FILE NO. 33-
CIK #897160
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
Form S-6
For Registration under the Securities Act of 1933 of Securities of Unit
Investment Trust Registered on Form N-8B-2.
A. Exact name of Trust: VAN KAMPEN AMERICAN CAPITAL INSURED
INCOME TRUST, SERIES 49
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:
Van Kampen American Capital
Distributors Inc. Chapman and Cutler
Attention: Don G. Powell, Chairman Attention: Mark J. Kneedy
One Parkview Plaza 111 West Monroe Street
Oakbrook Terrace, Illinois 60181 Chicago, Illinois 60603
E. Title and amount of securities being registered: *1,000 Units
F. Proposed maximum offering price to the public of the securities being
registered: ($1,010 per Unit): $1,010,000**
G. Amount of filing fee, computed at one twenty-nineth of 1 percent of
the proposed maximum aggregate offering price to the public: $348.28
H. Approximate date of proposed sale to the public:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE
OF THE REGISTRATION STATEMENT
_________________________________________________________________________
* 500 Units registered for primary distribution.
500 Units registered for resale by Depositor of Units previously sold
in primary distribution.
** Estimated solely for the purpose of calculating the registration fee.
_________________________________________________________________________
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.
Van Kampen American Capital Insured Income Trust,
Series 49
Cross Reference Sheet
Pursuant to Rule 404(c) of Regulation C
under the Securities Act of 1933
(Form N-8B-2 Items Required by Instruction
1 as to Prospectus on Form S-6)
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
I. Organization and General Information
1. (a) Name of trust )
(b) Title of securities issued ) Prospectus Front Cover Page
2. Name and address of Depositor ) Summary of Essential Financial
) Information
) Trust Administration
3. Name and address of Trustee ) Summary of Essential Financial
) Information
) Trust Administration
4. Name and address of principal ) Underwriting
underwriter
5. Organization of trust ) The Trust
6. Execution and termination of ) The Trust
Trust Indenture and Agreement ) Trust Administration
7. Changes of Name ) *
8. Fiscal year ) *
9. Material Litigation ) *
II. General Description of the Trust and
Securities of the Trust
10. General information regarding ) The Trust
trust's securities and rights of) Insurance on the Bonds
security holders ) Tax Status
) Public Offering
) Rights of Unitholders
) Trust Administration
11. Type of securities comprising units) Prospectus Front Cover Page
) The Trust
) Trust Portfolios
) Trust Portfolios
12. Certain information regarding ) *
periodic payment certificates )
13. (a) Loan, fees, charges and expenses) Prospectus Front Cover
Page
) Summary of Essential Financial
) Information
) Trust Portfolios
) Annual Unit Income and
) Estimated Current Returns
) Trust Operating Expenses
) Public Offering
) Rights of Unitholders
(b) Certain information regarding) *
periodic payment plan )
certificates )
(c) Certain percentages ) Prospectus Front Cover Page
) Summary of Essential Financial
) Information
) Annual Unit Income and
) Estimated Current Returns
) Insurance on the Bonds
) Public Offering
) Rights of Unitholders
(d) Certain other fees, expenses or) Trust Operating
Expenses
charges payable by holders ) Rights of Unitholders
(e) Certain profits to be received) Public Offering
by depositor, principal ) Underwriting
underwriter, trustee or any) Trust Portfolios
affiliated persons )
(f) Ratio of annual charges ) *
to income )
14. Issuance of trust's securities ) Rights of Unitholders
15. Receipt and handling of payments ) *
from purchasers )
16. Acquisition and disposition of ) The Trust
underlying securities ) Rights of Unitholders
) Trust Administration
17. Withdrawal or redemption ) Rights of Unitholders
) Trust Administration
18. (a) Receipt and disposition ) Prospectus Front Cover Page
of income ) Rights of Unitholders
(b) Reinvestment of distributions) *
(c) Reserves or special funds ) Trust Operating Expenses
) Rights of Unitholders
(d) Schedule of distributions ) *
19. Records, accounts and reports ) Rights of Unitholders
) Trust Administration
20. Certain miscellaneous provisions ) Trust Administration
of Trust Agreement )
21. Loans to security holders ) *
22. Limitations on liability ) Trust Portfolios
) Trust Administration
23. Bonding arrangements ) *
24. Other material provisions of ) *
Trust Indenture Agreement )
III. Organization, Personnel and Affiliated
Persons of Depositor
25. Organization of Depositor ) Trust Administration
26. Fees received by Depositor ) *
27. Business of Depositor ) Trust Administration
28. Certain information as to ) *
officials and affiliated )
persons of Depositor )
29. Companies owning securities ) *
of Depositor )
30. Controlling persons of Depositor ) *
31. Compensation of Officers of ) *
Depositor )
32. Compensation of Directors ) *
33. Compensation to Employees ) *
34. Compensation to other persons ) *
IV. Distribution and Redemption of Securities
35. Distribution of trust's securities) Public Offering
by states )
36. Suspension of sales of trust's ) *
securities )
37. Revocation of authority to ) *
distribute )
38. (a) Method of distribution )
(b) Underwriting agreements ) Public Offering
(c) Selling agreements )
39. (a) Organization of principal )
underwriter )
(b) N.A.S.D. membership by )
principal underwriter )
40. Certain fees received by ) *
principal underwriter )
41. (a) Business of principal ) Trust Administration
underwriter )
(b) Branch offices or principal ) *
underwriter )
(c) Salesmen or principal ) *
underwriter )
42. Ownership of securities of ) *
the trust )
43. Certain brokerage commissions ) *
received by principal underwriter)
44. (a) Method of valuation ) Prospectus Front Cover Page
) Summary of Essential Financial
) Information
) Trust Operating Expenses
) Public Offering
(b) Schedule as to offering price) *
(c) Variation in offering price ) *
to certain persons )
45. Suspension of redemption rights ) *
46. (a) Redemption valuation ) Rights of Unitholders
) Trust Administration
(b) Schedule as to redemption price) *
47. Purchase and sale of interests ) Public Offering
in underlying securities ) Trust Administration
V. Information Concerning the Trustee or Custodian
48. Organization and regulation of ) Trust Administration
Trustee )
49. Fees and expenses of Trustee ) Summary of Essential Financial
) Information
) Trust Operating Expenses
50. Trustee's lien ) Trust Operating Expenses
VI. Information Concerning Insurance of Holders of Securities
51. Insurance of holders of trust's ) Cover Page
securities ) Trust Operating Expenses
) Insurance on the Bonds
VII. Policy of Registrant
52. (a) Provisions of trust agree- ) Trust Administration
ment with respect to )
replacement or elimination )
portfolio securities )
(b) Transactions involving ) *
elimination of underlying )
securities )
(c) Policy regarding substitu- ) Trust Administration
tion or elimination of )
underlying securities )
(d) Fundamental policy not ) *
otherwise covered )
53. Tax Status of trust ) 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 (Instructions) Report of Independent
Certified
1(c) to Form S-6) ) Public Accountants
) Statements of Condition
______________________________________________
* Inapplicable, omitted, answer negative or not required
Preliminary Prospectus Dated July 26, 1995
Van Kampen American Capital
Insured Income Trust
1,000 Units Series 49
(A Unit Investment Trust)
The attached final Prospectus for a prior Series of the Fund is
hereby used as a preliminary Prospectus for the above stated Series. The
narrative information and structure of the attached final Prospectus will
be substantially the same as that of the final Prospectus for this
Series. Information with respect to pricing, the number of Units, dates
and summary information regarding the characteristics of securities to be
deposited in this Series is not now available and will be different since
each Series has a unique Portfolio. Accordingly the information
contained herein with regard to the previous Series should be considered
as being included for informational purposes only. Ratings of the
securities in this Series are expected to be comparable to those of the
securities deposited in the previous Series. However, the Estimated
Current Return for this Series will depend on the interest rates and
offering prices of the securities in this Series and may vary materially
from that of the previous Series.
A registration statement relating to the units of this Series will
be filed with the Securities and Exchange Commission but has not yet
become effective. Information contained herein is subject to completion
or amendment. Such Units may not be sold nor may offer to buy be
accepted prior to the time the registration statement becomes effective.
This Prospectus shall not constitute an offer to sell or the solicitation
of an offer to buy nor shall there be any sale of the Units in any state
in which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such
state.
Preliminary Prospectus Dated May 22, 1995
Subject To Completion
May 23, 1995
Van Kampen American Capital
Van Kampen American Capital Insured Income Trust,
Series 46 (Intermediate) and Series 47
The Trust. Van Kampen American Capital Insured Income Trust, Series 46
(Intermediate) ("Series 46") and Series 47 ("Series 47") are two separate and
distinct unit investment trusts. Series 46 and Series 47 are collectively
referred to herein as the "Trusts". Each Trust initially consists of delivery
statements relating to contracts to purchase debt obligations and, thereafter,
Series 46 will consist of a $3,065,000 aggregate principal amount portfolio
principally comprised of intermediate-term corporate, taxable municipal or
government debt obligations and Series 47 will consist of a $9,010,000
aggregate principal amount portfolio principally comprised of long-term
corporate, taxable municipal or government debt obligations. Series 46 and
Series 47 are comprised of 3,065 and 9,209 Units, respectively.
Attention Foreign Investors. If you are not a United States citizen or
resident, your interest income from each Trust may not be subject to Federal
withholding taxes if certain conditions are met. See "Tax Status".
Investment Objective of the Trusts. The investment objective of Series 46 is a
high level of current income consistent with preservation of capital through a
diversified investment in a fixed portfolio principally consisting of
intermediate-term corporate and taxable municipal debt securities issued after
July 18, 1984 (the "Intermediate-term Obligations"). The investment objective
of Series 47 is a high level of current income consistent with preservation of
capital through a diversified investment in a fixed portfolio principally
consisting of long-term corporate and taxable municipal debt securities issued
after July 18, 1984 (the "Long-term Obligations"). The Intermediate-term
Obligations and the Long-term Obligations are collectively referred to herein
as the "Obligations". See "Investment Objectives and Portfolio Selection".
There is no assurance that each Trust will achieve its objective. The payment
of interest and the preservation of principal is, of course, dependent upon
the continuing ability of the issuers and/or obligors of the Obligations and
of the insurer thereof to meet their respective obligations. Units of each
Trust are not insured by the FDIC, are not deposits or other obligations of,
or guaranteed by, any depository institution or any government agency and are
subject to investment risk, including possible loss of the principal amount
invested.
The Trust and "AAA"Rating. Insurance guaranteeing the payments of principal
and interest, when due, on the Obligations in the portfolio of each Trust has
been obtained from an insurance company either by such Trust or by the issuer
of the Obligations involved, by a prior owner of the Obligations or by the
Sponsor prior to the deposit of such Obligations in the Trust. See "Insurance
on the Obligations"on page 13. Insurance obtained by the Trust applies only
while the Obligations involved are retained in such Trust while insurance
obtained on Preinsured Obligations is effective so long as such Obligations
are outstanding. The Trustee, upon the sale of an Obligation insured under an
insurance policy obtained by the Trust, has a right to obtain from the insurer
involved permanent insurance for such Obligation upon the payment of a single
predetermined insurance premium and any expenses related thereto from the
proceeds of the sale of such Obligation. It should be noted that the
insurance, in either case, relates only to the Obligations in the Trust and
not to the Units offered hereby or to the market value thereof. As a result of
such insurance, the Units of each Trust have received a rating of "AAA"by
Standard & Poor's Ratings Group. Standard & Poor's Ratings Group has indicated
that this rating is not a recommendation to buy, hold or sell Units nor does
it take into account the extent to which expenses of the Trust or sales by the
Trust of Obligations for less than the purchase price paid by the Trust will
reduce payment to Unitholders of the interest and principal required to be
paid on such Obligations. See "Insurance on the Obligations". No
representation is made as to any insurer's ability to meet its commitments.
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.
Public Offering Price. The Public Offering Price of the Units of each Trust
during the initial offering period is equal to the aggregate offering price of
the Obligations in the portfolio and cash, if any, in the Principal Account
held or owned by the Trust divided by the number of Units outstanding, plus
the applicable sales charge plus accrued interest, if any. For sales charges
in the secondary market, see "Public Offering--General". If the Obligations in
each Trust were available for direct purchase by investors, the purchase price
of the Obligations would not include the sales charge included in the Public
Offering Price of the Units. During the initial offering period, the sales
charge is reduced on a graduated scale for sales involving 100 or more Units.
If Units were available for purchase at 8:00 A.M. Central Time on the Date of
Deposit, the Public Offering Price per Unit would have been that amount set
forth in the "Summary of Essential Financial Information"for each Trust. See
"Public Offering".
Estimated Current Return and Estimated Long-Term Return. The Estimated Current
Return and Estimated Long-Term Return to Unitholders were as set forth under
"Summary of Essential Financial Information". The methods of calculating
Estimated Current Return and Estimated Long-Term Return are set forth in the
footnotes to the "Summary of Essential Financial Information"and under
"Estimated Current Return and Estimated Long-Term Return".
Distribution Options. Purchasers of Units who desire to receive distributions
on a monthly or semi-annual basis may elect to do so at the time of settlement
during the initial public offering period. See "Rights of Unitholders--Change
of Distribution Option". The plan of distribution selected by such purchasers
will remain in effect until changed. Those indicating no choice will be deemed
to have chosen the monthly distribution plan. The first monthly distribution
for Series 46 will be $5.73 per Unit and will be made on July 15, 1995 to
Unitholders of record on July 1, 1995. The first monthly distribution for
Series 47 will be $6.09 per Unit and will be made on July 15, 1995 to
Unitholders of record on July 1, 1995. Record dates for monthly distributions
will be the first day of each month and record dates for semi-annual
distributions will be the first day of the months indicated under "Per Unit
Information"for the applicable Trust. Distributions will be made on the
fifteenth day of the month subsequent to the respective record dates. The
first distribution of funds from the Principal Account of each Trust, if any,
will be made on December 15, 1995 to Unitholders of record on December 1,
1995, and thereafter such distributions will be made on a semi-annual basis,
except under certain special circumstances (see "Rights of
Unitholders--Distributions of Interest and Principal").
Market for Units. Although not obligated to do so, the Sponsor, Van Kampen
American Capital Distributors, Inc., intends to, and certain of the other
Underwriters may, maintain a secondary market for the Units at prices based
upon the aggregate bid price of the Obligations in the portfolios of the
respective Trusts plus interest accrued to the date of settlement; however,
during the initial offering period such prices will be based upon the
aggregate offering prices of the Obligations plus interest accrued to the date
of settlement. If such a market is not maintained and no other
over-the-counter market is available, a Unitholder will be able to dispose of
his Units only through redemption at prices based upon the bid prices of the
underlying Obligations plus interest accrued to the date of settlement (see
"Rights of Unitholders--Redemption of Units"). Neither the bid nor offering
prices of the underlying Obligations or of the Units, absent situations in
which Obligations 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 the Trust. See "Public Offering--Public Market".
Reinvestment Option. Unitholders have the opportunity to have their
distributions reinvested into an open-end, management investment company as
described herein, providing the potential benefit of compounding. Foreign
investors should note, however, that any interest distributions resulting from
such a reinvestment program will be subject to U.S. Federal income taxes,
including withholding taxes. See "Rights of Unitholders--Reinvestment Option".
Risk Factors. An investment in Units of the Trusts should be made with an
understanding of the risks associated therewith, including, among other
factors, the inability of the issuer or an insurer to pay the principal of or
interest of a bond when due, volatile interest rates, early call provisions
and general economic conditions. See "Trust Portfolios--Risk Factors".
<TABLE>
VAN KAMPEN AMERICAN CAPITAL INSURED INCOME TRUST, SERIES 46
(INTERMEDIATE) AND SERIES 47
Summary of Essential Financial Information
As of 8:00 A.M. Central Time on the Date of Deposit: May 23, 1995
Sponsor: Van Kampen American Capital Distributors, Inc.
Evaluator: American Portfolio Evaluation Services
(A division of a subsidiary of the Sponsor)
Trustee: The Bank of New York
<CAPTION>
Series Series
General Information 46 47
<S> <C> <C>
Principal Amount (Par Value) of Obligations............................................ $ 3,065,000 $ 9,010,000
Number of Units ....................................................................... 3,065 9,209
Fractional Undivided Interest in the Trust per Unit.................................... 1/3,065 1/9,209
Principal Amount (Par Value) of Obligations per Unit <F1>.............................. $ 1,000.00 $ 978.39
Public Offering Price: ................................................................
Aggregate Offering Price of Obligations in Portfolio.................................. $ 3,041,844 $ 8,757,801
Aggregate Offering Price of Obligations per Unit...................................... $ 992.44 $ 951.00
Sales Charge <F2>..................................................................... $ 30.69 $ 49.00
Public Offering Price per Unit <F3>................................................... $ 1,023.13 $ 1,000.00
Redemption Price per Unit.............................................................. $ 988.77 $ 946.21
Secondary Market Repurchase Price per Unit............................................. $ 992.44 $ 951.00
Excess of Public Offering Price per Unit Over Redemption Price per Unit................ $ 34.36 $ 53.79
Excess of Sponsor's Initial Repurchase Price per Unit Over Redemption Price per Unit... $ 3.67 $ 4.79
Minimum Value of the Trust under which the Trust Agreement may be terminated........... $ 613,000 $ 1,802,000
Annual Portfolio Insurance Premium..................................................... $ 871 $ 8,955
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Minimum Principal Distribution....... $1.00 per Unit
First Settlement Date................ May 31, 1995
Evaluator's Annual Supervisory Fee... Maximum of $0.25 per Unit
Evaluator's Annual Evaluation Fee.... $0.30 per $1,000 principal amount of Obligations
</TABLE>
Evaluations for purpose of sale, purchase or redemption
of Units are made as of 4:00 P.M. Eastern time on days of
trading on the New York Stock Exchange next following
receipt of an order for a sale or purchase of Units or receipt
by The Bank of New York of Units tendered for redemption.
<TABLE>
<CAPTION>
Semi-
Per Unit Information for Series 46 (Intermediate): Monthly Annual
<S> <C> <C>
Calculation of Estimated Net Annual Unit Income:
Estimated Annual Interest Income per Unit............................. $ 69.35 $ 69.35
Less: Estimated Annual Expense per Unit <F4>.......................... $ 2.57 $ 2.11
Less: Annual Premium on Portfolio Insurance per Unit.................. $ .28 $ .28
Estimated Net Annual Interest Income per Unit......................... $ 66.50 $ 66.96
Calculation of Estimated Interest Earnings per Unit:
Estimated Net Annual Interest Income per Unit......................... $ 66.50 $ 66.96
Divided by 12 and 2, respectively..................................... $ 5.54 $ 33.48
Estimated Daily Rate of Net Interest Accrual per Unit.................. $ .18468 $ .18596
Estimated Current Return Based on Public Offering Price <F5><F6><F7>... 6.50% 6.54%
Estimated Long-Term Return <F5><F6><F7>................................ 6.55% 6.60%
Estimated Initial Monthly Distribution (July 1995)..................... $ 5.73
Estimated Initial Semi-annual Distribution (December 1995)............. $ 33.66
Estimated Normal Distribution per Unit <F7>............................ $ 5.54 $ 33.48
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Trustee's Annual Fee........... $.91 and $.51 per $1,000 principal amount of Obligations, respectively, for those portions of each
Trust under the monthly and semi-annual distribution plans
Record and Computation Dates... FIRST day of the month as follows: monthly--each month; semi-annual--June and December
Distribution Dates............. FIFTEENTH day of the month as follows: monthly--each month; semi-annual--June
and December commencing July 15, 1995
<FN>
<F1>Many unit investment trusts issue a number of units such that each unit
represents approximately $1,000 principal amount of underlying securities. The
Sponsor has elected to follow this format in determining the number of Units
for Series 46. The Sponsor on the other hand in determining the number of
Units for Series 47 has elected not to follow this format but rather to
provide that number of Units which will establish as close as possible as of
the Date of Deposit a Public Offering Price per Unit of $1,000.
<F2>Sales charges for the Trusts, expressed as a percentage of the Public Offering
Price per Unit and in parenthesis as a percentage of the aggregate offering
price of the Obligations, are as follows: Series 46--3.0% (3.093%); and Series
47--4.9% (5.152%).
<F3>Anyone ordering Units for settlement after the First Settlement Date will pay
accrued interest from such date to the date of settlement (normally five
business days after order) less distributions from the Interest Account
subsequent to the First Settlement Date. For purchases settling on the First
Settlement Date, no accrued interest will be added to the Public Offering
Price. After the initial offering period, the Sponsor's Repurchase Price per
Unit will be determined as described under the caption "Public
Offering--Public Market."
<F4>Excluding insurance costs. The Estimated Annual Expenses are expected to
fluctuate periodically (see "Trust Operating Expenses--Miscellaneous
Expenses").
<F5>The Estimated Current Returns and Estimated Long-Term Returns are increased
for transactions entitled to a reduced sales charge (see "Public
Offering--General").
<F6>The Estimated Current Returns are calculated by dividing the Estimated Net
Annual Interest Income per Unit by the Public Offering Price. The Estimated
Net Annual Interest Income per Unit will vary with changes in fees and
expenses of the Trustee and the Evaluator and with the principal prepayment,
redemption, maturity, exchange or sale of Obligations while the Public
Offering Price will vary with changes in the offering price of the underlying
Obligations; therefore, there is no assurance that the present Estimated
Current Returns indicated above will be realized in the future. The Estimated
Long-Term Returns are calculated using a formula which (1) takes into
consideration, and determines and factors in the relative weightings of, the
market values, yields (which takes into account the amortization of premiums
and the accretion of discounts) and estimated retirements of all of the
Obligations in each Trust and (2) takes into account the expenses and sales
charge associated with each Trust Unit. Since the market values and estimated
retirements of the Obligations and the expenses of the Trust will change,
there is no assurance that the present Estimated Long-Term Return as indicated
above will be realized in future. The Estimated Current Returns and Estimated
Long-Term Returns are expected to differ because the calculation of the
Estimated Long-Term Return reflects the estimated date and amount of principal
returned while the Estimated Current Return calculation includes only net
annual interest income and Public Offering Price. These rates may not reflect
the true return to Unitholders which may be lower because of a possible delay
in the first payment to Unitholders.
<F7>These figures are based on 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 Obligations. The estimated cash flows for each Trust are set
forth under "Estimated Cash Flows to Unitholders".
