File No. 333-30323
CIK #896955
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 295
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 of securities being registered: Units of fractional undivided
beneficial interest.
F. Approximate date of proposed sale to the public:
As soon as practicable after the effective date of the Registration
Statement
The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states that
this Registration Statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until the
Registration Statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a) may determine.
Insured Municipals Income Trust and
Investors' Quality Tax-Exempt Trust
Multi-Series 295
Cross Reference Sheet
Pursuant to Rule 404(c) of Regulation C
under the Securities Act of 1933
(Form N-8B-2 Items Required by Instruction
1 as to Prospectus on Form S-6)
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
I. Organization and General Information
1. (a) Name of trust )
(b) Title of securities issued ) Prospectus Part I Front Cover Page
2. Name and address of Depositor ) Part II-Introduction
) Part I-Summary of Essential Financial
) Information
) Part II-Trust Administration
3. Name and address of Trustee ) Part II-Introduction
) Part I-Summary of Essential Financial
) Information
) Part II-Trust Administration
4. Name and address of principal ) Part I-Other Matters-Underwriting
underwriter )
5. Organization of trust ) Part II-Introduction
6. Execution and termination of ) Part II-Introduction
Trust Indenture and Agreement ) Part II-Trust Administration
7. Changes of Name ) *
8. Fiscal year ) *
9. Material Litigation ) *
II. General Description of the Trust and Securities of the Trust
10. General information regarding ) Part II-Introduction
trust's securities and rights ) Part II-Unitholder Explanations
of security holders ) Part II-Trust Administration
11. Type of securities comprising ) Part II-Introduction
units ) Part I-Trust Information
) Part I-Portfolios
12. Certain information regarding ) *
periodic payment certificates )
13. (a) Load, fees, charges and ) Part II-Introduction
expenses ) Part I-Summary of Essential Financial
) Information
) Part II-Unitholder Explanations
) Part I-Trust Information
) Part II-Trust Administration
(b) Certain information regard- ) *
ing periodic payment plan )
certificates )
(c) Certain percentages ) Part I-Summary of EssentialFinancial
) Information
) Part II-Unitholder Explanations
(d) Certain other fees, ) Part II-Unitholder Explanations
expenses or charges ) Part II-Trust Administration
payable by holders )
(e) Certain profits to be ) Part II-Unitholder Explanations
received by depositor, ) Part I-Other Matters-Underwriting
principal underwriter, ) Part I-Notes to Portfolios
trustee or affiliated )
persons )
(f) Ratio of annual charges ) *
to income )
14. Issuance of trust's securities ) Part II-Unitholder Explanations
15. Receipt and handling of payments ) *
from purchasers )
16. Acquisition and disposition of ) Part II-Introduction
underlying securities ) Part II-Unitholder Explanations
) Part II-Trust Administration
17. Withdrawal or redemption ) Part II-Unitholder Explanations
) Part II-Trust Administration
18. (a) Receipt and disposition ) Part II-Introduction
of income ) Part II-Unitholder Explanations
(b) Reinvestment of distribu- ) *
tions )
(c) Reserves or special funds ) Part II-Unitholder Explanations
) Part II-Trust Administration
(d) Schedule of distributions ) *
19. Records, accounts and reports ) Part II-Unitholder Explanations
) Part II-Trust Administration
20. Certain miscellaneous provisions ) Part II-Trust Administration
of Trust Agreement )
21. Loans to security holders ) *
22. Limitations on liability ) Part I-Portfolios
) Part II-Trust Administration
23. Bonding arrangements ) *
24. Other material provisions of ) *
trust indenture or agreement )
III. Organization, Personnel and Affiliated Persons of Depositor
25. Organization of Depositor ) Part II-Trust Administration
26. Fees received by Depositor ) Part II-Trust Administration
27. Business of Depositor ) Part II-Trust Administration
28. Certain information as to )
officials and affiliated ) *
persons of Depositor )
29. Companies owning securities of ) *
Depositor )
30. Controlling persons of Depositor ) *
31. Compensation of Directors ) *
32. Compensation of Directors ) *
33. Compensation of Employees ) *
34. Compensation to other persons ) Part II-Unitholder Explanations
IV. Distribution and Redemption of Securities
35. Distribution of trust's ) Part II-Introduction
securities by states ) Part II-Settlement of Bonds in
) theTrusts
36. Suspension of sales of trust's ) *
securities )
37. Revocation of authority to ) *
distribute )
38. (a) Method of distribution )
(b) Underwriting agreements ) Part II-Unitholder Explanations
(c) Selling agreements )
39. (a) Organization of principal )
underwriter )
) Part II-Trust Administration
(b) N.A.S.D. membership by )
principal underwriter )
40. Certain fees received by ) *
principal underwriter )
41. (a) Business of principal ) Part II-Trust Administration
underwriter )
(b) Branch offices of principal ) *
underwriter )
(c) Salesmen of principal ) *
underwriter )
42. Ownership of securities of the ) *
trust )
43. Certain brokerage commissions )
received by principal ) *
underwriter )
44. (a) Method of valuation ) Part II-Introduction
) Part I-Summary of Essential Financial
) Information
) Part II-Unitholder Explanations
) Part II-Trust Administration
(b) Schedule as to offering ) *
price )
(c) Variation in offering price ) Part II-Unitholder Explanations
to certain persons )
45. Suspension of redemption rights ) *
46. (a) Redemption valuation ) Part II-Unitholder Explanations
) Part II-Trust Administration
(b) Schedule as to redemption ) *
price )
47. Purchase and sale of interests ) Part II-Unitholder Explanations
in underlying securities ) Part II-Trust Administration
V. Information Concerning the Trustee or Custodian
48. Organization and regulation of ) Part II-Trust Administration
trustee )
49. Fees and expenses of trustee ) Part I-Summary of Essential Financial
) Information
) Part II-Trust Administration
50. Trustee's lien ) Part II-Trust Administration
VI. Information Concerning Insurance of Holders of Securities
51. Insurance of holders of trust's )
securities ) *
VII. Policy of Registrant
52. (a) Provisions of trust agree- )
ment with respect to )
replacement or elimi- ) Part II-Trust Administration
nation of portfolio )
securities )
(b) Transactions involving )
elimination of underlying ) *
securities )
(c) Policy regarding substitu- ) Part II-Trust Administration
tion or elimination of )
underlying securities )
(d) Fundamental policy not ) *
otherwise covered )
53. Tax Status of trust ) Part I-Trust Information
) Part II-Federal Tax Status
VIII. Financial and Statistical Information
54. Trust's securities during ) *
last ten years )
55. )
)
56. Certain information regarding ) *
)
57. Periodic payment certificates )
58. )
59. Financial statements (Instruc- ) Part I-Other Matters
tions 1(c) to Form S-6) )
__________________________________
* Inapplicable, omitted, answer negative or not required
October 16, 1997
Van Kampen American Capital
Prospectus Part I
Insured Municipals Income Trust
and Investors' Quality Tax-Exempt Trust, Multi-Series 295
California IM-IT 170 Virginia Quality 79
This Part I of the Prospectus may not be distributed unless accompanied by
Part II. Both parts of this Prospectus should be retained for future reference.
In the opinion of counsel, interest to the Fund and to Unitholders, with
certain exceptions, is excludable under existing law from gross income for
Federal income taxes. In addition, the interest income of each State Trust is,
in the opinion of counsel, exempt to the extent indicated from state and local
taxes, when held by residents of the state where the issuers of Bonds in such
Trust are located. Capital gains, if any, are subject to Federal tax.
The Fund. The objectives of the Fund are Federal and, in the case of a State
Trust, state tax-exempt income and conservation of capital through an
investment in a diversified portfolio of tax-exempt bonds. The Fund consists
of two underlying separate unit investment trusts designated as California
Insured Municipals Income Trust, Series 170 (the "California IM-IT
Trust" ) and Virginia Investors' Quality Tax-Exempt Trust, Series 79 (the
"Virginia Quality Trust" ). The various trusts are collectively
referred to herein as the "Trusts" or the "State Trusts" ,
while the California IM-IT Trust is sometimes referred to herein as the "
Insured Trust" and the Virginia 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 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. Notwithstanding anything to the contrary in Part II of
this Prospectus, the amounts set forth under "Summary of Essential
Financial Information" and "Per Unit Information" for each Trust
are computed as of 8 A.M. Central Time on the Date of Deposit.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
INSURED MUNICIPALS INCOME TRUST
AND INVESTORS' QUALITY TAX-EXEMPT TRUST, Multi-Series 295
As of 8:00 A.M. Central Time on the Date of Deposit: October 16, 1997
Sponsor: Van Kampen American Capital Distributors, Inc.
Evaluator: American Portfolio Evaluation Services
(A division of an affiliate of the Sponsor)
Trustee: The Bank of New York
<TABLE>
<CAPTION>
California Virginia
IM-IT Quality
GENERAL INFORMATION Trust Trust
-------------- -------------
<S> <C> <C>
Principal Amount (Par Value) of Securities in Trust <F1>............................... $ 3,005,000 $ 3,000,000
Number of Units........................................................................ 3,033 3,024
Fractional Undivided Interest in the Trust per Unit ................................... 1/3,033 1/3,024
Principal Amount (Par Value) of Securities per Unit.................................... $ 990.77 $ 992.06
Public Offering Price: ................................................................
Aggregate Offering Price of Securities in Portfolio................................... $ 2,884,395 $ 2,875,839
Aggregate Offering Price of Securities per Unit........................................ $ 951.00 $ 951.00
Sales Charge <F2>...................................................................... $ 49.00 $ 49.00
Public Offering Price per Unit <F3>.................................................... $ 1,000.00 $ 1,000.00
Redemption Price per Unit <F3>......................................................... $ 943.70 $ 943.56
Secondary Market Repurchase Price per Unit <F3>........................................ $ 951.00 $ 951.00
Excess of Public Offering Price per Unit Over Redemption Price per Unit................ $ 56.30 $ 56.44
Excess of Sponsor's Initial Repurchase Price per Unit Over Redemption Price per Unit... $ 7.30 $ 7.44
Minimum Value of the Trust under which Trust Agreement may be terminated............... $ 601,000 $ 600,000
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
First Settlement Date................October 21, 1997
Evaluator's Annual Supervisory Fee...Maximum of $0.25 per Unit
Evaluator's Annual Evaluation Fee....$0.30 per $1,000 principal amount of Bonds
Evaluation Time......................4:00 p.m. Eastern Time
- ----------
<FN>
<F1>Because certain of the Securities in certain Trusts may from time to time
under certain circumstances be sold or redeemed or will be called or mature in
accordance with their terms (including the call or sale of zero coupon bonds
at prices less than par value), there is no guarantee that the value of each
Unit at the respective Trust's termination will be equal to the Principal
Amount (Par Value) of Securities per Unit stated above.
<F2>Sales charges for the Trusts, expressed as a percentage of the Public Offering
Price per Unit and as a percentage of the aggregate offering price of the
Securities are set forth under "Unitholder Explanations--Public
Offering--General" in Part II of this Prospectus.
<F3>Anyone ordering Units for settlement after the First Settlement Date will pay
accrued interest from such date to the date of settlement (normally three
business days after order) less distributions from the Interest Account
subsequent to the First Settlement Date. For purchases settling on the First
Settlement Date, no accrued interest will be added to the Public Offering
Price. After the initial offering period, the Sponsor's Repurchase Price per
Unit will be determined as described under the caption "Unitholder
Explanations--Public Offering--Market for Units" in Part II of this
Prospectus.
</TABLE>
CALIFORNIA IM-IT TRUST
- --------------------------------------------------------------------------
General. The California IM-IT Trust consists of 9 issues of Securities. None
of the Bonds in the California IM-IT Trust are general obligations of the
governmental entities issuing them or are backed by the taxing power thereof.
All of the issues are payable from the income of a specific project or
authority and are not supported by the issuer's power to levy taxes. These
issues are divided by purpose of issues (and percentage of principal amount to
total California IM-IT Trust) as follows: Health Care, 2 (20%);
Transportation, 2 (19%); Certificate of Participation, 1 (17%); General
Purpose, 1 (16%); Retail Electric/Gas/Telephone, 1 (14%); Tax District, 1
(10%) and Water and Sewer, 1 (4%). No Bond issue has received a provisional
rating.
Risk Factors. The Trust will invest substantially all of its assets in
California Municipal Obligations. The Trust is therefore susceptible to
political, economic or regulatory factors affecting issuers of California
Municipal Obligations. These include the possible adverse effects of certain
California constitutional amendments, legislative measures, voter initiatives
and other matters that are described below. The following information provides
only a brief summary of the complex factors affecting the financial situation
in California (the "State" ) and is derived from sources that are
generally available to investors and are believed to be accurate. No
independent verification has been made of the accuracy or completeness of any
of the following information. It is based in part on information obtained from
various State and local agencies in California or contained in official
statements for various California Municipal Obligations.
There can be no assurance that future statewide or regional economic
difficulties, and the resulting impact on State or local governmental finances
generally, will not adversely affect the market value of California Municipal
Obligations held in the portfolio of the Trust or the ability of particular
obligors to make timely payments of debt service on (or relating to) those
obligations.
California's economy is the largest among the 50 states and one of the largest
in the world. The State's population of almost 32 million represents 12.3% of
the total United States population and grew by 27% in the 1980's. Personal
income in the State, at an estimated $815 billion in 1996, accounts for
approximately 13% of all personal income in the nation. Total employement is
over 14 million, the majority of which is in the service, trade and
manufacturing sectors.
From mid-1990 to late 1993, the State's economy suffered its worst recession
since the 1930's, with recovery starting later than for the nation as a whole.
The State has experienced the worst job losses of any post-war recession.
Prerecession job levels may not be realized until near the end of the decade.
The largest job losses have been in Southern California, led by declines in
the aerospace and construction industries. Weakness statewide occurred in
manufacturing, construction, services and trade. Additional military base
closures will have further adverse effects on the State's economy later in the
decade.
Since the start of 1994, the California economy has shown signs of steady
recovery and growth. The State Department of Finance reports net job growth,
particularly in construction and related manufacturing, wholesale and retail
trade, transportation, recreation and services. This growth has offset the
continuing but slowing job losses in the aerospace industry and restructuring
of the finance and utility sectors. Unemployment in the State was down
substantially in 1994 from its 10% peak in January, 1994, but still remains
higher than the national average rate. Retail sales were up strongly in 1994
from year-earlier figures. Delay or slowdown in recovery will adversely affect
State revenues.
Certain California Municipal Obligations may be obligations of issuers which
rely in whole or in part, directly or indirectly, on ad valorem property taxes
as a source of revenue. The taxing powers of California local governments and
districts are limited by Article XIIIA of the California Constitution, enacted
by the voters in 1978 and commonly known as "Proposition 13." Briefly,
Article XIIIA limits to 1% of full cash value the rate of ad valorem property
taxes on real property and generally restricts the reassessment of property to
2% per year, except upon new construction or change of ownership (subject to a
number of exemptions). Taxing entities may, however, raise ad valorem taxes
above the 1% limit to pay debt service on voter-approved bonded indebtedness.
Under Article XIIIA, the basic 1% ad valorem tax levy is applied against the
assessed value of property as of the owner's date of acquisition (or as of
March 1, 1975, if acquired earlier), subject to certain adjustments. This
system has resulted in widely varying amounts of tax on similarly situated
properties. Several lawsuits have been filed challenging the acquisition-based
assessment system of Proposition 13, and on June 18, 1992 the U.S. Supreme
Court announced a decision upholding Proposition 13.
Article XIIIA prohibits local governments from raising revenues through ad
valorem property taxes above the 1% limit; it also requires voters of any
governmental unit to give two-thirds approval to levy any "special
tax." Court decisions, however, allowed non-voter approved levy of "
general taxes" which were not dedicated to a specific use. In response to
these decisions, the voters of the State in 1986 adopted an initiative statute
which imposed significant new limits on the ability of local entities to raise
or levy general taxes, except by receiving majority local voter approval.
