File No. 33-03002 CIK #788848
Securities and Exchange Commission
Washington, D. C. 20549
Post-Effective
Amendment No. 11
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 Government Securities Trust GNMA Portfolio, Series 12 and
Series 13
Name and executive office address of Depositor:
Ranson & Associates, Inc.
250 North Rock Road, Suite 150
Wichita, Kansas 67206
Name and complete address of agent for service:
Robin Pinkerton
Ranson & Associates, Inc.
250 North Rock Road, Suite 150
Wichita, Kansas 67206
( X ) Check box if it is proposed that this filing will
become effective at 2:00 p.m. on April 30, 1997
pursuant to paragraph (b) of Rule 485.
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KEMPER GOVERNMENT SECURITIES TRUST
KEMPER DEFINED FUNDS GNMA PORTFOLIO
KEMPER DEFINED FUNDS U.S. TREASURY PORTFOLIO
EVEREN UNIT INVESTMENT TRUSTS GNMA PORTFOLIO
EVEREN UNIT INVESTMENT TRUSTS U.S TREASURY PORTFOLIO
PART ONE
Each Series of the Kemper Government Securities Trust, GNMA
Portfolio, Kemper Defined Funds GNMA Portfolio and EVEREN Unit Investment
Trusts GNMA Portfolio (collectively, the "GNMA Trust") was formed for the
purpose of obtaining safety of capital and current monthly distributions
of interest and principal through investment in a portfolio consisting of
mortgage-backed Securities of the modified pass-through type. All
payments of principal and interest on the mortgage-backed Securities are
fully guaranteed by the Government National Mortgage Association
("GNMA"). The full faith and credit of the United States is pledged to
the payment of the Securities in the GNMA Trust but the Units of such
Series are not backed by such full faith and credit.
Each Series of the Kemper Government Securities Trust, U.S. Treasury
Portfolio, Kemper Defined Funds U.S. Treasury Portfolio and EVEREN Unit
Investment Trusts U.S. Treasury Portfolio (collectively, the "U.S.
Treasury Portfolio Series") was formed for the purpose of providing
safety of capital and investment flexibility through an investment in a
portfolio of interest-bearing (or in certain Series zero coupon) U.S.
Treasury obligations that are backed by the full faith and credit of the
United States Government. Interest income distributed by the U.S.
Treasury Portfolio Series is generally exempt from state personal income
taxes in all states.
Certain Series are available to non-resident aliens and the income
from such Series, provided certain conditions are met, will be exempt
from withholding for U.S. Federal income tax for such foreign investors.
A foreign investor must provide a completed W-8 form to his financial
representative or the trustee to avoid withholding on his account.
Units of the Trusts are not deposits or obligations of, or
guaranteed by, any bank, and are not Federally insured or otherwise
protected by the Federal Deposit Insurance Corporation and involve
investment risk including loss of principal.
SPONSOR: RANSON & ASSOCIATES, 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.
The investor is advised to read and retain both parts
of this Prospectus for future reference.
The date of this Part One is that date set forth in
Part Two of the Prospectus
TABLE OF CONTENTS
Page
SUMMARY - GNMA PORTFOLIO 4
GNMA PORTFOLIO 6
The GNMA Trust 6
Risk Factors 7
Portfolios 7
Origination 8
Nature of Ginnie Maes and GNMA Guaranty 9
Life of the Securities and of the Series of the GNMA Trust 10
SUMMARY - U.S. TREASURY PORTFOLIO 12
THE U.S. TREASURY PORTFOLIO SERIES 15
Risk Factors 15
General 16
PORTFOLIO SELECTION 16
THE UNITS 17
ESTIMATED LONG-TERM AND CURRENT RETURNS 17
PUBLIC OFFERING OF UNITS 18
Public Offering Price 18
Public Distribution 22
Profits of Sponsor 23
TAX STATUS OF THE TRUSTS 24
Regulated Investment Companies 24
U.S. Treasury Portfolio Series 26
Kemper Government Securities Trust, GNMA Portfolio (Foreign
Investors Trust) and Kemper Defined Funds, GNMA Portfolio,
Series 1 31
RETIREMENT PLANS 35
DISTRIBUTION REINVESTMENT 37
REDEMPTION 38
Right of Redemption 38
Computation of Redemption Value 39
Postponement of Redemption 40
RIGHTS OF UNITHOLDERS 40
Unitholders 40
Ownership of Units 41
Certain Limitations 41
EXPENSES AND CHARGES 42
Initial Expenses 42
Fees 42
Other Charges 42
DISTRIBUTIONS FROM THE INTEREST, PRINCIPAL AND
CAPITAL GAINS ACCOUNTS. 43
GNMA Trust 43
U.S. Treasury Portfolio Series 43
General 44
ADMINISTRATION OF THE TRUST 45
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Records and Accounts 45
Portfolio Supervision 45
Reports to Unitholders 46
Amendments 48
Termination 49
RESIGNATION, REMOVAL AND LIABILITY 49
Regarding the Trustee 49
Regarding the Sponsor 50
Regarding the Evaluator 50
MISCELLANEOUS 50
Sponsor 50
Trustee 51
Legal Opinions 51
INDEPENDENT AUDITORS 51
Essential Information*
Report of Independent Auditors*
Statement of Assets and Liabilities*
Statement of Operations*
Statement of Changes in Net Assets*
Schedule of Investments*
Notes to Schedule of Investments*
Notes to Financial Statements*
*INFORMATION ON THESE ITEMS APPEARS IN PART TWO
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KEMPER GOVERNMENT SECURITIES TRUST
KEMPER DEFINED FUNDS, GNMA PORTFOLIO
KEMPER DEFINED FUNDS, U.S. TREASURY PORTFOLIO
EVEREN UNIT INVESTMENT TRUSTS GNMA PORTFOLIO
SUMMARY - GNMA PORTFOLIO
General. Each Series of the Kemper Government Securities Trust,
GNMA Portfolio, Kemper Defined Funds, GNMA Portfolio and EVEREN Unit
Investment Trusts GNMA Portfolio (each a "GNMA Trust" or "Trust"), is one
of a series of unit investment trusts whose objective is to obtain safety
of capital and to provide current monthly distributions of interest and
principal through investment in a fixed portfolio initially consisting of
contracts to purchase taxable mortgage-backed securities of the modified
pass-through type ("Ginnie Maes" or "Securities"), including so-called
"Ginnie Mae II's" (see "GNMA Portfolios-Origination"), which involve
larger pools of mortgages and which have a central paying agent, fully
guaranteed as to principal and interest by the Government National
Mortgage Association ("GNMA"). Certain Series of the GNMA Trust contain
Ginnie Maes which consist of pools of long term (i.e., 30 year) mortgages
on 1- to 4-family dwellings. Other Series contain Ginnie Maes consisting
of pools of mortgages on 1- to 4-family dwellings which have stated
maturity of 15 years (so called "Ginnie Mae Midgets"). See "GNMA
Portfolios" and the "Schedule of Investments" in Part Two. Under certain
circumstances, the Sponsor may direct the Trustee to reinvest certain
surplus monies in the principal account of a Series in additional Ginnie
Maes. See "Administration of the Trust - Portfolio Supervision."
