File No. 33-83670
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 2 TO FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
A. Exact name of trust: MINT Group 12
B. Name of depositors:
J. C. BRADFORD & CO.
GLICKENHAUS & CO.
RAYMOND JAMES & ASSOCIATES, INC.
C. Complete address of depositors' principal executive offices:
J.C. BRADFORD & CO. GLICKENHAUS & CO.
330 Commerce Street 6 East 43rd Street
Nashville, Tennessee 37201 New York, New York 10017
RAYMOND JAMES & ASSOCIATES, INC.
880 Carillon Parkway
P.O. Box 12749
St. Petersburg, Florida 33733-2749
D. Name and complete address of agents for service:
J. RONALD SCOTT SETH M. GLICKENHAUS
J.C. BRADFORD & CO. GLICKENHAUS & CO.
331 Commerce Street 6 East 43rd Street
Nashville, Tennessee 37201 New York, New York 10017
RICHARD K. JOHNSON Copies to:
RAYMOND JAMES & ASSOCIATES, INC. ERIC F. FESS
880 Carillon Parkway CHAPMAN AND CUTLER
P.O. Box 12749 111 West Monroe Street
St. Petersburg, Florida 33733-2749 Chicago, Illinois 60603
XXXCheck box if it is proposed that this filing will become effective immedia
tely upon filing pursuant to paragraph (b) of Rule 485.
<PAGE>
MINT
MUNICIPAL INSURED NATIONAL TRUST
Series 45 - 5,472 Units
Tennessee Series 7 - 2,326 Units
NOTE: Part I of this Prospectus may not be distributed unless accompanied by
Part II.
THE MUNICIPAL INSURED NATIONAL TRUST
Prospectus, Part I
Dated: November 29, 1996
This Prospectus consists of two parts. The first contains a Summary of
Essential Financial Information on the reverse hereof as of July 31, 1996 and
a summary of additional specific information, including Special Factors
Concerning the Portfolios and audited financial statements of The Municipal
Insured National Trust Series 45 and Tennessee Series 7 (the "Trusts"),
including the related bond portfolios, as of July 31, 1996. The second part
of this Prospectus contains a general summary of the Trusts and special
factors concerning the issuers of the Bonds.
In the opinion of counsel, under existing law interest income to the Trusts
and, with certain exceptions, to Unit Holders is exempt from all Federal
income taxes, but may be subject to state and local taxes. Capital gains, if
any, are subject to tax. See Part II, under "The Trusts - Tax Status."
The Trusts are unit investment trusts formed for the purposes of obtaining
interest income and conserving capital through investment in a fixed and
insured portfolio of long-term bonds issued on behalf of the states, counties
or municipalities of the United States or authorities or political
subdivisions thereof (the "Bonds" or the "Securities"). See Part II under
"The Trusts." The payment of interest and the preservation of principal are
dependent upon the continuing ability of the issuers of the Bonds to meet such
obligations thereunder.
Offering. The initial public offerings of Units in the Trusts have been
completed. The Units offered hereby are issued and outstanding Units which
have been acquired by the Sponsors either by purchase from the Trustee of
Units tendered for redemption or in the secondary market. See Part II under
"Rights of Unit Holders - Redemption-Purchase by the Sponsors of Units
Tendered for Redemption" and "Public Offering - Market for Units." The price
at which the Units offered hereby were acquired was not less than the
redemption price determined as provided herein. See Part II under "Rights of
Unit Holders - Redemption - Computation of Redemption Price per Unit."
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.
<PAGE>
The Public Offering Price of the Units is based on the aggregate bid price of
the Securities, plus principal cash, in each Trust divided by the respective
number of Units outstanding, plus a sales charge calculated based upon years
to the pricing life date of the underlying portfolio as discussed in "Public
Offering - Offering Price" of Part II of the Prospectus. Neither the
evaluation of the Bonds or Units, except in situations in which the Bonds are
in default in payment of principal and/or interest or in significant risk of
such default, include value attributable to the insurance obtained by the
Trusts. See Part II under "Rights of Unit Holders - Redemption - Computation
of Redemption Price per Unit."
Market for Units. The Sponsors, although they are not obligated to do so,
intend to maintain a market for the Units at prices based on the aggregate bid
price of the Securities in the Trusts plus accrued interest to the date of
settlement, as more fully described in Part II under "Public Offering - Market
for Units." If such a market is not maintained, a Unit Holder may be able to
dispose of his Units only through redemption at prices based upon the
aggregate bid price of the underlying Securities. The purchase price of the
Securities in the Trusts, if they were available for direct purchase by
investors, would not include the sales charge included in the Public Offering
Price of the Units.
Investors should retain both Parts of this Prospectus for future reference.
<PAGE>
THE MUNICIPAL INSURED NATIONAL TRUST, SERIES 45
SUMMARY OF ESSENTIAL FINANCIAL INFORMATION
At July 31, 1996
Sponsors: J.C. Bradford & Co.
Glickenhaus & Co.
Raymond James & Associates, Inc.
Agent for Sponsors: J.C. Bradford & Co.
Trustee: The Bank of New York
Evaluator: Muller Data Corporation
<TABLE>
<S> <C>
Face Amount of Securities in Trust: $5,480,000
Number of Units: 5,472
Fractional Undivided Interest in Trust Per Unit: 1/5,472
Total Value of Securities in Portfolio (Based on
Bid Side Evaluations of Securities), less principal
cash overdraft: $5,534,661
==========
Sponsor's Repurchase Price Per Unit: $1,011.45
Plus Sales Charge of 4.865% of Public Offering Price: 51.72
__________
Public Offering Price Per Unit: $1,063.17*
==========
Redemption Price Per Unit: $1,011.45**
Excess of Public Offering Price Over Redemption Price Per Unit: $ 51.72
Weighted Average Maturity of Bonds in the Trust: 27.97 years
</TABLE>
Evaluation Time: 2:00 P.M., New York Time, on the next day
following receipt by the Sponsor of an
order for a Unit sale or purchase or by the
Trustee of a Unit tendered for redemption.
Evaluator's Fee: $.60 per Bond for each valuation.
Trustee's Annual Fee: For each $1,000 principal amount of Bonds in
the Trust, $1.27 under the monthly and $.87
under the semiannual distribution plan.
Sponsor's Annual Fee: $.25 per Unit outstanding maximum.
Date of Deposit: September 27, 1994
Date of Trust Agreement: September 27, 1994
Mandatory Termination Date: December 31, 2043
Minimum Principal Distribution: $1.00 per Unit
Minimum Value of the Trust under which Trust Agreement may be Terminated:
$1,100,000
[FN]
*Plus accrued interest to August 5, 1996, the expected date of settlement, of
$4.18 monthly and $9.25 semiannually.
**Based solely upon the bid side evaluations of the portfolio securities.
Upon tender for redemption, the price to be paid will include accrued interest
as described in Part II under "Rights of Unit Holders - Redemption -
Computation of Redemption Price Per Unit."
<PAGE>
THE MUNICIPAL INSURED NATIONAL TRUST, SERIES 45
SUMMARY OF ESSENTIAL FINANCIAL INFORMATION (continued)
At July 31, 1996
<TABLE>
<CAPTION>
PER UNIT
Monthly Semiannual
<S> <C> <C>
Estimated Annual Interest Income: $62.15 $62.15
Less Estimated Annual Expenses: 2.14 1.64
____________________
Estimated Net Annual Interest Income $60.01 $60.51
====================
Interest Distribution: $ 5.00 $30.25
Estimated Current Return Based on
Public Offering Price: 5.64% 5.69%
Estimated Long-Term Return Based
on Public Offering Price: 5.50% 5.55%
Daily Rate of Net Interest Accrual: $ .16668 $.16807
</TABLE>
Monthly Semiannual
Record Dates: 10th Day of Month 10th Day of June
and December
Payment Dates: 25th Day of Month 25th Day of June
and December
<PAGE>
Portfolio Information
On July 31, 1996, the bid side valuation of 29% of the aggregate principal
amount of Bonds in the portfolio for this Trust was at a discount from par and
71% was at a premium over par. See "The Trust - Portfolio - General
Considerations" in Part II of this Prospectus and Note (2) to the Portfolio
for information concerning call and redemption features of the Bonds.
Special Factors Concerning the Portfolio
The portfolio consists of 7 issues of Bonds issued by entities located in six
states. The Bonds may be divided by purpose of issue as follows: Revenue:
Water and Sewer, 1 (15%); Health Care, 1 (15%); Pollution Control, 3 (38%);
Special Tax, 1 (14%); and Appropriations, 1 (18%). The Trust is deemed
"concentrated" in a particular category or state when the Bonds in that
category or the Bonds issued by entities in such state constitute 25% or more
of the aggregate principal amount of the Bonds in the Trust. On July 31,
1996, 7 issues were rated AAA, by Standard & Poor's Corporation.* Subsequent
to such date, such ratings may have changed. As a result of insurance
guaranteeing the payment of principal and interest to the Trust, the units of
the Trust have received an AAA rating by Standard & Poor's Corporation and an
Aaa rating by Moody's Investors Service.
[FN]
*For the meaning of the ratings, see "Description of Bond Ratings" in Part II
of this Prospectus.
<PAGE>
REPORT OF INDEPENDENT AUDITORS
THE UNIT HOLDERS, SPONSORS AND TRUSTEE
THE MUNICIPAL INSURED NATIONAL TRUST, SERIES 45
We have audited the accompanying statement of financial condition and the
portfolio of The Municipal Insured National Trust, Series 45 as of July 31,
1996, and the related statements of operations and changes in net assets for
the year then ended and for the period from September 27, 1994 (date of
deposit) to July 31, 1995. These financial statements are the responsibility
of the Sponsors. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits 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 the securities owned as of July 31, 1996
by correspondence with the Trustee. An audit also includes assessing the
accounting principles used and the significant estimates made by the Sponsors,
as well as evaluating the overall financial statement presentation. We
believe that our audits provide 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 The Municipal Insured
National Trust, Series 45 as of July 31, 1996, and the results of its
operations and the changes in its net assets for the year then ended and for
the period from September 27, 1994 (date of deposit) to July 31, 1995, in
conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
October 31, 1996
<PAGE>
THE MUNICIPAL INSURED NATIONAL TRUST, SERIES 45
STATEMENT OF FINANCIAL CONDITION
July 31, 1996
<TABLE>
<CAPTION>
TRUST PROPERTY
<S> <C>
Investments in municipal bonds at market
value (amortized cost $5,248,069)
(Note (a) and Notes to Portfolio (4) and (5)) $5,544,149
Accrued interest receivable 60,602
__________
5,604,751
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND NET ASSETS
<S> <C> <C>
Cash overdraft 43,779
Accrued liabilities 1,173
_________
44,952
_________
Net assets:
Balance applicable to 5,472 units of
fractional undivided interest
outstanding (Notes (c) and (d)):
Capital, plus net unrealized market
appreciation of $296,080 $5,544,149
Undistributed net investment
income (Note (b)) 15,650
_________
Net assets $5,559,799
==========
</TABLE>
[FN]
See accompanying notes.
<PAGE>
THE MUNICIPAL INSURED NATIONAL TRUST, SERIES 45
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the period from
September 27, 1994
Year ended (date of deposit)
July 31, 1996 to July 31, 1995
<S> <C> <C>
Investment income - interest $340,724 281,531
Less expenses:
Trustee's fees and expenses 7,355 6,027
Evaluator's fees 1,092 658
Sponsor's fees 1,375 1,161
Audit fees 1,500 -
___________________________
Total expenses 11,322 7,846
___________________________
Investment income - net 329,402 273,685
Net gain (loss) on investments:
Net realized gain (loss) on
securities sold or redeemed 74,888 -
Increase (decrease) in net
unrealized appreciation/
depreciation 1,724 221,192
___________________________
Net gain (loss) on investments 76,612 221,192
___________________________
Net increase (decrease) in net
assets resulting from
operations $406,014 494,877
===========================
</TABLE>
[FN]
See accompanying notes.
<PAGE>
THE MUNICIPAL INSURED NATIONAL TRUST, SERIES 45
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the period from
September 27, 1994
Year ended (date of deposit)
July 31, 1996 to July 31, 1995
<S> <C> <C>
Operations:
Investment income - net $329,402 273,685
Net realized gain (loss)
on securities sold or redeemed 1,724 -
Increase (decrease) in net
unrealized appreciation/
depreciation 74,888 221,192
___________________________
Net increase (decrease) in net
assets resulting from operations 406,014 494,877
Less: Distributions to Unit Holders
Investment income - net (329,404) (248,497)
___________________________
Total distributions (329,404) (248,497)
Unit redemptions (28 in 1996):
Principal portion (28,988) -
Net interest accrued (48) -
___________________________
(29,036) -
___________________________
Net increase (decrease) in net assets 47,574 246,380
Net assets:
Beginning of period 5,512,225 5,265,845
___________________________
End of period (including
undistributed net investment
income of $15,650 and $25,188,
respectively) $5,559,799 5,512,225
===========================
</TABLE>
[FN]
See accompanying notes.
<PAGE>
THE MUNICIPAL INSURED NATIONAL TRUST, SERIES 45
NOTES TO FINANCIAL STATEMENTS
July 31, 1996
(a) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Trust is registered under the Investment Company Act of 1940 as a Unit
Investment Trust. The following is a summary of the significant accounting
policies of the Trust:
(1) Investments
Investments are stated at market value, as determined by the Evaluator
based on the bid side evaluations on the last day of trading during the
period.
(2) Income Taxes
The Trust is not an association taxable as a corporation for Federal
income tax purposes; accordingly, no provision is required for such
taxes.
(b) DISTRIBUTIONS
Interest received by the Trust is distributed to the Unit Holders either
semiannually on the 25th day of June and December, or if elected by the Unit
Holder, on the 25th day of each month, after deducting applicable expenses.
Receipts other than interest are distributed as explained in "Rights of Unit
Holders - Distribution of Interest and Principal" in Part II of this
Prospectus.
(c) ORIGINAL COST TO INVESTORS
The original cost to investors represents the aggregate initial public
offering price as of the date of deposit (September 27, 1994) exclusive of
accrued interest, computed on the basis set forth under "Public Offering -
Offering Price" in Part II of this Prospectus.
A reconciliation of the original cost of units to investors to the net amount
applicable to investors as of July 31, 1996 follows:
<TABLE>
<S> <C>
Original cost to investors $5,537,166
Less: Gross underwriting commissions (sales charge) (271,321)
__________
Net amount invested 5,265,845
Cost of securities sold (17,776)
Net unrealized market appreciation 296,080
__________
Net amount applicable to investors $5,544,149
==========
</TABLE>
<PAGE>
(d) OTHER INFORMATION
Selected data for a unit of the Trust:
Net assets as of July 31, 1996, represented by:
<TABLE>
<CAPTION>
Monthly Semiannual
Distribution Distribution
Plan Plan Total
<S> <C> <C> <C>
Value of fractional
undivided interest $4,716,377 $827,772 $5,544,149
Undistributed net
investment income 9,781 5,869 15,650
______________________________________
Total value $4,726,158 833,641 5,559,799
======================================
Units outstanding 4,655 817 5,472
======================================
Value per unit $1,015.29 $1,020.37
=========================
</TABLE>
<TABLE>
<CAPTION>
For the period from
September 27, 1994
Year ended (date of deposit)
July 31, 1996 to July 31, 1995
<S> <C> <C>
Distributions per Unit:
Interest:
Monthly plan $59.95 45.91
Semiannual plan 60.44 41.27
</TABLE>
<PAGE>
THE MUNICIPAL INSURED NATIONAL TRUST SERIES 45
PORTFOLIO
July 31, 1996
<TABLE>
<CAPTION>
Port- Optional
folio Rating Face Coupon Maturity Sinking Fund Refunding Market
Number Title of Securities (1) Amount Rate Date Redemptions (3) Redemptions (2) value (4)(5)
<C> <S> <C> <C> <C> <C> <C> <C> <C>
1. Metropolitan Pier & Exposition
Authority (Illinois) (McCormick
Place Expansion Project) (MBIA
Insured) AAA $800,000 6.500% 06/15/22 None 06/15/03 @ 102 $ 827,656
2. Lake Central Multi-District School
Building Corporation (St. John,
Indiana), First Mortgage Refunding,
Series 1992 (MBIA Insured) AAA 1,000,000 6.500 01/15/14 01/15/06 @ 100 07/15/02 @ 102 1,050,500
3. Municipality of Metropolitan
Seattle (Seattle, Washington),
Sewer Revenue, Series W
(MBIA Insured) AAA 800,000 6.300 01/01/33 01/01/24 @ 100 01/01/03 @ 102 812,968
4. Wisconsin Health and Educational
Facilities Authority, Revenue,
Series 1991 (Columbia Hospital,
Inc.) (MBIA Insured) AAA 800,000 6.250 11/15/21 11/15/11 @ 100 11/15/01 @ 102 817,232
5. New York State Energy Research &
Development Authority, Pollution
Control Refunding Revenue
(New York State Electric and Gas
Corporation Project), 1994
Series A (MBIA Insured) AAA 500,000 6.050 04/01/34 None 04/01/04 @ 102 501,400
6. Matagorda County Navigation
District Number One (Texas),
Pollution Control Revenue
Refunding (Central Power &
Light Company Project) (MBIA
Insured) AAA 800,000 6.000 07/01/28 None 07/01/03 @ 102 788,752
7. Illinois Development Finance
Authority, Pollution Control
Refunding Revenue, 1994 Series A
(Illinois Power Company Project)
(MBIA Insured) AAA 780,000 5.700 02/01/24 None 02/01/04 @ 102 745,641
__________ __________
$5,480,000 $5,544,149
========== ==========
</TABLE>
[FN]
See notes to portfolio.
<PAGE>
NOTES TO PORTFOLIO
(1) All ratings are by Standard & Poor's Corporation. A brief description
of applicable Security ratings is given under "Description of Bond
Ratings" in Part II of this Prospectus.
(2) There is shown under this heading the date on which each issue of
Securities is redeemable by the operation of optional call provisions
and the redemption price for that date; unless otherwise indicated, each
issue continues to be redeemable at declining prices thereafter but not
below par. Securities listed as noncallable, as well as Securities
listed as callable, may also be redeemable at par under certain
circumstances from special redemption payments.
(3) There is shown under this heading the date on which an issue of
Securities is subject to scheduled sinking fund redemption and the
redemption price for that date.
(4) The market value of the Securities as of July 31, 1996 was determined by
the Evaluator on the basis of bid side evaluations for the Securities at
such date.
(5) At July 31, 1996, the net unrealized market appreciation of all
Securities was comprised of the following:
<TABLE>
<S> <C>
Gross unrealized market appreciation $296,080
Gross unrealized market depreciation -
________
Net unrealized market appreciation $296,080
========
</TABLE>
The aggregate amortized cost of the Securities for Federal income tax
purposes was $5,248,069 at July 31, 1996.
<PAGE>
MINT TENNESSEE TRUST, SERIES 7
SUMMARY OF ESSENTIAL FINANCIAL INFORMATION
At July 31, 1996
Sponsors: J.C. Bradford & Co.
Glickenhaus & Co.
Raymond James & Associates, Inc.
Agent for Sponsors: J.C. Bradford & Co.
