus. No opinion is expressed
herein with regard to the Federal or State tax aspects of the bonds, the
Fund, and units of the Trust (the "Units"), or any interest, gains or
losses in respect thereof.
As more fully set forth in the Indenture and in the Prospectus, the
activities of the Trustee will include the following:
On the Date of Deposit, the Depositor will deposit with the Trustee
with respect to each Trusts, the total principal amount of interest
bearing obligations and/or contracts for the purchase thereof together
with an irrevocable letter of credit in the amount required for the
purchase price and accrued interest, if any, and, in the case of Trusts
denominated as "Insured," an insurance policy purchased by the Depositor
evidencing the insurance guaranteeing the timely payment of principal and
interest of the obligations comprising the corpus of that Trust other
than those obligations the timely payment of principal and interest of
which are guaranteed by an insurance policy purchased by the issuer
thereof or a prior owner, which may include the Depositor prior to the
Date of Deposit, as more fully set forth in the Prospectus with respect
to each Trust.
We understand with respect to the obligations described in the
preceding paragraph that all insurance, whether purchased by the
Depositor, the issuer or a prior owner, provides, or will provide, that
the amount paid by the insurer in respect of any bond may not exceed the
amount of principal and interest due on the bond and such payment will in
no event relieve the issuer from its continuing obligation to pay such
defaulted principal and interest in accordance with the terms of the
obligation.
The Trustee will not participate in the selection of the obligations
to be deposited in the Fund, and, upon the receipt thereof, will deliver
to the Depositor a registered certificate for the number of Units
representing the entire capital of each of the Trusts as more fully set
forth in the Prospectus and the Registration Statement. The Units, which
are represented by certificates ("Certificates"), will be offered to the
public by the Prospectus upon the effectiveness of the Registration
Statement.
The duties of the Trustee, which are ministerial in nature, will
consist primarily of crediting the appropriate accounts with interest
received by each of the Trusts and with the proceeds from the disposition
of obligations held in each of the Trusts and the distribution of such
interest and proceeds to the Unit holders of that Trust. The Trustee
will also maintain records of the registered holders of Certificates
representing an interest in each Trust and administer the redemption of
Units by such Certificate holders and may perform certain administrative
functions with respect to an automatic investment option.
Generally, obligations held in the Fund may be removed therefrom by
the Trustee only upon redemption prior to their stated maturity, at the
direction of the Depositor in the event of an advance refunding, or upon
the occurrence of certain other specified events which adversely affect
the sound investment character of the Fund, such as default by the issuer
in payment of interest or principal on the obligation and no provision
for payment is made therefor either pursuant to the portfolio insurance
or otherwise and the Depositor fails to instruct the Trustee, within
thirty (30) days after notification, to hold such obligation.
Prior to the termination of the Fund, the Trustee is empowered to
sell Bonds, from a list furnished by the Evaluator, only for the purpose
of redeeming Units tendered to it and of paying expenses for which funds
are not available. The Trustee does not have the power to vary the
investment of any Unit holder in the Fund, and under no circumstances may
the proceeds of sale of any obligations held by the Fund be used to
purchase new obligations to be held therein.
Article 9-A of the New York Tax Law imposes a franchise tax on
business corporations, and, for purposes of that Article, Section 208(l)
defines the term "corporation" to include, among other things, "any
business conducted by a trustee or trustees wherein interest or ownership
is evidenced by certificate or other written instrument."
The Regulations promulgated under Section 208 provide as follows:
The term "trust" includes any business conducted by a
trustee or trustees in which interest or ownership is
evidenced by certificate or other written instrument.
Such a trust includes, but is not limited to, an
association commonly referred to as a "business
trust" or "Massachusetts trust." In determining
whether a trustee or trustees are conducting a
business, the form of the agreement is of
significance but is not controlling. The actual
activities of the trustee or trustees, not their
purposes and powers, will be regarded as decisive
factors in determining whether a trust is subject to
tax under Article 9-A. The mere investment of funds
and the collection of income therefrom, with
incidental replacement of securities and reinvestment
of funds, does not constitute the conduct of a
business in the case of a business conducted by the
trustee or trustees. 20 NYCRR 1-2.3(b)(2) (July 11,
1990).
