File No. 2-80827 CIK #711007
Securities and Exchange CommissionWashington, D. C. 20549
Post-Effective
Amendment No. 12
to
Form S-6
For Registration under the Securities Act of 1933
of Securities of Unit Investment Trusts Registered
on Form N-8B-2
Kemper Tax-Exempt Income Trust, Series 54
Name and executive office address of Depositor:
Kemper Unit Investment Trusts
(a service of Kemper Securities, Inc.)
77 West Wacker - 29th Floor
Chicago, Illinois 60601
Name and complete address of agent for service:
Robert K. Burke
77 West Wacker - 29th Floor
Chicago, Illinois 60601
( X ) Check box if it is proposed that this filing will
become effective at 2:00 p.m. on April 28, 1995
pursuant to paragraph (b) of Rule 485.
KEMPER TAX-EXEMPT INCOME TRUST
NATIONAL SERIES
INTERMEDIATE TERM SERIES
SHORT-INTERMEDIATE TERM SERIES
PART ONE
The date of this Part One is that datewhich is set forth in Part
Twoof the Prospectus
Each Series of Kemper Tax-Exempt Income Trust (the "Trust"
or the "National Trust") was formed for the purpose of gaining
interest income free from Federal income taxes while conserving
capital and diversifying risks by investing in a fixed portfolio
of Municipal Bonds consisting of obligations of states of the
United States and political subdivisions and authorities thereof.
The portfolios of the Intermediate Term Series and the
Short-Intermediate Term Series of the Trust are similar to the
National Series, except that the Intermediate Term Series consist
of obligations having a dollar-weighted average maturity of 10
years or less and the Short-Intermediate Term Series have a
dollar-weighted average maturity of 5 years or less.
Units of the Trust are not deposits or obligations of, or
guaranteed by, any bank, and Units are not federally insured or
otherwise protected by the Federal Deposit Insurance Corporation
and involve investment risk including loss of principal.
This Prospectus is in two parts. Read and retain both parts
for future reference.
SPONSOR: KEMPER UNIT INVESTMENT TRUSTS,a service of Kemper
Securities, Inc.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
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TABLE OF CONTENTS
PAGE
<S> <C>
SUMMARY 3
The Trust 3
Public Offering Price 3
Interest and Principal Distributions 3
Reinvestment 4
Estimated Current Return and Estimated Long-Term
Return 4
Market for Units 4
Risk Factors 4
THE TRUST 5
PORTFOLIO 6
RISK FACTORS 7
DISTRIBUTION REINVESTMENT 13
INTEREST AND ESTIMATED LONG-TERM AND CURRENT RETURNS
13
TAX STATUS OF THE TRUST 14
PUBLIC OFFERING OF UNITS 18
Public Offering Price 18
Accrued Interest 20
Public Distribution of Units 21
Profits of Sponsor 22
MARKET FOR UNITS 22
REDEMPTION 23
Computation of Redemption Price 24
UNITHOLDERS 25
Ownership of Units 25
Distributions to Unitholders 25
Statements to Unitholders 26
Rights of Unitholders 28
INVESTMENT SUPERVISION 28
ADMINISTRATION OF THE TRUST 29
The Trustee 29
The Evaluator 30
Amendment and Termination 30
Limitations on Liability 31
EXPENSES OF THE TRUST 32
THE SPONSOR 33
LEGAL OPINIONS 33
INDEPENDENT AUDITORS 34
DESCRIPTION OF SECURITIES RATINGS 34
Essential Information*
Report of Independent Auditors*
Statement of Net Assets and Liabilities*
Statement of Operations*
Statement of Changes in Net Assets*
Schedule of Investments*
Notes to Schedule Investments*
Notes to Financial Statements*
*Information on these items appears in Part Two
</TABLE>
KEMPER TAX-EXEMPT INCOME TRUSTNATIONAL SERIESINTERMEDIATE TERM
SERIESSHORT-INTERMEDIATE TERM SERIES
SUMMARY
The Trust. Each Series of the Kemper Tax-Exempt Income
Trust (the "Trust" or the "National Trust") is one of a series of
investment companies each of which is a unit investment trust
consisting of a diversified portfolio of obligations of states of
the United States and political subdivisions and authorities
thereof ("Municipal Bonds" or "Securities"). The portfolios of
the Intermediate Term Series and Short-Intermediate Term Series
of the Trust are similar to the National Series, except that the
Intermediate Term Series consist of obligations having a
dollar-weighted average maturity of 10 years or less and the
Short-Intermediate Term Series have a dollar-weighted average
maturity of 5 years or less. Municipal Bonds in the portfolio
were rated as of the Date of Deposit in the category "A" or
better by Standard & Poor's Ratings Group ("Standard & Poor's")
or Moody's Investors Service, Inc. Ratings of the Municipal
Bonds may have changed since the Date of Deposit. See
"Description of Securities Ratings" herein and the "Schedule of
Investments" in Part Two.
The objective of each Series of the Trust is tax-exempt
income and conservation of capital with diversification of risk
through investment in a fixed portfolio of Municipal Bonds.
Interest on certain Municipal Bonds in certain of the National
Series will be a preference item for purposes of the alternative
minimum tax. Accordingly, such National Series may be
appropriate only for investors who are not subject to the
alternative minimum tax. There is, of course, no guarantee that
the Trust's objectives will be achieved.
The Units, each of which represents a pro rata undivided
fractional interest in the Municipal Bonds deposited in the
appropriate Series of the Trust, are issued and outstanding Units
which have been reacquired by the Sponsor either by purchase or
Units tendered to the Trustee for redemption or by purchase in
the open market. No offering is being made on behalf of the
Trust and any profit or loss realized on the sale of Units will
accrue to the Sponsor and/or the firm reselling such Units.
Public Offering Price. The Public Offering Price per
Unit of a Series of the Trust is equal to a pro rata share of the
aggregate bid prices of the Municipal Bonds in such Series (plus
or minus a pro rata share of cash, if any, in the Principal
Account, held or owned by the Series) plus a sales charge in the
amount shown under "Public Offering of Units." In addition,
there will be added to each transaction an amount equal to the
accrued interest from the last Record Date of such Series to the
date of settlement (five business days after order). The sales
charge is reduced on a graduated scale as indicated under "Public
Offering of Units_Public Offering Price."
Interest and Principal Distributions. Distributions of
the estimated annual interest income received by a National
Series or an Intermediate Term Series, after deduction of
estimated expenses, will be made monthly unless the Unitholder
elects to receive such distributions quarterly or semi-annually.
Distributions will be paid on the Distribution Dates to
Unitholders of Record of each such Series on the Record Dates set
forth for the applicable option. Distributions of the estimated
annual interest income to be received by a Short-Intermediate
Term Series of the Trust, after deduction of estimated expenses,
will be made semi-annually on January 15 and July 15 to
Unitholders of record on January 1 and July 1, respectively, of
each year. (See "Essential Information" in Part Two.)
The distribution of funds, if any, in the Principal Account
of each Series, will be made semi-annually to Unitholders of
Record on the appropriate dates. See "Essential Information" in
Part Two.
Reinvestment. Distributions of interest and principal,
including capital gains, if any, made by a Series of the Trust
will be paid in cash unless a Unitholder elects to reinvest such
distributions. Each Unitholder of a Trust Fund offered herein
may elect to have distributions of principal or interest or both
automatically invested without charge in shares of certain mutual
funds sponsored by Kemper Financial Services, Inc. See
"Distribution Reinvestment."
Estimated Current Return and Estimated Long-Term
Return. The Estimated Current Return is calculated by dividing
the estimated net annual interest income per Unit by the Public
Offering Price of such Trust. The estimated net annual interest
income per Unit will vary with changes in fees and expenses of
the Trustee, the Sponsor and Evaluator and with the principal
prepayment, redemption, maturity, exchange or sale of Securities
while the Public Offering Price will vary with changes in the bid
price of the underlying Securities; therefore, there is no
assurance that the present Estimated Current Returns will be
realized in the future. Estimated Long-Term Return is calculated
using a formula which (1) takes into consideration, and
determines and factors in the relative weightings of, the market
values, yields (which takes into account the amortization of
premiums and the accretion of discounts) and estimated
retirements of all of the Securities in the Trust and (2) takes
into account the expenses and sales charge associated with each
Trust Unit. Since the market values and estimated retirements of
the Securities and the expenses of the Trust will change, there
is no assurance that the present Estimated Long-Term Return will
be realized in the future. Estimated Current Return and
Estimated Long-Term Return are expected to differ because the
calculation of Estimated Long-Term Return reflects the estimated
date and amount of principal returned while Estimated Current
Return calculations include only net annual interest income and
Public Offering Price.
Market for Units. While under no obligation to do so,
the Sponsor intends, subject to change at any time, to maintain a
market for the Units of each Series of the Trust and to
continuously offer to repurchase such Units at prices which are
based on the aggregate bid side evaluation of the Municipal Bonds
in such Series of the Trust. If such a market is not maintained
and no other over-the-counter market is available, Unitholders
will still be able to dispose of their Units through redemption
by the Trustee at prices based upon the aggregate bid price of
the Municipal Bonds in such Series of the Trust. See
"Redemption."
Risk Factors. An investment in the Trusts should be
made with an understanding of the risks associated therewith,
including, among other factors, the inability of the issuer to
pay the principal of or interest on a bond when due, volatile
interest rates, early call provisions, and changes to the tax
status of the Municipal Bonds. See "Portfolio_Risk Factors."
KEMPER TAX-EXEMPT INCOME TRUST
NATIONAL SERIES
INTERMEDIATE-TERM SERIES
SHORT-INTERMEDIATE TERM SERIES
THE TRUST
Each Series of the Trust is one of a Series of unit
investment trusts created by the Sponsor under the name Kemper
Tax-Exempt Income Trust, all of which are similar, and each of
which was created under the laws of the State of Missouri
pursuant to a Trust Agreement* (the "Agreement"). Kemper Unit
Investment Trusts, a service of Kemper Securities, Inc. acts as
Sponsor and Evaluator and Investors Fiduciary Trust Company acts
as Trustee.
A Series of the Trust may be an appropriate investment
vehicle for investors who desire to participate in a portfolio of
tax-exempt, fixed income securities with greater diversification
than they might be able to acquire individually. In addition,
Municipal Bonds of the type deposited in the Trust are often not
available in small amounts.
Each Series of the Trust contains a portfolio of interest
bearing obligations issued by or on behalf of states of the
United States and political subdivisions and authorities thereof
the interest on which is, in the opinion of bond counsel to the
issuing authorities, exempt from all Federal income taxes under
existing law, but may be subject to state and local taxes. The
portfolios of the Intermediate Term Series and the
Short-Intermediate Term Series of the Trust are similar to the
National Series, except that the Intermediate Term Series consist
of obligations having a dollar-weighted average maturity of 10
years or less and the Short-Intermediate Series consist of
obligations having a dollar-weighted average maturity of 5 years
or less.
Proceeds of the maturity, redemption or sale of the
Municipal Bonds in a Series of the Trust, unless used to pay for
Units tendered for redemption, will be distributed to Unitholders
of such Series and will not be utilized to purchase replacement
or additional Municipal Bonds for such Series.
The Units, each of which represents a pro rata undivided
fractional interest in the principal amount of Municipal Bonds
deposited in a Series of the Trust, are issued and outstanding
Units which have been reacquired by the Sponsor either by
purchase of Units tendered to the Trustee for redemption or by
purchase in the open market. No offering is being made on behalf
of the Trust or any Series thereof and any profit or loss
realized on the sale of Units will accrue to the Sponsor and/or
the firm reselling such Units.
To the extent that Units of a Series of the Trust are
redeemed, the principal amount of Municipal Bonds in such Series
will be reduced and the undivided fractional interest represented
by each outstanding Unit of that Series will increase. See
"Redemption."
The objective of the Trust is tax-exempt income and
conservation of capital with diversification of risk through
investment in a fixed portfolio of Municipal Bonds. There is, of
course, no guarantee that the Trust's objectives will be
achieved.
PORTFOLIO
In selecting the Municipal Bonds which comprise the
portfolio of a Series of the Trust the following requirements,
among others, were deemed to be of primary importance: (a) a
minimum rating of "A" by either Standard & Poor's or Moody's
Investors Service, Inc. (See "Description of Securities
Ratings"); (b) the price of the Municipal Bonds relative to other
issues of similar quality and maturity; (c) the diversification
of the Municipal Bonds as to purpose of issue; (d) the dates of
maturity of the Municipal Bonds and (e) the income to the
Unitholders of the Series of the Trust. A Municipal Bond may
cease to be rated or its rating may be reduced below the minimum
required as of the Date of Deposit. Neither event requires the
elimination of such investment from the portfolio of a Series of
the Trust, but may be considered in the Sponsor's determination
to direct the Trustee to dispose of the investment. See
"Investment Supervision" herein and "Schedule of Investments" in
Part Two.
Interest on certain Municipal Bonds in certain of the
National Series will be a preference item for purposes of the
alternative minimum tax. Accordingly, such National Series may
be appropriate only for investors who are not subject to the
alternative minimum tax.
The Sponsor may not alter the portfolio of a Series of the
Trust, except that certain of the Municipal Bonds may be sold
upon the happening of certain extraordinary circumstances. See
"Investment Supervision."
Certain of the Municipal Bonds in the Series of the Trust
may be subject to redemption prior to their stated maturity date
pursuant to sinking fund provisions, call provisions or
extraordinary optional or mandatory redemption provisions or
otherwise. A sinking fund is a reserve fund accumulated over a
period of time for retirement of debt. A callable debt
obligation is one which is subject to redemption or refunding
prior to maturity at the option of the issuer. A refunding is a
method by which a debt obligation is redeemed at or before
maturity, by the proceeds of a new debt obligation. In general,
call provisions are more likely to be exercised when the offering
side valuation is at a premium over par than when it is at a
discount from par. Accordingly, any such call, redemption, sale
or maturity will reduce the size and diversity of such Series,
and the net annual interest income of the Series and may reduce
the Estimated Long-Term Return and/or Estimated Current Return.