The guaranteed payment of principal and interest afforded by Ginnie
Maes may make an investment in a Series of the GNMA Trust particularly
well suited for purchase by Individual Retirement Accounts, Keogh Plans,
pension funds and other tax-deferred retirement plans. In addition, the
ability to buy whole or fractional Units (minimum purchase $1,000, $250
for IRA accounts) enables such investors to tailor the dollar amount of
their purchases of Units to take maximum possible advantage of the annual
deductions available for contributions to such plans. Investors should
consult with their tax advisers before investing. See "Retirement
Plans."
Monthly Distributions. Monthly distributions of principal,
prepayments of principal, if any, and interest received by a Series of
the GNMA Trust will be paid in cash unless the Unitholder elects to have
them automatically reinvested in any open-end mutual fund underwritten or
advised by Zurich Kemper Investments, Inc. (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 GNMA Trusts, Unitholders
should carefully consider the consequences before selecting such Kemper
Funds for reinvestment. Any such reinvestment is made at net asset
value, that is, without a sales charge. Investors have the ability to
designate that only principal payments (including prepayments) or only
interest payments or both are to be reinvested. Investors who intend to
participate in the Reinvestment Program should so indicate at the time of
their purchase. See "Distribution Reinvestment." It should be noted by
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purchasers of Midget Foreign Investors Trusts that distributions from the
reinvestment fund chosen generally will be subject to U.S. Federal income
tax withholding. Distributions will be made on or about the last day of
each month to Unitholders of record on the 1st day of such month.
Securities. One or more different issues of Ginnie Maes were
deposited in the GNMA Trust on the Initial Date of Deposit. The current
percentage relationship among the Ginnie Maes in a GNMA Series is shown
under "Essential Information" and "Schedule of Investments" in Part Two.
Risk Factors. An investment in Units of a Series of the GNMA Trust
should be made with an understanding of the risks which an investment in
fixed rate long term 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. Because of the shorter average life of the
Securities in certain Series of the GNMA Trust and the lower coupon
interest rates on such Securities, the value of such Series should tend
to fluctuate less than longer term obligations. Some or all of the
Securities in a Series of the GNMA Trust may have been purchased at a
market discount.
Estimated Current and Long-Term Returns. The Estimated Current
Return shown under "Essential Information" in Part Two, shows the return
based on the Public Offering Price which includes a sales charge and is
computed by dividing the estimated net annual interest income by the
Public Offering Price. The net annual interest rate will vary with
changes in the fees and expenses of the Trustee, Sponsor and Evaluator
and with the exchange, redemption, sale, scheduled payments, prepayments
or maturity of underlying Securities. The Public Offering Price will
also vary with fluctuations in the evaluation of the underlying
Securities and accrued interest, and, in the case of certain Trusts, with
changes in Purchased Interest and Daily Accrued Interest. Therefore, it
can be expected that the Estimated Current Return will fluctuate in the
future. The 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 average life of all of the Securities in the Trusts and
(2) takes into account the expenses and sales charge associated with each
Unit of each Trust. Since the market values and estimated average life
of the Securities and the expenses of the Trusts will change, it can be
expected that the Estimated Long-Term Returns will fluctuate in the
future. The Estimated Current Return and Estimated Long-Term Return are
expected to differ because the calculation of the Estimated Long-Term
Return reflects the estimated date and amount of principal returned while
the Estimated Current Return calculation includes only the net annual
interest rate and Public Offering Price. See "Estimated Long-Term and
Current Returns." The net annual income is, of course, taxable to a
Unitholder. The net annual income is not taxable for Federal income tax
purposes to qualified foreign investors who have purchased Midget Foreign
Investors Trusts. See "Tax Status of the Trusts" and "Retirement Plans."
Market for Units. The Sponsor, though not obligated to do so,
intends to maintain a market for the Units of the Series of the GNMA
Trust based on the aggregate bid side evaluation of the underlying
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Securities plus, in the case of certain Trusts, Purchased Interest and
Daily Accrued Interest. If such market is not maintained, a Unitholder
will, nevertheless, be able to dispose of his Units through redemption at
prices based on the aggregate bid side evaluation of the underlying
Securities in each Series. See "Redemption." Market conditions may
cause such prices to be greater or less than the amount paid for Units.
GNMA PORTFOLIO
The GNMA Trust. Each Series of the GNMA Trust is a "unit investment
trust" created under Missouri or New York law pursuant to a Trust
Indenture and Agreement (hereinafter collectively referred to as the
"Indenture").* Ranson & Associates, Inc. is the Sponsor and Evaluator of
the Trusts and is successor sponsor and evaluator of all unit investment
trusts formerly sponsored by EVEREN Unit Investment Trusts, a service of
EVEREN Securities, Inc. The Bank of New York is the Trustee of the Trusts
as successor to Investors Fiduciary Trust Company.
