As filed with the Securities and Exchange Commission on
August 20, 1997
Registration No. 2-64015
=================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 17
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:
THE TAX-EXEMPT BOND FUND OF VIRGINIA,
SECOND SERIES
B. Name of depositor:
CRAIGIE INCORPORATED
C. Complete address of depositor's principal executive offices:
CRAIGIE INCORPORATED
823 East Main Street
Richmond, Virginia 23219
D. Name and complete address of agents for service:
ALLEN MEAD FERGUSON JOHN THOMAS WEST, IV
Chairman President
Craigie Incorporated Craigie Incorporated
823 East Main Street 823 East Main Street
Richmond, Virginia 23219 Richmond, Virginia 23219
Copies to:
C. PORTER VAUGHAN, III
Hunton & Williams
951 East Byrd Street
Richmond, Virginia 23219
________________________
(X) It is proposed that this filing will become effective
immediately upon filing pursuant to paragraph (b) of
Rule 485.
=================================================================
<PAGE>
THE TAX-EXEMPT BOND FUND OF VIRGINIA, SECOND SERIES
Cross-Reference Sheet
Pursuant to Rule 404(c) of Regulation C
under the Securities Act of 1933
(Form N-8B-2 Items required by Instructions as
to the Prospectus in Form S-6)
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
I. Organization and General Information
1. (a) Name of trust....................)
(b) Title of securities used.........) Prospectus, Part I,
front cover
2. Name and address of each depositor....)
3. Name and address of trustee...........) Prospectus, Part I,
rear cover
4. Name and address of principal
underwriters........................... Prospectus, Part I,
rear cover
5. State of organization of trust......... Objectives and
Organization of
the Fund
6. Execution and termination of........... Objectives and
trust agreement Organization of
the Fund; Amendment
and Termination of
Agreement
7. Changes of name.......................)
8. Fiscal year...........................) *
9. Litigation............................)
II. General Description of the Trust and Securities of the Trust
10. (a) Registered or bearer
securities....................... Description of
Certificate
(b) Cumulative or distributive
securities....................... Objectives and
Organization of the
Fund; Interest and
Estimated Current
Return
(c) Redemption....................... Information
Regarding the Fund,
Part I; Market for
Units; Redemption
__________
* Inapplicable, answer negative or not required
<PAGE>
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
(d) Conversion, transfer, etc........ Description of
Certificate;
Market for Units;
Redemption
(e) Periodic payment plan............ *
(f) Voting rights.................... Rights of
certificateholders
(g) Notice of certificateholders..... Investment
Supervision;
Administration of
the Fund;
Statements to
Certificateholders
(h) Consents required................ Rights of
Certificateholders;
Amendment and
Termination
of Agreement
(i) Other provisions................. Tax Status of the
Fund
11. Type of securities comprising
units................................. Prospectus, Part I,
front cover;
Information
Regarding the Fund,
Part I; Objectives
and Organization of
the Fund; Portfolio
12. Certain information regarding
periodic payment certificates......... *
13. (a) Load, fees, expenses, etc........ Prospectus, Part I,
front cover; inside
front cover, Part I;
Summary of Essential
Information, Part I;
Information
Regarding the Fund,
Part I; Public
Offering
Price; Expenses of
the Fund;
Distribution of
Units; Comparison
of Public Offering
Price and
Redemption Price;
Interest and
Estimated current
return; Profits
of Sponsor and
Underwriter
(b) Certain information
regarding periodic
payment certificates............. *
(c) Certain percentages.............. Prospectus, Part I,
inside front cover;
Summary of Essential
Information, Part I;
Public Offering
Price; Estimated
Current Return
(d) Certain other fees, etc.,
payable by holders............... Description of
Certificate
__________
* Inapplicable, answer negative or not required
<PAGE>
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
(e) Certain profits receivable
by depositors, principal
underwriters, trustee or
affiliated persons............... Prospectus, Part I,
front cover;
Information
Regarding the Fund,
Part I; Summary of
Essential
Information, Part I;
Expenses of the
Fund; Distribution
of Units; Public
Offering Price;
Profits of Sponsor
and Underwriter;
Market for Units
(f) Ratio of annual charges to
income........................... *
14. Issuance of trust's securities........ Prospectus, Part I,
front cover;
Objectives and
Organization of
the Fund;
Description of the
Certificate;
Redemption
15. Receipt and handling of
payments from purchasers.............. Objectives and
Organization of the
Fund
16. Acquisition and disposition of
underlying securities................. Prospectus, Part I,
front cover;
Objectives and
Organization of the
Fund; Portfolio;
Investment Super-
vision; Redemption
17. Withdrawal or redemption.............. Information
Regarding the Fund,
Part I; Market for
Units; Redemption;
Comparison of Public
Offering Price and
Redemption Price
18. (a) Receipt, custody and
disposition of income............ Distributions to
Certificateholders;
Statements to
Certificateholders
(b) Reinvestment of distributions.... *
(c) Reserves or special funds........ Expenses of the Fund
(d) Schedule of distributions........ Estimated Current
Return; Summary of
Essential
Information, Part I
19. Records, accounts and reports......... Statements to
Certificateholders;
Evaluation of the
Fund; The Trustee
__________
* Inapplicable, answer negative or not required
<PAGE>
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
20. Certain miscellaneous provisions
of trust agreement
(a) Amendment.......................) Amendment and
Termination of
(b) Termination.....................) Agreement
(c) and (d) Trustee, removal
and successor.................... The Trustee
(e) and (f) Depositor, removal
and successors................... Successor Sponsor
21. Loans to security holders............. *
22. Limitations on liability.............. Limitations on
Liability; Portfolio
23. Bonding arrangements.................. Additional
Information--Item A
24. Other material provisions of
trust agreement...................... *
III. Organization, Personnel and Affiliated Persons of Depositor
25. Organization of depositor............. The Sponsor
26. Fees received by depositor............ See Items 13(a) and
13(e)
27. Business of depositor................. The Sponsor
28. Certain information as to
officials and affiliated
persons of depositor.................. Additional
Information--Item B
29. Voting securities of depositor........ *
30. Persons controlling depositor......... *
31. Payments by depositor for certain
services rendered to trust...........)
32. Payment by depositor for certain )
other services rendered to trust.....)
33. Remuneration of employees of ) *
depositor for certain services )
rendered to trust....................)
34. Remuneration of other persons for )
certain services rendered to trust...)
IV. Distribution and Redemption
35. Distribution of trust's securities
by state.............................. Distribution of
Units
__________
* Inapplicable, answer negative or not required
<PAGE>
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
36. Suspension of sales of trust's
securities...........................)
37. Revocation of authority to ) *
distribute...........................)
38. (a) Method of distribution..........) Distribution of
Units; Market
(b) Underwriting agreements.........) for Units; Public
(c) Selling agreements..............) Offering Price
39. (a) Organization of principal
underwriters....................)
(b) N.A.S.D. membership of ) See Item 25
principal underwriters..........)
40. Certain fees received by principal
underwriters.......................... See Item 26
41. (a) Business of principal
underwriters..................... See Item 27
(b) Branch offices of principal
underwriters....................)
(c) Salesmen of principal )
underwriters....................)
42. Ownership of trust's securities by ) *
certain persons......................)
43. Certain brokerage commissions )
received by principal underwriters...)
44. (a) Method of valuation.............. Prospectus, Part I,
front cover; inside
front cover, Part I;
Summary of Essential
Information, Part I;
Public Offering
Price; Distribution
of Units; Comparison
of Public Offering
Price and Redemption
Price; Evaluation of
the Fund; Expenses
of the Fund
(b) Schedule as to offering price.... *
(c) Variation in offering price
to certain persons............... Distribution of
Units
45. Suspension of redemption rights....... *
__________
* Inapplicable, answer negative or not required
<PAGE>
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
46. (a) Redemption valuation............. Information
Regarding the Fund,
Part I; Redemption;
Market for Units;
Comparison of Public
Offering Price and
Redemption Price
(b) Schedule as to redemption
price............................ *
47. Maintenance of position in under-
lying securities...................... Information
Regarding the Fund,
Part I; Market for
Units; Comparison of
Public Offering
Price and Redemption
Price; Redemption
V. Information Concerning the Trustee or Custodian
48. Organization and regulation
of trustee............................ The Trustee
49. Fees and expenses of trustee.......... Summary of Essential
Information
50. Trustee's lien........................ Part I; Expenses of
the Fund;
Distributions to
Certificateholders
VI. Information Concerning Insurance of Holders of Securities
51. Insurance of holders of trust's
securities............................ *
VII. Policy of Registrant
52. (a) Provisions of trust agreement
with respect to selection or
elimination of underlying
securities....................... Prospectus, Part I,
front cover;
Objectives and
Organization of the
Fund; Portfolio;
Schedule of
Investments;
Investment
Supervision;
Redemption; Expenses
of the Fund
(b) Transactions involving
elimination of underlying
securities......................)
(c) Policy regarding substitution or
elimination of underlying
securities......................) Portfolio;
Investment
Supervision
(d) Fundamental policy not
otherwise covered...............)
__________
* Inapplicable, answer negative or not required
<PAGE>
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
53. Tax status of Trust................... Prospectus, Part I,
front cover; Tax
Status of the Fund
VIII. Financial and Statistical Information
54. Trust's securities during
last ten years.........................
55.)
56.) Certain information regarding periodic *
57.) payment certificates
58.)
59.) Financial statements (Instruction 1(c)
to Form S-6)........................... *
__________
* Inapplicable, answer negative or not required
<PAGE>
NOTE: Part I of this Prospectus may not be distributed
unless accompanied by Part II
THE TAX-EXEMPT BOND FUND OF VIRGINIA
Prospectus, Part I,
dated May 16, 1997
The Fund
The Tax-Exempt Bond Fund of Virginia, Second Series (the
"Fund") is a unit investment trust formed for the purpose of
gaining interest income free from Federal and Virginia income
taxes while conserving capital through a diversified investment
in tax-exempt bonds. The Bonds in the portfolio of the Fund
consist of obligations of political subdivisions, public
authorities and agencies of the Commonwealth of Virginia that
were rated "A" or better by Standard & Poor's Corporation or by
Moody's Investors Service, Inc. on the date of deposit. All
bonds deposited in the Fund were accompanied by copies
of opinions of recognized bond counsel to the effect that
interest thereon is exempt from all present Federal and Virginia
income taxes, except in certain instances depending on the
Certificateholder. In the opinion of counsel, such interest is
not taxable to the Fund and, with certain exceptions, is exempt
to Certificateholders from all present Federal and Virginia
income taxes, but may be subject to taxation by localities and
states other than Virginia. Capital gains, if any, will be
subject to Federal income taxes and may be subject to
Virginia income taxes to Certificateholders. (See "Tax Status of
the Fund" in Part II). Payment of interest and conservation of
capital are necessarily dependent upon the continuing ability of
the issuers of the bonds to meet their obligations. Each Unit of
interest ("Unit") at May 16, 1997 represented a 1/4,353th
fractional undivided interest in the $1,850,000 principal amount
of the Bonds and net income of the Fund in the ratio of 2.35
Units for each $1,000 par value of the bonds in the Fund. For a
summary of information about the composition of the portfolio,
see "Information Regarding the Fund" on page F-5.