Trustee: The Bank of New York
Evaluator: Muller Data Corporation
<TABLE>
<S> <C>
Face Amount of Securities in Trust: $2,325,000
Number of Units: 2,326
Fractional Undivided Interest in Trust Per Unit: 1/2,326
Total Value of Securities in Portfolio (Based on
Bid Side Evaluations of Securities), plus principal cash: $2,329,273
==========
Sponsor's Repurchase Price Per Unit: $1,001.41
Plus Sales Charge of 4.894% of Public Offering Price: 51.53
__________
Public Offering Price Per Unit: $1,052.94*
==========
Redemption Price Per Unit: $1,001.41**
Excess of Public Offering Price Over Redemption Price Per Unit: $ 54.19
Weighted Average Maturity of Bonds in the Trust: 21.99 years
</TABLE>
Evaluation Time: 2:00 P.M., New York Time, on the next day
following receipt by the Sponsor of an order
for a Unit sale or purchase or by the
Trustee of a Unit tendered for redemption.
Evaluator's Fee: $.60 per bond for each valuation.
Annual Insurance Premium: $2,190
Trustee's Annual Fee: For each $1,000 principal amount of Bonds in
the Trust, $.1.27 under the monthly and $.87
under the semiannual distribution plan.
Sponsor's Annual Fee: $.25 per Unit outstanding maximum.
Date of Deposit: September 27, 1994
Date of Trust Agreement: September 27, 1994
Mandatory Termination Date: December 31, 2043
Minimum Principal Distribution: $1.00 per Unit
Minimum Value of the Trust under which Trust Agreement may be Terminated:
$500,000
[FN]
*Plus accrued interest to August 5, 1996, the expected date of settlement, of
$3.90 monthly and $8.90 semiannually.
**Based solely upon the bid side evaluations of the portfolio securities.
Upon tender for redemption, the price to be paid will include accrued interest
as described in Part II under "Rights of Unit Holders - Redemption -
Computation of Redemption Price Per Unit."
<PAGE>
MINT TENNESSEE TRUST, SERIES 7
SUMMARY OF ESSENTIAL FINANCIAL INFORMATION (continued)
At July 31, 1996
<TABLE>
<CAPTION>
PER UNIT
Monthly Semiannual
<S> <C> <C>
Estimated Annual Interest Income: $59.37 $59.37
Less Annual Premium on
Portfolio Insurance: .94 .94
Less Estimated Annual Expenses: 2.62 2.22
__________________
Estimated Net Annual Interest Income $55.81 $56.21
==================
Interest Distribution: $ 4.65 $28.11
Estimated Current Return Based on
Public Offering Price: 5.30% 5.34%
Estimated Long-Term Return Based
on Public Offering Price: 5.13% 5.17%
Daily Rate of Net Interest Accrual: $.15503 $.15614
</TABLE>
Monthly Semiannual
Record Dates: 10th Day of Month 10th Day of June
and December
Payment Dates: 25th Day of Month 25th Day of June
and December
<PAGE>
Portfolio Information
On July 31, 1996, the bid side valuation of 62% of the aggregate principal
amount of Bonds in the portfolio for this Trust was at a discount from par and
38% was at a premium over par. See "The Trust - Portfolio - General
Considerations" in Part II of this Prospectus and Note (2) to the Portfolio
for information concerning call and redemption features of the Bonds.
Special Factors Concerning the Portfolio
The portfolio consists of 7 issues of Bonds issued by entities located in one
state. The Bonds may be divided by purpose of issue as follows: General
Obligations: 1 (17%); Revenue: Multi-family Housing, 2 (33%); Health Care,
2 (22%); Transportation, 1 (17%), and Water and Sewer, 1 (11%). The Trust is
deemed "concentrated" in a particular category or state when the Bonds in that
category or the Bonds issued by entities in such state constitute 25% or more
of the aggregate principal amount of the Bonds in the Trust. On July 31,
1996, 6 issues were rated AAA and 1 issue was rated AA by Standard & Poor's
Corporation.* Subsequent to such date, such ratings may have changed. As a
result of insurance guaranteeing the payment of principal and interest to the
Trust, the units of the Trust have received an AAA rating by Standard & Poor's
Corporation and an Aaa rating by Moody's Investors Service.
[FN]
*For the meaning of the ratings, see "Description of Bond Ratings" in Part II
of this Prospectus.
<PAGE>
REPORT OF INDEPENDENT AUDITORS
THE UNIT HOLDERS, SPONSORS AND TRUSTEE
MINT TENNESSEE TRUST, SERIES 7
We have audited the statement of financial condition and the portfolio of MINT
Tennessee Trust, Series 7 as of July 31, 1996, and the related statements of
operations and changes in net assets for the year then ended and for the
period from September 27, 1994 (date of deposit) to July 31, 1995. These
financial statements are the responsibility of the Sponsors. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits 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 the securities owned as of July 31, 1996
by correspondence with the Trustee. An audit also includes assessing the
accounting principles used and the significant estimates made by the Sponsors,
as well as evaluating the overall financial statement presentation. We
believe that our audits provide 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 MINT Tennessee Trust, Series
7 as of July 31, 1996 and the results of its operations and the changes in its
net assets for the year then ended and for the period from September 27, 1994
(date of deposit) to July 31, 1995, in conformity with generally accepted
accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
October 31, 1996
<PAGE>
MINT TENNESSEE TRUST, SERIES 7
STATEMENT OF FINANCIAL CONDITION
July 31, 1996
<TABLE>
<CAPTION>
TRUST PROPERTY
<S> <C>
Investments in municipal bonds at market
value (amortized cost $2,201,013) (Note (a)
and Notes to Portfolio (4) and (5)) $2,328,346
Accrued interest receivable 20,163
_________
2,348,509
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND NET ASSETS
<S> <C> <C>
Cash overdraft 8,047
Accrued liabilities 784
__________
8,831
__________
Net assets:
Balance applicable to 2,326 units of
fractional undivided interest
outstanding (Notes (c) and (d)):
Capital, plus net unrealized market
appreciation of $127,333 $2,328,346
Undistributed net investment
income (Note (b)) 11,332
__________
Net assets $2,339,678
==========
</TABLE>
[FN]
See accompanying notes.
<PAGE>
MINT TENNESSEE TRUST, SERIES 7
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the period from
September 27, 1994
Year ended (date of deposit)
July 31, 1996 to July 31, 1995
<S> <C> <C>
Investment income - interest $147,304 $122,559
Less expenses:
Trustee's fees and expenses 3,361 2,479
Evaluator's fees 1,092 508
Sponsor's fees 625 528
Insurance premiums 2,190 1,849
Audit fees 1,500 -
___________________________
Total expenses 8,768 5,364
___________________________
Investment income - net 138,536 117,195
Net gain (loss) on investments:
Net realized gain (loss) on
securities sold or redeemed 4,525 -
Increase (decrease) in net
unrealized appreciation/
depreciation 31,680 95,653
___________________________
Net gain (loss) on investments 36,205 95,653
___________________________
Net increase (decrease) in net
assets resulting from operations $174,741 $212,848
===========================
</TABLE>
[FN]
See accompanying notes.
<PAGE>
MINT TENNESSEE TRUST, SERIES 7
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the period from
September 27, 1994
Year ended (date of deposit)
July 31, 1996 to July 31, 1995
<S> <C> <C>
Operations:
Investment income - net $138,536 117,195
Net realized gain (loss) on
securities sold or redeemed 4,525 -
Increase (decrease) in net
unrealized appreciation/
depreciation 31,680 95,653
____________________________
Net increase (decrease) in net
assets resulting from operations 174,741 212,848
Less: Distributions to Unit Holders:
Investment income - net (138,598) (106,271)
____________________________
Total distributions (138,598) (106,271)
Units redeemed (174 in 1996):
Principal portion (174,848) -
Net interest accrued (457) -
____________________________
(175,305) -
____________________________
Net increase (decrease) in net
assets (139,162) 106,577
Net assets:
Beginning of period 2,478,840 2,372,263
____________________________
End of period (including
undistributed net investment
income of $11,332 and $10,924,
respectively) $2,339,678 2,478,840
============================
</TABLE>
[FN]
See accompanying notes.
<PAGE>
MINT TENNESSEE TRUST, SERIES 7
NOTES TO FINANCIAL STATEMENTS
July 31, 1996
(a) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Trust is registered under the Investment Company Act of 1940 as a Unit
Investment Trust. The following is a summary of the significant accounting
policies of the Trust:
(1) Investments
Investments are stated at market value, as determined by the Evaluator
based on the bid side evaluations on the last day of trading during the
period.
(2) Income Taxes
The Trust is not an association taxable as a corporation for Federal
income tax purposes; accordingly, no provision is required for such
taxes.
(b) DISTRIBUTIONS
Interest received by the Trust is distributed to the Unit Holders either
semiannually on the 25th day of June and December, or if elected by the Unit
Holder, on the 25th day of each month, after deducting applicable expenses.
Receipts other than interest are distributed as explained in "Rights of Unit
Holders - Distribution of Interest and Principal" in Part II of this
Prospectus.
(c) ORIGINAL COST TO INVESTORS
The original cost to investors represents the aggregate initial public
offering price as of the date of deposit (September 27, 1994) exclusive of
accrued interest, computed on the basis set forth under "Public Offering -
Offering Price" in Part II of this Prospectus.
A reconciliation of the original cost of units to investors to the net amount
applicable to investors as of July 31, 1996 follows:
<TABLE>
<S> <C>
Original cost to investors $2,494,493
Less: Gross underwriting commissions (sales charge) (122,230)
__________
Net amount invested 2,372,263
Cost of securities sold (171,250)
Net unrealized market appreciation 127,333
__________
Net amount applicable to investors $2,328,346
==========
</TABLE>
<PAGE>
(d) OTHER INFORMATION
Selected data for a unit of the Trust:
Net assets as of July 31, 1996, represented by:
<TABLE>
<CAPTION>
Monthly Semiannual
Distribution Distribution
Plan Plan Total
<S> <C> <C> <C>
Value of fractional
undivided interest $2,158,175 $170,171 $2,328,346
Undistributed net investment income 9,760 1,572 11,332
___________________________________
Total value $2,167,935 $171,743 $2,339,678
===================================
Units outstanding 2,156 170 2,326
===================================
Value per unit $1,005.54 $1,010.25
=====================
</TABLE>
<TABLE>
<CAPTION>
For the period from
September 27, 1994
Year ended (date of deposit)
July 31, 1996 to July 31, 1995
<S> <C> <C>
Distributions per Unit:
Interest:
Monthly plan $56.28 $42.78
Semiannual plan 56.49 38.49
</TABLE>
<PAGE>
MINT TENNESSEE TRUST, SERIES 7
PORTFOLIO
July 31, 1996
<TABLE>
<CAPTION>
Port- Optional
folio Rating Face Coupon Maturity Sinking Fund Refunding Market
Number Title of Securities (1) Amount Rate Date Redemptions (3) Redemptions (2) value (4)(5)
<C> <S> <C> <C> <C> <C> <C> <C> <C>
1. Metropolitan Nashville Airport
Authority (Tennessee), Airport
Improvement Revenue Refunding,
Series 1991 (FGIC Insured) AAA $400,000 6.600% 07/01/15 07/01/08 @ 100 07/01/01 @ 102 $422,852
2 Knox-Chapman Utility District of
Knox County, Tennessee, Water
and Sewer Revenue Refunding,
Series 1994 (MBIA Insured) AAA 250,000 6.000 01/01/14 01/01/10 @ 100 01/01/04 @ 102 255,385
3. Morristown Housing Development
Corporation (Tennessee),
Multi-Family Housing Revenue
Refunding, Series 1993 (Lenoir
City Series), FHA Insured AAA 400,000 6.000 12/01/22 06/01/04 @ 100 12/01/03 @ 102 400,608
4. Dayton Housing Assistance
Corporation (Tennessee), Mortgage
Revenue Refunding, Series 1993
(Pikeville Townhouse), FNMA
Insured AAA 360,000 5.875 05/01/24 05/01/14 @ 100 11/01/03 @ 102 355,014
5. The Health, Educational and
Housing Facilities Board of the
County of Knox (Tennessee),
Hospital Revenue, Series 1993A
(MBIA Insured) AAA 115,000 5.250 01/01/23 01/01/14 @ 100 01/01/04 @ 102 104,695
6. The Health, Educational and
Housing Facilities Board of the
County of Knox (Tennessee),
Hospital Revenue, Series 1993A
(MBIA Insured) AAA 400,000 5.250 01/01/13 01/01/07 @ 100 01/01/04 @ 102 379,528
7. The Metropolitan Government
of Nashville and Davidson
County (Tennessee), General
Obligation Multi-Purpose
Improvement, Series 1994 AA 400,000 6.125 05/15/19 None 05/15/02 @ 102 410,264
__________ __________
$2,325,000 $2,328,346
========== ==========
</TABLE>
[FN]
See notes to portfolio.
<PAGE>
NOTES TO PORTFOLIO
(1) All ratings are by Standard & Poor's Corporation. A brief description
of applicable Security ratings is given under "Description of Bond
Ratings" in Part II of this Prospectus.
(2) There is shown under this heading the date on which each issue of
Securities is redeemable by the operation of optional call provisions
and the redemption price for that date; unless otherwise indicated, each
issue continues to be redeemable at declining prices thereafter but not
below par. Securities listed as noncallable, as well as Securities
listed as callable, may also be redeemable at par under certain
circumstances from special redemption payments.
(3) There is shown under this heading the date on which an issue of
Securities is subject to scheduled sinking fund redemption and the
redemption price for that date.
(4) The market value of the Securities as of July 31, 1996 was determined by
the Evaluator on the basis of bid side evaluations for the Securities at
such date.
(5) At July 31, 1996, the net unrealized market appreciation of all
Securities was comprised of the following:
<TABLE>
<S> <C>
Gross unrealized market appreciation $127,333
Gross unrealized market depreciation -
________
Net unrealized market appreciation $127,333
========
</TABLE>
The aggregate amortized cost of the Securities for Federal income tax
purposes was $2,201,013 at July 31, 1996.
THE MUNICIPAL INSURED NATIONAL TRUSTS
PROSPECTUS NOTE: PART II OF THIS PROSPECTUS
Part Two MAY NOT BE DISTRIBUTED UNLESS
Dated July 31, 1996 ACCOMPANIED BY PART I
THE TRUSTS
The Municipal Insured National Trusts and the various state trusts are
series of similar but separate unit investment trusts designated as The
Municipal Insured National Trust (the "M.I.N.T. Series"), M.I.N.T. Long-
Intermediate Trust (the "Long-Intermediate Series"), MINT Balanced
Maturity Trust (the Balanced Maturity Series), and Tennessee Trust (the
"State Series"). Each individual series of the M.I.N.T. Series, Long-
Intermediate Series, Balanced Maturity Series and the State Series,
hereinafter referred to as a "Trust," was created under the laws of the
State of New York by a Trust Indenture and Agreement (the "Agreement"),
dated the Date of Deposit as set forth in the "Summary of Essential
Financial Information" in Part I of the Prospectus relating to each
Trust, among J. C. Bradford & Co., Glickenhaus & Co. and Raymond James &
Associates, Inc. as sponsors (the "Sponsors"), The Bank of New York, as
Trustee (the "Trustee"), and Muller Data Corporation, as evaluator (the
"Evaluator"). On the Date of Deposit for each Trust, the Sponsors
deposited with the Trustee delivery statements relating to contracts for
the purchase of obligations (the "Bonds" or "Securities") which Bonds
comprise the portfolio of each such Trust.
Portfolios. The objective of the Trusts is to obtain Federal tax-exempt
interest income and, in the case of State Trusts, where applicable,
state tax-exempt interest income through an investment in a fixed and
insured portfolio of municipal bonds, issued by or on behalf of states,
counties, territories, possessions or municipalities of the United
States or authorities or political subdivisions thereof. The primary
purpose of the Discount Series is to secure automatic compounding of
accrued income that deep discount bonds provide. The Long-Intermediate
Series contain Bonds which mature within 8 to 12 years from the Date of
Deposit (or Bonds which are subject to mandatory redemption by or
mandatory put to the issuers of such Bonds within such approximate 8 to
12 year period). No assurance can be given that the Trusts' objectives
will be achieved because they are each subject to the continuing ability
of the insurer for each Trust1 and of the respective issuers of the
Bonds in each Trust to meet their obligations. In addition, an
investment in such portfolio can be affected by fluctuations in interest
rates. Insurance guaranteeing the payment of all principal (either at
the stated maturity or by any advancement of maturity pursuant to a
mandatory sinking fund payment) and interest on each of the Bonds in a
Trust as such payment shall become due but shall not be paid has been
obtained by each Trust from the insurer. Certain Bonds in a Trust may
also be insured by insurance obtained by the issuers of such Bonds or by
other parties ("Pre-insured Bonds"). Insurance obtained by a Trust is
effective only while the bonds thus insured are held in such Trust;
however, any insurance previously obtained by the issuer or any other
party, for which a single premium has been paid, is effective so long as
the Pre-insured Bonds are outstanding. 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 a Trust unless Bonds are in default in payment
of principal or interest, or in the Sponsors' opinion, in significant
risk of such default. See "Public Offering-Offering Price." On the other
hand, the value, if any, of insurance obtained by the issuer of the
Bonds or other parties for which a single premium has been paid is
reflected and included in the market value of such Bonds.
________________
1. Municipal Bond Investors Assurance Corporation is the insurer for all
series of the Trust. See "The Trusts-Insurance on the Bonds."
Page 1
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-callable policy
for the payment of interest and principal on the Bonds is issued by the
insurer for that Trust. A single premium is paid by the issuer or other
parties for insurance on Pre-insured Bonds, and a monthly premium is
paid by a Trust for the insurance it obtains from the insurer for such
Trust on the Bonds in such Trust that are not pre-insured by Municipal
Bond Investors Assurance Corporation. No premium will be paid by a Trust
on Bonds pre-insured by Municipal Bond Investors Assurance Corporation.
Pursuant to an irrevocable commitment of the insurer for each Trust,
upon the sale of a Bond from such Trust, the Trustee has the right to
obtain permanent insurance with respect to such Bond upon the payment of
a single predetermined insurance premium from the proceeds of the sale
of such Bond. It is expected that the Trustee will exercise the right to
obtain permanent insurance for a Bond in a Trust upon instruction from
the Sponsors whenever the value of that Bond insured to its maturity
less the applicable permanent insurance premium and the related
custodial fee exceeds the value of the Bond without such insurance. See
"The Trusts-Insurance on the Bonds."
In view of the Trusts' objectives, the following factors, among others,
were considered in selecting the Bonds: (1) all of the Bonds are
obligations issued by or on behalf of states, counties, territories,
possessions or municipalities of the United States, or authorities or
political subdivisions thereof, so that the interest on them will be
excludable from gross income for Federal income tax purposes under
existing law, (2) the Bonds are diversified as to purpose of issue, (3)
in the opinion of the Sponsors, the Bonds were fairly valued at the Date
of Deposit relative to other bonds of comparable quality and maturity,
(4) insurance is available for the payment of principal and interest on
the Bonds, (5) in the case of the Long-Intermediate Series, an average
weighted portfolio maturity of 10 to 15 years from the Date of Deposit
of a Trust and, as to the Bonds therein, a fixed maturity date within
approximately 8 to 12 years from the Date of Deposit (or, with respect
to Bonds subject to mandatory redemption by or mandatory put to the
issuers of such Bonds, a mandatory redemption date or mandatory put date
within approximately 8 to 12 years from the Date of Deposit). Subsequent
to the Date of Deposit of a Trust, a Bond may cease to be rated or its
rating may be reduced. Neither event requires an elimination of such
Bond from the portfolio, but may be considered in the Sponsors'
determination to direct the Trustee to dispose of the Bonds. See
"Sponsors-Responsibility." An investment in Units of a Trust should be
made with an understanding of the risks entailed in investments in fixed-
rate bonds, including the risk that the value of such bonds (and,
therefore of the Units) will decline with increases in interest rates.