The purpose and objective of the GNMA Trust is to provide investors
with an appropriate vehicle to obtain safety of capital and monthly
distributions of interest and principal through investment in a fixed
portfolio of securities (the "GNMA Portfolio") consisting of taxable
mortgage-backed securities of the modified pass-through type ("Ginnie
Maes") guaranteed by the Government National Mortgage Association
("GNMA") and backed by the full faith and credit of the United States.
In addition, the Midget Foreign Investors Trusts and GNMA Foreign
Investors Portfolio Series, which are available only to non-resident
alien investors, have an additional purpose of providing income which is
exempt from withholding for U.S. Federal income taxes for such foreign
investors. A foreign investor must provide a completed W-8 Form to his
financial representative or the Trustee to avoid withholding on his
account. See "Tax Status of the Trusts."
As used herein, the term "Securities" means the Ginnie Maes
described in Part Two under "Schedule of Investments."
On the date shown, each Unit represented the fractional undivided
interest in the Securities and estimated net income of the Series of the
GNMA Trust set forth in Part Two under "Essential Information." Because
regular payments of principal are to be received and certain of the
Securities from time to time may be redeemed or will mature in accordance
with their terms or may be sold under certain circumstances described
herein, the Series of the GNMA Trust is not expected to retain its
present size and composition. Units will remain outstanding until
redeemed upon tender to the Trustee by any Unitholder (which may include
the Sponsor) or until the termination of a Series of the GNMA Trust
pursuant to the Indenture.
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* To the extent reference is made to the Indenture, any statements
herein are qualified in their entirety by the provisions of said
Indenture.
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Risk Factors. An investment in Units of a Series of the GNMA Trust
should be made with an understanding of the risks which an investment in
fixed rate long term debt obligations may entail, including the risk that
the value of the GNMA Portfolio and hence of the Units will decline with
increases in interest rates. Because of the shorter average life of the
Ginnie Mae Midgets in certain Series of the GNMA Trust, and the lower
coupon interest rate on such Securities, the value of the Units of such
Series should tend to fluctuate less than that of Series composed of
longer term obligations. The value of the underlying Securities will
fluctuate inversely with changes in interest rates. In addition, the
potential for appreciation of the underlying Securities, which might
otherwise be expected to occur as a result of a decline in interest rates
may be limited or negated by increased principal prepayments on the
underlying mortgages. The high inflation of prior years, together with
the fiscal measures adopted to attempt to deal with it, have resulted in
wide fluctuations in interest rates and, thus, in the value of fixed rate
long term debt obligations generally. The Sponsor cannot predict whether
such fluctuations will continue in the future.
The Securities in the Series of the GNMA Trust were chosen in part
on the basis of their respective stated maturity dates. The ranges of
maturity dates of the Securities contained in a Series of the Trust are
shown in Part Two on the "Schedule of Investments." See "Life of the
Securities and of the Series of the GNMA Trust."
A Series of the GNMA Trust may be an appropriate medium for
investors who desire to participate in a portfolio of taxable fixed
income securities offering the safety of capital provided by securities
backed by the full faith and credit of the United States but who do not
wish to invest the minimum $25,000 which is required for a direct
investment in GNMA guaranteed securities.
Portfolios. The GNMA Portfolios of the Series of the GNMA Trust
consist of Ginnie Maes, including so-called Ginnie Mae II's and, in the
case of certain designated Series, Ginnie Mae Midgets, fully guaranteed
as to payment of principal and interest by the Government National
Mortgage Association. In order for Ginnie Maes to be eligible for
inclusion in Midget Foreign Investors Trusts or GNMA Foreign Investors
Portfolio Series, evidence must be received by the Sponsor that the
underlying mortgages were originated after July 18, 1984. Although the
Sponsor believes that all the underlying mortgages were originated after
July 18, 1984, to the extent that this is not the case, a Foreign
Investor will be subject to withholding for U.S. Federal income taxes on
income derived from mortgages that were originated on or prior to
July 18, 1984. See "Tax Status of the Trusts." Each group of Ginnie
Maes described herein as having a specified range of maturities includes
individual mortgage-backed securities which have varying ranges of
maturities. Each such group of Ginnie Maes is described as one category
of securities because current market conditions accord no difference in
price among the individual Ginnie Mae securities within such group on the
basis of the difference in the maturity dates of each Ginnie Mae. As
long as this market condition prevails, a purchase of Ginnie Maes with
the same coupon rate and a maturity date within the range mentioned above
will be considered an acquisition of the same Security. In the future,
however, the difference in maturity ranges could affect the market value
of the individual Ginnie Maes. At such time, any additional purchases by
a GNMA Portfolio Series of the Trust will take into account the
maturities of the individual Securities.
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A Series of the GNMA Trust may contain Securities which were
acquired at a market discount. Such Securities trade at less than par
value because the interest rates thereon are lower than interest rates on
comparable debt securities being issued at currently prevailing interest
rates. If interest rates for newly issued and otherwise comparable
securities increase, the market discount of previously issued securities
will increase and if interest rates for newly issued comparable
securities decline, the market discount of previously issued securities
will decrease, other things being equal. Market discount attributable to
interest rate changes does not indicate a lack of market confidence in
the issue.
Holders of Units will be "at risk" with respect to such Securities
(i.e., may derive either gain or loss from fluctuations in the evaluation
of the Securities) from the date they commit for Units. See "Estimated
Long - Term and Current Returns."
The mortgages underlying a Ginnie Mae may be prepaid at any time
without penalty. A lower or higher return on Units may occur depending
on whether the price at which the respective Ginnie Maes were acquired by
a Series of the Trust is lower or higher than par (which represents the
price at which such Ginnie Maes will be redeemed upon prepayment).
Redemption of premium Ginnie Maes at par pursuant to prepayments of
mortgages will operate to lower the current return on Units outstanding
at that time since premium Ginnie Maes normally carry higher interest
coupons than par or discount Ginnie Maes. If mortgages rates decline in
the future, such prepayments may occur with increasing frequency because,
among other reasons, mortgagors may be able to refinance their
outstanding mortgages at lower interest rates. See "Life of the
Securities and of the Series of the GNMA Trust."