</TABLE>
<TABLE>
<CAPTION>
Semi-
Per Unit Information for Series 47: Monthly Annual
<S> <C> <C>
Calculation of Estimated Net Annual Unit Income:
Estimated Annual Interest Income per Unit............................. $ 74.29 $ 74.29
Less: Estimated Annual Expense per Unit <F4>.......................... $ 2.57 $ 2.12
Less: Annual Premium on Portfolio Insurance per Unit.................. $ .97 $ .97
Estimated Net Annual Interest Income per Unit......................... $ 70.75 $ 71.20
Calculation of Estimated Interest Earnings per Unit:
Estimated Net Annual Interest Income per Unit......................... $ 70.75 $ 71.20
Divided by 12 and 2, respectively..................................... $ 5.90 $ 35.60
Estimated Daily Rate of Net Interest Accrual per Unit.................. $ .19652 $ .19777
Estimated Current Return Based on Public Offering Price <F5><F6><F7>... 7.08% 7.12%
Estimated Long-Term Return <F5><F6><F7>................................ 7.07% 7.11%
Estimated Initial Monthly Distribution (July 1995)..................... $ 6.09
Estimated Initial Semi-annual Distribution (December 1995)............. $ 35.79
Estimated Normal Distribution per Unit <F7>............................ $ 5.90 $ 35.60
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Trustee's Annual Fee........... $.91 and $.51 per $1,000 principal amount of Obligations, respectively, for those portions of each
Trust under the monthly and semi-annual distribution plans
Record and Computation Dates... FIRST day of the month as follows: monthly--each month; semi-annual--June and December
Distribution Dates............. FIFTEENTH day of the month as follows: monthly--each month; semi-annual--June
and December commencing July 15, 1995
<FN>
<F1>Many unit investment trusts issue a number of units such that each unit
represents approximately $1,000 principal amount of underlying securities. The
Sponsor has elected to follow this format in determining the number of Units
for Series 46. The Sponsor on the other hand in determining the number of
Units for Series 47 has elected not to follow this format but rather to
provide that number of Units which will establish as close as possible as of
the Date of Deposit a Public Offering Price per Unit of $1,000.
<F2>Sales charges for the Trusts, expressed as a percentage of the Public Offering
Price per Unit and in parenthesis as a percentage of the aggregate offering
price of the Obligations, are as follows: Series 46--3.0% (3.093%); and Series
47--4.9% (5.152%).
<F3>Anyone ordering Units for settlement after the First Settlement Date will pay
accrued interest from such date to the date of settlement (normally five
business days after order) less distributions from the Interest Account
subsequent to the First Settlement Date. For purchases settling on the First
Settlement Date, no accrued interest will be added to the Public Offering
Price. After the initial offering period, the Sponsor's Repurchase Price per
Unit will be determined as described under the caption "Public
Offering--Public Market."
<F4>Excluding insurance costs. The Estimated Annual Expenses are expected to
fluctuate periodically (see "Trust Operating Expenses--Miscellaneous
Expenses").
<F5>The Estimated Current Returns and Estimated Long-Term Returns are increased
for transactions entitled to a reduced sales charge (see "Public
Offering--General").
<F6>The Estimated Current Returns are calculated by dividing the Estimated Net
Annual Interest Income per Unit by the Public Offering Price. The Estimated
Net Annual Interest Income per Unit will vary with changes in fees and
expenses of the Trustee and the Evaluator and with the principal prepayment,
redemption, maturity, exchange or sale of Obligations while the Public
Offering Price will vary with changes in the offering price of the underlying
Obligations; therefore, there is no assurance that the present Estimated
Current Returns indicated above will be realized in the future. The Estimated
Long-Term Returns are calculated using a formula which (1) takes into
consideration, and determines and factors in the relative weightings of, the
market values, yields (which takes into account the amortization of premiums
and the accretion of discounts) and estimated retirements of all of the
Obligations in each Trust and (2) takes into account the expenses and sales
charge associated with each Trust Unit. Since the market values and estimated
retirements of the Obligations and the expenses of the Trust will change,
there is no assurance that the present Estimated Long-Term Return as indicated
above will be realized in future. The Estimated Current Returns and Estimated
Long-Term Returns are expected to differ because the calculation of the
Estimated Long-Term Return reflects the estimated date and amount of principal
returned while the Estimated Current Return calculation includes only net
annual interest income and Public Offering Price. These rates may not reflect
the true return to Unitholders which may be lower because of a possible delay
in the first payment to Unitholders.
<F7>These figures are based on 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 Obligations. The estimated cash flows for each Trust are set
forth under "Estimated Cash Flows to Unitholders".
</TABLE>
THE TRUSTS
Van Kampen American Capital Insured Income Trust, Series 46 (Intermediate) and
Series 47 (the "Trusts") were created under the laws of the State of New York
pursuant to a Trust Agreement (the "Trust Agreement"), dated the Date of
Deposit, with Van Kampen American Capital Distributors, Inc., as Sponsor,
American Portfolio Evaluation Services, a division of Van Kampen American
Capital Investment Advisory Corp., as Evaluator, and The Bank of New York, as
Trustee.
Series 46 may be an appropriate medium for investors who desire to participate
in a portfolio of intermediate-term taxable fixed income securities issued
after July 18, 1984 with greater diversification than they might be able to
acquire individually. Series 47 may be an appropriate medium for investors who
desire to participate in a portfolio of long-term taxable fixed income
securities issued after July 18, 1984 with greater diversification than they
might be able to acquire individually. Diversification of each Trust's assets
will not eliminate the risk of loss always inherent in the ownership of
securities. For a breakdown of each portfolio see "Trust Portfolios". In
addition, securities of the type initially deposited in the portfolio of each
Trust are often not available in small amounts and may, in the case of any
privately placed securities, be available only to institutional investors.
On the Date of Deposit, the Sponsor deposited with the Trustee the Obligations
indicated under "Portfolios"herein, including delivery statements relating to
contracts for the purchase of certain such obligations and irrevocable letters
of credit issued by a financial institution in the aggregate amount required
for such purchases (the "Obligations"). Thereafter, the Trustee, in exchange
for the Obligations so deposited, delivered to the Sponsor the certificates
evidencing the ownership of 3,065 Units of Series 46 and 9,209 Units of Series
47. Unless otherwise terminated as provided therein, the Trust Agreement for
Series 46 will terminate at the end of the calendar year prior to the
twentieth anniversary of its execution and the Trust Agreement for Series 47
will terminate at the end of the calendar year prior to the fiftieth
anniversary of its execution. All of the Obligations in Series 46 are
intermediate-term debt instruments with maturities ranging from 2004 to 2005.
All of the Obligations in Series 47 are long-term debt instruments with
maturities ranging from 2019 to 2024. The dollar weighted average life of the
Obligations in each Trust are 9 years and 27 years, respectively.
Each Unit in Series 46 initially offered represents a 1/3,065 undivided
interest in such Trust. Each Unit in Series 47 initially offered represents a
1/9,209 undivided interest in such Trust. To the extent that any Units are
redeemed by the Trustee, the fractional undivided interest in each Trust
represented by each unredeemed Unit will increase, although the actual
interest in each Trust represented by such fraction will remain unchanged.
Units will remain outstanding until redeemed upon tender to the Trustee by
Unitholders, which may include the Sponsor or the Underwriters, or until the
termination of the Trust Agreement.
INVESTMENT OBJECTIVES AND PORTFOLIO SELECTION
The investment objective of Series 46 is to provide a high level of current
income consistent with safety of principal by investing in a professionally
selected portfolio principally consisting of intermediate-term corporate,
taxable municipal debt or government obligations issued after July 18, 1984.
The investment objective of Series 47 is to provide a high level of current
income consistent with safety of principal by investing in a professionally
selected portfolio principally consisting of long-term corporate, taxable
municipal debt or government obligations issued after July 18, 1984.
Insurance guaranteeing the timely payment, when due, of all principal and
interest on the Obligations in each Trust has been obtained by such Trust from
either AMBAC Indemnity Corporation ("AMBAC Indemnity"), Capital Markets
Assurance Corporation ("CapMAC") or a combination thereof (collectively, the
"Portfolio Insurers"), or by the issuer of such Obligations, by a prior owner
of such Obligations, or by the Sponsor prior to the deposit of such
Obligations in such Trust from (1) AMBAC Indemnity or one of its subsidiaries,
American Municipal Bond Assurance Corporation ("AMBAC") or MGIC Indemnity
Corporation ("MGIC Indemnity"), (2) Financial Guaranty Insurance Company
("Financial Guaranty"), (3) MBIA Insurance Corporation ("MBIA"), (4) Bond
Investors Guaranty Insurance Company ("BIG"), (5) National Union Fire
Insurance Company of Pittsburgh, PA ("National Union"), (6) Capital Guaranty
Insurance Company ("Capital Guaranty"), (7) CapMAC and/or (8) Financial
Security Assurance Inc. ("Financial Security"or "FSA") (collectively, the
"Preinsured Obligation Insurers") (see "Insurance on the Obligations"). The
Portfolio Insurers and the Preinsured Obligation Insurers are collectively
referred to herein as the "Insurers". Insurance obtained by a Trust is
effective only while the Obligations thus insured are held in such Trust. The
Trustee has the right to acquire permanent insurance from a Portfolio Insurer
with respect to each Obligation insured by the respective Portfolio Insurer
under a Trust portfolio insurance policy. Insurance relating to Obligations
insured by the issuer, by a prior owner of such Obligations or by the Sponsor
is effective so long as such Obligations are outstanding. Obligations insured
under a policy of insurance obtained by the issuer, by a prior owner of such
Bonds or by the Sponsor from one of the Preinsured Obligation Insurers (the
"Preinsured Obligations") are not additionally insured by the Trusts. No
representation is made as to any insurer's ability to meet its commitments.
Neither the Public Offering Price nor any evaluation of Units for purposes of
repurchases or redemptions reflects any element of value for the insurance
obtained by each Trust unless Obligations are in default in payment of
principal or interest or in significant risk of such default. See "Public
Offering--Offering Price".
In order for Obligations to be eligible for insurance, they must have credit
characteristics which would qualify them for at least the Standard & Poor's
Ratings Group rating of "BBB-"or at least the Moody's Investors Service, Inc.
rating of "Baa", which in brief represent the lowest ratings for securities of
investment grade (see "Description of Obligation Ratings"). Insurance is not a
substitute for the basic credit of an issuer, but supplements the existing
credit and provides additional security therefor. If an issue is accepted for
insurance, a non-cancellable policy for the prompt payment of interest and
principal on the Obligations, when due, is issued by the insurer. A monthly
premium is paid by each Trust for the insurance obtained by it. The Trustee
has the right to obtain permanent insurance from a Portfolio Insurer in
connection with the sale of an Obligation insured under the insurance policy
obtained from the respective Portfolio Insurer by a Trust upon the payment of
a single predetermined insurance premium from the proceeds of the sale of such
Obligation. Accordingly, any Obligation in a Trust is eligible to be sold on
an insured basis. All Obligations insured by a Portfolio Insurer or by a
Preinsured Obligation Insurer receive a "AAA"rating by Standard & Poor's
Ratings Group. Standard & Poor's Ratings Group describes securities it rates
"AAA"as having "the highest rating assigned by Standard & Poor's to a debt
obligation. Capacity to pay interest and repay principal is extremely
strong."See "Insurance on the Obligations".
In selecting Obligations for the Trusts, the following facts, among others,
were considered by the Sponsor: (a) the prices of the Obligations relative to
other obligations of comparable quality and maturity, (b) the diversification
of Obligations as to purpose of issue and location of issuer, (c) the
availability and cost of insurance for the prompt payment of principal and
interest on the Obligations and (d) whether the debt obligations were issued
after July 18, 1984.
TRUST PORTFOLIOS
Portfolios. Series 46 (Intermediate) consists of 9 issues, three of which have
been issued by public utilities, four of which have been issued by
municipalities, one of which has been issued by a Canadian municipality and
one of which is a U.S. Treasury bond. Series 47 consists of 11 issues, six of
which have been issued by public utilities, three of which have been issued by
municipalities, one of which has been issued by a Canadian municipality and
one of which is a U.S. Treasury bond.
Risk Factors. Public Utility Issues. Approximately 37% and 53% of the
aggregate principal amount of the Obligations in Series 46 and Series 47,
respectively, are obligations of public utility issuers. In view of this an
investment in the Trusts should be made with an understanding of the
characteristics of such issuers and the risks which such an investment may
entail. General problems of such issuers would include the difficulty in
financing large construction programs in an inflationary period, the
limitations on operations and increased costs and delays attributable to
environmental considerations, the difficulty of the capital market in
absorbing utility debt, the difficulty in obtaining fuel at reasonable prices
and the effect of energy conservation. All of such issuers have been
experiencing certain of these problems in varying degrees. In addition,
Federal, state and municipal governmental authorities may from time to time
review existing, and impose additional, regulations governing the licensing,
construction and operation of nuclear power plants, which may adversely affect
the ability of the issuers of certain of the Obligations in the portfolios to
make payments of principal and/or interest on such Obligations.
Utilities are generally subject to extensive regulation by state utility
commissions which, for example, establish the rates which may be charged and
the appropriate rate of return on an approved asset base, which must be
approved by the state commissions. Certain utilities have had difficulty from
time to time in persuading regulators, who are subject to political pressures,
to grant rate increases necessary to maintain an adequate return on investment
and voters in many states have the ability to impose limits on rate
adjustments (for example, by initiative or referendum). Any unexpected
limitations could negatively affect the profitability of utilities whose
budgets are planned far in advance. Also, changes in certain accounting
standards currently under consideration by the Financial Accounting Standards
Board could cause significant write-downs of assets and reductions in earnings
for many investor-owned utilities. In addition, gas pipeline and distribution
companies have had difficulties in adjusting to short and surplus energy
supplies, enforcing or being required to comply with long-term contracts and
avoiding litigation from their customers, on the one hand, or suppliers, on
the other.
Certain of the issuers of the Obligations in the Trusts may own or operate
nuclear generating facilities. Governmental authorities may from time to time
review existing, and impose additional, requirements governing the licensing,
construction and operation of nuclear power plants. Nuclear generating
projects in the electric utility industry have experienced substantial cost
increases, construction delays and licensing difficulties. These have been
caused by various factors, including inflation, high financing costs, required
design changes and rework, allegedly faulty construction, objections by groups
and governmental officials, limits on the ability to finance, reduced
forecasts of energy requirements and economic conditions. This experience
indicates that the risk of significant cost increases, delays and licensing
difficulties remains present through to completion and achievement of
commercial operation of any nuclear project. Also, nuclear generating units in
service have experienced unplanned outages or extensions of scheduled outages
due to equipment problems or new regulatory requirements sometimes followed by
a significant delay in obtaining regulatory approval to return to service. A
major accident at a nuclear plant anywhere, such as the accident at a plant in
Chernobyl, could cause the imposition of limits or prohibitions on the
operation, construction or licensing of nuclear units in the United States.
Other general problems of the gas, water, telephone and electric utility
industry (including state and local joint action power agencies) include
difficulty in obtaining timely and adequate rate increases, difficulty in
financing large construction programs to provide new or replacement facilities
during an inflationary period, rising costs of rail transportation to
transport fossil fuels, the uncertainty of transmission service costs for both
interstate and intrastate transactions, changes in tax laws which adversely
affect a utility's ability to operate profitably, increased competition in
service costs, recent reductions in estimates of future demand for electricity
and gas in certain areas of the country, restrictions on operations and
increased cost and delays attributable to environmental considerations,
uncertain availability and increased cost of capital, unavailability of fuel
for electric generation at reasonable prices, including the steady rise in
fuel costs and the costs associated with conversion to alternate fuel sources
such as coal, availability and cost of natural gas for resale, technical and
cost factors and other problems associated with construction, licensing,
regulation and operation of nuclear facilities for electric generation,
including among other considerations the problems associated with the use of
radioactive materials and the disposal of radioactive wastes, and the effects
of energy conservation. Each of the problems referred to could adversely
affect the ability of the issuers of any utility bonds in the Trusts to make
payments due on these bonds.
In view of the pending investigations and the other uncertainties discussed
above, there can be no assurance that any company's share of the full cost of
nuclear units under construction ultimately will be recovered in rates or of
the extent to which a company could earn an adequate return on its investment
in such units. The likelihood of a significantly adverse event occurring in
any of the areas of concern described above varies, as does the potential
severity of any adverse impact. It should be recognized, however, that one or
more of such adverse events could occur and individually or collectively could
have a material adverse impact on the financial condition or the results of
operations of a company's ability to make interest and principal payments on
its outstanding debt.
Taxable Municipal Issues. Approximately 60% and 44% of the aggregate principal
amount of the Obligations in Series 46 and Series 47, respectively, may be
taxable obligations of municipal issuers. In view of this an investment in the
Trusts should be made with an understanding of the characteristics of such
issuers and the risks which such an investment may entail. Obligations of
municipal issuers can be either general obligations of a government entity
that are backed by the taxing power of such entity or revenue bonds payable
from the income of a specific project or authority and are not supported by
the issuer's power to levy taxes.
General obligation bonds are secured by the issuer's pledge of its faith,
credit and taxing power for the payment of principal and interest. However,
the taxing power of any governmental entity may be limited by provisions of
state constitutions or laws and an entity's credit will depend on many
factors, including an erosion of the tax base due to population declines,
natural disasters, declines in the state's industrial base or inability to
attract new industries, economic limits on the ability to tax without eroding
the tax base and the extent to which the entity relies on Federal or state
aid, access to capital markets or other factors beyond the entity's control.
As a result of the current recession's adverse impact upon both their revenues
and expenditures, as well as other factors, many state and local governments
are confronting deficits and potential deficits which are the most severe in
recent years. Many issuers are facing highly difficult choices about
significant tax increases or spending reductions in order to restore budgetary
balance. Failure to implement these actions on a timely basis could force the
issuers to depend upon market access to finance deficits or cash flow needs.
In addition, certain of the Obligations in the Trusts may be obligations of
issuers who rely in whole or in part on ad valorem real property taxes as a
source of revenue. Recently, certain proposals, in the form of state
legislative proposals or voter initiatives, to limit ad valorem real property
taxes have been introduced in various states.
Revenue bonds, on the other hand, are payable only from revenues derived from
a particular facility or class of facilities, or, in some cases, from the
proceeds of a special excise tax or other special revenue source. The ability
of an issuer of revenue bonds to make payments of principal and/or interest on
such bonds is primarily dependent upon the success or failure of the facility
or class of facilities involved or whether the revenues received from an
excise tax or other special revenue source are sufficient to meet obligations.
Typically, interest income received from municipal issues is exempt from
Federal income taxation under Section 103 of the Internal Revenue Code of
1986, as amended (the "Code") and therefore is not includible in the gross
income of the owners thereof. However, interest income received for taxable
municipal obligations is not exempt from Federal income taxation under Section
103 of the Code. Thus, owners of taxable municipal obligations generally must
include interest on such obligations in gross income for Federal income tax
purposes and treat such interest as ordinary income.
Certain of the Obligations in the Trusts may be obligations which are payable
from and secured by revenues derived from the ownership and operation of
facilities such as airports, bridges, turnpikes, port authorities, convention
centers and arenas. In view of this an investment in such a Trust should be
made with an understanding of the characteristics of such issuers and the
risks which such an investment may entail. The major portion of an airport's
gross operating income is generally derived from fees received from signatory
airlines pursuant to use agreements which consist of annual payments for
leases, occupancy of certain terminal space and service fees. Airport
operating income may therefore be affected by the ability of the airlines to
meet their obligations under the use agreements. The air transport industry is
experiencing significant variations in earnings and traffic, due to increased
competition, excess capacity, increased costs, deregulation, traffic
constraints and other factors, and several airlines are experiencing severe
financial difficulties. The Sponsor cannot predict what effect these industry
conditions may have on airport revenues which are dependent for payment on the
financial condition of the airlines and their usage of the particular airport
facility. Similarly, payment on Bonds related to other facilities is dependent
on revenues from the projects, such as user fees from ports, tolls on
turnpikes and bridges and rents from buildings. Therefore, payment may be
adversely affected by reduction in revenues due to such factors as increased
cost of maintenance, decreased use of a facility, lower cost of alternative
modes of transportation, scarcity of fuel and reduction or loss of rents.
Certain of the Obligations in the Trusts may be health care revenue bonds. In
view of this an investment in such a Trust should be made with an
understanding of the characteristics of such issuers and the risks which such
an investment may entail. Ratings of bonds issued for health care facilities
are often based on feasibility studies that contain projections of occupancy
levels, revenues and expenses. A facility's gross receipts and net income
available for debt service may be affected by future events and conditions
including, among other things, demand for services and the ability of the
facility to provide the services required, physicians' confidence in the
facility, management capabilities, competition with other health care
facilities, efforts by insurers and governmental agencies to limit rates,
legislation establishing state rate-setting agencies, expenses, the cost and
possible unavailability of malpractice insurance, the funding of Medicare,
Medicaid and other similar third party payor programs, government regulation
and the termination or restriction of governmental financial assistance,
including that associated with Medicare, Medicaid and other similar third
party payor programs. Pursuant to recent Federal legislation, Medicare
reimbursements are currently calculated on a prospective basis utilizing a
single nationwide schedule of rates. Prior to such legislation Medicare
reimbursements were based on the actual costs incurred by the health facility.
The current legislation may adversely affect reimbursements to hospitals and
other facilities for services provided under the Medicare program. Such
adverse changes also may adversely affect the ratings of Securities held in
the portfolios of the Trust; however, because of the insurance obtained by the
Trust, the "AAA"rating of the Units of each of the Trust would not be
affected.
Approximately 3% and 3% of the Obligations in Series 46 and Series 47,
respectively, are "zero coupon"U.S. Treasury bonds. See footnote (6) in "Notes
to Portfolios". Zero coupon bonds are purchased at a deep discount because the
buyer receives only the right to receive a final payment at the maturity of
the bond and does not receive any periodic interest payments. The effect of
owning deep discount bonds which do not make current interest payments (such
as the zero coupon bonds) is that a fixed yield is earned not only on the
original investment but also, in effect, on all discount earned during the
life of such income on such obligation at a rate as high as the implicit yield
on the discount obligation, but at the same time eliminates the holder's
ability to reinvest at higher rates in the future. For this reason, zero
coupon bonds are subject to substantially greater price fluctuations during
periods of changing market interest rates than are securities of comparable
quality which pay interest.
Replacement Obligations. Because certain of the Obligations in the Trusts may
from time to time under certain circumstances be sold or redeemed or will
mature in accordance with their terms and because the proceeds from such
events will be distributed to Unitholders and will not be reinvested, no
assurance can be given that each Trust will retain for any length of time its
present size and composition. Neither the Sponsor nor the Trustee shall be
liable in any way for any default, failure or defect in any Obligation. In the
event of a failure to deliver any Obligation that has been purchased for each
Trust under a contract, including those securities purchased on a "when, as
and if issued"basis ("Failed Obligations"), the Sponsor is authorized under
the Trust Agreement to direct the Trustee to acquire other securities
("Replacement Obligations") to make up the original corpus of the affected
Trust.