The Units being offered by this Prospectus are issued and
outstanding Units that have been purchased by the Sponsor in the
secondary market or from the Trustee after having been tendered
for redemption. The Units are being offered at the Public
Offering Price plus interest accrued to the date of settlement.
The profit or loss resulting from the sale of Units will accrue
to the Sponsor. No proceeds from the sale will be received by
the Fund.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
____________________
Sponsor: Craigie Incorporated
____________________
<PAGE>
Public Offering Price
Units are offered at the Public Offering Price, plus
accrued interest. The Public Offering Price per Unit is equal to
the aggregate offering price of the underlying Bonds in the
Fund's portfolio, divided by the number of Units outstanding,
plus an amount equal to 4.439% thereof, resulting in a sales
charge equal to 4.25% of the Public Offering Price. (See "Public
Offering Price" in Part II). At May 16, 1997 the Public Offering
Price was $453.77 plus accrued interest to expected date of
settlement (three business days after such date) of $5.96, or a
total of $459.73. The Public Offering Price on the date of this
Prospectus or on any subsequent date will vary from this price in
accordance with fluctuations in the prices of the underlying
Bonds. If the Bonds were available for direct purchase, the
purchase prices thereof would not include the sales charge
included in the Public Offering Price.
Estimated Current Return
Estimated Current Return per Unit, which was 5.91% on May
16, 1997, is calculated by dividing net annual interest income
per Unit by the Public Offering Price. Since net interest income
will vary with changes in the expenses of the Fund and as Bonds
are redeemed, paid, sold or exchanged and the Public Offering
Price will vary with fluctuations in prices of the underlying
Bonds, there can be no guarantee that the Estimated Current
Return as of a particular date will be realized in the future.
On January 1, April 1, July 1 and October 1 of 1992 the
Fund distributed to Certificateholders interest income of $11.29
per Unit; on January 1, April 1, July 1 and October 1 of 1993,
the Fund distributed to Certificateholders interest income of
$9.48 per Unit; on January 1, April 1, July 1 and October 1 of
1994, the Fund distributed to Certificateholders interest income
of $7.20 per Unit; on January 1, April 1, July 1 and October 1
of 1995, the Fund distributed to Certificateholders interest
income of $6.82 per Unit; and on January 1, April 1, July 1 and
October 1 of 1996, the Fund distributed to Certificateholders
interest income of $6.74 per Unit.
Retain both parts of this Prospectus for future reference.
<PAGE>
THE TAX-EXEMPT BOND FUND OF VIRGINIA, SECOND SERIES
Summary of Essential Information
As of May 16, 1997, the Evaluation Date
Principal amount of Bonds in Fund Calculation of Quarterly
$1,850,000* Interest Distribution
per Unit
Number of Units Net annual interest per
4,353 Unit.............$26.80
Divided by 4......$ 6.70
Fractional Undivided Interest in Estimated Current Return
Fund represented by each Unit based on Public Offering
1/4,353 Price (see "The Fund-
Interest and Estimated
Current Return" in
Part II)
Public Offering Price: 5.91%
Aggregate Offering Price of Daily rate at which net
Underlying Bonds (see interest accrues per
Statement of Financial Unit
Condition on page D-2)...$1,891,319 $.0744
Record Days
Offering Price per Unit of The first day of March,
Underlying Bonds............$434.49 June, September and
December
Distribution Days
Plus 4.439% Sales Charge The first day of January,
(Equal to 4.25% of Public April, July and
Price)......................$ 19.28 October
Original cost of Securities
Public Offering Price per Unit Cost of Date of Deposit
..........................$453.77** (October 1, 1978) of
Bonds currently in
Redemption Value per Unit Fund............$4,846,922
$432.35*** Minimum Principal
Sponsor's Repurchase Price Distribution
Per Unit No distribution need be
$434.49* made from Principal
Account if balance in
Account is less
than $5,000
Excess of Public Offering Price Trustee's annual fee
per Unit over Redemption Value $0.75 per $1,000 principal
per Unit amount of Bonds per year,
$21.42 payable quarterly
Evaluator's fee for each
Excess of Public Offering Price evaluation
per Unit over Sponsor's Re- Minimum of $35 plus $0.25
purchase Price per Unit for each issue of Bonds
$19.28 in excess of 50 issues
(treat separate
Calculation of estimated net maturities of bonds as
annual interest per Unit: separate issues)
Annual interest income Evaluation Time
per Unit....................$26.80 4:00 p.m. New York Time
Less estimated annual Minimum value of Fund
expenses per Unit...........$ 1.41 Trust Agreement may be
Net annual interest terminated if value of
income per Unit.............$25.39 Fund is less than
$1,000,000
__________
* On the Date of Deposit the principal amount of Bonds in
the Fund was $5,000,000 and the Estimated Current Return at that
time was 6.40%.
** Exclusive of accrued interest. If Units had been
purchased on the Evaluation Date, accrued interest to the
settlement date of $5.96 would have been added to the Public
Offering Price.
*** Exclusive of accrued interest. The aggregate value
based on the bid side evaluation of Bonds in the Fund on the
Evaluation Date was $1,882,008.10.
<PAGE>
INFORMATION REGARDING THE FUND AT DECEMBER 31, 1996
Number of Issues General Obligations of a Government Entity
7 Number of Issues.....................1
Approximate Percentage of
Portfolio.........................12.37%
Range of Fixed Maturity Issues Payable from the Income of a
Dates of Bonds Specific Project or Authority
06-01-06 through 11-01-21 Number of Issues.....................6
Ratings of Bonds Description by purpose of issue:
Issues rated A or better Housing, 2; Transportation, 1;
by Standard & Poor's Water and Sewer, 2; Pollution
Corporation or by Control, 1; General Obligation, 1.
Moody's Investors
Service, Inc...........7
Housing Authorities. Approximately 54% of the aggregate
principal amount of the Bonds consists of obligations of Virginia
housing authorities. Because such Bonds are obligations of
issuers whose revenues are primarily derived from mortgage loans
to housing projects, the ability of such issuers to make debt
service payments will be affected by events and conditions
affecting finance projects, including, among other things,
maintenance of adequate levels of occupancy and rental income,
increases in operating expenses, changes in laws and social and
economic trends affecting the localities in which the projects
are located. Weaknesses in Federal housing subsidy programs and
their administration may result in a decrease in subsidies
available for payment of principal and interest on housing
authority bonds. Economic developments, including fluctuations
in interest rates and increasing construction and operating
costs, may also adversely affect revenues of housing authorities.
In the case of some housing authorities, inability to obtain
additional financing could also reduce revenues to pay existing
obligations.
Sponsor's Profits. Cash, if any, made available to the
Sponsor prior to a settlement date for the purchase of Units may
be used in the Sponsor's business, subject to the limitations of
17 C.F.R. Section 240.15c3-3 under the Securities Exchange Act of
1934, and may be of benefit to the Sponsor.
Market for Units. The Sponsor intends to continue to
offer to purchase Units of this and other series of The Tax-
Exempt Bond Fund of Virginia at prices, subject to change at any
time, based upon the offering side evaluation of the Bonds in the
Portfolio of this series and other series, but is under no
obligation to do so. (See "Market for Units" in Part II.)
<PAGE>
PART II
ADDITIONAL INFORMATION NOT INCLUDED IN THE PROSPECTUS
Item A. Bonding Arrangements of the Depositor.
The officers, Directors and employees of Craigie
Incorporated are covered under a Broker's Blanket Bond in the
amount of $5,000,000 with the Fidelity Deposit Insurance Company
of Maryland.
Item B. Information as to Officials and Affiliated Persons
of the Depositor.
The officers and Directors of Craigie Incorporated and
certain information as to their ownership of Common Stock (0 par
value) of Craigie Incorporated as of December 31, 1996, are set
forth below:
Owned Owned
Beneficially Beneficially
and of But Not of
Record Record
______________ ______________
Title Amount Percent Amount Percent
Name Office of Class (1) of Class (2) of Class
James A.