Set forth below is a brief description of the current method of
origination of Ginnie Maes; the nature of such securities, including the
guaranty of GNMA; the basis of selection and acquisition of the Ginnie
Maes included in the GNMA Portfolios; and the expected life of the Ginnie
Maes in the Series of the GNMA Trust. The "Schedule of Investments" in
Part Two contains information concerning the coupon rate and range of
stated maturities of the Ginnie Maes in such Series of the GNMA Trust.
Origination. The Ginnie Maes included in the GNMA Portfolios are
backed by the indebtedness secured by underlying mortgage pools of long
term mortgages on 1- to 4-family dwellings. In the case of The Midget
Foreign Investors Trusts or GNMA Foreign Investors Portfolio Series,
which may be acquired only by qualified foreign investors, the Sponsor
has acquired only pools containing mortgages which it believes were
originated after July 18, 1984. The pool of mortgages which is to
underlie a particular new issue of Ginnie Maes is assembled by the
proposed issuer of such Ginnie Maes. The issuer is typically a mortgage
banking firm, and in every instance must be a mortgagee approved by and
in good standing with the Federal Housing Administration ("FHA"). In
addition, GNMA imposes its own criteria on the eligibility of issuers,
including a net worth requirement.
The mortgages which are to comprise a new Ginnie Mae pool may have
been originated by the issuer itself in its capacity as a mortgage lender
or may be acquired by the issuer from a third party. Such third party
may be another mortgage banker, a banking institution, the Veterans
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Administration ("VA") (which in certain instances acts as a direct lender
and thus originates its own mortgages) or one of several other
governmental agencies. All mortgages in any given pool will be insured
under the National Housing Act, as amended ("FHA-insured") or Title V of
the Housing Act of 1949 ("FMHA-insured") or guaranteed under the
Servicemen's Readjustment Act of 1944, as amended, or Chapter 37 of
Title 38, U.S.C. ("VA-guaranteed"). Such mortgages will have a date for
the first scheduled monthly payment of principal that is not more than
one year prior to the date on which GNMA issues its guaranty commitment
as described below, will have comparable interest rates and maturity
dates, and will meet additional criteria of GNMA. All mortgages in the
pools backing the Ginnie Maes contained in the Portfolios are mortgages
on 1- to 4-family dwellings (having a stated maturity of up to 30 years,
except in the case of certain Series containing Ginnie Mae Midgets, whose
stated maturity is 15 years). In general, the mortgages in these pools
provide for monthly payments over the life of the mortgage (aside from
prepayments) designed to repay the principal of the mortgage over such
period, together with interest at the fixed rate of the unpaid balance.
To obtain GNMA approval of a new pool of mortgages, the issuer will
file with GNMA an application containing information concerning itself,
describing generally the pooled mortgages, and requesting that GNMA
approve the issue and issue its commitment (subject to GNMA's
satisfaction with the mortgage documents and other relevant
documentation) to guarantee the timely payment of principal of and
interest on the Ginnie Maes to be issued by the issuer. If the
application is in order, GNMA will issue its commitment and will assign a
GNMA pool number to the pool. Upon completion of the required
documentation (including detailed information as to the underlying
mortgages, a custodial agreement with a Federal or state regulated
financial institution satisfactory to GNMA pursuant to which the
underlying mortgages will be held in safekeeping, and a detailed guaranty
agreement between GNMA and the issuer) the issuance of the Ginnie Maes is
permitted. When the Ginnie Maes are issued, GNMA will endorse its
guaranty thereon. The aggregate principal amount of Ginnie Maes issued
will be equal to the then unpaid aggregate principal balances of the
pooled mortgages. The interest rate borne by the Ginnie Maes is
currently fixed at 1/2 of 1% below the interest rate of the pooled 1- to
4-family mortgages, the differential being applied to the payment of
servicing and custodial charges as well as GNMA's guaranty fee.
Ginnie Mae II's consist of jumbo pools of mortgages consisting of
pools of mortgages from more than one issuer. The major advantage of
Ginnie Mae II's lies in the fact that a central paying agent sends one
check to the holder on the required payment date. This greatly
simplifies the current procedure of collecting distributions from each
issuer of a Ginnie Mae, since such distributions are often received late.
Nature of Ginnie Maes and GNMA Guaranty. All of the Ginnie Maes in
the GNMA Portfolio, including the Ginnie Mae II's, are of the "modified
pass-through" type, i.e., they provide for timely monthly payments to the
registered holders thereof (including the Series of the GNMA Trust) of a
pro rata share of the scheduled principal payments on the underlying
mortgages, whether or not collected by the issuers. Such monthly
payments will also include, on a pro rata basis, any prepayments of
principal of such mortgages received and interest (net of the servicing
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and other charges described above) on the aggregate unpaid principal
balance of such Ginnie Maes, whether or not the interest on the
underlying mortgage has been collected by the issuers.
The Ginnie Maes in the GNMA Portfolios are guaranteed as to timely
payment of principal and interest by GNMA. Funds received by the issuers
on account of the mortgages backing the Ginnie Maes in the GNMA
Portfolios are intended to be sufficient to make the required payments of
principal of and interest on such Ginnie Maes but, if such funds are
insufficient for that purpose, the guaranty agreements between the
issuers and GNMA require the issuers to make advances sufficient for such
payments. If the issuers fail to make such payments, GNMA will do so.
GNMA is authorized by Section 306(g) of Title III of the National
Housing Act to guarantee the timely payment of principal of and interest
on securities which are based on or backed by a trust or pool composed of
mortgages insured by FHA, the Farmers' Home Administration ("FMHA") or
guaranteed by the VA. Section 306(g) provides further that the full
faith and credit of the United States is pledged to the payment of all
amounts which may be required to be paid under any guaranty under such
subsection. An opinion of an Assistant Attorney General of the United
States, dated December 9, 1969, states that such guaranties "constitute
general obligations of the United States backed by its full faith and
credit."* GNMA is empowered to borrow from the United States Treasury to
the extent necessary to make any payments of principal and interest
required under such guaranties.