See "Interest and Estimated Long-Term and Current Returns." Each
Trust portfolio contains a listing of the sinking fund and call
provisions, if any, with respect to each of the debt obligations.
Extraordinary optional redemptions and mandatory redemptions
result from the happening of certain events. Generally, events
that may permit the extraordinary optional redemption of
Municipal Bonds or may require the mandatory redemption of
Municipal Bonds include, among others: a final determination
that the interest on the Municipal Bonds is taxable; the
substantial damage or destruction by fire or other casualty of
the project for which the proceeds of the Municipal Bonds were
used; an exercise by a local, state or Federal governmental unit
of its power of eminent domain to take all or substantially all
of the project for which the proceeds of the Municipal Bonds were
used; changes in the economic availability of raw materials,
operating supplies or facilities or technological or other
changes which render the operation of the project for which the
proceeds of the Municipal Bonds were used uneconomic; changes in
law or an administrative or judicial decree which renders the
performance of the agreement under which the proceeds of the
Municipal Bonds were made available to finance the project
impossible or which creates unreasonable burdens or which imposes
excessive liabilities, such as taxes not imposed on the date the
Municipal Bonds are issued on the issuer of the Municipal Bonds
or the user of the proceeds of the Municipal Bonds; an
administrative or judicial decree which requires the cessation of
a substantial part of the operations of the project financed with
the proceeds of the Municipal Bonds; an overestimate of the costs
of the project to be financed with the proceeds of the Municipal
Bonds resulting in excess proceeds of the Municipal Bonds which
may be applied to redeem Municipal Bonds; or an underestimate of
a source of funds securing the Municipal Bonds resulting in
excess funds which may be applied to redeem Municipal Bonds. The
Sponsor is unable to predict all of the circumstances which may
result in such redemption of an issue of Municipal Bonds.
The Sponsor, and the Trustee shall not be liable in any way
for any default, failure or defect in any Municipal Bond.
Risk Factors. An investment in Units of a Series of the
Trust should be made with an understanding of the risks which an
investment in fixed rate debt obligations may entail, including
the risk that the value of the portfolio and hence of the Units
will decline with increases in interest rates. The value of the
underlying Municipal Bonds will fluctuate inversely with changes
in interest rates. The uncertain economic conditions of recent
years, together with the fiscal measures adopted to attempt to
deal with them, have resulted in wide fluctuations in interest
rates and, thus, in the value of fixed rate debt obligations
generally and long term obligations in particular. The Sponsor
cannot predict whether such fluctuations will continue in the
future.
Certain of the Municipal Bonds in some Series of the Trust
may be general obligations of a governmental entity that are
backed by the taxing power of such entity. All other Municipal
Bonds in such Trusts are revenue bonds payable from the income of
a specific project or authority and are not supported by the
issuer's power to levy taxes. General obligation bonds are
secured by the issuer's pledge of its faith, credit and taxing
power for the payment of principal and interest. Revenue bonds,
on the other hand, are payable only from the revenues derived
from a particular facility or class of facilities or, in some
cases, from the proceeds of a special excise or other specific
revenue source. There are, of course, variations in the security
of the different Municipal Bonds in the Trusts, both within a
particular classification and between classifications, depending
on numerous factors.
Certain of the Municipal Bonds in some Series of the Trust
may be obligations of issuers whose revenues are derived from
services provided by hospitals and other health care facilities,
including nursing homes. In view of this an investment in such
Series should be made with an understanding of the
characteristics of such issuers and the risks that such an
investment may entail. Ratings of bonds issued for health care
facilities are often based on feasibility studies that contain
projections of occupancy levels, revenues and expenses. A
facility's gross receipts and net income available for debt
service will be affected by future events and conditions
including, among other things, demand for services and the
ability of the facility to provide the services required,
physicians' confidence in the facility, management capabilities,
economic developments in the service area, competition, efforts
by insurers and governmental agencies to limit rates, legislation
establishing state rate-setting agencies, expenses, the cost and
possible unavailability of malpractice insurance, the funding of
Medicare, Medicaid and other similar third party payor programs,
and government regulation. Federal legislation has been enacted
which implemented a system of prospective Medicare reimbursement
which may restrict the flow of revenues to hospitals and other
facilities which are reimbursed for services provided under the
Medicare program. Future legislation or changes in the areas
noted above, among other things, would affect all hospitals to
varying degrees and, accordingly, any adverse changes in these
areas may adversely affect the ability of such issuers to make
payment of principal and interest on Municipal Bonds held in such
Series. Such adverse changes also may adversely affect the
ratings of the Municipal Bonds held in such Series of the Trust.
Certain of the Municipal Bonds in some Series of the Trust
may be single family mortgage revenue bonds, which are issued for
the purpose of acquiring from originating financial institutions
notes secured by mortgages on residences located within the
issuer's boundaries and owned by persons of low or moderate
income. Mortgage loans are generally partially or completely
prepaid prior to their final maturities as a result of events
such as sale of the mortgaged premises, default, condemnation or
casualty loss. Because these Municipal Bonds are subject to
extraordinary mandatory redemption in whole or in part from such
prepayments of mortgage loans, a substantial portion of such
Municipal Bonds will probably be redeemed prior to their
scheduled maturities or even prior to their ordinary call dates.
The redemption price of such issues may be more or less than the
offering price of such Municipal Bonds. Extraordinary mandatory
redemption without premium could also result from the failure of
the originating financial institutions to make mortgage loans in
sufficient amounts within a specified time period or, in some
cases, from the sale by the Municipal Bond issuer of the mortgage
loans. Failure of the originating financial institutions to make
mortgage loans would be due principally to the interest rates on
mortgage loans funded from other sources becoming competitive
with the interest rates on the mortgage loans funded with the
proceeds of the single family mortgage revenue bonds.
Additionally, unusually high rates of default on the underlying
mortgage loans may reduce revenues available for the payment of
principal of or interest on such mortgage revenue bonds. Single
family mortgage revenue bonds issued after December 31, 1980 were
issued under Section 103A of the Internal Revenue Code of 1954,
which Section contains certain ongoing requirements relating to
the use of the proceeds of such Bonds in order for the interest
on such Municipal Bonds to retain its tax-exempt status. In each
case, the issuer of the Municipal Bonds has covenanted to comply
with applicable ongoing requirements and bond counsel to such
issuer has issued an opinion that the interest on the Municipal
Bonds is exempt from Federal income tax under existing laws and
regulations. There can be no assurances that the ongoing
requirements will be met. The failure to meet these requirements
could cause the interest on the Municipal Bonds to become
taxable, possibly retroactively from the date of issuance.
Certain of the Municipal Bonds in some Series of the Trust
may be obligations of issuers whose revenues are primarily
derived from mortgage loans to housing projects for low to
moderate income families. The ability of such issuers to make
debt service payments will be affected by events and conditions
affecting financed projects, including, among other things, the
achievement and maintenance of sufficient occupancy levels and
adequate rental income, increases in taxes, employment and income
conditions prevailing in local labor markets, utility costs and
other operating expenses, the managerial ability of project
managers, changes in laws and governmental regulations, the
appropriation of subsidies and social and economic trends
affecting the localities in which the projects are located. The
occupancy of housing projects may be adversely affected by high
rent levels and income limitations imposed under Federal and
state programs. Like single family mortgage revenue bonds,
multi-family mortgage revenue bonds are subject to redemption and
call features, including extraordinary mandatory redemption
features, upon prepayment, sale or non-origination of mortgage
loans as well as upon the occurrence of other events. Certain
issuers of single or multi-family housing bonds have considered
various ways to redeem bonds they have issued prior to the stated
first redemption dates for such bonds. In connection with the
housing Municipal Bonds held by the Trust, the Sponsor has not
had any direct communications with any of the issuers thereof,
but at the initial Date of Deposit it was not aware that any of
the respective issuers of such Municipal Bonds were actively
considering the redemption of such Municipal Bonds prior to their
respective stated initial call dates. However, there can be no
assurance that an issuer of a Municipal Bond in a Trust will not
attempt to so redeem a Municipal Bond in such Trust.
Certain of the Municipal Bonds in some Series of the Trust
may be obligations of issuers whose revenues are derived from the
sale of water and/or sewerage services. Water and sewerage bonds
are generally payable from user fees. Problems faced by such
issuers include the ability to obtain timely and adequate rate
increases, a decline in population resulting in decreased user
fees, the difficulty of financing large construction programs,
the limitations on operations and increased costs and delays
attributable to environmental considerations, the increasing
difficulty of obtaining or discovering new supplies of fresh
water, the effect of conservation programs and the impact of
"no-growth" zoning ordinances. Issuers may have experienced
these problems in varying degrees.
Certain of the Municipal Bonds in some Series of the Trust
may be obligations of issuers whose revenues are primarily
derived from the sale of electric energy or natural gas.
Utilities are generally subject to extensive regulation by state
utility commissions which, among other things, establish the
rates which may be charged and the appropriate rate of return on
an approved asset base. The problems faced by such issuers
include the difficulty in obtaining approval for timely and
adequate rate increases from the governing public utility
commission, the difficulty in financing large construction
programs, the limitations on operations and increased costs and
delays attributable to environmental considerations, increased
competition, recent reductions in estimates of future demand for
electricity in certain areas of the county, the difficulty of the
capital market in absorbing utility debt, the difficulty in
obtaining fuel at reasonable prices and the effect of energy
conservation. Issuers may have experienced these problems in
varying degrees. In addition, Federal, state and municipal
governmental authorities may from time to time review existing
and impose additional regulations governing the licensing,
construction and operation of nuclear power plants, which may
adversely affect the ability of the issuers of such Municipal
Bonds to make payments of principal and/or interest on such
Municipal Bonds. The ability of state and local joint action
power agencies to make payments on bonds they have issued is
dependent in large part on payments made to them pursuant to
power supply or similar agreements. Courts in Washington and
Idaho have held that certain agreements between the Washington
Public Power Supply System ("WPPSS") and the WPPSS participants
are unenforceable because the participants did not have the
authority to enter into the agreements. While these decisions
are not specifically applicable to agreements entered into by
public entities in other states, they may cause a reexamination
of the legal structure and economic viability of certain projects
financed by joint action power agencies, which might exacerbate
some of the problems referred to above and possibly lead to legal
proceedings questioning the enforceability of agreements upon
which payment of these bonds may depend.
Certain of the Municipal Bonds in some Series of the Trust
may be industrial revenue bonds ("IRBs"), including pollution
control revenue bonds, which are tax-exempt securities issued by
states, municipalities, public authorities or similar entities to
finance the cost of acquiring, constructing or improving various
industrial projects. These projects are usually operated by
corporate entities. Issuers are obligated only to pay amounts
due on the IRBs to the extent that funds are available from the
unexpended proceeds of the IRBs or receipts or revenues of the
issuer under an arrangement between the issuer and the corporate
operator of a project. The arrangement may be in the form of a
lease, installment sale agreement, conditional sale agreement or
loan agreement, but in each case the payments to the issuer are
designed to be sufficient to meet the payments of amounts due on
the IRBs. Regardless of the structure, payment of IRBs is solely
dependent upon the creditworthiness of the corporate operator of
the project or corporate guarantor. Corporate operators or
guarantors may be affected by many factors which may have an
adverse impact on the credit quality of the particular company or
industry. These include cyclicality of revenues and earnings,
regulatory and environmental restrictions, litigation resulting
from accidents or environmentally-caused illnesses, extensive
competition and financial deterioration resulting from leveraged
buy-outs or takeovers. The IRBs in the Series of the Trust may
be subject to special or extraordinary redemption provisions
which may provide for redemption at par or, with respect to
original issue discount bonds, at issue price plus the amount of
original issue discount accreted to the redemption date plus, if
applicable, a premium. The Sponsor cannot predict the causes or
likelihood of the redemption of IRBs or other Municipal Bonds in
the Series of the Trust prior to the stated maturity of such
Municipal Bonds.
Certain of the Municipal Bonds in some Series of the Trust
may be obligations which are payable from and secured by revenues
derived from the ownership and operation of facilities such as
airports, bridges, turnpikes, port authorities, convention
centers and arenas. The major portion of an airport's gross
operating income is generally derived from fees received from
signatory airlines pursuant to use agreements which consist of
annual payments for leases, occupancy of certain terminal space
and service fees. Airport operating income may therefore be
affected by the ability of the airlines to meet their obligations
under the use agreements. The air transport industry is
experiencing significant variations in earnings and traffic, due
to increased competition, excess capacity, increased costs,
deregulation, traffic constraints and other factors, and several
airlines are experiencing severe financial difficulties. The
Sponsor cannot predict what effect these industry conditions may
have on airport revenues which are dependent for payment on the
financial condition of the airlines and their usage of the
particular airport facility. Similarly, payment on Municipal
Bonds related to other facilities is dependent on revenues from
the projects, such as user fees from ports, tolls on turnpikes
and bridges and rents from buildings. Therefore, payment may be
adversely affected by reduction in revenues due to such factors
as increased cost of maintenance, decreased use of a facility,
lower cost of alternative modes of transportation, scarcity of
fuel and reduction or loss of rents.
Certain of the Municipal Bonds in some Series of the Trust
may be obligations of issuers which are, or which govern the
operation of, schools, colleges and universities and whose
revenues are derived mainly from ad valorem taxes, or for higher
education systems, from tuition, dormitory revenues, grants and
endowments. General problems relating to school bonds include
litigation contesting the state constitutionality of financing
public education in part from ad valorem taxes, thereby creating
a disparity in educational funds available to schools in wealthy
areas and schools in poor areas. Litigation or legislation on
this issue may affect the sources of funds available for the
payment of school bonds in the Trusts. General problems relating
to college and university obligations would include the prospect
of a declining percentage of the population consisting of
"college" age individuals, possible inability to raise tuition
and fees sufficiently to cover increased operating costs, the
uncertainty of continued receipt of Federal grants and state
funding and new government legislation or regulations which may
adversely affect the revenues or costs of such issuers. All of
such issuers have been experiencing certain of these problems in
varying degrees.