New York cases dealing with the question of whether a trust will be
subject to the franchise tax have also delineated the general rule that
where a trustee merely invests funds and collects and distributes the
income therefrom, the trust is not engaged in business and is not subject
to the franchise tax. Burrell v. Lynch, 274 A.D. 347, 84 N.Y.S.2d 171
(3rd Dept. 1948), order resettled, 274 A.D. 1073, 85 N.Y.S.2d 705 (1949).
An opinion of the Attorney General of the State of New York, 47 N.Y.
Atty. Gen. Rep. 213 (Nov. 24, 1942), it was held that where the trustee
of an unincorporated investment trust was without authority to reinvest
amounts received upon the sales of securities and could dispose of
securities making up the trust only upon the happening of certain
specified events or the existence of certain specified conditions, the
trust was not subject to the franchise tax.
In the instant situation, the Trustee is not empowered to sell
obligations contained in the corpus of the Fund and reinvest the proceeds
therefrom. Further, the power to sell such obligations is limited to
circumstances in which the creditworthiness or soundness of the
obligation is in question or in which cash is needed to pay redeeming
Unit holders or to pay expenses, or where the Fund is liquidated pursuant
to the termination of the Indenture. Only in circumstances in which the
issuer of an obligation attempts to refinance it can the Trustee exchange
an obligation for a new security. In substance, the Trustee will merely
collect and distribute income and will not reinvest any income or
proceeds, and the Trustee has no power to vary the investment of any Unit
holder in a Trust.
Under Subpart E of Part I, Subchapter J of Chapter 1 of the Internal
Revenue Code of 1986, as amended (the "Code"), the grantor of a trust
will be deemed to be the owner of the trust under certain circumstances,
and therefore taxable on his proportionate interest in the income
thereof. Where this Federal tax rule applies, the income attributed to
the grantor will also be income to him for New York income tax purposes.
See TSB-M-78(9)(c), New York Department of Taxation and Finance June 23,
1978.
By letter, dated today, Messrs. Chapman and Cutler, counsel for the
Depositor, rendered their opinion that each Unit holder of a Trust will
be considered as owning a share of each asset of that Trust in the
proportion that the number of Units held by such holder bears to the
total number of Units outstanding and the income of a Trust will be
treated as the income of each Unit holder of that Trust in said
proportion pursuant to Subpart E of Part E, subchapter J of Chapter 1 of
the Code.
Based on the foregoing and on the opinion of Messrs. Chapman and
Cutler, counsel for the Depositor, dated today, upon which we
specifically rely, we are of the opinion that under existing laws,
rulings and court decisions interpreting the laws of the State and City
of New York.
1. Each Trust will not constitute an association taxable as a
corporation under New York law and, accordingly, will not be subject to
tax on its income under the New York franchise tax or the New York City
general corporation tax.
2. The income of each of the Trusts will be treated as the income
of the Unit holders under the income tax laws of the State and City of
New York.
3. Unit holders who are not residents of the State of New York are
not subject to the income tax laws thereof with respect to any interest
or gain derived from the Fund or any gain from the sale or other
disposition of the Units, except to the extent that such interest or gain
is from property employed in a business, trade, profession or occupation
carried on in the State of New York.
In addition, we are of the that opinion no New York State stock
transfer tax will be payable in respect of any transfer of the
Certificates by reason of the exemption contained in paragraph (a) of
Subdivision 8 of Section 270 of the New York Tax Law.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement relating to the Units and to the use of our name
and the reference to our firm in the Registration Statement and in the
Prospectus.
Very truly yours,
Tanner Propp & Farber
MJK:clh
Exhibit 3.4
Hunton & Williams
One Hanover Square, Suite 1400
Fayetteville Street Mall
Raleigh, North Carolina 27601
March 16, 1995
The Bank of New York
through its Wall Street Trust Division
101 Barclay Street
New York, New York 10286
Re: Van Kampen Merritt, Inc.