Ginnie Maes are backed by the aggregate indebtedness secured by the
underlying FHA-insured, FMHA-insured or VA-guaranteed mortgages and,
except to the extent of funds received by the issuers on account of such
mortgages, Ginnie Maes do not constitute a liability of nor evidence any
recourse against such issuers, but recourse thereon is solely against
GNMA. Holders of Ginnie Maes (such as the GNMA Trust) have no security
interest in or lien on the underlying mortgages.
The GNMA guaranties referred to herein relate only to payment of
principal of and interest on the Ginnie Maes in the GNMA Portfolios and
not to the Units offered hereby.
Life of the Securities and of the Series of the GNMA Trust. Monthly
payments of principal will be made, and additional prepayments of
principal may be made, to the Series of the GNMA Trust in respect of the
mortgages underlying the Ginnie Maes in the GNMA Portfolios. All of the
mortgages in the pools relating to the Ginnie Maes in the GNMA Portfolios
are subject to prepayment without any significant premium or penalty at
the option of the mortgagors. While the mortgages on 1- to 4-family
dwellings underlying the Ginnie Maes have a stated maturity of up to 30
years (15 years for Ginnie Mae Midgets), it has been the experience of
the mortgage industry that the average life of comparable mortgages,
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* Any statement in this Prospectus that a particular Security is
backed by the full faith and credit of the United States is based
upon the opinion of an Assistant Attorney General of the United
States and should be so construed.
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owing to prepayments, refinancings and payments from foreclosures is
considerably less.
In the mid 1970s, published tables for Ginnie Maes utilized a 12-
year average life assumption for Ginnie Mae pools of 26-30 year mortgages
on 1- to 4-family dwellings. This assumption was derived from the FHA
experience relating to prepayments on such mortgages during the period
from the mid 1950s to the mid 1970s. This 12-year average life
assumption was calculated in respect of a period during which mortgage
lending rates were fairly stable. That assumption is probably no longer
an accurate measure of the life of Ginnie Maes or their underlying single
family mortgage pools. However, current yield tables, published in 1981,
still utilize the 12-year average life assumption and Ginnie Maes
continue to be traded based on this assumption. Recently, mortgages
issued at high interest rates have experienced accelerated prepayment
rates which would indicate a shorter average life than 12 years.
A number of factors, including homeowner's mobility, change in
family size and mortgage market interest rates will affect the average
life of the Ginnie Maes in the GNMA Portfolios. For example, Ginnie Maes
issued during a period of high interest rates will be backed by a pool of
mortgage loans bearing similarly high rates. In general, during a period
of declining interest rates, new mortgage loans with interest rates lower
than those charged during periods of high rates will become available.
To the extent a homeowner has an outstanding mortgage with a high rate,
he may refinance his mortgage at a lower interest rate or he may rapidly
repay his old mortgage. Should this happen, a Ginnie Mae issued with a
high interest rate may experience a rapid prepayment of principal as the
underlying mortgage loans prepay in whole or in part. Accordingly, there
can be no assurance that the prepayment levels which will be actually
realized will conform to the experience of the FHA, other mortgage
lenders or other Ginnie Mae investors.
It is not possible to meaningfully predict prepayment levels
regarding the Ginnie Maes in the GNMA Portfolios. Therefore, the
termination of a Series of the GNMA Trust might be accelerated as a
result of prepayments made as described herein.
In addition to prepayments as described above, sales of Securities
in the GNMA Portfolios under certain permitted circumstances may result
in an accelerated termination of a Series of the GNMA Trust. Also, it is
possible that, in the absence of a secondary market for the Units or
otherwise, redemptions of Units may occur in sufficient numbers to reduce
the GNMA Portfolios to a size resulting in such termination. Early
termination of a Series of the GNMA Trust may have important consequences
to the Unitholder, e.g., to the extent that Units were purchased with a
view to an investment of longer duration, the overall investment program
of the investor may require readjustment; or the overall return on
investment may be less or greater than anticipated, depending, in part,
on whether the purchase price paid for Units represented the payment of
an overall premium or a discount, respectively, above or below the stated
principal amounts of the underlying mortgages. In addition, a capital
gain or loss may result for tax purposes from termination of the GNMA
Portfolios.
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<PAGE>
SUMMARY - U.S. TREASURY PORTFOLIO
Each Kemper Government Securities Trust, U.S. Treasury Portfolio,
Kemper Defined Funds, U.S. Treasury Portfolio and EVEREN Unit Investment
Trusts U.S. Treasury Portfolio (collectively, the "U.S. Treasury
Portfolio Series") is a unit investment trust whose objective is to
obtain safety of capital and investment flexibility as well as current
monthly distributions of interest through investment in a fixed, laddered
portfolio consisting of interest-bearing U.S. Treasury obligations or, in
certain U.S. Treasury Portfolio Series, consisting of some or almost all
zero coupon U.S. Treasury obligations (the "U.S. Treasury Obligations").
The U.S. Treasury Portfolio Series is formed for the purpose of providing
protection against changes in interest rates and also passing through to
Unitholders in all states the exemption from state personal income taxes
afforded to direct owners of U.S. obligations. Each U.S. Treasury
Portfolio Series has an additional purpose of providing income which is
exempt from withholding for U.S. Federal income taxes for non-resident
alien investors. A foreign investor must provide a completed W-8 Form to
his financial representative or the Trustee to avoid withholding on his
account. The Securities are direct obligations of the United States and
are backed by its full faith and credit. The value of the Units, the
estimated current return and estimated long-term return to new purchasers
will fluctuate with the value of the portfolio which will generally
decrease or increase inversely with changes in interest rates.
The guaranteed payment of principal and interest afforded by U.S.
Treasury Obligations, and, with respect to those Series which own zero
coupon U.S. Treasury Obligations ("Stripped Treasury Securities"), the
additional fact that no interest distributions will be made prior to
maturity of the Stripped Treasury Securities may make investment in U.S.
Treasury Portfolio Series particularly well suited for purchase by
Individual Retirement Accounts, Keogh Plans, pension funds and other tax-
deferred retirement plans. In addition, the ability to buy Units
(minimum purchase $1,000 per Series, $250 for IRA accounts) at a Public
Offering Price of approximately $1.00 per Unit ($10.00 per Unit for
Kemper Defined Funds and EVEREN Unit Investment Trusts) enables such
investors to tailor the dollar amount of their purchases of Units to take
maximum possible advantage of the annual deductions available for
contributions to such plans. Investors should consult with their tax
advisers before investing. See "Retirement Plans."