The Replacement Obligations must be purchased within 20 days after delivery of
the notice of the failed contract and the purchase price (exclusive of accrued
interest) may not exceed the amount of funds reserved for the purchase of the
Failed Obligations. The Replacement Obligations shall (i) in the case of
Series 46, be intermediate-term corporate or taxable municipal bonds,
debentures, notes or other straight debt obligations (whether secured or
unsecured and whether senior or subordinated) without equity or other
conversion features, with fixed maturity dates substantially the same as those
of the Failed Obligations having no warrants or subscription privileges
attached, and in the case of Series 47, be long-term corporate or taxable
municipal bonds, debentures, notes or other straight debt obligations (whether
secured or unsecured and whether senior or subordinated) without equity or
other conversion features, with fixed maturity dates substantially the same as
those of the Failed Obligations having no warrants or subscription privileges
attached; (ii) be payable in United States currency; (iii) not be when, as and
if issued obligations or restricted securities; (iv) be issued after July 18,
1984 if interest thereon is United States source income; (v) be issued or
guaranteed by an issuer subject to or exempt from the reporting requirements
under Section 13 or 15(d) of the Securities Exchange Act of 1934 (or similar
provisions of law) or in effect guaranteed, directly or indirectly, by means
of a lease agreement, agreement to buy securities, services or products, or
other similar commitment of the credit of such an issuer to the payment of the
substitute Obligations; (vi) not cause the Units of the Trusts to cease to be
rated AAA by Standard & Poor's Ratings Group; and (vii) be eligible for (and
when acquired be insured under) the insurance obtained by the Trust. Whenever
a Replacement Obligation has been acquired for either Trust, the Trustee
shall, within five days thereafter, notify all Unitholders of such Trust of
the acquisition of the Replacement Obligation and shall, on the next monthly
distribution date which is more than 30 days thereafter, make a pro rata
distribution of the amount, if any, by which the cost to the affected Trust of
the Failed Obligation exceeded the cost of the Replacement Obligation plus
accrued interest. Once the original corpus of a Trust is acquired, the Trustee
will have no power to vary the investment of the Trust; i.e., the Trust will
have no managerial power to take advantage of market variations to improve a
Unitholder's investment.
If the right of limited substitution described in the preceding paragraph
shall not be utilized to acquire Replacement Obligations in the event of a
failed contract, the Sponsor will refund the sales charge attributable to such
Failed Obligations to all Unitholders of the affected Trust and distribute the
principal and accrued interest (at the coupon rate of such Failed Obligations
to the date the Failed Obligations are removed from the Trust) attributable to
such Failed Obligations not more than 30 days after such removal or such
earlier time as the Trustee in its sole discretion deems to be in the interest
of the Unitholders. In the event a Replacement Obligation should not be
acquired by a Trust, the Estimated Net Annual Interest Income per Unit for the
Trust would be reduced and the Estimated Current Return and the Estimated
Long-Term Return thereon might be lowered. In addition, Unitholders should be
aware that they may not be able at the time of receipt of such principal to
reinvest such proceeds in other securities at a yield equal to or in excess of
the yield which such proceeds were earning to Unitholders in the affected
Trust.
Redemption of Obligations. Certain of the Obligations in the Trusts are
subject to redemption prior to their stated maturity date pursuant to sinking
fund provisions, call provisions or extraordinary optional or mandatory
redemption provisions or otherwise. A sinking fund is a reserve fund
accumulated over a period of time for retirement of debt. A callable debt
obligation is one which is subject to redemption or refunding prior to
maturity at the option of the issuer. A refunding is a method by which a debt
obligation is redeemed, at or before maturity, by the proceeds of a new debt
obligation. In general, call provisions are more likely to be exercised when
the offering side valuation is at a premium over par than when it is at a
discount from par. The exercise of redemption or call provisions will (except
to the extent the proceeds of the called Obligations are used to pay for Unit
redemptions) result in the distribution of principal and may result in a
reduction in the amount of subsequent interest distributions and it may also
offset the current return on Units of the Trust involved. The portfolio
contains a listing of the sinking fund and call provisions, if any, with
respect to each of the Obligations. Extraordinary optional redemptions and
mandatory redemptions result from the happening of certain events. Generally,
events that may permit the extraordinary optional redemption of Obligations or
may require the mandatory redemption of Obligations include, among others: the
substantial damage or destruction by fire or other casualty of the project for
which the proceeds of the Obligations were used; an exercise by a local, state
or Federal governmental unit of its power of eminent domain to take all or
substantially all of the project for which the proceeds of the Obligations
were used; changes in the economic availability of raw materials, operating
supplies or facilities or technological or other changes which render the
operation of the project for which the proceeds of the Obligations were used
uneconomical; changes in law or an administrative or judicial decree which
renders the performance of the agreement under which the proceeds of the
Obligations were made available to finance the project impossible or which
creates unreasonable burdens or which imposes excessive liabilities, such as
taxes, not imposed on the date the Obligations are issued on the issuer of the
Obligations or the user of the proceeds of the Obligations; an administrative
or judicial decree which requires the cessation of a substantial part of the
operations of the project financed with the proceeds of the Obligations; an
overestimate of the costs of the project to be financed with the proceeds of
the Obligations resulting in excess proceeds of the Obligations which may be
applied to redeem Obligations; or an underestimate of a source of funds
securing the Obligations resulting in excess funds which may be applied to
redeem Obligations. The Sponsor is unable to predict all of the circumstances
which may result in such redemption of an issue of Obligations. See
"Portfolios"for each Trust and footnote (3) in "Notes to Portfolios".
ESTIMATED CURRENT RETURN AND ESTIMATED LONG-TERM RETURN
As of the opening of business on the Date of Deposit, the Estimated Current
Returns and the Estimated Long-Term Returns under the monthly and semi-annual
distribution plans were those indicated in the "Summary of Essential Financial
Information"for each Trust. The Estimated Current Returns are calculated by
dividing the Estimated Net Annual Interest Income per Unit by the Public
Offering Price. The Estimated Net Annual Interest Income per Unit will vary
with changes in fees and expenses of the Trustee and the Evaluator and with
the principal prepayment, redemption, maturity, exchange or sale of
Obligations while the Public Offering Price will vary with changes in the
offering price of the underlying Obligations; therefore, there is no assurance
that the present Estimated Current Returns will be realized in the future.
Estimated Long-Term Returns are calculated using a formula which (1) takes
into consideration, and determines and factors in the relative weightings of,
the market values, yields (which takes into account the amortization of
premiums and the accretion of discounts) and estimated retirements of all the
Obligations in a Trust and (2) takes into account the expenses and sales
charge associated with each Trust Unit. Since the market values and estimated
retirements of the Obligations and the expenses of a Trust will change, there
is no assurance that the present Estimated Long-Term Returns will be realized
in the future. Estimated Current Returns and Estimated Long-Term Returns are
expected to differ because the calculation of Estimated Long-Term Returns
reflects the estimated date and amount of principal returned while Estimated
Current Returns calculations include only Net Annual Interest Income and
Public Offering Price. These rates may not reflect the true return to
Unitholders which may be lower because of a possible delay in the first
payment to Unitholders.
In order to acquire certain of the Obligations contracted for by the Sponsor
for deposit in the Trusts, it may be necessary for the Sponsor or Trustee to
pay on the settlement dates for delivery of such Obligations amounts covering
accrued interest on such Obligations which exceed the amounts which will be
made available through cash furnished by the Sponsor on the Date of Deposit,
which amount of cash may exceed the interest which would accrue to the First
Settlement Date. The Trustee has agreed to pay for any amounts necessary to
cover any such excess and will be reimbursed therefor, without interest, when
funds become available from interest payments on the particular Obligations
with respect to which such payments may have been made.
TRUST OPERATING EXPENSES
Initial Costs. All costs and expenses incurred in creating and establishing
the Trusts, including the cost of the initial preparation, printing and
execution of the Trust Agreement and the certificates, legal and accounting
expenses, advertising and selling expenses, expenses of the Trustee, initial
fees for evaluations and other out-of-pocket expenses have been borne by the
Sponsor at no cost to the Trusts.
Compensation of Sponsor and Evaluator. The Sponsor will not receive any fees
in connection with its activities relating to the Trusts. However, American
Portfolio Evaluation Services, a division of Van Kampen American Capital
Investment Advisory Corp., which is a wholly-owned subsidiary of the Sponsor
(the "Evaluator"), will receive an annual supervisory fee, which is not to
exceed the amount set forth under "Summary of Essential Financial
Information", for providing portfolio supervisory services for each Trust.
Such fee (which is based on the number of Units outstanding on January 1 of
each year) may exceed the actual costs of providing such supervisory services
for these Trusts, but at no time will the total amount received for portfolio
supervisory services rendered to Series 1 and subsequent series of Van Kampen
Merritt Insured Income Trust or its successor trusts (Van Kampen American
Capital Insured Income Trust) in any calendar year exceed the aggregate cost
to the Evaluator of supplying such services in such year. In addition, the
Evaluator shall receive an annual evaluation fee as indicated under "Summary
of Essential Financial Information"(which is based on the outstanding
principal amount of obligations on January 1 of each year) for regularly
evaluating the Trust's portfolio. Both of the foregoing fees may be increased
without approval of the Unitholders by amounts not exceeding proportionate
increases under the category "All Services Less Rent of Shelter"in the
Consumer Price Index published by the United States Department of Labor or, if
such category is no longer published, in a comparable category. The Sponsor
and the Underwriters will receive sales commissions and may realize other
profits (or losses) in connection with the sale of Units and the deposit of
the Obligations as described under "Public Offering-- Sponsor and Underwriter
Compensation".
Trustee's Fee. For its services, the Trustee will receive a fee based on the
aggregate outstanding principal amount of Obligations in each Trust as of the
opening of business on January 2 and July 2 of each year as set forth under
"Summary of Essential Financial Information."Such fee will be computed at $.51
and $.91 per $1,000 principal amount, respectively, for those portions of each
Trust representing semi-annual and monthly distribution plans. Based on the
size of each Trust on the Date of Deposit and assuming all Unitholders had
chosen the semi-annual distribution plan, the Trustee's estimated annual fee
for ordinary recurring services would initially amount to $1,563 and $4,595
for Series 46 and Series 47, respectively. Assuming in the alternative that
all Unitholders had elected the monthly distribution plan, such fee would
initially amount to $2,789 and $8,199 for Series 46 and Series 47,
respectively. The Trustee's fees are payable monthly on or before the
fifteenth day of each month from the Interest Account to the extent funds are
available and then from the Principal Account. Such fees may be increased
without approval of the Unitholders by amounts not exceeding proportionate
increases under the category "All Services Less Rent of Shelter"in the
Consumer Price Index published by the United States Department of Labor or, if
such category is no longer published, in a comparable category. Since the
Trustee has the use of the funds being held in the Principal and Interest
Accounts for future distributions, payment of expenses and redemptions and
since such Accounts are non-interest bearing to Unitholders, the Trustee
benefits thereby. Part of the Trustee's compensation for its services to each
Trust is expected to result from the use of these funds. For a discussion of
the services rendered by the Trustee pursuant to its obligations under the
Trust Agreement, see "Rights of Unitholders--Reports Provided"and "Trust
Administration".
Insurance Premiums. The cost of the portfolio insurance obtained by each Trust
is $871 and $8,955 per annum for Series 46 and Series 47, respectively, so
long as each Trust retains the Obligations. Premiums, which are Trust
expenses, are payable monthly by the Trustee on behalf of each Trust. As
Obligations in the portfolios are redeemed by their respective issuers or are
sold by the Trustee, the amount of the premium will be reduced in respect of
those Obligations no longer owned by and held in such Trust. If the Trustee
exercises the right to obtain Permanent Insurance, the premium payable for
such Permanent Insurance will be paid solely from the proceeds of the sale of
the related Obligations. The premiums for such Permanent Insurance with
respect to each Obligation will decline over the life of the Obligation.
Miscellaneous Expenses. The following additional charges are or may be
incurred by the Trusts: (a) fees of the Trustee for extraordinary services,
(b) expenses of the Trustee (including legal and auditing expenses) and of
counsel designated by the Sponsor, (c) various governmental charges, (d)
expenses and costs of any action taken by the Trustee to protect the Trusts
and the rights and interests of Unitholders, (e) indemnification of the
Trustee for any loss, liability or expenses incurred by it in the
administration of the Trusts without negligence, bad faith or willful
misconduct on its part, (f) any special custodial fees payable in connection
with the sale of any of the bonds in a Trust, (g) expenditures incurred in
contacting Unitholders upon termination of the Trusts and (h) costs incurred
to reimburse the Trustee for advancing funds to the Trusts to meet scheduled
distributions (which costs may be adjusted periodically in response to
fluctuations in short-term interest rates).
The fees and expenses set forth herein are payable out of the Trusts. When
such fees and expenses are paid by or owing to the Trustee, they are secured
by a lien on the portfolio or portfolios of the applicable Trust or Trusts. If
the balances in the Interest and Principal Accounts are insufficient to
provide for amounts payable by the Trusts, the Trustee has the power to sell
Obligations to pay such amounts.
INSURANCE ON THE OBLIGATIONS
Insurance has been obtained by each Trust guaranteeing prompt payment of
interest and principal, when due (as more fully described below), in respect
of all the Obligations in the Trusts (except for issues for which insurance
has been obtained by the issuer of the Obligations). See "Investment
Objectives and Portfolio Selection". Each insurance policy obtained by each
Trust is non-cancellable and will continue in force so long as such Trust is
in existence, the Portfolio Insurer involved is still in business and the
Obligations described in such policy continue to be held by such Trust (see
"Portfolios"). Non-payment of premiums on a policy obtained by the Trust will
not result in the cancellation of insurance but will force the Portfolio
Insurer involved to take action against the Trustee to recover premium
payments due it. The Trustee in turn will be entitled to recover such payments
from the Trust. Premium rates for each issue of Obligations protected by the
policy obtained by the Trust are fixed for the life of the Trust. The premium
for any insurance policy or policies obtained by an issuer of Obligations has
been paid in advance by such issuer and any such policy or policies are
non-cancellable and will continue in force so long as the Obligations so
insured are outstanding and the Portfolio Insurer involved remains in
business. If the provider of an original issuance insurance policy is unable
to meet its obligations under such policy or if the rating assigned to the
claims-paying ability of any such insurer deteriorates, the Portfolio Insurers
have no obligation to insure any issue adversely affected by either of the
above described events.
The aforementioned Trust insurance guarantees the timely payment of principal
and interest on the Obligations as they fall due. For the purposes of the
Portfolio Insurance, "when due"generally means the stated maturity date for
the payment of principal and interest. However, in the event (a) an issuer of
an Obligation defaults in the payment of principal or interest on such
Obligation, (b) such issuer enters into a bankruptcy proceeding or (c) the
maturity of such Obligation is accelerated, the Portfolio Insurer involved has
the option, in its sole discretion, for a limited period of time after
receiving notice of the earliest to occur of such a default, bankruptcy
proceeding or acceleration to pay the outstanding principal amount of such
Obligation plus accrued interest to the date of such payment and thereby
retire the Obligation from a Trust prior to such Obligation's stated maturity
date. The insurance does not guarantee the market value of the Obligations or
the value of the Units. Insurance obtained by a Trust is only effective as to
Obligations owned by and held in such Trust. In the event of a sale of any
such Obligation by the Trustee, such insurance terminates as to such
Obligation on the date of sale.
Pursuant to an irrevocable commitment of the Portfolio Insurers, the Trustee,
upon the sale of an Obligation covered under a portfolio insurance policy
obtained by each Trust, has the right to obtain permanent insurance with
respect to such Obligation (i.e., insurance to maturity of the Obligations
regardless of the identity of the holder thereof) (the "Permanent Insurance")
upon the payment of a single predetermined insurance premium and any expenses
related thereto from the proceeds of the sale of such Obligation. Accordingly,
any Obligation in the Trust is eligible to be sold on an insured basis. It is
expected that the Trustee would exercise the right to obtain Permanent
Insurance only if upon such exercise the Trust would receive net proceeds
(sale of Obligation proceeds less the insurance premium and related expenses
attributable to the Permanent Insurance) from such sale in excess of the sale
proceeds if such Obligations were sold on an uninsured basis.The insurance
premium with respect to each Obligation eligible for Permanent Insurance would
be determined based upon the insurability of each Obligation as of the Date of
Deposit and would not be increased or decreased for any change in the
creditworthiness of each Obligation.
The Sponsor believes that the Permanent Insurance option provides an advantage
to a Trust in that each Obligation insured by a Trust insurance policy may be
sold out of the Trust with the benefits of the insurance attaching thereto.
Thus, the value of the insurance, if any, at the time of sale, can be realized
in the market value of the Obligation so sold (which is not the case in
connection with any value attributable to such Trust's portfolio insurance).
See "Public Offering--Offering Price". Because any such insurance value may be
realized in the market value of the Obligation upon the sale thereof upon
exercise of the Permanent Insurance option, the Sponsor anticipates that (a)
in the event the Trust were to be comprised of a substantial percentage of
Obligations in default or significant risk of default, it is much less likely
that the Trust would need at some point in time to seek a suspension of
redemptions of Units than if the Trust were to have no such option (see
"Rights of Unitholders--Right of Redemption") and (b) at the time of
termination of the Trust, if the Trust were holding defaulted Obligations or
Obligations in significant risk of default, the Trust would not need to hold
such Obligations until their respective maturities in order to realize the
benefits of the Trust's portfolio insurance (see "Trust
Administration--Amendment or Termination").
Except as indicated below, insurance obtained by a Trust has no effect on the
price or redemption value of Units. It is the present intention of the
Evaluator to attribute a value for such insurance (including the right to
obtain Permanent Insurance) for the purpose of computing the price or
redemption value of Units if the Obligations covered by such insurance are in
default in payment of principal or interest or in significant risk of such
default. The value of the insurance will be equal to the difference between
(i) the market value of an Obligation which is in default in payment of
principal or interest or in significant risk of such default assuming the
exercise of the right to obtain Permanent Insurance (less the insurance
premium and related expenses attributable to the purchase of Permanent
Insurance) and (ii) the market value of such Obligations not covered by
Permanent Insurance. See "Public Offering--Offering Price"herein for a more
complete description of the Trust's method of valuing defaulted Obligations
which have a significant risk of default.
The portfolio insurance policies obtained by each Trust were issued by either
AMBAC Indemnity or CapMAC. The other policy (or commitment therefor) obtained
by an Obligation issuer was issued by AMBAC Indemnity. See "Investment
Objectives and Portfolio Selection".
CapMAC is a New York-domiciled monoline stock insurance company which engages
only in the business of financial guarantee and surety insurance. CapMAC is
licensed in 50 states in addition to the District of Columbia, the
Commonwealth of Puerto Rico and the territory of Guam. CapMAC insures
structured asset-backed, corporate, municipal and other financial obligations
in the U.S. and international capital markets. CapMAC also provides financial
guarantee reinsurance for structured asset-backed, corporate, municipal and
other financial obligations written by other major insurance companies.
CapMAC's claims-paying ability is rated "Aaa"by Moody's Investors Service,
Inc. ("Moody's"), "AAA"by Standard & Poor's Ratings Group ("Standard &
Poor's"), "AAA"by Duff & Phelps Credit Rating Co. ("Duff & Phelps") and
"AAA"by Nippon Investors Service Inc. Such ratings reflect only the views of
the respective rating agencies, are not recommendations to buy, sell or hold
securities and are subject to revision or withdrawal at any time by such
rating agencies.
CapMAC is wholly owned by CapMAC Holdings Inc. ("Holdings"), a company that is
owned by a group of institutional and other investors, including CapMAC's
management and employees. Neither Holdings nor any of its stockholders is
obligated to pay any claims under any policy issued by CapMAC or any debts of
CapMAC or to make additional capital contributions.
CapMAC is regulated by the Superintendent of Insurance of the State of New
York. In addition, CapMAC is subject to regulation by the insurance
departments of the other jurisdictions in which it is licensed. Such insurance
laws regulate, among other things, the amount of net exposure per risk that
CapMAC may retain, capital transfers, dividends, investment of assets, changes
in control, transactions with affiliates and consolidations and acquisitions.
CapMAC is subject to periodic regulatory examinations by the same regulatory
authorities.
CapMAC's obligations under the Policy(s) may be reinsured. Such reinsurance
does not relieve CapMAC of any of its obligations under the Policy(s).
THE POLICY IS NOT COVERED BY THE PROPERTY/CASUALTY INSURANCE SECURITY FUND
SPECIFIED IN ARTICLE 76 OF THE NEW YORK INSURANCE LAW.
As at December 31, 1994 and 1993, CapMAC had qualified statutory capital
(which consists of policyholders' surplus and contingency reserve) of
approximately $170 million and $168 million, respectively, and had not
incurred any debt obligations. Article 69 of the New York State Insurance Law
requires CapMAC to establish and maintain the contingency reserve, which is
available to cover claims under policies issued by CapMAC.
Copies of CapMAC's financial statements prepared in accordance with statutory
accounting standards, which differ from generally accepted accounting
principles, and filed with the Insurance Department of the State of New York
are available upon request. CapMAC is located at 885 Third Avenue, New York,
New York 10022, and its telephone number is (212) 755-1155.
AMBAC Indemnity Corporation ("AMBAC Indemnity") is a Wisconsin-domiciled stock
insurance corporation regulated by the Office of the Commissioner of Insurance
of the State of Wisconsin and licensed to do business in 50 states, the
District of Columbia and the Commonwealth of Puerto Rico, with admitted assets
of approximately $1,988,000,000 (unaudited) and statutory capital of
approximately $1,148,000,000 (unaudited) as of March 31, 1994. Statutory
capital consists of AMBAC Indemnity's policyholders' surplus and statutory
contingency reserve. AMBAC Indemnity is a wholly owned subsidiary of AMBAC
Inc., a 100% publicly-held company. Moody's Investors Service, Inc. and
Standard & Poor's Ratings Group have both assigned a triple-A claims-paying
ability rating to AMBAC Indemnity.
Copies of its financial statements prepared in accordance with statutory
accounting standards are available from AMBAC Indemnity. The address of AMBAC
Indemnity's administrative offices and its telephone number are One State
Street Plaza, 17th Floor, New York, New York, 10004 and (212) 668-0340.
AMBAC Indemnity has entered into quota share reinsurance agreements under
which a percentage of the insurance underwritten pursuant to certain municipal
bond insurance programs of AMBAC Indemnity has been and will be assumed by a
number of foreign and domestic unaffiliated reinsurers.
MBIA Insurance Corporation ("MBIA") is the principal operating subsidiary of
MBIA Inc., a New York Stock Exchange listed company. MBIA Inc. is not
obligated to pay the debts of or claims against MBIA. MBIA is a limited
liability corporation rather than a several liability association. MBIA is
domiciled in the State of New York and licensed to do business in all fifty
states, the District of Columbia and the Commonwealth of Puerto Rico. As of
September 30, 1994 MBIA had admitted assets of $3.3 billion (unaudited), total
liabilities of $2.2 billion (unaudited), and total capital and surplus of $1.1
billion (unaudited) determined in accordance with statutory accounting
practices prescribed or permitted by insurance regulatory authorities. Copies
of MBIA's year end financial statements prepared in accordance with statutory
accounting practices are available from MBIA. The address of MBIA is 113 King
Street, Armonk, New York 10504.
Effective December 31, 1989, MBIA Inc. acquired Bond Investors Group, Inc. On
January 5, 1990, MBIA acquired all of the outstanding stock of Bond Investors
Group, Inc., the parent of Bond Investors Guaranty Insurance Company (BIG),
now known as MBIA Insurance Corp. of Illinois. Through a reinsurance
agreement, BIG has ceded all of its net insured risks, as well as its unearned
premium and contingency reserves, to MBIA and MBIA has reinsured BIG's net
outstanding exposure.
Moody's Investors Service, Inc. rates all bond issues insured by MBIA "Aaa"and
short-term loans "MIG 1,"both designated to be of the highest quality.