Inflation and recession, as well as measures implemented to address
these and other economic problems, contribute to fluctuations in
interest rates and the values of fixed-rate bonds generally. The
Sponsors cannot predict future economic policies or their consequences;
nor, therefore, can they predict the course or extent of such
fluctuations in the future.
Considerations
Because certain of the Bonds may from time to time under certain
circumstances be sold or redeemed or will mature in accordance with
their terms and the proceeds from such events will be distributed to
Unit holders and will not be reinvested, no assurance can be given that
a Trust will retain for any length of time its present size and
composition. Except as described in footnotes to "Summary of Essential
Financial Information," in Part I of the Prospectus, interest accrues to
the benefit of Unit holders commencing with the expected date of
settlement for purchase of the Units. Neither the Sponsors nor the
Trustee shall be liable in any way for any default, failure or defect in
any Bond.
An expected economic effect of investing in the Discount Series is that
the investor who purchases Units at the Public Offering Price and holds
such Units until maturity or redemption of the underlying Bonds will
receive the offering yield on his investment as well as on all earned
discount attributed to those Bonds for the date of purchase through the
life of the Discount Series. The offering yield reflects current market
conditions relating to interest rates on comparable debt offerings. The
assumed or implicit automatic reinvestment of the portion of the yield
represented by earned discount of market discount and/or zero coupon
bonds differentiates the Discount Series from trusts comprised solely of
customary securities on which periodic interest is paid at market rates
existing at the time of issue. Accordingly, an investor in the Units of
the Discount Series, unlike an investor in a trust comprised solely of
customary securities, lessens his risk of being unable to invest
Page 2
distributions at a rate as high as the yield on the Discount Series, but
may forego the ability to reinvest fully at higher rates in the future.
See "The Trusts-Estimated Current and Long Term Return to Unit Holders."
Factors Affecting the Issuers of Bonds
If during the term of a Trust any agency or municipality experiences
financial difficulties, or if there should be a financial crisis
relating to a state, county, territory, possession or municipality of
the United States, or authorities or political subdivisions thereof, the
market price and marketability of outstanding Bonds in such Trust, and
therefore the value of Units of such Trust could be adversely affected.
If a Trust is required to sell Bonds of issuers experiencing such
financial difficulties in order to meet redemption obligations, such
Bonds may have to be sold at a discount from the initial purchase price
by such Trust. See "Rights of Unit Holders-Redemption-Tender of Units"
and "Sponsors-Responsibility."
The Sponsors believe the information summarized below describes some of
the more significant considerations relating to the Bonds in the Trusts.
The sources of such information include official statements of the
issuers as well as other publicly available documents. The Sponsors have
not independently verified any of the information contained in such
official statements and other publicly available documents and are not
aware of any facts which would render such information inaccurate.
Certain circumstances may adversely affect the ability of such issuers
to make payment of principal and interest on Bonds held in the portfolio
of a Trust or may adversely affect the ratings of such Bonds. Standard &
Poor's ("Standard & Poor's") has assigned a rating of AAA to the Units
of each Trust. Because of the insurance obtained by the Sponsors or by
the issuers, however, such changes should not adversely affect a Trust's
receipt of principal and interest, or the ratings of the Bonds or the
Units in a Trust. An investment in Units of a Trust should be made with
an understanding of the risks that such an investment may entail,
certain of which are described below.
General Obligation Bonds
General obligation bonds are secured by the issuer's pledge of its
faith, credit and taxing power for the payment of principal and
interest. The taxing power of any governmental entity may be limited,
however, by provisions of state constitutions or laws, and an entity's
credit will depend on many factors, including potential 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, state
legislative proposals or voter initiatives to limit ad valorem real
estate property taxes and the extent to which the entity relies on
Federal or state aid, access to capital markets or other factors beyond
the state or entity's control.
Appropriations Bonds
Many state or local governmental entities enter into lease purchase
obligations as a means of financing the acquisition of capital projects
(e.g., buildings or equipment among other things). Such obligations are
often made subject to annual appropriations. Certain Bonds in a Trust
may be Bonds that are, in whole or in part, subject to and dependent
upon (i) the governmental entity making appropriations from time to time
or (ii) the continued existence of special temporary taxes which require
legislative action for their reimposition. The availability of any
appropriation generally is subject to the willingness of the
governmental entity to continue to make such special appropriations or
to reimpose such special taxes. The obligation to make lease payments
generally exists only to the extent of the monies available to the
governmental entity therefor, and no liability is incurred by the
governmental entity beyond the monies so appropriated. Subject to the
foregoing, once an annual appropriation is made, the governmental
entity's obligation to make lease rental payments generally is absolute
and unconditional without setoff or counterclaim, regardless of
contingencies, whether or not a given project is completed or used by
the governmental entity and notwithstanding any circumstances or
occurrences which might arise. In the event of non-appropriation, bond
owners' sole remedy (absent credit enhancement) generally is limited to
repossession of the collateral for resale or releasing, and the
obligation of the governmental lessee is not backed by a pledge of the
general credit of the governmental lessee. In the event of non-
appropriation, the Sponsors may instruct the Trustee to sell such Bonds.
Page 3
Moral Obligation Bonds. Certain of the Bonds in a Trust may be secured
by pledged revenues and additionally by the so-called "moral obligation"
of the state or local governmental body. Should the pledged revenues
prove insufficient, provisions for the payment of such Bonds is not a
legal obligation of the state or local government, and is subject to its
willingness to appropriate funds therefor.
Revenue Bonds
Single Family Housing Bonds and Multifamily Housing Bonds. Single family
housing bonds and multifamily housing bonds are obligations of state and
local housing authorities that have been issued in connection with a
variety of single and multifamily housing projects. Economic
developments, including fluctuations in interest rates, increasing
construction and operating costs, increasing real estate taxes and
declining occupancy rates, and investment risks may have an adverse
effect upon the revenues of such projects and such housing authorities.
Multifamily housing bonds may be subject to mandatory redemption prior
to maturity, including redemption from non-completion of the project or
upon receipt of FHA or certain other insurance proceeds. Certain housing
bonds used in the Trusts may also be secured by GNMA certificates or be
guaranteed by the U. S. Government. Bonds issued by state or local units
or authorities and payable from revenues from single family residential
mortgages may be subject to mandatory redemption prior to maturity,
including redemption from mortgage loan prepayments and undisbursed bond
proceeds reserved for the purpose of purchasing mortgage loans. Housing
bonds may also be subject to changes in creditworthiness due to
potential weaknesses or mortgage insurance companies providing various
policies, fluctuations in the valuation of invested funds and in the
strengths of banks and other entities which may provide investment
agreements and smaller than expected mortgage portfolios due to partial
non-origination.
Single family housing bonds and multifamily housing bonds must meet
certain requirements in order to maintain their exemption from Federal
income taxation after the date of their issuance. The Internal Revenue
Code of 1986, as amended (the "Code"), provides, in general, that
interest on "mortgage revenue bonds" (generally those obligations of
which all or a significant portion of the proceeds are to be used
directly or indirectly for mortgages on owner-occupied residences)
issued after December 31, 1980 is not exempt from Federal income
taxation unless the bonds are part of a "qualified mortgage issue"
wherein certain requirements are and will continue to be met with
respect to the terms, amount and purpose of the bonds, the use of the
funds generated by the issue, the nature of the residences and the
mortgages, and the eligibility of the borrower executing the mortgage.
In addition, interest on obligations issued to finance residential
rental property will be exempt from Federal income taxes when the
proceeds are used to finance multifamily rental property and a specified
percentage of the units are occupied by individuals of "low or moderate
income." For such Bonds in a Trust, the issuer of the Bonds has
covenanted to comply with the applicable ongoing requirements and bond
counsel to such issuers has issued an opinion that the interest on the
Bonds is exempt from Federal income tax under existing laws and
regulations. There can be no assurances that the ongoing requirements
will be met. The failure to meet these requirements could cause the
interest on such Bonds to become taxable, possibly retroactive from the
date of issuance. The Code provides relief from noncompliance in certain
circumstances if the issuer corrects any noncompliance occurring after
the issuance of the bonds within a reasonable period after such
noncompliance is first discovered or would have been discovered by the
exercise of reasonable diligence; however, the failure to meet certain
other requirements cannot be cured under the Code. If the interest on
any single family housing bonds or multifamily housing bonds in a Trust
should ultimately be deemed to be taxable, the Sponsors may instruct the
Trustee to sell such Bonds and, since they would be sold as taxable
securities, it is expected that such Bonds would have to be sold at a
substantial discount from current market price.
Public Power Revenue Bonds
General problems of the electric utility industry include difficulty in
financing large construction programs during an inflationary period;
restrictions on operations and increased costs and delays attributable
to environmental considerations; the difficulty of the capital markets
in absorbing utility debt and equity securities; the availability of
fuel for electric generation at reasonable prices, including among other
considerations the potential rise in fuel costs and the costs associated
with conversion to alternate fuel sources such as coal; technical cost
Page 4
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 waste; and
the effects of energy conservation. Certain of the issuers of the Bonds
may own or operate nuclear generating facilities. Federal, state and
municipal governmental authorities may from time to time review and
revise existing, and impose additional requirements governing the
licensing, construction and operation of nuclear power plants. Each of
the problems referred to above could adversely affect the ability of the
issuers of public power revenue bonds to make payments of principal
and/or interest on such bonds. Certain municipal utilities or agencies
may have entered into contractual arrangements with investor-owned
utilities and large industrial users and consequently may be dependent
in varying degrees on the performance of such contracts of pay of bond
debt service.
Health Care Revenue Bonds. Ratings of bonds issued for health care
facilities are sometimes 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, the ability of the facility to provide the services required,
physicians' confidence in the facility, management capabilities,
competition with other hospitals, efforts by insurers and governmental
agencies to limit rates, legislation establishing state rate-setting
agencies, expenses, government regulation, the cost and possible
unavailability of malpractice insurance and the termination of
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.
A number of additional legislative proposals concerning health care have
been introduced in Congress or have been reported to be under
consideration by the Clinton Administration. These proposals span a wide
range of topics, including cost controls, national health insurance,
incentives for competition in the provision of health care services, tax
incentives and penalties related to health care insurance premiums, and
promotion of prepaid health care plans. The Sponsors are unable to
predict the effect of any of these proposals, if enacted, on any of the
Securities.
Higher Education Revenue Bonds. Higher education revenue bonds include
debt of state and private colleges, universities and systems and
parental and student loan obligations. The ability of universities and
colleges to meet their obligations is dependent upon various factors,
including the revenues, costs and enrollment levels of the institutions.
In addition, their ability may be affected by declines in Federal, state
and alumni financial support, fluctuations in interest rates and
construction costs, increase maintenance and energy costs, failure or
inability to raise tuition or room charges and adverse results of
endowment fund investments.
Pollution Control Facility Revenue Bonds. Bonds in the pollution control
facilities category include securities issued on behalf of a private
corporation, including utilities, to provide facilities for the
treatment of air, water and solid waste pollution. Repayment of these
bonds is dependent upon income for the specific pollution control
facility and/or the financial condition of the project corporation. See
also "Industrial Development Bonds."
Other Utility Revenue Bonds. Bonds in this category include securities
issued to finance natural gas supply, distribution and transmission
facilities, public water supply, treatment and distribution facilities
and sewage collection, treatment and disposal facilities. Repayment of
these bonds is dependent primarily on revenues derived from the billing
of residential, commercial and industrial customers for utility
services, as well as, in some instances, connection fees and hook-up
charges. Such utility revenue bonds may be adversely affected by the
lack of availability of Federal and state grants and by decisions of
Federal and state regulatory bodies and courts.
Solid Waste and Resource Recovery Revenue Bonds. Bonds in this category
include securities issued to finance facilities for removal and disposal
of solid municipal waste. Repayment of these bonds is dependent on
factors which may include revenues from appropriations from a
governmental entity, the financial condition of the private project
Page 5
corporation and revenues derived from the collection of charges for
disposal of solid waste. Repayment of resource recovery bonds may also
be dependent to various degrees on revenues from the sale of electric
energy or steam. Bonds in this category may be subject to mandatory
redemption in the event of project non-completion, if the project is
rendered uneconomical or if it is considered an environmental hazard.
Transportation Revenue Bonds. Bonds in this category include bonds
issued for airport facilities, bridges, turnpikes, port authorities,
railroad systems or mass transit systems. Generally, airport facility
revenue bonds are payable from and secured by the revenues derived from
the ownership and operation of a particular airport. Payment on other
transportation bonds is often dependent primarily or solely on revenues
from financed facilities, including user fees, charges, tolls and rents.
Such revenues may be adversely affected by increased construction and
maintenance costs or taxes, decreased use, competition from alternative
facilities, scarcity of fuel, reduction or loss of rents or the impact
of environmental considerations. Other transportation bonds may be
dependent primarily or solely on Federal, state or local assistance
including motor fuel and motor vehicle taxes, fees, and licenses and
therefore may be subject to fluctuations in such assistance.
Industrial Development Bonds ("IDBs"). IDBs are tax-exempt securities
issued by states, municipalities or public authorities and are issued to
provide funds, usually through a loan or lease arrangement, to a private
corporation, partnership or individual (i.e., a "beneficiary") for the
purpose of financing construction or improvement of a facility to be
used by the beneficiary. The issuer of an IDB is not obligated to pay
the principal of or premium, if any, or interest on the Bonds or other
costs incident thereto, except from the revenues assigned and pledged by
the beneficiary therefor. Such bonds are secured primarily by revenues
derived from loan repayments or lease payments due from a beneficiary
which may or may not be guaranteed by a parent company or otherwise
secured. In view of this, an investor should be aware of the risks that
such an investment may entail. Continued ability of a beneficiary to
generate sufficient revenues for the payment of principal and interest
on such bonds will be affected by many factors including the size of the
beneficiary, capital structure, demand for products or services,
competition, general economic conditions, government regulation and the
beneficiary's dependence for revenues on the operation of the particular
facility being financed. In addition, interest on IDBs is excludable
from gross income for Federal income tax purposes provided the issuer
and beneficiary continue to meet certain Code requirements. If the
interest on these debt obligations should ultimately be deemed to be
taxable, the Sponsors may instruct the Trustee to sell them and, since
they would be sold as taxable securities, it is expected that they would
have to sold at a substantial discount from current market prices. Debt
of private beneficiaries may be subject to deterioration in
creditworthiness or redemption in events of mergers, acquisitions,
reorganizations or as a result of adverse court decisions. Such bonds
may also be subject to mandatory redemption upon the determination that
the project has become uneconomical or in the event that the bonds are
rendered taxable.
Special Tax Revenue Bonds. Bonds in this category are bonds secured
primarily or solely by receipt of certain state or local taxes,
including sales and use taxes or excise taxes. Consequently, such bonds
may be subject to fluctuations in the collection of such taxes. Such
bonds do not include tax increment bonds or special assessment bonds.
Other Revenue Bonds. The Trusts may also contain revenue bonds which are
payable from and secured primarily or solely by revenues from the
ownership and operation of particular facilities, such as correctional
facilities, parking facilities, convention centers, arenas, museums and
other facilities owned or used by a charitable entity. Payment on bonds
related to such facilities is, therefore, primarily or solely dependent
on revenues from such projects, including user fees, charges and rents.
Such revenues may be affected adversely by increased construction and
maintenance costs or taxes, decreased use, competition from alternative
facilities, reduction or loss of rents or the impact of environmental
considerations.
Certain of the Bonds in the Trusts are secured by direct obligations of
the U.S. Government, or in some cases obligations guaranteed by the U.S.
Government, placed in an escrow account maintained by an independent
trustee until maturity or a predetermined redemption date. In a few
isolated instances to date, bonds which were thought to be escrowed to
maturity have been called for redemption prior to maturity.
Page 6
Puerto Rico Bonds
Certain of the Bonds in the Trusts may be general obligations and/or
revenue bonds of issuers in Puerto Rico which will be affected by
general economic conditions in Puerto Rico. Unemployment, although at
the lowest level since the late 1970's, is high by United States
standards, The average hourly manufacturing wage rate in Puerto Rico is
approximately 55% of the United States mainland rate. The United States
minimum wage laws apply to Puerto Rico. The Puerto Rican economy,
closely integrated with that of the United States, is dominated by the
manufacturing (pharmaceuticals, scientific instruments, computers,
microprocessors, medical products and electrical products) and service
sectors. The Puerto Rican economy is affected by a number of
Commonwealth and Federal investment incentive programs. For example,
Section 936 of the Code provides a credit against Federal income earned
within Puerto Rico by United States companies operating on the island
which qualified under the rules of Section 936.
To qualify under section 936 in any given taxable year, a corporation
must derive for the three year period immediately preceding the end of
such taxable year (i) 80% or more of its gross income from sources
within Puerto Rico, and (ii) 75% or more of its gross income must be
from the active conduct of a trade or business in Puerto Rico. Personal
income in Puerto Rico includes transfer payments under various Federal
social programs, two-thirds of which represents entitlements to
individuals for services performed on contributions made under such
programs as Social Security. Total Federal payments to Puerto Rico,
including transfer payments, are lower per capita in Puerto Rico than in
any state.
Refunded Bonds
Certain of the Bonds in the Trusts may be bonds which have been refunded
and are secured by an escrow of securities issued, or guaranteed as to
principal and interest, by the United States in accordance with the bond
resolution or indenture. Bonds which have been refunded are generally no
longer entitled to their original security, including any pledge of
revenues or mortgage or security interest in the facility financed. The
escrow for the refunded Bonds is structured in order to provide for the
timely payment of principal, any applicable redemption premium, and
interest on the refunded Bonds when due.
Original Issue Discount and Zero Coupon Bonds
Certain of the Bonds in a Trust may be original issue discount bonds.
These Bonds were issued with nominal interest rates less than the rates
then offered by comparable securities and as a consequence were
originally sold at a discount from their face, or par, values. This
original issue discount, the difference between the initial purchase
price and face value, is deemed under current law to accrue on a daily
basis and the accrued portion is treated as tax-exempt interest income
for federal income tax purposes. On sale or redemption, gain, if any,
realized in excess of the earned portion of original issue discount will
be taxable as ordinary income. See "Tax Status." The current value of
original issue discount bond reflects the present value of its face
amount at maturity. In a stable interest rate environment, the market
value of an original issue discount bond would tend to increase more
slowly in early years and in greater increments as the bond approached
maturity.
Certain of the original issue discount bonds in a Trust may be zero
coupon bonds. Zero coupon bonds do not provide for the payment of any
current interest; the buyer receives only the right to receive a final
payment of the face amount of the bond at its maturity. The effect of
owning a zero coupon bond is that a fixed yield is earned not only the
original investment but also, in effect, on all discount earned during
the life of the obligation. This implicit reinvestment of earnings at
the same rate eliminates the risk of being unable to reinvest the income
on such obligation at a rate as high as the implicit yield, but at the
same time also 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 that pay
interest currently.
Original issue discount bonds, including zero coupon bonds, may be
subject to redemption at prices based on the issue price plus the amount
of original discount accreted to redemption plus, if applicable, some
premium. Pursuant to such call provisions an original issue discount
bond may be called prior to its maturity date at a price less than its
face value.