Monthly Distributions. Monthly distributions of interest received
by each U.S. Treasury Portfolio Series will be paid in cash unless the
Unitholder elects to have them automatically reinvested in any mutual
fund underwritten or advised by Zurich Kemper Investments, Inc. (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
U.S. Treasury Portfolio, Unitholders should carefully consider the
consequences before selecting such Kemper Funds for reinvestment. Any
such reinvestment is made at net asset value (that is, without a sales
charge). Investors have the ability to designate that only principal
payments or only interest payments or both are to be reinvested (see
"Reinvestment Program"). Distributions of principal will be made in
accordance with the instructions of the investor in any month the amount
in the Principal Account equals or exceeds $1.00 per 1,000 Units ($1.00
-12-
<PAGE>
per 100 Units for certain Trusts). Distributions will be made as
specified in Part Two for each Trust.
Stripped Treasury Securities. Stripped Treasury Securities are sold
at a deep discount because the buyer of those securities obtains only the
right to receive a future fixed payment on the security and not any
rights to periodic interest payments thereon. Purchasers of these
Securities acquire, in effect, discount obligations that are economically
identical to the "zero-coupon bonds" that have been issued by
corporations. Zero coupon bonds are debt obligations which do not make
any periodic payments of interest prior to maturity and accordingly are
issued at a deep discount.
Stripped Treasury Securities held by any Series of the U.S. Treasury
Portfolio Series Trust shall consist solely of either of the following
types of the registered securities: (a) U.S. Treasury debt obligations
originally issued as bearer coupon bonds which have been stripped of
their unmatured interest coupons and (b) coupons which have been stripped
from U.S. Treasury bearer bonds, either of which may be held through the
Federal Reserve Bank's book entry system called "Separate Trading of
Registered Interest and Principal of Securities" ("STRIPS"). The
Stripped Treasury Securities are payable in full at maturity at their
stated maturity amount and are not subject to redemption prior to
maturity. In addition, the Stripped Treasury Securities do not make any
periodic payments of interest.
The Stripped Treasury Securities are sold at a substantial discount
from their face amounts payable at maturity. The holder of Stripped
Treasury Securities will be required to include annually in gross income
an allocable portion of the deemed original issue discount, prior to
receipt of cash attributable to that income. Accordingly, any Series
owning Stripped Treasury Securities may not be a suitable investment
unless these taxes can be paid from other funds or unless such Series is
purchased by Individual Retirement Accounts, Keogh plans or other tax-
deferred retirement plans. Stripped Treasury Securities are marketable
in substantially the same manner as other discount Treasury Securities.
Risk Factors. An investment in Units of the U.S. Treasury Portfolio
should be made with an understanding of the risks which an investment in
fixed-rate U.S. Treasury obligations may entail, including the risk that
the value of the portfolio and hence of the Units will decline with
increases in interest rates. Some or all of the Securities in the Trust
Fund have been purchased at a market discount. The current returns
(coupon interest rate) of such Securities are lower than the current
returns of similar, comparably rated, Securities issued at currently
prevailing interest rates.
Additionally, an investment in a Series holding Stripped Treasury
Securities should be made with an understanding of the risks which an
investment in debt obligations, most of which were purchased at a deep
discount, may entail, including the risk that the value of the underlying
debt obligations and hence of the Units will decline with increases in
interest rates. The market value of Stripped Treasury Securities, and
therefore the value of the Units, may be subject to greater fluctuations
in response to changing interest rates than debt obligations of
comparable maturities which pay interest currently. This risk is greater
when the period to maturity is longer. No distributions of income are
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<PAGE>
anticipated until maturity of the Stripped Treasury Securities. The
price per Unit will vary in accordance with fluctuations in the values of
the Stripped Treasury Securities, and the distributions could change if
Stripped Treasury Securities are paid or sold, or if the expenses of the
Trust change.
The Stripped Treasury Securities will mature at one year intervals
in consecutive years and do not make any periodic payment of income prior
to maturity. Accordingly, it is not anticipated that there will be any
periodic distributions of income.
Because interest on "zero coupon" debt obligations is not
distributed on a current basis but in effect compounded, the value of
securities of this type, including the value of accreted and reinvested
interest (and of a trust comprised of these obligations), is subject to
greater fluctuations than of obligations which distribute income
regularly. Accordingly, while the full faith and the credit of the U.S.
government provides a high level of protection against credit risks on
the Securities, sale of Units before maturity of the Securities at a time
when interest rates have increased would involve greater risk than in a
trust which is invested in debt obligations or comparable maturity which
pay interest currently. This risk is greater when the period to maturity
is longer.
Estimated Current and Long-Term Returns. The Estimated Current
Return is calculated by dividing the estimated net annual interest rate
per Unit by the Public Offering Price. The net estimated annual interest
rate per Unit will vary with changes in the fees and expenses of the
Trustee, Sponsor and Evaluator and with the exchange, redemption, sales,
scheduled payments, prepayments or maturity of underlying Securities in
the portfolio. The Public Offering Price of a Trust will also vary with
fluctuations in the evaluation of the underlying Securities and accrued
interest, and in the case of certain Trusts with changes in the Purchased
Interest and Daily Accrued Interest; therefore, there is no assurance
that the present Estimated Current Return will be realized in the future.
The Estimated Long-Term Return is calculated using a formula which
(1) takes into account the amortization of premiums and the accretion of
discounts, the estimated retirements of all the Securities in such Series
and (2) takes into account the expenses and sales charge associated with
each Unit of the Trust. Since the market values and the estimated
average lives or estimated retirements, as the case may be, of the
Securities and the expenses of a Trust will change, it can be expected
that the Estimated Long-Term Returns will fluctuate in the future.
Estimate Current Return and Estimated Long-Term Return are expected to
differ because the calculation of the Estimated Long-Term Return reflects
the estimated date and amount of principal returned while the Estimated
Current Return calculation includes only the net annual interest rate and
Public Offering Price.