Certain of the Municipal Bonds in some Series of the Trust
may be Urban Redevelopment Bonds ("URBs"). URBs have generally
been issued under bond resolutions pursuant to which the revenues
and receipts payable under the arrangements with the operator of
a particular project have been assigned and pledged to
purchasers. In some cases, a mortgage on the underlying project
may have been granted as security for the URBs. Regardless of
the structure, payment of the URBs is solely dependent upon the
creditworthiness of the operator of the project.
Certain of the Municipal Bonds in the Trust may be lease
revenue bonds whose revenues are derived from lease payments made
by a municipality or other political subdivision which is leasing
equipment or property for use in its operation. The risks
associated with owning Municipal Bonds of this nature include the
possibility that appropriation of funds for a particular project
or equipment may be discontinued. The Sponsor cannot predict the
likelihood of non-appropriation of funds for these types of lease
revenue Municipal Bonds.
Certain of the Municipal Bonds in some Series of the Trust
may be "zero coupon" bonds, i.e., an original issue discount bond
that does not provide for the payment of current interest. Zero
coupon bonds are purchased at a deep discount because the buyer
obtains only the right to receive a final payment at the maturity
of the bond and does not receive any periodic interest payments.
The effect of owning deep discount bonds which do not make
current interest payments (such as the zero coupon bonds) is that
a fixed yield is earned not only on the original investment but
also, in effect, on all discount earned during the life of such
obligation. This implicit reinvestment of earnings at the same
rate eliminates the risk of being unable to reinvest the income
on such obligation at a rate as high as the implicit yield on the
discount obligation, but at the same time eliminates the holder's
ability to reinvest at higher rates in the future. For this
reason, zero coupon bonds are subject to substantially greater
price fluctuations during periods of changing market interest
rates than are securities of comparable quality which pay
interest currently. For the Federal tax consequences of original
issue discount bonds such as the zero coupon bonds, see "Tax
Status of the Trust."
Investors should be aware that many of the Municipal Bonds
in some Series of the Trust are subject to continuing
requirements such as the actual use of Municipal Bond proceeds or
manner of operation of the project financed from Municipal Bond
proceeds that may affect the exemption of interest on such
Municipal Bonds from Federal income taxation. Although at the
time of issuance of each of the Municipal Bonds in the Trusts an
opinion of bond counsel was rendered as to the exemption of
interest on such obligations from Federal income taxation, there
can be no assurance that the respective issuers or other obligors
on such obligations will fulfill the various continuing
requirements established upon issuance of the Municipal Bonds. A
failure to comply with such requirements may cause a
determination that interest on such obligations is subject to
Federal income taxation, perhaps even retroactively from the date
of issuance of such Municipal Bonds, thereby reducing the value
of the Municipal Bonds and subjecting Unitholders to
unanticipated tax liabilities.
Federal bankruptcy statutes relating to the adjustment of
debts of political subdivisions and authorities of states of the
United States provide that, in certain circumstances, such
subdivisions or authorities may be authorized to initiate
bankruptcy proceedings without prior notice to or consent of
creditors, which proceedings could result in material and adverse
modification or alteration of the rights of holders of
obligations issued by such subdivisions or authorities.
Certain of the Municipal Bonds in some Series of the Trust
represent "moral obligations" of another governmental entity
other than the issuer. In the event that the issuer of the
Municipal Bond defaults in the repayment thereof, such other
governmental entity lawfully may, but is not obligated to,
discharge the obligation of the issuer to repay such Municipal
Bond.
To the best of the Sponsor's knowledge, as of the date of
the Prospectus, there is no litigation pending with respect to
any Municipal Bonds which might reasonably be expected to have a
material adverse effect on the Trust or any Series thereof.
Although the Sponsor is unable to predict whether any litigation
may be instituted, or if instituted, whether such litigation
might have a material adverse effect on the Trust or any Series,
the Trust received copies of the opinions of bond counsel given
to the issuing authorities at the time of original delivery of
each of the Municipal Bonds to the effect that the Municipal
Bonds had been validly issued and that the interest thereon is
exempt from Federal income taxes.
DISTRIBUTION REINVESTMENT
Each Unitholder of the Trust may elect to have distributions
of principal (including capital gains, if any) or interest or
both automatically invested without charge in shares of any
mutual fund registered in such Unitholder's state of residence
which is underwritten or advised by KFS (the "Kemper Funds"),
other than those Kemper Funds sold with a contingent deferred
sales charge. Since the portfolio securities and investment
objectives of such Kemper Funds may differ significantly from
that of the Trust, Unitholders should carefully consider the
consequences, before selecting such Kemper Funds for
reinvestment. Detailed information with respect to the
investment objectives and the management of the Kemper Funds is
contained in their respective prospectuses, which can be obtained
from the Sponsor, and many investment firms, upon request. An
investor should read the appropriate prospectus prior to making
the election to reinvest. Unitholders who desire to have such
distributions automatically reinvested should inform their broker
at the time of purchase or should file with the Program Agent
referred to below a written notice of election.
Unitholders who are receiving distributions in cash may
elect to participate in distribution reinvestment by filing with
the Program Agent an election to have such distributions
reinvested without charge. Such election must be received by the
Program Agent at least ten days prior to the Record Date
applicable to any distribution in order to be in effect for such
Record Date. Any such election shall remain in effect until a
subsequent notice is received by the Program Agent. See
"Distributions to Unitholders."
The Program Agent is Investors Fiduciary Trust Company. All
inquiries concerning participation in distribution reinvestment
should be directed to Kemper Service Company, service agent for
the Program Agent at P.O. Box 419430, Kansas City, Missouri
64173-0216, telephone (800) 422-2848.
INTEREST AND ESTIMATED LONG-TERM AND CURRENT RETURNS
As of the opening of business on the date indicated therein,
the Estimated Current Returns and the Estimated Long-Term Returns
for the Trust were as set forth under "Essential Information" in
Part Two of this Prospectus. Unitholders choosing distributions
quarterly or semi-annually will receive a slightly higher rate
because of the lower Trustee's fees and expenses under such
plans. Estimated Current Returns are calculated by dividing the
estimated net annual interest income per Unit by the Public
Offering Price. The estimated net annual interest income per
Unit will vary with changes in fees and expenses of the Trustee,
the sponsor and the Evaluator and with the principal prepayment,
redemption, maturity, exchange or sale of Securities while the
Public Offering Price will vary with changes in the offering
price of the underlying Securities; therefore, there is no
assurance that the present Estimated Current Returns will be
realized in the future. Estimated Long-Term Returns are
calculated using a formula which (1) takes into consideration,
and determines and factors in the relative weightings of, the
market values, yields (which takes into account the amortization
of premiums and the accretion of discounts) and estimated
retirements of all of the Securities in the Trust and (2) takes
into account the expenses and sales charge associated with the
Trust Unit. Since the market values and estimated retirements of
the Securities and the expenses of the Trust will change, there
is no assurance that the present Estimated Long-Term Returns will
be realized in the future. Estimated Current Returns and
Estimated Long-Term Returns are expected to differ because the
calculation of Estimated Long-Term Returns reflects the estimated
date and amount of principal returned while Estimated Current
Returns calculations include only net annual interest income and
Public Offering Price.
TAX STATUS OF THE TRUST
All Municipal Bonds in the Series of the Trust Fund were
accompanied by copies of opinions of bond counsel given to the
issuers thereof at the time of original delivery of the Municipal
Bonds to the effect that the interest thereon is exempt from all
Federal income taxes. In connection with the offering of Units
of the Trust Funds, neither the Sponsor, the Trustee, the
auditors nor their respective counsel have made any review of the
proceedings relating to the issuance of the Municipal Bonds or
the basis for such opinions. Gain realized on the sale or
redemption of the Municipal Bonds by the Trustee or of a Unit by
a Unitholder is, however, includable in gross income for Federal
income tax purposes. Such gain does not include any amounts
received in respect of accrued interest or earned original issue
discount. It should be noted that under recently enacted
legislation described below that subjects accretion of market
discount on tax-exempt bonds to taxation as ordinary income, gain
realized on the sale or redemption of Municipal Bonds by the
Trustee or of Units by a Unitholder that would have been treated
as capital gain under prior law is treated as ordinary income to
the extent it is attributable to accretion of market discount.
Market discount can arise based on the price a Trust Fund pays
for Municipal Bonds or the price a Unitholder pays for his or her
Units. In addition, bond counsel to the issuing authorities
rendered opinions as to the exemption of interest on such Bonds,
when held by residents of the state in which the issuers of such
bonds are located, from state income taxes and, where applicable,
local income taxes.
Neither the Sponsor, the Trustee, the Independent Auditors
nor their respective counsel have made any review of the
proceedings relating to the issuance of the Municipal Bonds or
the bases for such opinions.
In the opinion of Chapman and Cutler, counsel for the
Sponsor.
Each Series of the Trust Fund is not an
association taxable as a corporation for Federal income
tax purposes and interest and accrued original issue
discount on Bonds which is excludable from gross income
under the Internal Revenue Code of 1986 (the "Code")
will retain its status when distributed to Unitholders,
except to the extent such interest is subject to the
alternative minimum tax, an additional tax on branches
of foreign corporations and the environmental tax (the
"Superfund Tax"), as noted below.
Exemption of interest and accrued original issue
discount on any Municipal Bonds for Federal income tax
purposes does not necessarily result in tax-exemption
under the laws of the several states as such laws vary
with respect to the taxation of such securities and in
many states all or part of such interest accrued
original issue discount may be subject to tax.
Each Unitholder is considered to be the owner of a
pro rata portion of each asset of the respective Trust
Fund in the proportion that the number of Units of such
Trust Fund held by him bears to the total number of
Units outstanding of such Trust Fund under Subpart E,
Subchapter J of Chapter 1 of the Code and will have a
taxable event when such Trust Fund disposes of a
Municipal Bond, or when the Unitholder redeems or sells
his Units. Unitholders must reduce the tax basis of
their Units for their share of accrued interest
received by a Trust Fund, if any, on Municipal Bonds
delivered after the Unitholders pay for their Units to
the extent that such interest accrued on such Municipal
Bonds during the period from the Unitholder's
settlement date to the date such Municipal Bonds are
delivered to a Trust Fund and, consequently, such
Unitholders may have an increase in taxable gain or
reduction in capital loss upon the disposition of such
Units. Gain or loss upon the sale or redemption of
Units is measured by comparing the proceeds of such
sale or redemption with the adjusted basis of the
Units. If the Trustee disposes of Municipal Bonds
(whether by sale, payment on maturity, redemption or
otherwise), gain or loss is recognized to the
Unitholder. The amount of any such gain or loss is
measured by comparing the Unitholder's pro rata share
of the total proceeds from such disposition with the
Unitholder's basis for his or her fractional interest
in the asset disposed of. In the case of a Unitholder
who purchases Units, such basis (before adjustment for
earned original issue discount and amortized bond
premium, if any) is determined by apportioning the cost
of the Units among each of the Trust Fund's assets
ratably according to value as of the date of
acquisition of the Units. The basis of each Unit and
of each Municipal Bond which was issued with original
issue discount must be increased by the amount of the
accrued original issue discount and the basis of each
Unit and of the Unitholder's interest in each Municipal
Bond which was acquired by such Unitholder at a premium
must be reduced by the annual amortization of Municipal
Bond premium. The tax cost reduction requirements of
the Code relating to amortization of bond premium may,
under some circumstances, result in the Unitholder
realizing a taxable gain when his Units are sold or
redeemed for an amount equal to his original cost.
Sections 1288 and 1272 of the Internal Revenue Code of 1986
(the "Code") provide a complex set of rules governing the accrual
of original issue discount. These rules provide that original
issue discount accrues either on the basis of a constant compound
interest rate or ratably over the term of the Municipal Bond,
depending on the date the Municipal Bond was issued. In
addition, special rules apply if the purchase price of a
Municipal Bond exceeds the original issue price plus the amount
of original issue discount which would have previously accrued
based upon its issue price (its "adjusted issue price"). The
application of these rules will also vary depending on the value
of the Municipal Bond on the date a Unitholder acquires his
Units, and the price the Unitholder pays for his Units.
Investors with questions regarding these Code sections should
consult with their tax advisers.
"The Revenue Reconciliation Act of 1993" (the "Tax Act")
subjects tax-exempt bonds to the market discount rules of the
Code effective for bonds purchased after April 30, 1993. In
general, market discount is the amount (if any) by which the
stated redemption price at maturity exceeds an investor's
purchase price (except to the extent that such difference, if
any, is attributable to original issue discount not yet accrued)
subject to a statutory "de minimis" rule. Market discount can
arise based on the price a Trust pay for Municipal Bonds or the
price a Unitholder pays for his or her Units. Under the Tax Act,
accretion of market discount is taxable as ordinary income; under
prior law the accretion had been treated as capital gain. Market
discount that accretes while a Trust Fund holds a Municipal Bond
would be recognized as ordinary income by the Unitholders when
principal payments are received on the Municipal Bond, upon sale
or at redemption (including early redemption), or upon the sale
or redemption of his or her Units, unless a Unitholder elects to
include market discount in taxable income as it accrues. The
market discount rules are complex and Unitholders should consult
their tax advisers regarding these rules and their application.
In the case of all Unitholders (both individuals and
corporations), interest on all or certain Bonds held by certain
Series of the Trust may be treated as an item of tax preference
for purposes of computing the alternative minimum tax.
Accordingly, investments in Units may subject Unitholders to (or
result in increased liability under) the alternative minimum tax.