Standard & Poor's Ratings Group rates all new issues insured by MBIA
"AAA"Prime Grade.
The Moody's Investors Service, Inc. rating of MBIA should be evaluated
independently of the Standard & Poor's Ratings Group rating of MBIA. No
application has been made to any other rating agency in order to obtain
additional ratings on the Obligations. The ratings reflect the respective
rating agency's current assessment of the creditworthiness of MBIA and its
ability to pay claims on its policies of insurance. Any further explanation as
to the significance of the above ratings may be obtained only from the
applicable rating agency.
The above ratings are not recommendations to buy, sell or hold the Obligations
and such ratings may be subject to revision or withdrawal at any time by the
rating agencies. Any downward revision or withdrawal of either or both ratings
may have an adverse effect on the market price of the Obligations.
Financial Guaranty Insurance Company ("Financial Guaranty"or "FGIC") is a
wholly-owned subsidiary of FGIC Corporation (the "Corporation"), a Delaware
holding company. The Corporation is a wholly-owned subsidiary of General
Electric Capital Corporation ("GECC"). Neither the Corporation nor GECC is
obligated to pay the debts of or the claims against Financial Guaranty.
Financial Guaranty is domiciled in the State of New York and is subject to
regulation by the State of New York Insurance Department. As of December 31,
1994, the total capital and surplus of Financial Guaranty was approximately
$893,700,000. Copies of Financial Guaranty's financial statements, prepared on
the basis of statutory accounting principles, and the Corporation's financial
statements, prepared on the basis of generally accepted accounting principles,
may be obtained by writing to Financial Guaranty at 115 Broadway, New York,
New York 10006, Attention: Communications Department, telephone number: (212)
312-3000 or to the New York State Insurance Department at 160 West Broadway,
18th Floor, New York, New York 10013, Attention: Property Companies Bureau,
telephone number: (212) 621-0389.
In addition, Financial Guaranty is currently licensed to write insurance in
all 50 states and the District of Columbia.
Financial Security Assurance Inc. ("Financial Security"or "FSA") is a monoline
insurance company incorporated on March 16, 1984 under the laws of the State
of New York. The operations of Financial Security commenced on July 25, 1985,
and Financial Security received its New York State insurance license on
September 23, 1985. Financial Security and its two wholly owned subsidiaries
are licensed to engage in the financial guaranty insurance business in 49
states, the District of Columbia and Puerto Rico.
Financial Security and its subsidiaries are engaged exclusively in the
business of writing financial guaranty insurance, principally in respect of
asset-backed and other collateralized securities offered in domestic and
foreign markets. Financial Security and its subsidiaries also write financial
guaranty insurance in respect of municipal and other obligations and reinsure
financial guaranty insurance policies written by other leading insurance
companies. In general, financial guaranty insurance consists of the issuance
of a guaranty of scheduled payments of an issuer's securities, thereby
enhancing the credit rating of those securities, in consideration for payment
of a premium to the insurer.
Financial Security is approximately 91.6% owned by US WEST, Inc. and 8.4%
owned by The Tokio Marine and Fire Insurance Co., Ltd. ("Tokio Marine").
Neither US WEST, Inc. nor Tokio Marine is obligated to pay the debts of or the
claims against Financial Security. Financial Security is domiciled in the
State of New York and is subject to regulation by the State of New York
Insurance Department. As of March 31, 1993 the total policyholders' surplus
and contingency reserves and the total unearned premium reserve, respectively,
of Financial Security and its consolidated subsidiaries were, in accordance
with generally accepted accounting principles, approximately $479,110,000
(unaudited) and $220,078,000 (unaudited), and the total shareholders' equity
and the total unearned premium reserve, respectively, of Financial Security
and its consolidated subsidiaries were, in accordance with generally accepted
accounting principles, approximately $628,119,000 (unaudited) and $202,493,000
(unaudited). Copies of Financial Security's financial statements may be
obtained by writing to Financial Security at 350 Park Avenue, New York, New
York, 10022, Attention: Communications Department. Its telephone number is
(212) 826-0100.
Pursuant to an intercompany agreement, liabilities on financial guaranty
insurance written by Financial Security or either of its subsidiaries are
reinsured among such companies on an agreed-upon percentage substantially
proportional to their respective capital, surplus and reserves, subject to
applicable statutory risk limitations. In addition, Financial Security
reinsures a portion of its liabilities under certain of its financial guaranty
insurance policies with unaffiliated reinsurers under various quota share
treaties and on a transaction-by-transaction basis. Such reinsurance is
utilized by Financial Security as a risk management device and to comply with
certain statutory and rating agency requirements; it does not alter or limit
Financial Security's obligations under any financial guaranty insurance
policy.
Financial Security's claims-paying ability is rated "Aaa"by Moody's Investors
Service, Inc., and "AAA"by Standard & Poor's Ratings Group, Nippon Investors
Service Inc., Duff & Phelps Inc. and Australian Ratings Pty. Ltd. Such ratings
reflect only the views of the respective rating agencies, are not
recommendations to buy, sell or hold securities and are subject to revision or
withdrawal at any time by such rating agencies.
Capital Guaranty Insurance Company ("Capital Guaranty") is a "Aaa/AAA"rated
monoline stock insurance company incorporated in the State of Maryland, and is
a wholly owned subsidiary of Capital Guaranty Corporation, a Maryland
insurance holding company. Capital Guaranty Corporation is a publicly owned
company whose shares are traded on the New York Stock Exchange.
Capital Guaranty is authorized to provide insurance in all 50 states, the
District of Columbia, the Commonwealth of Puerto Rico, Guam and the U.S.
Virgin Islands. Capital Guaranty focuses on insuring municipal securities and
our policies guaranty the timely payment of principal and interest when due
for payment on new issue and secondary market issue municipal bond
transactions. Capital Guaranty's claims-paying ability is rated "Triple-A"by
both Moody's and Standard & Poor's.
As of December 31, 1994, Capital Guaranty had more than $15.7 billion in net
exposure outstanding (excluding defeased issues). The total statutory
policyholders' surplus and contingency reserve of Capital Guaranty was
$196,529,000, and the total admitted assets were $303,723,316 as reported to
the Insurance Department of the State of Maryland as of December 31, 1994.
Financial statements for Capital Guaranty Insurance Company, that have been
prepared in accordance with statutory insurance accounting standards, are
available upon request. The address of Capital Guaranty's headquarters and its
telephone number are Steuart Tower, 22nd Floor, One Market Plaza, San
Francisco, CA 94105-1413 and (415) 995-8000.
Because the Obligations are insured by CapMAC, MBIA or AMBAC Indemnity as to
the timely payment of principal and interest, when due (as more fully
described above), and on the basis of the various reinsurance agreements in
effect, Standard & Poor's Ratings Group has assigned to the Units of each
Trust its "AAA"investment rating. See "Investment Objectives and Portfolio
Selection". The obtaining of this rating by each Trust should not be construed
as an approval of the offering of the Units by Standard & Poor's Ratings Group
or as a guarantee of the market value of the Trusts or of the Units.
On the date of this Prospectus, the Estimated Current Return on the
Obligations in Series 46 and Series 47 portfolios were 6.50% and 7.08% based
on the monthly plan of distribution, after payment of the insurance premiums
payable by each Trust, while the Estimated Long-Term Return on the Obligations
in each Trust's portfolio were 6.55% and 7.07%, respectively. The Estimated
Current Return on an identical portfolio without the insurance obtained by the
Trusts would have been 6.53% and 7.17%, respectively, based on the monthly
distribution plan on such date, while the Estimated Long-Term Return on
identical portfolios without the insurance obtained by the Trusts would have
been 6.58% and 7.16%, respectively.
An objective of portfolio insurance obtained by the Trusts is to obtain a
higher yield on each Trust portfolio than would be available if all the
Obligations in such portfolio had Standard & Poor's Ratings Group "AAA"rating
and yet at the same time to have the protection of insurance of prompt payment
of interest and principal, when due (as more fully described above), on the
Obligations. There is, of course, no certainty that this result will be
achieved.
In the event of nonpayment of interest or principal, when due (as more fully
described above), in respect of an Obligation, the appropriate Insurer shall
make such payment within 30 days after it has been notified that such
nonpayment has occurred. The appropriate Insurer, as regards any payment it
may make, will succeed to the rights of the Trustee in respect thereof.
The information relating to the Insurers has been furnished by the respective
Insurers. The financial information with respect to the Insurers appears in
reports filed with state insurance regulatory authorities and is subject to
audit and review by such authorities. No representation is made herein as to
the accuracy or adequacy of such information or as to the absence of material
adverse changes in such information subsequent to the dates thereof.
TAX STATUS
For purposes of the following discussions and opinions, it is assumed that
interest on each of the Obligations (including the taxable municipal bonds, if
any) is included in gross income for Federal income tax purposes. In the
opinion of Chapman and Cutler, special counsel for the Sponsor, under existing
law:
Each Trust is not an association taxable as a corporation for United States
Federal income tax purposes.
Each Unitholder will be considered the owner of a pro rata portion of each of
a Trust's assets for Federal income tax purposes under Subpart E, Subchapter J
of Chapter 1 of the Internal Revenue Code of 1986 (the "Code"). Each
Unitholder will be considered to have received his pro rata share of income
derived from each such asset when such income is received by each Trust. Each
Unitholder will also be required to include in taxable income for Federal
income tax purposes, original issue discount with respect to his interest in
any Obligations held by a Trust at the same time and in the same manner as
though the Unitholder were the direct owner of such interest.
Each Unitholder will have a taxable event when an Obligation of a Trust is
disposed of (whether by sale, exchange, redemption, or payment at maturity) or
when the Unitholder redeems or sells his Units. The cost of the Units to a
Unitholder on the date such Units are purchased is allocated among the
Obligations held in a Trust (in accordance with the proportion of the fair
market values of such Obligations) in order to determine his tax basis for his
pro rata portion in each Obligation. Unitholders must reduce the tax basis of
their Units for their share of accrued interest received, if any, on
Obligations delivered after the date the Unitholders pay for their Units and,
consequently, such Unitholders may have an increase in taxable gain or
reduction in capital loss upon the disposition of such Units. Gain or loss
upon the sale or redemption of Units is measured by comparing the proceeds of
such sale or redemption with the adjusted basis of the Units. If the Trustee
disposes of Obligations (whether by sale, exchange, payment on majority,
redemption or otherwise), gain or loss is recognized to the Unitholder. The
amount of any such gain or loss is measured by comparing the Unitholder's pro
rata share of the total proceeds from such disposition with his basis for his
fractional interest in the asset disposed of. The basis of each Unit and of
each Obligation which was issued with original issue discount (including the
Treasury Bonds) must be increased by the amount of accrued original issue
discount and the basis of each Unit and of each Obligation which was purchased
by a Trust at a premium must be reduced by the annual amortization of bond
premium which the Unitholder has properly elected to amortize under Section
171 of the Code. The tax cost reduction requirements of the Code relating to
amortization of bond premium may, under some circumstances, result in the
Unitholder realizing a taxable gain when his Units are sold or redeemed for an
amount equal to or less than his original cost. The Treasury Bonds held by a
Trust are treated as bonds that were originally issued at an original issue
discount provided, pursuant to a Treasury Regulation (the "Regulation") issued
on December 28, 1992, that the amount of original issue discount determined
under Section 1286 of the Code is not less than a "de minimis"amount as
determined thereunder (as discussed below under "Original Issue Discount").
Because the Treasury Bonds represent interests in "stripped"bonds, a
Unitholder's initial cost for his pro rata portion of each Treasury Bond held
by a Trust (determined at the time he acquires his Units, in the manner
described above) shall be treated as its "purchase price"by the Unitholder.
Original issue discount is effectively treated as interest for Federal income
tax purposes, and the amount of original issue discount in this case is
generally the difference between the bond's purchase price and its stated
redemption price at maturity. A Unitholder will be required to include in
gross income for each taxable year the sum of his daily portions of original
issue discount attributable to the Treasury Bonds held by a Trust as such
original issue discount accrues and will, in general, be subject to Federal
income tax with respect to the total amount of such original issue discount
that accrues for such year even though the income is not distributed to the
Unitholders during such year to the extent it is not less than a "de
minimis"amount as determined under the Regulation. To the extent the amount of
such discount is less than the respective "de minimis"amount, such discount
shall be treated as zero. In general, original issue discount accrues daily
under a constant interest rate method which takes into account the semi-annual
compounding of accrued interest. In the case of the Treasury Bonds, this
method will generally result in an increasing amount of income to the
Unitholders each year. Unitholders should consult their tax advisers regarding
the Federal income tax consequences and accretion of original issue discount.
Limitations on Deductibility of Trust Expenses by Unitholders. Each
Unitholder's pro rata share of each expense paid by a Trust is deductible by
the Unitholder to the same extent as though the expense had been paid directly
by him, subject to the following limitation. It should be noted that as a
result of the Tax Reform Act of 1986, certain miscellaneous itemized
deductions, such as investment expenses, tax return preparation fees and
employee business expenses will be deductible by an individual only to the
extent they exceed 2% of such individual's adjusted gross income. Temporary
regulations have been issued which require Unitholders to treat certain
expenses of the Trusts as miscellaneous itemized deductions subject to this
limitation.
Acquisition Premium. If a Unitholder's tax basis of his pro rata portion in
any Obligations held by a Trust exceeds the amount payable by the issuer of
the Obligation with respect to such pro rata interest upon the maturity of the
Obligation, such excess would be considered "acquisition premium"which may be
amortized by the Unitholder at the Unitholder's election as provided in
Section 171 of the Code. Unitholders should consult their tax advisors
regarding whether such election should be made and the manner of amortizing
acquisition premium.
Original Issue Discount. Certain of the Obligations of the Trusts may have
been acquired with "original issue discount."In the case of any Obligations of
a Trust acquired with "original issue discount"that exceeds a "de
minimis"amount as specified in the Code or in the case of the Treasury Bonds
as specified in the Regulation, such discount is includable in taxable income
of the Unitholders on an accrual basis computed daily, without regard to when
payments of interest on such Obligations are received. The Code provides a
complex set of rules regarding the accrual of original issue discount. These
rules provide that original issue discount generally accrues on the basis of a
constant compound interest rate over the term of the Obligations. Unitholders
should consult their tax advisers as to the amount of original issue discount
which accrues.
Special original issue discount rules apply if the purchase price of the
Obligation by a Trust exceeds its original issue price plus the amount of
original issue discount which would have previously accrued based upon its
issue price (its "adjusted issue price"). Similarly these special rules would
apply to a Unitholder if the tax basis of his pro rata portion of an
Obligation issued with original issue discount exceeds his pro rata portion of
its adjusted issue price. Unitholders should also consult their tax advisers
regarding these special rules.
It is possible that a Corporate Bond that has been issued at an original issue
discount may be characterized as a "high-yield discount obligation"within the
meaning of Section 163(e)(5) of the Code. To the extent that such an
obligation is issued at a yield in excess of six percentage points over the
applicable Federal rate, a portion of the original issue discount on such
obligation will be characterized as a distribution on stock (e.g., dividends)
for purposes of the dividends received deduction which is available to certain
corporations with respect to certain dividends received by such corporation.
Market Discount. If a Unitholder's tax basis in his pro rata portion of
Obligations is less than the allocable portion of such Obligation's stated
redemption price at maturity (or, if issued with original issue discount, the
allocable portion of its "revised issue price"), such difference will
constitute market discount unless the amount of market discount is "de
minimis"as specified in the Code. Market discount accrues daily computed on a
straight line basis, unless the Unitholder elects to calculate accrued market
discount under a constant yield method. The market discount rules do not apply
to Treasury Bonds because they are stripped debt instruments subject to
special original issue discount rules as discussed above. Unitholders should
consult their tax advisors as to the amount of market discount which accrues.
Accrued market discount is generally includable in taxable income to the
Unitholders as ordinary income for Federal tax purposes upon the receipt of
serial principal payments on the Obligations, on the sale, maturity or
disposition of such Obligations by a Trust, and on the sale by a Unitholder of
Units, unless a Unitholder elects to include the accrued market discount in
taxable income as such discount accrues. If a Unitholder does not elect to
annually include accrued market discount in taxable income as it accrues,
deductions for any interest expense incurred by the Unitholder which is
incurred to purchase or carry his Units will be reduced by such accrued market
discount. In general, the portion of any interest expense which was not
currently deductible would ultimately be deductible when the accrued market
discount is included in income. Unitholders should consult their tax advisers
regarding whether an election should be made to include market discount in
income as it accrues and as to the amount of interest expense which may not be
currently deductible.
Computation of the Unitholder's Tax Basis. The tax basis of a Unitholder with
respect to his interest in an Obligation is increased by the amount of
original issue discount (and market discount, if the Unitholder elects to
include market discount, if any, on the Obligations held by the Trust in
income as it accrues) thereon properly included in the Unitholder's gross
income as determined for Federal income tax purposes and reduced by the amount
of any amortized acquisition premium which the Unitholder has properly elected
to amortize under Section 171 of the Code. A Unitholder's tax basis in his
Units will equal his tax basis in his pro rata portion of all of the assets of
the Trust.
Recognition of Taxable Gain or Loss Upon Disposition of Obligations by the
Trusts or Disposition of Units. A Unitholder will recognize taxable capital
gain (or loss) when all or part of his pro rata interest in an Obligation is
disposed of in a taxable transaction for an amount greater (or less) than his
tax basis therefor. Any gain recognized on a sale or exchange and not
constituting a realization of accrued "market discount,"and any loss will,
under current law, generally be capital gain or loss except in the case of a
dealer or financial institution. As previously discussed, gain realized on the
disposition of the interest of a Unitholder in any Obligation deemed to have
been acquired with market discount will be treated as ordinary income to the
extent the gain does not exceed the amount of accrued market discount not
previously taken into income. Any capital gain or loss arising from the
disposition of an Obligation by a Trust or the disposition of Units by a
Unitholder will be short-term capital gain or loss unless the Unitholder has
held his Units for more than one year in which case such capital gain or loss
will be long-term. For taxpayers other than corporations, net capital gains
are subject to a maximum marginal stated tax rate of 28 percent. However, it
should be noted that legislative proposals are introduced from time to time
that affect tax rates and could affect relative differences at which ordinary
income and capital gains are taxed. The tax cost reduction requirements of the
Code relating to amortization of bond premium may under some circumstances,
result in the Unitholder realizing taxable gain when his Units are sold or
redeemed for an amount equal to or less than his original cost.
"The Revenue Reconciliation Act of 1993"(the "Tax Act") raised tax rates on
ordinary income while capital gains remain subject to a 28% maximum stated
rate for taxpayers other than corporations. Because some or all capital gains
are taxed at a comparatively lower rate under the Tax Act, the Tax Act
includes a provision that characterizes capital gains as ordinary income in
the case of certain financial transactions that are "conversion
transactions"effective for transactions entered into after April 30, 1993.
Unitholders and prospective investors should consult with their tax advisers
regarding the potential effect of this provision on their investment in Units.
If the Unitholder disposes of a Unit, he is deemed thereby to have disposed of
his entire pro rata interest in all Trust assets including his pro rata
portion of all of the Obligations represented by the Unit. This may result in
a portion of the gain, if any, on such sale being taxable as ordinary income
under the market discount rules (assuming no election was made by the
Unitholder to include market discount in income as it accrues) as previously
discussed.
Foreign Investors. A Unitholder who is a foreign investor (i.e., an investor
other than a U.S. citizen or resident or a U.S. corporation, partnership,
estate or trust) will not be subject to United States Federal income taxes,
including withholding taxes, on interest income (including any original issue
discount) on, or any gain from the sale or other disposition of, his pro rata
interest in any Obligation or the sale of his Units provided that all of the
following conditions are met: (i) the interest income or gain is not
effectively connected with the conduct by the foreign investor of a trade or
business within the United States, (ii) either (a) the interest is not from
sources within the United States or (b) the interest is United States source
income (which is the case for most securities issued by United States
issuers), the Obligation is issued after July 18, 1984 (which is the case for
each Obligation held by the Trust), the foreign investor does not own,
directly or indirectly, 10% or more of the total combined voting power of all
classes of voting stock of the issuer of the Obligation and the foreign
investor is not a controlled foreign corporation related (within the meaning
of Section 864(d)(4) of the Code) to the issuer of the Obligation, (iii) with
respect to any gain, the foreign investor (if an individual) is not present in
the United States for 183 days or more during his or her taxable year and (iv)
the foreign investor provides all certification which may be required of his
status (foreign investors may contact the Sponsor to obtain a Form W-8 which
must be filed with the Trustee and refiled every three calendar years
thereafter). Foreign investors should consult their tax advisers with respect
to United States tax consequences of ownership of Units.
It should be noted that the Tax Act includes a provision which eliminates the
exemption from United States taxation, including withholding taxes, for
certain "contingent interest."The provision applies to interest received after
December 31, 1993. No opinion is expressed herein regarding the potential
applicability of this provision and whether United States taxation or
withholding taxes could be imposed with respect to income derived from the
Units as a result thereof. Unitholders and prospective investors should
consult with their tax advisers regarding the potential effect of this
provision on their investment in Units.
General. Each Unitholder (other than a foreign investor who has properly
provided the certifications described above) will be requested to provide the
Unitholder's taxpayer identification number to the Trustee and to certify that
the Unitholder has not been notified that payments to the Unitholder are
subject to back-up withholding. If the proper taxpayer identification number
and appropriate certification are not provided when requested, distributions
by a Trust to such Unitholder will be subject to back-up withholding.
In the opinion of Tanner Propp & Farber, special counsel to the Trusts for New
York tax matters, each Trust is not an association taxable as a corporation
and the income of such Trust will be treated as the income of the Unitholders
under the existing income tax laws of the State and City of New York.
The foregoing discussion relates only to United States Federal and New York
State and City income taxes; Unitholders may be subject to state and local
taxation in other jurisdictions (including a foreign investor's country of
residence). Unitholders should consult their tax advisers regarding potential
state, local, or foreign taxation with respect to the Units.
ACCRUED INTEREST
Accrued Interest. Accrued interest is an accumulation of unpaid interest on
securities which generally is paid semi-annually, although the Trusts accrue
such interest daily. Because of this, each Trust always has an amount of
interest earned but not yet collected by the Trustee. For this reason, with
respect to sales settling subsequent to the First Settlement Date, the Public
Offering Price of Units will have added to it the proportionate share of
accrued interest to the date of settlement. Unitholders will receive on the
next distribution date of the applicable Trust the amount, if any, of accrued
interest paid on their Units.
In an effort to reduce the amount of accrued interest which would otherwise
have to be paid by Unitholders, the Trustee will advance the amount of accrued
interest to the Sponsor as the Unitholder of record as of the First Settlement
Date. Consequently, the amount of accrued interest to be added to the Public
Offering Price of Units will include only accrued interest from the First
Settlement Date to the date of settlement, less any distributions from the
Interest Account subsequent to the First Settlement Date. See "Rights of
Unitholders--Distributions of Interest and Principal".