Insured Municipals Income Trust and
Investors' Quality Tax-Exempt Trust, Multi-Series 247,
North Carolina Investors' Quality Tax-Exempt Trust, Series 81
Gentlemen:
We are acting as special North Carolina counsel to the Insured
Municipals Income Trust and Investors' Quality Tax-Exempt Trust, Multi-
Series 247 (the "Fund") on North Carolina tax matters relating to North
Carolina Investors' Quality Tax-Exempt Trust, Series 81 (the "North
Carolina Trust") included as part of the Fund. Units of beneficial
interest in the North Carolina Trust (the "Units") are to be sold
pursuant to an effective registration statement on Form S-6 (Registration
No. 33-57823) under the Securities Act of 1933 (the "Registration
Statement"), filed by Van Kampen Merritt, Inc. (the "Sponsor") on behalf
of the Fund, covering the Units and other units of the other trusts
described in the Registration Statement. The number of Units to be sold
is stated in the Registration Statement.
The North Carolina Trust is to be established and the Units are to
be created pursuant to a Trust Agreement (the "Trust Agreement"), dated
the date hereof, among the Sponsor and The Bank of New York through its
Wall Street Trust division, as Trustee (the "Trustee"). The portfolio of
the North Carolina Trust will consist of bonds issued by the State of
North Carolina or municipalities, authorities or political subdivisions
thereof (the "Bonds").
We have examined originals, forms or certified copies, or copies
otherwise identified to our satisfaction, of the Trust Agreement, the
Registration Statement and such other documents as we have deemed
necessary for the purpose of this opinion. We have also relied upon the
form of opinion, to be dated the date hereof and addressed to the
Sponsor, of Chapman and Cutler, counsel to the Sponsor, with respect to
the matters of Federal income tax law set forth therein.
Based upon the foregoing, we are of the opinion that, insofar as the
law of the State of North Carolina is concerned, upon the establishing of
the North Carolina Trust and the issuance of the Units thereunder:
A. The North Carolina Trust is not an "association" taxable
as a corporation under North Carolina law with the result that
income of the North Carolina Trust will be deemed to be income of
the Unit holders.
B. Interest on the Bonds that is exempt from North Carolina
income tax when received by the North Carolina Trust will retain its
tax-exempt status when received by the Unit holders.
C. Unit holders will realize a taxable event when the North
Carolina Trust disposes of a Bond (whether by sale, exchange,
redemption or payment at maturity) or when a Unit holder redeems or
sells his Units (or any of them), and taxable gains for Federal
income tax purposes may result in gains taxable as ordinary income
for North Carolina income tax purposes. However, when a Bond has
been issued under an act of the North Carolina General Assembly that
provides that all income from such Bond, including any profit made
from the sale thereof, shall be free from all taxation by the State
of North Carolina, any such profit received by the North Carolina
Trust will retain its tax-exempt status in the hands of the Unit
holders.
D. Unit holders must amortize their proportionate shares of
any premium on a Bond. Amortization for each taxable year is
achieved by lowering the Unit holder's basis (as adjusted) in his
Units, with no deduction against gross income for the year.
E. The Units are exempt from the North Carolina tax on
intangible personal property so long as the corpus of the North
Carolina Trust remains composed entirely of Bonds or, pending
distribution, amounts received on the sale, redemption or maturity
of the Bonds and the Trustee periodically supplies to the North
Carolina Department of Revenue at such times as required by the
Department of Revenue a complete description of the North Carolina
Trust and also the name, description and value of the obligations
held in the corpus of the North Carolina Trust.
In rendering the foregoing opinion we have not passed on or
considered, among other things, the due authorization and delivery of the
Bonds or the North Carolina income tax or intangibles tax status of the
Bonds or income therefrom.