Due to the complexity of the alternative minimum tax, Unitholders
are urged to consult their tax advisers regarding the impact, if
any, of the alternative minimum tax.
In addition, in the case of certain corporations, the
alternative minimum tax and the Superfund Tax depend upon the
corporation's alternative minimum taxable income, which is the
corporation's taxable income with certain adjustments. One of
the adjustment items used in computing the alternative minimum
taxable income and the Superfund Tax of a corporation (other than
an S Corporation, Regulated Investment Company, Real Estate
Investment Trust, or REMIC) is an amount equal to 75% of the
excess of such corporation's "adjusted current earnings" over an
amount equal to its alternative minimum taxable income (before
such adjustment item and the alternative tax net operating loss
deduction). "Adjusted current earnings" includes all tax-exempt
interest, including interest on all of the Municipal Bonds in a
Trust Fund. Unitholders are urged to consult their tax advisers
with respect to the particular tax consequences to them including
the corporate alternative minimum tax, the Superfund Tax and the
branch profit tax imposed by Section 884 of the Code.
Counsel for the Sponsor has also advised that under
Section 265 of the Code, interest on indebtedness incurred or
continued to purchase or carry Units of a Trust Fund is not
deductible for Federal income tax purposes. The Internal Revenue
Service has taken the position that such indebtedness need not be
directly traceable to the purchase or carrying of Units (however,
these rules generally do not apply to interest paid on
indebtedness incurred to purchase or improve a personal
residence). Also, under Section 265 of the Code, certain
financial institutions that acquire Units would generally not be
able to deduct any of the interest expense attributable to
ownership of such Units. Investors with questions regarding
these issues should consult with their tax advisers.
In the case of certain Municipal Bonds in the Trust Funds,
the opinions of bond counsel indicate that interest on such
securities received by a "substantial user" of the facilities
being financed with the proceeds of these securities or persons
related thereto, for periods while such securities are held by
such a user or related person, will not be excludable from
Federal gross income, although interest on such securities
received by others would be excludable from Federal gross income.
"Substantial user" and "related person" are defined under U.S.
Treasury Regulations. Any person who believes that he or she may
be a "substantial user" or a "related person" as so defined
should contact his or her tax adviser.
In the case of corporations, the alternative tax rate
applicable to long-term capital gains is 35% effective for
long-term capital gains realized in taxable years beginning on or
after January 1, 1993. For taxpayers other than corporations,
net capital gains are subject to a maximum marginal stated tax
rate of 28%. However, it should be noted that legislative
proposals are introduced from time to time that affect tax rates
and could affect relative differences at which ordinary income
and capital gains are taxed. Under the Code, taxpayers must
disclose to the Internal Revenue Service the amount of tax-exempt
interest earned during the year.
Under existing law, the Trust Funds are not associations
taxable as a corporation and the income of the Trust Funds will
be treated as the income of the Unitholders under the income tax
laws of the State of Missouri.
All statements of law in the Prospectus concerning exclusion
from gross income for Federal, state or other tax purposes are
the opinions of counsel and are to be so construed.
At the respective times of issuances of the Bonds, opinions
relating to the validity thereof and to the exclusion of interest
thereon from Federal gross income are rendered by bond counsel to
the respective issuing authorities. Neither the Sponsor nor
Chapman and Cutler has made any special review for the Trust
Funds of the proceedings relating to the issuance of the Bonds or
of the basis for such opinions.
Section 86 of the Code, in general, provides that fifty
percent of Social Security benefits are includable in gross
income to the extent that the sum of "modified adjusted gross
income" plus fifty percent of the Social Security benefits
received exceeds a "base amount". The base amount is $25,000 for
unmarried taxpayers, $32,000 for married taxpayers filing a joint
return and zero for married taxpayers who do not live apart at
all during the taxable year and who file separate returns.
Modified adjusted gross income is adjusted gross income
determined without regard to certain otherwise allowable
deductions and exclusions from gross income and by including tax
exempt interest. To the extent that Social Security benefits are
includable in gross income, they will be treated as any other
item of gross income.
In addition, under the Tax Act, for taxable years beginning
after December 31, 1993, up to 85 percent of Social Security
benefits are includable in gross income to the extent that the
sum of "modified adjusted gross income" plus fifty percent of
Social Security benefits received exceeds an "adjusted base
amount." The adjusted base amount is $34,000 for married
taxpayers, $44,000 for married taxpayers filing a joint return
and zero for married taxpayers who do not live apart at all times
during the taxable year and who file separate returns.
Although tax-exempt interest is included in modified
adjusted gross income solely for the purpose of determining what
portion, if any, of Social Security benefits will be included in
gross income, no tax exempt interest, including that received
from the Trust Fund, will be subject to tax. A taxpayer whose
adjusted gross income already exceeds the base amount or the
adjusted base amount must include fifty percent or eighty-five
percent, respectively of his Social Security benefits in gross
income whether or not he receives any tax-exempt interest. A
taxpayer whose modified adjusted gross income (after inclusion of
tax-exempt interest) does not exceed the base amount need not
include any Social Security benefits in gross income.
The exemption of interest on state and local obligations for
Federal income tax purposes discussed above does not necessarily
result in exemption under the income or other tax laws of any
state or city. The laws of the several states vary with respect
to the taxation of such obligations.
PUBLIC OFFERING OF UNITS
Public Offering Price. Units of each Series of the
Trust are offered at the Public Offering Price, plus accrued
interest to the expected settlement date. The Public Offering
Price per Unit is equal to the aggregate bid side evaluation of
the Municipal Bonds in the Series' portfolio (as determined
pursuant to the terms of a contract with the Evaluator, by Muller
Data Corporation a non-affiliated firm regularly engaged in the
business of evaluating, quoting or appraising comparable
securities), plus or minus cash, if any, in the Principal
Account, held or owned by such Series of the Trust, divided by
the number of outstanding Units of the Series, plus the sales
charge applicable. The sales charge is based upon the dollar
weighted average maturity of the Trust and is determined in
accordance with the table set forth below. Investors who
purchase Units through brokers or dealers pursuant to a current
management agreement which by contract or operation of law does
not allow such broker or dealer to earn an additional commission
(other than any fee or commission paid for maintenance of such
investor's account under the management agreement) on such
transactions may purchase such Units at the current Public
Offering Price net of the applicable broker or dealer connection.
See "Public Distribution of Units" below. For purposes of this
computation, Municipal Bonds will be deemed to mature on their
expressed maturity dates unless: (a) the Municipal Bonds have
been called for redemption or funds or securities have been
placed in escrow to redeem them on an earlier call date, in which
case such call date will be deemed to be the date upon which they
mature; or (b) such Municipal Bonds are subject to a "mandatory
tender," in which case such mandatory tender will be deemed to be
the date upon which they mature. The effect of this method of
sales charge computation will be that different sales charge
rates will be applied to the Trust based upon the dollar weighted
average maturity of such Trust's portfolio, in accordance with
the following schedule:
<TABLE>
<CAPTION>
PERCENT OF PERCENT
PUBLIC OF NET
DOLLAR WEIGHTED AVERAGE OFFERING AMOUNT
YEARS TO MATURITY PRICE INVESTED
<S> <C> <C>
1 to 3.99 years 2.00% 2.041%
4 to 7.99 years 3.50 3.627
8 to 14.99 years 4.50 4.712
15 or more years 5.50 5.820
</TABLE>
The sales charge per Unit will be reduced as set forth
below:
<TABLE>
<CAPTION>
DOLLAR WEIGHTED AVERAGE YEARS TO MATURITY*
4 TO 7.99 8 TO 14.99 15 OR MORE
Amount Of Investment Sales Charge (% Of Public Offering Price)
<S> <C> <C> <C>
$1,000 to $99,999 3.50% 4.50% 5.50%
$100,000 to $499,999 3.25 4.25 5.00
$500,000 to $999,999 3.00 4.00 4.50
$1,000,000 or more 2.75 3.75 4.00
- ----------------
</TABLE>
* If the dollar weighted average maturity of the Trust is from
1 to 3.99 years, the sales charge is 2% and 1.5% of the
Public Offering for purchases of $1 to $249,999 and $250,000
or more, respectively.
The reduced sales charges as shown on the chart above will
apply to all purchases of Units on any one day by the same
purchaser from the same firm and for this purpose purchases of
Units of a Series of the Trust will be aggregated with concurrent
purchases of Units of any other unit investment trust that may be
offered by the Sponsor. Additionally, Units purchased in the
name of a spouse or child (under 21) of such purchaser will be
deemed to be additional purchases by such purchaser. The reduced
sales charges will also be applicable to a trust or other
fiduciary purchasing for a single trust estate or single
fiduciary account.
The Sponsor intends to permit officers, directors and
employees of the Sponsor and, at the discretion of the Sponsor
and Evaluator, registered representatives of selling firms to
purchase Units of the Trust without a sales charge, although a
transaction processing fee may be imposed on such trades.
The Public Offering Price per Unit of a Series of the Trust
on the date shown on the cover page of Part Two of the Prospectus
or on any subsequent date will vary from the amounts stated under
"Essential Information" in Part Two due to fluctuations in the
prices of the underlying Municipal Bonds. The aggregate bid side
evaluation of the Municipal Bonds shall be determined (a) on the
basis of current bid prices of the Municipal Bonds, (b) if bid
prices are not available for any particular Municipal Bond, on
the basis of current bid prices for comparable bonds, (c) by
determining the value of the Municipal Bonds on the bid side of
the market by appraisal, or (d) by any combination of the above.
The foregoing evaluations and computations shall be made as
of the Evaluation Time stated under "Essential Information" in
Part Two, on each business day effective for all sales made
during the preceding 24-hour period, and for purposes of resales
and repurchase of Units.
The interest on the Municipal Bonds in a Series of the
Trust, less the estimated fees and expenses, is estimated to
accrue in the annual amounts per Unit set forth under "Essential
Information" in Part Two. The amount of net interest income
which accrues per Unit may change as Municipal Bonds mature or
are redeemed, exchanged or sold, or as the expenses of such
Series of the Trust change or as the number of outstanding Units
of the Series changes.
Payment for Units must be made on or before the fifth
business day following purchase (the "settlement date"). A
purchaser becomes the owner of Units on the settlement date. If
a Unitholder desires to have certificates representing Units
purchased, such certificates will be delivered as soon as
possible following a written request therefor. For information
with respect to redemption of Units purchased, but as to which
certificates requested have not been received, see "Redemption"
below.
Accrued Interest. Accrued interest consists of two
elements. The first element arises as a result of accrued
interest which is the accumulation of unpaid interest on a bond
from the last day on which interest thereon was paid. Interest
on Bonds in the Trust Fund is actually paid either monthly or
semi-annually to the Trust Fund. However, interest on the Bonds
in the Trust Funds is accounted for daily on an accrual basis.
Because of this, a Trust Fund always has an amount of interest
earned but not yet collected by the Trustee by the Trustee
because of coupons that are not yet due. For this reason, the
Public Offering Price of Units will have added to it the
proportionate share of accrued and undistributed interest to the
date of settlement.
The Trustee advanced the amount of accrued interest as the
First Settlement Date and the same was distributed to the
Sponsor. Such advance was repaid to the Trustee through the
first receipts of interest received on the Municipal Bonds.
Consequently, the amount of accrued interest added to the Public
Offering Price of Units included only accrued interest arising
after the First Settlement Date of a Trust Fund, less any
distributions from the Interest Account subsequent to the First
Settlement Date. Since the First Settlement Date was the date of
settlement for anyone who ordered Units on the Date of Deposit,
no accrued interest was added to the Public Offering Price of
Units ordered on the Date of Deposit.
The second element of accrued interest arises because of the
structure of the Interest Account. The Trustee has no cash for
distribution to Unitholders until it receives interest payments
on the Bonds in a Trust Fund. The Trustee is obligated to
provide its own funds, at times, in order to advance interest
distributions. The Trustee will recover these advancements when
such interest is received. Interest Account balances are
established so that it will not be necessary on a regular basis
for the Trustee to advance its own funds in connection with such
interest distributions and since the funds held by the Trustee
will be used by it to earn interest thereon, it benefits thereby
(see "Expenses of the Trust").
Accrued interest is computed as of the initial Record Date
of the Trust Funds. On the date of the first distribution of
interest to Unitholders after the First Settlement Date, the
interest collected by the Trustee will be sufficient to repay its
advances, to allow for accrued interest under the monthly,
quarterly and semi-annual plans of distribution and to generate
enough cash to commence distributions to Unitholders. If a
Unitholder sells or redeems all or a portion of his Units or if
the Bonds in a Trust Fund are sold or otherwise removed or if a
Trust Fund is liquidated, he will receive at that time his
proportionate share of the accrued interest computed to the
settlement date in the case of sale or liquidation and to the
date of tender in the case of redemption in such Trust Fund.
Public Distribution of Units. The Sponsor has
qualified Units for sale in all states. Units will be sold
through dealers who are members of the National Association of
Securities Dealers, Inc. and through others. Sales may be made
to or through dealers at prices which represent discounts from
the Public Offering Price as set forth below. Certain commercial
banks are making Units of the Trust available to their customers
on an agency basis. A portion of the sales charge paid by their
customers is retained by or remitted to the banks, in an amount
as shown in the tables below. Under the Glass-Steagall Act,
banks are prohibited from underwriting Trust Units; however, the
Glass-Steagall Act does permit certain agency transactions and
the banking regulators have indicated that these particular
agency transactions are permitted under such Act. In addition,
state securities laws on this issue may differ from the
interpretations of federal law expressed herein and banks and
financial institutions may be required to register as dealers
pursuant to state law.