Significant elements of this initiative, "Proposition 62," have been
overturned in recent court cases. An initiative proposed to re-enact the
provisions of Proposition 62 as a constitutional amendment was defeated by the
voters in November 1990, but such a proposal may be renewed in the future.
California and its local governments are subject to an annual "
appropriations limit" imposed by Article XIIIB of the California
Constitution, enacted by the voters in 1979 and significantly amended by
Propositions 98 and 111 in 1988 and 1990, respectively. Article XIIIB
prohibits the State or any covered local government from spending "
appropriations subject to limitation" in excess of the appropriations
limit imposed. "Appropriations subject to limitation" are
authorizations to spend "proceeds of taxes," which consists of tax
revenues and certain other funds, including proceeds from regulatory licenses,
user charges or other fees, to the extent that such proceeds exceed the cost
of providing the product or service, but "proceeds of taxes" excludes
most State subventions to local governments. No limit is imposed on
appropriations of funds which are not "proceeds of taxes," such as
reasonable user charges or fees and certain other non-tax funds, including
bond proceeds.
Among the expenditures not included in the Article XIIIB appropriations limit
are (1) the debt service cost of bonds issued or authorized prior to January
1, 1979, or subsequently authorized by the voters, (2) appropriations arising
from certain emergencies declared by the Governor, (3) appropriations for
certain capital outlay projects, (4) appropriations by the State of post-1989
increases in gasoline taxes and vehicle weight fees, and (5) appropriations
made in certain cases of emergency.
The appropriations limit for each year is adjusted annually to reflect changes
in cost of living and population, and any transfers of service
responsibilities between government units. The definitions for such
adjustments were liberalized in 1990 by Proposition 111 to follow more closely
growth in California's economy.
"Excess" revenues are measured over a two-year cycle. With respect to
local governments, excess revenues must be returned by a revision of tax rates
or fee schedules within the two subsequent fiscal years. The appropriations
limit for a local government may be overridden by referendum under certain
conditions for up to four years at a time. With respect to the State, 50% of
any excess revenues is to be distributed to K-12 school districts and
community college districts (collectively, "K-14 districts" ) and the
other 50% is to be refunded to taxpayers. With more liberal annual adjustment
factors since 1988, and depressed revenues since 1990 because of the
recession, few governments, including the State, are currently operating near
their spending limits, but this condition may change over time. Local
governments may, by voter approval, exceed their spending limits for up to
four years.
Because of the complex nature of Articles XIIIA and XIIIB of the California
Constitution, the ambiguities and possible inconsistencies in their terms, and
the impossibility of predicting future appropriations or changes in population
and cost of living, and the probability of continuing legal challenges, it is
not currently possible to determine fully the impact of Article XIIIA or
Article XIIIB on California Municipal Obligations or on the ability of
California or local governments to pay debt service on such California
Municipal Obligations. It is not presently possible to predict the outcome of
any pending litigation with respect to the ultimate scope, impact or
constitutionality of either Article XIIIA or Article XIIIB, or the impact of
any such determinations upon State agencies or local governments, or upon
their ability to pay debt service on their obligations. Future initiative or
legislative changes in laws or the California Constitution may also affect the
ability of the State or local issuers to repay their obligations.
Under the California Constitution, debt service on outstanding general
obligation bonds is the second charge to the General Fund after support of the
public school system and public institutions of higher education. Total
outstanding general obligation bond and lease purchase debt of the State
increased from $9.4 billion at June 30, 1987 to $23.5 billion at June 30,
1994. In FY 1993-94, debt service on general obligation bonds and lease
purchase debt was approximately 5.2% of General Fund revenues.
The principal sources of General Fund revenues in 1993-94 were the California
personal income tax (44% of total revenues), the sales tax (35%), bank and
corporation taxes (12%), and the gross premium tax on insurance (3%).
California maintains a Special Fund for Economic Uncertainties (the "
Economic Uncertainties Fund" ), derived from General Fund revenues, as a
reserve to meet cash needs of the General Fund.
Throughout the 1980's, State spending increased rapidly as the State
population and economy also grew rapidly, including increased spending for
many assistance programs to local governments, which were constrained by
Proposition 13 and other laws. The largest State program is assistance to
local public school districts. In 1988, an initiative (Proposition 98) was
enacted which (subject to suspension by a two-thirds vote of the Legislature
and the Governor) guarantees local school districts and community college
districts a minimum share of State General Fund revenues (currently about
33%).
Since the start of 1990-91 Fiscal Year, the State has faced adverse economic,
fiscal and budget conditions. The economic recession seriously affected State
tax revenues. It also caused increased expenditures for health and welfare
programs. The State is also facing a structural imbalance in its budget with
the largest programs supported by the General Fund (education, health, welfare
and corrections) growing at rates significantly higher than the growth rates
for the principal revenue sources of the General Fund. These structural
concerns will be exacerbated in coming years by the expected need to
substantially increase capital and operating funds for corrections as a result
of a "Three Strikes" law enacted in 1994.
As a result of these factors, among others, from the late 1980's until
1992-1993, the State had a period of nearly chronic budget imbalance, with
expenditures exceeding revenues in four out of six years, and the State
accumulated and sustained a budget deficit in the budget reserve, the Special
Fund for Economic Uncertainties ("SFEU" ) approaching $2.8 billion at
its peak at June 30, 1993. Starting in the 1990-91 Fiscal Year and for each
year thereafter, each budget required multibillion dollar actions to bring
projected revenues and expenditures into balance and to close large "
budget gaps" which were identified. The Legislature and Governor
eventually agreed on a number of different steps to produce Budget Acts in the
years 1991-92 to 1994-95, including: significant cuts in health and welfare
program expenditures; transfers of program responsibilities and funding from
the State to local governments, coupled with some reduction in mandates on
local government; transfer of about $3.6 billion in annual local property tax
revenues from cities, counties, redevelopment agencies and some other
districts to local school districts, thereby reducing State funding for
schools; reduction in growth of support for higher education programs, coupled
with increases in student fees; revenue increases (particularly in the 1992-93
Fiscal Year budget), most of which were for a short duration; increased
reliance on aid from the federal government to offset the costs of
incarcerating, educating and providing health and welfare services to
undocumented aliens (although these efforts have produced much less federal
aid than the State Administration has requested) and various on-time
adjustments and accounting changes.
Despite these budget actions, the effects of the recession led to large,
unanticipated deficits in the SFEU, as compared to projected positive
balances. By the start of the 1993-94 Fiscal Year, the accumulated deficit was
so large (almost $2.8 billion) that it was impractical to budget to retire it
in one year, so a two-year program was implemented, using the issuance of
revenue anticipation warrants to carry a portion of the deficit over the end
of the fiscal year. When the economy failed to recover sufficiently in
1993-94, a second two-year plan was implemented in 1994-95, to carry the final
retirement of the deficit into 1995-96.
The combination of stringent budget actions cutting State expenditures, and
the turnaround of the economy by late 1993, finally led to the restoration of
positive financial results. While General Fund revenues and expenditures were
essentially equal in FY 1992-93 (following two years of excess expenditures
over revenues), the General Fund had positive operating results in FY 1993-94
and 1994-95, which have reduced the accumulated budget deficit to around $600
million as of June 30, 1995.
A consequence of the accumulated budget deficits in the early 1990's, together
with other factors such as disbursement of funds to local school districts
"borrowed" from future fiscal years and hence not shown in the annual
budget, was to significantly reduce the State's cash resources available to
pay its ongoing obligations. When the Legislature and the Governor failed to
adopt a budget for the 1992-93 Fiscal Year by July 1, 1992, which would have
allowed the State to carry out its normal annual cash flow borrowing to
replenish its cash reserves, the State Controller was forced to issue
registered warrants ("IOUs" ) to pay a variety of obligations
representing prior years' or continuing appropriations, and mandates from
court orders. Available funds were used to make constitutionally-mandated
payments, such as debt service on bonds and warrants. Between July 1 and
September 4, 1992 the State Controller issued a total of approximately $3.8
billion of registered warrants. After that date, all remaining outstanding
registered warrants (about $2.9 billion) were called for redemptions from
proceeds of the issuance of 1992 Interim Notes after the budget was adopted.
The State's cash condition became so serious in late spring of 1992 that the
State Controller was required to issue revenue anticipation warrants maturing
in the following fiscal year in order to pay the State's continuing
obligations. The State was forced to rely increasingly on external debt
markets to meet its cash needs, as a succession of notes and warrants (both
forms of short-term cash flow financing) were issued in the period from June,
1992 to July, 1994, often needed to pay previously-maturing notes or warrants.
These borrowings were used also in part to spread out the repayment of the
accumulated budget deficit over the end of a fiscal year.
The State issued $7.0 billion of short-term debt in July, 1994 to meet its
cash flow needs and to finance the deferral of part of the accumulated budget
deficit to the 1995-96 fiscal year. In order to assure repayment of the $4
billion, 22-month part of this borrowing, the State enacted legislation (the
"Trigger Law" ) which can lead to automatic, across-the-board cuts in
General Fund expenditures in either the 1994-95 or 1995-96 fiscal years if
cash flow projections made at certain times during those years show
deterioration from the projections made in July 1994 when the borrowings were
made. On November 15, 1994, the State Controller as part of the Trigger Law
reported that the cash position of the General Fund on June 30, 1995 would be
about $580 million better than earlier projected, so no automatic budget
adjustments were required in 1994-95. The Controller's report showed that loss
of federal funds was offset by higher revenues, lower expenditures, and
certain other increases in cash resources.
For the first time in four years, the State entered the 1995-96 fiscal year
with strengthening revenues based on an improving economy. The major feature
of the Governor's proposed Budget, a 15% phased tax cut, was rejected by the
Legislature.
The 1995-96 Budget Act was signed by the Governor on August 3, 1995, 34 days
after the start of the fiscal year. The Budget Act projects General Fund
revenues and transfers of $44.1 billion. Expenditures are budgeted at $43.4
billion. The Department of Finance projects that, after repaying the last of
the carryover budget deficit, there will be a positive balance of less than
$30 million in the budget reserve, the Special Fund for Economic
Uncertainties, at June 30, 1996, providing no margin for adverse results
during the year.
The Department of Finance projects cash flow borrowings in the 1995-96 Fiscal
Year will be the smallest in many years, comprising about $2 billion of notes
to be issued in April, 1996, and maturing by June 30, 1996. With full payment
of $4 billion of revenue anticipation warrants on April 25, 1996, the
Department sees no further need for borrowing over the end of the fiscal year.
The Department projects that available cash resources to pay State obligations
will be almost $2 billion at June 30, 1996. This "cushion" will be
re-examined by the State Controller on October 15, 1995, in the third step in
the Budget Adjustment Law process. If the Controller believes the available
cash resources on June 30, 1996 will, in fact, be zero or less, her report
would start a process which could lead to automatic budget cuts starting in
December, 1995.
The principal features of the 1995-96 Budget Act, in addition to those noted
above, are additional cuts in health and welfare expenditures (some of which
are subject to approvals or waivers by the federal government); assumed
further federal aid for illegal immigrant costs; and an increase in per-pupil
funding for public schools and community colleges, the first such significant
increase in four years.
State general obligation bonds ratings were reduced in July, 1994 to "
A1" by Moody's and "A" by S&P. Both of these ratings were reduced
from "AAA" levels which the State held until late 1991. There can be
no assurance that such ratings will be maintained in the future. It should be
noted that the creditworthiness of obligations issued by local California
issuers may be unrelated to the creditworthiness of obligations issued by the
State of California, and that there is no obligation on the part of the State
to make payment on such local obligations in the event of default.
The State is involved in certain legal proceedings (described in the State's
recent financial statements) that, if decided against the State, may require
the State to make significant future expenditures or may substantially impair
revenues. Trial courts have recently entered tentative decisions or
injunctions which would overturn several parts of the State's recent budget
compromises. The matters covered by these lawsuits include a deferral of
payments by the State to the Public Employees Retirement System, reductions in
welfare payments, and the use of certain cigarette tax funds for health costs.
All of these cases are subject to further proceedings and appeals, and if the
State eventually loses, the final remedies may not have to be implemented in
one year.
There are a number of State agencies, instrumentalities and political
subdivisions of the State that issue Municipal Obligations, some of which may
be conduit revenue obligations payable from payments from private borrowers.
These entities are subject to various economic risks and uncertainties, and
the credit quality of the securities issued by them may vary considerably from
the credit quality of the obligations backed by the full faith and credit of
the State.
Property tax revenues received by local governments declined more than 50%
following passage of Proposition 13. Subsequently, the California Legislature
enacted measures to provide for the redistribution of the State's General Fund
surplus to local agencies, the reallocation of certain State revenues to local
agencies and the assumption of certain governmental functions by the State to
assist municipal issuers to raise revenues. Total local assistance from the
State's General Fund was budgeted at approximately 75% of General Fund
expenditures in recent years, including the effect of implementing reductions
in certain aid programs. To reduce State General Fund support for school
districts, the 1992-93 and 1993-94 Budget Acts caused local governments to
transfer $3.9 billion of property tax revenues to school districts,
representing loss of the post-Proposition 13 "bailout" aid. The
largest share of these transfers came from counties, and the balance from
cities, special districts and redevelopment agencies. In order to make up this
shortfall, the Legislature proposed and voters approved in 1993 dedicating
0.5% of the sales tax to counties and cities for public safety purposes. In
addition, the Legislature has changed laws to relieve local governments of
certain mandates, allowing them to reduce costs.
To the extent the State should be constrained by its Article XIII
appropriations limit, or its obligation to conform to Proposition 98, or other
fiscal considerations, the absolute level, or the rate of growth, of State
assistance to local governments may be further reduced. Any such reductions in
State aid could compound the serious fiscal constraints already experienced by
many local governments, particularly counties. At lease one rural county
(Butte) publicly announced that it might enter bankruptcy proceedings in
August, 1990, although such plans were put off after the Governor approved
legislation to provide additional funds for the county. Other counties have
also indicated that their budgetary condition is extremely grave. The Richmond
Unified School District (Contra Costa County) entered bankruptcy proceedings
in May, 1991 but the proceedings have been dismissed. Los Angeles County, the
largest in the State, has reported severe fiscal problems, leading to a
nominal $1.2 billion deficit in its $11 billion budget for the 1995-96 Fiscal
Year. To balance the budget, the county has imposed severe cuts in services,
particularly for health care. The Legislature is considering actions to help
alleviate the County's fiscal problems, but none were completed before August
15, 1995. As a result of its bankruptcy proceedings (discussed further below)
Orange County also has implemented stringent cuts in services and has laid off
workers.
California Municipal Obligations which are assessment bonds may be adversely
affected by a general decline in real estate values or a slowdown in real
estate sales activity. In many cases, such bonds are secured by land which is
undeveloped at the time of issuance but anticipated to be developed within a
few years after issuance. In the event of such reduction or slowdown, such
development may not occur or may be delayed, thereby increasing the risk of a
default on the bonds. Because the special assessments or taxes securing these
bonds are not the personal liability of the owners of the property assessed,
the lien on the property is the only security for the bonds. Moreover, in most
cases the issuer of these bonds is not required to make payments on the bonds
in the event of delinquency in the payment of assessments or taxes, except
from amounts, if any, in a reserve fund established for the bonds.
Certain California long-term lease obligations, though typically payable from
the general fund of the municipality, are subject to "abatement" in
the event the facility being leased is unavailable for beneficial use and
occupancy by the municipality during the term of the lease. Abatement is not a
default, and there may be no remedies available to the holders of the
certificates evidencing the lease obligation in the event abatement occurs.