Because of the varying interest payment dates of the Obligations, accrued
interest at any point in time will be greater than the amount of interest
actually received by a Trust and distributed to Unitholders. If a Unitholder
sells or redeems all or a portion of his Units, he will be entitled to receive
his proportionate share of the accrued interest from the purchaser of his
Units. Since the Trustee has the use of the funds held in the Interest Account
for distributions to Unitholders and since such Account is
non-interest-bearing to Unitholders, the Trustee benefits thereby.
PUBLIC OFFERING
General. Units are offered at the Public Offering Price. During the initial
offering period the Public Offering Price is based on the offering prices of
the Obligations in each Trust and includes a sales charge of 3.0% of the
Public Offering Price (3.093% of the aggregate offering price of the
Obligations) for Series 46 and 4.9% of the Public Offering Price (5.152% of
the aggregate offering price of the Obligations) for Series 47. However, the
sales charge applicable to quantity purchases is, during the initial offering
period, reduced on a graduated basis to any person acquiring 100 or more Units
as follows:
<TABLE>
<CAPTION>
Aggregate Number of Units PurchasedDollar Amount of Sales
Charge Reduction Per Unit
Series 46Series 47
<S> <C> <C>
100-249 Units $4.00 $4.00
250-499 Units $6.00 $6.00
500-999 Units $9.00 $14.00
1,000 or more Units $11.00 $19.00
</TABLE>
In the secondary market, Units are offered at the Public Offering Price which
is based on the bid prices of all the Obligations and includes a sales charge
determined in accordance with the table set forth below and is based upon the
dollar weighted average maturity of each Trust, plus accrued interest. For
purposes of computation, Obligations will be deemed to mature on their
expressed maturity dates unless: (a) the Obligations have been called for
redemption or funds or securities have been placed in escrow to redeem them on
an earlier call date, in which case such call date will be deemed to be the
date upon which they mature; or (b) such Obligations are subject to a
"mandatory tender", in which case such mandatory tender will be deemed to be
the date upon which they mature. The effect of this method of sales charge
computation will be that different sales charges rates will be applied to the
Trust based upon the dollar weighted average maturity of such Trust's
portfolio, in accordance with the following schedule:
<TABLE>
<CAPTION>
Sales Charge Sales Charge
Years To Maturity Years To Maturity
<S> <C> <C> <C>
1 1.523% 9 4.712%
2 2.041 10 4.932
3 2.564 11 4.932
4 3.199 12 4.932
5 3.842 13 5.374
6 4.058 14 5.374
7 4.275 15 5.374
8 4.493 16 to 30 6.045
</TABLE>
The sales charges in the above table are expressed as a percentage of the
aggregate bid prices of the Obligations in a Trust. Expressed as a percent of
the Public Offering Price, the sales charge on a Trust consisting entirely of
a portfolio of Obligations with 15 years to maturity would be 5.10%.
Employees of Van Kampen American Capital Distributors, Inc. and its
subsidiaries may purchase Units of the Trusts at the current Public Offering
Price less the underwriting commission during the initial offering period, and
less the dealer's concession for secondary market transactions. Registered
representatives of selling Underwriters may purchase Units of the Trusts at
the current Public Offering Price less the underwriting commission during the
initial offering period, and less the dealer's concession for secondary market
transactions. Registered representatives of selling brokers, dealers, or
agents may purchase Units of the Trusts at the current Public Offering Price
less the dealer's concession during the initial offering period and for
secondary market transactions.
Any such reduced sales charge shall be the responsibility of the selling
Underwriter, broker, dealer or agent. The Sponsor will, however, increase the
concession or agency commission for such quantity purchases. See "Public
Offering--Unit Distribution". This reduced sales charge structure will apply
on all purchases by the same person from any one Underwriter or dealer of
units of Van Kampen American Capital-sponsored unit investment trusts which
are being offered in the initial offering period (a) on any one day (the
"Initial Purchase Date") or (b) on any day subsequent to the Initial Purchase
Date if (1) the units purchased are of a unit investment trust purchased on
the Initial Purchase Date, and (2) the person purchasing the units purchased a
sufficient amount of units on the Initial Purchase Date to qualify for a
reduced sales charge on such date. In the event units of more than one trust
are purchased on the Initial Purchase Date, the aggregate dollar amount of
such purchases will be used to determine whether purchasers are eligible for a
reduced sales charge. Such aggregate dollar amount will be divided by the
public offering price per unit (on the date preceding the date of purchase) of
each respective trust purchased to determine the total number of units which
such amount could have purchased of each individual trust. Purchasers must
then consult the applicable trust's prospectus to determine whether the total
number of units which could have been purchased of a specific trust would have
qualified for a reduced sales charge and, if so qualified, the amount of such
reduction. Assuming a purchaser qualifies for a sales charge reduction or
reductions, to determine the applicable sales charge reduction or reductions
it is necessary to accumulate all purchases made on the Initial Purchase Date
and all purchases made in accordance with (b) above. Units purchased in the
name of the spouse of a purchaser or in the name of a child of such purchaser
under 21 years of age will be deemed for the purposes of calculating the
applicable sales charge to be additional purchases by the purchaser. The
reduced sales charges will also be applicable to a trustee or other fiduciary
purchasing securities for one or more trust estate or fiduciary accounts.
Units may be purchased in the primary or secondary market at the Public
Offering Price (for purchases which do not qualify for a sales charge
reduction for quantity purchases) less the concession the Sponsor typically
allows to brokers and dealers for purchases (see "Unit Distribution"below) by
(1) investors who purchase Units through registered investment advisers,
certified financial planners and registered broker-dealers who in each case
either charge periodic fees for financial planning, investment advisory or
asset management services, or provide such services in connection with the
establishment of an investment account for which a comprehensive "wrap
fee"charge is imposed, (2) bank trust departments investing funds over which
they exercise exclusive discretionary investment authority and that are held
in a fiduciary, agency, custodial or similar capacity, (3) any person who for
at least 90 days, has been an officer, director or bona fide employee of any
firm offering Units for sale to investors or their immediate family members
(as described above) and (4) officers and directors of bank holding companies
that make Units available directly or through subsidiaries or bank affiliates.
Notwithstanding anything to the contrary in this Prospectus, such investors,
bank trust departments, firm employees and bank holding company officers and
directors who purchase Units through this program will not receive sales
charge reductions for quantity purchases.
Offering Price. The Public Offering Price of the Units will vary from the
amounts stated under "Summary of Essential Financial Information"in accordance
with fluctuations in the prices of the underlying Obligations in each Trust.
As indicated above, the price of the Units as of 8:00 A.M. Central time or the
opening of business on the date the Obligations were deposited in each Trust
was determined by adding to the determination of the aggregate offering price
of the Obligations an amount equal to the applicable sales charge expressed as
a percentage of the aggregate offering price of the Obligations and dividing
the sum so obtained by the number of Units outstanding. This computation
produced a gross underwriting profit equal to such sales charge expressed as a
percentage of the Public Offering Price. Such price determination as of 8:00
A.M. Central time or the opening of business on the Date of Deposit was made
on the basis of an evaluation of the Obligations in each Trust prepared by
Interactive Data Services, Inc., a firm regularly engaged in the business of
evaluating, quoting or appraising comparable securities. Except on the Date of
Deposit during the period of initial offering, the Evaluator will appraise or
cause to be appraised daily the value of the underlying Obligations as of 4:00
P.M. Eastern time on days the New York Stock Exchange is open and will adjust
the Public Offering Price of the Units commensurate with such appraisal. Such
Public Offering Price will be effective for all orders received at or prior to
4:00 P.M. Eastern time on each such day. Orders received by the Trustee,
Sponsor or any Underwriter for purchases, sales or redemptions after that
time, or on a day when the New York Stock Exchange is closed, will be held
until the next determination of price. For secondary market sales the Public
Offering Price per Unit will be equal to the aggregate bid price of the
Obligations in each Trust plus an amount equal to the applicable secondary
market sales charge expressed as a percentage of the aggregate bid price of
the Obligations and dividing the sum so attained by the number of Units then
outstanding. This computation produces a gross underwriting profit equal to
such sales charge expressed as a percentage of the Public Offering Price. For
secondary market purposes such appraisal and adjustment will be made by the
Evaluator as of 4:00 P.M. Eastern time on days on which the New York Stock
Exchange is open for each day on which any Unit of such Trust is tendered for
redemption, and it shall determine the aggregate value of any Trust as of 4:00
P.M. Eastern time on such other days as may be necessary.
The aggregate price of the Obligations in each Trust has been and will be
determined on the basis of bid prices or offering prices, as appropriate, (a)
on the basis of current market prices for the Obligations obtained from
dealers or brokers who customarily deal in bonds comparable to those held by
the Trust; (b) if such prices are not available for any particular
Obligations, on the basis of current market prices for comparable bonds; (c)
by causing the value of the Obligations to be determined by others engaged in
the practice of evaluation, quoting or appraising comparable bonds; or (d) by
any combination of the above. Unless the Obligations are in default in payment
of principal or interest or in significant risk of such default, the Evaluator
will not attribute any value to the insurance obtained by the Trusts.
The Evaluator will consider in its evaluation of Obligations which are in
default in payment of principal or interest or, in the Sponsor's opinion, in
significant risk of such default (the "Defaulted Obligations") the value of
the insurance guaranteeing interest and principal payments. The value of the
insurance will be equal to the difference between (i) the market value of
Defaulted Obligations assuming the exercise of the right to obtain Permanent
Insurance (less the insurance premium and related expenses attributable to the
purchase of Permanent Insurance) and (ii) the market value of such Defaulted
Obligations not covered by Permanent Insurance. In addition, the Evaluator
will consider the ability of the Portfolio Insurer involved to meet its
commitments under the Trust's insurance policy, including the commitments to
issue Permanent Insurance. It is the position of the Sponsor that this is a
fair method of valuing the Obligations and the insurance obtained by the Trust
and reflects a proper valuation method in accordance with the provisions of
the Investment Company Act of 1940.
No value has been ascribed to insurance obtained by the Trusts as of the date
of this Prospectus.
The initial or primary Public Offering Price of the Units and the Sponsor's
initial repurchase price per Unit are based on the offering price per Unit of
the underlying Obligations plus the applicable sales charge and interest
accrued but unpaid from the First Settlement Date to the date of settlement.
The secondary market Public Offering Price and the Redemption Price per Unit
are based on the bid price per Unit of the Obligations in the Trust plus the
applicable sales charge plus accrued interest. The offering price of
Obligations in each Trust may be expected to range from .35%-1% more than the
bid price of such Obligations. On the Date of Deposit, the offering side
evaluation of the Obligations in the Trusts were higher than the bid side
evaluation of such Obligations by the amount indicated under footnote (5) in
"Notes to Portfolios".
Although payment is normally made five business days following the order for
purchase, payment may be made prior thereto. However, delivery of certificates
representing Units so ordered will be made five business days following such
order or shortly thereafter. A person will become the owner of Units on the
date of settlement provided payment has been received. Cash, if any, made
available to the Sponsor prior to the date of settlement for the purchase of
Units may be used in the Sponsor's business and may be deemed to be a benefit
to the Sponsor, subject to the limitations of the Securities Exchange Act of
1934.
Unit Distribution. During the initial offering period, Units will be
distributed to the public by Underwriters, broker-dealers and others (see
"Underwriting") at the Public Offering Price, plus accrued interest computed
as described above under "Accrued Interest". Upon the completion of the
initial offering, Units repurchased in the secondary market, if any, may be
offered by this prospectus at the secondary Public Offering Price in the
manner described.
The Sponsor intends to qualify the Units for sale in a number of states.
Broker-dealers or others will be allowed a concession or agency commission in
connection with the distribution of Units during the initial offering period
of (a) for Series 46 of $20.00 per Unit for less than 100 Units, $22.00 per
Unit for any single transaction of 100 to 249 Units, $21.50 per Unit for any
single transaction of 250 to 499 Units, $24.50 per Unit for any single
transaction of 500 to 999 Units and $24.00 per Unit for any single transaction
of 1,000 or more Units, and (b) for Series 47 of $30.00 per Unit for less than
100 Units, $36.00 per Unit for any single transaction of 100 to 249 Units,
$38.00 per Unit for any single transaction of 250 to 499 Units, $39.00 per
Unit for any single transaction of 500 to 999 Units and $39.00 per Unit for
any single transaction of 1,000 or more Units, provided that such Units are
acquired either from the Sponsor (in the case of dealer transactions) or
through the Sponsor (in the case of transactions involving brokers or others).
The increased concession or agency commission is a result of the discount
given to purchasers for quantity purchases. See "Public Offering--General".
Certain commercial banks are making Units of the Trusts available to their
customers on an agency basis. A portion of the sales charge (equal to the
agency commission referred to above) is retained by or remitted to the banks.
Under the Glass-Steagall Act, banks are prohibited from underwriting Units of
the Trusts; however, the Glass-Steagall Act does permit certain agency
transactions and the banking regulators have not indicated that these
particular agency transactions are not permitted under such Act. In addition,
state securities laws on this issue may differ from the interpretations of
Federal law expressed herein and banks and financial institutions may be
required to register as dealers pursuant to state law. Any quantity discount
(see "General"above) provided to investors will be borne by the selling dealer
or agent. For secondary market transactions, such concession or agency
commission will amount to 4% of the Public Offering Price per Unit.
To facilitate the handling of transactions during the initial offering period,
sales of Units shall normally be limited to transactions involving a minimum
of five Units. Further purchases may be made in multiples of one Unit. The
minimum purchase in the secondary market will be one Unit.
The Sponsor reserves the right to reject, in whole or in part, any order for
the purchase of Units and to change the amount of the concession or agency
commission to dealers and others from time to time. See "Underwriting".
Sponsor and Underwriter Compensation. The Underwriters through the initial or
primary distribution of Units will receive a gross sales commission equal to
that percentage of the Public Offering Price of the Units as indicated under
"Offering Price", less any reduced sales charge for quantity purchases as
described under "General"above.
The Sponsor will receive from the Underwriters the excess of such gross sales
commission over $22.00 and $35.00 per Unit of Series 46 and Series 47,
respectively, as of the Date of Deposit. In connection with quantity sales to
purchasers of Series 46 the Underwriters will receive from the Sponsor
commissions totalling $23.00 per Unit for any single transaction of 100 to 249
Units, $23.00 per Unit for any single transaction of 250 to 499 Units, $24.75
per Unit for any single transaction of 500 to 999 Units and $24.00 per Unit
for any single transaction of 1,000 or more Units. In connection with quantity
sales to purchasers of Series 47 the Underwriters will receive from the
Sponsor commissions totalling $37.00 per Unit for any single transaction of
100 to 249 Units, $39.00 per Unit for any single transaction of 250 to 499
Units, $40.00 per Unit for any single transaction of 500 to 999 Units and
$39.00 per Unit for any single transaction of 1,000 or more Units. See "Public
Offering--General". Further, each Underwriter who underwrites 1,000 or more
Units in any Trust will receive additional compensation from the Sponsor of
$1.00 for each Unit it underwrites. In addition, the Sponsor and the
Underwriters will realize a profit or the Sponsor will sustain a loss, as the
case may be, as a result of the difference between the price paid for the
Obligations by the Sponsor and the cost of such Obligations to each Trust
(which is based on the determination of the aggregate offering price of the
Obligations in such Trust on the Date of Deposit as prepared by Interactive
Data Services, Inc.). See "Underwriting"and "Portfolio". The Sponsor and the
Underwriters may also realize profits or sustain losses with respect to
Obligations deposited in a Trust which were acquired by the Sponsor from
underwriting syndicates of which they were members. The Sponsor has not
participated as sole underwriter or as manager or as a member of any
underwriting syndicates from which any of the Obligations in the portfolio of
either Trust were acquired. The Underwriters may further realize additional
profit or loss during the initial offering period as a result of the possible
fluctuations in the market value of the Obligations in each Trust after the
Date of Deposit, since all proceeds received from purchasers of Units
(excluding dealer concessions or agency commissions allowed, if any) will be
retained by the Underwriters. Affiliates of an Underwriter are entitled to the
same dealer concessions or agency commission that are available to the
Underwriter.
As stated under "Public Market"below, the Sponsor intends to, and certain of
the other Underwriters may, maintain a secondary market for the Units of the
Trusts. In so maintaining a market, the Sponsor or any such Underwriters will
also realize profits or sustain losses in the amount of any difference between
the price at which Units are purchased and the price at which Units are resold
(which price is based on the bid prices of the Obligations in each Trust and
includes a sales charge). In addition, the Sponsor or any such Underwriters
will also realize profits or sustain losses resulting from a redemption of
such repurchased Units at a price above or below the purchase price for such
Units, respectively.
Public Market. During the initial public offering period, the Sponsor and/or
certain of the other Underwriters intend to offer to purchase Units at a price
based on the aggregate offering price per Unit of the Obligations in each
Trust and the amount of accrued interest to the date of settlement less the
related sales commission. Afterward, although they are not obligated to do so,
the Sponsor intends to, and certain of the other Underwriters may, maintain a
market for the Units offered hereby and to offer continuously to purchase such
Units at prices, subject to change at any time, based upon the aggregate bid
prices of the Obligations in the portfolio of each Trust plus interest accrued
to the date of settlement plus any principal cash on hand, less any amounts
representing taxes or other governmental charges payable out of the Trust and
less any accrued Trust expenses. If the supply of Units exceeds demand or if
some other business reason warrants it, the Sponsor and/or the other
Underwriters may either discontinue all purchases of Units or discontinue
purchases of Units at such prices. In the event that a market is not
maintained for the Units and the Unitholder cannot find another purchaser, a
Unitholder desiring to dispose of his Units may be able to dispose of such
Units only by tendering them to the Trustee for redemption at the Redemption
Price, which is based upon the aggregate bid price of the Obligations in the
portfolio of such Trust plus any accrued interest. The aggregate bid prices of
the underlying Obligations in a Trust are expected to be less than the related
aggregate offering prices. See "Rights of Unitholders--Redemption of Units". A
Unitholder who wishes to dispose of his Units should inquire of his broker as
to current market prices in order to determine whether there is in existence
any price in excess of the Redemption Price and, if so, the amount thereof.
RIGHTS OF UNITHOLDERS
Certificates. The Trustee is authorized to treat as the record owner of Units
that person who is registered as such owner on the books of the Trustee.
Ownership of Units of the Trust is evidenced by separate registered
certificates executed by the Trustee and the Sponsor. Certificates are
transferable by presentation and surrender to the Trustee properly endorsed or
accompanied by a written instrument or instruments of transfer. A Unitholder
must sign exactly as his name appears on the face of the certificate with the
signature guaranteed by a participant in the Securities Transfer Agents
Medallion Program ("STAMP") or such other signature guaranty program in
addition to, or in substitution for, STAMP, as may be accepted by the Trustee.
In certain instances the Trustee may require additional documents such as, but
not limited to, trust instruments, certificates of death, appointments as
executor or administrator or certificates of corporate authority. Certificates
will be issued in denominations of one Unit or any multiple thereof.
Although no such charge is now made or contemplated, the Trustee may require a
Unitholder to pay a reasonable fee for each certificate reissued or
transferred and to pay any governmental charge that may be imposed in
connection with each such transfer or interchange. Destroyed, stolen,
mutilated or lost certificates will be replaced upon delivery to the Trustee
of satisfactory indemnity, evidence of ownership and payment of expenses
incurred. Mutilated certificates must be surrendered to the Trustee for
replacement.
Distributions of Interest and Principal. Interest received by a Trust,
including that part of the proceeds of any disposition of Obligations which
represents accrued interest and including any insurance proceeds representing
interest due on defaulted Obligations, is credited by the Trustee to the
Interest Account. Other receipts are credited to the Principal Account.
Interest received by a Trust after deduction of amounts sufficient to
reimburse the Trustee, without interest, for any amounts advanced and paid to
the Sponsor as the Unitholder of record as of the First Settlement Date (see
"Public Offering--Offering Price") will be distributed on or shortly after the
fifteenth day of each month on a pro rata basis to Unitholders of record as of
the preceding record date (which will be the first day of the month) who are
entitled to distributions at that time under the plan of distribution chosen.
All distributions will be net of applicable expenses. The pro rata share of
cash in the Principal Account will be computed on the date indicated under
"Distribution Options"on page 2, and thereafter as of the semi-annual record
date, and distributions to the Unitholders as of such record date will be made
on or shortly after the fifteenth day of such month. Proceeds received from
the disposition of any of the Obligations after such record date and prior to
the following distribution date will be held in the Principal Account and not
distributed until the next distribution date. The Trustee is not required to
pay interest on funds held in the Principal or Interest Accounts (but may
itself earn interest thereon and therefore benefits from the use of such
funds) nor to make a distribution from the Principal Account unless the amount
available for distribution shall equal at least $1.00 per Unit. However,
should the amount available for distribution in the Principal Account equal or
exceed $10.00 per Unit, the Trustee will make a special distribution from the
Principal Account on the next succeeding monthly distribution date to holders
of record on the related monthly record date.
The distribution to the Unitholders of a Trust as of each record date after
the First Settlement Date will be made on the following distribution date or
shortly thereafter and shall consist of an amount substantially equal to such
portion of the Unitholders' pro rata share of the estimated net annual
interest income in the Interest Account of such Trust after deducting
estimated expenses attributable as is consistent with the distribution plan
chosen. Because interest payments are not received by a Trust at a constant
rate throughout the year, such interest distribution may be more or less than
the amount credited to such Interest Account as of the record date. For the
purpose of minimizing fluctuation in the distributions from an Interest
Account, the Trustee is authorized to advance such amounts as may be necessary
to provide interest distributions of approximately equal amounts. The Trustee
shall be reimbursed for any such advances from funds in the Interest Account
on the ensuing record date. Persons who purchase Units between a record date
and a distribution date will receive their first distribution on the second
distribution date after purchase, under the applicable plan of distribution.
Notification to the Trustee of the transfer of Units is the responsibility of
the purchaser, but in the normal course of business such notice is provided by
the selling broker-dealer.
As of the first day of each month, the Trustee will deduct from the Interest
Account and, to the extent funds are not sufficient therein, from the
Principal Account, amounts necessary to pay the expenses of each Trust (as
determined on the basis set forth under "Trust Operating Expenses"). The
Trustee also may withdraw from said accounts such amounts, if any, as it deems
necessary to establish a reserve for any governmental charges payable out of
the Trust. Amounts so withdrawn shall not be considered a part of the Trust's
assets until such time as the Trustee shall return all or any part of such
amounts to the appropriate accounts. In addition, the Trustee may withdraw
from the Interest and Principal Accounts such amounts as may be necessary to
cover purchases of Replacement Obligations and redemption of Units by the
Trustee.
Change of Distribution Option. The plan of distribution selected by a
Unitholder will remain in effect until changed. Unitholders purchasing Units
in the secondary market will initially receive distributions in accordance
with the election of the prior owner. Unitholders may change the plan of
distribution in which they are participating. For convenience of Unitholders,
the Trustee will furnish a card for this purpose; cards may also be obtained
upon request from the Trustee. Unitholders desiring to change their plan of
distribution may so indicate on the card and return it together with their
certificate and such other documentation that the Trustee may then require, to
the Trustee. Certificates should only be sent by registered or certified mail
to minimize the possibility of their being lost or stolen. If the card and
certificate are properly presented to the Trustee, the change will become
effective as of the opening of business on the first day after the next
succeeding semi-annual record date and will be effective, unless further
changed, for all subsequent distributions.