Market for Units. The Sponsor, though not obligated to do so, after
the initial offering period, intends to maintain a market for the Units
based on the aggregate bid side evaluation of the underlying Securities
plus Purchased Interest, if any, and accrued interest (or Daily Accrued
Interest). If such market is not maintained, a Unitholder will,
nevertheless, be able to dispose of his Units through redemption at
prices based on the aggregate bid side evaluation of the underlying
Securities. See "Redemption." Market conditions may cause such prices
to be greater or less than the amount paid for Units.
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<PAGE>
THE U.S. TREASURY PORTFOLIO SERIES
Each Kemper Government Securities Trust, U.S. Treasury Portfolio,
Kemper Defined Funds, U.S. Treasury Portfolio and EVEREN Unit Investment
Trusts U.S. Treasury Portfolio (collectively, the "U.S. Treasury
Portfolio Series") is a "unit investment trust" created under Missouri or
New York law pursuant to a Trust Indenture and Agreement (hereinafter
collectively referred to as the "Indenture").* Ranson & Associates, Inc.
is the Sponsor and Evaluator of the Trusts and is successor sponsor and
evaluator of all unit investment trusts formerly sponsored by EVEREN Unit
Investment Trusts, a service of EVEREN Securities, Inc. The Bank of New
York is the Trustee of the Trusts as successor to Investors Fiduciary
Trust Company.
The objective of the U.S. Treasury Portfolio is to obtain safety of
capital and investment flexibility through investment in a fixed,
laddered portfolio consisting of interest-bearing (or in some cases zero
coupon) U.S. Treasury obligations. The U.S. Treasury Portfolio Series is
formed for the purpose of providing protection against changes in
interest rates and also passing through to Unitholders in all states the
exemption from state personal income taxes afforded to direct owners of
U.S. obligations. The Securities are direct obligations of the United
States and are backed by its full faith and credit. The value of the
Units, the estimated current return and estimated long-term return to new
purchasers will fluctuate with the value of the Securities included in
the portfolio which will generally decrease or increase inversely with
changes in interest rates. See "Tax Status of the Trusts."
Risk Factors. An investment in Units of the U.S. Treasury Portfolio
Series should be made with an understanding of the risks which an
investment in fixed rate debt obligations may entail, including the risks
that the value of the Portfolio and hence of the Units will decline with
increases in interest rates. The value of the underlying Securities will
fluctuate inversely with changes in interest rates. The high inflation
of prior years, together with the fiscal measures adopted to attempt to
deal with it, have resulted in wide fluctuations in interest rates and,
thus, in the value of fixed rate long term debt obligations generally.
The Sponsor cannot predict whether such fluctuations will continue in the
future.
In selecting Securities for deposit in the U.S. Treasury Portfolio
Series, the following factors, among others, were considered by the
Sponsor: (i) the prices of the Securities relative to other comparable
Securities; (ii) the maturities of these Securities; and (iii) whether
the Securities were issued after July 18, 1984.
The U.S. Treasury Portfolio Series may be an appropriate medium for
investors who desire to participate in a portfolio of taxable fixed
income securities offering the safety of capital provided by an
investment backed by the full faith and credit of the United States. In
addition, many investors may benefit from the exemption from state and
- -----------------
* To the extent reference is made to the Indenture, any statements
herein are qualified in their entirety by the provisions of said
indenture.
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<PAGE>
local personal income taxes that will pass through the U.S. Treasury
Portfolio Series to Unitholders in virtually all states.
Since Unitholders of a Series holding Stripped Treasury Securities
will be required for Federal income tax purposes to include amounts in
ordinary gross income in advance of the receipt of the cash attributable
to such income, such Series may be appropriate only for an account which
can pay taxes with other funds in advance of the receipt of the cash
attributable to such income or for Individual Retirement Accounts, Keogh
plans or other tax-deferred retirement plans.
General. Each Unit in a Series represents the fractional undivided
interest in the U.S. Treasury Portfolio Series as set forth under
"Essential Information" in Part Two. Because certain of the Securities
from time to time may be redeemed or will mature in accordance with their
terms or may be sold under certain circumstances described herein, the
U.S. Treasury Portfolio Series of the Trust is not expected to retain its
present size and composition. Units will remain outstanding until
redeemed upon tender to the Trustee by any Unitholder (which may include
the Sponsor) or until the termination of the Trust pursuant to the
Indenture.
PORTFOLIO SELECTION
In selecting Ginnie Maes and U.S. Treasury Obligations (collectively
referred to herein as the "Portfolio Obligations") for deposit in a
Series of the appropriate Trusts, the following factors, among others,
were considered by the Sponsor: (i) the types of such obligations
available; (ii) the prices and yields of such obligations relative to
other comparable obligations including the extent to which such
obligations are trading at a premium or at a discount from par; and
(iii) the maturities of such obligations.
Each Series of the Trusts consists of the unamortized principal
amount of the Portfolio Obligations listed in Part Two under "Schedule of
Investments" as may continue to be held from time to time in such Series
together with accrued and undistributed interest thereon and
undistributed cash representing payments and prepayments of principal and
proceeds realized from the disposition of Portfolio Obligations. Neither
the sponsor nor the Trustee shall be liable in any way for any default,
failure or defect in any of the Securities.
Each series of the Trust may contain "zero coupon" U.S. Treasury
Obligations. See "Schedule of Investments" in Part Two of this
Prospectus. Zero coupon obligations are purchased at a deep discount
because the buyer receives only the right to receive a final payment at
the maturity of the obligations and does not receive any periodic
interest payments. The effect of owning deep discount obligations which
do not make current interest payments (such as the zero coupon
obligations) is that a fixed yield is earned not only on the original
investment but also, in effect, on all discount earned during the life of
such income on such obligation at a rate as high as the implicit yield on
the discount obligation, but at the same time eliminates the holder's
ability to reinvest at higher rates in the future. For this reason, zero
coupon obligations are subject to substantially greater price
-16-
<PAGE>
fluctuations during periods of changing market interest rates than are
securities of comparable quality which pay interest.