The most common cases of abatement are failure to complete construction of the
facility before the end of the period during which lease payments have been
capitalized and uninsured casualty losses to the facility (e.g., due to
earthquake). In the event abatement occurs with respect to a lease obligation,
lease payments may be interrupted (if all available insurance proceeds and
reserves are exhausted) and the certificates may not be paid when due.
Several years ago the Richmond Unified School District (the "District"
) entered into a lease transaction in which certain existing properties of the
District were sold and leased back in order to obtain funds to cover operating
deficits. Following a fiscal crisis in which the District's finances were
taken over by a State receiver (including a brief period under bankruptcy
court protection), the District failed to make rental payments on this lease,
resulting in a lawsuit by the Trustee for the Certificate of Participation
holders, in which the State was a named defendant (on the grounds that it
controlled the District's finances). One of the defenses raised in answer to
this lawsuit was the invalidity of the original lease transaction. The trial
court has upheld the validity of the District's lease, and the case has been
settled. Any judgment in any future case against the position asserted by the
Trustee in the Richmond case may have adverse implications for lease
transactions of a similar nature by other California entities.
The repayment of industrial development securities secured by real property
may be affected by California laws limiting foreclosure rights of creditors.
Securities backed by health care and hospital revenues may be affected by
changes in State regulations governing cost reimbursements to health care
providers under Medi-Cal (the State's Medicaid program), including risks
related to the policy of awarding exclusive contracts to certain hospitals.
Limitations on ad valorem property taxes may particularly affect "tax
allocation" bonds issued by California redevelopment agencies. Such bonds
are secured solely by the increase in assessed valuation of a redevelopment
project area after the start of redevelopment activity. In the event that
assessed values in the redevelopment project decline (e.g., because of a major
natural disaster such as an earthquake), the tax increment revenue may be
insufficient to make principal and interest payments on these bonds. Both
Moody's and S&P suspended ratings on California tax allocation bonds after the
enactment of Articles XIIIA and XIIIB, and only resumed such ratings on a
selective basis.
Proposition 87, approved by California voters in 1988, requires that all
revenues produced by a tax rate increase go directly to the taxing entity
which increased such tax rate to repay that entity's general obligation
indebtedness. As a result, redevelopment agencies (which, typically, are the
Issuers of tax allocation securities) no longer receive an increase in tax
increment when taxes on property in the project area are increased to repay
voter-approved bonded indebtedness.
The effect of these various constitutional and statutory changes upon the
ability of California municipal securities issuers to pay interest and
principal on their obligations remains unclear. Furthermore, other measures
affecting the taxing or spending authority of California or its political
subdivisions may be approved or enacted in the future. Legislation has been or
may be introduced which would modify existing taxes or other revenue-raising
measures or which either would further limit or, alternatively, would increase
the abilities of state and local governments to impose new taxes or increase
existing taxes. It is not presently possible to determine the impact of any
such legislation on California Municipal Obligations in which the Fund may
invest, future allocations of state revenues to local governments or the
abilities of state or local governments to pay the interest on, or repay the
principal of, such California Municipal Obligations.
Substantially all of California is within an active geologic region subject to
major seismic activity. Northern California in 1989 and Southern California in
1994 experienced major earthquakes causing billions of dollars in damages. The
federal government provided more than $1.8 billion in aid for both
earthquakes, and neither event is expected to have any long-term negative
economic impact. Any California Municipal Obligation in the Portfolio could be
affected by an interruption of revenues because of damaged facilities, or,
consequently, income tax deductions for casualty losses or property tax
assessment reductions. Compensatory financial assistance could be constrained
by the inability of (i) an issuer to have obtained earthquake insurance
coverage at reasonable rates; (ii) an insurer to perform on its contracts of
insurance in the event of widespread losses; or (iii) the Federal or State
government to appropriate sufficient funds within their respective budget
limitations.
On January 17, 1994, a major earthquake with an estimated magnitude 6.8 on the
Richter scale struck the Los Angeles area, causing significant property damage
to public and private facilities, presently estimated at $15-20 billion. While
over $9.5 billion of federal aid, and a projected $1.9 billion of State aid,
plus insurance proceeds, will reimburse much of that loss, there will still be
some ultimate loss of health and income in the region, in addition to costs of
the disruption caused by the event. Short-term economic projections are
generally neutral, as the infusion of aid will restore billions of dollars to
the local economy within a few months; already the local construction industry
has picked up. Although the earthquake will hinder recovery from the recession
in Southern California, already hard-hit, its long-term impact is not expected
to be material in the context of the overall wealth of the region. There are
few remaining effects of the 1989 Loma Prieta earthquake in northern
California (which, however, caused less severe damage than Northridge).
On December 7, 1994, Orange County, California (the "County" ),
together with its pooled investment fund (the "Pools" ) filed for
protection under Chapter 9 of the federal Bankruptcy Code, after reports that
the Pools had suffered significant market losses in its investments caused a
liquidity crisis for the Pools and the County. Approximately 180 other public
entities, most but not all located in the County, were also depositors in the
Pools. The County estimated the Pools' loss at about $1.64 billion, or 23%, of
its initial deposits of around $7.5 billion. Many of the entities which kept
moneys in the Pools, including the County, faced cash flow difficulties
because of the bankruptcy filing and may be required to reduce programs or
capital projects. Moody's and Standard & Poor's have suspended, reduced to
below investment grade levels, or placed on "Credit Watch" various
securities of the County and the entities participating in the Pools.
On May 2, 1995, the Bankruptcy Court approved a settlement agreement covering
claims of the other participating entities against the County and the Pools.
Most participants have received in cash 80% (90% for school districts) of
their Pools' investment; the balance is to be paid in the future. The County
succeeded in deferring, by consent, until June 30, 1996, the repayment of $800
million of short-term obligations due in July and August, 1995; these notes
are, however, considered to be in default by Moody's and S&P. On June 27,
1995, County voters turned down a proposal for a temporary 0.5% increase in
the local sales tax, making the County's fiscal recovery much harder.
The State of California has no obligation with respect to any obligations or
securities of the County or any of the other participating entities, although
under existing legal precedents, the State may be obligated to ensure that
school districts have sufficient funds to operate. All school districts were
able to meet their obligations in the 1994-95 Fiscal Year.
Tax Status. For a discussion of the Federal tax status of income earned on
California IM-IT Trust Units, see "Federal Tax Status" in Part II of
this Prospectus.
In the opinion of Orrick, Herrington & Sutcliffe, LLP, special counsel to the
Fund for California tax matters, under existing California income and property
tax law applicable to individuals who are California residents:
(1)the California IM-IT Trust is not an association taxable as a corporation
and the income of the California IM-IT Trust will be treated as the income of
the Unitholders under the income tax laws of California;
(2)amounts treated as interest on the underlying Securities in the California
IM-IT Trust which are exempt from tax under California personal income tax and
property tax laws when received by the California IM-IT Trust will, under such
laws, retain their status as tax-exempt interest when distributed to
Unitholders. However, interest on the underlying Securities attributed to a
Unitholder which is a corporation subject to the California franchise tax laws
may be includable in its gross income for purposes of determining its
California franchise tax. Further, certain interest which is attributable to a
Unitholder subject to the California personal income tax and which is treated
as an item of tax preference for purposes of the federal alternative minimum
tax pursuant to Section 57(a)(5) of the Internal Revenue Code of 1986 may also
be treated as an item of tax preference that must be taken into account in
computing such Unitholder's alternative minimum taxable income for purposes of
the California alternative minimum tax enacted by 1987 California Statutes,
chapter 1138. However, because of the provisions of the California
Constitution exempting the interest on bonds issued by the State of
California, or by local governments within the state, from taxes levied on
income, the application of the new California alternative minimum tax to
interest otherwise exempt from the California personal income tax in some
cases may be unclear;
(3)under California income tax law, each Unitholder in the California IM-IT
Trust will have a taxable event when the California IM-IT Trust disposes of a
Security (whether by sale, exchange, redemption, or payment at maturity) or
when the Unitholder redeems or sells Units. Because of the requirement that
tax cost basis be reduced to reflect amortization of bond premium, under some
circumstances a Unitholder may realize taxable gains when Units are sold or
redeemed for an amount equal to, or less than, their original cost. The total
cost of each Unit in the California IM-IT Trust to a Unitholder is allocated
among each of the Bond issues held in the California IM-IT Trust (in
accordance with the proportion of the California IM-IT Trust comprised by each
Bond issue) in order to determine his per Unit tax cost for each Bond issue;
and the tax cost reduction requirements relating to amortization of bond
premium will apply separately to the per Unit tax cost of each Bond issue.
Unitholders' bases in their units, and the bases for their fractional interest
in each Trust asset, may have to be adjusted for their pro rata share of
accrued interest received, if any, on Securities delivered after the
Unitholders' respective settlement dates;
(4)under the California personal property tax laws, bonds (including the
Securities in the California IM-IT Trust) or any interest therein is exempt
from such tax;
(5)any proceeds paid under the insurance policy issued to the California IM-IT
Trust with respect to the Securities which represent maturing interest on
defaulted obligations held by the Trustee will be exempt from California
personal income tax if, and to the same extent as, such interest would have
been so exempt if paid by the issuer of the defaulted obligations; and
(6)under Section 17280(b)(2) of the California Revenue and Taxation Code,
interest on indebtedness incurred or continued to purchase or carry Units of
the California IM-IT Trust is not deductible for the purposes of the
California personal income tax. While there presently is no California
authority interpreting this provision, Section 17280(b)(2) directs the
California Franchise Tax Board to prescribe regulations determining the proper
allocation and apportionment of interest costs for this purpose. The Franchise
Tax Board has not yet proposed or prescribed such regulations. In interpreting
the generally similar Federal provision, the Internal Revenue Service has
taken the position that such indebtedness need not be directly traceable to
the purchase or carrying of Units (although the Service has not contended that
a deduction for interest on indebtedness incurred to purchase or improve a
personal residence or to purchase goods or services for personal consumption
will be disallowed). In the absence of conflicting regulations or other
California authority, the California Franchise Tax Board generally has
interpreted California statutory tax provisions in accord with Internal
Revenue Service interpretations of similar Federal provisions.
At the respective times of issuance of the Securities, opinions relating to
the validity thereof and to the exemption of interest thereon from Federal
income tax and California personal income tax are rendered by bond counsel to
the respective issuing authorities. Except in certain instances in which
Orrick, Herrington & Sutcliffe, LLP, acted as bond counsel to issuers of
Securities, and as such made a review of proceedings relating to the issuance
of certain Securities at the time of their issuance, Orrick, Herrington &
Sutcliffe, LLP, has not made any special review for the California IM-IT Trust
of the proceedings relating to the issuance of the Securities or of the basis
for such opinions.
<TABLE>
<CAPTION>
Per Unit Information: Semi-
Monthly Annual
------------ -----------
<S> <C> <C>
Calculation of Estimated Net Annual Unit Income:
Estimated Annual Interest Income per Unit..................... $ 51.15 $ 51.15
Less: Estimated Annual Expense per Unit <F1>.................. $ 2.41 $ 1.95
Less: Annual Premium on Portfolio Insurance per Unit..........
Estimated Net Annual Interest Income per Unit................. $ 48.74 $ 49.20
Calculation of Estimated Interest Earnings per Unit:
Estimated Net Annual Interest Income per Unit................. $ 48.74 $ 49.20
Divided by 12 and 2, respectively............................. $ 4.06 $ 24.60
Estimated Daily Rate of Net Interest Accrual per Unit.......... $ .13540 $ .13667
Estimated Current Return Based on Public Offering Price <F2>... 4.87% 4.92%
Estimated Long-Term Return <F2>................................ 4.90% 4.95%
Estimated Initial Monthly Distribution (November 1997)......... $ 2.57
Estimated Initial Semi-annual Distribution (January 1998)...... $ 10.79
Estimated Normal Distribution per Unit <F2>.................... $ 4.06 $ 24.60
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Trustee's Annual Fee <F3>...... $.91 and $.51 per $1,000 principal amount of Bonds, respectively, for those portions of the
California IM-IT Trust under the monthly and semi-annual distribution plans
Record and Computation Dates... TENTH day of the month as follows: monthly--each month; semi-annual--January and July
Distribution Dates............. TWENTY-FIFTH day of the month as follows: monthly--each month; semi-annual--
January and July
- ----------
<FN>
<F1>Excluding insurance costs. The Estimated Annual Expenses are expected to
fluctuate periodically (see "Trust Administration--Fund Administration and
Expenses--Miscellaneous Expenses" in Part II of this Prospectus).
<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" in Part II of this Prospectus. For
a discussion of how these returns are calculated, see "Unitholder
Explanations--Estimated Current Returns and Estimated Long-Term Returns"
in Part II of this Prospectus. These figures are based on estimated per Unit
cash flows. Estimated cash flows will vary with changes in fees and expenses,
with changes in current interest rates and with the principal prepayment,
redemption, maturity, call, exchange or sale of the underlying Securities. The
estimated cash flows for this Series are set forth under "Other
Matters--Estimated Cash Flows to Unitholders" .
<F3>Based on the size of the Trust on the Date of Deposit and assuming all
Unitholders had chosen the semi-annual distribution plan, the Trustee's
estimated annual fees for ordinary recurring services would initially amount
to $1,533. Assuming in the alternative that all Unitholders had elected the
monthly distribution plan, such fees would initially amount to $2,735.
</TABLE>
<TABLE>
CALIFORNIA INSURED MUNICIPALS INCOME TRUST SERIES 170
(IM-IT AND QUALITY MULTI-SERIES 295)
PORTFOLIO As of October 16, 1997
<CAPTION>
Offering
Price To
California
Aggregate Name of Issuer, Title, Interest Rate and Maturity Date of Redemption IM-IT Trust
either Bonds Deposited or Bonds Contracted for<F1><F5> Rating<F2> Feature<F3> <F4>
- ------------- -------------------------------------------------------------- -------------- ------------------ -------------
<S> <C> <C> <C> <C> <C>
$ 420,000 Sacramento, California, Municipal Utility District, Electric
Revenue Bonds, Series J (AMBAC Indemnity Insured) #5.50% Due 2006 @ 102
8/15/2021..................................................... AAA 2017 @ 100 S.F. $ 422,100
500,000 Sulphur Springs, California, Union School District (Los
Angeles, California) Certificate of Participation (AMBAC 2007 @ 102
Indemnity Insured) #5.375% Due 2/1/2022...................... AAA 2013 @ 100 S.F. 496,655
100,000 Riverside County, California, Asset Leasing Corporation,
Leasehold Revenue Bonds, Series 1997A (County of Riverside
Hospital Project) MBIA Insured #0.00% Due 6/1/2024........... AAA 23,098<F6>
325,000 Los Angeles County, California, Metropolitan Transportation
Authority, Sales Tax Revenue Refunding Bonds, Proposition A,
First Tier Senior, Series A (MBIA Insured) #5.25% Due 2007 @ 101
7/1/2027...................................................... AAA 2020 @ 100 S.F. 317,086
500,000 California Health Facilities Financing Authority, Insured
Revenue Refunding Bonds (Sutter Health) Series A (FSA 2007 @ 102
Insured) #5.25% Due 8/15/2027................................ AAA 2018 @ 100 S.F. 484,235
500,000 Indio Public Financing Authority (Riverside County,
California) Tax Increment Revenue Refunding Bonds, Series B 2006 @ 102
(MBIA Insured) #5.35% Due 8/15/2027.......................... AAA 2018 @ 100 S.F. 491,525
300,000 South San Francisco, California, Redevelopment Agency, Tax
Allocation Revenue Bonds, Downtown/Central Redevelopment 2007 @ 101
Project (AMBAC Indemnity Insured) #5.25% Due 9/1/2027........ AAA 2019 @ 100 S.F. 292,677
110,000 California State, Department of Water Resources, Central
Valley Project, Water System Revenue Bonds, Series Q (MBIA 2006 @ 101.50
Insured) #5.375% Due 12/1/2027............................... AAA 2018 @ 100 S.F. 109,329
250,000 San Joaquin Hills, California, Transportation Corridor
Agency, Toll Road Revenue Refunding Bonds, Series 1997A
(MBIA Insured) #5.375% Due 1/15/2029......................... AAA 2007 @ 102 247,690
$ 3,005,000 $ 2,884,395
============= =============
- ----------
All of the Bonds in the portfolio are insured by one of the Preinsured Bond
Insurers as indicated in the Bond name. See "Unitholder
Explanations--Insurance on the Bonds in the Insured Trusts" in Part II of
this Prospectus.