Alexander, III Senior
Vice
President
and
Director Common 18,087 2.68 1,457 .61
Richard C. Vice
Anthony President Common 2,265 .34 ___ ___
J. Rand Vice
Baggesen President Common 3,500 .52 ___ ___
Lynne F. Assistant
Baldacci Vice
President Common 232 .03 ___ ___
Charles C. Vice
Bassett President Common 5,622 .83 ___ ___
Timothy M. Behl Vice
President Common ___ ___ 645 .27
A. Plunket Vice
Bierne President Common 20 .003 ___ ___
Horatio A.E. Vice
Bigelow President Common ___ ___ 4,001 1.67
John D. Blair Executive
Vice
President
and
Director Common 77,400 11.48 27,113 11.32
Arnold W. Brown Senior
Vice
President
and
Director Common 8,194 1.22 7,847 3.28
<PAGE>
Owned Owned
Beneficially Beneficially
and of But Not of
Record Record
______________ ______________
Title Amount Percent Amount Percent
Name Office of Class (1) of Class (2) of Class
Jeffrey T. Vice
Catlett President Common 28 .004 ___ ___
William T. Vice
Clarke, Jr. President Common 2,571 .38 ___ ___
John J. Conrad Vice
President Common 22 .003 38 .02
Nicholas G. Vice
Costas President Common 6,122 .91 ___ ___
Daniel R. Cox Vice
President Common 32 .005 ___ ___
Vicki W. Davis Vice
President Common 317 .05 34 .01
Earnest A. Vice
Dettbarn President Common ___ ___ ___ ___
John De Maght Vice
President Common 65 .010 ___ ___
Donald B. Vice
De Vore President Common 183 .03 ___ ___
Mark T. Dillon Vice
President Common 1,651 .25 ___ ___
W. Randall Vice
Dunning President Common 1,027 .15 ___ ___
John H. Fenlon Vice
President Common ___ ___ ___ ___
Allen M. President
Ferguson and
Director Common 96,860 14.37 45,789 19.11
Mary C. Vice
Ferguson President Common 473 .07 329 .14
David G. Vice
Fischer President Common 335 .05 ___ ___
Julian R. Assistant
FitzGerald Vice
President Common 4 .0006 ___ ___
John F. Garth Senior Vice
President Common 5,065 .75 ___ ___
Philip R. Vice
Gilboy President Common ___ ___ ___ ___
Holmes Ginn Vice
President Common 685 .10 ___ ___
<PAGE>
Owned Owned
Beneficially Beneficially
and of But Not of
Record Record
______________ ______________
Title Amount Percent Amount Percent
Name Office of Class (1) of Class (2) of Class
Merlin T. Grim Senior
Vice
President
and
Director Common 2,051 .30 214 .09
Melvin J. Senior
Harley, Jr. Vice
President
and
Director Common 19,670 2.92 16,150 6.74
Cynthia E. Vice
Harris President Common 1,200 .18 7,441 3.11
J. Grier Hudson Vice
President Common 300 .04 1,074 .45
Christine A. Assistant
Hunt Vice
President Common 400 .06 149 .06
Sarah N. Jones Vice
President Common 4 .0006 100 .04
John B. Jung, Senior
Jr. Vice
President
and
Director Common 28,237 4.19 1,308 .55
Robert S. Vice
Kowalski President Common ___ ___ ___ ___
Harry R. Vice
Lankenau President Common 1,318 .20 ___ ___
Joseph M. Senior
Lowry, Jr. Vice
President
and
Director Common 14,114 2.09 1,796 .75
James L. Vice
Lynde, Jr. President Common ___ ___ 1,722 .72
Frank B. McCann Vice
President Common ___ ___ ___ ___
Richard S. Vice
Naurath President Common 120 .02 941 .39
Pamela J. Assistant
Patterson Vice
President Common 14 .002 ___ ___
Kimberly J. Assistant
Perry Vice
President Common 16 .002 ___ ___
H. Elizabeth Vice
Powell President Common 2,245 .33 1,015 .42
George B. Executive
Pugh, Jr. Vice
President
and
Director Common 109,480 16.24 37,398 15.61
Richard M. Reid Vice
President Common 674 .10 ___ ___
<PAGE>
Owned Owned
Beneficially Beneficially
and of But Not of
Record Record
______________ ______________
Title Amount Percent Amount Percent
Name Office of Class (1) of Class (2) of Class
William B. Executive
Reynolds Vice
President
and
Director Common 48,974 7.27 37,985 15.86
Randall B. Vice
Saufley President Common 58 .009 ___ ___
Peter H. Shea Executive
Vice
President
and
Director Common 36,614 5.43 8,267 3.45
Bradley K. Senior
Smallwood Vice
President
and
Director Common 21,387 3.17 3,423 1.43
Thomas D. Vice
Thalman President Common 90 .01 ___ ___
Denise Y. Assistant
Togger Vice
President Common 3,033 .45 31 .01
Jonathan R. Senior
Wallace Vice
President Common 4,837 .72 ___ ___
Clay W. Walter Vice
President Common 753 .11 ___ ___
John T. West, President
IV and
Director Common 124,152 18.42 28,582 11.93
Andrew T. Wiley Vice
President Common 1,057 .16 ___ ___
David J. Vice
Williams President Common 192 .03 ___ ___
Geoffrey W. Vice
Williams President Common 6,177 .92 ___ ___
Bradford E. Vice
Willmore President Common ___ ___ ___ ___
Derrick Wilson Assistant
Vice
President Common ___ ___ ___ ___
John W. Wright Executive
Vice
President
and
Director Common 16,386 2.43 4,721 1.97
__________
(1) Numbers of shares.
(2) Numbers of shares held in an employee stock ownership
plan as to which the rights of the respective persons
named are vested.
<PAGE>
The business address of all of the foregoing Officers and
Directors is 823 East Main Street, Richmond, Virginia 23219,
except for Messrs. Daniel R. Cox, David G. Fischer, John F.
Garth, Richard M. Reid, Thomas D. Thalman and David J. Williams
and Ms. Pamela J. Patterson, whose business address is One First
Union Center, Suite 2120, 301 S. College Street, Charlotte, North
Carolina 28202. All of the Officers and Directors have been
associated with Craigie Incorporated for at least five years,
except for the following:
Richard C. Anthony
Timothy M. Behl
A. Plunket Bierne
Earnest A. Dettbarn
Philip R. Gilboy
Robert S. Kowalski
James L. Lynde
Frank B. McCann
David J. Williams
Bradford E. Willmore
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
This Post-Effective Amendment to the Registration
Statement on Form S-6 comprises the following papers and
documents:
The facing sheet of Form S-6.
The cross-reference sheet.
The Prospectus.
Additional information.
Written consent of independent certified public
accountants.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933, the registrant, The Tax-Exempt Bond Fund of Virginia,
Second Series, certifies that it meets all of the requirements
for effectiveness of this Amendment to Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has
duly caused this Amendment to Registration Statement to be signed
on its behalf by the undersigned thereunto duly authorized, in
the City of Richmond and State of Virginia on the 16th day of
May, 1997.
THE TAX-EXEMPT BOND FUND OF
VIRGINIA, SECOND SERIES
(Registrant)
By: CRAIGIE INCORPORATED
(Depositor)
By:/s/ John Thomas West, IV
John Thomas West, IV
President
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to Registration Statement has been signed below by the
following persons in the capacities indicated on the 16th day of
May, 1997.
Signature Title
/s/ James T. Alexander, III Director
James T. Alexander, III
/s/ John D. Blair Director
John D. Blair
/s/ Allen M. Ferguson Director
Allen M. Ferguson
/s/ Melvin J. Harley, Jr. Director
Melvin J. Harley, Jr.
/s/ John B. Jung, Jr. Director
John B. Jung, Jr.
/s/ Joseph M. Lowry, Jr. Director
Joseph M. Lowry, Jr.
/s/ George B. Pugh, Jr. Director
George B. Pugh, Jr.
/s/ William B. Reynolds Director
William B. Reynolds
/s/ Peter H. Shea Director
Peter H. Shea
/s/ Bradley K. Smallwood Director
Bradley K. Smallwood
/s/ John T. West, IV Director
John T. West, IV
<PAGE>
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Tax-Exempt Bond Fund of
Virginia, Second Series
As independent certified public accountants, we hereby
consent to the use in Post-Effective Amendment No. 17 to
Registration Statement No. 2-64015 of our report, dated
May 29, 1997 and to the reference to our firm under the caption
"Auditors" in the Prospectus that is part of the Amendment.
TERRY, HAGEN & ATWOOD, P.C.
Richmond, Virginia
August 19, 1997
<PAGE>
INDEPENDENT AUDITOR'S REPORT
The Sponsors, Trustee and Unit Holders of
The Tax-Exempt Bond Fund of Virginia, Second Series
We have audited the accompanying statement of assets and
liabilities of The Tax-Exempt Bond Fund of Virginia, Second
Series, including the schedule of portfolio investments, as of
December 31, 1996 and the related statements of operations and
changes in net assets for each of the three years in the period
then ended, and selected per unit data and ratios for each of the
five years in the period then ended. These financial statements
and per unit data and ratios are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these
financial statements and per unit data and ratios 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 and per unit data and ratios 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 securities owned as of December 31, 1996 by correspondence
with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by
management, 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 and selected per
unit data and ratios referred to above present fairly, in all
material respects, the financial position of The Tax-Exempt Bond
Fund of Virginia, Second Series, as of December 31, 1996, the
results of its operations for the year then ended and the changes
in its net assets for each of the three years in the period then
ended, and selected per unit data and ratios for each of the five
years in the period then ended in conformity with generally
accepted accounting principles.
TERRY, HAGEN & ATWOOD, P.C.
Richmond, Virginia
May 29, 1997
<PAGE>
THE TAX-EXEMPT BOND FUND OF VIRGINIA, SECOND SERIES
Statement of Assets and Liabilities
December 31, 1996
T R U S T P R O P E R T Y
Assets
Investment in securities at market
value (cost $1,789,125) (Note 1) $1,901,475
Interest receivable 43,281
Total assets 1,944,756
L I A B I L I T I E S A N D N E T A S S E T S
Liabilities
Distribution payable (Note 2) 29,209
Accounts payable 12,867
Total liabilities 42,076
Net assets
Balance applicable to 4,353 units of fractional
undivided interest outstanding: (Note 4)
Capital, plus unrealized appreciation of
investments of $112,350 1,900,985
Balance of distributable funds (applicable
to unit holders) 1,695
Net assets $1,902,680
Value per unit (4,353 units) $ 437.10
See Notes to Financial Statements
<PAGE>
THE TAX-EXEMPT BOND FUND OF VIRGINIA, SECOND SERIES
Schedule of Portfolio Investments as of December 31, 1996
Aggregate Name of Issuer Coupon Maturity
Principal and Title of Bond Ratings(1) Rate Dates
$ 500,000 Virginia Housing
Development
Authority, Multi-
Family Mortgage
Bonds, 1978 Series B AA+ 6.700% 11-1-2021
100,000 Harrisonburg-
Rockingham Regional
Sewer Authority
(Virginia), Sewer
Revenue Bonds, Series
A (Harrisonburg,
Bridgewater and Dayton
Guaranteed) A+ 5.875% 7-1-2007
230,000 City of Harrisonburg,
Virginia, Elderly
Housing Facility
General Obligation
Bonds, Series of 1979 A 6.500% 2-1-2010
205,000 Richmond Metropolitan
Authority, Expressway
Revenue Refunding Bonds,
Series of 1973 A 5.400% 1-15-2013
245,000 Fairfax County Water
Authority (Virginia),
Water Revenue Refunding
Bonds, Series 1977 AAA* 5.800% 1-1-2016
<PAGE>
Redemption Current
Provisions Cost Evaluation
11-01-99 @ 100-S.F. $ 486,300 $ 508,185
93,180 103,871
233,059 231,023
170,703 203,052
221,137 251,681
See Notes to Financial Statements
<PAGE>
THE TAX-EXEMPT BOND FUND OF VIRGINIA, SECOND SERIES
Schedule of Portfolio Investments as of December 31, 1996
(Continued)
Aggregate Name of Issuer Coupon Maturity
Principal and Title of Bond Ratings(1) Rate Dates
$ 80,000 Industrial Development
Authority of the City
of Lynchburg, Virginia,
Industrial Development
Revenue Bonds (Mead-
Lynchburg Foundry
Project), Series
1976-A A3(*) 7.00% 6-1-2006
500,000 Richmond Redevelopment
and Housing Authority,
Richmond, Virginia,
Revenue Bonds
(Chippenham Place
Section 8 Assisted
Project), Series of
1979 A- 7.625% 8-1-2010
$1,860,000
(1) All ratings are by Standard & Poors Corporation except those
indicated by (*) which are by Moody's Investors Service, Inc. A
brief description of the rating symbols used and their meanings
appears in the Prospectus, Part II.
<PAGE>
Redemption Current
Provisions Cost Evaluation
$ 83,296 $ 81,208
08-01-98 @ 102-Opt.