<TABLE>
<CAPTION>
DOLLAR WEIGHTED AVERAGE YEARS TO MATURITY*
AMOUNT OF INVESTMENT 4 TO 7.99 8 TO 14.99 15 OR MORE
Discount Per Unit (% Of Public Offering Price)
<S> <C> <C> <C>
$1,000 to $99,999 2.00% 3.00% 4.00%
$100,000 to $499,999 1.75 2.75 3.50
$500,000 to $999,999 1.50 2.50 3.00
$1,000,000 or more 1.25 2.25 2.50
- -----------------
</TABLE>
* If the dollar weighted average maturity of a Trust is from 1
to 3.99 years, the concession or agency commission is 1.00%
of the Public Offering Price.
The Sponsor reserves the right to change the discounts set
forth above from time to time. In addition to such discounts,
the Sponsor may, from time to time, pay or allow an additional
discount, in the form of cash or other compensation, to dealers
employing registered representatives who sell, during a specified
time period, a minimum dollar amount of Units of the Trust and
other unit investment trusts underwritten by the Sponsor. The
difference between the discount and the sales charge will be
retained by the Sponsor.
The Sponsor reserves the right to reject, in whole or in
part, any order for the purchase of Units.
Profits of Sponsor. The Sponsor will retain a portion
of the sales charge of each Unit sold, representing the
difference between the Public Offering Price of the Units and the
discounts allowed to firms selling such Units. The Sponsor may
realize additional profit or loss as a result of the possible
change in the daily evaluation of the Municipal Bonds in a Series
of the Trust, since the value of its inventory of Units may
increase or decrease.
MARKET FOR UNITS
While not obligated to do so, the Sponsor intends to, and
certain of the Underwriters may, subject to change at any time,
maintain a market for Units of each Series of the Trust offered
hereby and to continuously offer to purchase said Units at
prices, as determined by the Evaluator, based on the aggregate
bid prices of the underlying Municipal Bonds of such Series,
together with accrued interest to the expected date of
settlement. Accordingly, Unitholders who wish to dispose of
their Unit should inquire of their bank or broker as to the
current market price in order to determine whether there is in
existence any price in excess of the Redemption Price and, if so,
the amount thereof.
The offering price of any Units resold by the Sponsor will
be in accord with that described in 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 suspend or discontinue purchases of Units of any
Trust Fund if the supply of Units exceeds demand, or for other
business reasons.
REDEMPTION
If more favorable terms do not exist in the over-the-counter
market described above, Unitholders of a Series of the Trust may
cause their Units to be redeemed by the Trustee by making a
written request to the Trustee, Investors Fiduciary Trust
Company, P.O. Box 419430, Kansas City, Missouri 64173-0216 and,
in the case of Units evidenced by a certificate, by tendering
such certificate to the Trustee, properly endorsed or accompanied
by a written instrument or instruments of transfer in form
satisfactory to the Trustee. Unitholders must sign such written
request, and such certificate or transfer instrument, exactly as
their names appear on the records of the Trustee and on any
certificate representing the Units to be redeemed. If the amount
of the redemption is $25,000 or less and the proceeds are payable
to the Unitholder(s) of record at the address of record, no
signature guarantee is necessary for redemptions by individual
account owners (including joint owners). Additional
documentation may be requested, and a signature guarantee is
always required, from corporations, executors, administrators,
trustees, guardians or associations. The signatures must be
guaranteed by a participant in the Securities Transfer Agents
Medallion Program ("STAMP") or such other guarantee program in
addition to, or in substitution for, STAMP, as may be accepted by
the Trustee. A certificate should only be sent by registered or
certified mail for the protection of the Unitholder. Since
tender of the certificate is required for redemption when one
has been issued, Units represented by a certificate cannot be
redeemed until the certificate representing the Units has been
received by the purchaser.
Redemption shall be made by the Trustee on the seventh
calendar day following the day on which a tender for redemption
is received, or if the seventh calendar day is not a business
day, on the first business day prior thereto (the "Redemption
Date"), by payment of cash equivalent to the Redemption Price for
such series, determined as set forth below under "Computation of
Redemption Price," as of the evaluation time stated under
"Essential Information" in Part Two, next following such tender,
multiplied by the number of Units being redeemed. The price
received upon redemption might be more or less than the amount
paid by the Unitholder depending on the value of the Municipal
Bonds in the portfolio at the time of redemption. Any Units
redeemed shall be cancelled and any undivided fractional interest
in that Series of the Trust will be extinguished.
Under regulations issued by the Internal Revenue Service,
the Trustee is required to withhold a specified percentage of the
principal amount of a Unit redemption if the Trustee has not been
furnished the redeeming Unitholder's tax identification number
in the manner required by such regulations. Any amount so
withheld is transmitted to the Internal Revenue Service and may
be recovered by the Unitholder only when filing a tax return.
Under normal circumstances the Trustee obtains the Unitholder's
tax identification number from the selling broker. However, any
time a Unitholder elects to tender Units for redemption, such
Unitholder should make sure that the Trustee has been provided a
certified tax identification number in order to avoid this
possible "back-up withholding." In the event the Trustee has not
been previously provided such number, one must be provided at the
time redemption is requested.
Any amounts paid on redemption representing interest shall
be withdrawn from the Interest Account for such Series to the
extent that funds are available for such purpose. All other
amounts paid on redemption shall be withdrawn from the Principal
Account of such Series. The Trustee is empowered to sell
Municipal Bonds from the portfolio of a Series of the Trust in
order to make funds available for the redemption of Units of such
Series. Such sale may be required when Municipal Bonds would not
otherwise be sold and might result in lower prices than might
otherwise be realized. To the extent Municipal Bonds are sold,
the size and diversity of that Series will be reduced.
The Trustee is irrevocably authorized in its discretion, if
an Underwriter does not elect to purchase any Unit tendered for
redemption, in lieu of redeeming such Units, to sell such Units
in the over-the counter market for the account of tendering
Unitholders at prices which will return to such Unitholders
amounts in cash, net after brokerage commissions, transfer taxes
and other charges, equal to or in excess of Redemption Price for
such Units. In the event of any such sale, the Trustee shall pay
the net proceeds thereof to the Unitholders on the day they would
otherwise be entitled to receive payment of the Redemption Price.
The right of redemption may be suspended and payment
postponed (1) for any period during which the New York Stock
Exchange is closed, other than customary weekend and holiday
closings, or during which (as determined by the Securities and
Exchange Commission) trading on the New York Stock Exchange is
restricted; (2) for any period during which an emergency exists
as a result of which disposal by the Trustee of Municipal Bonds
is not reasonably practicable or it is not reasonably practicable
to fairly determine the value of the underlying Municipal Bonds
in accordance with the Trust Agreements; or (3) 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 which may result from any such suspension
or postponement.
Computation of Redemption Price. The Redemption Price
for Units of each Series of the Trust is computed by the
Evaluator as of the evaluation time stated under "Essential
Information" in Part Two next occurring after the tendering of a
Unit for redemption and on any other business day desired by it,
by
A. adding (1) the cash on hand in such Series of the
Trust; (2) the aggregate value of each issue of the
Municipal Bonds held in such Series of the Trust, as
determined by the Evaluator on the basis of bid prices
therefor; and (3) interest accrued and unpaid on the
Municipal Bonds in such Series of the Trust as of the date
of computation; and
B. deducting therefrom (1) amounts representing any
applicable taxes or governmental charges payable out of the
Series of the Trust and for which no deductions have been
previously made for the purpose of additions to the Reserve
Account described under "Expenses of the Trust"; (2) amounts
representing estimated accrued expenses of such Series
including, but not limited to, fees and expenses of the
Trustee (including legal and auditing fees), the Evaluator,
the Sponsor, and bond counsel, if any; (3) cash held for
distribution to Unitholders of record as of the business day
prior to the evaluation being made; and (4) other
liabilities incurred by such Series; and
C. finally, dividing the results of such computation
by the number of Units of such Series of the Trust
outstanding as of the date thereof.
UNITHOLDERS
Ownership of Units. Ownership of Units of a Series of
the Trust will not be evidenced by a certificate unless a
Unitholder or the Unitholder's registered broker/dealer or the
clearing agent for such broker/dealers makes a written request to
the Trustee. Units are transferable by making a written request
to the Trustee and, in the case of Units evidenced by a
certificate, presenting and surrendering such certificate to the
Trustee properly endorsed or accompanied by a written instrument
or instruments of transfer which should be sent registered or
certified mail for the protection of the Unitholder. Unitholders
must sign such written request, and such certificate or transfer
instrument, exactly as their names appear on the records of the
Trustee and on any certificate representing the Units to be
transferred. Such signatures must be guaranteed by a participant
in the Securities Transfer Agents Medallion Program ("STAMP") or
such other signature guarantee program in addition to, or in
substitution for, STAMP, as may be accepted by the Trustee.
Units may be purchased and certificates, if requested, will
be issued in denominations of one Unit or any whole Unit multiple
thereof subject to any minimum requirement established by the
sponsor from time to time. Any certificate issued will be
numbered serially for identification, issued in fully registered
form and will be transferable only on the books of the trustee.
The Trustee may require a Unitholder to pay a reasonable fee, to
be determined in the sole discretion of the Trustee, for each
certificate 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 the normal transfer or interchange of certificates.
Destroyed, stolen, mutilated or lost certificates will be
replaced upon delivery to the Trustee of satisfactory indemnity
(generally amounting to 3% of the market value of the Units),
affidavit of loss, evidence of ownership and payment of expenses
incurred.
Distributions to Unitholders. Interest Distributions:
Interest received by a Series of the Trust, including any portion
of the proceeds from a disposition of Municipal Bonds which
represents accrued interest, is credited by the Trustee to the
Interest Account for such Series. All other receipts are
credited by the Trustee to a separate Principal Account for such
Series. During each year the distributions to the Unitholders of
each Series of the Trust as of each Record Date (see "Essential
Information" in Part Two) will be made on the following
Distribution Date or shortly thereafter and shall consist of an
amount substantially equal to one-twelfth, one-quarter or
one-half (depending on the distribution option selected) of such
Unitholders' pro rata share of the estimated annual income to the
Interest Account for such Series, after deducting estimated
expenses. However, interest to which Unitholders of a Series of
the Trust are entitled will at most times exceed the amount
available for distribution, there will almost always remain an
item of accrued interest that is accounted for daily and is added
to the value of each Unit. If Unitholders sell or redeem all or
a portion of their Units, they will be paid their proportionate
share of the accrued interest of such Series of the Trust to, but
not including, the fifth business day after the date of sale or
to the date of tender in the case of a redemption.
Persons who purchase Units between a Record Date and a
Distribution Date will receive their first distributions on the
second Distribution Date following their purchase of Units.
Since interest on Municipal Bonds in each Series of the Trust is
payable at varying intervals, usually in semi-annual
installments, and distributions of income are made to Unitholders
of the Series of the Trust at what may be different intervals
from receipt of interest, the interest accruing to such Series of
the Trust may not be equal to the amount of money received and
available for distribution from the Interest Account for such
Series. Therefore, on each Distribution Date the amount of
interest actually on deposit in the Interest Account and
available for distribution may be slightly more or less than the
interest distribution made. In order to eliminate fluctuations
in interest distributions resulting from such variances, the
Trustee is authorized by the Trust Agreements to advance such
amounts as may be necessary to provide interest distributions of
approximately equal amounts. The Trustee will be reimbursed,
without interest, for any such advances from funds available in
the Interest Account of such Series.
Unitholders purchasing Units will initially receive
distributions in accordance with the election of the prior owner.
Unitholders desiring to change their distribution option, if
applicable, may do so by sending written notice to the Trustee,
together with their certificate (if one was issued).
Certificates should only be sent by registered or certified mail
to minimize the possibility of loss. If written notice and any
certificate are received by the Trustee not later than January 1
or July 1 of a year, the change will become effective on
January 2 for distributions commencing with February 15 or
August 15, respectively, of that year. If notice is not received
by the Trustee, the Unitholder will be deemed to have elected to
continue with the same option.
Principal Distributions: The Trustee will distribute on
each Distribution Date or shortly thereafter, to each Unitholder
of Record of a Series of the Trust on the preceding Record Date,
an amount substantially equal to such Unitholders' pro rata share
of the cash balance, if any, in the Principal Account of such
Series (but not less than $1.00 per Unit or $.001 per Unit for
certain Series) computed as of the close of business on the
preceding Record Date.
Statements to Unitholders. With each distribution, the
Trustee will furnish or cause to be furnished to each Unitholder
a statement of the amount of interest and the amount of other
receipts, if any, which are being distributed, expressed in each
case as a dollar amount per Unit.
The accounts of each Series of the Trust are required to be
audited annually, at the Series' expense, by independent auditors
designated by the Sponsor, unless the Trustee determines that
such an audit would not be in the best interest of the
Unitholders of such Series of the Trust. The accountants' report
will be furnished by the Trustee to any Unitholder of such Series
of the Trust upon written request.
Within a reasonable period of time after the end of each
calendar year, the Trustee shall furnish to each person who at
any time during calendar year was a Unitholder of such Series of
the Trust a statement covering the calendar year, setting forth
for the applicable series:
A. As to the Interest Account for such Series:
1. The amount of interest received on the
Municipal Bonds and the percentage of such amount by
states and territories in which the issuers of such
Bonds are located;
2. The amount paid from the Interest account
representing accrued interest of any Units redeemed;
3. 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;
4. Any amounts credited by the Trustee to a
Reserve Account described under "Expense of the Trust";
and
5. The net amount remaining after such payment
and deductions, expressed both as a total dollar amount
and a dollar amount per Unit outstanding on the last
business day of such calendar year.
B. As to the Principal Account for such Series:
1. The dates of the maturity, liquidation or
redemption of any of the Municipal Bonds and the net
proceeds received therefrom excluding any portion
credited to the Interest Account;
2. The amount paid from the Principal Account
representing the principal of any Units redeemed;
3. The deductions from the Principal Account for
payment of applicable taxes, if any, fees and expenses
(including auditing fees) of the Trustee, the
Evaluator, and, if any, of bond counsel;
4. The amounts credited by the Trustee to a
Reserve Account described under "Expenses of the
Trust"; and
5. 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 such calendar year.