For an explanation of the footnotes used on this page, see "Notes to
Portfolios".
</TABLE>
VIRGINIA QUALITY TRUST
- --------------------------------------------------------------------------
General. The Virginia Quality Trust consists of 8 issues of Securities. None
of the Bonds in the Virginia Quality Trust are general obligations of the
governmental entities issuing them or are backed by the taxing power thereof.
All of the issues are payable from the income of a specific project or
authority and are not supported by the issuer's power to levy taxes. These
issues are divided by purpose of issues (and percentage of principal amount to
total Virginia Quality Trust) as follows: Water and Sewer, 4 (53%); Health
Care, 2 (33%) and Transportation, 2 (14%). No Bond issue has received a
provisional rating.
Risk Factors. The Commonwealth's financial condition is supported by a
broad-based economy, including manufacturing, tourism, agriculture, ports,
mining and fisheries. Manufacturing continues to be a major source of
employment, ranking behind only services, wholesale and retail trade, and
government (Federal, state and local). The Federal government is a major
employer in Virginia due to the heavy concentration of Federal employees in
the metropolitan Washington, D.C. segment of northern Virginia and the
military employment in the Hampton Roads area, which houses the nation's
largest concentration of military installations, although civilian defense
employment has been adversely affected by the retrenchment of the military
sector and continues to decrease.
As the expansion phase of the current economic cycle further matures,
Virginia's economy is expected to grow moderately over the next few years.
Virginia's job growth is expected to slightly outperform the nation over the
next few years. This reverses a trend of the last two years in which federal
government downsizings placed a drag on total income growth. Likewise,
Virginia is also expected to outperform the nation in personal income growth.
The Virginia economy experienced continued growth in fiscal year 1996 as the
expansion entered its fourth year. Both total nonagricultural employment and
personal income growth slowed. The anticipated slowdown in the Virginia
economy occurred in fiscal year 1996 as employment increased by a modest 1.8%.
The services and trade sectors recorded stronger job growth than forecast,
while the government, construction, finance, insurance, and real estate
sectors all were much weaker than anticipated. These gains amounted to almost
53,500 new jobs, only about two-thirds of the 86,600 new jobs created in
fiscal year 1995. Northern Virginia experienced the best job growth among the
state's metropolitan statistical areas during 1996, at 2.6% or 23,500 jobs.
In fiscal year 1997, Virginia is expected to add 65,500 nonagricultural jobs
for growth of 2.1%. Services will again lead job growth at 4.4%, with gains of
39,500 jobs, only 200 more new jobs than in fiscal year 1996. Wholesale and
retail trade will add almost 19,200 jobs. Job growth is forecast to continue
to close to this level over the next biennium. The forecast anticipates that
59,600 new jobs will be created in fiscal year 1998. However, manufacturing
employment continues to decline with an expected job loss of 3,000 in fiscal
year 1997, or a decrease of 0.7%. Small job increases of 0.3% are predicted
for fiscal year 1998. Most of the manufacturing job losses have occurred in
textiles and apparel. This loss in manufacturing employment emphasizes the
shift from a goods-producing economy to a service-producing one.
The impact of federal government downsizing remains an important concern over
the next few years. The loss of high-paying manufacturing and federal
government jobs has significantly contributed to Virginia's recent
underperformance in comparison to the nation. The previous five years of
federal government defense and non-defense downsizing have already taken more
than 36,000 jobs from the Virginia economy - nearly one-half of a typical
year's job growth. Federal government downsizing was even more pronounced in
fiscal year 1996 than in the previous two fiscal years (recording job losses
of 4,100 and 4,500 in fiscal years 1994 and 1995, respectively) as federal
civilian government employment declined by 5,000 jobs. Most of the job losses
during 1994-96 resulted from continued defense downsizing and federal
government cutbacks in Northern Virginia and Hampton Roads.
The unemployment picture brightened in Virginia in fiscal year 1996.
Virginia's unemployment rate of 4.4% was below the national average of 5.4%.
Virginia's unemployment rate has typically been one of the lowest in the
nation, largely as a result of the balance found in Virginia's economy, and
has remained consistently below the national rate.
Personal income figures for Virginia have generally followed national trends.
Changes in the Commonwealth personal income were generally higher than the
U.S. figures in the 1980's. Since then, the Commonwealth and the nation have
grown at similar rates. Virginia's per capita personal income of $23,974 for
1995 was 103% of the national figure, an increase of 4.5% from the previous
year. Total personal income in Virginia is forecast to grow at 5.2% in fiscal
year 1997 and 4.9% in fiscal year 1998. The largest portion of personal
income, wages and salaries, is expected to increase 5.3% and 4.9% in fiscal
years 1997 and 1998, respectively. This growth is expected to outperform U.S.
personal income gains.
The Commonwealth of Virginia has historically operated on a fiscally
conservative basis and is required by its Constitution to have a balanced
biennial budget. At the end of the June 30, 1995, fiscal year, the General
Fund had an ending fund balance computed on a budgetary cash basis of $350.7
million, of which $151.6 million was in required reserves. Approximately
$199.1 million thereof was designated for expenditure during the next fiscal
year, leaving no undesignated, unreserved fund balance. This is the first year
since fiscal year 1991 that there has not been an undesignated fund balance.
Computed on a modified accrual basis in accordance with generally accepted
accounting principles, the General Fund balance at the end of the fiscal year
ended June 30, 1995, was $(86.4) million, compared with a General Fund balance
at the end of the fiscal year ended June 30, 1994, of $185.3 million. The
fiscal year 1995 deficit in the General Fund when measured on the GAAP basis
of accounting is the result of a settlement and subsequent ruling by the
Virginia Supreme Court in the case of Harper v. Department of Taxation
relating to the tax treatment of federal retiree's benefits.
In fiscal year 1996, total general fund revenues grew 6.9% to $7,356.1
million, exceeding the official forecast of $7,302.7 million (6.1% growth) by
$53.4 million. This marked the sixth consecutive year that actual revenue
collections slightly exceeded the official forecast.
General fund revenues for fiscal year 1996 consisted of the following:
individual income tax at $4,348 million or 59.1% of total general fund
revenue, state sales and use tax at $1,722 million or 23.4%, corporate income
tax at $402.3 million or 5.5%, insurance premiums tax at $218 million or 3%,
public utility tax at $115.5 million or 1.6%, and miscellaneous taxes and
other revenues at $550.2 million or 7.5% of total general fund revenue. From
1995-96, corporate income taxes increased by 6.9%, individual income taxes
increased by 7.9%, sales and use tax increased 3.9%, and the public utility
tax increased by 6.3%.
A surge in collections of net individual income taxes, particularly in
nonwithholding payments, accounted for most of the revenue surplus in fiscal
year 1996. The $67.6 million surplus in net individual income taxes more than
offset a $31.3 million shortfall in the corporate income tax source. The
remaining three major sources--insurance company premium taxes, public service
gross receipts taxes, and sales and use taxes--fell short of the official
estimates, but remained close to their respective forecasts. Miscellaneous
taxes and other revenues finished the fiscal year with a $28.8 million
surplus. Stronger than expected collections of wills, suits, and deeds, estate
and gift taxes, and interest on state monies provided the bulk of the gain in
miscellaneous revenues. Total revenues are expected to grow by 4.6% for fiscal
year 1997 and 4.7% for fiscal year 1998.
For fiscal years 1997 and 1998, the Governor has recommended amendments to
fund the supplemental federal retiree settlement. For those retirees who were
unable to participate in the first two settlements, the Governor proposed
increases from the general fund of $499,409 for fiscal year 1997 and $320,895
for fiscal year 1998.
As of June 30, 1995, total debt of the Commonwealth aggregated $9.3 billion.
Of that amount, $2.7 billion was tax-supported. Outstanding general obligation
debt backed by the full faith and credit of the Commonwealth was $963 million
at June 30, 1995. Of that amount, $524 million was also secured by revenue
producing capital projects.
The Virginia Constitution contains limits on the amount of general obligation
bonds which the Commonwealth can issue. These limits are substantially in
excess of current levels of outstanding bonds, and at June 30, 1995 would
permit an additional total of approximately $6 billion of bonds secured by
revenue-producing projects and approximately $6.1 billion of unsecured general
obligation bonds for capital projects, with not more than approximately $1
billion of the latter to be issued in any four-year period. Bonds which are
not secured by revenue-producing projects must be approved in a state-wide
election. In 1996, the Commonwealth issued over $259 million in bonds.
The Commonwealth of Virginia maintains a "triple A" rating from
Standard & Poor's, Moody's and Fitch Investors Service on its general
obligation indebtedness, reflecting in part its sound fiscal management,
diversified economic base and low debt ratios. There can be no assurance that
these conditions will continue. Nor are these same conditions necessarily
applicable to securities which are not general obligations of the
Commonwealth. Securities issued by specific municipalities, governmental
authorities or similar issuers may be subject to economic risks or
uncertainties peculiar to the issuers of such securities or the sources from
which they are to be paid.
Tax Status. For a discussion of the Federal tax status of income earned on
Virginia Quality Trust Units, see "Federal Tax Status" in Part II of
this Prospectus.
The assets of the Trust will consist of interest-bearing obligations issued by
or on behalf of the Commonwealth of Virginia ("Virginia" ) or counties,
municipalities, authorities or political subdivisions thereof (the "
Bonds" ).
Neither the Sponsor nor its counsel have 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 excludible from gross income
for federal income tax purposes and (iii) the interest thereon is exempt from
income tax imposed by Virginia that is applicable to individuals and
corporations (the "Virginia Income Tax" ). The opinion set forth below
does not address the taxation of persons other than full time residents of
Virginia.
In the opinion of Chapman and Cutler, special counsel to the Fund for Virginia
tax matters, under existing law as of the date of this prospectus and based
upon the assumptions set forth above:
The Virginia Quality Trust is not an association taxable as a corporation for
purposes of the Virginia Income Tax and each Unitholder of the Trust will be
treated as the owner of a pro rata portion of each of the assets held by the
Trust and the income of such portion of the Virginia Quality Trust will be
treated as income of the Unitholder for purposes of the Virginia Income Tax.
Interest on the Bonds which is exempt from Virginia Income Tax when received
by the Virginia Quality Trust, and which would be exempt from Virginia Income
Tax if received directly by a Unitholder, will retain its status as exempt
from such tax when received by the Trust and distributed to such Unitholder.
The Virginia legislature has recently enacted a law, effective July 1, 1997,
that would exempt from the Virginia Income Tax income derived on the sale or
exchange of obligations of the Commonwealth of Virginia or any political
subdivision or instrumentality of the Commonwealth of Virginia. However,
Virginia law does not address whether this exclusion would apply to gains
recognized through entities such as the Virginia Quality Trust. Accordingly,
we express no opinion as to the treatment for Virginia Income Tax purposes of
any gain or loss recognized by a Unitholder for federal income tax purposes.
The Virginia Income Tax does not permit a deduction of interest paid on
indebtedness incurred or continued to purchase or carry Units in the Virginia
Quality Trust to the extent that interest income related to the ownership of
Units is exempt from the Virginia Income Tax.
In the case of Unitholders subject to the Virginia Bank Franchise Tax, the
income derived by such a Unitholder from his pro rata portion of the Bonds
held by the Virginia Quality Trust may affect the determination of such
Unitholder's Bank Franchise Tax. Prospective investors subject to the Virginia
Bank Franchise Tax should consult their tax advisors. Chapman and Cutler has
expressed no opinion with respect to taxation under any other provisions of
Virginia law. Ownership of the Units may result in collateral Virginia tax
consequences to certain taxpayers. Prospective investors should consult their
tax advisors as to the applicability of any such collateral consequences.
<TABLE>
<CAPTION>
Per Unit Information: Semi-
Monthly Annual
------------ -----------
<S> <C> <C>
Calculation of Estimated Net Annual Unit Income <F1>:
Estimated Annual Interest Income per Unit......................... $ 50.90 $ 50.90
Less: Estimated Annual Expense per Unit <F2>...................... $ 2.40 $ 1.90
Estimated Net Annual Interest Income per Unit..................... $ 48.50 $ 49.00
Calculation of Estimated Interest Earnings per Unit:
Estimated Net Annual Interest Income per Unit..................... $ 48.50 $ 49.00
Divided by 12 and 2, respectively................................. $ 4.04 $ 24.50
Estimated Daily Rate of Net Interest Accrual per Unit.............. $ .13471 $ .13609
Estimated Current Return Based on Public Offering Price <F1><F3>... 4.85% 4.90%
Estimated Long-Term Return <F3>.................................... 4.88% 4.94%
Estimated Initial Monthly Distribution (November 1997)............. $ 2.55
Estimated Initial Semi-annual Distribution (November 1997)......... -- $ 2.58
Estimated Normal Distribution per Unit <F3>........................ $ 4.04 $ 24.50
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Trustee's Annual Fee <F1><F4>... $.91 and $.51 per $1,000 principal amount of Bonds, respectively, for those portions of the
Virginia Quality Trust under the monthly and semi-annual distribution plans
Record and Computation Dates.... TENTH day of the month as follows: monthly--each month; semi-annual--May and November
Distribution Dates.............. TWENTY-FIFTH day of the month as follows: monthly--each month; semi-annual--
May and November
- ----------
<FN>
<F1>During the first year the Trustee will reduce its fee by approximately $.01
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 $50.91. Estimated Annual Expense
per Unit will be increased to $2.41 and $1.91 under the monthly and
semi-annual distribution plans, respectively; and Estimated Net Annual
Interest Income per Unit will remain the same as shown. See "Estimated
Current Returns and Estimated Long-Term Returns" in Part II of this
Prospectus.
<F2>The estimated annual expenses are expected to fluctuate periodically (see "
Trust Administration--Fund Administration and Expenses--Miscellaneous
Expenses" in Part II of this Prospectus).
<F3>The Estimated Current Returns and Estimated Long-Term Returns are increased
for transactions entitled to a reduced sales charge. See "Unitholder
Explanations--Public Offering--General" in Part II of this Prospectus. For
a discussion of how these returns are calculated, see "Unitholder
Explanations--Estimated Current Returns and Estimated Long-Term Returns"
in Part II of this Prospectus. These figures are based on estimated per Unit
cash flows. Estimated cash flows will vary with changes in fees and expenses,
with changes in current interest rates and with the principal prepayment,
redemption, maturity, call, exchange or sale of the underlying Securities. The
estimated cash flows for this Series are set forth under "Other
Matters--Estimated Cash Flows to Unitholders" .
<F4>Based on the size of the Trust on the Date of Deposit and assuming all
Unitholders had chosen the semi-annual distribution plan, the Trustee's
estimated annual fees for ordinary recurring services would initially amount
to $1,530. Assuming in the alternative that all Unitholders had elected the
monthly distribution plan, such fees would initially amount to $2,730.