Reinvestment Option. Unitholders of the Trusts may elect to have each
distribution of interest income, capital gains and/or principal on their Units
automatically reinvested in shares of any of the mutual funds listed under
"Trust Administration--Sponsor"which are registered in the Unitholder's state
of residence. Such mutual funds are hereinafter collectively referred to as
the "Reinvestment Funds".
Each Reinvestment Fund has investment objectives which differ in certain
respects from those of the Trusts. The prospectus relating to each
Reinvestment Fund describes the investment policies of such fund and sets
forth the procedures to follow to commence reinvestment. A Unitholder may
obtain a prospectus for the respective Reinvestment Funds from Van Kampen
American Capital Distributors, Inc. at One Parkview Plaza, Oakbrook Terrace,
IL 60181. Texas residents who desire to reinvest may request that a
broker-dealer registered in Texas send the prospectus relating to the
respective fund.
After becoming a participant in a reinvestment plan, each distribution of
interest income, capital gains and/or principal on the participant's Units
will, on the applicable distribution date, automatically be applied, as
directed by such person, as of such distribution date by the Trustee to
purchase shares (or fractions thereof) of the applicable Reinvestment Fund at
a net asset value as computed as of the close of trading on the New York Stock
Exchange on such date, plus a sales charge of $1.00 per $100 of reinvestment
except if the participant selects the Van Kampen Merritt Money Market Fund,
the Van Kampen Merritt Tax Free Money Fund, the Van Kampen Merritt Florida
Insured Tax Free Income Fund, the Van Kampen Merritt New Jersey Tax Free
Income Fund, or the Van Kampen Merritt New York Tax Free Income Fund, in which
case no sales charge applies. A minimum of one-half of such sales charge would
be paid to Van Kampen American Capital Distributors, Inc.
Confirmations of all reinvestments by a Unitholder into a Reinvestment Fund
will be mailed to the Unitholder by such Reinvestment Fund.
A participant may at any time prior to five days preceding the next succeeding
distribution date, by so notifying the Trustee in writing, elect to terminate
his or her reinvestment plan and receive future distributions on his or her
Units in cash. There will be no charge or other penalty for such termination.
Each Reinvestment Fund, its sponsor and its investment adviser shall have the
right to terminate at any time the reinvestment plan relating to such fund.
Reports Provided. The Trustee shall furnish Unitholders of a Trust in
connection with each distribution a statement of the amount of interest and,
if any, the amount of other receipts (received since the preceding
distribution), if any, being distributed expressed in each case as a dollar
amount representing the pro rata share of each Unit of a Trust outstanding.
For as long as the Trustee deems it to be in the best interests of the
Unitholders, the accounts of each Trust shall be audited, not less frequently
than annually, by independent certified public accountants and the report of
such accountants shall be furnished by the Trustee to Unitholders upon
request. Within a reasonable period of time after the end of each calendar
year, the Trustee shall furnish to each person who at any time during the
calendar year was a registered Unitholder of a Trust a statement (i) as to the
Interest Account: interest received (including amounts representing interest
received upon any disposition of the Obligations), deductions for applicable
taxes and for fees and expenses of the Trust (including insurance costs), for
purchases of Replacement Obligations and for redemptions of Units, if any, and
the balance remaining after such distributions and deductions, expressed in
each case both as a total dollar amount and as a dollar amount representing
the pro rata share of each Unit outstanding on the last business day of such
calendar year; (ii) as to the Principal Account: the dates of disposition of
any Obligations and the net proceeds received therefrom (excluding any portion
representing accrued interest and the premium and any expenses related thereto
attributable to the exercise of the right to obtain Permanent Insurance), the
amount paid for purchases of Replacement Obligations and for redemptions of
Units, if any, deductions for payment of applicable taxes, fees and expenses
of the Trust and the balance remaining after such distributions and deductions
expressed both as a total dollar amount and as a dollar amount representing
the pro rata share of each Unit outstanding on the last business day of such
calendar year; (iii) a list of the Obligations held and the number of Units
outstanding on the last business day of such calendar year; (iv) the
Redemption Price per Unit based upon the last computation thereof made during
such calendar year; and (v) amounts actually distributed during such calendar
year from the Interest and Principal Accounts, separately stated, expressed
both as total dollar amounts and as dollar amounts representing the pro rata
share of each Unit outstanding.
In order to comply with Federal and state tax reporting requirements,
Unitholders will be furnished, upon request to the Trustee, evaluations of the
Obligations in a Trust furnished to it by the Evaluator.
Each distribution statement of a Trust will reflect pertinent information in
respect of the other plan of distribution so that Unitholders may be informed
regarding the results of such other plan of distribution.
Redemption of Units. A Unitholder may redeem all or a portion of his Units by
tender to the Trustee at its Unit Investment Trust Division, 101 Barclay
Street, 20th Floor, New York, New York 10286, of the certificates representing
the Units to be redeemed, duly endorsed or accompanied by proper instruments
of transfer with signature guaranteed (or by providing satisfactory indemnity,
as in connection with lost, stolen or destroyed certificates) and by payment
of applicable governmental charges, if any. Thus, redemption of Units cannot
be effected until certificates representing such Units have been delivered by
the person seeking redemption or satisfactory indemnity provided. No
redemption fee will be charged. On the seventh calendar day following such
tender, or if the seventh calendar day is not a business day, on the first
business day prior thereto, the Unitholder will be entitled to receive in cash
an amount for each Unit equal to the Redemption Price per Unit next computed
after receipt by the trustee of such tender of Units. The "date of tender"is
deemed to be the date on which Units are received by the Trustee, except that
as regards Units received after 4:00 P.M. Eastern time on days of trading on
the New York Stock Exchange, the date of tender is the next day on which such
Exchange is open for trading and such Units will be deemed to have been
tendered to the Trustee on such day for redemption at the redemption price
computed on that day.
Under regulations issued by the Internal Revenue Service, the Trustee will be
required to withhold a specified percentage of the principal amount of a Unit
redemption if the Trustee has not been furnished the redeeming Unitholder's
tax identification number in the manner required by such regulations. Any
amount so withheld is transmitted to the Internal Revenue Service and may be
recovered by the Unitholder only when filing a return. Under normal
circumstances the Trustee obtains the Unitholder's tax identification number
from the selling broker. However, at any time a Unitholder elects to tender
Units for redemption, such Unitholder should provide a tax identification
number to the Trustee in order to avoid this possible "back-up withholding"in
the event the Trustee has not been previously provided such number.
Accrued interest paid on redemption shall be withdrawn from the Interest
Account of such Trust or, if the balance therein is insufficient, from the
Principal Account of such Trust. All other amounts will be withdrawn from the
Principal Account of such Trust. The Trustee is empowered to sell underlying
Obligations of a Trust in order to make funds available for redemption. Units
so redeemed shall be cancelled.
The Redemption Price per Unit (as well as the secondary market Public Offering
Price) will be determined on the basis of the bid price of the Obligations in
each Trust, while the initial and primary Public Offering Price of Units will
be determined on the basis of the offering price of the Obligations, as of
4:00 P.M. Eastern time on days of trading on the New York Stock Exchange on
the date any such determination is made. On the Date of Deposit, the Public
Offering Price per Unit (which is based on the offering prices of the
Obligations in each Trust and includes the sales charge) exceeded the value at
which Units could have been redeemed (based upon the current bid prices of the
Obligations in such Trust) by the amount shown under "Summary of Essential
Financial Information". While the Trustee has the power to determine the
Redemption Price per Unit when Units are tendered for redemption, such
authority has been delegated to the Evaluator which determines the price per
Unit on a daily basis. The Redemption Price per Unit is the pro rata share of
each Unit in the Trust determined on the basis of (i) the cash on hand in such
Trust or monies in the process of being collected, (ii) the value of the
Obligations in such Trust based on the bid prices of the Obligations, except
for those cases in which the value of insurance has been included and (iii)
interest accrued thereon, less (a) amounts representing taxes or other
governmental charges payable out of such Trust and (b) the accrued expenses of
such Trust. The Evaluator may determine the value of the Obligations in each
Trust by employing any of the methods set forth in "Public Offering--Offering
Price". In determining the Redemption Price per Unit no value will be assigned
to the portfolio insurance maintained by the Trust on the Obligations in such
Trust unless such Obligations are in default in payment of principal or
interest or in significant risk of such default. For a description of the
situations in which the Evaluator may value the insurance obtained by the
Trusts, see "Public Offering--Offering Price".
The price at which Units may be redeemed could be less than the price paid by
the Unitholder and may be less than the par value of the Obligations
represented by the Units so redeemed. As stated above, the Trustee may sell
Obligations to cover redemptions. When Obligations are sold, the size and
diversity of the affected Trust will be reduced. Such sales may be required at
a time when Obligations would not otherwise be sold and might result in lower
prices than might otherwise be realized. Pursuant to an irrevocable commitment
of the Portfolio Insurers, the Trustee upon the sale of an Obligation has the
right to obtain permanent insurance for such Obligation upon the payment of a
single predetermined insurance premium and any expenses related thereto from
the proceeds of the sale of such Obligation. Accordingly, any Obligation may
be sold on an insured basis.
The right of redemption may be suspended and payment postponed for any period
during which the New York Stock Exchange is closed, other than for customary
weekend and holiday closings, or during which the Securities and Exchange
Commission determines that trading on that Exchange is restricted or an
emergency exists, as a result of which disposal or evaluation of the
Obligations in the Trust is not reasonably practicable, or for such other
periods as the Securities and Exchange Commission may by order permit. Under
certain extreme circumstances the Sponsor may apply to the Securities and
Exchange Commission for an order permitting a full or partial suspension of
the right of Unitholders to redeem their Units.
TRUST ADMINISTRATION
Sponsor Purchases of Units. The Trustee shall notify the Sponsor of any tender
of Units for redemption. If the Sponsor's bid in the secondary market at that
time equals or exceeds the Redemption Price per Unit, it may purchase such
Units by notifying the Trustee before the close of business on the second
succeeding business day and by making payment therefor to the Unitholder not
later than the day on which the Units would otherwise have been redeemed by
the Trustee. Units held by the Sponsor may be tendered to the Trustee for
redemption as any other Units.
The offering price of any Units acquired by the Sponsor will be in accord with
the Public Offering Price described in the then currently effective prospectus
describing such Units. Any profit resulting from the resale of such Units will
belong to the Sponsor which likewise will bear any loss resulting from a lower
offering or redemption price subsequent to its acquisition of such Units.
Portfolio Administration. The Trustee is empowered to sell, for the purpose of
redeeming Units tendered by any Unitholder, and for the payment of expenses
for which funds may not be available, such of the Obligations designated by
the Evaluator as the Trustee in its sole discretion may deem necessary. The
Evaluator, in designating such Obligations, will consider a variety of
factors, including (a) interest rates, (b) market value and (c) marketability.
To the extent that Obligations are sold which are current in payment of
principal and interest in order to meet redemption requests and defaulted
Obligations are retained in the portfolio in order to preserve the related
insurance protection applicable to said Obligations, the overall quality of
the Obligations remaining in a Trust's portfolio will tend to diminish. The
Sponsor is empowered, but not obligated, to direct the Trustee to dispose of
Obligations in the event of an advanced refunding.
The Sponsor is required to instruct the Trustee to reject any offer made by an
issuer of any of the Obligations to issue new obligations in exchange or
substitution for any Obligation pursuant to a refunding or refinancing plan,
except that the Sponsor may instruct the Trustee to accept or reject such an
offer or to take any other action with respect thereto as the Sponsor may deem
proper if (1) the issuer is in default with respect to such Obligation or (2)
in the written opinion of the Sponsor the issuer will probably default with
respect to such Obligation in the reasonably foreseeable future. Any
obligation so received in exchange or substitution will be held by the Trustee
subject to the terms and conditions of the Trust Agreement to the same extent
as Obligations originally deposited thereunder. Within five days after the
deposit of obligations in exchange or substitution for underlying Obligations,
the Trustee is required to give notice thereof to each Unitholder, identifying
the Obligations eliminated and the Obligations substituted therefor. Except as
stated herein and under "Trust Portfolio--Replacement Obligations"regarding
the substitution of Replacement Obligations for Failed Obligations, the
acquisition by the Trust of any obligations other than the Obligations
initially deposited is not permitted.
If any default in the payment of principal or interest on any Obligation
occurs and no provision for payment is made therefor either pursuant to the
portfolio insurance, or otherwise, within 30 days, the Trustee is required to
notify the Sponsor thereof. If the Sponsor fails to instruct the Trustee to
sell or to hold such Obligation within 30 days after notification by the
Trustee to the Sponsor of such default, the Trustee may in its discretion sell
the defaulted Obligation and not be liable for any depreciation or loss
thereby incurred.
Amendment or Termination. The Sponsor and the Trustee have the power to amend
the Trust Agreement without the consent of any of the Unitholders when such an
amendment is (a) to cure an ambiguity or to correct or supplement any
provision of the Trust Agreement which may be defective or inconsistent with
any other provision contained therein or (b) to make such other provisions as
shall not adversely affect the interest of the Unitholders (as determined in
good faith by the Sponsor and the Trustee), provided that the Trust Agreement,
may not be amended to increase the number of Units issuable thereunder or to
permit the deposit or acquisition of obligations either in addition to or in
substitution for any of the Obligations initially deposited in the Trust,
except for the substitution of certain refunding obligations for such
Obligations. In the event of any amendment, the Trustee is obligated to notify
promptly all Unitholders of the substance of such amendment.
A Trust may be terminated at any time by consent of Unitholders representing
51% of the Units of the Trust then outstanding or by the Trustee when the
value of the Trust, as shown by any semi-annual evaluation, is less than that
indicated under "Summary of Essential Financial Information".
A Trust will be liquidated by the Trustee in the event that a sufficient
number of Units not yet sold are tendered for redemption by the Underwriters,
including the Sponsor, so that the net worth of the Trust would be reduced to
less than 40% of the initial principal amount of the Trust. If the Trust is
liquidated because of the redemption of unsold Units by the Underwriters, the
Sponsor will refund to each purchaser of Units the entire sales charge paid by
such purchaser.
The Trust Agreement provides that the Trust shall terminate upon the
redemption, sale or other disposition of the last Obligation held in the
Trust, but in no event shall it continue beyond the end of the year preceding
the twentieth anniversary of the Trust Agreement in the case of Series 46 or
beyond the end of the year preceding the fiftieth anniversary of the Trust
Agreement in the case of Series 47. In the event of termination of either
Trust, written notice thereof will be sent by the Trustee to each Unitholder
of the Trust at his address appearing on the registration books of the Trust
maintained by the Trustee, such notice specifying the time or times at which
the Unitholder may surrender his certificate or certificates for cancellation.
Within a reasonable time thereafter the Trustee shall liquidate any
Obligations then held in the Trust and shall deduct from the funds of the
Trust any accrued costs, expenses or indemnities provided by the Trust
Agreement, including estimated compensation of the Trustee and costs of
liquidation and any amounts required as a reserve to provide for payment of
any applicable taxes or other governmental charges. The sale of Obligations in
the Trust upon termination may result in a lower amount than might otherwise
be realized if such sale were not required at such time. For this reason,
among others, the amount realized by a Unitholder upon termination may be less
than the principal amount or par amount of Obligations represented by the
Units held by such Unitholder. The Trustee shall then distribute to each
Unitholder his share of the balance of the Interest and Principal Accounts.
With such distribution the Unitholders shall be furnished a final distribution
statement of the amount distributable. At such time as the Trustee in its sole
discretion shall determine that any amounts held in reserve are no longer
necessary, it shall make distribution thereof to Unitholders in the same
manner.
Limitation on Liabilities. The Sponsor, the Evaluator and the Trustee shall be
under no liability to Unitholders for taking any action or for refraining from
taking any action in good faith pursuant to the Trust Agreement, or for errors
in judgment, but shall be liable only for their own willful misfeasance, bad
faith or negligence (gross negligence in the case of the Sponsor) in the
performance of their duties or by reason of their reckless disregard of their
obligations and duties hereunder. The Trustee shall not be liable for
depreciation or loss incurred by reason of the sale by the Trustee of any of
the Obligations. In the event of the failure of the Sponsor to act under the
Trust Agreement, the Trustee may act thereunder and shall not be liable for
any action taken by it in good faith under the Trust Agreement.
The Trustee shall not be liable for any taxes or other governmental charges
imposed upon or in respect of the Obligations or upon the interest thereon or
upon it as Trustee under the Trust Agreement or upon or in respect of the
Trust which the Trustee may be required to pay under any present or future law
of the United States of America or of any other taxing authority having
jurisdiction. In addition, the Trust Agreement contains other customary
provisions limiting the liability of the Trustee.
The Trustee, Sponsor and Unitholders may rely on any evaluation furnished by
the Evaluator and shall have no responsibility for the accuracy thereof.
Determinations by the Evaluator under the Trust Agreement shall be made in
good faith upon the basis of the best information available to it, provided,
however, that the Evaluator shall be under no liability to the Trustee,
Sponsor or Unitholders for errors in judgment. This provision shall not
protect the Evaluator in any case of willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations and duties.
Sponsor. Van Kampen American Capital Distributors, Inc., a Delaware
corporation, is the Sponsor of the Trust. Van Kampen American Capital
Distributors, Inc. is primarily owned by Clayton, Dubilier & Rice, Inc., a New
York-based private investment firm. Van Kampen American Capital Distributors,
Inc. management owns a significant minority equity position. Effective
December 20, 1994, the parent of Van Kampen Merritt Inc. acquired American
Capital Management & Research, Inc. As a result, Van Kampen Merritt Inc., has
changed its name to Van Kampen American Capital Distributors, Inc. Van Kampen
American Capital Distributors, Inc. specializes in the underwriting and
distribution of unit investment trusts and mutual funds. The Sponsor is a
member of the National Association of Securities Dealers, Inc. and has offices
at One Parkview Plaza, Oakbrook Terrace, Illinois 60181, (708) 684-6000 and
2800 Post Oak Boulevard, Houston, Texas, 77056, (713) 993-0500. It maintains a
branch office in Philadelphia and has regional representatives in Atlanta,
Dallas, Los Angeles, New York, San Francisco, Seattle and Tampa. As of
December 31, 1994 the total stockholders' equity of Van Kampen Merritt Inc.
was $117,357,000 (audited). (This paragraph relates only to the Sponsor and
not to the Insured Income Trust or to any other Underwriter. The information
is included herein only for the purpose of informing investors as to the
financial responsibility of the Sponsor and its ability to carry out its
contractual obligations. More detailed financial information will be made
available by the Sponsor upon request.)
As of March 31, 1995, the Sponsor and its affiliates managed or supervised
approximately $51.7 billion of investment products, of which over $24.7
billion is invested in municipal securities. The Sponsor and its affiliates
managed $38.9 billion of assets, consisting of $20.3 billion for 42 open end
mutual funds, $9.4 billion for 38 closed-end funds and $5.6 billion for 82
institutional accounts. The Sponsor has also deposited approximately $26
billion of unit investment trusts. Based on cumulative assets deposited, the
Sponsor believes that it is the largest sponsor of insured municipal unit
investment trusts, primarily through the success of its Insured Municipals
Income Trust(R)or the IM-IT(R) trust. The Sponsor also provides surveillance
and evaluation services at cost for approximately $13 billion of unit
investment trust assets outstanding. Since 1976, the Sponsor has serviced over
one million retail investor accounts, opened through retail distribution
firms. Van Kampen American Capital Distributors, Inc. is the sponsor of the
various series of the trusts listed below. Some of the mutual funds and
closed-end funds for which Van Kampen American Capital Distributors, Inc. acts
as distributor are also listed. Only those mutual funds available for
reinvestment under the Reinvestment Option to Unitholders of unit investment
trusts are listed below. Unitholders may only invest in the trusts, mutual
funds and closed-end funds which are registered for sale in the state of
residence of such Unitholder. In order for a Unitholder to invest in the
trusts, mutual funds and closed-end funds listed below, such Unitholder must
obtain a prospectus relating to the trust or fund involved. A prospectus is
the only means by which an offer can be delivered to investors.