There can be no assurance that additional Federal legislation will not
be enacted or that existing legislation will not be amended hereafter
Page 7
with the effect that interest on bonds becomes subject to Federal income
taxation. If the interest on the Bonds should ultimately be deemed to be
taxable, the Trustee may sell them and, since they would be sold as
taxable securities, it is expected that they would have to be sold at a
substantial discount from current market price.
Investors should be aware that many of the Bonds in the Trusts are
subject to continuing requirements such as the actual use of Bond
proceeds or manner of operation of the project financed from Bond
proceeds that may affect the exemption of interest on such bonds from
Federal income taxation. Although at the time of issuance of each of the
Bonds in the Trusts an opinion of bond counsel was rendered as to the
exemption of interest on such obligations from Federal income taxation,
there can be no assurance that the respective issuers or other obligors
on such obligations will fulfill the various continuing requirements
established upon issuance of the Bonds. A failure to comply with such
requirements may cause a determination that interest on such obligations
is subject to Federal income taxation, perhaps even retroactively from
the date of issuance of such Bonds, thereby reducing the value of the
Bonds and subjecting Unit holders to unanticipated tax liabilities.
Because certain of the Bonds 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 Unit holders and will not be reinvested, no assurance can
be given that the Trusts will retain for any length of time their
present size and composition. Neither the Sponsors nor the Trustee shall
be liable in any way for any default, failure or defect in any Bond.
Certain of the Bonds in a Trust may be subject to redemption prior to
their stated maturity dates pursuant to sinking fund or call provisions.
A sinking fund is a reserve fund accumulated over a period of time for
retirement of debt. Such a provision is designed to redeem a significant
portion of an issue gradually over the life of the issue; obligations to
be redeemed are generally chosen by lot. A callable debt obligation is
one which is subject to redemption prior to maturity at the option of
the issuer. To the extent that such obligations were deposited in a
Trust at a price higher than their par value, such redemption at par
would result in a loss of capital to a purchaser of Units. The estimated
current return of the Units of a Trust might also be adversely affected
if the return on the retired Bonds is greater than the average return on
the Bonds in such Trust. Certain of the Bonds in a Trust may be subject
to sinking fund or call provisions early in the life of such Trust. 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. Certain of the Bonds in Trusts of the Long-
Intermediate Series are subject to mandatory redemption by or mandatory
put to the issuers of such Bonds within approximately 8 to 12 years from
the Date of Deposit. In the case of an obligation subject to mandatory
redemption the obligation is satisfied and no longer extant upon such
redemption. In the case of an obligation subject to mandatory put,
however, the current holder of the obligation is required to sell the
obligation back to its issuer but that obligation is not satisfied,
remains extant and can be resold by the issuer. The portfolio in Part I
of the Prospectus contains a listing of the sinking fund and call
provisions, if any, with respect to each of the Bonds.
To the best knowledge of the Sponsors, there is no litigation pending as
of the date of Part I of the Prospectus relating to each trust in
respect of any Bonds in such Trust which might reasonably be expected to
have a material adverse effect upon such Trust. At any time after the
Date of Deposit, litigation may be initiated on a variety of grounds
with respect to Bonds in the Trusts. Such litigation, as for example,
suits challenging the issuance of pollution control revenue bonds under
environmental protection statutes, may affect the validity of such Bonds
or the tax-free nature of the interest thereon. While the outcome of any
such litigation can never be predicted with certainty, bond counsel have
given opinions to the issuing authorities of each Bond on the date of
issuance to the effect that such Bonds have been validly issued and that
the interest thereon is excludable from gross income for Federal income
tax purposes. In addition, other litigation or other factors may arise
from time to time which potentially may impair the ability of issuers to
meet obligations undertaken with respect to Bonds.
The Units
Each Unit of a Trust represents the fractional undivided interest in
such Trust set forth in Part I of the Prospectus relating to such Trust
under "Summary of Essential Financial Information" as of the date of
Page 8
such "Summary of Essential Financial Information." Thereafter, if any
Units of a Trust are redeemed by the Trustee, the fractional undivided
interest in such Trust represented by each unredeemed Unit will
increase, although the actual interest in such Trust represented by each
such Unit will remain essentially the same. Units of a Trust will remain
outstanding until redeemed upon tender to the Trustee by any Unit
holder, which may include the Sponsors, or until the termination of the
Trust Agreement for such Trust. See "Rights of Unit Holders-Redemption."
Estimated Current and Long-Term Return to Unit Holders
Estimated Current Return is computed by dividing the Estimated Net
Annual Interest Income per Unit by the Public Offering Price. Any change
in either the Estimated Net Annual Interest Income per Unit or the
Public Offering Price will result in a change in the Estimated Current
Return. For each Trust, the Public Offering Price will vary in
accordance with fluctuations in the prices of the underlying Bonds and
the Net Annual Interest Income per Unit will change as Bonds are
redeemed, paid, sold or exchanged in certain refundings or as the
expenses of each Trust change. Therefore, there is no assurance that the
Estimated Current Return indicated in the "Special Trust Information" in
Part I for each Trust will be realized in the future. Estimated Long-
Term Return is calculated using a formula which (1) takes into
consideration, and determines and factors in the relative weightings of,
the market values, yields (which take into account the amortization of
premiums and the accretion of discounts) and estimated retirements of
all of the Bonds in a Trust; (2) takes into account a compounding factor
and the expenses and sales charge associated with each Unit of a Trust;
and (3) takes into effect the tax-adjusted yield from potential capital
gains at the Date of Deposit. Since the market values and estimated
retirements of the bonds and the expenses of each Trust will change,
there is no assurance that the Estimated Long-Term Return indicated in
the "Special Trust Information" in Part I for the Trusts will be
realized in the future. The Estimated Long-Term Return assumes that each
Bond is retired on its pricing life date (i.e., that date which produces
the lowest dollar price when yield price calculations are done for each
optional call date and the maturity date of a callable security). If the
Bond is retired on any optional call or maturity date other than the
pricing life date, the yield to the holder of that Bond will differ from
the initial quoted yield. Estimated Current Return and Estimated Long-
Term Return are expected to differ because the calculation of Estimated
Current Return calculations include only Net Annual Interest Income per
Unit and Public Offering Price. Neither rate reflects the true return to
Unit holders which is lower because neither includes the effect of the
delay in the first payment to Unit holders. The Estimated Long-Term
Return is based on the estimated per Unit cash flow. 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 Bonds. The Sponsors
will provide cash flow information relating to each Trust without charge
to each potential investor in the Trust who receives this Prospectus and
makes an oral or written request to the Sponsors for such information.
Insurance on the Bonds
Insurance guaranteeing the timely payment, when due, of all principal
and interest on the Bonds in each Trust has been obtained from Municipal
Bond Investors Assurance Corporation (the "Corporation") by such Trusts.
The Corporation has issued a separate policy of insurance to each trust
(the "Corporation Policy"), including Bonds which may previously have
been insured. The insurance obtained by each Trust from the Corporation
is only effective as to Bonds owned by and held in such Trust and,
consequently, does not cover Bonds for which the contract for purchase
fails. The Corporation Policy shall continue in force only with respect
to Bonds held in and owned by a Trust, and the Corporation shall not
have any liability under the policy with respect to any Bonds which do
not constitute part of such Trust. In determining to insure the Bonds,
the Corporation has applied its own standards which correspond generally
to the standards it has established for determining the insurability of
new issues of municipal bonds.
By the terms of its policy, the Corporation will unconditionally
guarantee to each Trust the payment when due, required of the issuer of
the Bonds held in such Trust of an amount equal to the principal of and
interest on such Bonds as such payments shall become due but are not
paid, except that in the event of any acceleration of the due date of
principal by reason of mandatory or optional redemption (other than in
mandatory sinking fund redemption), default or otherwise, the payments
guaranteed will be made to the related Trust in such amounts and at such
Page 9
times as would have been had there not been such acceleration by reason
of mandatory or optional redemption (other than a mandatory sinking fund
redemption). The Corporation will be responsible for such payments less
any amounts received by a Trust from any Trustee for the Bond issuers or
from any other source. The Corporation Policy also does not insure
against nonpayment of principal of or interest on the Bonds resulting
from the insolvency, negligence or any other act or omission of the
Trustee or other paying agent from the Bonds. However, with respect to
small issue industrial development Bonds and pollution control revenue
Bonds covered by the Corporation Policy obtained by a Trust, the
Corporation guarantees the full and complete payments required to be
made to such Trust by or on behalf of an issuer of such Bonds if there
occurs pursuant to the terms of the Bonds an event which results in the
loss of the tax-exempt status of interest on such, including principal,
interest or premium payments payable thereon, if any, as and when
required to be made by or on behalf of the issuer pursuant to the terms
of such Bonds. No assurance can be given that the Corporation Policy
would insure the payment of principal or interest on Bonds which is not
required to be paid by the issuer thereof because the Bonds were not
validly issued. At the respective times of issuance of the bonds,
opinions relating to the validity thereof were rendered by bond counsel
to the respective issuing authorities. The Corporation Policy is non-
cancellable and will continue in force so long as the related Trust is
in existence and the Bonds described in the Corporation Policy continue
to be held in and owned by such Trust. Failure to pay premiums on the
Corporation Policy obtained by a Trust will not result in the
cancellation of insurance but will force the Corporation to take action
against the Trustee to recover premium payments due it. The Trustee in
turn will be entitled to recover such payments from related Trust.
The Corporation Policy obtained by a Trust shall terminate as to any
Bonds which have been redeemed from or sold by the Trustee or such Trust
on the date of such redemption or on the settlement date of such sale,
and the Corporation shall not have any liability under such policy as to
any such Bonds thereafter. If the date of such redemption or the
settlement date of such sale occurs between a record and a date of
payment of any such bond, the Corporation Policy will terminate as to
such Bonds on the business day next succeeding such date of payment. The
termination of the Corporation Policy as to any Bond shall not affect
the Corporation's obligations regarding any other Bond in such Trust or
any other Trust which has obtained a Corporation Policy. The Corporation
Policy obtained by a Trust will terminate as to all Bonds therein on the
date on which the last of such Bonds mature, are redeemed or are sold by
such Trust. Pursuant to an irrevocable commitment of the Corporation,
the Trustee upon the sale of a Bond in a Trust has the right to obtain
permanent insurance with respect to such Bond (i.e., insurance to
maturity of the Bonds) (the "Permanent Insurance") upon the payment of a
single predetermined insurance premium from the proceeds of the sale of
such Bonds. Accordingly, any Bond in a Trust is eligible to be sold on
an insured basis. It is expected that the Trustee will exercise the
right to obtain Permanent Insurance for a Bond in a Trust upon
instruction from the Sponsors only if upon such exercise such Trust
would receive net proceeds (sale of Bond proceeds less the insurance
premium attributable to the Permanent Insurance and the related
custodial fee) from such sale in excess of the sale proceeds if such
Bond were sold on an uninsured basis. The Permanent Insurance premium
with respect to each Bond is determined based upon the insurability of
each Bond as of the Date of Deposit for such and will not be increased
or decreased for any change in the creditworthiness of such Bond unless
such Bond is in default as to payment of principal and/or interest. In
such event, the Permanent Insurance Premium shall be subject to an
increase predetermined at the Date of Deposit and payable from the
proceeds of the sale of such Bond.
Except as indicated below, insurance obtained by a Trust has no effect
on the price or redemption value of Units thereof. It is the present
intention of the Evaluator to attribute a value to the insurance
obtained by a Trust (including the right to obtain Permanent Insurance)
for the purpose of computing the price or redemption value of Units
thereof only if the Bonds covered by such insurance are in default in
payment of principal or interest or, in the Sponsors' opinion, in
significant risk of such default ("Defaulted Bonds"). The value of the
insurance will be equal to the difference between (i) the market value
of a Bond which is in default assuming the exercise of the right to
obtain Permanent Insurance (less the insurance premium attributable to
the purchase of Permanent Insurance and the related custodial fee) and
(ii) the market value of such Defaulted Bond not covered by Permanent
Insurance. See "Public Offering-Offering Price" for a more complete
description of the Evaluator's method of valuing Defaulted Bonds.
Page 10
Insurance obtained by the issuer of a Bond or by other parties is
effective so long as such Pre-insured Bond is outstanding and the
insurer of such Pre-insured Bond continues to fulfill its obligations.
Regardless of whether the insurer of a Pre-insured Bond continues to
fulfill its obligations, however, such Bond will continue to be insured
under the policy obtained by a Trust from the Corporation as long as the
Bond is held in such Trust. Insurance obtained by the issuer of a Bond
or by other parties may be considered to represent an element of market
value in regard to the Bonds thus insured, but the exact effect, if any,
of this insurance on such market value cannot be predicted.
In the event that interest on or principal of a Bond held in a Trust is
due for payment but is unpaid by reason of nonpayment by the issuer
thereof, the Corporation will make payments to its fiscal agent,
Citibank, N.A., New York, New York, (the "Fiscal Agent"), equal to such
unpaid amounts or principal and interest not later than one business day
after the Corporation has been notified by the Trustee for such Trust
that such nonpayment has occurred (but not earlier than the date such
payment is due). The Fiscal Agent will disburse to the Trustee the
amount of principal and interest which is then due for payment but is
unpaid upon receipt by the Fiscal Agent of (i) evidence of such Trust's
right to receive payment of such principal and interest and (ii)
evidence, including any appropriate instruments of assignment, that all
of the rights to payment of such principal or interest then due for
payment shall thereupon vest in the Corporation. Upon payment by the
Corporation of any principal or interest payments with respect to any
Bonds, the Corporation shall succeed to the rights of the owner of such
Bonds with respect to such payment.
The Corporation 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 the Corporation. The Corporation is a
limited liability corporation rather than a several liability
association. The Corporation is domiciled in the State of New York and
licensed to do business in all 50 states, the District of Columbia, the
Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana
Islands, the Virgin Islands of the United States and the Territory of
Guam. The Corporation has one European branch in the Republic of France.
As of March 31, 1996 the Insurer had admitted assets of $4.0 billion
(unaudited), total liabilities of $2.7 billion (unaudited), and total
capital and surplus of $1.3 billion (unaudited) determined in accordance
with statutory accounting practices prescribed or permitted by insurance
regulatory authorities. As of December 31, 1995, the Insurer had
admitted assets of $3.8 billion (audited), total liabilities of $2.5
billion (audited), and total capital and surplus of $1.3 billion
(audited) determined in accordance with statutory accounting practices
prescribed or permitted by insurance regulatory authorities. Copies of
the Corporation's financial statements prepared in accordance with
statutory accounting practices are available from the Corporation. The
address of the Corporation is 113 King Street, Armonk, New York 10504.
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 date thereof. The Sponsors are not aware
that the information herein is inaccurate or incomplete as of the date
hereof.
Standard & Poor's has assigned to the Units in each Trust a rating of
AAA and has assigned to the Bonds in each Trust a rating of AAA, as
insured, and Moody's has assigned a rating of "Aaa" to the Bonds in each
Trust , as insured, only while such Bonds are held in such Trust. Also
for each Trust for which a Corporation Policy has been obtained these
ratings reflect Standard & Poor's and Moody's current assessment of the
creditworthiness of the Corporation and its ability to pay claims on its
policies of insurance.
The contract of insurance relating to each Trust, certain agreements
relating to the Permanent Insurance and the negotiations in respect
thereof represent the only significant relationship between the
Corporation and each Trust. Otherwise, neither the corporation nor any
associate thereof has any material business relationship, direct or
indirect with each Trust or the sponsors, except that Sponsors may from
time to time in the future, in the normal course of their business,
participate as underwriters or as managers or as members of underwriting
syndicates in the distribution of new issues of municipal bonds for
which a policy of insurance guaranteeing the payment of interest and
principal has been obtained from the Corporation. Although all issues
contained in the respective Trusts are individually insured, neither the
respective Trusts nor the Units are insured directly by the Corporation.
A purpose of the insurance obtained by each Trust on the underlying
Bonds is to obtain a higher yield on such underlying Bonds than would be
available if all such Bonds had Standard & Poor's AAA rating and/or
Moody's Aaa rating but were uninsured and yet, at the same time, to have
Page 11
the protection of insurance of payment of interest and principal of such
Bonds. There is, of course, no certainty that this result will be
achieved. Any Pre-insured Bonds in a Trust (all of which are rated AAA
by Standard & Poor's and/or Moody's) may or may not have a higher yield
than uninsured bonds rated AAA by Standard & Poor's and/or Aaa by Moody's.
Because the Bonds in each Trust are insured by the Corporation as to the
payment of principal and interest, Standard & Poor's has assigned its
AAA investment rating to the Units and to the Bonds while in the Trusts,
and Moody's has assigned a rating of Aaa to all of the Bonds in the
Trusts, as insured. The obtaining of these ratings by the Trusts should
not be construed as an approval of the offering of the Units by Standard
& Poor's or Moody's or as a guarantee of the market value of the Trusts
or of the Units. These ratings are not a recommendation to buy, hold or
sell and do not take into account the extent to which a Trust's expenses
or sales or portfolio assets for less than such Trust's acquisition
price will reduce payment to the Unit holders of the interest or principal.
TAX STATUS
Interest income on the Bonds contained in each Trust's portfolio is, in
the opinion of bond counsel to the issuing governmental authorities,
which opinion was rendered at the time of original issuance of the
Bonds, excludable from Federal gross income under the Internal Revenue
Code of 1986, as amended (the "Code"). See "The Trusts-Portfolios."
Gain (or loss) realized on sale, maturity, or redemption of the Bonds or
on sale or redemption of a Unit is, however, includible in gross income
as capital gain (or loss) for Federal, state and local income tax
purposes assuming that the Unit is held as a capital asset. Such gain
(or loss) does not include any amount received in respect of accrued
interest. In addition, such gain (or loss) may be long or short-term
depending on the holding period of the Units. Bonds selling at a market
discount tend to increase in market value as they approach maturity when
the principal amount is payable, thus increasing the potential for
taxable gain (or reducing the potential for loss) on their redemption,
maturity or sale. It should be noted that under recently proposed
legislation that would subject accretion of market discount on tax-
exempt bonds to taxation as ordinary income, gain realized on the sale
or redemption of Bonds by the Trustee or of Units by a Unit holder that
would otherwise be treated as capital gain may be recharacterized as
ordinary income to the extent it is attributable to accretion of market
discount. Market discount can arise based on the price the Trust pays
for the Bonds or the price a Unit holder pays for his Units. Since the
proceeds from sales of Bonds, under certain circumstances, may not be
distributed pro rata, Unit holders taxable income for any year may
exceed their actual cash distributions in that year.