08-01-00 @ 100-S.F. 501,450 522,455
$1,789,125 $1,901,475
See Notes to Financial Statements
<PAGE>
THE TAX-EXEMPT BOND FUND OF VIRGINIA, SECOND SERIES
Statements of Operations
Years Ended December 31
1996 1995 1994
Interest income $123,541 $124,811 $131,043
Expenses
Trustee's fees (Note 3) 1,661 1,679 1,867
Evaluator's fees (Note 3) 2,081 1,933 2,100
Stationery, printing and postage 1,295 2,005 2,191
Professional fees 2,677 1,214 3,101
Total expenses 7,714 6,831 9,259
Investment income - net 115,827 117,980 121,784
Realized and unrealized gain
(loss) on investments
Realized gain from
securities transactions 498 497 21,567
Unrealized appreciation (depreci-
ation) during the year ( 24,284) 118,800 ( 147,707)
Net gain (loss) on investments ( 23,786) 119,297 ( 126,140)
Net increase (decrease)
in net assets resulting
from operations $ 92,041 $ 237,277 ($ 4,356)
See Notes to Financial Statements
<PAGE>
THE TAX-EXEMPT BOND FUND OF VIRGINIA, SECOND SERIES
Statements of Changes in Net Assets
Years Ended December 31
1996 1995 1994
Increase (decrease) in net
assets from operations
Investment income - net $ 115,827 $ 117,980 $ 121,784
Net realized gain from
securities sold 498 497 21,567
Net unrealized market
appreciation
(depreciation) ( 24,284) 118,800 ( 147,707)
Net increase (decrease)
in net assets resulting
from operations 92,041 237,277 ( 4,356)
Distributions to unit holders
(Note 2)
Investment income - net 117,183 118,576 125,411
Proceeds from the
disposition of
investments 20,024 19,980 827,026
Total distributions 137,207 138,556 952,437
Increase (decrease) in
net assets ( 45,166) 98,721 ( 956,793)
Net assets
Beginning of year 1,947,846 1,849,125 2,805,918
End of year (including
undistributed net
investment income of
$1,198, $2,554 and $3,149,
for 1996, 1995, and 1994,
respectively) $1,902,680 $1,947,846 $1,849,125
See Notes to Financial Statements
<PAGE>
THE TAX-EXEMPT BOND FUND OF VIRGINIA, SECOND SERIES
Notes to Financial Statements
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
The Fund is registered under the Investment Company Act of 1940,
as amended, as a Unit Investment Trust. The following is a
summary of significant accounting policies followed by the Fund
in the preparation of its financial statements.
Basis of Presentation
The Fund maintains its books on a cash basis. The accompanying
financial statements have been adjusted to record the unrealized
appreciation (depreciation) of investments and to record expenses
and interest income on the accrual basis.
Securities
Securities are stated at value as determined by the Evaluator as
explained under "Public Offering of Units - Evaluation of the
Fund" (Prospectus, Part II), based on bid side evaluation. Cost
was based on offering side evaluation at the date of deposit.
The difference between cost and market value is reflected as
unrealized appreciation (depreciation) of investments. Realized
gains and losses from securities transactions are determined for
federal income tax and for financial reporting purposes on the
basis of the cost of specified certificates. Security
transactions are recorded on the trade date.
Income Taxes
The Fund's policy is to comply with the requirements of the
Internal Revenue Code that are applicable to regulated investment
companies and to distribute all its taxable income to its
certificate-holders. Therefore, no income tax provision is
required.
Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and the disclosure of contingent assets
and liabilities at the date of the financial statements. Such
estimates also affect the reported amounts of revenues and
expenses during the reporting period. Actual results could vary
from the estimates that were used.
<PAGE>
THE TAX-EXEMPT BOND FUND OF VIRGINIA, SECOND SERIES
Notes to Financial Statements
NOTE 2 - DISTRIBUTIONS
Net investment income is distributed to unit holders on the first
day of each calendar quarter. Such distributions are accrued on
the record dates, which are March 1, June 1, September 1, and
December 1. The distribution payable at December 31, 1996
amounted to $6.71 per unit. Distributions of principal from the
sale or maturation of securities, if any, are made and recorded
in the manner described above.
NOTE 3 - TRUSTEE AND EVALUATOR FEES
The Fund pays a fee for services rendered by the Trustee of $.89
per year per $1,000 of outstanding investment principal, payable
quarterly, plus expenses. The Fund's Evaluator is paid a fixed
fee of $35 for each portfolio valuation plus expenses.
NOTE 4 - ORIGINAL COST TO UNIT HOLDERS
The original cost to unit holders represents the aggregate
initial offering price as of the date of deposit exclusive of
accrued interest. A reconciliation of the original cost of units
to investors to the net amount applicable to investors as of
December 31, 1996, is set forth below:
Original cost to investors $5,062,060
Plus Undistributed proceeds from
securities sold or redeemed 11
Net unrealized appreciation of
securities 112,350
Less Gross underwriting commissions ( 215,138)
Cost of securities sold or
redeemed since date of deposit ( 3,170,158)
Net amount applicable to investors $1,789,125
<PAGE>
THE TAX-EXEMPT BOND FUND OF VIRGINIA, SECOND SERIES
Notes to Financial Statements
NOTE 5 - SUPPLEMENTARY INFORMATION
Selected data for a unit of the Fund outstanding throughout each
period follows:
1996 1995 1994 1993 1992
Interest income $ 28.38 $ 28.67 $ 30.10 $ 40.47 $ 45.34
Expenses 1.77 1.57 2.13 2.14 1.82
Investment income
- net 26.61 27.10 27.97 38.33 43.52
Income
distributions ( 26.92) ( 27.24) ( 28.81) ( 38.95) ( 44.39)
( .31) ( .14) ( .84) ( .62) ( .87)
Principal
distributions ( 4.60) ( 4.59) ( 189.99) ( 13.78) ( 126.46)
Net realized gain
(loss) and
change in
unrealized
appreciation
(depreciation)( 5.46) 27.41 ( 28.98) 13.51 9.08
Increase (decrease)
in net asset
value ( 10.37) 22.68 ( 219.81) ( .89) (118.25)
Net asset value,
beginning of
the period 447.47 424.79 644.60 645.49 763.74
Net asset value,
end of the
period,
including
distributable
funds $437.10 $447.47 $424.79 $644.60 $645.49
Ratios:
Expense to
average net
assets (%) 0.40 0.36 0.40 0.33 0.26
Net investment
income to
average net
assets (%) 5.97 6.21 5.23 5.94 6.18
<PAGE>
THE PROSPECTUS, PART II
TAX-EXEMPT
BOND FUND Note: Part II of this Prospectus may not be
OF VIRGINIA delivered unless accompanied by Part I.
THE FUND
Objectives and Organization of the Fund
The Fund is one of a series of investment companies
created by the Sponsor under the name "The Tax-Exempt Bond Fund
of Virginia", all of which are similar but each of which is
separate and is designated by a different series number.
The Fund consists of (i) interest bearing obligations of
political subdivisions, public authorities and agencies of the
Commonwealth of Virginia, the interest on which is exempt to
holders thereof, in the opinion of bond counsel for the
respective issues, from Federal and Virginia income taxes, (ii)
all undistributed interest received or accrued therein and (iii)
any undistributed cash realized from the sale, redemption or
other disposition of the Bonds.
On the Evaluation Date set forth in Part I each Unit
represented the undivided fractional interest set forth under
Summary of Essential Information in Part I. Thereafter, the
denominator of the undivided fractional interest may be reduced
to the extent of any redeemed Units.
The Fund was created under the laws of the State of New
York pursuant to a Trust Agreement (the "Agreement"), among
Craigie Incorporated (the "Sponsor"), Untied States Trust Company
of New York, as Trustee (the "Trustee") and Standard & Poor's
Corporation (the "Evaluator"). Reference is hereby made to the
Agreement, and any statements contained herein are qualified in
their entirety by the provisions of the Agreement.
The Units offered by this Prospectus are issued and
outstanding Units that have been reacquired by the Sponsor either
by purchase in the open market or by purchase of Units tendered
to the Trustee for redemption. No offering is being made on
behalf of the Fund and any profit or loss realized on the sale of
Units will accrue to the Sponsor.
Portfolio
The Fund is a unit investment trust formed for the
purpose of obtaining tax-exempt income, while conserving capital,
through investments in a diversified portfolio (the "Portfolio")
of municipal bonds. There is no guarantee that the Fund's
objectives will be achieved. The Sponsor has deposited with the
Trustee the bonds listed in "Tax Exempt Bond Portfolio" contained
in Part I (the "Bonds").
The selection of the Bonds that comprise the portfolio of
the Fund was based largely upon the experience and judgment of
the Sponsor. In making such selections, the Sponsor deemed the
following requirements, among others, to be of primary
importance: (a) a minimum rating of A by the Evaluator or by
Moody's Investors Service, Inc.; (b) the price of the Bonds
relative to other issues of similar quality and maturity; (c) the
diversification as to purpose of issue; and (d) the income to the
Certificateholder of the Fund. (See "Description of Bond
Ratings" on page 14 hereof.)
The Sponsor may not alter the portfolio of the Fund
except upon the happening of certain extraordinary
circumstances. (See "Investment Supervision"). Certain of the
Bonds may from time to time be redeemed or will mature in
accordance with their terms, and the proceeds from such
redemptions and maturities will be distributed to
Certificateholders and will not be reinvested. Therefore, no
assurance can be given that the Fund will retain its present size
and composition for any length of time. Substantially all of the
Bonds contained in the Portfolio of the Fund are subject to being
called or redeemed in whole or in part prior to their stated
maturities pursuant to sinking fund or redemption provisions in
their governing instruments. A sinking fund is a reserve fund
accumulated over a period of time for retirement of debt. A
callable bond is one that is subject to redemptions or refunding
before maturity at the option of the issuer. A refunding is a
method by which a bond issue is redeemed, at or before maturity,
by the proceeds of a new bond issue. For information concerning
the maturity dates, redemption provisions, and optional call
provisions of the Bonds, see "Tax Exempt Bond Portfolio" in Part
I.
Neither the Sponsor nor the Trustee shall be liable in
any way for any default, failure or defect in any Bond. In the
event that any contract for the purchase of Bonds fails, each
Certificateholder of record will receive a refund of his pro rata
portion of the sales charge attributable to such contract,
together with his pro rata portion of the cash deposited for such
purchase. The Sponsor has agreed to direct the Trustee to
terminate the Fund if the value of the Fund is less than
$1,000,000.
To the best of the Sponsor's knowledge, there is no
litigation pending as of the Evaluation Date with respect to any
Bonds that might reasonably be expected to have a material
adverse effect on the Fund. At any time after the Evaluation
Date, litigation may be instituted on a variety of grounds with
respect to the Bonds in the Fund. The Sponsor is unable to
predict whether any such litigation may be instituted, or if
instituted, whether such litigation might have a material adverse
effect on the Fund.