<TABLE>
<CAPTION>
Name of Trust Trust Investment Objective
<S> <C>
Insured Municipals Income Trust.................................. Tax-exempt income by investing in insured municipal securities
California Insured Municipals Income Trust....................... Double tax-exemption for California residents by investing
in insured California municipal securities
New York Insured Municipals Income Trust......................... Double and in certain cases triple tax-exemption for New York
residents by investing in insured New York municipal securities
Pennsylvania Insured Municipals Income Trust..................... Double and in certain cases triple tax-exemption for Pennsylvania
residents by investing in insured Pennsylvania municipal
securities
Insured Municipals Income Trust, Insured Multi-Series............ Tax-exempt income by investing in insured municipal securities;
(Premium Bond Series, National, Limited Maturity, Intermediate, all issuers of bonds in a state trust are located in such state
Short Intermediate, Discount, Alabama, Arizona, Arkansas, or in territories or possessions of the United States--
California, California Intermediate, California Intermediate providing exemptions from all state income tax for residents of
Laddered Maturity, California Premium, Colorado, Connecticut, such state (except for the Oklahoma IM-IT Trust where a portion
Florida, Florida Intermediate, Florida Intermediate Laddered of the income of the Trust may be subject to the Oklahoma state
Maturity, Georgia, Louisiana, Massachusetts, Massachusetts income tax)
Premium, Michigan, Michigan Intermediate, Michigan Intermediate
Laddered Maturity, Michigan Premium, Minnesota, Missouri,
Missouri Intermediate Laddered Maturity, Missouri Premium,
New Jersey, New Jersey Intermediate Laddered Maturity,
New Mexico, New York, New York Intermediate, New York
Intermediate Laddered Maturity, New York Limited Maturity,
Ohio, Ohio Intermediate, Ohio Intermediate Laddered Maturity,
Ohio Premium, Oklahoma, Pennsylvania, Pennsylvania Intermediate,
Pennsylvania Intermediate Laddered Maturity, Pennsylvania
Premium, Tennessee, Texas, Texas Intermediate Laddered
Maturity, Washington, West Virginia
Insured Tax Free Bond Trust...................................... Tax-exempt income by investing in insured municipal securities
Insured Tax Free Bond Trust, Insured Multi-Series................ Tax-exempt income by investing in insured municipal securities;
(National, Limited Maturity, New York) all issuers of bonds in a state trust are located in such state--
providing exemptions from state income tax for residents
of such state
Investors' Quality Tax-Exempt Trust.............................. Tax-exempt income by investing in municipal securities
Investors' Quality Tax-Exempt Trust, Multi-Series ............... Tax-exempt income by investing in municipal securities; all
(National, National AMT, Intermediate, Alabama, Arizona, issuers of bonds in a state trust are located in such state or in
Arkansas, California, Colorado, Connecticut, Delaware, territories or possessions of the United States--providing
Florida, Georgia, Hawaii, Kansas, Kentucky, Maine, Maryland, exemptions from state income tax for residents of such state
Massachusetts, Michigan, Minnesota, Missouri, Nebraska,
New Jersey, New York, North Carolina, Ohio, Oregon,
Pennsylvania, South Carolina, Virginia)
Investors' Quality Municipals Trust, AMT Series.................. Tax-exempt income for investors not subject to the alternative
minimum tax by investing in municipal securities, some or all of
which are subject to the Federal alternative minimum tax
Investors' Corporate Income Trust................................ Taxable income by investing in corporate bonds
Investors' Governmental Securities--Income Trust................. Taxable income by investing in government-backed GNMA securities
Van Kampen Merritt International Bond Income Trust............... High current income through an investment in a diversified
portfolio of foreign currency denominated corporate debt
obligations
Van Kampen Merritt Insured Income Trust.......................... High current income consistent with preservation of capital
through a diversified investment in a fixed portfolio of insured,
long-term or intermediate-term corporate debt securities
Van Kampen American Capital Insured Income Trust................. High current income consistent with preservation of capital
through a diversified investment in a fixed portfolio of insured,
long-term or intermediate-term corporate debt securities
Van Kampen Merritt Utility Income Trust.......................... High dividend income and capital appreciation by investing in
common stock of electric utilities
Van Kampen Merritt Select Equity Trust........................... Provide the potential for capital appreciation and income by
investing in a portfolio of actively traded, New York Stock
Exchange listed equity securities which are components of
the Dow Jones Industrial Average*
Van Kampen Merritt Select Equity and Treasury Trust.............. Protect Unitholders' capital and provide the potential for
capital appreciation and income by investing a portion of
its portfolio in "zero coupon"U.S. Treasury obligations and
the remainder of the trust's portfolio in actively traded,
New York Stock Exchange listed equity securities which
at the time of the creation of the trust were components
of the Dow Jones Industrial Average*
Van Kampen Merritt Blue Chip Opportunity Trust................... Provide the potential for capital appreciation and income by
investing in a portfolio of actively traded, New York Stock
Exchange listed equity securities which are components of the
Dow Jones Industrial Average*
Van Kampen Merritt Blue Chip Opportunity and Treasury Trust ..... Protect Unitholders' capital and provide the potential for
capital appreciation and income by investing a portion of its
capital in "zero coupon"U.S. Treasury obligations and
the remainder of the trust's portfolio in actively traded,
New York Stock Exchange listed equity securities which at
the time of the creation of the trust were components of the
Dow Jones Industrial Average*
Van Kampen Merritt Emerging Markets Income Trust................. High current income consistent with preservation of capital
through a diversified investment in a fixed portfolio primarily
consisting of Brady Bonds of emerging market countries that
have restructured sovereign debt pursuant to the framework of
the Brady Plan
Van Kampen Merritt Global Telecommunications Trust............... Provide the potential for capital appreciation and income
consistent with the preservation of invested capital, by
investing in a portfolio of equity securities which provide
equipment for or services to the telecommunications industry
Van Kampen Merritt Global Energy Trust........................... Provide the potential for capital appreciation and income
consistent with the preservation of invested capital, by the
energy industry investing in a portfolio of equity securities
diversified within the energy industry
Strategic Ten Trust.............................................. Provide an above average total return through a combination of
(United States, United Kingdom, and Hong Kong Portfolios) potential capital appreciation and dividend income, consistent
with preservation of invested capital, by investing in a portfolio
of common stocks of the ten companies in a recognized stock
exchange index having the highest dividend yields
Van Kampen Merritt Brand Name Equity Trust....................... Provide the potential for capital appreciation and income
consistent with the preservation of invested capital, by
investing in a portfolio of equity securities diversified within
the non-durable consumer products industry
____________________
*The Dow Jones Industrial Average is the property of Dow Jones & Company, Inc. Dow Jones & Company, Inc. has not
granted to the Trust or the Sponsor a license to use the Dow Jones Industrial Average.
</TABLE>
<TABLE>
<CAPTION>
Name of Mutual Fund Fund Investment Objective
<S> <C>
Van Kampen Merritt U.S. Government Fund................... High current income by investing in U.S. Government securities
Van Kampen Merritt Insured Tax Free Income Fund........... High current income exempt from Federal income taxes
by investing in insured municipal securities
Van Kampen Merritt Municipal Income Fund.................. High level of current income exempt from Federal income tax,
consistent with preservation of capital
Van Kampen Merritt Tax Free High Income Fund.............. High current income exempt from Federal income taxes by
investing in medium and lower grade municipal securities
Van Kampen Merritt California Insured Tax Free Fund....... High current income exempt from Federal and California income
taxes by investing in insured California municipal securities
Van Kampen Merritt High Yield Fund........................ Provide a high level of current income by investing in
medium and lower grade domestic and foreign
government and corporate debt securities. The Fund will
seek capital appreciation as a secondary objective
Van Kampen Merritt Growth and Income Fund................. Long-term growth of both capital and dividend income
by investing in dividend paying common stocks
Van Kampen Merritt Pennsylvania Tax Free Income Fund...... High current income exempt from Federal and
Pennsylvania state and local income taxes by investing in
medium and lower grade Pennsylvania municipal securities
Van Kampen Merritt Money Market Fund...................... High current income by investing in a broad range of
money market instruments that will mature within twelve months
Van Kampen Merritt Tax Free Money Fund.................... High current income exempt from Federal income taxes
by investing in a broad range of municipal securities that
will mature within twelve months
Van Kampen Merritt Short-Term Global Income Fund.......... High current income by investing in a global portfolio of high
quality debt securities denominated in various currencies
having remaining maturities of not more than three years
Van Kampen Merritt Adjustable Rate U.S. Government Fund... High level of current income with a relatively stable net
asset value investing in U.S. Government securities
Van Kampen Merritt Limited Term Municipal Income Fund..... High level of current income exempt from Federal income tax,
consistent with preservation of capital
Van Kampen Merritt Utility Fund........................... Provide capital appreciation and current income by investing
in a diversified portfolio of common stocks and income
securities issued by companies engaged in the utilities industry
Van Kampen Merritt Strategic Income Fund.................. Provide shareholders with high current income. The Fund will
seek capital appreciation as a secondary objective
Van Kampen Merritt Florida Insured Tax Free Income Fund... High level of current income exempt from Federal income tax
and Florida intangible personal property taxes consistent
with preservation of capital
Van Kampen Merritt New Jersey Tax Free Income Fund........ High level of current income exempt from Federal income tax
and New Jersey gross income tax consistent with
preservation of capital
Van Kampen Merritt New York Income Fund................... High level of current income exempt from Federal as well as
New York State and New York City income taxes, consistent
with preservation of capital
</TABLE>
<TABLE>
<CAPTION>
Name of Closed-end Fund Fund Investment Objective
<S> <C>
Van Kampen Merritt Municipal Income Trust.......................... High current income exempt from Federal income taxes with
safety of principal by investing in a diversified portfolio of
investment grade municipal securities
Van Kampen Merritt California Municipal Trust...................... High current income exempt from Federal and California income
taxes with safety of principal by investing in a diversified
portfolio of investment grade California municipal securities
Van Kampen Merritt Intermediate Term High Income Trust............. High current income while seeking to preserve shareholders'
capital by investing in a diversified portfolio of high yield
fixed income securities
Van Kampen Merritt Limited Term High Income Trust.................. High current income while seeking to preserve shareholders'
capital by investing in a diversified portfolio of high
yield fixed income securities
Van Kampen Merritt Prime Rate Income Trust......................... High current income, consistent with preservation of capital
by investing in interests in floating or variable rate senior
loans
Van Kampen Merritt Investment Grade Municipal Trust................ High current income exempt from Federal income tax, consistent
with preservation of capital
Van Kampen Merritt Municipal Trust................................. High level of current income exempt from Federal income tax,
consistent with preservation of capital
Van Kampen Merritt California Quality Municipal Trust.............. High current income exempt from Federal and California income
taxes with safety of principal by investing in a diversified
portfolio of investment grade California municipal securities
Van Kampen Merritt Florida Quality Municipal Trust................. High current income exempt from Federal income taxes and
Florida intangible personal property taxes with safety of
principal by investing in a diversified portfolio of investment
grade Florida municipal securities
Van Kampen Merritt New York Quality Municipal Trust................ High current income exempt from Federal as well as New York
State and New York City income taxes with safety of
principal by investing in a diversified portfolio of investment
grade New York municipal securities
Van Kampen Merritt Ohio Quality Municipal Trust.................... High current income exempt from Federal and Ohio income
taxes with safety of principal by investing in a diversified
portfolio of investment grade Ohio municipal securities
Van Kampen Merritt Pennsylvania Quality Municipal Trust............ High current income exempt from Federal and Pennsylvania
income taxes with safety of principal by investing in a
diversified
portfolio of investment grade Pennsylvania municipal securities
Van Kampen Merritt Trust for Investment Grade Municipals........... High level of current income exempt from Federal income tax,
consistent with preservation of capital
Van Kampen Merritt Trust for Insured Municipals.................... High level of current income exempt from Federal income tax,
consistent with preservation of capital by investing in a
diversified portfolio of municipal securities which are
covered by insurance with respect to timely payment of
principal and interest
Van Kampen Merritt Trust for Investment Grade CA Municipals........ High level of current income exempt from Federal and
California income taxes, consistent with preservation of
capital by investing in a diversified portfolio of California
municipal securities
Van Kampen Merritt Trust for Investment Grade FL Municipals........ High level of current income exempt from Federal income
taxes, consistent with preservation of capital. The Fund
also seeks to offer its Shareholders the opportunity to
own securities exempt from Florida intangible personal
property taxes
Van Kampen Merritt Trust for Investment Grade NJ Municipals........ High level of current income exempt from Federal income
taxes and New Jersey gross income taxes, consistent
with preservation of capital
Van Kampen Merritt Trust for Investment Grade NY Municipals........ High level of current income exempt from Federal as well as
from New York State and New York City income taxes,
consistent with preservation of capital
Van Kampen Merritt Trust for Investment Grade PA Municipals........ High level of current income exempt from Federal and
Pennsylvania income taxes and, where possible under
local law, local income and property taxes, consistent
with preservation of capital
Van Kampen Merritt Municipal Opportunity Trust..................... High level of current income exempt from Federal income
tax, consistent with preservation of capital by
investing in a diversified portfolio of municipal securities
Van Kampen Merritt Advantage Municipal Income Trust................ High level of current income exempt from Federal income
tax, consistent with preservation of capital by investing
in a diversified portfolio of municipal securities
Van Kampen Merritt Advantage Pennsylvania Municipal Income Trust... High level of current income exempt from Federal and
Pennsylvania income taxes and, where possible under
local law, local income and property taxes, consistent
with preservation of capital
Van Kampen Merritt Strategic Sector Municipal Trust................ Provide common shareholders with a high level of current
income exempt from Federal income taxes, consistent
with preservation of capital
Van Kampen Merritt Value Municipal Income Trust.................... High level of current income exempt from Federal income
taxes, consistent with preservation of capital
Van Kampen Merritt California Value Municipal Income Trust......... High level of current income exempt from Federal and California
income taxes, consistent with preservation of capital
Van Kampen Merritt Massachusetts Value Municipal Income Trust...... High level of current income exempt from Federal income taxes
and Massachusetts personal income taxes, consistent with
preservation of capital
Van Kampen Merritt New Jersey Value Municipal Income Trust......... High level of current income exempt from Federal income
taxes and New Jersey gross income tax, consistent with
preservation of capital
Van Kampen Merritt New York Value Municipal Income Trust........... High level of current income exempt from Federal as well as
New York State and New York City income taxes,
consistent with preservation of capital
Van Kampen Merritt Ohio Value Municipal Income Trust............... High level of current income exempt from Federal and Ohio
income taxes, consistent with preservation of capital
High level of current income exempt from Federal and
Van Kampen Merritt Pennsylvania Value Municipal Income Trust....... Pennsylvania
income taxes, consistent with preservation of capital
Van Kampen Merritt Municipal Opportunity Trust II.................. High level of current income exempt from Federal income tax,
consistent with preservation of capital
Van Kampen Merritt Florida Municipal Opportunity Trust ............ High level of current income exempt from Federal income tax,
consistent with preservation of capital. The Fund seeks
to offer its common shareholders the opportunity to own
securities exempt from Florida intangible personal property
taxes
Van Kampen Merritt Advantage Municipal Income Trust II............. Provide common shareholders with a high level of current
income exempt from Federal income tax, consistent
with preservation of capital
Van Kampen Merritt Select Sector Municipal Trust................... To provide common shareholders with a high level of current
income exempt from Federal income tax, consistent with
preservation of capital
</TABLE>
If the Sponsor shall fail to perform any of its duties under the Trust
Agreement or become incapable of acting or become bankrupt or its affairs are
taken over by public authorities, then the Trustee may (i) appoint a successor
Sponsor at rates of compensation deemed by the Trustee to be reasonable and
not exceeding amounts prescribed by the Securities and Exchange Commission,
(ii) terminate the Trust Agreement and liquidate the Trust as provided therein
or (iii) continue to act as Trustee without terminating the Trust Agreement.
Trustee. The Trustee is The Bank of New York, a trust company organized under
the laws of New York. The Bank of New York has its offices at 101 Barclay
Street, New York, New York 10286, (800) 221-7668. The Bank of New York is
subject to supervision and examination by the Superintendent of Banks of the
State of New York and the Board of Governors of the Federal Reserve System,
and its deposits are insured by the Federal Deposit Insurance Corporation to
the extent permitted by law.
The duties of the Trustee are primarily ministerial in nature. It did not
participate in the selection of Obligations for the portfolios of either of
the Trusts.
In accordance with the Trust Agreement, the Trustee shall keep proper books of
record and account of all transactions at its office for each Trust. Such
records shall include the name and address of, and the certificates issued by
each Trust to, every Unitholder of the Trusts. Such books and records shall be
open to inspection by any Unitholder at all reasonable times during usual
business hours. The Trustee shall make such annual or other reports as may
from time to time be required under any applicable state or Federal statute,
rule or regulation (see "Rights of Unitholders--Reports Provided"). The
Trustee is required to keep a certified copy or duplicate original of the
Trust Agreement on file in its office available for inspection at all
reasonable times during the usual business hours by any Unitholder, together
with a current list of the Obligations held in each Trust.
Under the Trust Agreement, the Trustee or any successor trustee may resign and
be discharged of the Trusts created by the Trust Agreement by executing an
instrument in writing and filing the same with the Sponsor. The Trustee or
successor trustee must mail a copy of the notice of resignation to all
Unitholders then of record, not less than 60 days before the date specified in
such notice when such resignation is to take effect. The Sponsor upon
receiving notice of such resignation is obligated to appoint a successor
trustee promptly. If, upon such resignation, no successor trustee has been
appointed and has accepted the appointment within 30 days after notification,
the retiring Trustee may apply to a court of competent jurisdiction for the
appointment of a successor. The Sponsor may remove the Trustee and appoint a
successor trustee as provided in the Trust Agreement at any time with or
without cause. Notice of such removal and appointment shall be mailed to each
Unitholder by the Sponsor. Upon execution of a written acceptance of such
appointment by such successor trustee, all the rights, powers, duties and
obligations of the original trustee shall vest in the successor. The
resignation or removal of a Trustee becomes effective only when the successor
trustee accepts its appointment as such or when a court of competent
jurisdiction appoints a successor trustee.
Any corporation into which a Trustee may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which a Trustee shall be a party, shall be the successor trustee. The Trustee
must be a banking corporation organized under the laws of the United States or
any State and having at all times an aggregate capital, surplus and undivided
profits of not less than $5,000,000.
UNDERWRITING
The Underwriters named below have severally purchased Units in the following
respective amounts from the Sponsor.
<TABLE>
<CAPTION>
Series
Name 46
Address Units
<S> <C> <C>
Van Kampen American Capital Dist., Inc. One Parkview Plaza, Oakbrook Terrace, Illinois 60181 2,565
Dean Witter Reynolds, Incorporated 2 World Trade Center, 59th Floor, New York, New York 10048 100
A.G. Edwards & Sons, Inc. One North Jefferson Avenue, St. Louis, Missouri 63103 100
Fidelity Capital Markets 164 Northern Avenue, Boston, Massachusetts 02215 100
Gruntal & Co., Incorporated 14 Wall Street, New York, New York 10005 100
Pershing DIV of DLJ Secs Corp. One Pershing Plaza, 7th Floor, Jersey City, New Jersey 07399 100
3,065
</TABLE>
<TABLE>
<CAPTION>
Series
Name 47
Address Units
<S> <C> <C>
Van Kampen American Capital Dist., Inc. One Parkview Plaza, Oakbrook Terrace, Illinois 60181 7,309
McLaughlin, Piven, Vogel
Securities, Inc. 30 Wall Street, 5th Floor, New York, New York 10005 500
Fidelity Capital Markets 164 Northern Avenue, Boston, Massachusetts 02215 250
Pershing DIV of DLJ Secs Corp. One Pershing Plaza, 7th Floor, Jersey City, New Jersey 07399 250
B.C. Ziegler and Company 215 North Main Street, West Bend, Wisconsin 53095 250
Oppenheimer & Co., Inc. World Financial Center, 8th Floor, New York, New York 10281 150
Dean Witter Reynolds, Incorporated 2 World Trade Center, 59th Floor, New York, New York 10048 100
A.G. Edwards & Sons, Inc. One North Jefferson Avenue, St. Louis, Missouri 63103 100
Gruntal & Co., Incorporated 14 Wall Street, New York, New York 10005 100
Edward D. Jones & Co. 201 Progress Parkway, Maryland Heights, Missouri 63043 100
Kemper Securities, Inc. 77 West Wacker Drive, 28th Floor, Chicago, Illinois 60601 100
9,209
</TABLE>
Units may also be sold to broker-dealers and others at prices representing the
per Unit concession or agency commission stated under "Public Offering--Unit
Distribution". However, resales of Units by such broker-dealers and others to
the public will be made at the Public Offering Price described in the
Prospectus. The Sponsor reserves the right to reject, in whole or in part, any
order for the purchase of Units and the right to change the amount of the
concession or agency commission from time to time.
In addition to any other benefits the Underwriters may realize from the sale
of the Units of the Trusts, the Agreement Among Underwriters provides that the
Sponsor will share on a pro rata basis among those Underwriters who underwrite
at least 250 Units 50% of the aggregate gain, if any, represented by the
difference between the Sponsor's cost of the Securities in connection with
their acquisition and the evaluation thereof on the Date of Deposit less
deductions for certain accrued interest and certain other costs. See "Public
Offering--Sponsor and Underwriter Compensation"and "Portfolio".
Underwriters and broker-dealers of each Trust, banks and/or others are
eligible to participate in a program in which such firms receive from the
Sponsor a nominal award for each of their registered representatives who have
sold a minimum number of units of unit investment trusts created by the
Sponsor during a specified time period. In addition, at various times the
Sponsor may implement other programs under which the sales forces of
Underwriters, brokers, dealers, banks and/or others may be eligible to win
other nominal awards for certain sales efforts, or under which the Sponsor
will reallow to any such Underwriters, brokers, dealers, banks and/or others
that sponsor sales contests or recognition programs conforming to criteria
established by the Sponsor, or participate in sales programs sponsored by the
Sponsor, an amount not exceeding the total applicable sales charges on the
sales generated by such person at the public offering price during such
programs. Also, the Sponsor in its discretion may from time to time pursuant
to objective criteria established by the Sponsor pay fees to qualifying
Underwriters, brokers, dealers, banks or others for certain services or
activities which are primarily intended to result in sales of Units of the
Trust. Such payments are made by the Sponsor out of its own assets, and not
out of the assets of the Trust. These programs will not change the price
Unitholders pay for their Units or the amount that the Trust will receive from
the Units sold. Approximately every eighteen months the Sponsor holds a
business seminar which is open to Underwriters that sell units of trusts it
sponsors. The Sponsor pays substantially all costs associated with the
seminar, excluding Underwriter travel costs. Each Underwriter is invited to
send a certain number of representatives based on the gross number of units
such firm underwrites during a designated time period.
OTHER MATTERS
Legal Opinions. The legality of the Units offered hereby has been passed upon
by Chapman and Cutler, 111 West Monroe Street, Chicago, Illinois 60603, as
counsel for the Sponsor. Tanner Propp & Farber, 99 Park Avenue, New York, New
York 10016 has acted as counsel for the Trustee and as special counsel for the
Trust for New York tax matters.
Independent Certified Public Accountants. The statements of condition and the
related portfolios at the Date of Deposit included in this Prospectus have
been audited by Grant Thornton LLP, independent certified public accountants,
as set forth in their report in this Prospectus, and are included herein in
reliance upon the authority of said firm as experts in accounting and
auditing.
DESCRIPTION OF OBLIGATION RATINGS
Standard & Poor's Ratings Group. A brief description of the applicable
Standard & Poor's Ratings Group ("Standard & Poor's") rating symbols and their
meanings follows:
A Standard & Poor's corporate or municipal bond rating is a current assessment
of the creditworthiness of an obligor with respect to a specific debt
obligation. This assessment may take into consideration obligors such as
guarantors, insurers or lessees.
The bond rating is not a recommendation to purchase, sell or hold a security,
inasmuch as it does not comment as to market price or suitability for a
particular investor.
The ratings are based on current information furnished by the issuer and
obtained by Standard & Poor's from other sources it considers reliable.
Standard & Poor's does not perform an audit in connection with any rating and
may, on occasion, rely on unaudited financial information. The ratings may be
changed, suspended, or withdrawn as a result of changes in, or unavailability
of, such information, or for other circumstances.
The ratings are based, in varying degrees, on the following considerations:
I. Likelihood of default--capacity and willingness of the obligor as to the
timely payment of interest and repayment of principal in accordance with the
terms of the obligation;
II. Nature of and provisions of the obligation;
III. Protection afforded by, and relative position of, the obligation in the
event of bankruptcy, reorganization or other arrangements under the laws of
bankruptcy and other laws affecting creditors' rights.
AAA--Bonds rated AAA have the highest rating assigned by Standard & Poor's to
a debt obligation. Capacity to pay interest and repay principal is extremely
strong.
AA--Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in small degree.
A--Bonds rated A have a strong capacity to pay interest and repay principal
although they are somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than bonds in higher rated categories.
BBB--Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay interest and repay
principal for bonds in this category than for bonds in higher rated
categories.
Plus (+) or Minus (-): The ratings from "AA"to "BBB"may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
Provisional Ratings: The symbol "(p)"indicates that the rating is provisional.
A provisional rating assumes the successful completion of the project being
financed by the bonds being rated and indicates that payment of debt service
requirements is largely or entirely dependent upon the successful and timely
completion of the project. This rating, however, while addressing credit
quality subsequent to completion of the project, makes no comment on the
likelihood of, or the risk of default upon failure of, such completion. The
investor should exercise his own judgment with respect to such likelihood and
risk.
Moody's Investors Service, Inc. A brief description of the applicable Moody's
Investors Service, Inc. rating symbols and their meanings follow:
Aaa--Bonds which are rated Aaa are judged to be the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge". Interest payments are protected by a large, or by an exceptionally
stable, margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues. With the occasional
exception of oversupply in a few specific instances, the safety of obligations
of this class is so absolute that their market value is affected solely by
money market fluctuations.