On the Date of Deposit corresponding to each Trust, Chapman and Cutler,
Counsel for the Sponsors, rendered an opinion substantially to the
effect that:
(A) Each Trust is not an association taxable as a corporation for
Federal income tax purposes and interest and accrued original issue
discount on Bonds which is excludable from gross income under the
Internal Revenue Code of 1986, as amended (the "Code") will retain its
status when distributed to Unit holders; however, such interest may be
taken into account in computing the alternative minimum tax, an
additional tax on branches of foreign corporations and the environmental
tax (the "Superfund Tax"), as noted below;
(B) Each Unit holder is considered to be the owner of a pro rata
portion of the respective Trust under subpart E, subchapter J of chapter
1 of the Code and will have a taxable event when the Trust disposes of a
Bond, or when the Unit holder redeems or sells his Units. Unit holders
must reduce the tax basis of their Units for their share of accrued
interest received by the Trust, if any, on Bonds delivered after the
Unit holders pay for their Units to the extent that such interest
accrued on such Bonds during the period from the Unit holder's
settlement date to the date such Bonds are delivered to the respective
Trust and, consequently, such Unit holders may have an increase in
taxable gain or reduction in capital loss upon the disposition of such
Units. Gain or loss upon the sale or redemption of Units is measured by
comparing the proceeds of such sale or redemption with the adjusted
basis of the Units. If the Trustee disposes of Bonds (whether by sale,
payment on maturity, redemption or otherwise), gain or loss is
recognized to the Unit holder. The amount of any such gain or loss is
Page 12
measured by comparing the Unit holder's pro rata share from such
disposition with the Unit holder's basis for his or her fractional
interest in the asset disposed of. In the case of a Unit holder who
purchases Units, such basis (before adjustment for earned original
discount and amortization of Bond premium, if any) is determined by
apportioning the cost of the Units among each of the Trust assets
ratably according to value as of the valuation date nearest the date of
acquisition of the Units. The tax basis reduction requirements of the
Code relating to amortization of bond premium may, under some
circumstances, result in the Unit holder realizing a taxable gain when
his Units are sold or redeemed for an amount equal to or less than his
original cost;
(C) Any proceeds paid under individual policies obtained by issuers of
Bonds which represent maturing interest on defaulted Bonds held by the
Trustee will be excludable from Federal gross income if, and to the same
extent as, such interest would have been so excludable if paid in the
normal course by the issuer of the defaulted Bonds provided that, at the
time such policies are purchased, the amounts paid for such policies are
reasonable, customary and consistent with the reasonable expectation
that the issuer of the Bonds, rather than the insurer, will pay debt
service on the Bonds.
Sections 1288 and 1272 of the Code provide a complex set of rules
governing the accrual of original issue discount. These rules provide
that original issued discount accrues either on the basis of a constant
compound interest rate or ratably over the term of the Bond, depending
on the date the Bond was issued. In addition, special rules apply if the
purchase price of a Bond exceeds the original issue price plus the
amount of original issue discount which would have previously accrued
based upon its issue price (its "adjusted issue price") to prior owners.
The application of these rules will also vary depending on the value of
the Bond on the date a Unit holder acquires his Units, and the price the
Unit holder pays for his Units. Unit holders should consult their tax
advisers regarding these rules and their application.
"The Revenue Reconciliation Act of 1993" (the "Tax Act") subjects tax-
exempt bonds to the market discount rules of the Code effective for
bonds purchased after April 30, 1993. In general, market discount is the
amount (if any) by which the stated redemption price at maturity exceeds
an investor's purchase price (except to the extent that such difference,
if any, is attributable to original issue discount not yet accrued)
subject to a statutory de minimis rule. Market discount can arise based
on the price a Trust pays for Bonds or the price a Unit holder pays for
his or her Units. Under the Tax Act, accretion of market discount is
taxable as ordinary income; under prior law the accretion had been
treated as capital gain. Market discount that accretes while the Trust
holds a Bond would be recognized as ordinary income by the Unit holder
when principal payments are received on the Bond, upon sale or at
redemption (including early redemption) or upon the sale or redemption
of his Units, unless a Unit holder elects to include market discount in
taxable income as it accrues. The market discount rules are complex and
Unit holders should consult their tax advisers regarding these rules and
their application.
In the case of certain corporations, the alternative minimum tax and the
Superfund tax for taxable years beginning after December 31, 1986,
depends upon the corporation's alternative minimum taxable income, which
is the corporation's taxable income with certain adjustments. One of the
adjustment items used in computing the alternative minimum taxable
income and the Superfund Tax of a corporation (other than an S
Corporation, Regulated Investment Company, Real Estate Investment Trust,
or REMIC) is an amount equal to 75% of the excess of such corporation's
"adjusted current earnings" over an amount equal to its alternative
minimum taxable income (before such adjustment item and the alternative
tax net operating loss deduction). "Adjusted current earnings" includes
all tax-exempt interest, including interest on all of the Bonds in the
Trusts. Under current Code provisions, the Superfund Tax does not apply
to tax years beginning on or after January 1, 1996. However, the
Superfund Tax could be extended retroactively. Under the provisions of
Section 884 of the Code, a branch profits tax is levied on the
"effectively connected earnings and profits" of certain foreign
corporations which include tax-exempt interest such as interest on the
Bonds in the Trust. Unit holders should consult their tax advisers with
respect to the particular tax consequences to them including the
corporate alternative minimum tax, the Superfund Tax and the branch
profits tax imposed by Section 884 of the Code.
Counsel for the Sponsors has also advised that under Section 265 of the
Code, interest on indebtedness incurred or continued to purchase or
carry Units of a Trust is not deductible for Federal income tax
Page 13
purposes. The Internal Revenue Service has taken the position that such
indebtedness need not be directly traceable to the purchase or carrying
of Units (however, these rules do not apply to interest paid on
indebtedness incurred to purchase or improve a personal residence).
Also, under Section 265 of the Code, certain financial institutions that
acquire Units would generally not be able to deduct any of the interest
expense attributable to ownership of such Units. On December 7, 1995,
the U.S. Treasury Department released proposed legislation that, if
enacted, would generally extend the financial institution rules to all
corporations, effective for obligations acquired after the date of
announcement. Investors with questions regarding this issue should
consult with their tax advisers.
In the case of certain of the Bonds in a Trust, the opinions of bond
counsel indicate that interest on such Bonds received by a "substantial
user" of the facilities being financed with the proceeds of these Bonds,
or persons related thereto, for periods while such Bonds are held by
such a user or related person, will not be excludable from Federal gross
income, although interest on such Bonds received by others would be
excludable from Federal gross income. "Substantial user" and "related
person" are defined under the Code and U.S. Treasury Regulations. Any
person who believes he or she may be a "substantial user" or "related
person" as so defined should contact his or her tax adviser.
At the time of closing Kroll & Tract, special counsel to the Trust for
New York tax matters, rendered an opinion substantially to the effect
that the Trust is not an association taxable as a corporation and the
income of the Trust will be treated as the income of the Unit holders
under the then existing income tax laws of the State and City of New York.
All statements in the Prospectus concerning exclusion from gross income
for Federal, state or other taxes are the opinions of counsel and are to
be so construed.
At the respective times of issuance of the Bonds, opinions relating to
the validity thereof and to the exclusion of interest thereon from
Federal gross income are rendered by bond counsel to the respective
issuing authorities. Neither the Sponsor, Chapman and Cutler nor Kroll &
Tract made any special review for any Trust of the proceedings relating
to the issuance of the Bonds or of the basis of such opinions.
In the case of corporations, the alternative tax rate applicable to long-
term capital gains is 35%, effective for long-term capital gains
realized in taxable years beginning on or after January 1, 1993. For
taxpayers other than corporations, net capital gains are subject to a
maximum marginal stated tax rate of 28%. However, it should be noted
that legislative proposals are introduced from time to time that affect
tax rates and could affect relative differences at which ordinary income
and capital gains are taxed. Under the Code, taxpayers must disclose to
the Internal Revenue Service the amount of tax-exempt interest earned
during the year.
Section 86 of the Code provides that 50% of the Social Security benefits
are includible in gross income to the extent the "modified adjusted
gross income" plus 50% of the Social Security benefits received exceeds
a "base amount." The base amount is $25,000 for unmarried taxpayers,
$32,000 for married taxpayers filing a joint return and zero for married
taxpayers who do not live apart at all times during the taxable year and
who file separate returns. Modified adjusted gross income is adjusted
gross income determined without regard to certain otherwise allowable
deductions and exclusions from gross income and by including tax exempt
interest. To the extent that Social Security benefits are includible in
gross income, they will be treated as any other item of gross income.
In addition, under the Tax Act, for taxable years beginning after
December 31, 1993, up to 85% of Social Security benefits are includible
in gross income to the extent that the sum of "modified adjusted gross
income" plus 50% of Social Security benefits received exceeds an
"adjusted base amount." The adjusted base amount is $34,000 for
unmarried taxpayers, $44,000 for married taxpayers filing a joint
return, and zero for married taxpayers who do not live apart at all
times during the taxable year and who file separate returns.
Although tax-exempt interest is included in modified adjusted gross
income solely for the purpose of determining what portion, if any, of
Social Security benefits will be included in gross income, no tax-exempt
interest, including that received from a Trust, will be subject to tax.
A taxpayer whose adjusted gross income already exceeds the base amount
or the adjusted base amount must include 50% or 85%, respectively of his
Social Security benefits in gross income whether or not he receives any
tax-exempt interest. A taxpayer whose modified adjusted gross income
(after inclusion of tax-exempt interest) does not exceed the base amount
need not include any Social Security benefits in gross income.
Page 14
Ownership of the Units may result in collateral federal income tax
consequences to certain taxpayers, including, without limitation,
corporations subject to either the environmental tax or the branch
profits tax, financial institutions, certain insurance companies,
certain S corporations, individual recipients of Social Security or
Railroad Retirement benefits and taxpayers who may be deemed to have
incurred (or continued) indebtedness to purchase or carry tax-exempt
obligations. Prospective investors should consult their tax advisors as
to the applicability of any collateral consequences. On December 7, 1995
the U.S. Treasury Department released proposed legislation that, if
adopted, could affect the United States Federal income taxation of non-
United States Unit holders and the portion of the Trust's income
allocable to non-United States Unit holders. Similar language, which
would be effective on the date of enactment, was included in the Health
Insurance Reform Bill as passed by the U.S. Senate on April 23, 1996.
Tennessee Tax Status. The assets of the Tennessee Trust will consist of
bonds issued by the State of Tennessee (the "State") or any county or
any municipality or political subdivision thereof, including any agency,
board, authority or commission, the interest on which is exempt from the
Hall Income Tax imposed by the State of Tennessee ("Tennessee Bonds") or
by the Commonwealth of Puerto Rico (the "Puerto Rico Bonds")
(collectively, the "Bonds").
Under Tennessee law, a unit investment trust for federal income tax
purposes is entitled to special Tennessee State tax treatment (as more
fully described below) with respect to its proportionate share of
interest income received or accrued with respect to the Tennessee Bonds.
Tennessee law also provides an exemption for distributions made by a
unit investment trust or mutual fund that are attributable to "bonds or
securities of the United States government or any agency or
instrumentality thereof" ("U.S. Government, Agency or Instrumentality
Bonds"). If it were determined that the Trust held assets other than
Tennessee Bonds or U.S. Government, Agency or Instrumentality Bonds, a
proportionate share of distributions from the Trust would be taxable to
Unit holders for Tennessee Income Tax purposes.
Further, this provision appears only to provide an exemption for
distributions that relate to interest income, distributions by the Trust
that relate to capital gains realized from the sale or redemption of
Tennessee Bonds or U.S. Government Agency or Instrumentality Bonds are
likely to be treated as taxable dividends for purposes of the Hall
Income Tax. However, capital gains realized directly by a Unit holder
when the Unit holder sells or redeems his Unit will not be subject to
the Hall Income Tax. The opinion set forth below assumes that the
interest on the Tennessee Bonds, if received directly by a Unit holder,
would be exempt from the Hall Income Tax under Tennessee State law. This
opinion does not address the taxation of persons other than full-time
residents of the State of Tennessee.
Because this provision only provides an exemption for distributions
attributable to interest on Tennessee Bonds or U.S. Government, Agency
or Instrumentality Bonds, it must be determined whether bonds issued by
the Government of Puerto Rico qualify as U.S. Government, Agency or
Instrumentality Bonds. For Hall Income Tax purposes, there is currently
no published administrative interpretation or opinion of the Attorney
General of Tennessee dealing with the status of distributions made by
unit investment trusts such as the Tennessee Trust that are attributable
to interest paid on bonds issued by the Government of Puerto Rico.
However, in a letter dated August 14, 1992 (the "Commissioner's
Letter"), the Commissioner of the State of Tennessee Department of
Revenue advised that Puerto Rico would be an "instrumentality" of the
U.S. Government and treated bonds issued by the Government of Puerto
Rico as U.S. Government, Agency or Instrumentality Bonds. Based on this
conclusion, the Commissioner advised that distributions from a mutual
fund attributable to investments in Puerto Rico Bonds are exempt from
the Hall Income Tax. Both the Sponsor and Chapman and Cutler, for
purposes of its opinion (as set forth below), have assumed, based on the
Commissioner's Letter, that bonds issued by the Government of Puerto
Rico are U.S. Government, Agency or Instrumentality Bonds. However, it
should be noted that the position of the Commissioner is not binding,
and is subject to change, even on a retroactive basis.
The Sponsor cannot predict whether new legislation will be enacted into
law affecting the tax status of Tennessee Trusts. The occurrence of such
an event could cause distributions on interest income from the Trust to
be subject to the Hall Income Tax. Investors should consult their own
tax advisors in this regard.
In the opinion of Chapman and Cutler, Counsel to the Sponsor, under
existing Tennessee State law as of the date of this prospectus:
Page 15
For purposes of the Hall Income Tax, the Tennessee Excise Tax imposed by
Section 67-4-806 (the "State Corporate Income Tax"), and the Tennessee
Franchise Tax imposed by Section 67-4-903, the Tennessee Trusts will not
be subject to such taxes.
For Hall Income Tax purposes, a proportionate share of distributions
from the Tennessee Trusts to Unit holders, to the extent attributable to
interest on the Tennessee Bonds (based upon the relative proportion of
interest income received or accrued attributable to such bonds) will be
exempt from the Hall Income Tax when distributed to such Unit holders.
Based on the Commissioner's Letter, distributions from the Trust to Unit
holders, to the extent attributable to interest on the Puerto Rico Bonds
(based on the relative proportion of interest received or accrued
attributable to the Puerto Rico Bonds) will be exempt from the Hall
Income Tax when distributed to such Unit holders. A proportionate share
of distributions from the Tennessee Trusts attributable to interest on
assets other than the Bonds would not, under current law, be exempt from
the Hall Income Tax when distributed to Unit holders. (See the Tennessee
Trust Portfolio for a listing of these Bonds).
For Tennessee State Corporate Income Tax Purposes, Tennessee law does
not provide an exemption for interest on the Tennessee Bonds and
requires that all interest excludable from Federal gross income must be
included in calculating "net earnings" subject to the State Corporate
Income Tax. No opinion is expressed regarding whether such tax would be
imposed on the earnings or distributions of the Tennessee Trusts
(including interest on the Bonds or gain realized upon the disposition
of the Bonds by the Tennessee Trusts) attributable to Unit holders
subject to the State Corporate Income Tax. However, based upon prior
written advice from the Tennessee Department of Revenue, earnings and
distributions from the Tennessee Trusts (including interest on the
Tennessee Bonds or gain realized upon the disposition of the Tennessee
Bonds by the Tennessee Trusts) attributable to the Unit holders subject
to the State Corporate Income Tax should be exempt from the State
Corporate Income Tax. The position of the Tennessee Department of
Revenue is not binding, and is subject to change, even on a retroactive
basis.
Each Unit holder will realize taxable gain or loss for State Corporate
Income Tax purposes when the Unit holder redeems or sells his Units, at
a price that differs from original cost as adjusted for accretion or any
discount or amortization of any premium and other basis adjustments,
including any basis reduction that may be required to reflect a Unit
holder's share of interest, if any, accruing on Bonds during the
interval between the Unit holder's settlement date and the date such
Bonds are delivered to the Trust, if later. Tax basis reduction
requirements relating to amortization of bond premium may, under some
circumstances, result in Unit holders realizing taxable gain when the
Units are sold or redeemed for an amount equal to or less than their
original cost.
For purposes of the Tennessee Property Tax, the Tennessee Trusts will be
exempt from taxation with respect to the Bonds it holds. As for the
taxation of the Units held by the Unit holders, although intangible
personal property is not presently subject to Tennessee taxation, no
opinion is expressed with regard to potential property taxation of the
Unit holders with respect to the Units because the determination of
whether property is exempt from such tax is made on a county by county
basis.
No opinion is expressed herein regarding whether insurance proceeds paid
in lieu of interest on the Bonds held by the Tennessee Trust (including
Tennessee Bonds) are exempt from the Hall Income Tax. Distributions of
such proceeds to Unit holders may be subject to the Hall Income Tax.
The Bonds and the Units held by the Unit holders will not be subject to
Tennessee sales and use taxes.
We have not examined any of the Bonds to be deposited and held in the
Tennessee Trust of the proceedings for the issuance thereof or the
opinion of bond counsel with respect thereto, and therefore express no
opinion as to the exemption from State income taxes of interest on the
Bonds if received directly be a Unit holder.
Chapman and Cutler has expressed no opinion with respect to taxation
under any other provisions of Tennessee law. Ownership of the Units may
result in collateral Tennessee tax consequences to certain taxpayers.
Prospective investors should consult their tax advisors as to the
applicability of any such collateral consequences.
Page 16
CERTAIN CONSIDERATIONS
The Tennessee Trusts
The following discussion regarding Tennessee's economy is based upon
information drawn from publicly available sources and is included for
the purpose of providing information about general economic conditions
that may or not affect issuers of the Tennessee obligations. The Sponsor
has not independently verified any of the information contained in such
publicly available documents.
The State Constitution of Tennessee requires a balanced budget. No legal
authority exists for deficit spending for operating purposes beyond the
end of a fiscal year. Tennessee State law permits tax anticipation
borrowing but any amount borrowed must be repaid during the fiscal year
for which the borrowing was done. Tennessee has not issued any debt for
operating purposes during recent years with the exception of some
advances which were made from the Federal Unemployment Trust Fund in
1984. No such advances are now outstanding nor is borrowing of any type
for operating purposes contemplated.
The State constitution of Tennessee forbids the expenditure of the
proceeds of any debt obligation for a purpose other than the purpose for
which it was authorized by statute. Under State law, the term of bonds
authorized an issued cannot exceed the expected life of the projects
being financed. Furthermore, the amount of a debt obligation cannot
exceed the amount authorized by the General Assembly.
The recommended State budget for Fiscal Year 1994-95 is $12,570,380,800.
State revenues are scheduled to be obtained from taxes, each of which
will generate a certain percentage of the total revenues as follows:
sales (54%); franchise and excise (12%); gasoline (11%); gross receipts
and privilege (4%); motor vehicle (3%); income and inheritance (3%);
insurance and banking (3%); tobacco, beer, and alcoholic beverages (2%)
and all other taxes (8%).
For Fiscal Year 1994-95, State revenues are scheduled to be allocated in
the following percentages: education (44%); health and social services
(22%); transportation (11%); law, safety and correction (9%); cities and
counties (8%); general government (3%); resources and regulation (2%)
and business and economic development (1%).
Overall, the economic indicators were positive for Tennessee for 1993.
After a slow start, inflation-adjusted personal income in Tennessee
rebounded in the second quarter, resulting in overall growth of 4.4%
from the second quarter of 1992 to the second quarter of 1993.
Tennessee's employment also grew in 1993, although its growth was not as
impressive as income growth. Third-quarter statistics for 1993 show that
Tennessee nonagricultural employment was 1.7% above the same quarter in
1992. In 1994, the Tennessee economy continued to expand. From December,
1993 to December, 1994 Tennessee's seasonally adjusted employment grew
from 2,395,100 people to 2,567,300 people, while its unemployment rate
decreased from 4.6% to 3.8% over that same period.