C. The following information:
1. A list of the Municipal Bonds in such Series
as of the last business day of such calendar year;
2. The number of Units of such
Series
outstanding on the last business day of such calendar
year;
3. The Redemption Price of such Series based on
the last Trust Evaluation made during such calendar
year;
4. The amount actually distributed during such
calendar year from the Interest and Principal Accounts
of such Series separately stated, expressed both as
total dollar amounts and as dollar amounts per Unit
outstanding on the Record Date for each such
distribution.
Rights of Unitholders. A Unitholder may at any time
tender Units to the Trustee for redemption. No Unitholder shall
have the right to control the operation and management of the
Trust or any Series thereof in any manner, except to vote with
respect to amendment of the Trust Agreements or termination of a
Series of the Trust. The death or incapacity of any Unitholder
will not operate to terminate any Series of the Trust nor entitle
legal representatives or heirs to claim an accounting or to bring
any action or proceeding in any court for partition for winding
up of the Trust.
INVESTMENT SUPERVISION
The Sponsor may not alter the portfolio of a Series of the
Trust by the purchase, sale or substitution of Municipal Bonds,
except in the special circumstances noted below. Thus, with the
exception of the redemption or maturity of Municipal Bonds in
accordance with their terms, and/or the sale of Municipal Bonds
to meet redemption requests, the assets of each Series of the
Trust will remain unchanged under normal circumstances.
The Sponsor may direct the Trustee to dispose of Municipal
Bonds the value of which has been affected by certain adverse
events including institution of certain legal proceedings or
decline in price or the occurrence of other market factors,
including advance refunding, so that in the opinion of the
Sponsor the retention of such Bonds in a Series of the Trust
would be detrimental to the interest of the Unitholders. The
proceeds from any such sales, exclusive of any portion which
represents accrued interest, will be credited to the Principal
Account of such Series for distribution to the Unitholders.
The Sponsor is required to instruct the Trustee to reject
any offer made by an issuer of the Municipal Bonds to issue new
obligation in exchange or substitution for any of such Municipal
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 any other action with respect thereto as the
Sponsor may deem proper if (a) the issuer is in default with
respect to such Municipal 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 such Municipal 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 Trust Agreement to the same extent as the
Municipal Bonds originally deposited thereunder. Within five
days after the deposit of obligations in exchange or substitution
for underlying Bonds, the Trustee is required to give notice
thereof to each Unitholder of such Series of such Series of the
Trust registered on the books of the Trustee, identifying the
Municipal Bonds eliminated and the Municipal Bonds substituted
therefor.
ADMINISTRATION OF THE TRUST
The Trustee. The Trustee, Investors Fiduciary Trust
Company, is a trust company specializing in investment related
services, organized and existing under the laws of Missouri,
having its trust office at 127 West 10th Street, Kansas City,
Missouri 64105. The Trustee is subject to supervision and
examination by the Division of Finance of the State of Missouri
and the Federal Deposit Insurance Corporation. Investors
Fiduciary Trust Company is owned by State Street Boston
Corporation.
The Trustee, whose duties are ministerial in nature, has not
participated in selecting the portfolio of any Series of the
Trust. For information relating to the responsibilities of the
Trustee under the Trust Agreements, reference is made to the
material set forth under "Unitholders."
In accordance with the Trust Agreements, the Trustee shall
keep records of all transactions at its office. Such records
shall include the name and address of, and the number of Units
held by, every Unitholder of a Series of the Trust. Such books
and records shall be open to inspection by any Unitholder of such
Series at all reasonable times during the usual business hours.
The Trustee shall make such annual or other reports as may from
time to time be required under any applicable state or Federal
statute, rule or regulation. The Trustee shall keep a certified
copy or duplicate original of the Trust Agreements on file in its
office available for inspection at all reasonable times during
usual business hours by any Unitholder of such Series, together
with a current list of the Municipal Bonds held in such Series of
the Trust. Pursuant to the Trust Agreements, the Trustee may
employ one or more agents for the purpose of custody and
safeguarding of Municipal Bonds comprising the portfolio.
Under the Trust Agreements, the Trustee or any successor
trustee may resign and be discharged of its duties created by the
Trust Agreements by executing an instrument in writing and filing
the same with the Sponsor.
The Trustee or successor trustee must mail a copy of the
notice of resignation to all Unitholders then of record, not
less than sixty days before the date specified in such notice
when such resignation is to take effect. The Sponsor upon
receiving notice of such resignation is obligated to appoint a
successor trustee promptly. If, upon such resignation, no
successor trustee has been appointed and has accepted the
appointment within 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 Trust Agreements.
Notice of such removal and appointment shall be mailed to each
Unitholder by the Sponsor. Upon execution of a written
acceptance of such appointment by a successor trustee, all the
rights, powers, duties and obligations of the original Trustee
shall vest in successor.
The Trustee shall be a corporation organized under the laws
of the United States or any state thereof, which is authorized
under such laws to exercise trust powers. The Trustee shall have
at all times an aggregate capital, surplus and undivided profits
of not less than $5,000,000.
The Evaluator. Kemper Unit Investment Trusts, a
service of Kemper Securities, Inc., the Sponsor, also serves as
Evaluator. The Evaluator may resign or be removed by the Trustee
in which event the Trustee is to use its best efforts to appoint
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 thirty 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 shall be mailed by the
Trustee to each Unitholder. At the present time, pursuant to a
contract with the Evaluator, Muller Data Corporation, a
non-affiliated firm regularly engaged in the business of
evaluating, quoting or appraising comparable securities, provides
portfolio evaluations of the Municipal Bonds in the Trust which
are then reviewed by the Evaluator. In the event the Sponsor is
unable to obtain current evaluations from Muller Data
Corporation, it may make its own evaluations or it may utilize
the services of any other non-affiliated evaluator or evaluators
it deems appropriate.
Amendment and Termination. The Trust Agreements may be
amended by the Trustee and the Sponsor without the consent of any
of the Unitholders: (1) to cure any ambiguity or to correct or
supplement any provision which may be defective or inconsistent;
(2) to change any provision thereof as may be required by the
Securities and Exchange Commission or any successor governmental
agency; or (3) to make such provisions as shall not adversely
affect the interests of the Unitholders. The Trust Agreements
may also 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 Units representing 66-2/3% of the Units
then outstanding of such Series, provided that no such amendment
or waiver will reduce the interest of any Unitholder without the
consent of such Unitholder or reduce the percentage of Units
required to consent to any such amendment or waiver without
consent of all Unitholders of such Series. In no event shall the
Trust Agreements be amended to increase the number of Units of a
Series issuable thereunder or to permit, except in accordance
with the provisions of the Trust Agreements, the acquisition of
any Municipal Bonds in addition to or in substitution for those
in any Series of the Trust. The Trustee shall promptly notify
Unitholders of the substance of any such amendment.
The Trust Agreement provide that each Series of the Trust
shall terminate upon the maturity, redemption or other
disposition, of the last of the Municipal Bonds held in such
Series. If the value of a Series of the Trust shall be less than
the applicable minimum value stated under "Essential Information"
in Part Two the Trustee may, in its discretion, and shall, when
so directed by the Sponsor, terminate such Series of the Trust.
A Series of the Trust may be terminated at any time by the
holders of Units representing 66-2/3% of the Units of such Series
then outstanding. In the event of termination of a Series,
written notice thereof will be sent by the Trustee to all
Unitholders of such Series. Within a reasonable period after
termination, the Trustee will sell any Municipal Bonds remaining
in that Series of the Trust and, after paying all expenses and
charges incurred by the Series, will distribute to Unitholders of
such Series (upon surrender for cancellation of certificates for
Units, if issued) their pro rata share of the balances remaining
in the Interest and Principal Accounts of such Series.
Limitations on Liability. The Sponsor: The Sponsor is
liable for the performance of its obligations arising from the
responsibilities under the Trust Agreements, but will be under no
liability to the Unitholders for taking any action or refraining
from any action in good faith pursuant to the Trust Agreements or
for errors in judgment, except in cases of its own gross
negligence, bad faith or willful misconduct. The Sponsor shall
not be liable or responsible in any way for depreciation or loss
incurred by reason of the sale of any Municipal Bonds.
The Trustee: The Trust Agreements provide 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, Municipal 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 Municipal Bonds. In the event that the
Sponsor shall fail to act, the Trustee may act and shall not be
liable for any such action taken in good faith. The Trustee
shall not be personally liable for any taxes or other
governmental charges imposed upon or in respect of the Municipal
Bonds or upon the interest thereon. In addition, the Trust
Agreements contain other customary provisions limiting the
liability of the Trustee.
The Evaluator: The Trustee and Unitholders may rely on any
evaluation furnished by the Evaluator and shall have no
responsibility for the accuracy thereof. The Trust Agreements
provide 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 or Unitholders for errors in
judgment, but shall be liable only for its gross negligence, lack
of faith or willful misconduct.
EXPENSES OF THE TRUST
The Sponsor will charge each Series a surveillance fee for
services performed for such Series in an amount not to exceed
that amount set forth in "Essential Information" in Part Two but
in no event will such compensation, when combined with all
compensation received from other unit investment trusts for which
the Sponsor both acts as sponsor and provides portfolio
surveillance, exceed the aggregate cost to the Sponsor for
providing such services. Such fee shall be based on the total
number of Units of each series outstanding as the January Record
Date for any annual period. The Sponsor and other Underwriters
paid all the expenses of creating and establishing the Trust,
including the cost of the initial preparation, printing and
execution of the Prospectus, Trust Agreements and the
certificates, legal and accounting expenses, advertising and
selling expenses, payment of closing fees, expenses of the
Trustee, initial evaluation fees and other out-of-pocket
expenses.
The Trustee receives for its services a fee calculated on
the basis of the annual rate set forth under "Essential
Information" in Part Two based on the largest aggregate principal
amount of Municipal Bonds in such Series of the Trust at any time
during the monthly, quarterly or semi-annual period, as
appropriate. The Trustee also receives indirect benefits to the
extent that it holds funds on deposit in the various non-interest
bearing accounts created pursuant to the Agreement; however, the
Trustee is also authorized by the Agreement to make from time to
time certain non-interest bearing advances to the Series of the
Trust. See "Unitholders-Distributions to Unitholders."
For evaluation of Municipal Bonds in a Series of the Trust,
the Evaluator receives a fee, calculated on an annual rate as
set forth under "Essential Information" in Part Two, based upon
the largest aggregate principal amount of Municipal Bonds in such
Series of the Trust at any time during such monthly period.
The Trustee's and Evaluator's fees are payable monthly on or
before each Distribution Date by deductions from the Interest
Account of such Series to the extent funds are available and then
from the Principal Account of such Series. Both fees may be
increased without approval of Unitholders by amounts not
exceeding a proportionate increase in the Consumer Price Index
entitled "All Services Less Rent of Shelter," published by the
United States Department of Labor, or any equivalent index
substituted therefor.
The following additional charges are or may be incurred by a
Series of the Trust: (a) fees for the Trustee's extraordinary
services; (b) expenses of the Trustee (including legal and
auditing expenses, but not including any fees and expenses
charged by any agent for custody and safeguarding of Municipal
Bonds) and of bond counsel, if any; (c) various governmental
charges; (d) expenses and costs of any action taken by the
Trustee to protect the Trust or any series thereof, or the rights
and interests of the Unitholders; (e) indemnification of the
Trustee for any loss, liability or expense incurred by it in the
administration of the Trust or any Series without gross
negligence, bad faith or willful misconduct on its part; (f)
indemnification of the Sponsor for any loss, liability or expense
incurred in acting as Depositor of a Series of the Trust without
gross negligence, bad faith or willful misconduct; and (g)
expenditures incurred in contacting Unitholders upon termination
of a Series of the Trust. The fees and expenses set forth herein
are payable out of the appropriate Series of the Trust and, when
owed to the Trustee, are secured by a lien on the assets of such
Series.
Fees and expenses of a Series of the Trust shall be deducted
from the Interest Account of such Series, or, to the extent funds
are not available in such Account, from the Principal Interest
Account of such Series. The Trustee may withdraw from the
Principal Account of a Series or the Interest Account of a Series
such amounts, if any, as it deems necessary to establish a
reserve for any taxes or other governmental charges or other
extraordinary expenses payable out of the Trust. Amounts so
withdrawn shall be credited to a separate account maintained for
such Series of the Trust known as the Reserve Account and shall
not be considered a part of such Series of the Trust 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.
THE SPONSOR
The Sponsor, Kemper Unit Investment Trusts, with an office
at 77 W. Wacker Drive, 29th Floor, Chicago, Illinois 60601, (800)
621-5024, is a service of Kemper Securities, Inc., which is a
wholly-owned subsidiary of Kemper Financial Companies, Inc.
which, in turn, is a wholly-owned subsidiary of Kemper
Corporation. The Sponsor acts as underwriter of a number of
other Kemper unit investment trusts and will act as underwriter
of any other unit investment trust products developed by the
Sponsor in the future. As of January 31, 1994, the total
stockholder's equity of Kemper Securities, Inc., was
approximately $261,673,436 (unaudited).
If at any time the Sponsor shall fail to perform any of its
duties under the Agreement or shall become incapable of acting or
shall be adjudged a bankrupt or insolvent 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, or (b) terminate the Agreement and liquidate the
Trust or any Series as provided therein or (c) continue to act as
Trustee without terminating the Agreement.
The foregoing financial information with regard to the
Sponsor relates to the Sponsor only and not to any Series of this
Trust. Such information is included in this Prospectus only for
the purpose of informing investors as to the financial
responsibility of the Sponsor and its ability to carry out its
contractual obligations with respect to the Series of the Trust.
More comprehensive financial information can be obtained upon
request from the Sponsor.