</TABLE>
<TABLE>
VIRGINIA INVESTORS' QUALITY TAX-EXEMPT TRUST SERIES 79
(IM-IT AND QUALITY MULTI-SERIES 295)
PORTFOLIO As of October 16, 1997
<CAPTION>
Offering
Rating<F2> Price To
Virginia
Standard Quality
Aggregate Name of Issuer, Title, Interest Rate and Maturity Date of either & Poor's Redemption Trust
Principal<F1> Bonds Deposited or Bonds Contracted for<F1><F5> Moody's Feature<F3> <F4>
- ----------------- ----------------------------------------------------------------- ------------- ------------------ -------------
<S> <C> <C> <C> <C> <C>
$ 150,000 Commonwealth of Virginia, Transportation Board, Revenue
Refunding Bonds (Northern Virginia Transportation District)
Project B #5.125% Due 5/15/2019##............................... AA Aa2 2007 @ 101 $ 145,526
100,000 Prince William County, Virginia, Service Authority, Water and
Sewer System Revenue Refunding Bonds, Series 1993 (FGIC Insured) 2003 @ 102
#5.00% Due 7/1/2021............................................. AAA Aaa 2014 @ 100 S.F. 94,291
250,000 Chesapeake Bay, Virginia, Bridge and Tunnel Commission, Revenue 2005 @ 102
Refunding Bonds (MBIA Insured) #5.00% Due 7/1/2022............ AAA Aaa 2020 @ 100 S.F. 237,027
500,000 Fredericksburg, Virginia, Industrial Development Authority,
Hospital Facilities Revenue Bonds (Medicorp Health
System-Obligated Group) Ambac Indemnity Insured #5.25% Due 2007 @ 102
6/15/2023........................................................ AAA Aaa 2017 @ 100 S.F. 487,390
500,000 Roanoke County, Virginia, Water System Revenue Bonds, Series B 2003 @ 102
(FGIC Insured) #5.00% Due 7/1/2026.............................. AAA Aaa 2014 @ 100 S.F. 468,630
500,000 Norfolk, Virginia, Industrial Development Authority, Health Care
Revenue Bonds, Bon Secours Health System (MBIA Insured) #5.25% 2007 @ 102
Due 8/15/2026.................................................... AAA Aaa 2018 @ 100 S.F. 486,595
500,000 Fairfax County, Virginia, Water Authority, Water Revenue 2007 @ 102
Refunding Bonds #5.00% Due 4/1/2029............................. AA Aa2 2022 @ 100 S.F. 469,025
500,000 Loudon County, Virginia, Sanitary Authority, Water Sewer Revenue 2007 @ 102
Bonds (FGIC Insured) #5.25% Due 1/1/2030........................ AAA Aaa 2027 @ 100 S.F. 487,355
$ 3,000,000 $ 2,875,839
================= =============
- ----------
For an explanation of the footnotes used on this page, see "Notes to
Portfolios".
</TABLE>
As of the Date of Deposit: October 16, 1997
- --------------------------------------------------------------------------
(1)All Securities are represented by "regular way" or "when
issued" contracts for the performance of which an irrevocable letter of
credit, obtained from an affiliate of the Trustee, has been deposited with the
Trustee. At the Date of Deposit, Securities may have been delivered to the
Sponsor pursuant to certain of these contracts; the Sponsor has assigned to
the Trustee all of its right, title and interest in and to such Securities.
Contracts to acquire Securities were entered into during the period from
October 10, 1997 to October 15, 1997. These Securities have expected
settlement dates ranging from October 16, 1997 to October 23, 1997 (see "
Unitholder Explanations--Settlement of Bonds in the Trusts" in Part II of
this Prospectus).
(2)All ratings are by Standard & Poor's unless otherwise indicated. "*"
indicates that the rating of the Bond is by Moody's. The ratings represent
the latest published ratings by the respective rating agency or, if not
published, represent private letter ratings or those ratings expected to be
published by the respective rating agency. "Y" indicates that such
rating is contingent upon physical receipt by the respective rating agency of
a policy of insurance obtained by the issuer of the bonds involved and issued
by the Preinsured Bond Insurer named in the bond's title. A commitment for
insurance in connection with these bonds has been issued by the Preinsured
Bond Insurer named in the bond's title. "N/R" indicates that the
applicable rating service did not provide a rating for that particular
Security. For a brief description of the rating symbols and their related
meanings, see "Description of Ratings" in Part II of this Prospectus.
(3)There is shown under this heading the year in which each issue of Bonds is
initially or currently callable and the call price for that year. Each issue
of Bonds continues to be callable at declining prices thereafter (but not
below par value) except for original issue discount bonds which are redeemable
at prices based on the issue price plus the amount of original issue discount
accreted to redemption date plus, if applicable, some premium, the amount of
which will decline in subsequent years. "S.F." indicates a sinking
fund is established with respect to an issue of Bonds. Certain Bonds may be
subject to redemption without premium prior to the date shown pursuant to
extraordinary optional or mandatory redemptions if certain events occur. For a
general discussion of certain of these events, see "Unitholder
Explanations--Settlement of Bonds in the Trusts--Risk Factors" in Part II
of this Prospectus. Distributions will generally be reduced by the amount of
the income which would otherwise have been paid with respect to redeemed
Securities and there will be distributed to Unitholders the principal amount
and any premium received on such redemption. The Estimated Current Return and
Estimated Long-Term Return in this event may be affected by such redemptions.
For the Federal tax effect on Unitholders of such redemptions and resultant
distributions, see "Federal Tax Status" in Part II of this Prospectus.
(4)Evaluation of Securities is made on the basis of current offering prices
for the Securities. The offering prices are greater than the current bid
prices of the Securities which is the basis on which Unit value is determined
for purposes of redemption of Units (see "Unitholder Explanations--Public
Offering--Offering Price" in Part II of this Prospectus).
(5)Other information regarding the Bonds in each Trust, as of the Date of
Deposit, is as follows:
<TABLE>
<CAPTION>
Annual
Annual Profit Interest Bid Side
Insurance Cost to (Loss) to Income to Evaluation
Trust Cost Sponsor Sponsor Trust of Bonds
--------- ------------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C>
California IM-IT... $ $ 2,860,932 $ 23,463 $ 155,138 $ 2,862,233
Virginia Quality... $ $ 2,852,860 $ 22,979 $ 153,938 $ 2,853,339
</TABLE>
The Bonds in the Insured Trust are insured as follows:
<TABLE>
<CAPTION>
Bonds insured Bonds insured
under AMBAC under Financial
Trust Indemnity Guaranty Preinsured Total
portfolio insurance portfolio insurance Bonds
----------------------- ----------------------- ------------- --------
<S> <C> <C> <C> <C>
California IM-IT... -- -- 100% 100%
</TABLE>
The breakdown of the Preinsured Bond Insurers is as follows: California IM-IT
Trust-- AMBAC Indemnity 40%, MBIA 43% and FSA 17%.
The Sponsor may have entered into contracts which hedge interest rate
fluctuations on certain Bonds in certain Trusts. The cost of any such
contracts and the corresponding gain or loss is included in the Cost to
Sponsor. Securities marked by a double pound symbol (##) following the
maturity date have been purchased on a "when, as and if issued" or
"delayed delivery" basis. Interest on these Securities begins accruing
to the benefit of Unitholders on their respective dates of delivery. Delivery
is expected to take place at various dates after the First Settlement Date as
follows:
<TABLE>
<CAPTION>
Percent of
Aggregate Principal Range of Days Subsequent to
Trust Amount First Settlement Date
---------------------- -------------------------------
<S> <C> <C>
California IM-IT... -- --
Virginia Quality... 5% 2 days
</TABLE>
On the Date of Deposit, the offering side evaluations of the Securities in the
California IM-IT and Virginia Quality Trusts were higher than the bid side
evaluations of such Securities by 0.74% and 0.75%, respectively, of the
aggregate principal amounts of such Securities.
"#" prior to the coupon rate indicates that such Bond was issued at an
original issue discount. The tax effect of Bonds issued at an original issue
discount is described in "Federal Tax Status" in Part II of this
Prospectus.
(6)This Bond has been purchased at a deep discount from the par value because
there is little or no stated interest thereon. Bonds which pay no interest are
normally described as "zero coupon" bonds. Over the life of bonds
purchased at a deep discount, the value of such bonds will increase such that
upon maturity the holders of such bonds will receive 100% of the principal
amount thereof. To the extent that zero coupon bonds are sold or called prior
to maturity, there is no guarantee that the value of the proceeds received
therefrom by the Trust will equal or exceed the par value that would have been
obtained at maturity of such zero coupon bonds. Approximately 3% of the
aggregate principal amount of the Securities in the California IM-IT Trust are
"zero coupon" bonds. See "Unitholder Explanations--Settlement of
Bonds in the Trusts--Risk Factors" in Part II of this Prospectus for a
discussion of zero coupon bonds.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors of Van Kampen American Capital Distributors, Inc.
and the Unitholders of Insured Municipals Income Trust and Investors' Quality
Tax-Exempt Trust, Multi-Series 295 (California IM-IT and Virginia 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 295 (California IM-IT and Virginia Quality
Trusts) as of October 16, 1997. The statements of condition and portfolios are
the responsibility of the Sponsor. Our responsibility is to express an opinion
on such financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of irrevocable letters of credit deposited to
purchase tax-exempt securities by correspondence with the Trustee. An audit
also includes assessing the accounting principles used and significant
estimates made by the Sponsor, as well as evaluating the overall financial
statement presentation. We believe our audit provides a reasonable basis for
our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Insured Municipals Income
Trust and Investors' Quality Tax-Exempt Trust, Multi-Series 295 (California
IM-IT and Virginia Quality Trusts) as of October 16, 1997, in conformity with
generally accepted accounting principles.
GRANT THORNTON LLP
Chicago, Illinois
October 16, 1997
<TABLE>
INSURED MUNICIPALS INCOME TRUST and
INVESTORS' QUALITY TAX-EXEMPT TRUST,
MULTI-SERIES 295
Statements of Condition
As of October 16, 1997
<CAPTION>
California Virginia
INVESTMENT IN SECURITIES IM-IT Quality
Trust Trust
------------- -------------
<S> <C> <C>
Contracts to purchase tax-exempt securities <F1><F2><F3>... $ 2,884,395 $ 2,875,839
Accrued interest to the First Settlement Date <F1><F3>..... 32,734 44,288
------------- -------------
Total...................................................... $ 2,917,129 $ 2,920,127
============= =============
LIABILITY AND INTEREST OF UNITHOLDERS
Liability--
Accrued interest payable to Sponsor <F1><F3>............... $ 32,734 $ 44,288
Interest of Unitholders--
Cost to investors <F4>..................................... 3,033,000 3,024,000
Less: Gross underwriting commission <F4>................... 148,605 148,161
------------- -------------
Net interest to Unitholders <F1><F3><F4>................... 2,884,395 2,875,839
------------- -------------
Total...................................................... $ 2,917,129 $ 2,920,127
============= =============
==========
<FN>
<F1>The aggregate value of the Securities listed under "Portfolio" for
each Trust herein, and their cost to such Trust are the same. The value of the
Securities is determined by Interactive Data Corporation on the bases set
forth under "Unitholder Explanations--Public Offering--Offering Price"
in Part II of this Prospectus. The contracts to purchase tax-exempt Securities
are collateralized by irrevocable letters of credit which have been deposited
with the Trustee in and for the following amounts:
</TABLE>
<TABLE>
<CAPTION>
Principal Offering Accrued
Amount of Amount of Price of Interest to
Letter of Bonds Under Bonds Under Expected
Credit Contracts Contracts Delivery Dates
------------- ------------- ------------- ----------------
<S> <C> <C> <C> <C>
California IM-IT Trust... $ 2,916,140 $ 3,005,000 $ 2,884,395 $ 31,745
Virginia Quality Trust... $ 2,918,229 $ 3,000,000 $ 2,875,839 $ 42,390
</TABLE>
Insurance coverage providing for timely payment, when due, of all principal
and interest on the Bonds in the Insured Trusts has been obtained by such
Trusts, by a prior owner of such Bonds, by the Sponsor prior to the deposit of
such Bonds or by the issuers of such Bonds. Such insurance does not guarantee
the market value of the Bonds or the value of the Units. The insurance
obtained by the Insured Trusts is effective only while Bonds thus insured are
held in such Trusts. Neither the bid nor offering prices of the underlying
Bonds or of the Units, absent situations in which bonds are in default in
payment of principal or interest or in significant risk of such default,
include value, if any, attributable to the insurance obtained by such Trusts.
The Trustee will advance to the Trust the amount of net interest accrued to
October 21, 1997, the First Settlement Date, for distribution to the Sponsor
as the Unitholder of record as of the First Settlement Date.
The aggregate public offering price (exclusive of interest) and the aggregate
sales charge are computed on the bases set forth under "Unitholder
Explanations--Public Offering--Offering Price" and "Trust
Administration--General--Sponsor and Underwriter Compensation" in Part II
of this Prospectus and assume all single transactions involve less than 100
Units. For single transactions involving 100 or more Units, the sales charge
is reduced (see "Unitholder Explanations--Public Offering--General" in
Part II of this Prospectus) resulting in an equal reduction in both the Cost
to investors and the Gross underwriting commission while the Net interest to
Unitholders remains unchanged.
EQUIVALENT TAXABLE ESTIMATED CURRENT RETURN TABLES
- --------------------------------------------------------------------------
As of the date of this Prospectus, the following tables show the approximate
taxable estimated current returns for individuals that are equivalent to
tax-exempt estimated current returns under combined Federal and State taxes
(where applicable) using the published Federal and State tax rates (where
applicable) scheduled to be in effect in 1997. They incorporate increased tax
rates for higher income taxpayers that were included in the Revenue
Reconciliation Act of 1993. These tables illustrate approximately what you
would have to earn on taxable investments to equal the tax-exempt estimated
current return in your income tax bracket. The tables assume that Federal
taxable income is equal to State income subject to tax, and for cases in which
more than one State rate falls within a Federal bracket, the State rate
corresponding to the highest income within that Federal bracket is used. The
combined State and Federal tax rates shown reflect the fact that State tax
payments are currently deductible for Federal tax purposes. The tables do not
reflect any local taxes or any taxes other than personal income taxes. The
tables do not show the approximate taxable estimated current returns for
individuals that are subject to the alternative minimum tax. The taxable
equivalent estimated current returns may be somewhat higher than the
equivalent returns indicated in the following tables for those individuals who
have adjusted gross incomes in excess of $121,200. The tables do not reflect
the effect of Federal or State limitations (if any) on the amount of allowable
itemized deductions and the deduction for personal or dependent exemptions or
any other credits. These limitations were designed to phase out certain
benefits of these deductions for higher income taxpayers. These limitations,
in effect, raise the marginal maximum Federal tax rate to approximately 44
percent for taxpayers filing a joint return and entitled to four personal
exemptions and to approximately 41 percent for taxpayers filing a single
return entitled to only one personal exemption. These limitations are subject
to certain maximums, which depend on the number of exemptions claimed and the
total amount of the taxpayer's itemized deductions. For example, the
limitation on itemized deductions will not cause a taxpayer to lose more than
80% of his allowable itemized deductions, with certain exceptions. See "
Federal Tax Status" below and in Part II of this Prospectus for a more
detailed discussion of recent Federal tax legislation, including a discussion
of provisions affecting corporations.