We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references to this firm in the
Registration Statement under the headings "Tax Status Of The Trust Funds"
and "Legal Opinions."
Very truly yours,
Hunton & Williams
Exhibit 4.1
Interactive Data
14 Wall Street
New York, New York 10005
March 16, 1995
Van Kampen American Capital Distributors, Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
Re: Insured Municipals Income Trust and Investors' Quality
Tax-Exempt Trust, Multi-Series 247 (A Unit Investment Trust)
Registered Under the Securities Act of 1933, File No. 33-57823
Gentlemen:
We have examined the Registration Statement for the above captioned
Fund, copy of which is attached hereto.
We hereby consent to the reference in the Prospectus and
Registration Statement for the above captioned Fund to Interactive Data
Services, Inc., as the Evaluator, and to the use of the Obligations
prepared by us which are referred to in such Prospectus and Statement.
You are authorized to file copies of this letter with the Securities
and Exchange Commission.
Very truly yours,
James Perry
Vice President
Exhibit 4.2
Standard & Poor's Corporation
25 Broadway
New York, New York 10004-1064
Mr. Mark Kneedy
Chapman and Cutler
111 West Monroe Street
Chicago, Illinois 60603
Re:Insured Municipals Income Trust and Investors' Quality
Tax-Exempt Trust, Multi-Series 247
Pursuant to your request for a Standard & Poor's rating on the units
of the above-captioned trust, SEC #33-57823, we have reviewed the
information presented to us and have assigned a 'AAA' rating to the units
of the trust and a 'AAA' rating to the securities contained in the trust
for as long as they remain in the trust. The ratings are direct
reflections, of the portfolio of the trust, which will be composed solely
of securities covered by bond insurance policies that insure against
default in the payment of principal and interest on the securities so
long as they remain in the trust. Since such policies have been issued
by one or more insurance companies which have been assigned a 'AAA'
claims paying ability rating by S&P, S&P has assigned a 'AAA' rating to
the units of the trust and to the securities contained in the trust for
as long as they remain in the trust.
You have permission to use the name of Standard & Poor's Corporation
and the above-assigned ratings in connection with your dissemination of
information relating to these units, provided that it is understood that
the ratings are not "market" ratings nor recommendations to buy, hold, or
sell the units of the trust or the securities contained in the trust.
Further, it should be understood the rating on the units does not take
into account the extent to which fund expenses or portfolio asset sales
for less than the fund's purchase price will reduce payment to the unit
holders of the interest and principal required to be paid on the
portfolio assets. S&P reserves the right to advise its own clients,
subscribers, and the public of the ratings. S&P relies on the sponsor
and its counsel, accountants, and other experts for the accuracy and
completeness of the information submitted in connection with the ratings.
S&P does not independently verify the truth or accuracy of any such
information.
This letter evidences our consent to the use of the name of Standard
& Poor's Corporation in connection with the rating assigned to the units
in the registration statement or prospectus relating to the units or the
trust. However, this letter should not be construed as a consent by us,
within the meaning of Section 7 of the Securities Act of 1933, to the use
of the name of Standard & Poor's Corporation in connection with the
ratings assigned to the securities contained in the trust. You are
hereby authorized to file a copy of this letter with the Securities and
Exchange Commission.
Please be certain to send us three copies of your final prospectus
as soon as it becomes available. Should we not receive them within a
reasonable time after the closing or should they not conform to the
representations made to us, we reserve the right to withdraw the rating.
We are pleased to have had the opportunity to be of service to you.
If we can be of further help, please do not hesitate to call upon us.