An increase in consumer spending is reflected in Tennessee taxable
sales, which grew 10.4% from the third quarter of 1992 to the third
quarter of 1993. Long-term average growth for taxable sales is 8.5%, but
the distinction between this figure and the recent 10.4% figure is more
substantial than first appearances suggest because the long-term average
includes some periods of significantly higher inflation than the most
recent quarters. Adjusted for inflation, taxable sales grew by 7.5% from
the third quarter of 1992 to the third quarter of 1993, which is triple
the long-term inflation-adjusted average of 2.5%.
The largest contributor to Tennessee's employment growth is services,
accounting for 40.9% of the employment growth that occurred from the
third quarter of 1992 to the third quarter of 1993. While it is still
the most substantial source of employment growth for Tennessee, services
has historically grown at a higher rate. Similarly, the large trade
sector is not as dominant, contributing 27.8% of employment growth from
the third quarter of 1992 to the third quarter of 1993. Another section
that has become less influential on total employment growth in Tennessee
is the finance, insurance, and real estate industry, which contributed
nothing to employment growth during the year ending in the third quarter
of 1993.
Bond Ratings. Tennessee's general obligation bonds are rated Aaa by
Moody's and AA+ by Standard & Poor's. There can be no assurance that the
economic conditions on which these ratings are based will continue or
that particular obligations contained in the Portfolio of the Tennessee
Insured Trust may not be adversely affected by changes in economic or
political conditions.
Legal Proceedings. Tennessee is involved in certain legal proceedings
that, if decided against the State, may require the State to make
Page 17
significant future expenditures or may substantially impair revenues.
The Tennessee Supreme Court currently is reviewing a case in which the
lower court found the Tennessee Department of Revenue improperly defined
non-business earnings for tax purposes. Although this case involves only
$925,000, its outcome could affect at least five other cases and could
have a detrimental impact to Tennessee's revenue base. If the case is
affirmed, Tennessee could lose an estimated $80 million to $100 million
a year in corporate income taxes. The Tennessee Supreme Court also may
hear a similar case in which the lower court found the taxpayer's
partial sale of business holdings resulting in taxable business income.
A ruling in favor of the taxpayer could result in a $10 million tax refund.
Two other tax related cases could also affect the State's financial
condition. A recently filed class-action suit seeks damages in excess of
$25 million for the allegedly illegal collection of sales taxes paid on
extended warranty contracts on motor vehicles. In addition, a coalition
of more than a dozen hospitals is considering a class-action suit to
challenge the legality or Tennessee's Medicaid service tax. Tennessee's
hospitals currently pay approximately $504 million dollars in special taxes.
The foregoing information constitutes only a brief summary of some of
the financial difficulties which may impact certain issuers of Bonds and
does not purport to be a complete or exhaustive description of all
adverse conditions to which the issuers in the Tennessee Trusts are
subject. Additionally, many factors including national economic, social
and environmental policies and conditions, which are not within the
control of the issuers of Bonds, could affect or could have an adverse
impact on the financial condition of the State, various agencies and
political subdivisions located in the State. The Sponsor is unable to
predict whether or to what extent such factors or other factors may
affect the issuers of Bonds, the market value or marketability of the
Bonds or the ability of the respective issuers of the bonds acquired by
the Tennessee Trusts to pay interest on or principal of the bonds.
The exemption of interest on municipal obligations for Federal income
tax purposes does not necessarily result in exemption under the income
tax laws of any state or local government. The laws of such states and
local governments vary with respect to the taxation of such obligations
and each Unit holder is advised to consult his own tax advisor as to the
status of his Units under state and local tax laws.
Expenses and Charges
FEES
The Trustee's, Sponsors' and Evaluator's fees are set forth under
"Summary of Essential Financial Information" in Part I of the
Prospectus. The Sponsors' fee, which is earned for portfolio supervisory
services, is based on the number of Units outstanding at December 1 of
each year. The Sponsors' fee, which will not to exceed the maximum
amount set forth under "Summary of Essential Financial Information" in
Part I of the Prospectus, may exceed the actual costs of providing
portfolio supervisory services for a particular Trust, but at no time
will the total amount the Sponsors receive for portfolio supervisory
services rendered to all Trusts in any calendar year exceed the
aggregate cost to them of supplying such services in such year.
The Trustee will receive for its ordinary recurring services to each
Trust an annual fee in the amount set forth under "Summary of Essential
Financial Information" in Part I of the Prospectus for such Trust. Such
fees may be adjusted as set forth below. There is no minimum fee and,
except as hereinafter set forth, no maximum fee. For a discussion of
certain benefits derived by the Trustee from the funds of each Trust,
see "Rights of Unit Holders-Distribution of Interest and Principal." For
a discussion of the services performed by the Trustee pursuant to its
obligations under each Trust Agreement, reference is made to the
material set forth under "Rights of Unit Holders." The Evaluator will
receive an amount as set forth under the "Summary of Essential Financial
Information" in Part I of the Prospectus relating to each Trust for each
daily evaluation of the Bonds in such Trust. See "Evaluator-
Responsibility." The Trustee's and Evaluator's fees are payable monthly
on or before each Distribution Date and the Sponsors' annual fee is
payable annually on December 1, each from the Interest Account of each
Trust to the extent funds are available and then from the Principal
Account thereof. These fees may be increased without approval of the
Unit holders of the related Trust by amounts not exceeding proportionate
increases in consumer prices for services as measured by the United
States Department of Labor's Consumer Price Index entitled "All Services
Less Rent." If the balances in the Principal and Interest Accounts of a
Page 18
Trust are insufficient to provide for amounts payable by such Trust, or
amounts payable to the Trustee which are secured by prior lien on such
Trust, the Trustee is permitted to sell Bonds from such Trust to pay
such amounts.
Insurance Premiums
The insurance premium for the insurance obtained by each Trust, which is
an obligation of each separate Trust, is payable monthly by the Trustee
on behalf of each Trust. As Bonds in the portfolio of a Trust mature,
are redeemed by their respective issuers or are sold by the Trustee, the
amount of the premium payable by such Trust will be reduced in respect
of those Bonds no longer owned by and held in such Trust. A Trust does
not incur any expense for insurance which has been obtained by an issuer
of a Pre-insured Bond or another party, since the premium or premiums
for such insurance have been paid by such issuer or other party; Pre-
insured Bonds, however, are additionally insured by such Trust. No
premium will be paid by a Trust on Bonds that are pre-insured by either
the Association or the Corporation. The premium payable for Permanent
Insurance and the related custodial fee will be paid solely from the
proceeds of the sale of a Bond from a Trust in the event the Trustee
exercises the right to obtain Permanent Insurance on such Bond.
Other Charges
The following additional charges are or may be incurred by a Trust: all
expenses (including audit and counsel fees) of the Trustee incurred in
connection with its activities under the Trust Agreement for such Trust,
including the expenses and costs of any action undertaken by the Trustee
to protect such Trust and the rights and interest of the Unit holders
thereof; fees of the Trustee for any extraordinary services performed
under the Trust Agreement for such Trust; indemnification of the Trustee
for any loss or liability not attributable to gross negligence, bad
faith or willful misconduct on its part, arising out of or in connection
with its acceptance or administration of such Trust; annual auditing
fees as provided in the Trust Agreement for such Trust; and all taxes
and other governmental charges imposed upon the Bonds or any part of
such Trust (no such taxes or charges are being levied or made or, to the
knowledge of the Sponsors, contemplated). The above expenses, including
the Trustee's fee, when paid by or owing to the Trustee, are secured by
a lien on the applicable Trust. In addition, if the balances in the
Interest and Principal Accounts of the applicable Series are
insufficient to provide for amounts payable by such Trust, the Trustee
is empowered to sell Bonds in order to make funds available to pay all
expenses.
PUBLIC OFFERING
Offering Price
The Public Offering Price of Units of a Trust for secondary market
purchases will be determined by adding to the Evaluator's determination
of the aggregate bid price of the Bonds in a Trust the appropriate sales
charge determined in accordance with the schedule set forth below, based
upon the years to the pricing life date of each bond in the underlying
portfolio.
The effect of this method of sales charge computation will be that
different sales charge rates will be applied to each of the various
Bonds in the Trust based upon the years to the pricing life date of such
bonds, in accordance with the following schedule:
Percentage Percentage
of Public of Public
Years to Pricing Life Date Offering Price Invested
__________________________ ______________ __________
0.000 to 1.000 1.0% 1.010%
1.001 to 2.000 2.0% 2.041%
2.001 to 4.000 3.0% 3.093%
4.001 to 8.000 4.0% 4.167%
8.001 to 12.000 5.0% 5.263%
12.001 to 15.000 5.5% 5.820%
15.001 or more 5.7% 6.045%
However, the minimum sales charge on units will be 2% of the Public
Offering Price. There will be no reduction of the sales charges for
Page 19
volume purchases. A dealer will receive from the co-Sponsors a dealer
concession of 70% of the sales charge, subject to change from time to
time. A proportionate share of accrued and undistributed interest on the
Bonds at the date of delivery of the Units to the purchaser is also
added to the Public Offering Price.
Each Sponsor has agreed to reduce the Public Offering Price of Units for
employees and officers (including their immediate families and trustees,
custodians or fiduciaries for the benefit of such person) in the
accounts listed below. J. C. Bradford & Co. offers Units to employees
and officers in both the primary and secondary market at a price equal
to the Public Offering Price less 50% of the Sponsor's commission.
Glickenhaus & Co. offers Units to employees and officers in the
secondary market at the secondary market bid price plus $5.00. Raymond
James & Associates, Inc. offers Units to employees and officers in both
the primary and secondary market at a price equal to the Public Offering
Price per Unit less $32.00 per Unit plus a $100.00 fee per transaction.
Certain commercial banks are making Units of the Trusts available to
their customers on an agency basis. A portion of the sales charge
discussed 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 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.
For information relating to the calculation of the Redemption Price,
which is based upon the aggregate bid price of the underlying Bonds, see
"Rights of Unit Holders-Certificates" and "Rights of Unit Holders-
Redemption." Unless Bonds are in default in payment of principal or
interest or in significant risk of such default, the Evaluator will not
attribute any value to the Units of a Trust due to the insurance
obtained by such Trust.
The Evaluator will consider in its evaluation of Defaulted Bonds, which
are covered by insurance obtained by a Trust, the value of the insurance
guaranteeing the principal payments. The value of the insurance will be
equal to the difference between (i) the market value of Defaulted Bonds
assuming the exercise of the right to obtain Permanent Insurance (less
the insurance premium attributable to the purchase of Permanent
Insurance and the related custodial fee) and (ii) the market value of
such Defaulted Bonds not covered by Permanent Insurance. In any case the
Evaluator will consider the ability of the insurer for that Trust to
meet its commitments under that Trust's insurance policy, including the
commitment to issue Permanent Insurance. The Evaluator intends to use a
similar valuation method with respect to Bonds insured under a policy
issued to a Trust if there is a significant risk of default and a
resulting decrease in the market value. For a description of the
circumstances under which a full or partial suspension of the right of
Unit holders of the affected Trust to redeem their Units may occur, see
"Rights of Unit Holders-Redemption."
If the Trustee does not exercise the right to obtain Permanent Insurance
on any Defaulted Bonds in a Trust, it is the present intention of the
Trustee, so long as such Trust contains either some bonds not in default
or any Pre-insured Bonds, not to sell Defaulted Bonds to effect
redemptions or for any other reason, but rather to retain them in the
related Trust portfolio because value attributable to the insurance
obtained by a Trust cannot be realized upon sale. Insurance obtained by
the issuer of Pre-insured Bonds, or by some other party, is effective so
long as such Pre-insured Bond is outstanding and the insurer of such
Bond continues to fulfill its obligations. Therefore, any such insurance
may be considered to represent an element of market value in regard to
the Pre-insured Bond, but the exact effect, if any, of this insurance on
such market value cannot be quantified. Regardless of whether the
insurer of a Pre-insured Bond continues to fulfill its obligations,
however, such Bond will in any case continue to be insured under the
policy obtained by the related Trust, as long as the Bond is held in
such Trust.
Market for Units
Although they are not obligated to do so, the Sponsors intend to
maintain a market for the Units of each Trust and continuously offer to
purchase such Units at prices based upon the aggregate bid price of the
Bonds in such Trust (the "Sponsors' Repurchase Price"). The Sponsors
Repurchase Price of a Unit shall be not less than the Redemption Price
of such Unit plus accrued interest through the expected Settlement Date.
See "Rights of Unit Holders-Redemption-Computation of Redemption Price
Page 20
per Unit." There is no sales charge incurred when a Unit holder sells
Units back to the Sponsors. Any Units repurchased by the Sponsors may be
reoffered to the public by the Sponsors at the Public Offering Price at
the time, plus accrued interest. If the supply of Units of a Trust
exceeds demand, or for some other business reason, the Sponsors may
discontinue purchases of Units of such Trust. The Sponsors do not
guarantee the enforceability, marketability, or price of any Bond in a
Trust portfolio or of the related Units. In the event that a market is
not maintained for the Units of a Trust, a Unit holder of such Trust
desiring to dispose of his Units may be able to do so only by tendering
such Units to the Trustee for redemption at the applicable Redemption
Price, which is based upon the aggregate bid price of the underlying
Bonds. If a Unit holder wishes to dispose of his Units, he should
inquire of the Sponsors as to current market prices prior to making a
tender for redemption to the Trustee. See "Rights of Unit Holders-
Redemption" and "Sponsors."
Distribution of Units
It is the Sponsors' intention to effect a public distribution of the
Units solely through their own organizations. However, Units may be sold
to dealers who are members of the National Association of Securities
Dealers, Inc. at prices which represent a concession of 70% of the sales
charge (see "Public Offering-Offering Price"), per Unit of the Public
Offering Price, subject in each case to change from time to time by the
Agent for the Sponsors. In maintaining a market for the Units (see
"Public Offering-Market for Units") the Sponsors will also realize
profits or sustain losses in the amount of any difference between the
price at which they buy Units and the price at which they resell such
Units (the Public Offering Price which includes the sales charge set
forth in Part I under "Summary of Essential Financial Information") or
redeem such Units (based on the aggregate bid side valuation of the Bonds).
RIGHTS OF UNIT HOLDERS
Certificates
Ownership of Units of a Trust is evidenced by registered certificates
executed by the Trustee and the Sponsors. 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. Certificates are transferable by
presentation and surrender to the Trustee properly endorsed and
accompanied by a written instrument or instruments of transfer.
Certificates may be issued in denominations of one Unit or any multiple
thereof. A Unit holder may be required to pay $2.00 per certificate
reissued or transferred, and to pay any governmental charge that may be
imposed in connection with each such transfer or interchange. For new
certificates issued to replace destroyed, stolen or lost certificates,
the Unit holder must furnish indemnity satisfactory to the Trustee and
must pay such expenses as the Trustee may incur. Mutilated certificates
must be surrendered to the Trustee for replacement.
Distribution of Interest and Principal
While interest will be distributed semi-annually or monthly, depending
on the method of distribution chosen, principal, including capital
gains, will be distributed only semi-annually; provided, however, that,
other than for purposes of redemption, no distribution need be made from
the Principal Account of a Trust if the balance therein is less than
$1.00 per unit then outstanding and that if at any time the pro rata
share represented by the Units of cash in the Principal Account of such
Trust exceeds $10.00 per Unit as of a Monthly Record Date, the Trustee
shall, on the next succeeding Monthly Distribution Date, distribute the
Unit holder's pro rata share of the balance of the Principal Account.
Interest (semi-annually or monthly) and principal, including capital
gains, if any (semi-annually) received by a Trust will be distributed on
each Distribution Date to Unit holders of record of such Trust as of the
preceding Record Date who are entitled to such distributions at that
time under the plan of distribution chosen. All distributions to Unit
holders of a Trust will be net of applicable expenses and funds required
for the redemption of Units thereof. See "Summary of Essential
Information" in Part I of the Prospectus, "The Trusts-Expenses and
Charges" and "Rights of Unit Holders-Redemption."
The Trustee will credit to the Interest Account of a Trust all interest
received by such Trust, including that part of the proceeds of any
disposition of underlying Bonds which represents accrued interest
Page 21
(including insurance proceeds representing accrued interest). Other
receipts of a Trust will be credited to the related Principal Account.
The pro rata share of the Interest Account and the pro rata share of
cash in the Principal Account of a Trust represented by each Unit on
such Trust will be computed by the Trustee each month as of the Record
Date. See "Summary of Essential Financial Information" in Part I of the
Prospectus relating to such Trust. Proceeds received from the
disposition of any of the Bonds in a Trust subsequent to a Record Date
and prior to the next succeeding Distribution Date will be held in the
Principal Account of such Trust and will not be distributed until the
second succeeding Distribution Date. Because interest on the Bonds is
not received by a Trust at a constant rate throughout the year, any
particular interest distribution may be more or less than the amount
credited to the Interest Account of such Trust as of the Record Date.
Persons who purchase Units between a Record Date and the next succeeding
Distribution Date will receive their first distribution on the second
Distribution Date following their purchase of Units under the applicable
plan of distribution. No distribution need be made from the Principal
Account of a Trust if the balance therein is less than an amount
sufficient to distribute $1.00 per unit. The difference between the
estimated net interest accrued to a Record date and the estimated net
interest accrued to the related Distribution Date is an asset of the
respective Unit holder and will be realized in subsequent distributions
or upon the earlier of the sale of such Units or the maturity,
redemption or sale of Bonds in the Trusts. Record dates for monthly
distributions will be the tenth day of the month and record dates for
semi-annual distributions will be the tenth day of June and December.
See "Summary of Essential Financial Information" in Part I of the
Prospectus relating to such Trust.
Unit holders will initially receive distributions in accordance with the
election of the prior owner. Each April, the Trustee will furnish each
Unit holder a card to be returned together with the Certificate by June
10 of such year if the Unit holder desires to change his plan of
distribution, and the change will become effective on June 11 of such
year for the ensuing twelve months. For a discussion of redemption of
Units, see "Rights of Unit Holders-Redemption-Tender of Units." The
Trustee will, as of the twenty-fifth day of each month, deduct from the
Interest Account of each Trust and, to the extent funds are not
sufficient therein, from the Principal Account of such Trust, amounts
necessary to pay the expenses of such Trust as of the tenth day of such
month. See "The Trusts-Expenses and Charges." 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 such
Trust. Amounts so withdrawn shall not be considered a part of such
Trust's assets until such time as the Trustee shall return all or any
part of such amounts to the appropriate account. In addition, the
Trustee may withdraw from the Interest Account and the Principal Account
of a Trust such amounts as may be necessary to cover redemption of
related Units by the Trustee. See "Rights of Unit Holders-Redemption
Funds" which are available for future distributions, payments of
expenses and redemptions of a particular Trust, are in accounts which
are non-interest bearing to the Unit holders of such Trust and are
available for use by the Trustee pursuant to normal banking procedures.