CALIFORNIA
<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 - 24.65 $ 0 - 41.20 20.1% 5.63% 6.26% 6.88% 7.51% 8.14% 8.76% 9.39%
24.65 - 59.75 41.20 - 99.60 34.7 6.89 7.66 8.42 9.19 9.95 10.72 11.49
59.75 - 124.65 99.60 - 151.75 37.4 7.19 7.99 8.79 9.58 10.38 11.18 11.98
124.65 - 271.05 151.75 - 271.05 42 7.76 8.62 9.48 10.34 11.21 12.07 12.93
Over 271.05 Over 271.05 45.2 8.21 9.12 10.04 10.95 11.86 12.77 13.69
</TABLE>
VIRGINIA
<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 - 24.65 $ 0 - 41.20 19.9% 5.62% 6.24% 6.87% 7.49% 8.11% 8.74% 9.36%
24.65 - 59.75 41.20 - 99.60 32.1 6.63 7.36 8.10 8.84 9.57 10.31 11.05
59.75 - 124.65 99.60 - 151.75 35 6.92 7.69 8.46 9.23 10.00 10.77 11.54
124.65 - 271.05 151.75 - 271.05 39.7 7.46 8.29 9.12 9.95 10.78 11.61 12.44
Over 271.05 Over 271.05 43.1 7.91 8.79 9.67 10.54 11.42 12.30 13.18
</TABLE>
A comparison of tax-free and equivalent taxable estimated current returns with
the returns on various taxable investments is one element to consider in
making an investment decision. The Sponsor may from time to time in its
advertising and sales materials compare the then current estimated returns on
the Trusts and returns over specified periods on other similar Van Kampen
American Capital sponsored unit investment trusts with inflation rates and
with returns on taxable investments such as corporate or U.S. Government
bonds, bank CDs and money market accounts or money market funds, each of which
has investment characteristics that may differ from those of the Trusts. U.S.
Government bonds, for example, are backed by the full faith and credit of the
U.S. Government, and bank CDs and money market accounts are insured by an
agency of the federal government. Money market accounts and money market funds
provide stability of principal, but pay interest at rates that vary with the
condition of the short-term debt market. The investment characteristics of the
Trusts are described more fully elsewhere in this Prospectus.
FEDERAL TAX STATUS
- --------------------------------------------------------------------------
On August 5, 1997, the President signed the Taxpayer Relief Act of 1997 (the
"Act" ). Notwithstanding anything to the contrary in "Federal Tax
Status" in Part II of this Prospectus, under the Act, for taxpayers other
than corporations, net capital gains (which is defined as net long-term
capital gain over net short-term capital loss for the taxable year) are
subject to a maximum marginal stated tax rate of either 28% or 20%, depending
upon the holding period of the capital assets. In particular, net capital
gain, excluding net gain from property held more than one year but not more
than 18 months and gain on certain other assets, is subject to a maximum
marginal stated tax rate of 20% (10% in the case of certain taxpayers in the
lowest tax bracket). Net capital gain that is not taxed at the maximum
marginal stated tax rate of 20% (or 10%) as described in the preceding
sentence, is generally subject to a maximum marginal stated tax rate of 28%.
The Act also includes provisions that would treat certain transactions
designed to reduce or eliminate risk of loss and opportunities for gain (e.g.,
short sales, offsetting notional principal contracts, futures or forward
contracts, or similar transactions) as constructive sales for purposes of
recognition of gain (and not loss) and for purposes of determining the holding
period. Potential investors should consult their own tax advisors regarding
the potential effect of the Act on their investment in Units. For a discussion
of the Federal tax status of income earned on Trusts Units, see "Federal
Tax Status" in Part II of 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.
California IM-IT Trust
<TABLE>
Monthly
<CAPTION>
Estimated Estimated Estimated
Distribution Dates Interest Principal Total
(Each Month) Distribution Distribution Distribution
- ---------------------------------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
November 1997 $ 2.57 $ 2.57
December 1997 - August 2008 4.06 4.06
September 2008 3.54 $ 138.47 142.01
October 2008 - January 2022 3.44 3.44
February 2022 3.23 164.86 168.09
March 2022 - May 2024 2.73 2.73
June 2024 2.73 32.97 35.70
July 2024 - June 2027 2.73 2.73
July 2027 2.59 107.15 109.74
August 2027 2.28 2.28
September 2027 .97 428.62 429.59
October 2027 - November 2027 .45 .45
December 2027 .40 36.27 36.67
January 2028 - January 2029 .29 .29
February 2029 82.42 82.42
</TABLE>
<TABLE>
Semi-annual
<CAPTION>
Distribution Dates Estimated Estimated Estimated
(Each January and July Interest Principal Total
Unless Otherwise Indicated) Distribution Distribution Distribution
- --------------------------------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
January 1998 $ 10.79 $ 10.79
July 1998 - July 2008 24.60 24.60
September 2008 $ 138.47 138.47
January 2009 21.60 21.60
July 2009 - January 2022 20.88 20.88
February 2022 164.86 164.86
July 2022 17.05 17.05
January 2023 - January 2024 16.55 16.55
June 2024 32.97 32.97
July 2024 - January 2027 16.55 16.55
July 2027 16.42 107.15 123.57
September 2027 428.62 428.62
December 2027 36.27 36.27
January 2028 4.92 4.92
July 2028 - January 2029 1.80 1.80
February 2029 82.42 82.42
</TABLE>
Virginia Quality Trust
<TABLE>
Monthly
<CAPTION>
Estimated Estimated Estimated
Distribution Dates Interest Principal Total
(Each Month) Distribution Distribution Distribution
- ---------------------------------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
November 1997 $ 2.55 $ 2.55
December 1997 - May 2019 4.04 4.04
June 2019 3.87 $ 49.60 53.47
July 2019 - June 2021 3.83 3.83
July 2021 3.79 33.07 36.86
August 2021 - June 2022 3.70 3.70
July 2022 3.60 82.67 86.27
August 2022 - June 2023 3.36 3.36
July 2023 2.78 165.34 168.12
August 2023 - June 2026 2.66 2.66
July 2026 2.46 165.35 167.81
August 2026 2.00 2.00
September 2026 1.41 165.34 166.75
October 2026 - March 2029 1.30 1.30
April 2029 1.10 165.34 166.44
May 2029 - December 2029 .63 .63
January 2030 .42 165.35 165.77
</TABLE>
<TABLE>
Semi-annual
<CAPTION>
Distribution Dates Estimated Estimated Estimated
(Each May and November Interest Principal Total
Unless Otherwise Indicated) Distribution Distribution Distribution
- ---------------------------------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
November 1997 $ 2.58 $ 2.58
May 1998 - May 2019 24.50 24.50
June 2019 $ 49.60 49.60
November 2019 23.29 23.29
May 2020 - May 2021 23.25 23.25
July 2021 33.07 33.07
November 2021 22.67 22.67
May 2022 22.45 22.45
July 2022 82.67 82.67
November 2022 21.00 21.00
May 2023 20.43 20.43
July 2023 165.34 165.34
November 2023 17.02 17.02
May 2024 - May 2026 16.19 16.19
July 2026 165.35 165.35
September 2026 165.34 165.34
November 2026 11.30 11.30
May 2027 - November 2028 7.92 7.92
April 2029 165.34 165.34
May 2029 7.05 7.05
November 2029 3.89 3.89
January 2030 1.08 165.35 166.43
</TABLE>
UNDERWRITING
- --------------------------------------------------------------------------
The Underwriters named below have severally purchased Units in the following
respective amounts from the Sponsor. For additional information regarding the
Underwriters, including information relating to compensation and benefits
received by the Underwriters, see "Unitholder
Explanations--Underwriting" in Part II of this Prospectus.
<TABLE>
<CAPTION>
California
Name IM-IT Trust
Address Units
-----------------
<S> <C> <C>
Van Kampen American Capital Dist., Inc. One Parkview Plaza, Oakbrook Terrace, Illinois 60181 2,383
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
Gruntal & Co., Incorporated 14 Wall Street, New York, New York 10005 100
Edward D. Jones & Co. 201 Progress Parkway, Maryland Heights, Missouri 63043 100
McLaughlin, Piven, Vogel Securities, Inc. 30 Wall Street, 5th Floor, New York, New York 10005 100
3,033
=================
</TABLE>
<TABLE>
<CAPTION>
Virginia
Quality
Name Trust
Address Units
---------
<S> <C> <C>
Van Kampen American Capital Dist., Inc. One Parkview Plaza, Oakbrook Terrace, Illinois 60181 1,924
Anderson & Strudwick, Inc. 1108 East Main Street, Richmond, Virginia 23219 500
Davenport & Co. of Virginia Inc. 901 E. Cary Street, Richmond, Virginia 23219 100
Dean Witter Reynolds, Incorporated 2 World Trade Center, 59th Floor, New York, New York 10048 100
Gruntal & Co., Incorporated 14 Wall Street, New York, New York 10005 100
Edward D. Jones & Co. 201 Progress Parkway, Maryland Heights, Missouri 63043 100
Prudential Securities Inc. 1 New York Plaza, 14th Floor, New York, New York 10292-2014 100
Wheat First Butcher Singer River Front Plaza, 901 East Byrd Street, Richmond, Virginia 23219 100
3,024
=========
</TABLE>
No person is authorized to give any information or to make any representations
not contained in this Prospectus; and any information or representation not
contained herein must not be relied upon as having been authorized by the
Fund, the Sponsor or the Underwriters. This Prospectus does not constitute an
offer to sell, or a solicitation of an offer to buy, securities in any state
to any person to whom it is not lawful to make such offer in such state.
<TABLE>
<CAPTION>
Title Page
<S> <C>
SUMMARY OF ESSENTIAL FINANCIAL INFORMATION 2
CALIFORNIA IM-IT TRUST 3
VIRGINIA QUALITY TRUST 13
OTHER MATTERS 20
Report of Independent Certified Public Accountants 20
Statements of Condition 21
Equivalent Taxable Estimated Current Return Tables 22
Federal Tax Status 23
Estimated Cash Flows to Unitholders 24
Underwriting 26
</TABLE>
This Prospectus contains information concerning the Fund and the Sponsor, but
does not contain all of the information set forth in the registration
statements and exhibits relating thereto, which the Fund has filed with the
Securities and Exchange Commission, Washington, D.C., under the Securities Act
of 1933 and the Investment Company Act of 1940, and to which reference is
hereby made.
PROSPECTUS
PART I
October 16, 1997
Insured Municipals Income Trust and Investors' Quality Tax-Exempt Trust,
Multi-Series 295
California IM-IT 170
Virginia Quality 79
A Wealth of Knowledge A Knowledge of Wealth
VAN KAMPEN AMERICAN CAPITAL
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
2800 Post Oak Boulevard
Houston, Texas 77056
This Part I of the Prospectus may not be distributed unless accompanied by
Part II. Both Parts of this Prospectus should be retained for future reference.
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.
1.5 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
and Virginia income tax status of securities being registered.
3.3 Opinion and consent of counsel as to New York income tax status of
the Fund under New York law.
3.4 Opinion and consent of counsel as to income tax status to
California residents of Units of the California IM-IT Trust.
4.1 Consent of Interactive Data Corporation.
4.2 Consent of Standard & Poor's with respect to the Insured Trusts.
4.3 Consent of Grant Thornton LLP.
EX-27 Financial Data Schedules.
Signatures
The Registrant, Insured Municipals Income Trust and Investors'
Quality Tax-Exempt Trust, Multi-Series 295, 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 295 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 October, 1997.
Insured Municipals Income Trust and
Investors' Quality Tax-Exempt
Trust, Multi-Series 295
By Gina M. Costello
Assistant Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below on October
16, 1997 by the following persons who constitute a majority of the Board
of Directors of Van Kampen American Capital Distributors, Inc.
Signature Title
Don G. Powell Chairman and Chief Executive )
Officer )
William R. Molinari President and Chief Operating )
Officer
Ronald A. Nyberg Executive Vice President and )
General Counsel
William R. Rybak Executive Vice President and )
Chief Financial Officer )
Gina M.Costello (Attorney-in-fact*)
*An executed copy of each of the related powers of attorney was
filed with the Securities and Exchange Commission in connection with the
Registration Statement on Form S-6 of Van Kampen American Capital Equity
Opportunity Trust, Series 64 (File No. 333-33087) 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 295
Trust Agreement
Dated: October 16, 1997
This Trust Agreement between Van Kampen American Capital
Distributors, Inc., as Depositor, American Portfolio Evaluation Services,
a division of Van Kampen American Capital Investment Advisory Corp., as
Evaluator, and The Bank of New York, as Trustee, sets forth certain
provisions in full and incorporates other provisions by reference to the
document entitled "Standard Terms and Conditions of Trust For Van Kampen
American Capital Distributors, Inc. Tax-Exempt Trust, Dated March 16,
1995" (herein called the "Standard Terms and Conditions of Trust"), and
such provisions as are set forth in full and such provisions as are
incorporated by reference constitute a single instrument. All references
herein to Articles and Sections are to Articles and Sections of the
Standard Terms and Conditions of Trust.
Witnesseth That:
In consideration of the premises and of the mutual agreements herein
contained, the Depositor and the Trustee agree as follows:
Part I
Standard Terms and Conditions of Trust
Subject to the provisions of Part II hereof, all the provisions
contained in the Standard Terms and Conditions of Trust are herein
incorporated by reference in their entirety and shall be deemed to be a
part of this instrument as fully and to the same extent as though said
provisions had been set forth in full in this instrument.
Part II
Special Terms and Conditions of Trust
The following special terms and conditions are hereby agreed to:
(a) The Bonds defined in Section 1.01(4), listed in the
Schedules hereto, have been deposited in the Trusts under this Trust
Agreement.
(b) The fractional undivided interest in and ownership of the
various Trusts represented by each Unit thereof is the amount set
forth under "Summary of Essential Financial Information-Fractional
Undivided Interest in the Trust per Unit" in Prospectus Part I.
(c) The approximate amounts, if any, which the Trustee shall
be required to advance out of its own funds and cause to be paid to
the Depositor pursuant to Section 3.05 shall be the amount per Unit
that the Trustee agreed to reduce its fee or pay Trust expenses set
forth in the footnotes to the "Per Unit Information" for each Trust
in Prospectus Part I times the number of units in such Trust
referred to in Part II (b) of this Trust Agreement.
(d) The First General Record Date and the amount of the second
distribution of funds from the Interest Account of each Trust shall
be the record date for the Interest Account and the amount set forth
under "Per Unit Information" for each Trust in Prospectus Part I.
(e) The First Settlement Date shall be the date set forth
under "Summary of Essential Financial Information-First Settlement
Date" in Prospectus Part I.
(f) Any monies held to purchase "when issued" bonds will be
held in noninterest bearing accounts.
(g) The Evaluation Time for purpose of sale, purchase or
redemption of Units shall be 4:00 P.M. Eastern time.
(h) As set forth in Section 3.05, the Record Dates and
Distribution Dates for each Trust are those dates set forth in the
section entitled "Per Unit Information" for each Trust as appears in
Prospectus Part I.
(i) As set forth in Section 3.15, the Evaluator's Annual
Supervisory Fee shall be that amount set forth in "Summary of
Essential Financial Information-Evaluator's Annual Supervisory Fee"
in Prospectus Part I.
(j) As set forth in Section 4.03, the Evaluator's Annual
Evaluation Fee shall be that amount, and computed on that basis, set
forth in "Summary of Essential Financial Information-Evaluator's
Annual Evaluation Fee" in Prospectus Part I
(k) The Trustee's annual compensation as set forth under
Section 6.04, under each distribution plan shall be that amount as
specified in Prospectus Part I under the section entitled "Per Unit
Information" for each Trust and will include a fee to induce the
Trustee to advance funds to meet scheduled distributions.
(l) The sixth paragraph of Section 3.05 is hereby revoked and
replaced by the following paragraph:
Unitholders desiring to receive semi-annual
distributions and who purchase their Units prior to the Record
Date for the second distribution under the monthly plan of
distribution may elect at the time of purchase to receive
distributions on a semi-annual basis by notice to the Trustee.
Such notice shall be effective with respect to subsequent
distributions until changed by further notice to the Trustee.
Unitholders desiring to receive semi-annual distributions and
who purchase their Units prior to the Record Date for the first
distribution may elect at the time of purchase to receive
distributions on a semi-annual basis by notice to the Trustee.