Interest and Estimated Current Return
The Net Annual Unit Income of the Fund is computed by
dividing the total annual interest income to the Fund, less
annual estimated fees and expenses of the Trustee and the
Evaluator, as set forth under Expenses of the Fund, by the number
of Units outstanding. As of the Evaluation Date, the Fund's Net
Annual Unit Income was as set forth under Summary of Essential
Information in Part I. The net annual interest income per Unit
will change as Bonds are redeemed, paid, sold or exchanged, or as
the expenses of the Fund fluctuate.
Units of the Fund are offered to investors on a "dollar
price" basis as distinguished from a "yield price" basis, which
is often used in offerings of tax-exempt bonds and involves the
computation of yield to maturity of the bonds or to an earlier
redemption date. The rate of return on an investment in Units of
the Fund is measured in terms of Estimated Current Return, which
is computed by dividing the net annual interest income per Unit
by the Public Offering Price. At the Evaluation Date, the net
annual interest income per Unit divided by the Public Offering
Price resulted in an Estimated Current Return stated in Part I.
The Public Offering Price will vary in accordance with
fluctuations in the prices of the underlying Bonds.
Because any change in either the net annual interest
income per Unit or the Public Offering Price will result in a
change in the current return, there can be no guarantee that the
Estimated Current Return as of a particular date will be realized
in the future.
Tax Status of the Fund
All Bonds deposited in the Fund were accompanied by
copies of opinions of recognized bond counsel to the effect that
the interest thereon is exempt from all Federal and Virginia
income taxes. Neither the Sponsor nor the Trustee nor their
respective counsel have made any review of the proceedings
relating to the issuance of the Bonds or the bases for such
opinions except to the extent that Messrs. Hunton & Williams,
counsel for the Sponsor, may have served as bond counsel at the
time of one or more of such issuances.
Federal Income Taxes. In the opinion of Messrs. Hunton &
Williams, counsel for the Sponsor, under existing law:
1. The Fund is not an "association" taxable as a
corporation for Federal income tax purposes under the
Internal Revenue Code (the "Code"), and, to the extent
that income of the Fund consists of interest excludable
from gross income under the Code, such income will be
excludable from the gross income of the
Certificateholders of the Fund.
2. Each Certificateholder will be considered (a)
the owner of a pro rata portion of the Fund for federal
income tax purposes and (b) to have received his pro rata
share of Bond interest when it is received by the Fund,
and each Certificateholder will have a taxable event when
the Fund disposes of a Bond (whether by sale, exchange,
redemption or payment at maturity) or when the
Certificateholder redeems or sells his Certificates.
3. The total tax cost of each Unit to a
Certificateholder is allocated among each of the Bond
issues held in the Fund (in accordance with the
proportion of the Fund comprised by each Bond issue) in
order to determine his per Unit tax cost for each Bond
issue, and the tax cost reduction requirements of the
Code relating to amortization of bond premium will apply
separately to the per Unit tax cost of each Bond issue.
(To determine the proportion of the Fund comprised by
each issue of Bonds in order to compute premiums
applicable to such issues, see Aggregate Principal Amount
and Cost of Bonds to Fund in the Tax Exempt Bond
Portfolio contained in Part I.) Therefore, under some
circumstances a Certificateholder may realize taxable
gains even if his Units are sold or redeemed for an
amount equal to or below his original cost. A
Certificateholder will realize gains that will be taxable
under Federal income tax laws and may be taxable under
Virginia income tax laws if his Units are sold or
redeemed for an amount greater than his original cost.
In the case of certain of the Bonds, the opinions of bond
counsel to the respective issuing authorities indicate that
although interest on such Bonds is generally exempt from Federal
income tax, such Bonds are "industrial development bonds" as that
term is defined in Section 103(b)(2) of the Internal Revenue Code
of 1954, and interest on such Bonds will not be exempt from
Federal income tax for any period during which such Bonds are
held by a "substantial user" of the facilities financed by the
proceeds of such Bonds or a "related person" within the meaning
of Section 103(b)(10) of the Internal Revenue Code of 1954. In
the opinion of Messrs. Hunton & Williams, interest on any such
Bonds allocable to a Certificateholder who is such a "substantial
user" or "related person" will not be tax-exempt. No
investigation as to the users or the facilities financed by the
Bonds has been made by the Sponsor or its counsel. Investors
should consult their tax advisors for advice with respect to the
effect of these provisions on their particular tax situation.
From time to time proposals have been introduced before
Congress the purpose of which is to restrict or eliminate the
Federal income tax exemption for interest on debt obligations
similar to the Bonds, and it can be expected that similar
proposals may be introduced in the future. The Fund cannot
predict what additional legislation, if any, with respect to the
tax status of interest on such debt obligations may be proposed
by the executive branch or by members of Congress, nor can it
predict which proposals, if any, might be enacted, or whether any
legislation, if enacted, would apply to the Bonds in the Fund.
Under Section 265 of the Code, if borrowed funds are used
by a holder of Certificates to purchase or carry Units of the
Fund, interest on such indebtedness will not be deductible for
Federal income tax purposes. Under rules used by the Internal
Revenue Service, the purchase of Units may be considered to have
been made with borrowed funds even though the borrowed funds are
not directly traceable to the purchase of Units. Similar rules
are applicable for Virginia tax purposes.
Virginia Income Taxes. In the opinion of Messrs. Hunton
& Williams, based upon a ruling received by the Fund from the
Virginia Department of Taxation, under existing law:
1. The Fund is not an "association" taxable as a
corporation for Virginia income tax purposes with the
result that income of the Fund will be treated as income
of the Certificateholders.
2. Interest on the underlying Bonds that is exempt
from Virginia income tax when received by the Fund will
retain its tax-exempt status in the hands of the
Certificateholders.
3. Certificateholders will realize a taxable event
when the Fund disposes of a Bond (whether by sale,
exchange, redemption or payment at maturity) or when a
Certificateholder redeems or sells his Certificates, and
taxable gains for Federal income tax purposes may result
in taxable gain for Virginia income tax purposes.
Certain Bonds, however, have been issued under acts of
the Virginia General Assembly that provide that all
income from such Bonds, including any profit made from
the sale thereof, shall be free from all taxation by the
Commonwealth of Virginia. To the extent any such profit
is exempt from Virginia income tax, any such profit
received by the Fund will retain its tax-exempt status in
the hands of the Certificateholders.
New York Income Taxes. In the opinion of Messrs. Carter,
Ledyard & Milburn, as special counsel for the Fund for New York
tax matters, under the income tax laws of the State and City of
New York, the Fund is not an "association" taxable as a
corporation with the result that the Fund will not be subject to
the New York State franchise tax or the New York City general
corporation tax. In addition, the income of the Fund will be
treated as the income of the Certificateholders under the income
tax laws of the State and City of New York, and interest on the
underlying Bonds which is exempt from tax under these laws when
received by the Fund will retain its status as tax-exempt
interest in the hands of Certificateholders. Non-residents of
the State or City of New York are not subject to the income tax
laws thereof with respect to any interest or gain derived from
the Fund or any gain from the sale or other disposition of
Certificates.
The exemption of interest on municipal obligations for
Federal, Virginia and New York income tax purposes does not
necessarily result in exemption under the income tax laws of any
state other than Virginia and New York or any city. The laws of
the several states and local taxing authorities vary with respect
to the taxation of such obligations, and each Certificateholder
is advised to consult his own tax advisor as to the status of his
Certificates under such state and local tax laws. (See
"Statements to Certificateholders").
PUBLIC OFFERING OF UNITS
Public Offering Price
The Public Offering Price per Unit is computed by adding
to the aggregate of the offering prices of the Bonds in the Fund
(as determined by the Evaluator), divided by the number of Units
outstanding, the sales charge set forth under Summary of
Essential Information on page F-3 in Part I. A proportionate
share of accrued and undistributed interest on the Bonds to the
settlement date is added to the Public Offering Price. The
Public Offering Price will vary from the amount stated in Part I
of this Prospectus in accordance with fluctuations in the prices
of the underlying Bonds.
The aggregate price of the Bonds in the Fund is
determined by the Evaluator, (a) on the basis of current
offering prices of the Bonds, (b) if offering prices are not
available for any particular Bonds, on the basis of current
offering prices for comparable bonds, (c) by determining the
value of the Bonds on the offer side of the market by
appraisal, or (d) by any combination of the above. Such
evaluations and computations are made on the last business
day of each week as of the Evaluation Time, effective for all
sales made during the following week, provided that, if the
Evaluator cannot determine that the previous week's evaluation is
within one-half point ($5.00 on a Unit representing $1,000
principal amount of underlying Bonds) of the current offering
side evaluation of Units, the Sponsor will request a new
evaluation with respect to such Units effective for resales and
repurchases until the next weekly evaluation.
Comparison of Public Offering Price and Redemption Price
While the Public Offering Price of Units will be
determined on the basis of the current offering prices of
the Bonds in the Fund, the Unit Value at which Units may be
redeemed (see "Redemption") will be determined on the basis of
the current bid prices of such Bonds. On the Evaluation Date the
Public Offering Price Per Unit (based on the offering prices of
the Bonds in the Fund and including the sales charge) exceeded
the Unit Value at which Units could have been redeemed (based
upon the current bid prices of the Bonds in the Fund) by the
amount shown under Summary of Essential Information. In the
past, the bid prices of similar bonds have been lower than the
offering prices thereof by as much as 3% or more of principal
amount in the case of inactively traded bonds or as little as 1/2
of 1% in the case of actively traded bonds, but the difference
between such offering and bid prices has averaged about 1 1/2% to
2% of principal amount. For this reason, among others (including
fluctuations in the market prices of the bonds and the fact that
the Public Offering Price includes the sales charge set forth
under Summary of Essential Information on page F-3 in Part I),
the amount realized by a Certificateholder upon any redemption of
Units may be less than the price paid by him for such Units.
Market for Units
The Sponsor now maintains a market for certain other
series of The Tax-Exempt Bond Fund of Virginia and continually
offers to purchase units of those series at prices based on the
offering side evaluation of the bonds in the portfolios of those
series.