LEGAL OPINIONS
The legality of the Units offered hereby and certain matters
relating to Federal tax law were originally passed upon by
Chapman and Cutler, 111 West Monroe Street, Chicago, Illinois
60603, as counsel for the Sponsor.
INDEPENDENT AUDITORS
The statement of net assets, including the schedule of
investments, appearing in Part Two of this Prospectus and
Registration Statement, with information pertaining to the
specific Series of the Trust to which such statements relate,
have been audited by Ernst & Young LLP, independent auditors, as
set forth in their report appearing in Part Two and is included
in reliance upon such report given upon the authority of such
firm as experts in accounting and auditing.
DESCRIPTION OF SECURITIES RATINGS*
Standard & Poor's Ratings Group. A brief description of
the applicable Standard & Poor's Ratings Group ("Standard &
Poor's") rating symbols and their meanings follows:
A Standard & Poor's corporate or municipal bond rating is a
current assessment of the creditworthiness of an obligor with
respect to a specific debt obligation. This assessment may take
into consideration obligors such as guarantors, insurers, or
lessees.
The bond rating is not a recommendation to purchase, sell or
hold a security, inasmuch as it does not comment as to market
price or suitability for a particular investor.
The ratings are based on current information furnished by
the issuer and obtained by Standard & Poor's from other sources
it considers reliable. Standard & Poor's does not perform an
audit in connection with any rating and may, on occasion, rely on
unaudited financial information. The ratings may be changed,
suspended, or withdrawn as a result of changes in, or
unavailability of, such information, or for other circumstances.
The ratings are based, in varying degrees, on the following
considerations:
I. Likelihood of default - capacity and willingness of the
obligor as to the timely payment of interest and repayment of
principal in accordance with the terms of the obligation;
II. Nature of and provisions of the obligation;
III. Protection afforded by, and relative position
of,
the obligation in the event of bankruptcy, reorganization or
other arrangement, under the laws of bankruptcy and other laws
affecting creditors' rights.
AAA _ Bonds rated AAA have the highest
rating
assigned by Standard & Poor's to a debt obligation. Capacity to
pay interest and repay principal is extremely strong.
AA _ Bonds rated AA have a very strong capacity to pay
interest and repay principal and differ from the highest rated
issues only in small degree.
A _ Bonds rated A have a strong capacity to
pay
interest and repay principal although they are somewhat more
susceptible to the adverse effects of changes in circumstances
and economic conditions than bonds in higher rated categories.
BBB _ Bonds rated BBB are regarded as having
an
adequate capacity to pay interest and repay principal. Whereas
they normally exhibit adequate protection parameters, adverse
economic conditions or changing circumstances are more likely to
lead to a weakened capacity to pay interest and repay principal
for bonds in this category than for bonds in higher rated
categories.
Plus (+) or Minus (-): The ratings from "AA" to "A" may be
modified by the addition of a plus or minus sign to show relative
standing within the major rating categories.
Provisional Ratings: The letter "p" indicates the rating is
provisional. A provisional rating assumes the successful
completion of the project being financed by the bonds being rated
and indicates that payment of debt service requirements is
largely or entirely dependent upon the successful and timely
completion of the project. This rating, however, while
addressing credit quality subsequent to completion of the
project, makes no comment on the likelihood of, or the risk of
default upon failure of, such completion. The investor should
exercise his own judgment with respect to such likelihood and
risk.
Moody's Investors Service, Inc. _ A brief description of the
applicable Moody's Investors Service, Inc. rating symbols and
their meanings follow:
Aaa _ Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and
are generally referred to as "gilt edge." Interest payments are
protected by a large or by an exceptionally stable margin and
principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such
issues. Their safety is so absolute that with the occasional
exception of oversupply in a few specific instances,
characteristically, 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. Their market value is
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 upper medium
grade obligations. Factors giving security to principal and
interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the
future. The market value of A-rated bonds may be influenced to
some degree by economic performance during a sustained period of
depressed business conditions, but, during periods of normalcy,
A-rated bonds frequently move in parallel with Aaa and Aa
obligations, with the occasional exception of oversupply in a few
specific instances.
A1 _ Bonds which are rated A1 offer the maximum in security
within their quality group, can be bought for possible upgrading
in quality, and additionally, afford the investor an opportunity
to gauge more precisely the relative attractiveness of offering
in the market place.
Baa _ Bonds which are rated Baa are considered as lower
medium grade obligations, i.e., they are neither highly protected
nor poorly secured. Interest payments and principal security
appear adequate for the present but certain protective elements
may be lacking or may be characteristically unreliable over any
great length of time. Such bonds lack outstanding investment
characteristics and, in fact, have speculative characteristics as
well. The market value of Baa-rated bonds is more sensitive to
changes in economic circumstances and, aside from occasional
speculative factors applying to some bonds of this class, Baa
market valuations move in parallel with Aaa, Aa and A obligations
during periods of economic normalcy, except in instances of
oversupply.
Conditional Ratings: Bonds rated "Con (-)" are ones for
which the security depends upon the completion of some act or the
fulfillment of some condition. These are bonds secured by (a)
earnings of projects under construction. (b) earnings of project
unseasoned in operation experience, (c) rentals which begin when
facilities are completed, or (d) payments to which some other
limiting condition attaches. Parenthetical rating denotes
probable credit stature upon completion of construction or
elimination of basis of condition.
Note: Moody's applies numerical modifiers, 1, 2, and 3 in
each generic rating classification from Aa through B in certain
areas of its bond rating system. The modifier 1 indicates that
the security ranks in the higher end of its generic rating
category; the modifier 2 indicates a mid-range ranking; and the
modifier 3 indicates that the issuer ranks in the lower end of
its generic rating category.
<PAGE>
Kemper Tax-Exempt Income Trust
Series 54
Part Two
Dated April 28, 1995
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
NOTE: Part Two of this Prospectus May Not Be Distributed unless Accompanied by
Part One.
<PAGE>
Kemper Tax-Exempt Income Trust
Series 54
Essential Information
As of March 15, 1995
Sponsor: Kemper Financial Services, Inc.
Evaluator: Kemper Unit Investment Trusts
Trustee: Investors Fiduciary Trust Company
<TABLE>
<CAPTION>
General Information
<S> <C>
Principal Amount of Municipal Bonds $3,190,000
Number of Units 13,204
Fractional Undivided Interest in the Trust per Unit 1/13,204
Principal Amount of Municipal Bonds per Unit $241.59
Public Offering Price:
Aggregate Bid Price of Municipal Bonds in the Portfolio $3,533,688
Aggregate Bid Price of Municipal Bonds per Unit $267.62
Cash per Unit (1) $5.73
Sales Charge 4.712% (4.5% of Public Offering Price) $12.88
Public Offering Price per Unit (exclusive of accrued
interest) (2) $286.23
Redemption Price per Unit (exclusive of accrued interest) $273.35
Excess of Public Offering Price per Unit Over Redemption
Price per Unit $12.88
Minimum Value of the Trust under which Trust Agreement
may be terminated $3,120,000
</TABLE>
Date of Trust March 9, 1983
Mandatory Termination Date December 31, 2033
Annual Evaluation Fee: $.35 per $1,000 principal amount of Municipal Bonds.
Evaluations for purpose of sale, purchase or redemption of Units are made as
of the close of business of the Sponsor next following receipt of an order for
a sale or purchase of Units or receipt by Investors Fiduciary Trust Company of
Units tendered for redemption.
[FN]
1. This amount, if any, represents principal cash or overdraft which is an
asset or liability of the Trust and is included in the Public Offering Price.
2. Units are offered at the Public Offering Price plus accrued interest to
the date of settlement (five business days after purchase). On March 15,
1995, there was added to the Public Offering Price of $286.23, accrued
interest to the settlement date of March 22, 1995 of $4.01, $7.63 and $7.66
for a total price of $290.24, $293.86 and $293.89 for the monthly, quarterly
and semiannual distribution options, respectively.
<PAGE>
Kemper Tax-Exempt Income Trust
Series 54
Essential Information (continued)
As of March 15, 1995
Sponsor: Kemper Financial Services, Inc.
Evaluator: Kemper Unit Investment Trusts
Trustee: Investors Fiduciary Trust Company
<TABLE>
<CAPTION>
Special Information Based on Various Distribution Options
Monthly Quarterly Semiannual
<S> <C> <C> <C>
-------- -------- --------
Calculation of Estimated Net Annual
Interest Income per Unit (3):
Estimated Annual Interest Income $22.1325 $22.1325 $22.1325
Less: Estimated Annual Expense .8796 .6894 .6014
-------- -------- --------
Estimated Net Annual Interest Income $21.2529 $21.4431 $21.5311
======== ======== ========
Calculation of Interest Distribution
per Unit:
Estimated Net Annual Interest Income $21.2529 $21.4431 $21.5311
Divided by 12, 4 and 2, respectively $1.7711 $5.3608 $10.7656
Estimated Daily Rate of Net Interest
Accrual per Unit $.0590 $.0596 $.0598
Estimated Current Return Based on Public
Offering Price (3) 7.43% 7.49% 7.52%
Estimated Long-Term Return (3) 6.79% 6.86% 6.89%
</TABLE>
Trustee's Annual Fees and Expenses (including Evaluator's Fee): $.8796,
$.6894 and $.6014 ($.4576, $.3316 and $.3458 of which represent expenses) per
Unit under the monthly, quarterly and semiannual distribution options,
respectively.
Record and Computation Dates: First day of the month, as follows: monthly -
each month; quarterly - January, April, July and October; semiannual - January
and July.
Distribution Dates: Fifteenth day of the month, as follows: monthly - each
month; quarterly - January, April, July and October; semiannual - January and
July.
[FN]
3. The Estimated Long-Term Return and Estimated Current Return will vary.
For detailed explanation, see Part One of this prospectus.
<PAGE>
Report of Independent Auditors
Unitholders
Kemper Tax-Exempt Income Trust
Series 54
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of Kemper Tax-Exempt Income Trust
Series 54 as of December 31, 1994, and the related statements of operations
and changes in net assets for each of the three years in the period then
ended. These financial statements are the responsibility of the Trust's
sponsor. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of investments owned as of December 31, 1994,
by correspondence with the custodial bank. An audit also includes assessing
the accounting principles used and significant estimates made by the sponsor,
as well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Kemper Tax-Exempt Income
Trust Series 54 at December 31, 1994, and the results of its operations and
the changes in its net assets for each of the three years in the period then
ended in conformity with generally accepted accounting principles.
Ernst & Young LLP
Kansas City, Missouri
April 14, 1995
<PAGE>
Kemper Tax-Exempt Income Trust
Series 54
Statement of Assets and Liabilities
December 31, 1994
<TABLE>
<CAPTION>
<S> <C> <C>
Assets
Municipal Bonds, at value (cost $3,143,742) $3,554,597
Interest receivable 101,284
Cash 100,473
----------
3,756,354
Liabilities and net assets
Accrued liabilities 3,489
Net assets, applicable to 13,352 Units outstanding:
Cost of Trust assets, exclusive of interest $3,143,742
Unrealized appreciation 410,855
Distributable funds 198,268
---------- ----------
Net assets $3,752,865
==========
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
Kemper Tax-Exempt Income Trust
Series 54
Statements of Operations
<TABLE>
<CAPTION>
Year ended December 31
1994 1993 1992
<S> <C> <C> <C>
--------- --------- ---------
Investment income - interest $319,028 $470,461 $964,540
Expenses:
Trustee's fees and related expenses 8,463 11,054 16,456
Evaluator's fees 1,245 1,972 3,692
--------- --------- ---------
Total expenses 9,708 13,026 20,148
--------- --------- ---------
Net investment income 309,320 457,435 944,392
Realized and unrealized gain (loss)
on investments:
Realized gain (loss) 137,973 346,802 (10,245)
Unrealized depreciation during
the year (380,867) (413,721) (269,627)
--------- --------- ---------
Net loss on investments (242,894) (66,919) (279,872)
--------- --------- ---------
Net increase in net assets resulting
from operations $66,426 $390,516 $664,520
========= ========= =========
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
Kemper Tax-Exempt Income Trust
Series 54
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Year ended December 31
1994 1993 1992
<S> <C> <C> <C>
----------- ----------- -----------
Operations:
Net investment income $309,320 $457,435 $944,392
Realized gain (loss) on investments 137,973 346,802 (10,245)
Unrealized depreciation on
investments during the year (380,867) (413,721) (269,627)
----------- ----------- -----------
Net increase in net assets resulting
from operations 66,426 390,516 664,520
Distributions to Unitholders:
Net investment income (385,650) (592,796) (991,306)
Principal from investment
transactions (717,861) (5,429,746) (1,997,281)
Capital transactions:
Redemption of Units (21,377) - -
----------- ----------- -----------
Total decrease in net assets (1,058,462) (5,632,026) (2,324,067)
Net assets:
At the beginning of the year 4,811,327 10,443,353 12,767,420
----------- ----------- -----------
At the end of the year (including
distributable funds applicable to
Trust Units of $198,268, $230,136
and $436,717 at December 31, 1994,
1993 and 1992, respectively) $3,752,865 $4,811,327 $10,443,353
========== =========== ===========
Trust Units outstanding at the end
of the year 13,352 13,428 13,428
========== =========== ===========
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
<TABLE>
Kemper Tax-Exempt Income Trust
Series 54
Schedule of Investments
December 31, 1994
<CAPTION>
Coupon Maturity Redemption Principal
Name of Issuer and Title of Bond(5) Rate Date Provisions(2) Rating(1) Amount(4) Value(3)
<S> <C> <C> <C> <C> <C> <C>
------- ---------- -------------- -------- ---------- ----------
+County of Franklin, Ohio, Hospital Revenue 10.00% 12/01/2001 AAA $630,000 $694,122
Bonds, Series 1980 (Grant Hospital Project).