Because interest on Bonds in a Trust is payable at varying intervals,
usually in semi-annual installments, the interest accruing to such Trust
will not be equal to the amount of money received and available monthly
for distribution from the Interest Account of such Trust to Unit holders
choosing the monthly payment plan. Therefore, on each monthly
Distribution Date, the amount of interest actually deposited in an
Interest Account and available for distribution may be more or less than
the monthly interest distributions made therefrom. In order to eliminate
fluctuations in monthly interest distributions resulting from such
variances during the first year of a Trust, the Trustee is required by
the Trust Agreement to advance such amounts to such Trust as may be
necessary to provide monthly interest distributions to the Unit holders
of such Trust of approximately equal amounts. The Trustee will be
reimbursed, without interest, for any such advances from funds available
from the Interest Account of the affected Trust on the next ensuing
monthly Record Date. The Trustee is not required to pay interest on
funds held in the Principal or Interest Account of each Trust (but may
itself earn interest thereon and therefore benefit from the use of such
funds). In addition, because of the varying interest payment dates of
the Bonds comprising each Trust portfolio, accrued interest at any point
in time will be greater than the amount of interest actually received by
a Trust and distributed to Unit holders thereof. Therefore, there will
always remain an item of accrued interest that is added to the value of
the Units of a Trust. If a Unit holder sells 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. Similarly, if a Unit
Page 22
holder redeems all or a portion of his Units, the Redemption Price per
Unit which he is entitled to receive from the Trustee will also include
accrued interest on the Bonds. Thus, the accrued interest attributable
to a Unit will not be entirely recovered until the holder redeems or
sells such Unit or until the related Trust is terminated.
Reinvestment Option
The Sponsors have entered into an arrangement with First Investors
Insured Tax Exempt Fund, Inc. ("First Investors") which permits Unit
holders of the Trusts to elect to have each distribution of interest
income, capital gains or principal on his Units automatically reinvested
in shares of First Investors at the price (plus sales charge) described
below. First Investors, whose investment adviser is First Investors
Management Company (the "Adviser"), is an open-end, diversified
management investment company with the objective of providing, through
investment in a professionally managed, insured portfolio of municipal
bonds, a high level of current tax-exempt income. First Investors has
investment objectives which differ in certain respects from those of the
Trusts. First Investors is permitted to own tax-exempt bonds rated less
than A by Moody's or Standard & Poor's and bonds not rated by Moody's or
Standard & Poor's, if, in the judgment of the Adviser, such bonds are
suitable for achieving First Investors' investment objectives and if, in
the judgment of the independent insurance company (AMBAC Indemnity)
which issues insurance covering the securities in the portfolio of First
Investors, such bonds are acceptable for issuance of municipal bond
insurance. As a result of such insurance the fund has received a rating
of AAA by Standard & Poor's. First Investors may also own (not to exceed
10% of the portfolio on average) short-term, fixed-income investments,
the interest income from which may be subject to Federal income tax, as
described in the Prospectus relating to First Investors. Each person who
purchases Units of a Trust may request from First Investors a prospectus
describing First Investors and a form by which such person may elect to
become a participant in the reinvestment plan. Texas residents may
request from First Investors that broker-dealers registered in Texas
send such materials. Thereafter, as directed by such person, each
distribution of interest income, capital gains or principal on the
participant's Units will, on the applicable Distribution Date,
automatically be applied as of that date by the Trustee to purchase
shares (or fractions thereof) of First Investors 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 1/2% of the offering price of such
shares. The sales charge will be paid to the Adviser and First Investors
Corporation, as principal underwriters of First Investors, which will
reallow 1.0% to underwriters and dealers. The balance will be invested
in First Investors. Confirmation of all transactions undertaken for each
participant in the reinvestment plan will be mailed to such participant
by First Investors indicating distributions and shares (or fractions
thereof) of First Investors purchased on his behalf. 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 participation in the reinvestment plan and receive future
distributions on his Units in cash. There will be no charge or other
penalty for such termination. The Sponsors, First Investors and the
Adviser each will have the right to terminate this investment plan.
Reinvestment of distributions through the reinvestment plan will not
affect the income tax status of the distributions. For more information
on the reinvestment plan please write Administrative Data Management, 10
Woodbridge Center Drive, Woodbridge, New Jersey 07095-1198, Attn: Client
Relations. The reinvestment option currently is unavailable to
Massachusetts residents.
Reports and Records
The Trustee will furnish Unit holders in connection with each
distribution a statement of the amount of interest, if any, and the
amount of other receipts, if any, which are being distributed, expressed
in each case as a dollar amount per Unit. Within a reasonable time after
the end of each calendar year, the Trustee will furnish to each person
who at any time during the calendar year was a Unit holder of record of
a Trust, a statement providing the following information: (1) as to the
Interest Account of such Trust: interest received (including amounts
representing interest received upon any disposition of Bonds and any
earned original issue discount), and, deductions for payment of
applicable taxes and for fees and expenses of such Trust (including
insurance costs), redemptions of Units of such 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
Page 23
share of each Unit of such Trust outstanding on the last business day of
such calendar year; (2) as to the Principal Account of such Trust: the
dates of disposition of any Bonds and the net proceeds received
therefrom (including any earned original issue discount but excluding
any portion representing interest, the premium attributable to the
Trustee's exercise of the right to obtain Permanent Insurance and any
related custodial fee), deductions for payments of applicable taxes and
for fees and expenses of such Trust, for purchases of Replacement Bonds,
and for redemptions of Units, 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; (3) a list
of the Bonds held and the number of Units outstanding on the last
business day of such calendar year; (4) the Redemption Price per Unit
based upon the last computation thereof made during such calendar year;
(5) amounts actually distributed during such calendar year from the
Interest Account of such Trust and from the Principal Account of such
Trust, separately stated, expressed both as total dollar amounts and as
dollar amounts representing the pro rata share of each Unit outstanding;
and (6) determinations made by the Trustee regarding Federal or state
tax law. The Trustee shall keep available for inspection by Unit holders
of a Trust at all reasonable times during usual business hours, books of
record and account of its transactions as Trustee including records of
the names and addresses of Unit holders, certificates issued or held, a
current list of Bonds in the respective Trust portfolio and a copy of
the Trust Agreement for the Trust.
Redemption
TENDER OF UNITS
While it is anticipated that Units can be sold in the secondary market,
Units may also be tendered to the Trustee for redemption at its
corporate trust office at 101 Barclay Street, New York, NY 10268, upon
payment of any relevant tax. At the present time there are not specific
taxes related to the redemption of the Units. No redemption fee will be
charged by the Sponsors or the Trustee. Units redeemed by the Trustee
will be canceled.
Certificates for Units to be redeemed must be delivered to the Trustee
and must be properly endorsed and accompanied by a written instrument of
transfer. Thus, redemption of Units cannot be effected until
Certificates representing such Units have been delivered to the Trustee
by the person seeking redemption. See "Rights of Unit Holders-
Certificates." Unit holders must sign exactly as their names appear on
the face of the Certificate with signature(s) 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.
Within three business days following such tender, the Unit holder will
be entitled to receive in cash an amount for each Unit tendered equal to
the applicable Redemption Price per Unit computed as of the Evaluation
Time set forth under "Summary of Essential Financial Information" in
Part I as of the next subsequent Evaluation Time. See "Computation of
Redemption Price per Unit." The "date of tender" is deemed to be the
date on which Units are received by the Trustee, except that with
respect to Units received after the Evaluation Time on the New York
Stock Exchange, Inc., the date of tender is the next day on which such
Exchange is open for trading or the next day on which there is a
sufficient degree of trading in Units of the Trust, and such Units will
be deemed to have been tendered to the Trustee on such day for
redemption at the applicable Redemption Price computed on that day. For
information relating to the purchase by the Sponsors of Units tendered
to the Trustee for redemption at prices in excess of the applicable
Redemption Price, see "Purchase by the Sponsors of Units Tendered for
Redemption."
Accrued interest paid on redemption shall be withdrawn from the Interest
Account of the applicable Trust, or, if the balance therein is
insufficient, from the Principal Account of the applicable Trust. All
other amounts paid on redemption will be withdrawn from the Principal
Account of the applicable Trust. The Trustee is empowered to sell Bonds
from a Trust in order to make funds available for redemption of Units of
such Trust. When and to the extent Bonds are sold from a Trust, the size
and diversity of such Trust will be reduced. Such sales may be required
at a time when Bonds would not otherwise be sold and might result in
Page 24
lower prices than might otherwise be realized. If the Trustee exercises
the right to obtain Permanent Insurance on a Bond, such Bond will be
sold from the applicable Trust on an insured basis. In the event the
Trustee does not exercise the right to obtain Permanent Insurance on a
Bond, such Bond will be sold from the applicable Trust on an uninsured
basis since the insurance obtained by a Trust covers the timely payment
of principal and interest, when due, on the Bonds only while such Bonds
are held in and owned by such Trust. If the Trustee does not obtain
Permanent Insurance on a Defaulted Bond, to the extent that Bonds which
are current in payment of interest are sold from a Trust portfolio in
order to meet redemption requests and Defaulted Bonds are retained in
the portfolio in order to preserve the related insurance protection
applicable to said Bonds, the overall value of the Bonds remaining in
such Trust will tend to diminish. See "Sponsors-Responsibility" for the
effect of selling Defaulted Bonds to meet redemption requests.
The Trustee reserves the right to suspend the right of redemption and to
postpone the date of payment of the applicable Redemption Price per Unit
for any period during which the New York Stock Exchange, Inc. is closed,
other than weekend and holiday closings, or during which trading on that
Exchange is restricted or (as determined by the Securities and Exchange
Commission by rule or regulation) an emergency exists as a result of
which disposal or evaluation of the underlying Bonds is not reasonably
practicable, or for such other periods as the Securities and Exchange
Commission has by order permitted.
Because insurance obtained by a Trust terminates as to Bonds therein
which are sold by the Trustee, and because the insurance obtained by
such Trust does not have a realizable cash value which can be used by
the Trustee to meet redemptions of Units thereof, under certain
circumstances the Sponsors may apply to the Securities and Exchange
Commission for an order permitting a full or partial suspension of the
right of Unit holders of the affected Trust to redeem their Units if a
significant portion of the Bonds in such Trust portfolio are Defaulted
Bonds. No assurance can be given that the Securities and Exchange
Commission will permit the Sponsors to suspend the rights of Unit
holders to redeem their Units, and without the suspension of such
redemption rights when faced with excessive redemptions, the Sponsors
may not be able to preserve the benefits of a Trust's insurance on
Defaulted Bonds.
COMPUTATION OF REDEMPTION PRICE PER UNIT
The Redemption Price per Unit of a Trust is determined by the Trustee on
the basis of the bid prices of the Bonds in such Trust as of the
Evaluation Time stated under "Summary of Essential Financial
Information" in Part I of the Prospectus of such Trust. The Redemption
Price per Unit is each Unit's pro rata share, determined by the Trustee,
of the following: (1) the aggregate value of the Bonds in a Trust
(determined by the Evaluator as set forth below), except for those cases
in which the value of insurance has been included, (2) cash on hand in a
Trust, and (3) accrued and unpaid interest on the Bonds in a Trust as of
the date of computation, less (a) amounts representing taxes or
governmental charges payable out of such Trust, (b) the accrued expenses
of such Trust, and (c) cash held for distribution to Unit holders of
record of such Trust as of a date prior to the evaluation. The Evaluator
may determine the value of the Bonds in a Trust (1) on the basis of
current bid prices for the Bonds, (2) if bid prices are not available
for any Bonds, on the basis of current bid prices for comparable bonds,
(3) by appraisal, or (4) by any combination of the above. In determining
the Redemption Price per Unit of a Trust no value will be assigned to
the portfolio insurance obtained by such Trust on the Bonds in such
Trust unless such Bonds are in default in payment of principal or
interest or, in the opinion of the Sponsors, are in significant risk of
default. On the other hand, Pre-insured Bonds are entitled at all times
to the benefits of insurance obtained by their respective issuers so
long as the Pre-insured Bonds are outstanding and the insurer continues
to fulfill its obligations, and such benefits are reflected and included
in the market value of Pre-insured Bonds. For a description of the
situations in which the Evaluator may value the insurance obtained by a
Trust, see "Public Offering-Offering Price."
Purchase by the Sponsors of Units Tendered for Redemption
The Trust Agreement for each Trust requires that the Trustee notify the
Sponsors of any tender of Units of a Trust for redemption. So long as
the Sponsors are maintaining a secondary market in the Units of such
Trust, the Sponsors, prior to the close of business on the second
business day following tender, may purchase any such Units tendered to
the Trustee for redemption at the price so bid by making payment
Page 25
therefor to the Unit holder in an amount not less than the applicable
Redemption Price on the date of tender. Payment for such Units shall be
made not later than the day on which the Units would otherwise have been
redeemed by the Trustee. See "Public Offering-Markets for Units." Units
held by the Sponsors may be tendered to the Trustee for redemption as
any other Units, provided that the Sponsors shall not receive for Units
purchased as set forth above a higher price than they paid, but may
receive accrued interest from the Sponsors' date of purchase. The
offering price of any Units resold by the Sponsors will be the Public
Offering Price determined in the manner provided in this Prospectus. See
"Public Offering-Offering Price." Any profit resulting from the resale
of such Units will belong to the Sponsors which likewise will bear any
loss resulting from a lower offering or redemption price subsequent to
their acquisition of such Units. See "Public Offering-Distribution of Units."
SPONSORS
J. C. Bradford & Co. ("Bradford"), a Tennessee limited partnership
formed in 1927, is among the largest investment banking firms
headquartered in the Southeast. Since its founding on May 21, 1927, the
firm has grown to over seventy-five offices in fifteen states with over
600 brokers. Bradford offers a full line of investment products and
services for individual and institutional investors. In addition, the
firm provides a complete range of services to corporate and municipal
clients through its Public and Corporate Finance Departments. Bradford
is a member of the New York Stock Exchange, the American Stock Exchange,
the Pacific Stock Exchange, the Philadelphia Stock Exchange, the Midwest
Stock Exchange, the Chicago Board of Options Exchange and the National
Association of Securities Dealers, Inc. The principal offices of
Bradford are located at 330 Commerce Street, Nashville, TN 37201.
Glickenhaus & Co. ("Glickenhaus"), a New York limited partnership
organized in 1961, is engaged in the underwriting and securities
brokerage business, and is in the investment advisory business. It is a
member of the New York Stock Exchange and the National Association of
Securities Dealers, Inc. and is an associate member of the American
Stock Exchange. Glickenhaus acts as a sponsor for successive series of
Empire State Municipal Exempt Trust (including those sold under the name
of Municipal Exempt Trust, New York Exempt Series 1, New York Series 2
and New York Series 3), Empire State Municipal Exempt Trust, Guaranteed
Series and Empire State Municipal Exempt Trust, Maximus Series.
Glickenhaus, in addition to participating as a member of various selling
groups of other investment companies, executes orders on behalf of
investment companies for the purchase and sale of securities of such
companies and sells securities to such companies in its capacity as a
broker or dealer in securities. The principal offices of Glickenhaus are
located 6 East 43rd Street, New York, NY 10017.
Raymond James & Associates, Inc. ("Raymond James"), a Florida
corporation, along with its affiliates Investment Management & Research,
Inc. and Robert Thomas Securities, Inc. services clients through nearly
2000 account executives in approximately 650 offices from coast-to-
coast. A wholly-owned subsidiary of Raymond James Financial Inc. (NYSE-
RJF), Raymond James, the successor to the business of Robert A. James
Investments, Inc. was originally founded in 1962 to provide financial
planning services to investors. Raymond James is a member of the New
York, American and Philadelphia Stock Exchanges, as well as the Chicago
Board of Options Exchange. The principal offices of Raymond James are
located at 880 Carillon Parkway, P.O. Box 12749, St. Petersburg, FL
33733-2749.
At March 31, 1996, the total partners' capital of Bradford was
$110,582,183 (unaudited); at March 31, 1996, the total partners' capital
of Glickenhaus was $147,143,000 (unaudited); and at September 30, 1995,
the stock equity of Raymond James was $266,193,000 (audited). The
foregoing information with regard to the Sponsors relates to the
Sponsors only, an not to this series of MINT Group. Such information is
included only for the purpose of informing investors as to the financial
responsibility of the Sponsors and their ability to carry out their
contractual obligations. More comprehensive financial information can be
obtained upon request from any Sponsor.
Limitations on Liability
The Sponsors are liable for the performance of their obligations arising
from their responsibilities under the Trust Agreement for each Trust,
but will be under no liability to the Unit holders for taking any action
or refraining from any action in good faith or for errors in judgment
Page 26
and will not be responsible in any way for depreciation or loss incurred
by reason of the sale of any Bonds, except in cases of willful
misconduct, bad faith, gross negligence or reckless disregard for their
obligations and duties. See "The Trusts-Portfolio and "Sponsors-
Responsibility."
Responsibility
The Trustee shall sell, for the purposes of redeeming Units of a Trust
tendered by any Unit holder and for paying expenses of such Trust for
which funds are not available, such of the Bonds in such Trust in a list
furnished by the Sponsors as the Trustee in its sole discretion may deem
necessary. In the event the Trustee does not exercise the right to
obtain Permanent Insurance on a Defaulted Bond or Bonds, to the extent
that Bonds are sold from a Trust which are current in payment of
principal and interest in order to meet redemption requests and
Defaulted Bonds are retained in such Trust portfolio in order to
preserve the related insurance protection applicable to said Bonds, the
overall value of the Bonds remaining in such Trust's portfolio will tend
to diminish. In the event the Trustee does not exercise the right to
obtain Permanent Insurance on a Defaulted Bond or Bonds, except as
described below and in certain other unusual circumstances for which it
is determined by the Trustee to be in the best interests of the Unit
holders of a Trust or if there is no alternative, the Trustee is not
empowered to sell Defaulted Bonds from such Trust for which value has
been attributed for the insurance obtained by such Trust. Because of
such restrictions on the Trustee under certain circumstances the
Sponsors may seek a full or partial suspension of the right of Unit
holders of the affected Trust to redeem their Units. See "Rights of Unit
Holders-Redemption." The Sponsors are empowered, but not obligated, to
direct the Trustee to dispose of Bonds in a Trust in the event of
advanced refunding. It is the responsibility of the Sponsors to instruct
the Trustee to reject any offer made by an issuer of any of the Bonds in
a Trust to issue new obligations in exchange and substitution for any
such Bonds pursuant to a refunding or refinancing plan, except that the
Sponsors may instruct the Trustee to accept such an offer or to take any
other action with respect thereto as the Sponsors may deem proper if the
issuer is in default with respect to such Bonds or in the opinion of the
Sponsors the issuer will probably default in respect to such Bonds in
the foreseeable future.
Any obligations so received in exchange or substitution will be held by
the Trustee subject to the terms and conditions of the Trust Agreement
for such Trust to the same extent as Bonds originally deposited
thereunder. Within five days after the deposit of obligations in
exchange or substitution for underlying Bonds of a Trust, the Trustee is
required to give notice thereof to each Unit holder of such Trust,
identifying the obligations eliminated and the Bonds substituted
therefor. Except as stated in this and the preceding paragraph, the
acquisition by a Trust of any securities other than the Bonds initially
therein is prohibited.
If any default in the payment of principal or interest on any Bond in a
Trust occurs and no provision for payment is made therefor, either
pursuant to the portfolio insurance obtained by such Trust or otherwise
within 30 days, the Trustee is required to notify the Sponsors thereof.
If the Sponsors fail to instruct the Trustee to sell or to hold such
Bonds within 30 days after notification by the Trustee to the Sponsors
of such default, the Trustee may in its discretion sell the Defaulted
Bond and determine whether to obtain Permanent Insurance with respect
thereto and not be liable for any depreciation or loss thereby incurred.
See "The Trust-Insurance on the Bonds."
The Sponsors may direct the Trustee to dispose of Bonds upon default in
the payment of principal or interest, institution of certain legal
proceedings or the existence of certain other impediments to the payment
of Bonds, default under other documents which may adversely affect debt
service, default in payment of principal or interest on other
obligations of the same issuer, decline in projected income pledged for
debt service on revenue Bonds, or decline in price or the occurrence of
other market factors, including advance refunding, so that in the
opinion of the Sponsors the retention of such Bonds in a Trust would be
detrimental to the interest of the Unit holders thereof. The proceeds
from any such sales will be credited to the Principal Account of the
affected Trust for distribution to the Unit holders thereof.