As of the date of this Prospectus, although it is under
no obligation to do so, the Sponsor intends to maintain a market
for Units of this series and continually to offer to purchase
such Units at prices, subject to change at any time, based on the
aggregate offering prices of the Bonds in the Fund (as determined
by the Evaluator). Accordingly, a Certificateholder who wishes
to dispose of his Units should inquire of his bank or broker or
the Sponsor as to the current market price of the Units prior to
making a tender for redemption to the Trustee. The offering
price of any Units acquired by the Sponsor will be determined in
accordance with the currently effective Prospectus describing
such Units. Any profit or loss resulting from the resale of such
Units will belong to the Sponsor. The Sponsor may either
discontinue all purchases of Units or discontinue purchases of
Units at prices based on the offering prices of Bonds in the
Fund, if the supply of Units exceeds demand, or for other
business reasons. In the event that the Sponsor purchases Units
in the secondary market at a price below the then current
aggregate offering side evaluation of the Bonds in the Fund, such
Units will not be resold by the Sponsor in the secondary market.
In addition, upon the tender of a Certificate to the
Trustee for redemption, the Sponsor has the right (exercisable
before the close of business on the second business day after the
date of such tender) to purchase the Units represented by such
Certificate. Any such purchase will be made at a price not less
than the Redemption Price. So long as the Sponsor is maintaining
a bid in the secondary market in excess of the Redemption Price,
the Sponsor will be required by the Trust Agreement to repurchase
any Units so tendered. The Sponsor may redeem any Units that it
has purchased in the secondary market to the extent that it
determines that it is undesirable to hold such Units in its
inventory. Factors that the Sponsor will consider in making such
a determination will include the number of Units that it has in
its inventory, the saleability of such Units, its estimate of the
time required to sell such Units and general market conditions.
The Sponsor intends to continue to qualify Units for sale
only in Virginia by the Sponsor and by dealers who are members of
the National Association of Securities Dealers, Inc. Sales may
be made to dealers at prices which represent a concession from
the Public Offering Price of 3% per Unit. The Sponsor, however,
reserves the right to change the amount of the concession to
dealers from time to time.
Redemption
A Certificateholder may cause his Unit(s) to be redeemed
by tender of the Certificates representing the Units to be
redeemed, to the Trustee at its corporate trust office, at 45
Wall Street, New York, New York 10005, and the redemption price
of such Units shall be paid by the Trustee on the seventh
calendar day following the day on which tender for redemption is
received, or if the seventh calendar day is not a business day,
on the last business day prior thereto (the "Redemption Date").
Certificates to be redeemed must be properly endorsed or
accompanied by a written instrument or instruments of transfer.
Certificateholders must sign exactly as their name appears on
the face of the Certificate with the signature guaranteed by a
national bank or trust company or by a member firm of a national
or regional securities exchange. Subject to the payment of any
applicable taxes or governmental charges, the amount to be paid
on the Redemption Date to a Certificateholder is the Unit Value,
determined as set forth below under "Evaluation of the Fund",
multiplied by the number of Units represented by the Certificate
tendered for redemption (the "Redemption Price"). The Unit Value
will be determined as of the next Evaluation Time (as stated
under Summary of Essential Information on page F-3 of Part I)
following any such tender that occurs on a business day or, if
the day of receipt is not a business day, at the Evaluation Time
on the next business day following such receipt.
Any amounts paid on redemption representing interest
shall be withdrawn from the Interest Account to the extent that
funds are available for such purpose. All other amounts paid on
redemption shall be withdrawn from the Principal Account. The
Trustee is empowered to sell Bonds in order to make funds
available for the redemption of Certificates. Any Certificates
redeemed shall be cancelled and any undivided fractional interest
in the Fund extinguished. To the extent Bonds are sold, the size
and diversity of the Fund will be reduced. Such sale may be
required when Bonds would not otherwise be sold and might result
in lower prices than might otherwise be realized. The price
received upon redemption may be more or less than the amount paid
by the Certificateholder depending on the value of the Bonds in
the portfolio at the time of redemption.
The Trustee is irrevocably authorized, in its discretion,
in lieu of redeeming Units tendered for redemption, to sell such
Units in the over-the-counter market for the account of tendering
Certificateholders at prices that will return to the
Certificateholders amounts in cash, net after brokerage
commissions, transfer taxes and other charges, equal to or in
excess of the Redemption Price for such Units. In the event of
any such sale, the Trustee shall pay the net proceeds thereof to
the Certificateholder on the day he would otherwise be entitled
to receive payment of the Redemption Price. The right of
redemption may be suspended and payment postponed (a) for any
period during which the New York Stock Exchange is closed, other
than customary weekend and holiday closings; (b) for any
period, as determined by the Securities and Exchange Commission,
during which either (i) trading on the New York Stock Exchange is
restricted or (ii) an emergency exists as a result of which
disposal by the Trustee of the Bonds is not reasonably
practicable or it is not reasonably practicable fairly to
determine in accordance with the Agreement the value of the
Bonds; or (c) for such other period as the Securities and
Exchange Commission may by order permit. The Trustee is not
liable to any person or in any way for any loss or damage that
may result from any such suspension or postponement.
Evaluation of the Fund
Unit Value is computed by the Trustee as of the
Evaluation Time stated under Summary of Essential Information (a)
on the Record Days as set forth in Summary of Essential
Information (or on the last business day prior thereto), (b) on
any business day as of the Evaluation Time next following the
tender of a Unit for redemption, and (c) on any other business
day desired by the Trustee, in each case, by adding:
(i) The cash on hand in the Fund (other than
cash deposited in the Fund to purchase Bonds not applied
to the purchase of Bonds or credited to the Principal
Account);
(ii) The aggregate value of each issue of the
Bonds (including "when issued" contracts, if any)
held in the Fund, as determined by the Evaluator on the
basis of the bid prices therefor; and
(iii) Accrued and unpaid interest on the Bonds as
of the date of the computation;
and deducting therefrom:
(i) amounts representing any applicable taxes or
governmental charges payable out of the Fund not
previously deducted;
(ii) amounts representing estimated accrued
expenses of the Fund, including but not limited to unpaid
fees and expenses of the Trustee (including legal and
auditing fees), the Evaluator, and, if any, of bond
counsel; and
(iii) cash held for distribution to
Certificateholders of record as of a date prior to the
evaluation being made on the days or dates set forth
above;
and dividing the result of such computation by the number of
Units outstanding as of the date thereof.
CERTIFICATEHOLDERS
Description of Certificate
Ownership of Units is evidenced by registered
Certificates executed by the Trustee and the Sponsor.
Certificates are transferable by presentation and surrender to
the Trustee properly endorsed or accompanied by a written
instrument or instruments of transfer.
Certificates will be issued in denominations of one Unit
or any whole multiple thereof. The Trustee may require a
Certificateholder to pay $2.00 per Certificate (or such other
amount as may be determined by the Trustee and approved by the
Sponsor) re-issued or transferred and to pay any governmental
charge that may be imposed in connection with each such transfer
or interchange. The Trustee at the present time does not intend
to charge for services rendered in connection with the normal
transfer or interchange of Certificates. Destroyed, stolen,
mutilated or lost Certificates will be replaced upon delivery to
the Trustee of satisfactory indemnity, evidence of ownership
and payment of expenses incurred.
Distributions to Certificateholders
The Trustee shall collect the interest on a Bond as it
becomes payable and credit such interest to a separate
Interest Account. All monies, other than interest credited to
the Interest Account received by the Trustee, are to be credited
to a separate Principal Account. After deduction of the expenses
of the Fund, including fees and expenses of the Trustee, the
Evaluator and, if any, of bond counsel, each Certificateholder of
record on the Record Days shown under Summary of Essential
Information will receive distributions on or promptly after the
next following Distribution Day shown under Summary of Essential
Information of his pro rata share of the balances of the Interest
Account and the Principal Account, both computed as of the Record
Day. Because interest payments are not received by the Fund at a
constant rate throughout the year, such interest distribution may
be more or less than the amount credited to the Interest Account
as of the Record Date. For the purpose of eliminating
fluctuations in the quarterly distributions from the Interest
Account during the Fund's existence, the Trustee is required by
the Agreement to advance such amounts as may be necessary to
provide quarterly interest distributions of approximately
equal amounts. The Trustee will be reimbursed, without interest,
for any such advances from funds in the Interest Account on or
before the next ensuing Distribution Day. Certificateholders who
purchase Units between a Record Day and a Distribution Day will
receive their first distribution on the second Distribution Day
after such purchase. No distribution need be made from the
Principal Account if the balance therein is less than the amount
stated under "Summary of Essential Information" in Part I.
Funds that are available for future distributions,
redemptions and payment of expenses are held in accounts that are
non-interest bearing to Certificateholders and are available for
use by United States Trust Company of New York pursuant to normal
banking procedures.
Statements to Certificateholders
With each distribution, the Trustee will furnish each
Certificateholder a statement of the amount of interest and the
amount of other receipts, if any, then being distributed,
expressed in each case as a dollar amount per Unit. Within a
reasonable period of time after the end of each calendar year
(normally within 20 to 60 days), the Trustee will furnish to each
person who at any time during the calendar year was a
Certificateholder a statement setting forth:
(a) As to the Interest Account: (i) the amount of
interest received on the Bonds and the percentage of such
amount by states and territories in which the issuers of
the Bonds are located; (ii) the amount paid from the
Interest Account representing accrued interest from any
Certificates redeemed; (iii) the deductions from the
Interest Account for applicable taxes, if any, fees and
expenses of the Trustee, the Evaluator, and, if any, of
bond counsel; (iv) the net amount remaining after such
payments and deductions, expressed both as a total dollar
amount and as a dollar amount per Unit outstanding on the
last business day of such calendar year;
(b) as to the Principal Account: (i) the dates of
the maturity, liquidation or redemption of any of the
Bonds and the net proceeds received therefrom excluding
any portion credited to the Interest Account; (ii) the
amount paid from the Principal Account representing the
principal of any Certificate redeemed; (iii) the
deductions from the Principal Account for payment of
applicable taxes, if any, fees and expenses of the
Trustee, the Evaluator, and, if any, of bond counsel;
(iv) the net amount remaining after distributions of
principal and deductions, expressed both as a dollar
amount and as a dollar amount per Unit outstanding on the
last business day of the calendar year;
(c) a list of the Bonds held and the number of
Units outstanding on the last business day of such
calendar year;
(d) the Unit Value based on the last Fund
Evaluation made during such calendar year; and
(e) the amounts actually distributed during such
calendar year from the Interest and Principal Accounts
separately stated, expressed both as total dollar amounts
and as dollar amounts per Unit outstanding on the Record
Days for each such distribution.
The Trustee shall also prepare and distribute such other
reports as may from time to time be required under applicable
state or Federal statutes, rules or regulations.
Other Rights of Certificateholders
A Certificateholder may at any time tender his
Certificate to the Trustee for redemption. The death or
incapacity of any Certificateholder will not operate to terminate
the Fund nor entitle his legal representatives or heirs to claim
an accounting or to bring any action or proceeding in any court
for partition or winding up of the Fund.
No Certificateholder shall have the right to control the
operation and management of the Fund in any manner, except to
vote with respect to amendment of the Agreement or termination of
the Fund.