Such notice shall be effective with respect to subsequent
distributions until changed by further notice to the Trustee.
Changes in the plan of distribution will become effective as of
opening of business on the day after the next succeeding semi-
annual Record Date and such distributions will continue until
further notice.
(m) Sections 8.02(d) and 8.02(e) are hereby revoked and
replaced with the following:
(d) distribute to each Unitholder of such Trust such
holder's pro rata share of the balance of the Interest Account
of such Trust;
(e) distribute to each Unitholder of such Trust such
holder's pro rata share of the balance of the Principal Account
of such Trust; and
In Witness Whereof, Van Kampen American Capital Distributors, Inc.
has caused this Trust Agreement to be executed by one of its Vice
Presidents or Assistant Vice Presidents and its corporate seal to be
hereto affixed and attested by its Secretary or one of its Vice
Presidents or Assistant Secretaries, American Portfolio Evaluation
Services, a division of Van Kampen American Capital Investment Advisory
Corp., has caused this Trust Indenture and Agreement to be executed by
its President or one of its Vice Presidents and its corporate seal to be
hereto affixed and attested to by its Secretary, its Assistant Secretary
or one of its Assistant Vice Presidents and The Bank of New York, has
caused this Trust Agreement to be executed by one of its Vice Presidents
and its corporate seal to be hereto affixed and attested to by one of its
Vice Presidents, Assistant Vice Presidents or Assistant Treasurers; all
as of the day, month and year first above written.
Van Kampen American Capital
Distributors, Inc.
By James J. Boyne
Vice President, Associate General
Counsel and Assistant Secretary
(Seal)
Attest:
By Cathy Napoli
Assistant Secretary
American Portfolio Evaluation
Service, a division of Van Kampen
American Capital Investment
Advisory Corp.
By Dennis J. Mcdonnell
President
(Seal)
Attest:
By James J. Boyne
Assistant Secretary
The Bank Of New York
By Ted Rudich
Vice President
(Seal)
Attest:
By Jeffrey Cohen
Assistant Treasurer
Schedules to Trust Agreement
Securities Initially Deposited
Insured Municipals Income Trust and
Investors' Quality Tax-Exempt Trust
Multi-Series 295
(Note: Incorporated herein and made a part hereof as indicated below
are the corresponding "Portfolios" of each of the Trusts as set
forth in Prospectus Part I.)
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 forth Indicated below our firm name and at the
head of this Agreement address exactly as 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
October 16, 1997
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 295
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 295
(hereinafter referred to as the "Fund"), in connection with the
preparation, execution and delivery of a Trust Agreement dated October
16, 1997 between Van Kampen American Capital Distributors, Inc., as
Depositor, American Portfolio Evaluation Services, a division of Van
Kampen American Capital Investment Advisory Corp., as Evaluator, and The
Bank of New York, as Trustee, pursuant to which the Depositor has
delivered to and deposited Bonds listed in the Schedules to the Trust
Agreement with the Trustee and pursuant to which the Trustee has issued
to or on the order of the Depositor a certificate or certificates
representing Units of fractional undivided interest in and ownership of
the several Trusts of said Fund (hereinafter referred to as the "Units")
created under said Trust Agreement.
In connection therewith, we have examined such pertinent records and
documents and matters of law as we have deemed necessary in order to
enable us to express the opinions hereinafter set forth.
Based upon the foregoing, we are of the opinion that:
1. The execution and delivery of the Trust Agreement and the
execution and issuance of certificates evidencing the Units in the
several Trusts of the Fund have been duly authorized; and
2. The certificates evidencing the Units in the several
Trusts of the Fund when duly executed and delivered by the Depositor
and the Trustee in accordance with the aforementioned Trust
Agreement, will constitute valid and binding obligations of such
Trusts and the Depositor in accordance with the terms thereof.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement (File No. 333-30323) relating to the Units
referred to above and to the use of our name and to the reference to our
firm in said Registration Statement and in the related Prospectus.
Respectfully submitted,
Chapman and Cutler
MJK/slm
Exhibit 3.2
Chapman and Cutler
111 West Monroe Street
Chicago, Illinois 60603
October 16, 1997
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 295
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 295 (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 October 16,
1997 (the "Indenture") between Van Kampen American Capital Distributors,
Inc., as Depositor, American Portfolio Evaluation Services, a division of
Van Kampen American Capital Investment Advisory Corp., as Evaluator, and
The Bank of New York, as Trustee.
In this connection, we have examined the Registration Statement, the
form of Prospectus proposed to be filed with the Securities and Exchange
Commission, the Indenture and such other instruments and documents as we
have deemed pertinent. For purposes of the following opinions, it is
assumed that each asset of the Trusts is debt, the interest on which is
excluded from gross income for federal income tax purposes.
Based upon the foregoing and upon an investigation of such matters
of law as we consider to be applicable, we are of the opinion that, under
existing Federal income tax law:
(i) Each Trust is not an association taxable as a corporation
but will be governed by the provisions of subchapter J (relating to
trusts) of Chapter 1, Internal Revenue Code of 1986 (the "Code").
(ii) Each Unitholder will be considered as owning a pro rata
share of each asset of the respective Trust in the proportion that
the number of Units of such Trust held by him bears to the total
number of Units outstanding of such Trust. Under Subpart E,
Subchapter J of Chapter 1 of the Code, income of each Trust will be
treated as income of each Unitholder of the respective Trust in the
proportion described, and an item of Trust income will have the same
character in the hands of a Unitholder as it would have in the hands
of the Trustee. Accordingly, to the extent that the income of a
Trust consists of interest and original issue discount excludable
from gross income under Section 103 of the Code, such income will be
excludable from Federal gross income of the Unitholders, except in
the case of a Unitholder who is a substantial user (or a person
related to such user) of a facility financed through issuance of any
industrial development bonds or certain private activity bonds held
by the respective Trust. In the case of such Unitholder who is a
substantial user (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 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. If a Bond is acquired with accrued interest,
that portion of the price paid for the accrued interest is added to
the tax basis of the Bond. When this accrued interest is received,
it is treated as a return of capital and reduces the tax basis of
the Bond. If a Bond is purchased for a premium, the amount of the
premium is added to the tax basis of the Bond. Bond premium is
amortized over the remaining term of the Bond, and the tax basis of
the Bond is reduced each tax year by the amount of the premium
amortized in that tax year. Accordingly, Unitholders must reduce
the tax basis of their Units for their share of accrued interest
received by the respective Trust, if any, on Bonds delivered after
the Unitholders pay for their Units to the extent that such interest
accrued on such Bonds before the date the Trust acquired ownership
of the Bonds (and the amount of this reduction may exceed the amount
of accrued interest paid to the seller) and, consequently, such
Unitholders may have an increase in taxable gain or reduction in
capital loss upon the disposition of such Units. In addition, such
basis will be increased by the Unitholder's aliquot share of the
accrued original issue discount (and market discount, if the
Unitholder elects to include market discount in income as it
accrues) with respect to each Bond held by the Trust with respect to
which there was original issue discount at the time the Bond was
issued (or which was purchased with market discount) and reduced by
the annual amortization of bond premium, if any, on Bonds held by
the Trust.
(iv) If the Trustee disposes of a Trust asset (whether by sale,
payment on maturity, redemption or otherwise) gain or loss is
recognized to the Unitholder and the amount thereof is measured by
comparing the Unitholder's aliquot share of the total proceeds from
the transaction with his basis for his fractional interest in the
asset disposed of. Such basis is ascertained by apportioning the
tax basis for his Units among each of the Trust assets (as of the
date on which his Units were acquired) ratably according to their
values as of the valuation date nearest the date on which he
purchased such Units. A Unitholder's basis in his Units and of his
fractional interest in each Trust asset must be reduced by the
amount of his aliquot share of accrued interest received by the
Trust, if any, on Bonds delivered after the Unitholders pay for
their Units to the extent that such interest accrued on the Bonds
before the date the Trust acquired ownership of the Bonds (and the
amount of this reduction may exceed the amount of accrued interest
paid to the seller), must be reduced by the annual amortization of
bond premium, if any, on Bonds held by the Trust and must be
increased by the Unitholder's share of the accrued original issue
discount (and market discount, if the Unitholder elects to include
market discount in income as it accrues) with respect to each Bond
which, at the time the Bond was issued, had original issue discount
(or which was purchased with market discount).
(v) In the case of any Bond held by the Trust where the
"stated redemption price at maturity" exceeds the "issue price",
such excess shall be original issue discount. With respect to each
Unitholder, upon the purchase of his Units subsequent to the
original issuance of Bonds held by the Trust, Section 1272(a)(7) of
the Code provides for a reduction in the accrued "daily portion" of
such original issue discount upon the purchase of a Bond subsequent
to the Bond's original issue, under certain circumstances. In the
case of any Bond held by the Trust the interest on which is
excludable from gross income under Section 103 of the Code, any
original issue discount which accrues with respect thereto will be
treated as interest which is excludable from gross income under
Section 103 of the Code.
(vi) We have examined the Municipal Bond Unit Investment Trust
Insurance policies, if any, issued to certain of the Trusts on the
Date of Deposit by AMBAC Indemnity Corporation, Financial Guaranty
Insurance Corporation or a combination thereof. Each such policy,
or a combination of such policies, insures all bonds held by the
Trustee for that particular Trust (other than bonds described in
paragraph (vii)) against default in the prompt payment of principal
and interest. In our opinion, any amount paid under each said
policy, or a combination of said policies, which represents maturing
interest on defaulted Bonds held by the Trustee will be excludable
from Federal gross income if, and to the same extent as, such
interest would have been so excludable if paid in normal course by
the Issuer of the defaulted 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 (the "Insured Bonds").
Insurance has been obtained for such Insured 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 Insured Bonds.
Insurance on Insured Bonds is effective so long as such Insured
Bonds remain outstanding. For each of these Insured Bonds, we have
been advised that the aggregate principal amount of such Insured
Bonds listed on the portfolio page for the respective Trust was
acquired by the applicable Trust and are part of the series of such
Insured Bonds listed in the aggregate principal amount. Based upon
the assumption that the Insured Bonds of the Trust are part of the
series covered by an insurance policy or, in the case of a
commitment, will be ultimately insured under the terms of such an
insurance policy, it is our opinion that any amounts received by the
applicable Trust representing maturing interest on such Insured
Bonds will be excludable from federal gross income if, and to the
same extent as, such interest would have been so excludable if paid
in normal course by the Issuer provided that, at the time such
policies are purchased, the amounts paid for such policies are
reasonable, customary and consistent with the reasonable expectation
that the issuer of the Insured Bonds, rather than the insurer, will
pay debt service on the Insured Bonds. Paragraph (ii) of this
opinion is accordingly applicable to such payment.
Sections 1288 and 1272 of the Code provide a complex set of rules
governing the accrual of original issue discount. These rules provide
that original issue discount accrues either on the basis of a constant
compound interest rate or ratably over the term of the Bond, depending on
the date the Bond was issued. In addition, special rules apply if the
purchase price of a Bond exceeds the original issue price plus the amount
of original issue discount which would have previously accrued based upon
its issue price (its "adjusted issue price"). The application of these
rules will also vary depending on the value of the Bond on the date a
Unitholder acquires his Units, and the price the Unitholder pays for his
Units.
Because the Trusts do not include any "private activity" bonds
within the meaning of Section 141 of the Code issued on or after August
8, 1986, none of the Trust Funds' interest income shall be treated as an
item of tax preference when computing the alternative minimum tax. In
the case of corporations, for taxable years beginning after December 31,
1986, the alternative minimum tax depends upon the corporation's
alternative minimum taxable income ("AMTI") which is the corporation's
taxable income with certain adjustments.
Pursuant to Section 56(c) of the Code, one of the adjustment items
used in computing AMTI 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 generally be the amount that bears the same ratio to the interest
deduction otherwise allowable (determined without regard to Section 265)
to the taxpayer for the taxable year as the taxpayer's average adjusted
basis (within the meaning of Section 1016) of tax-exempt obligations
acquired after August 7, 1986, bears to such average adjusted basis for
all assets of the taxpayer. Legislative proposals have been made that
would extend the financial institution rules to all corporations.
We also call attention to the fact that, under Section 265 of the
Code, interest on indebtedness incurred or continued to purchase or carry
Units is not deductible for Federal income tax purposes. Under rules
used by the Internal Revenue Service for determining when borrowed funds
are considered used for the purpose of purchasing or carrying particular
assets, the purchase of Units may be considered to have been made with
borrowed funds even though the borrowed funds are not directly traceable
to the purchase of Units. However, these rules generally do not apply to
interest paid on indebtedness incurred for expenditures of a personal
nature such as a mortgage incurred to purchase or improve a personal
residence.
"The Revenue Reconciliation Act of 1993" (the "Tax Act") subjects
tax-exempt bonds to the market discount rules of the Code effective for
bonds purchased after April 30, 1993. In general, market discount is the
amount (if any) by which the stated redemption price at maturity exceeds
an investor's purchase price (except to the extent that such difference,
if any, is attributable to original issue discount not yet accrued)
subject to a statutory de minimis rule. Market discount can arise based
on the price a Trust pays for Bonds or the price a Unitholder pays for
his or her Units. Under the Tax Act, accretion of market discount is
taxable as ordinary income; under prior law, the accretion had been
treated as capital gain. Market discount that accretes while a Trust
holds a Bond would be recognized as ordinary income by the Unitholders
when principal payments are received on the Bond, upon sale or at
redemption (including early redemption), or upon the sale or redemption
of his or her Units, unless a Unitholder elects to include market
discount in taxable income as it accrues.
We have also examined the income tax law of the Commonwealth of
Virginia ("Virginia"), which is based upon the Federal Law, to determine
its applicability to the Virginia Quality Trust (the "Virginia Trust")
being created as part of the Fund and to the holders of Units in the
Virginia Trust who are residents of the Commonwealth of Virginia
("Virginia Unitholders").
The assets of the Virginia Trust will consist of interest-bearing
obligations issued by or on behalf of Virginia ("Virginia") or counties,
municipalities, authorities or political subdivisions thereof (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
excludable from gross income for federal income tax purposes and (iii)
the interest thereon is exempt from income tax imposed by Virginia that
is applicable to individuals and corporations (the "Virginia Income
Tax"). This opinion does not address the taxation of persons other than
full time residents of Virginia. Based upon the foregoing it is our
opinion that under Virginia income tax law, as presently enacted and
construed:
(a) The Virginia Trust is not an association taxable as a
corporation for Virginia income tax purposes and each Unitholder of
the Virginia Trust will be treated as the owner of a pro rata
portion of the assets held by the Virginia Trust and the income of
such portion of the assets held by the Virginia Trust will be
treated as income of the Unitholder for purposes of the Virginia
Income Tax.
(b) Interest on the Bonds which is exempt from Virginia Income
Tax when received by the Virginia Trust, and which would be exempt
from Virginia Income Tax if received directly by a Unitholder, will
retain its status as exempt from such tax when received by the
Virginia Trust and distributed to such Unitholder.
(c) The Virginia legislature enacted a law, effective July 1,
1997, that would exempt from the Virginia Income Tax income derived
on the sale or exchange of obligations of the Commonwealth of
Virginia or any political subdivision or instrumentality of the
Commonwealth of Virginia. However, Virginia law does not address
whether this exclusion would apply to gains recognized through
entities such as the Virginia Quality Trust. Accordingly, we
express no opinion as to the treatment for Virginia Income Tax
purposes of any gain or loss recognized by a Unitholder for federal
income tax purposes
(d) The Virginia Income Tax does not permit a deduction of
interest paid on indebtedness incurred or continued to purchase or
carry Units in the Virginia Trust to the extent that interest income
related to the Ownership of Units is exempt from Virginia Income
Tax.