*As published by the rating companies.
Aa--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuations of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities. These Aa bonds are high grade, their market value virtually immune
to all but money market influences, with the occasional exception of
oversupply in a few specific instances.
A--Bonds which are rated A possess many favorable investment attributes and
are to be considered as higher medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may
be present which suggest a susceptibility to impairment sometime in the
future. The market value of A-rated bonds may be influenced to some degree by
credit circumstances during a sustained period of depressed business
conditions. During periods of normalcy, bonds of this quality frequently move
in parallel with Aaa and Aa obligations, with the occasional exception of
oversupply in a few specific instances.
Baa--Bonds which are rated Baa are considered as lower medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well. The market value of Baa-rated bonds is more sensitive to changes in
economic circumstances, and aside from occasional speculative factors applying
to some bonds of this class, Baa market valuations move in parallel with Aaa,
Aa and A obligations during periods of economic normalcy, except in instances
of oversupply.
Moody's bond rating symbols may contain numerical modifiers of a generic
rating classification. The modifier 1 indicates that the bond ranks at the
high end of its category; the modifier 2 indicates a mid-range ranking; and
the modifier 3 indicates that the issue ranks in the lower end of its generic
rating category.
Con--Bonds for which the security depends upon the completion of some act or
the fulfillment of some condition are rated conditionally. These are bonds
secured by (a) earnings of projects under construction, (b) earnings of
projects unseasoned in operating experience, (c) rentals which begin when
facilities are completed, or (d) payments to which some other limiting
condition attaches. Parenthetical rating denotes probable credit stature upon
completion of construction or elimination of basis of condition.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors of Van Kampen American Capital Distributors, Inc.
and the Unitholders of Van Kampen American Capital Insured Income Trust,
Series 46 (Intermediate) and Series 47:
We have audited the accompanying statements of condition and the related
portfolios of Van Kampen American Capital Insured Income Trust, Series 46
(Intermediate) and Series 47 as of May 23, 1995. The statements of condition
and portfolios are the responsibility of the Sponsor. Our responsibility is to
express an opinion on such financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of an irrevocable letter of credit deposited
to purchase 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 Van Kampen American Capital
Insured Income Trust, Series 46 (Intermediate) and Series 47 as of May 23,
1995, in conformity with generally accepted accounting principles.
GRANT THORNTON LLP
Chicago, Illinois
May 23, 1995
<TABLE>
VAN KAMPEN AMERICAN CAPITAL INSURED INCOME TRUST
SERIES 46 (INTERMEDIATE) and SERIES 47
Statements of Condition
As of May 23, 1995
<CAPTION>
Series Series
INVESTMENT IN SECURITIES 46 47
<S> <C> <C>
Contracts to purchase securities <F1><F2><F4>............ $ 3,041,844 $ 8,757,801
Accrued interest to the First Settlement Date <F1><F4>... 61,175 350,131
Total.................................................... $ 3,103,019 $ 9,107,932
LIABILITY AND INTEREST OF UNITHOLDERS
Liability--..............................................
Accrued interest payable to Sponsor <F1><F4>............. $ 61,175 $ 350,131
Interest of Unitholders-- ...............................
Units of fractional undivided interest outstanding:......
Cost to investors <F3> .................................. 3,135,893 9,209,000
Less: Gross underwriting commission <F3> ................ 94,049 451,199
Net interest to Unitholders <F3><F4>..................... 3,041,844 8,757,801
Total.................................................... $ 3,103,019 $ 9,107,932
<FN>
<F1>The aggregate value of the Obligations listed under "Portfolios"for each Trust
herein and their cost to such Trust are the same. The value of the Obligations
is determined by Interactive Data Services, Inc. on the bases set forth under
"Public Offering--Offering Price". The contracts to purchase Obligations are
collateralized by irrevocable letters of credit which have been deposited with
the Trustee in and for the following amounts:
</TABLE>
<TABLE>
<CAPTION>
Principal Accrued
Amount of Offering Price Interest to
Amount of Obligations of Obligations Expected
Letter of Under Under Delivery
Credit Contracts Contracts Dates
<S> <C> <C> <C> <C>
Series 46 $ 3,098,983 $ 3,065,000 $ 3,041,844 $ 57,139
Series 47 $ 9,101,601 $ 9,010,000 $ 8,757,801 $ 343,800
<F2>Insurance coverage providing for the timely payment, when due (as more fully
set forth under "Insurance on the Obligations"), of all principal and interest
on the Obligations in the portfolio of each Trust has been obtained by each
Trust except for Obligations in each Trust for which insurance has been
obtained by the issuer of the Obligation. Such insurance does not guarantee
the market value of the Obligations or the value of the Units. The insurance
obtained by the Trusts is effective only while the Obligations are held in
such Trusts, however, insurance obtained by an Obligation issuer is effective
so long as such Obligation is outstanding. Neither the bid nor offering prices
of the underlying Obligations or of the Units, absent situations in which the
Obligations 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 the Trusts.
<F3>The aggregate public offering price (exclusive of interest) and the aggregate
sales charge are computed on the bases set forth under "Public
Offering--Offering Price"and "Public Offering--Sponsor and Underwriter
Compensation"and assume all single transactions involve less than 100 Units.
For single transactions involving 100 or more Units, the sales charge is
reduced (see "Public Offering--General") resulting in an equal reduction in
both the Cost to investors and the Gross underwriting commission while the Net
interest to Unitholders remains unchanged.
<F4>The Trustee will advance to each Trust the amount of net interest accrued to
May 31, 1995, the First Settlement Date, for distribution to the Sponsor as
the Unitholder of record as of the First Settlement Date.
</TABLE>
VAN KAMPEN AMERICAN CAPITAL INSURED INCOME TRUST
SERIES 46 (INTERMEDIATE)
PORTFOLIO as of May 23, 1995
<TABLE>
<CAPTION>
Name of Issuer, Title, Interest Rateand Offering
Aggregate Maturity Date of eitherObligations Deposited or As Redemption Price to
Principal<F1> ObligationsContracted for<F1><F5> Rating<F2> Insured<F7> Features<F3> Trust<F4>
<S> <C> <C> <C> <C> <C> <C>
100,000 Public Service Electric and Gas #6.50% Due
/$ 5/1/2004 ....................................... A AAA $ 96,250
/ 90,000 U.S. Treasury Strip #0.00% Due 5/15/2004 ..... N/R AAA 50,063 <F6>
450,000 Los Angeles County, California, Taxable Pension
Obligation Bonds (General Obligation-Unlimited
Tax) Series A 8.49% Due 6/30/2004 ............ A AAA 487,687
500,000 Province of Saskatchewan (Canada) (FSA Insured)
8.00% Due 7/15/2004 .......................... AAA AAA 534,375
150,000 Municipal Authority of Westmoreland County
(Westmoreland County, Pennsylvania) Taxable
Municipal Service Revenue Bonds, Series 1993A
(FGIC Insured) #5.95% Due 8/15/2004 .......... AAA AAA 139,313
525,000 Texas Utilities Electric Company (MBIA Insured)
6.25% Due 10/1/2004 .......................... AAA AAA 500,719
500,000 Hydro-Quebec Power Company, Medium-Term Notes,
Series B (MBIA Insured) 6.98% Due 2/28/2005 .. AAA AAA 494,375
250,000 Rensselaer County, New York, Pension System
General Obligation Bonds, Series 1995B
(Federally Taxable) FGIC Insured 7.50% Due
5/1/2005 ....................................... AAA AAA 258,437
500,000 San Diego County, California, Taxable Pension
Obligation Bonds (General Obligation-Unlimited
Tax) Series A (FSA Insured) 6.49% Due
8/15/2005 ...................................... AAA AAA 480,625
$ 3,065,000 $ 3,041,844
</TABLE>
All of the Obligations in the portfolio are insured either by one of the
Preinsured Obligation Insurers (as indicated in the obligation name) or under
a portfolio insurance policy obtained by the Trust from AMBAC Indemnity or
CapMAC. Obligations that are insured under a portfolio insurance policy
obtained by the Trust from CapMAC are marked by a "/". See "Insurance on the
Obligations".
For an explanation of the footnotes used on this page, see "Notes to
Portfolios".
VAN KAMPEN AMERICAN CAPITAL INSURED INCOME TRUST
SERIES 47
PORTFOLIO as of May 23, 1995
<TABLE>
<CAPTION>
Name of Issuer, Title, Interest Rateand
Maturity Date of eitherObligations Offering
Aggregate Deposited or ObligationsContracted As Redemption Price to
Principal<F1> for<F1><F5> Rating<F2> Insured<F7> Features<F3> Trust<F4>
<S> <C> <C> <C> <C> <C> <C>
1,000,000 Redevelopment Agency of the City of San
Diego, Mount Hope Redevelopment Project,
Tax Allocation Bonds, Series 1995B
(Taxable) Capital Guaranty Insured** 8.10% 2005 @ 102
$ Due 10/1/2019 ............................. AAA AAA 2011 @ 100 S.F. $ 1,025,470
1,000,000 City of Anaheim, California, Certificates
of Participation (1993 Land Acquisition
Refinancing Project) Federally Taxable
(AMBAC Indemnity Insured) #6.50% Due 2003 @ 102
11/1/2019 .................................. AAA AAA 2009 @ 100 S.F. 865,000
/ 235,000 U.S. Treasury Strip #0.00% Due 2/15/2020 . N/R AAA 40,831 <F6>
1,000,000 Redevelopment Agency of the City of San
Jose (California) Merged Area Redevelopment
Project Housing Set-Aside Taxable Tax
Allocation Bonds, Series 1993C (MBIA 2004 @ 102
Insured) #7.60% Due 8/1/2021 ............. AAA AAA 2011 @ 100 S.F. 985,000
500,000 Pacific Gas and Electric Company #8.25%
Due 11/1/2022 .............................. A AAA 2002 @ 103.14 516,875
1,000,000 New York State Electric and Gas Corporation
/ 8.30% Due 12/15/2022 ..................... BBB+ AAA 2002 @ 103.43 1,037,500
1,000,000 Nevada Power Company 8.50% Due 1/1/2023 .. BBB AAA 2003 @ 103.71 1,043,750
1,000,000 Metropolitan Edison Company, Medium Term
/ Notes 8.15% Due 1/30/2023 ................ BBB+ AAA 2003 @ 104.08 1,025,000
1,000,000 Jersey Central Power and Light Company
/ 7.50% Due 5/1/2023 ........................ BBB+ AAA 2003 @ 103.33 958,750
1,000,000 Province of Newfoundland (Canada) (FSA
Insured) 7.32% Due 10/13/2023 ............ AAA AAA 961,250
275,000 Connecticut Light and Power Company (FSA
Insured) 8.50% Due 6/1/2024 ............... AAA AAA 2004 @ 103.87 298,375
$ 9,010,000 $ 8,757,801
</TABLE>
All of the Obligations in the portfolio are insured either by one of the
Preinsured Obligation Insurers (as indicated in the obligation name) or under
a portfolio insurance policy obtained by the Trust from AMBAC Indemnity or
CapMAC. Obligations that are insured under a portfolio insurance policy
obtained by the Trust from CapMAC are marked by a "/". See "Insurance on the
Obligations".
For an explanation of the footnotes used on this page, see "Notes to
Portfolios".
NOTES TO PORTFOLIOS: As of the Date of Deposit: May 23, 1995
(1)All Obligations 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, Obligations 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 Obligations. Contracts to acquire
Obligations were entered into during the period from May 15,1995 to May
22,1995. These Obligations have expected settlement dates from May 23,1995 to
June 1,1995 (see "Trust Portfolios").
(2)All ratings are by Standard & Poor's Ratings Group unless otherwise
indicated. "*"indicates that the rating of the Obligation is by Moody's
Investors Service, Inc. The ratings represent the latest published ratings by
the respective ratings agency. "Y"indicates that such rating is contingent
upon physical receipt by the respective ratings agency of a policy of
insurance obtained by the issuer of the bonds involved and issued by the
Preinsured Bond Insurer named in the bond's title. A commitment for insurance
in connection with these bonds has been issued by the Preinsured Bond Insurer
named in the bond's title. "N/R"indicates that the applicable rating service
did not provide a rating for that particular Obligation. For a brief
description of the rating symbols and their related meaning, see "Description
of Obligation Ratings".
(3)There is shown under this heading the year in which each issue of the
Obligations is initially or currently callable and the call price for that
year. Each issue of the Obligations 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 the
Obligations. Redemption pursuant to call provisions generally will, and
redemption pursuant to sinking fund provisions may, occur at times when the
redeemed bonds have an offering side valuation which represents a premium over
par. Certain Obligations may be subject to redemption without premium prior to
the date shown pursuant to extraordinary optional or mandatory redemptions if
certain events occur. Notwithstanding any provisions to the contrary, certain
bond issuers have in the past and others may in the future, attempt to redeem
bonds prior to their initially scheduled call dates and at prices which do not
include any premiums. For a general discussion of certain of these events, see
"Trust Portfolios--Redemptions of Obligations". To the extent that the
Obligations were deposited in the Trust at a price higher than the price at
which they are redeemed, this will represent a loss of capital when compared
with the original Public Offering Price of the Units. Conversely, to the
extent that the Obligations were acquired at a price lower than the redemption
price, this will represent an increase in capital when compared with the
original Public Offering Price of the Units. Distributions will generally be
reduced by the amount of the income which would otherwise have been paid with
respect to redeemed Obligations 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 "Tax Status"and "Estimated
Current Return and Estimated Long-Term Return".
(4)Evaluation of Obligations is made on the basis of current offering prices
for the Obligations. The offering prices are greater than the current bid
prices of the Obligations which is the basis on which Unit value is determined
for purposes of redemption of Units (see "Public Offering--Offering Price").
(5)Other information regarding the Obligations in each Trust, as of the Date
of Deposit, is as follows:
<TABLE>
<CAPTION>
Annual Bid Side
Annual Interest Evaluation
Insurance Cost to Profit (Loss) Income to of
Trust Cost Sponsor to Sponsor Trust Obligations
<S> <C> <C> <C> <C> <C>
Series 46... $871 $3,026,260 $15,584 $212,543 $3,030,575
Series 47... $8,955 $8,698,518 $59,283 $684,325 $8,713,633
</TABLE>
The Sponsor may have entered into contracts which hedge interest rate
fluctuations on certain Obligations in the portfolios. The cost of any such
contracts and the corresponding gain or loss is included in the Cost to
Sponsor.
On the Date of Deposit, the offering side evaluation of the Obligations in the
Trusts were higher than the bid side evaluation of such Obligations by 0.37%,
and 0.49%, of the aggregate principal amount of such Obligations for Series 46
and Series 47, respectively. All contracts are expected to be settled by the
First Settlement Date for the purchase of Units.
"#"indicates that such Obligation was issued at an original issue discount.
The tax effect of Obligations issued at an original issue discount is
described in "Tax Status".
(6)This Obligation has been purchased at a deep discount from the par value
because there is little or no stated interest income thereon. Obligations
which pay no interest are normally described as "zero coupon"bonds. Over the
life of bonds purchased at a deep discount the value of such bonds will
increase such that upon maturity the holders of such bonds will receive 100%
of the principal amount thereof. Approximately 3%, and 3%, of the aggregate
principal amount of the Obligations in Series 46 and Series 47, respectively,
are "zero coupon"bonds.
(7)Standard & Poor's Ratings Group has assigned its "AAA"investment rating to
all of the Obligations while in the Trusts, as insured by the Insurers.
ESTIMATED CASH FLOWS TO UNITHOLDERS
The table below sets forth the per Unit estimated distributions of interest
and principal to Unitholders. The table assumes no changes in Trust expenses,
no changes in the current interest rates, no exchanges, redemptions, sales,
prepayments or partial prepayments of the underlying Obligations 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.
Series 46 (Intermediate)
Monthly
<TABLE>
<CAPTION>
Estimated Estimated Estimated
Distribution Dates Interest Principal Total
(Each Month) Distribution Distribution Distribution
<S> <C> <C> <C> <C> <C> <C>
July 1995 $ 5.73 $ 5.73
August 1995 - April 2004 5.54 5.54
May 2004 5.54 $ 32.62 38.16
June 2004 5.42 29.37 34.79
July 2004 5.39 146.81 152.20
August 2004 3.85 163.14 166.99
September 2004 3.22 48.94 52.16
October 2004 3.11 171.28 174.39
November 2004 - February 2005 2.23 2.23
March 2005 2.14 163.14 165.28
April 2005 1.30 1.30
May 2005 1.30 81.56 82.86
June 2005 - August 2005 .80 .80
September 2005 .34 163.14 163.48
</TABLE>
Semi-annual
<TABLE>
<CAPTION>
Distribution Dates Estimated Estimated Estimated
(Each June and December Interest Principal Total
Unless Otherwise Indicated) Distribution Distribution Distribution
<S> <C> <C> <C> <C> <C> <C>
December 1995 $ 33.66 $ 33.66
June 1996 - December 2003 33.48 33.48
May 2004 $ 32.62 32.62
June 2004 33.36 29.37 62.73
July 2004 146.81 146.81
August 2004 163.14 163.14
September 2004 48.94 48.94
October 2004 171.28 171.28
December 2004 20.19 20.19
March 2005 163.14 163.14
May 2005 81.56 81.56
June 2005 10.11 10.11
September 2005 1.97 163.14 165.11
</TABLE>
Series 47
Monthly
<TABLE>
<CAPTION>
Estimated Estimated Estimated
Distribution Dates Interest Principal Total
(Each Month) Distribution Distribution Distribution
<S> <C> <C> <C> <C> <C> <C>
July 1995 $ 6.09 $ 6.09
August 1995 - May 2004 5.90 5.90
June 2004 5.90 $ 31.01 36.91
July 2004 - September 2007 5.75 5.75
October 2007 5.75 108.59 114.34
November 2007 - November 2012 5.03 5.03
December 2012 5.03 54.30 59.33
January 2013 4.28 217.18 221.46
February 2013 3.16 108.59 111.75
March 2013 - October 2019 2.50 2.50
November 2019 2.50 108.58 111.08
December 2019 - February 2020 1.92 1.92
March 2020 1.92 25.52 27.44
April 2020 - July 2021 1.92 1.92
August 2021 1.92 108.59 110.51
September 2021 - April 2023 1.25 1.25
May 2023 1.25 108.59 109.84
June 2023 - October 2023 .60 .60
November 2023 .21 108.59 108.80
</TABLE>
Semi-annual
<TABLE>
<CAPTION>
Distribution Dates Estimated Estimated Estimated
(Each June and December Interest Principal Total
Unless Otherwise Indicated) Distribution Distribution Distribution
<S> <C> <C> <C> <C> <C> <C>
December 1995 $ 35.79 $ 35.79
June 1996 - December 2003 35.60 35.60
June 2004 35.60 $ 31.01 66.61
December 2004 - June 2007 34.73 34.73
October 2007 108.59 108.59
December 2007 33.28 33.28
June 2008 - June 2012 30.38 30.38
December 2012 30.38 54.30 84.68
January 2013 217.18 217.18
February 2013 108.59 108.59
June 2013 17.58 17.58
December 2013 - June 2019 15.12 15.12
November 2019 108.58 108.58
December 2019 14.54 14.54
March 2020 25.52 25.52
June 2020 11.65 11.65
December 2020 - June 2021 11.65 11.65
August 2021 108.59 108.59
December 2021 8.95 8.95
June 2022 - December 2022 7.58 7.58
May 2023 108.59 108.59
June 2023 6.92 6.92
November 2023 2.65 108.59 111.24
</TABLE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
No person is authorized to give any information or to make any representations
not contained in this Prospectus; and any information or representation not
contained herein must not be relied upon as having been authorized by the
Fund, the Sponsor or the Underwriters. This Prospectus does not constitute an
offer to sell, or a solicitation of an offer to buy, securities in any state
to any person to whom it is not lawful to make such offer in such state.
<TABLE>
<CAPTION>
Title Page
<S> <C>
Summary of Essential Financial Information 3
The Trusts 6
Investment Objectives and Portfolio Selection 6
Trust Portfolios 7
Estimated Current Return and Estimated
Long-Term Return 11
Trust Operating Expenses 12
Insurance on the Obligations 13
Tax Status 18
Accrued Interest 21
Public Offering 21
Rights of Unitholders 25
Trust Administration 29
Underwriting 35
Other Matters 37
Description of Obligation Ratings 37
Report of Independent Certified Public Accountants 39
Statements of Condition 40
Portfolios 41
Notes to Portfolios 43
Estimated Cash Flows to Unitholders 45
</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
May 23, 1995
Van Kampen American Capital
Insured Income Trust
Series 46 (Intermediate)
and Series 47
A Wealth of Knowledge A Knowledge of Wealth(sm)
VAN KAMPEN AMERICAN CAPITAL
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
2800 Post Oak Boulevard
Houston, Texas 77056
Please retain this Prospectus for future reference.
Contents Of Registration Statement
This Registration Statement comprises the following papers and documents:
The facing sheet
The Cross-Reference Sheet
The Prospectus
The signatures
The consents of independent public accountants, rating services
and legal counsel
The following exhibits:
1.1 Proposed form of Trust Agreement between Van Kampen American Capital
Distributors, Inc., Depositor, American Portfolio Advisory Service, a
division of Van Kampen American Capital Investment Advisory Corp., as
Evaluator, and The Bank of New York, as Trustee (to be supplied by
amendment).
1.4 Copy of Bond Fund Portfolio Insurance Policy (to be supplied by
amendment).
1.5 Form of Agreement Among Underwriters (to be supplied by amendment).
3.1 Opinion and consent of counsel as to legality of securities being
registered (to be supplied by amendment).
3.2 Opinion of counsel as to Federal income tax status of securities
being registered (to be supplied by amendment).
3.3 Opinion and consent of counsel as to New York tax status of
securities being registered (to be supplied by amendment).
4.1 Consent of Interactive Data Services, Inc. (to be supplied by
amendment).
4.2 Consent of Standard & Poor's Ratings Group (to be supplied by
amendment).
4.3 Consent of Grant Thornton LLP (to be supplied by amendment).
Signatures
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Van Kampen American Capital Insured Income Trust, Series 49
has duly caused this 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 26th day of July, 1995.
Van Kampen American Capital Insured
Income Trust, Series 49
By Van Kampen American Capital
Distributors, Inc.
(Depositor)
By Sandra A. Waterworth
Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities and on July 26, 1995.
Signature Title
Don G. Powell Chairman and Chief )
Executive Officer )
William R. Rybak Senior Vice President and )
Chief Financial Officer )
Ronald A. Nyberg Director )
William R. Molinari Director )
Sandra A. Waterworth
(Attorney-in-fact*)
________________________________________________________________________
*An executed copy of each of the related powers of attorney was filed
with the Securities and Exchange Commission in connection with the
Registration Statement on Form S-6 of Insured Municipals Income Trust and
Investors' Quality Tax-Exempt Trust, Multi-Series 203 (File No. 33-65744)
and with the Registration Statement on Form S-6 of Insured Municipals
Income Trust, 170th Insured Multi-Series (File No. 33-55891) and the same
are hereby incorporated herein by this reference.