INVESTMENT SUPERVISION
The Sponsor may not alter the portfolio of the Fund by
the purchase, sale or substitution of the Bonds, except in the
special circumstances set forth below. Thus, with the exception
of the redemption or maturity of the Bonds in accordance with
their terms, the assets of the Fund will remain unchanged under
normal circumstances.
The Sponsor may direct the Trustee to dispose of Bonds
the value of which has been affected by certain adverse events,
including default in the payment of principal or interest,
institution of certain legal proceedings, default under other
documents that may adversely affect debt service, default in the
payment of principal or interest on other obligations of the same
issuer, decline in projected income pledged for debt service on
revenue Bonds, or a decline in price or the occurrence of other
market factors, including advance refunding, if, in the opinion
of the Sponsor, the retention of such Bonds in the Fund would be
detrimental to the interest of the Certificateholders. The
proceeds from any such sales will be credited to the Principal
Account for distribution to the Certificateholders.
The Sponsor is required to instruct the Trustee to reject
any offer made by an issuer of the Bonds to issue new obligations
in exchange and substitution for any of the Bonds pursuant to a
refunding financing plan, except that the Sponsor may instruct
the Trustee to accept or reject such an offer or to take such
other action with respect thereto as the Sponsor may deem proper
if (a) the issuer is in default with respect to the Bonds, or (b)
in the written opinion of the Sponsor, there is a reasonable
basis to believe that the issuer will default with respect to the
Bonds in the foreseeable future. Any obligations received in
exchange or substitution will be held by the Trustee subject
to the terms and conditions of the Agreement to the same extent
as the Bonds originally deposited thereunder. Within five days
after such deposit, notice of such exchange shall be given by the
Trustee to each Certificateholder, including an identification of
the Bonds eliminated and the Bonds substituted therefor.
If a default in the payment of principal or interest on
any of the Bonds occurs and if the Sponsor fails to instruct the
Trustee to sell or hold within 30 days after the Sponsor is
notified thereof by the Trustee, the Agreement requires the
Trustee to sell the defaulted Bonds forthwith. The Trustee will
not be liable for any depreciation or loss incurred by reason of
such sale. The Trustee may sell Bonds designated by the Sponsor
for the purpose of redeeming Certificates tendered for redemption
and the payment of expenses.
ADMINISTRATION OF THE FUND
The Trustee
The Trustee is United States Trust Company of New York,
having its corporate trust office at 45 Wall Street, New York,
New York 10005. The Trustee is a member of the New York Clearing
House Association and is subject to supervision and examination
by the Superintendent of Banks of the State of New York, the
Federal Deposit Insurance Corporation and the Board of Governors
of the Federal Reserve Bank System.
In accordance with the Agreement, the Trustee will keep
at its office proper books of record and account of all Fund
transactions. Such records will include the name and address of,
and the Certificates issued to, every Certificateholder. Such
books and records shall be open to inspection by any
Certificateholder at all reasonable times during the usual
business hours. The Trustee will make such annual or other
reports as may from time to time be required under any applicable
state or Federal statute, rule or regulation. The Trustee will
keep a certified copy or duplicate original of the Agreement on
file in its office available for inspection at all reasonable
times during usual business hours by any Certificateholder,
together with a current list of the Bonds held in the Fund.
Under the Agreement, the Trustee or any successor may
resign and be discharged of the trust created by the Agreement by
executing an instrument in writing and filing the same with the
Sponsor and mailing a copy of the notice of resignation to all
Certificateholders then of record, not less than sixty days
before the date specified in such notice when such resignation is
to take effect. The Sponsor is obligated to appoint a Successor
Trustee promptly upon receiving notice of such resignation. If,
upon such resignation, no Successor Trustee 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. In
case the Trustee becomes incapable of acting or is adjudged a
bankrupt or is taken over by public authorities, the Sponsor may
remove the Trustee and appoint a Successor Trustee as provided in
the Agreement. Notice of such removal and appointment shall be
mailed to each Certificateholder by the Sponsor. Upon execution
of a written acceptance of such appointment by such Successor
Trustee, all of the rights, powers, duties and obligations of the
original Trustee shall vest in the successor.
The Trustee shall be a corporation organized and doing
business under the laws of the United States, the State of New
York or the Commonwealth of Virginia and shall be authorized
under such laws to exercise corporate trust powers. The Trustee
shall have its principal office in New York City if it is a New
York or United States corporation (or in the City of Richmond if
it is a Virginia corporation) and shall have at all times an
aggregate capital, surplus and undivided profit of not less than
$50,000,000.
The Evaluator
The Evaluator is Standard & Poor's Corporation, a
corporation organized and existing under the laws of the State of
New York with its principal offices at 25 Broadway, New York, New
York 10004.
The Evaluator may resign or be removed by either the
Sponsor or the Trustee. The Sponsor and the Trustee will use
their best efforts to secure a satisfactory successor. Such
resignation or removal shall become effective upon acceptance of
appointment by the Successor Evaluator. If, upon resignation of
the Evaluator, no successor has accepted appointment within 30
days after notice of resignation, the Evaluator may apply to a
court of competent jurisdiction for the appointment of a
successor. Notice of such resignation or removal and appointment
will be mailed by the Trustee to each Certificateholder.
Successor Sponsor
If at any time the Sponsor resigns, fails to perform any
of its duties under the Agreement or becomes incapable of acting
or bankrupt or its affairs are taken over by public authorities,
then the Trustee may (a) appoint a successor Sponsor at rates of
compensation deemed by the Trustee to be reasonable and not
exceeding such reasonable amounts as may be prescribed by the
Securities and Exchange Commission, (b) terminate the Trust
Agreement and liquidate the Fund as provided therein, or (c)
continue to act as Trustee without terminating the Agreement and
without appointing a successor Sponsor. In no event may the
Trustee act as a Sponsor of the Fund.
Amendment and Termination of Agreement
The Agreement may be amended by the Trustee and the
Sponsor without the consent of any of the Certificateholders:
(a) to cure any ambiguity or to correct or supplement any
provision that may be defective or inconsistent; (b) to change
any provision thereof as may be required by the Securities and
Exchange Commission or any successor governmental agency; or (c)
to make any other change that, in the opinion of the Trustee and
the Sponsor, will not adversely affect the interests of the
Certificateholders. In all other circumstances, the Agreement
may be amended in any respect by the Sponsor and the Trustee, or
any of the provisions thereof may be waived, with the consent of
the holders of Certificates representing 66 2/3% of the Units
then outstanding, provided that no such amendment or waiver will
reduce the interest in the Fund of any Certificateholder without
the consent of such Certificateholder or reduce the percentage of
Units required to consent to any such amendment or waiver
without the consent of all Certificateholders. In no event shall
the Agreement be amended to increase the number of Units issuable
thereunder or to permit, except in accordance with the provisions
of the Agreement, the acquisition of any Bonds in addition to or
in substitution for those initially deposited in the Fund. The
Trustee shall promptly notify Certificateholders of the substance
of any such amendment.
The Agreement provides that the Fund shall terminate upon
the maturity, redemption or other disposition, as the case may
be, of the last of the Bonds held in the Fund. If the value of
the Fund declines to less than the minimum value set forth under
Summary of Essential Information in Part I, the Trustee may, in
its discretion, and shall, when so directed by the Sponsor,
terminate the Fund. The Fund may also be terminated at any time
by the holders of Certificates representing at least 66 2/3% of
the Units then outstanding. In no event will the Fund continue
beyond January 1 of the Fund's fiftieth year. In the event of
termination, written notice thereof will be sent by the Trustee
to all Certificateholders. Within a reasonable period after
termination, the Trustee will sell any Bonds remaining in the
Fund, and, after paying all expenses and charges incurred by the
Fund, will distribute to each Certificateholder, upon surrender
for cancellation of his Certificate for Units, his pro rata share
of the balances remaining in the Interest and Principal Accounts.
Limitations on Liability
The Sponsor: The Sponsor is liable for the performance
of its obligations arising from its responsibilities under the
Agreement, but will be under no liability to the
Certificateholders for taking any action or refraining from
any action in good faith pursuant to the Agreement or for errors
in judgment, except in cases of its own gross negligence, bad
faith or willful misconduct. The Sponsor will not be liable or
responsible in any way for depreciation or loss incurred by
reason of the sale of any Bonds.
The Trustee: The Agreement provides that the Trustee
shall be under no liability for any action taken in good faith in
reliance upon prima facie properly executed documents or for the
disposition of monies, Bonds, or Certificates except by reason of
its own gross negligence, bad faith or willful misconduct, nor
shall the Trustee be liable or responsible in any way for
depreciation or loss incurred by reason of the sale by the
Trustee of any Bonds. In the event that the Sponsor fails to
act, the Trustee may act and will not be liable for any such
action taken by it in good faith. The Trustee will not be
personally liable for any taxes or other governmental charges
imposed upon or in respect of the Bonds or upon the interest
thereon, or upon it as Trustee or upon or in respect of the Fund
that the Trustee may be required to pay under any present o r
future law of the United States of America or of any other taxing
authority having jurisdiction. In addition, the Agreement
contains other customary provisions limiting the liability of the
Trustee. The Trustee, whose duties are ministerial, has not
participated in the selection of any Bonds for the Fund.
The Evaluator: The Trustee, Sponsor and
Certificateholders may rely on any evaluation furnished by the
Evaluator and will have no responsibility for the accuracy
thereof. The Agreement provides that the determinations
made by the Evaluator shall be made in good faith upon the basis
of the best information available to it, provided, however, that
the Evaluator shall be under no liability to the Trustee, Sponsor
or Certificateholders for errors in judgment, but shall be liable
only for its gross negligence, bad faith or willful misconduct.
EXPENSES OF THE FUND
All expenses incurred in the establishment of the Fund,
including the costs of the initial preparation, printing and
execution of the Certificates and the Agreement, the initial fees
and expenses of the Trustee fees of the Evaluator during the
initial public offering and other expenses, including legal and
audit fees and expenses, were paid by the Sponsor at no charge to
the Fund.
The Sponsor receives no fee from the Fund for its
services as such.
For services performed under the Agreement, the Trustee
and the Evaluator receive the respective fees set forth under
Summary of Essential Information. The fees of the Trustee and
the Evaluator are payable quarterly on or before each
Distribution Day by deductions from the Interest Account to the
extent funds are available, then from the Principal Account.
Both fees may be increased without approval of Certificateholders
by amounts not exceeding a proportionate increase in the Consumer
Price Index entitled "All Services Less Rent", published by the
United States Department of Labor, or any equivalent index
substituted therefor. The Trustee also receives benefits to the
extent that it holds funds in the various non-interest bearing
accounts created under the Agreement (see
"Certificateholders-Distributions to Certificateholders" on page
8).