Notwithstanding the foregoing in connection with final distributions to
Unit holders, if the Trustee does not exercise the right to obtain
Permanent Insurance on any Defaulted Bond, because the portfolio
insurance obtained by a Trust is applicable only while Bonds so insured
are held by such Trust, the price to be received by such Trust upon the
disposition of any Defaulted Bond will not reflect any value based on
such insurance. Therefore, in connection with any liquidation prior to
the related Mandatory Termination Date set forth in Part I of the
Page 27
related Prospectus under "Summary of Essential Financial Information,"
it will not be necessary for the Trustee to, and the Trustee does not
currently intend to, dispose of any Bonds in a Trust if retention of
such Bonds, until due, shall be deemed to be in the best interest of
Unit holders of the affected Trust, including, but not limited to,
situations in which Bonds so insured are in default and situations in
which a Bond or Bonds so insured have a deteriorated market price
resulting from a significant risk of default. Since Pre-insured Bonds
will reflect the value of the insurance obtained by the Bond issuer, it
is the present intention of the Sponsors not to direct the Trustee to
hold any Pre-insured Bonds after the date of termination of the
applicable Trust. All proceeds received, less applicable expenses, from
insurance on Defaulted Bonds not disposed of at the applicable date of
termination will ultimately be distributed to Unit holders of record of
the applicable Trust as of such date of termination as soon as
practicable after the date such Defaulted Bonds become due and
applicable insurance proceeds have been received by the Trustee.
Agent for the Sponsors
Bradford has been appointed by the other Sponsors as agent for purposes
of taking action under each Trust Agreement (the "Agent"). If the
Sponsors are unable to agree with respect to action to be taken jointly
by them under the Trust Agreements, then the Agent for Sponsors shall
act as their attorney-in-fact with respect to such action. The Sponsors
appointing the Agent as attorney-in-fact may, by unanimous consent,
appoint another Sponsor attorney-in-fact. If one of the Sponsors fails
to perform its duties under the Trust Agreement or becomes incapable of
acting or becomes bankrupt or has its affairs taken over by public
authorities or revokes its power of attorney to the Agent without the
appointment of a successor agent, that Sponsor is automatically
discharged under the Trust Agreements and the other Sponsors act as the
Sponsors.
Resignation
Any Sponsor may resign at any time provided that at the time of such
resignation one remaining Sponsor maintains a net worth of $1,000,000
and all the remaining Sponsors are agreeable to such resignation.
Concurrent with or subsequent to such resignation a new Sponsor may be
appointed by the remaining Sponsors and the Trustee to assume the duties
of the resigning Sponsor. If, at any time, only one Sponsor is acting
under a Trust Agreement and that Sponsor shall resign or fail to perform
any of its duties thereunder or becomes incapable of acting or becomes
bankrupt or its affairs are taken over by public authorities, then the
Trustee may appoint a successor sponsor or terminate such Trust
Agreement and liquidate such Trust.
TRUSTEE
The Trustee is The Bank of New York, a trust organized under the laws of
New York. The Bank of New York has its offices at 101 Barclay Street,
New York, NY 10286 (800) 848-6468. 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 administrative in nature.
The Trustee must be a banking corporation organized under the laws of
the United States or any state and must have at all times an aggregate
capital, surplus and undivided profits of not less than $5,000,000. The
Trustee did not participate in the selection of securities for the
portfolio of the Trust.
Limitations on Liability
The Trustee shall not be liable or responsible in any way for
depreciation of loss incurred by reason of the disposition of any
moneys, Bonds or certificates or in respect of any evaluation or for any
action taken in good faith reliance on prima facie properly executed
documents except in cases of willful misconduct, bad faith, gross
negligence or reckless disregard for its obligations and duties. In
addition, the Trustee shall not be personally liable for any taxes or
other governmental charges imposed upon or in respect of a Trust which
the Trustee may be required to pay under current or future law of the
United States or any other taxing authority having jurisdiction. See
"The Trusts-Portfolios."
Page 28
Responsibility
For information relating to the responsibilities of the Trustee under
the Trust Agreement relating to a Trust, reference is made to the
material set forth under "Rights of Unit Holders," "Sponsors-
Responsibility" and "Sponsors-Resignation."
Resignation
By executing an instrument in writing and filing the same with the
Sponsors, the Trustee and any successor may resign. In such an event the
Sponsors are obligated to appoint a successor trustee as soon as
possible. If the Trustee becomes incapable of acting or becomes bankrupt
or its affairs are taken over by public authorities, if the Sponsors
deem it to be in the best interest of the Unit holders, the Sponsors may
remove the Trustee and appoint a successor as provided in the Trust
Agreement for each Trust. Such resignation or removal shall become
effective upon the acceptance of appointment by the successor trustee.
If, upon resignation of a trustee, no successor has been appointed and
has accepted the appointment within thirty days after notification, the
retiring trustee may apply to a court of competent jurisdiction for the
appointment of a 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.
EVALUATOR
Both during and after the initial offering period, the Evaluator is
Muller Data Corporation with main offices located at 395 Hudson Street,
New York, New York, 10014-3622. The Trustee and the Sponsors may rely on
any evaluation furnished by the Evaluator and shall have no
responsibility for the accuracy thereof. Determinations by the Evaluator
under a 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, the Sponsors or
Unit holders of the related Trust for errors in judgment. The Evaluator
may be liable in cases of willful misconduct, bad faith, gross
negligence or reckless disregard of its obligations and duties. The
Trust Agreement for each Trust requires the Evaluator to evaluate the
Bonds on the basis of their bid prices on each business day after the
initial offering period, when any Unit of such Trust is tendered for
redemption and on any other day such evaluation is desired by the
Trustee or is requested by the Sponsors. For information relating to the
responsibility of the Evaluator to evaluate the Bonds in a Trust on the
basis of their offering prices, see "Public Offering-Offering Price."
The Evaluator may resign or may be removed by the Sponsors and the
Trustee, and the Sponsors and the Trustee will do their best efforts to
appoint a satisfactory successor. Such resignation or removal shall
become effective upon the acceptance of appointment by the successor
evaluator. If upon resignation of the Evaluator no successor has
accepted appointment within thirty days after notice of resignation, the
Evaluator may apply to a court of competent jurisdiction for the
appointment of a successor.
AMENDMENT AND TERMINATION OF THE TRUST AGREEMENT
The Sponsors and the Trustee have the power to amend a Trust Agreement
for a particular Trust without the consent of any of the Unit holders
thereof when such an amendment is (1) to cure any ambiguity or to
correct or supplement any provision of such Trust Agreement which may be
defective or inconsistent with any other provision contained therein, or
(2) to make such other provisions as shall not adversely affect the
interest of the Unit holders; and the Sponsors and the Trustee may amend
the Trust Agreement for a particular Trust with the consent of the
holders of Certificates evidencing 66 2/3% of the Units thereof then
outstanding, provided that no such amendment will reduce the interest in
a Trust of any Unit holder thereof without the consent of such Unit
holder or reduce the percentage of Units of such Trust required to
consent to any such amendment without the consent of all the Unit
holders of such Trust. In no event shall a Trust Agreement be amended to
increase the number of Units insurable thereunder or to permit the
deposit or acquisition of securities either in addition to or in
substitution for any of the Bonds initially deposited in such Trust,
except in accordance with the provisions of such Trust Agreement. In the
event of any amendment, the Trustee is obligated to notify promptly all
Unit holders of the affected Trust of the substance of such amendment.
Page 29
A Trust shall terminate upon the maturity, redemption, sale or other
disposition, as the case may be, of the last of the Bonds in such Trust.
Each trust may be liquidated by the written consent of 66 2/3% of the
Unit holders of such Trust or by the Trustee when the value of such
Trust, as shown by any evaluation, is less than $2,000,000 or less than
20% of the aggregate principal amount of the Bonds deposited in the
Trust during the primary offering period, whichever is lower, or in the
event that Units of a Trust not yet sold aggregating more than 60% of
the Units of such Trust are tendered for redemption by the Underwriters,
including the Sponsors. If a Trust is liquidated because of the
redemption of unsold Units of the Trust by the Underwriters, the
Sponsors will refund to purchasers of Units of such Trust the entire
sales charge paid by such purchaser. In no event, however, may a Trust
continue beyond the Mandatory Termination Date relating thereto as set
forth in Part I of the Prospectus for such Trust under the "Summary of
Essential Information"; provided however, that prior to such Mandatory
Termination Date, the Trustee shall not dispose of any Bonds in such
Trust if the retention of such Bonds, until due, shall be deemed to be
in the best interest of the Unit holders thereof. In the event of
termination of a Trust, written notice thereof will be sent by the
Trustee to all Unit holders of the affected Trust. Within a reasonable
period after termination of a Trust, the Trustee will sell any remaining
Bonds therein, and, after paying all expenses and charges incurred by
such Trust, will distribute to each Unit holder thereof, upon surrender
for cancellation of his certificate for Units, his pro rata share of the
balances remaining in the Interest and Principal Accounts of such Trust.
LEGAL OPINIONS
Certain legal matters have been passed upon by Chapman and Cutler, 111
W. Monroe, Chicago, IL 60603, as special counsel for the Sponsors, and
Kroll & Tract, 520 Madison Avenue, New York, NY 10022, acting as counsel
for the Trustee.
EXPERTS
The financial statements, including the portfolio of each Trust
appearing in Part One of the Prospectus and Registration Statement have
been audited by Ernst & Young LLP, independent auditors, as set forth in
their reports thereon appearing therein, and in the Registration
Statement, and are included in reliance upon such reports given upon the
authority of such firm as experts in accounting and auditing.
DESCRIPTION OF BOND RATINGS
Standard & Poor's: 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 or
obtained by Standard & Poor's from other sources it considers reliable.
Standard & Poor's does not perform any 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
timely payment of interest and repayment of principal in accordance with
the terms of the obligation;
II. Nature of provisions of the obligation; and
III. Protection afforded by, and relative position of, the obligation in
the event of bankruptcy, reorganization or other arrangement 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 strong capacity to pay interest and repay
principal and differ from the highest rated issues only in a small degree.
A-Bonds rated A have a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse
Page 30
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 hanging
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.
BB, B, CCC, CC: Bonds rated BB, B, CCC and CC are regarded, on balance,
as predominantly speculative with respect to capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB
indicates the lowest degree of speculation and CC the highest degree of
speculation. While such bonds will likely have some quality and
protective characteristics, these are outweighed by large uncertainties
or major risk exposures to adverse conditions.
Plus (+) or Minus (-): The ratings from AA to B may be modified by the
addition of a plus or minus sign to show relative standing within the
major rating categories.
Provisional Ratings: The letter "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. Accordingly, the investor should
exercise his own judgment with respect to such likelihood and risk.
NR-Indicates that no rating has been requested, that there is
insufficient information on which to base a rating or that Standard &
Poor's does not rate a particular type of obligation as a matter of
policy.
SP-1 Very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics will be
given a plus (+) designation.
SP-2 Satisfactory capacity to pay principal and interest.
SP-3 Speculative capacity to pay principal and interest.
Moody's Investors Service: A brief description of the applicable Moody's
Investors Service rating symbols and their meanings follow:
Aaa-Bonds which are rated Aaa are judged to be of 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.
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.
A-Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper 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.
Baa-Bonds which are rated Baa are considered as medium grade
obligations; i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present
but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds
lack outstanding investment characteristics and in fact have few
speculative characteristics as well.
Ba-Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection
of interest and principal payments may be very moderate and thereby not
well safeguarded during both good and bad times over the future.
Uncertainty of position characterized bonds in this class.
B-Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time
may be small.
Page 31
Con. (- - -)-Bonds for which the security depends upon the completion of
some act of the fulfillment of some condition are rated conditionally.
These bonds are secured by (a) earnings of projects under construction,
(b) earnings of projects unseasoned in operating experience, rentals
which begin when the 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.
Moody's applies numerical modifiers 1, 2, and 3 in each generic rating
classification from Aa through B in its corporate bond rating system.
Although Industrial Revenue Bonds and Environmental Control Revenue
Bonds are tax-exempt issues, they are included in the corporate bond
rating system. The modifier 1 indicates that the security ranks in the
higher end of its generic rating 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. Moody's does not apply
numerical modifiers other than Aa, A-1, and Baa-1 which are described
above, in its municipal bond rating system.
This Prospectus contains information concerning the Trusts and the
sponsors, but does not contain all of the information set forth in the
registration statements and exhibits relating thereto, which each Trust
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.
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 Trusts or the Sponsors. 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.
Page 32
INDEX
The Trusts 1
Tax Status 12
Certain Considerations 17
Public Offering 19
Rights of Unit Holders 21
Sponsors 26
Trustee 28
Evaluator 29
Amendment and Termination of the Trust Agreements 29
Legal Opinions 30
Experts 30
Description of Bond Ratings 30
Page 33
PART II. ADDITIONAL INFORMATION NOT REQUIRED IN PROSPECTUS
Contents of Registration Statement
These Post-Effective Amendments to the Registration Statement on
Form S-6 comprise the following papers and documents:
(i) The facing sheet on Form S-6
The Cross-Reference Sheet (previously filed)
The Prospectus
Signatures
(ii) Written Consent of the following persons:
Brown & Wood (previously filed)
Ernst & Young LLP
Summary of Essential Financial Information A-2
Report of Independent Auditors Relating to the Trust A-4
Statement of Net Assets A-7
Portfolio Information A-10
Page 34
MINT Group 12
By: J. C. BRADFORD & CO.
(Sponsor)
By J. Ronald Scott
(J. Ronald Scott, a General
Partner)
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 the dates indicated.
SIGNATURE TITLE DATE
JAMES AVENT* General Partner
_______________________
(James Avent)
J.C. BRADFORD, JR.* General Partner
_______________________
(J.C. Bradford, Jr.)
BOB DOOLITTLE* General Partner
_______________________
(Bob Doolittle)
ALAN ERB* General Partner
_______________________
(Alan Erb)
R.R. HARNESS* General Partner
_______________________
(R.R. Harness)
R. MURRAY HATCHER* General Partner
_______________________
(R. Murray Hatcher)
MITCHELL JOHNSON* General Partner
_______________________
(Mitchell Johnson)
C. TAXON MALOTT* General Partner
_______________________
(C. Taxon Malott)
SIGNATURE TITLE DATE
BARRY POLSTON* General Partner
_______________________
(Barry Polston)
VICTOR PTAK* General Partner
_______________________
(Victor Ptak)
ALTON ROSS, JR.* General Partner
_______________________
(Alton Ross, Jr.)
General Partner November 29, 1996
J. Ronald Scott
(J. Ronald Scott)
MICHAEL SHEA* General Partner
_______________________
(Michael Shea)
W. LUCAS SIMONS* General Partner
_______________________
(W. Lucas Simons)
PARK SMITH* General Partner
_______________________
(Park Smith)
FRANK V. VENABLE, JR.* General Partner
_______________________
(Frank V. Venable, Jr.)
*By: J. Ronald Scott November 29, 1996
(J. Ronald Scott,
Attorney-in-Fact)
MINT Group 12
By: GLICKENHAUS & CO.
(Sponsor)
By Brian Laux
(Brian Laux, Attorney-in-Fact)
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 the dates indicated.
SIGNATURE TITLE DATE
ROBERT SANTORO* General Partner
_______________________
(Robert Santoro)
ALFRED FEINMAN* General Partner
_______________________
(Alfred Feinman)
SETH M. GLICKENHAUS* General Partner
_______________________
(Seth M. Glickenhaus)
STEVEN B. GREEN* General Partner
_______________________
(Steven B. Green)
ARTHUR WINSTON* General Partner
(Arthur Winston)
*By Brian Laux November 29, 1996
(Brian Laux,
Attorney-in-Fact)
MINT Group 12
By: RAYMOND JAMES & ASSOCIATES,
INC.
(Sponsor)
By Richard K. Johnson
(Richard K. Johnson,
Senior 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 the dates indicated.
SIGNATURE TITLE DATE
THOMAS S. FRANKE* President and Director
_______________________
(Thomas S. Franke)
THOMAS A. JAMES* Director
_______________________
(Thomas A. James)
Senior Vice President
of Finance, Secretary
LYNN PIPPENGER and Director November 29, 1996
_______________________
(Lynn Pippenger)
ROBERT F. SHUCK* Director
_______________________
(Robert F. Shuck)
DENNIS W. ZANK
Director
(Dennis W. Zank)
*By Richard K. Johnson November 29, 1996
(Richard K. Johnson,
Attorney-in-Fact)
CONSENT OF INDEPENDENT AUDITORS
_______________________________
We consent to the reference to our firm under the caption "Experts" and
to the use of our report dated October 31, 1996 in this Post-Effective
Amendment to the Registration Statement and related Prospectus of The
Municipal Insured National Trust Series 45 and Tennessee Trust Series 7
dated November 29, 1996.
ERNST & YOUNG LLP
Chicago, Illinois
November 28, 1996
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This schedule contains summary financial information extracted from
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<NUMBER> 045
<NAME> MINT TRUST
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<S> <C>
<PERIOD-TYPE> YEAR
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<PERIOD-START> AUG-01-1995
<PERIOD-END> JUL-31-1996
<INVESTMENTS-AT-COST> 5,248,069
<INVESTMENTS-AT-VALUE> 5,544,149
<RECEIVABLES> 60,602
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 5,604,751
<PAYABLE-FOR-SECURITIES> 0
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<TOTAL-LIABILITIES> 44,952
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<PAID-IN-CAPITAL-COMMON> 5,248,069
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<SHARES-COMMON-PRIOR> 5,500
<ACCUMULATED-NII-CURRENT> 15,656
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 296,080
<NET-ASSETS> 5,559,799
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 340,724
<OTHER-INCOME> 0
<EXPENSES-NET> 11,322
<NET-INVESTMENT-INCOME> 329,402
<REALIZED-GAINS-CURRENT> 1,724
<APPREC-INCREASE-CURRENT> 74,888
<NET-CHANGE-FROM-OPS> 406,014
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 329,404
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 28
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 47,574
<ACCUMULATED-NII-PRIOR> 25,188
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
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<AVG-DEBT-PER-SHARE> 0
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<TABLE> <S> <C>
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<LEGEND>
This schedule contains summary financial information extracted from
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</LEGEND>
<SERIES>
<NUMBER> 007
<NAME> MINT TENNESSEE TRUST
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-01-1995
<PERIOD-END> JUL-31-1996
<INVESTMENTS-AT-COST> 2,201,013
<INVESTMENTS-AT-VALUE> 2,328,346
<RECEIVABLES> 20,163
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,348,509
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 8,831
<TOTAL-LIABILITIES> 8,831
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,201,013
<SHARES-COMMON-STOCK> 2,326
<SHARES-COMMON-PRIOR> 2,500
<ACCUMULATED-NII-CURRENT> 11,332
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 127,333
<NET-ASSETS> 2,339,678
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 147,304
<OTHER-INCOME> 0
<EXPENSES-NET> 8,768
<NET-INVESTMENT-INCOME> 138,536
<REALIZED-GAINS-CURRENT> 4,525
<APPREC-INCREASE-CURRENT> 31,680
<NET-CHANGE-FROM-OPS> 174,741
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 138,598
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 174
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (139,162)
<ACCUMULATED-NII-PRIOR> 10,924
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