+Illinois Health Facilities Authority, Revenue 7.875 2/01/2004 1999 @ 100 S.F. NR 890,000 856,785
Bonds, Series 1976A (Columbus-Cuneo-Cabrini
Medical Center), Chicago, Illinois.
+City of Muscatine, Iowa, Electric Revenue 6.70 1/01/2013 2000 @ 100 S.F. AAA 260,000 251,022
Bonds, Series 1979.
+City of Muscatine, Iowa, Electric Revenue 9.70 1/01/2013 2005 @ 100 S.F. AAA 500,000 629,525
Bonds, Series 1980.
New Jersey Housing Finance Agency, Multifamily 9.625 11/01/2003 1997 @ 100 S.F. A+ 480,000 470,098
Housing Revenue Bonds (Multi-Project Issue), 1995 @ 102
1983 Series A.
+The Hospitals Authority of Philadelphia 10.875 7/01/2008 2005 @ 100 Aaa* 420,000 515,810
(Pennsylvania) Hospital Revenue Bonds,
Series of 1980 (United Hospitals, Inc.).
+Sam Rayburn Municipal Power Agency (Texas) 8.00 9/01/2012 AAA 125,000 137,235
Power Supply System Revenue Bonds, Series ---------- ----------
1981. $3,305,000 $3,554,597
========== ==========
</TABLE>
[FN]
See accompanying notes to Schedule of Investments.
<PAGE>
Kemper Tax-Exempt Income Trust
Series 54
Notes to Schedule of Investments
1. All ratings are by Standard & Poor's Corporation, unless marked with the
symbol "*", in which case the rating is by Moody's Investors Service, Inc.
The symbol "NR" indicates Bonds for which no rating is available.
2. There is shown under this heading the year in which each issue of Bonds is
initially redeemable and the redemption price for that year or, if currently
redeemable, the redemption price currently in effect; unless otherwise
indicated, each issue continues to be redeemable at declining prices
thereafter, but not below par value. In addition, certain Bonds in the
Portfolio may be redeemed in whole or in part other than by operation of the
stated redemption or sinking fund provisions under certain unusual or
extraordinary circumstances specified in the instruments setting forth the
terms and provisions of such Bonds. "S.F." indicates a sinking fund is
established with respect to an issue of Bonds. Redemption pursuant to call
provisions generally will, and redemption pursuant to sinking fund provisions
may, occur at times when the redeemed Bonds have a valuation which represents
a premium over the call price or par.
To the extent that the Bonds were deposited in the Trust at a price higher
than the price at which they are redeemed, this will represent a loss of
capital when compared with the original Public Offering Price of the Units.
To the extent that the Bonds were acquired at a price lower than the
redemption price, this may represent an increase in capital when compared with
the original Public Offering Price of the Units. Distributions of net income
will generally be reduced by the amount of the income which would otherwise
have been paid with respect to redeemed Bonds and, unless utilized to pay for
Units tendered for redemption, there will be distributed to Unitholders the
principal amount and any premium received on such redemption. In this event
the estimated current return and estimated long-term return may be affected by
such redemptions.
3. See Note 1 to the accompanying financial statements for a description of
the method of determining cost and value.
<PAGE>
Kemper Tax-Exempt Income Trust
Series 54
Notes to Schedule of Investments (continued)
4. At December 31, 1994, the Portfolio of the Trust consists of 7 obligations
issued by entities located in 6 states. All of the issues are payable from
the income of a specific project or authority and are not supported by an
issuer's power to levy taxes. The sources of payment for the revenue bonds
are divided as follows: Electric Systems, 3; Hospitals and Health Care, 3;
Housing, 1. Approximately 59% of the aggregate principal amount of Bonds in
the Trust are obligations of hospitals and health care issuers. Approximately
27% of the aggregate principal amount of Bonds in the Trust are obligations of
electrical systems. Approximately 27% of the aggregate principal amount of
Bonds in the Trust are obligations of an entity located in Illinois.
Approximately 41% of the aggregate principal amount of Bonds in the Trust are
subject to call by the issuers within five years after December 31, 1994.
5. Those securities preceded by (+) are secured by, and payable from,
escrowed U.S. Government securities.
[FN]
See accompanying notes to financial statements.
<PAGE>
Kemper Tax-Exempt Income Trust
Series 54
Notes to Financial Statements
1. Significant Accounting Policies
Valuation of Municipal Bonds
Municipal Bonds (Bonds) are stated at bid prices as determined by Kemper Unit
Investment Trusts (A Service of Kemper Securities, Inc.), the "Evaluator" of
the Trust. The aggregate bid prices of the Bonds are determined by the
Evaluator based on (a) current bid prices of the Bonds, (b) current bid prices
for comparable bonds, (c) appraisal, or (d) any combination of the above.
Cost of Municipal Bonds
Cost of the Trust's Bonds was based on the offering prices of the Bonds on
March 9, 1983 (Date of Deposit). The premium or discount (including any
original issue discount) existing at March 9, 1983, is not being amortized.
Realized gain (loss) from Bond transactions is reported on an identified cost
basis.
2. Unrealized Appreciation and Depreciation
Following is an analysis of net unrealized appreciation at December 31, 1994:
<TABLE>
<CAPTION>
<S> <C>
Gross unrealized depreciation $(9,902)
Gross unrealized appreciation 420,757
--------
Net unrealized appreciation $410,855
========
</TABLE>
3. Transactions with Affiliates
From the inception of the Trust through January 31, 1995, the Trustee,
Investors Fiduciary Trust Company (IFTC), was 50% owned by Kemper Financial
Services, Inc., the Trust's sponsor and an affiliate of Kemper Unit Investment
Trusts. On that date, State Street Boston Corporation acquired IFTC. The
Trustee's fee (not including the reimbursement of out-of-pocket expenses),
calculated monthly, is at the annual rate of $1.35, $1.08 and $.75 under the
monthly, quarterly and semiannual distribution options, respectively, per
$1,000 principal amount of Bonds in the Trust, based on the largest aggregate
principal amount of Bonds in the Trust at any time during such monthly,
quarterly or semiannual periods. The Evaluator received a fee, payable
monthly, at an annual rate of $.35 per $1,000 principal amount of Bonds, based
on the largest aggregate principal amount of Bonds in the Trust at any time
during such monthly period.
<PAGE>
Kemper Tax-Exempt Income Trust
Series 54
Notes to Financial Statements (continued)
4. Federal Income Taxes
The Trust is not an association taxable as a corporation for federal income
tax purposes. Each Unitholder is considered to be the owner of a pro rata
portion of the Trust under Subpart E, Subchapter J of Chapter 1 of the
Internal Revenue Code of 1986, as amended. Accordingly, no provision has been
made for federal income taxes.
5. Other Information
Cost to Investors
The cost to initial investors of Units of the Trust was based on the aggregate
offering price of the Bonds on the date of an investor's purchase, plus a
sales charge of 4.5% of the Public Offering Price (equivalent to 4.712% of the
net amount invested). The Public Offering Price for secondary market
transactions is based on the aggregate bid price of the Bonds plus or minus a
pro rata share of cash or overdraft in the Principal Account, if any, on the
date of an investor's purchase, plus a sales charge of 4.5% of the Public
Offering Price (equivalent to 4.712% of the net amount invested).
Distributions
Distributions of net investment income to Unitholders are declared and paid in
accordance with the option (monthly, quarterly or semiannual) selected by the
investor. Such income distributions, on a record date basis, are as follows:
<TABLE>
<CAPTION>
Year ended Year ended Year ended
Distribution December 31, 1994 December 31, 1993 December 31, 1992
Plan Per Unit Total Per Unit Total Per Unit Total
<S> <C> <C> <C> <C> <C> <C>
-------- -------- -------- -------- -------- --------
Monthly $27.85 $202,451 $38.66 $275,689 $71.56 $504,903
Quarterly 28.74 81,065 44.90 129,439 74.37 217,274
Semiannual 30.40 102,170 54.26 187,668 77.74 269,129
-------- -------- --------
$385,686 $592,796 $991,306
======== ======== ========
</TABLE>
<PAGE>
Kemper Tax-Exempt Income Trust
Series 54
Notes to Financial Statements (continued)
5. Other Information (continued)
In addition, the Trust redeemed Units with proceeds from the sale of Bonds as
follows:
<TABLE>
<CAPTION>
Year ended
December 31,
1994
<S> <C>
-------
Principal portion $21,377
Net interest accrued 870
-------
$22,247
=======
Units 76
=======
</TABLE>
<PAGE>
<TABLE>
Kemper Tax-Exempt Income Trust
Series 54
Notes to Financial Statements (continued)
5. Other Information (continued)
Selected data for a Unit of the Trust outstanding throughout each year -
<CAPTION>
Monthly Quarterly Semiannual
Year ended December 31 Year ended December 31 Year ended December 31
1994 1993 1992 1994 1993 1992 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
------- -------- -------- ------- -------- -------- ------- -------- --------
Investment income - interest $23.83 $35.04 $71.83 $23.83 $35.04 $71.83 $23.83 $35.04 $71.83
Expenses .84 1.10 1.72 .63 .85 1.37 .55 .73 1.12
------- -------- -------- ------- -------- -------- ------- -------- --------
Net investment income 22.99 33.94 70.11 23.20 34.19 70.46 23.28 34.31 70.71
Distributions to Unitholders:
Net investment income (27.85) (38.66) (71.56) (28.74) (44.90) (74.37) (30.40) (54.26) (77.74)
Principal from investment
transactions (53.46) (404.36) (148.74) (53.46) (404.36) (148.74) (53.46) (404.36) (148.74)
Net loss on investments (18.05) (5.07) (20.85) (18.05) (5.07) (20.85) (18.05) (5.07) (20.85)
------- -------- -------- ------- -------- -------- ------- -------- --------
Change in net asset value (76.37) (414.15) (171.04) (77.05) (420.14) (173.50) (78.63) (429.38) (176.62)
Net asset value:
Beginning of the year 354.29 768.44 939.48 358.99 779.13 952.63 366.28 795.66 972.28
------- -------- -------- ------- -------- -------- ------- -------- --------
End of the year, including
distributable funds $277.92 $354.29 $768.44 $281.94 $358.99 $779.13 $287.65 $366.28 $795.66
======= ======== ======== ======= ======== ======== ======= ======== ========
</TABLE>
<PAGE>
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Independent
Auditors" and to the use of our report dated April 14, 1995, in this Post-
Effective Amendment to the Registration Statement (Form S-6) and related
Prospectus of Kemper Tax-Exempt Income Trust Series 54 dated April 28, 1995.
Ernst & Young LLP
Kansas City, Missouri
April 28, 1995
<PAGE>
Contents of Post-Effective AmendmentTo Registration Statement
This Post-Effective amendment to the Registration Statement
comprises the following papers and documents:
The facing sheet
The prospectus
The signatures
The Consent of Independent Accountants
<PAGE>
Signatures
Pursuant to the requirements of the Securities Act of 1933,
The Registrant, Kemper Tax-Exempt Income Trust, Series 54,
certifies that it meets all of the requirements for effectiveness
of this registration statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this Amendment to the
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Chicago,
and State of Illinois, on the 27th day of April, 1995.
Kemper Tax-Exempt Income Trust,
Series 54
Registrant
By: Kemper Unit Investment Trusts
(a service of Kemper
Securities, Inc.)
Depositor
By: Michael J. Thoms
Vice President
Pursuant to the requirements of the Securities Act of 1933,
this Amendment to the Registration Statement has been signed
below on April 27, 1995 by the following persons, who constitute
a majority of the Board of Directors of Kemper Securities, Inc.
Signature Title
James R. Boris Chairman and Chief Executive Officer
James R. Boris
Stephen G. McConahey President and Chief Operating Officer
Stephen G. McConahey
Frank V. Geremia Senior Executive Vice President
Frank V. Geremia
David M. Greene Senior Executive Vice President
David M. Greene
Arthur J. McGivern Senior Executive Vice President and Director
Arthur J. McGivern
Ramon Pecuch Senior Executive Vice President and Director
Ramon Pecuch
Thomas R. Reedy Senior Executive Vice President and Director
Thomas R. Reedy
Janet L. Reali Executive Vice President and Director
Janet L. Reali
Daniel D. Williams Executive Vice President and Treasurer
Daniel D. Williams
David B. Mathis Director
David B. Mathis
Stephen B. Timbers Director
Stephen B. Timbers
Donald F. Eller Director
Donald F. Eller
Michael J. Thoms
Michael J. Thoms signs this document pursuant to a Power of
Attorney filed with the Securities and Exchange Commission with
Amendment No. 1 to the Registration Statement on Form S-6 for
Kemper Defined Funds Series 28 (Registration No. 33-56779).
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from
Post-effective Amendment Number 12 to Form S-6 and is qualified in
its entirety by reference to such Post-effective Amendment to Form S-6.
</LEGEND>
<SERIES>
<NUMBER> 54
<NAME> KEMPER TAX EXEMPT SERIES
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 3,143,742
<INVESTMENTS-AT-VALUE> 3,554,597
<RECEIVABLES> 101,284
<ASSETS-OTHER> 100,473
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,756,354
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,489
<TOTAL-LIABILITIES> 3,489
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,143,742
<SHARES-COMMON-STOCK> 13,352
<SHARES-COMMON-PRIOR> 13,428
<ACCUMULATED-NII-CURRENT> 198,268
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 410,855
<NET-ASSETS> 3,752,865
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 319,028
<OTHER-INCOME> 0
<EXPENSES-NET> 9,708
<NET-INVESTMENT-INCOME> 309,320
<REALIZED-GAINS-CURRENT> 137,973
<APPREC-INCREASE-CURRENT> (380,867)
<NET-CHANGE-FROM-OPS> 66,426
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (385,650)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> (717,861)
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 76
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (1,058,462)
<ACCUMULATED-NII-PRIOR> 230,136
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