In addition to the above, the following charges may be
incurred by the Fund: (a) fees for the Trustee's extraordinary
services; (b) expenses of the Trustee (including legal and
auditing expenses) and of bond counsel; (c) various governmental
charges; (d) expenses and costs of any action taken by the
Trustee to protect the Fund or the rights and interests of the
Certificateholders; (e) indemnification of the Trustee for any
loss, liabilities and expenses incurred by it in the
administration of the Fund without negligence, bad faith or
willful misconduct on its part; and (f) expenditures incurred in
communicating with Certificateholders upon termination of the
Fund. The fees and expenses set forth herein are payable out of
the Fund and, if so paid by or owing to the Trustee, will be
secured by a lien on the Fund.
Fees and expenses of the Fund will be deducted from the
Interest Account, or, to the extent funds are not available in
such Account, from the Principal Account. The Trustee may
withdraw from the Principal Account or the Interest Account such
amounts, if any, as it deems necessary to establish a reserve for
any taxes or other governmental charges payable out of the Fund.
Amounts so withdrawn shall be credited to a separate account
known as the Reserve Account and shall not be considered a part
of the Fund when determining the value of the Units until such
time as the Trustee shall return all or any part of such amounts
to the appropriate account. If the balances in the Principal and
Interest Accounts are insufficient to provide for amounts payable
by the Fund, the Trustee is permitted to sell Bonds to pay such
amounts.
THE SPONSOR
Craigie Incorporated, a corporation organized in 1929
under the laws of the Commonwealth of Virginia, is an investment
banking firm that is a member of the Philadelphia and Pacific
stock exchanges, the National Association of Securities Dealers,
Inc., the Securities Industry Association, Inc. and the Public
Securities Association. Craigie Incorporated has its principal
office at 814 East Main Street, Richmond, Virginia 23219.
The primary business of Craigie Incorporated is
underwriting, trading and distributing municipal bonds.
The Sponsor also distributes United States Government securities,
Federal Agency obligations and corporate bonds, as well as common
and preferred stocks.
The Sponsor may have participated as sole underwriter,
managing underwriter or member of an underwriting syndicate from
which certain of the Bonds in the Fund were acquired.
LEGAL OPINIONS
The legality of the Units originally offered and certain
matters relating to Federal and Virginia tax law has been passed
upon by Messrs. Hunton & Williams, Richmond, Virginia, as counsel
for the Sponsor.
AUDITORS
The financial statements of the Fund included in Part I
of this Prospectus have been examined by Charles M. Terry &
Company, independent certified public accountants, as indicated
in their report with respect thereto, and have been so included
in reliance upon such report given upon the authority of that
firm as experts in accounting and auditing.
DESCRIPTION OF BOND RATINGS
Standard & Poor's Corporation
Standard & Poor's Municipal Bond Ratings cover
obligations of states and political subdivisions. Ratings
are assigned to general obligation and revenue bonds. General
obligation bonds are usually secured by all resources available
to the municipality and the factors outlined in the rating
definitions below are weighed in determining the rating. Because
revenue bonds in general are payable from specifically pledged
revenues, the essential element in the security for a revenue
bond is the quantity and quality of the pledged revenues
available to pay debt service. Although an appraisal of most of
the same factors that bear on the quality of general obligation
bond credit is usually appropriate in the rating analysis of a
revenue bond, other factors are important, including particularly
the competitive position of the municipal enterprise under review
and the basic security covenants.
AAA - Bonds rated AAA have the highest rating assigned by
Standard & Poor's to a debt obligation. Capacity to pay interest
and repay principal is extremely strong.
AA - Bonds rated AA have a very strong capacity to pay
interest and repay principal and differ from the highest rated
issues only in small degree.
A - Bonds rated A have a strong capacity to pay interest
and repay principal although they are somewhat more susceptible
to the adverse effects of changes in circumstances and economic
conditions than bonds in higher rated categories.
BBB - Bonds rated BBB are regarded as having an adequate
capacity to pay interest and repay principal. Whereas they
normally exhibit adequate protection parameters, adverse economic
conditions or changing circumstances are more likely to lead to a
weakened capacity to pay interest and repay principal for bonds
in this category than for bonds in higher rated categories.
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.
C - The rating C is reserved for income bonds on which no
interest is being paid.
D - Bonds rated D are in default, and payment of interest
and/or repayment of principal is in arrears.
Plus ( + ) or Minus ( - ): The ratings from "AA" to "BB"
may be modified by the addition of a plus or minus sign to show
relative standing within the major rating categories.
Provisional Ratings: "P" following a rating indicates
that the rating is provisional. A provisional rating assumes the
successful completion of the project being financed by the bonds
being rated and indicates that payment of debt service
requirements is largely or entirely dependent upon the successful
and timely completion of the project. This rating, however,
while addressing credit quality subsequent to completion of the
project, makes no comment on the likelihood of, or the risk of
default upon failure of, such completion. The investor should
exercise his own judgment with respect to such likelihood and
risk.
Moody's Investors Service, Inc. A brief description of
the applicable Moody's Investors Service rating symbols and their
meaning follows:
Aaa - Bonds which are rated Aaa are judged to be the best
quality. They carry the smallest degree of investment risk and
are generally referred to as "gilt edge". Interest payments are
protected by a large, or by an exceptional stable margin, and
principal in secure. While the various protective elements are
likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such
issues. With the occasional exception of oversupply in a few
specific instances, the safety of obligations of this class is so
absolute that their market value is affected solely by money
market fluctuations.
Aa - Bonds which are rated Aa are judged to be of high
quality by all standards. Together with the Aaa group they
comprise what are generally known as high grade bonds. They are
rated lower than the best bonds because margins of protection may
not be as large as in Aaa securities or fluctuations of
protective elements may be of greater amplitude or there may be
other elements present which make the long-term risks appear
somewhat larger than in Aaa securities. These Aa bonds are high
grade, their market value virtually immune to all but money
market influences, with the occasional exception of oversupply in
a few specific instances.
A - Bonds which are rated A possess many favorable
investment attributes and are to be considered as higher medium
grade obligations. Factors giving security to principal and
interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the
future. The market value of A-rated bonds may be influenced to
some degree by credit circumstances during a sustained period of
depressed business conditions. During periods of normalcy, bonds
of this quality frequently move in parallel with Aaa and Aa
obligations, with the occasional exception of over-supply in a
few specific instances.
A 1 and Baa 1 - Bonds which are rated A 1 and Baa 1 offer
the maximum in security within the A and Baa groups,
respectively. They can be bought for possible appreciation.
Baa - Bonds which are rated Baa are considered as lower
medium grade obligations: i.e., they are neither highly
protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable
over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative
characteristics as well. The market value of Baa-rated bonds is
vulnerable to changes in economic circumstances as well as money
market influences. Aside from occasional speculative factors and
the aforementioned economic circumstances applying to
some bonds of this class, Baa market valuations move in parallel
with Aaa, Aa and A obligations during periods of economic
normalcy, except instances of oversupply.
<PAGE>
TAX EXEMPT VS. TAXABLE YIELDS
For Virginia Residents Who Itemize Their Deductions
1997
Approximate
Combined
Taxable Income (1,000's) Federal &
Single Joint Virginia
Return Return Tax Rate
$ 17.00- 24.65 17.00- 41.20 19.89%
24.65- 59.75 41.20- 99.60 32.14%
59.75-124.65 99.60-151.75 34.97%
124.65-271.05 151.75-271.05 39.68%
Over 271.05 Over 271.05 43.07%
A Tax Exempt Rate of Return of
4.00% 4.50% 5.00% 5.50% 6.00% 6.50% 7.00% 7.50%
4.99% 5.62% 6.24% 6.87% 7.49% 8.11% 8.74% 9.36%
5.89% 6.63% 7.37% 8.10% 8.84% 9.58% 10.32% 11.05%
6.15% 6.92% 7.69% 8.46% 9.23% 10.00% 10.76% 11.53%
6.63% 7.46% 8.29% 9.12% 9.95% 10.78% 11.60% 12.43%
7.03% 7.90% 8.78% 9.66% 10.54% 11.42% 12.30% 13.17%
<PAGE>
PROSPECTUS
THE TAX-EXEMPT BOND FUND
OF VIRGINIA
FIRST SERIES
TABLE OF CONTENTS
Page
SUMMARY OF ESSENTIAL INFORMATION . . . . . . . . F-3
INFORMATION REGARDING THE FUND . . . . . . . . . F-5
ACCOUNTANTS' REPORT RELATING TO THE
FUND . . . . . . . . . . . . . . . . . . . . . . D-1
STATEMENT OF CONDITION OF THE FUND . . . . . . . D-2
SCHEDULE OF INVESTMENTS. . . . . . . . . . . . . D-3
THE FUND . . . . . . . . . . . . . . . . . . . . 1
Objectives and Organization of the Fund. . . . 1
Portfolio. . . . . . . . . . . . . . . . . . . 1
Interest and Estimated Current Return. . . . . 2
Tax Status of the Fund . . . . . . . . . . . . 3
PUBLIC OFFERING OF UNITS . . . . . . . . . . . . 5
CERTIFICATEHOLDERS . . . . . . . . . . . . . . . 9
INVESTMENT SUPERVISION . . . . . . . . . . . . . 11
ADMINISTRATION OF THE FUND . . . . . . . . . . . 12
EXPENSES OF THE FUND . . . . . . . . . . . . . . 15
THE SPONSOR. . . . . . . . . . . . . . . . . . . 16
LEGAL OPINIONS . . . . . . . . . . . . . . . . . 16
AUDITORS . . . . . . . . . . . . . . . . . . . . 17
DESCRIPTION OF BOND RATINGS. . . . . . . . . . . 17
TABLE OF TAXABLE AND TAX-EXEMPT
RETURNS. . . . . . . . . . . . . . . . . . . . F-7
This Prospectus contains information concerning the Fund
and the Sponsor, but does not contain all of the
information set forth in the registration statements and
exhibits relating hereto, 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
Fund, the Trustee, the Evaluator, or the Sponsor. The
Fund is registered as a unit investment trust under the
Investment Company Act of 1940. Such registration does
not imply that the Fund or any of its Units have been
guaranteed, sponsored, recommended or approved by the
United States or any state or any agency or officer
thereof.
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.
THE
TAX-EXEMPT
BOND FUND
OF
VIRGINIA
Sponsor:
CRAIGIE INCORPORATED
814 East Main Street
Richmond, Virginia 23219
(804) 649-3900
Trustee:
UNITED STATES TRUST COMPANY
OF NEW YORK
45 Wall Street
New York, New York 10005
(212) 425-4500
Evaluator:
STANDARD & POOR'S CORPORATION
25 Broadway
New York, New York 10004
PROSPECTUS