In the case of Unitholders subject to the Virginia Bank Franchise
Tax, the income derived by such a Unitholder from his pro rata portion of
the Bonds held by the Virginia Trust may affect the determination of such
Unitholder's Bank Franchise Tax. Prospective investors should consult
their tax advisors.
We have not examined any of the Bonds to be deposited and held in
the Virginia Trust or the proceedings for the issuance thereof or the
opinions of the bond counsel with respect thereto, and therefore express
no opinion as to the exemption from Virginia Income Tax of interest on
the Virginia Bonds if received directly by a Unitholder. In addition, we
express no opinion with respect to any taxes or items other than those
described above.
Very truly yours,
Chapman and Cutler
MJK/md
Exhibit 3.3
Winston & Strawn
200 Park Avenue
New York, New York 10166-4193
October 16, 1997
The Bank of New York,
As Trustee of Insured Municipals
Income Trust and Investors' Quality
Tax-Exempt Trust, Multi-Series 295
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 295 (the
"Fund") consisting of California Insured Municipals Income Trust, Series
170 and Virginia Investors' Quality Tax-Exempt Trust, Series 79 (in the
aggregate "Trusts" and individually "Trust") for the purposes of
determining the applicability of certain New York taxes under the
circumstances hereinafter described.
The Fund is created pursuant to a Trust Agreement (the
"Indenture"), dated as of today (the "Date of Deposit") among Van Kampen
American Capital Distributors, Inc. (the "Depositor"), American Portfolio
Evaluation Services, a division of Van Kampen American Capital Investment
Advisory Corp., as Evaluator, and The Bank of New York as Trustee (the
"Trustee"). As described in the prospectus relating to the Fund dated
today to be filed as an amendment to a registration statement previously
filed with the Securities and Exchange Commission (file number 333-30323)
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, to the extent indicated in the Prospectus, from income tax, if
any, of that State. No opinion is expressed herein with regard to the
Federal or State tax aspects (other than New York) of the bonds, the
Fund, the Trusts and units of each of the Trusts (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 of the Trusts, the total principal amount of
interest bearing obligations and/or contracts for the purchase thereof
together with an irrevocable letter of credit in the amount required for
the purchase price and accrued interest, if any, and, 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 those
trusts other than those obligations the timely payment of principal and
interest of which are guaranteed by an insurance policy purchased by the
issuer thereof or a prior owner, which may be the Depositor prior to the
Date of Deposit, as more fully set forth in the Prospectus with respect
to each of the Trusts..
We understand with respect to the obligations described in the
preceding paragraph which are deposited into a trust denominated as
"Insured" 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. 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 Trust and with the proceeds from the disposition of
obligations held in each Trust and the distribution of such interest and
proceeds to the Unit holders of that Trust. The Trustee will also
maintain records of the registered holders of Certificates representing
an interest in each of the Trusts 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
in the case of trusts denominated as "Insured" 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 Depositor, 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
defines the term "corporation" to include, among other things, "any
business conducted by a trustee or trustees wherein interest or ownership
is evidenced by certificate or other written instrument."
The Regulations promulgated under Section 208 provide as follows:
A business conducted by a trustee or trustees in
which interest or ownership is evidenced by
certificate or other written instrument includes, but
is not limited to, an association commonly referred
to as a "business trust" or "Massachusetts trust".
In determining whether a trustee or trustees are
conducting a business, the form of the agreement is
of significance but is not controlling. The actual
activities of the trustee or trustees, not their
purposes and powers, will be regarded as decisive
factors in determining whether a trust is subject to
tax under Article 9-A. The mere investment of funds
and the collection of income therefrom, with
incidental replacement of securities and reinvestment
of funds, does not constitute the conduct of a
business in the case of a business conducted by a
trustee or trustees. 20 NYCRR 1-2.3(b)(2) (July 11,
1990).
New York cases dealing with the question of whether a trust will be
subject to the franchise tax have also delineated the general rule that
where a trustee merely invests funds and collects and distributes the
income therefrom, the trust is not engaged in business and is not subject
to the franchise tax. Burrell v. Lynch, 274 A.D. 347, 84 N.Y.S.2d 171
(3rd Dept. 1948), order resettled, 274 A.D. 1083, 85 N.Y.S.2d 705 (3rd
Dept. 1949).
In an opinion of the Attorney General of the State of New York,
47 N.Y. Att'y. Gen. Rep. 213 (Nov. 24, 1942), it was held that where the
trustee of an unincorporated investment trust was without authority to
reinvest amounts received upon the sales of securities and could dispose
of securities making up the trust only upon the happening of certain
specified events or the existence of certain specified conditions, the
trust was not subject to the franchise tax.
In the instant situation, the Trustee is not empowered to, and we
assume will not, sell obligations contained in the corpus of the Fund and
reinvest the proceeds therefrom. Further, the power to sell such
obligations is limited to circumstances in which the creditworthiness or
soundness of the obligation is in question or in which cash is needed to
pay redeeming Unit holders or to pay expenses, or where the Fund is
liquidated pursuant to the termination of the Indenture. Only in
circumstances in which the issuer of an obligation attempts to refinance
it can the Trustee exchange an obligation for a new security. In
substance, the Trustee will merely collect and distribute income and will
not reinvest any income or proceeds, and the Trustee has no power to vary
the investment of any Unit holder in the Fund under Subpart E of Part I,
Subchapter J of Chapter 1 of the Internal Revenue Code of 1986, as
amended (the "Code"), the grantor of a trust will be deemed to be the
owner of the trust under certain circumstances, and therefore taxable on
his proportionate interest in the income thereof. Where this Federal tax
rule applies, the income attributed to the grantor will also be income to
him for New York income tax purposes. (See TSB-M-78(9)(C), New York
Department of Taxation and Finance, June 23, 1978).
By letter, dated today, Messrs. Chapman and Cutler, counsel for the
Depositor, rendered their opinion that each Unit holder of a Trust will
be considered as owning a share of each asset of that Trust in the
proportion that the number of Units held by such holder bears to the
total number of Units outstanding and the income of a Trust will be
treated as the income of each Unit holder of that Trust in said
proportion pursuant to Subpart E of Part I, Subchapter J of Chapter 1 of
the Code.
Based on the foregoing and on the opinion of Messrs. Chapman and
Cutler, counsel for the Depositor, dated today, upon which we
specifically rely, we are of the opinion that under existing laws,
rulings, and court decisions interpreting the laws of the State and City
of New York:
1. Each Trust will not constitute an association taxable as a
corporation under New York law, and, accordingly, will not be subject to
tax on its income under the New York State franchise tax or the New York
City general corporation tax.
2. The income of each Trust will be treated as the income of the
Unit holders under the income tax laws of the State and City of New York.
3. Unit holders who are not residents of the State of New York are
not subject to the income tax law thereof with respect to any interest or
gain derived from the Fund or any gain from the sale or other disposition
of the Units, except to the extent that such interest or gain is from
property employed in a business, trade, profession or occupation carried
on in the State of New York.
In addition, we are of the opinion no New York State stock transfer
tax will be payable in respect of any transfer of the Certificates by
reason of the exemption contained in paragraph (a) of Subdivision 8 of
Section 270 of the New York Tax Law.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement relating to the Units and to the use of our name
and the reference to our firm in the Registration Statement and in the
Prospectus.
Very truly yours,
Winston & Strawn
MNS:hbm
Exhibit 3.4
Orrick, Herrington & Sutcliffe llp
Old Federal Reserve Bank Building
400 Sansome Street
San Francisco, California 94111
October 16, 1997
The Bank of New York
through its Wall Street Trust Division
101 Barclay Street
New York, New York 10286
Re: California Insured Municipals Income Trust, Series 170
Dear Sirs:
We have acted as special California counsel for Van Kampen American
Capital Distributors, Inc., as Sponsor and Depositor of California
Insured Municipals Income Trust, Series 170, (the "Fund"), in connection
with the issuance under the Trust Indenture and Agreement dated October
16, 1997, among Van Kampen American Capital Distributors, Inc., as
Sponsor and Depositor, American Portfolio Evaluation Services, a division
of Van Kampen American Capital Investment Advisory Corp., as Evaluator,
and The Bank of New York through its Wall Street Trust division, as
Trustee, of 3,033 Units of fractional undivided interest in the Fund
(the "Units") in exchange for certain bonds, as well as "regular-way" and
"when-issued" contracts for the purchase of bonds (such bonds and
contracts are hereinafter referred to collectively as the "Securities").
In connection therewith, we have examined such corporate records,
certificates and other documents and such questions of law as we have
deemed necessary or appropriate for the purpose of this opinion, and, on
the basis of such examination, and upon existing provisions of the
Revenue and Taxation Code of the State of California, we are of the
opinion that:
1. The Fund is not an association taxable as a corporation
and the income of the Fund will be treated as the income of the
certificateholders under the income tax laws of California.
2. Amounts treated as interest on the underlying securities
which are exempt from tax under California personal income tax and
property tax laws when received by the Fund will, under such laws,
retain their status as tax-exempt interest when distributed to
certificateholders. However, interest on the underlying securities
attributed to a certificateholder which is a corporation subject to
the California franchise tax laws may be includable in its gross
income for purposes of determining its California franchise tax.
3. Under California income tax law, each certificateholder in
the Fund will have a taxable event when the Fund disposes of a
security (whether by sale, exchange, redemption, or payment at
maturity) or when the certificateholder redeems or sells Units.
Because of the requirement that tax cost basis be reduced to reflect
amortization of bond premium, under some circumstances a
certificateholder may realize taxable gain when Units are sold or
redeemed for an amount equal to, or less than, their original cost.
The total tax cost of each Unit to a certificateholder is allocated
among each of the bond issues held in the Fund (in accordance with
the proportion of the Fund comprised by each bond issue) in order to
determine his per unit tax cost for each bond issue; and the tax
cost reduction requirements relating to amortization of bond premium
will apply separately to the per unit cost of each bond issue.
Certificateholders' bases in their Units, and the bases for their
fractional interest in each Fund asset, may have to be adjusted for
their pro rata share of accrued interest received, if any, on
securities delivered after the certificateholders' respective
settlement dates.
4. Under the California personal property tax laws, bonds
(including the Securities) or any interest therein is exempt from
such tax.
5. Any proceeds paid under the insurance policy issued to the
Trustee of the fund with respect to the Securities which represent
maturing interest on defaulted obligations held by the Trustee will
be exempt from California personal income tax if, and to the same
extent as, such interest would have been so exempt if paid by the
issuer of the defaulted obligations.
6. Under Section 17280(b)(2) of the California Revenue and
Taxation Code, interest on indebtedness incurred or continued to
purchase or carry Units of the Trust is not deductible for the
purposes of the California personal income tax. While there
presently is no California authority interpreting this provision,
Section 17280(b)(2) directs the California Franchise Tax Board to
prescribe regulations determining the proper allocation and
apportionment of interest costs for this purpose. The Franchise Tax
Board has not yet proposed or prescribed such regulations. In
interpreting the generally similar Federal provision, the Internal
Revenue Service has taken the position that such indebtedness need
not be directly traceable to the purchase or carrying of Units
(although the Service has not contended that a deduction for
interest on indebtedness incurred to purchase or improve a personal
residence or to purchase goods or services for personal consumption
will be disallowed). In the absence of conflicting regulations or
other California authority, the California Franchise Tax Board
generally has interpreted California statutory tax provisions in
accord with Internal Revenue Service interpretations of similar
Federal provisions.
Opinions relating to the validity of securities and the exemption of
interest thereon from State of California income tax are rendered by bond
counsel to the issuing authority at the time securities are issued and we
have relied solely upon such opinions, or, as to securities not yet
delivered, forms of such opinions contained in official statements
relating to such securities. Except in certain instances in which we
acted as bond counsel to issuers of securities, and as such made a review
of proceedings relating to the issuance of certain securities at the time
of their issuance, we have not made any review of proceedings relating to
the issuance of securities or the bases of bond counsels' opinions.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement (SEC No. 333-30323) relating to the Units referred
to above and to the use of our name and to the reference to our firm in
said Registration Statement and in the related Prospectus.
Very truly yours,
Orrick, Herrington & Sutcliffe llp
Exhibit 4.1
Interactive Data
14 Wall Street
New York, New York 10005
October 15, 1997
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 295 (A Unit Investment Trust)
Registered Under the Securities Act of 1933, File No. 333-30323
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
Corporation, as the Evaluator, and to the use of the obligations prepared
by us which are referred to in such Prospectus and Statement.
You are authorized to file copies of this letter with the Securities
and Exchange Commission.
Very truly yours,
James Perry
Vice President
Exhibit 4.2
Standard & Poor's
A Division of The McGraw-Hill Corporation
25 Broadway
New York, New York 10004-1064
Van Kampen American Capital
One Parkview Plaza
Oakbrook Terrace, IL 60181
Re: Insured Municipals Income Trust and Investors' Quality Tax-Exempt
Trust, Multi-Series 295, consisting of: California Insured
Municipals Income Trust, Series 170
Pursuant to your request for a Standard & Poor's rating on the units
of the above-captioned trust, SEC #333-30323 we have reviewed the
information presented to us and have assigned a 'AAA' rating to the units
of the trust and a 'AAA' rating to the securities contained in the trust
for as long as they remain in the trust. The ratings are direct
reflections, of the portfolio of the trust, which will be composed solely
of securities covered by bond insurance policies that insure against
default in the payment of principal and interest on the securities so
long as they remain in the trust. Since such policies have been issued
by one or more insurance companies which have been assigned a 'AAA'
claims paying ability rating by S&P, S&P has assigned a 'AAA' rating to
the units of the trust and to the securities contained in the trust for
as long as they remain in the trust.
Standard & Poor's will maintain surveillance on the "AAA" Rating
until November 16, 1998. On this date, the rating will be automatically
withdrawn by Standard & Poor's unless a post effective letter is
requested by the Trust.
You have permission to use the name of Standard & Poor's Corporation
and the above-assigned ratings in connection with your dissemination of
information relating to these units, provided that it is understood that
the ratings are not "market" ratings nor recommendations to buy, hold, or
sell the units of the trust or the securities contained in the trust.
Further, it should be understood the rating on the units does not take
into account the extent to which fund expenses or portfolio asset sales
for less than the fund's purchase price will reduce payment to the unit
holders of the interest and principal required to be paid on the
portfolio assets. S&P reserves the right to advise its own clients,
subscribers, and the public of the ratings. S&P relies on the sponsor
and its counsel, accountants, and other experts for the accuracy and
completeness of the information submitted in connection with the ratings.
S&P does not independently verify the truth or accuracy of any such
information.
This letter evidences our consent to the use of the name of Standard
& Poor's Corporation in connection with the rating assigned to the units
in the registration statement or prospectus relating to the units or the
trust. However, this letter should not be construed as a consent by us,
within the meaning of Section 7 of the Securities Act of 1933, to the use
of the name of Standard & Poor's Corporation in connection with the
ratings assigned to the securities contained in the trust. You are
hereby authorized to file a copy of this letter with the Securities and
Exchange Commission.
Please be certain to send us three copies of your final prospectus
as soon as it becomes available. Should we not receive them within a
reasonable time after the closing or should they not conform to the
representations made to us, we reserve the right to withdraw the rating.
We are pleased to have had the opportunity to be of service to you.
If we can be of further help, please do not hesitate to call upon us.
Sincerely,
Sanford Bragg
Exhibit 4.3
Independent Certified Public Accountants' Consent
We have issued our report dated October 16, 1997 on the statements
of condition and related bond portfolios of Insured Municipals Income
Trust and Investors' Quality Tax-Exempt Trust, Multi-Series 295
(California IM-IT 170 and Virginia Quality 79 Trusts) as of October 16,
1997 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" in Prospectus Part I.
Grant Thornton LLP
Chicago, Illinois
October 16, 1997
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This report reflects the current period taken from 487 on October 16, 1997 it is
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