Sincerely,
Vincent S. Orgo
*Consisting of:
Insured Municipals Income Trust, Series 346
Insured Municipals Income Trust, Short Intermediate Series 98
Florida Insured Municipals Income Trust, Series 90
Missouri Insured Municipals Income Trust, Series 88
Oklahoma Insured Municipals Income Trust, Series 15
North Carolina Investors Quality Tax-Exempt Trust, Series 81
Exhibit 4.3
Independent Certified Public Accountants' Consent
We have issued our report dated March 16, 1995 on the statements of
condition and related bond portfolios of Insured Municipals Income Trust
and Investors' Quality Tax-Exempt Trust, Multi-Series 247 (IM-IT, IM-IT
Short Intermediate, Florida IM-IT, Missouri IM-IT, Oklahoma IM-IT and
North Carolina Quality Trusts) as of March 16, 1995 contained in the
Registration Statement on Form S-6 and in the Prospectus. We consent to
the use of our report in the Registration Statement and in the Prospectus
and to the use of our name as it appears under the caption "Other Matters-
Independent Certified Public Accountants."
Grant Thornton LLP
Chicago, Illinois
March 16, 1995
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This report reflects the current period taken from 487 on March 16, 1995 it is
unaudited
</LEGEND>
<SERIES>
<NUMBER> 346
<NAME> IM-IT
<CAPTION>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-31-1996
<PERIOD-START> MAR-16-1995
<PERIOD-END> MAR-16-1995
<INVESTMENTS-AT-COST> 8573305
<INVESTMENTS-AT-VALUE> 8573305
<RECEIVABLES> 118673
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 8691978
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<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 8573305
<SHARES-COMMON-STOCK> 9015
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<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
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<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
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<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
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<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 March 16, 1995 it is
unaudited
</LEGEND>
<SERIES>
<NUMBER> 98
<NAME> IM-IT Short Intermediate
<CAPTION>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-31-1996
<PERIOD-START> MAR-16-1995
<PERIOD-END> MAR-16-1995
<INVESTMENTS-AT-COST> 4969139
<INVESTMENTS-AT-VALUE> 4969139
<RECEIVABLES> 55959
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 5025098
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 55959
<TOTAL-LIABILITIES> 55959
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4969139
<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> 994
<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 March 16, 1995 it is
unaudited
</LEGEND>
<SERIES>
<NUMBER> 90
<NAME> Florida IM-IT
<CAPTION>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-31-1996
<PERIOD-START> MAR-16-1995
<PERIOD-END> MAR-16-1995
<INVESTMENTS-AT-COST> 2908181
<INVESTMENTS-AT-VALUE> 2908181
<RECEIVABLES> 38584
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2946765
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 38584
<TOTAL-LIABILITIES> 38584
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2908181
<SHARES-COMMON-STOCK> 3058
<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 March 16, 1995 it is
unaudited
</LEGEND>
<SERIES>
<NUMBER> 88
<NAME> Missouri IM-IT
<CAPTION>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-31-1996
<PERIOD-START> MAR-16-1995
<PERIOD-END> MAR-16-1995
<INVESTMENTS-AT-COST> 3300936
<INVESTMENTS-AT-VALUE> 3300936
<RECEIVABLES> 31777
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3332713
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 31777
<TOTAL-LIABILITIES> 31777
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3300936
<SHARES-COMMON-STOCK> 3471
<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 March 16, 1995 it is
unaudited
</LEGEND>
<SERIES>
<NUMBER> 15
<NAME> Oklahoma IM-IT
<CAPTION>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-31-1996
<PERIOD-START> MAR-16-1995
<PERIOD-END> MAR-16-1995
<INVESTMENTS-AT-COST> 2966185
<INVESTMENTS-AT-VALUE> 2966185
<RECEIVABLES> 40424
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3006609
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 40424
<TOTAL-LIABILITIES> 40424
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2966185
<SHARES-COMMON-STOCK> 3119
<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 March 16, 1995 it is
unaudited
</LEGEND>
<SERIES>
<NUMBER> 81
<NAME> North Carolina Quality
<CAPTION>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-31-1996
<PERIOD-START> MAR-16-1995
<PERIOD-END> MAR-16-1995
<INVESTMENTS-AT-COST> 2917698
<INVESTMENTS-AT-VALUE> 2917698
<RECEIVABLES> 45896
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2963594
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 45896
<TOTAL-LIABILITIES> 45896
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2917698
<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> 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>