Because regular payments of principal are to be received and certain
of the Portfolio Obligations from time to time may be redeemed or will
mature in accordance with their terms or may be sold under certain
circumstances described herein, the Series of the Trusts are not expected
to retain their present size and composition.
THE UNITS
Each Unit represents the fractional undivided interest in a Series
of the Trusts set forth in Part Two under "Essential Information." If
any Units are redeemed by the Trustee, the principal amount of Portfolio
Obligations in such Series of the Trusts will be reduced by amounts
allocable to redeemed Units, and the fractional undivided interest
represented by each Unit in the balance will be increased. Units will
remain outstanding until redeemed upon tender to the Trustee by any
Unitholder (which may include the Sponsor) or until the termination of
the Series of the Trusts. See "Redemption" and "Administration of the
Trust - Termination."
ESTIMATED LONG-TERM AND CURRENT RETURNS
The Estimated Current Return and Estimated Long-Term Return for each
trust are the amounts set forth in Part Two under "Essential Information"
as of the date shown on that page. Estimated Current Return is
calculated by dividing the estimated net annual interest rate per Unit by
the Public Offering Price. The estimated net annual interest rate 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 Portfolio Obligations while the Public
Offering Price will vary with changes in the offering price of the
underlying Portfolio Obligations and accrued interest, and in the case of
certain Trusts, with changes in Purchased Interest and Daily Accrued
Interest; therefore, there is no assurance that the present Estimated
Current Return will be realized in the future. The 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, in the case of GNMA Portfolio Series,
the estimated average life of all the Portfolio Obligations in such
Series or, in the case of U.S. Treasury Portfolio Series, the estimated
retirements of all of the Portfolio Obligations in such Series and
(2) takes into account the expenses and sales charge associated with each
Trust Unit. Since the market values and the estimated average lives or
estimated retirements, as the case may be, of the Portfolio Obligations
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. The
Estimated Current Return and Estimated Long-Term Return are expected to
differ because the calculation of the Estimated Long-Term Return reflects
the estimated dates and amounts of principal returned while the Estimated
Current Return calculations include only net annual interest rates and
Public Offering Price. See "Summary - GNMA Portfolio - Estimated Current
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<PAGE>
and Long-Term Returns" and "Summary - U.S. Treasury Portfolio - Estimated
Current and Long-Term Returns."
Payments received in respect of the mortgages underlying the Ginnie
Maes in the GNMA Trust Portfolios will consist of a portion representing
interest and a portion representing principal. Although the aggregate
monthly payment made by the obligor on each mortgage remains constant
(aside from optional prepayments of principal), in the early years most
of each such payment will represent interest, while in later years, the
proportion representing interest will decline and the proportion
representing principal will increase. However, by reason of optional
prepayments, principal payments in the earlier years on the mortgages
underlying the Ginnie Maes may be substantially in excess of those
required by the amortization schedules of such mortgages. Therefore,
principal payments in later years may be substantially less since the
aggregate unpaid principal balances of such underlying mortgages may have
been greatly reduced. To the extent that the underlying mortgages
bearing higher interest rates in the GNMA Trust Portfolios are pre-paid
faster than the other underlying mortgages, the net annual interest rate
per Unit and the Estimated Current Return on the Units can be expected to
decline. Monthly payments to the Unitholders will reflect all of the
foregoing factors.
In addition to the Public Offering Price, the price of a Unit will
include accrued interest on the Portfolio Obligations from the last
Record Date of that Series of the Trusts to the date of settlement for
any purchase. Therefore, accrued interest will generally be added to the
value of the Units. If a Unitholder sells all or a portion of his Units,
he will receive his proportionate share of the accrued interest on such
Series from the purchaser of his Units. Similarly, if a Unitholder
redeems all or a portion of his Units, the Redemption Price per Unit will
include accrued interest on the Portfolio Obligations.
PUBLIC OFFERING OF UNITS
Public Offering Price. The Public Offering Price of Units is
computed by adding to the aggregate bid price of the Portfolio
Obligations in that Series of the Trusts as determined by the Evaluator
(see below) plus any money in the Principal Account of such Series other
than money required to redeem tendered Units, plus Purchased Interest, if
any, and accrued interest (or Daily Accrued Interest), then dividing such
sum by the number of Units of such Series outstanding and then adding
that sales charge referred to below.
Although under no obligation to do so, the Sponsor intends to permit
volume purchasers of Units to purchase Units at a reduced sales charge.
The Sponsor may at any time change the amount by which the sales charge
is reduced or may discontinue the discount altogether.
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<PAGE>
The sales charge per Unit for the GNMA Portfolio Series will be
reduced pursuant to the following graduated scale:
<TABLE>
<CAPTION>
GNMA MIDGET SERIES GNMA SERIES
------------------------ ------------------------
PERCENT OF PERCENT OF PERCENT OF PERCENT OF
OFFERING NET AMOUNT OFFERING NET AMOUNT
TICKET SIZE PRICE INVESTED PRICE INVESTED
- ----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Less than $100,000 3.50% 3.627% 3.95% 4.112%
$100,000 to $249,999 3.25 3.359 3.70 3.842
$250,000 to $499,999 2.85 2.934 3.35 3.466
$500,000 to $999,999* 2.60 2.669 3.10 3.199
</TABLE>
- ----------------
* For any transaction in excess of this amount, contact the Sponsor
for the applicable sales charge.
The sales charge per Unit for U.S. Treasury Portfolio Series will be
reduced pursuant to the following graduated scale:
<TABLE>
<CAPTION>
DOLLAR WEIGHTED AVERAGE YEARS TO MATURITY
0-1.99 YEARS 2-2.99 YEARS 3-4.99 YEARS 5-6.99 YEARS 7-9.99 YEARS
------------ ------------ ------------ ------------ ------------
TICKET SIZE SALES CHARGE (PERCENT OF PUBLIC OFFERING PRICE)
- ----------- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Less than $500,000 1.25% 1.50% 1.75% 2.25% 3.00%
$500,000 to $999,999 1.00 1.25 1.50 1.75 2.50
$1,000,000 to $1,499,999* 1.00 1.00 1.25 1.50 2.00
</TABLE>
- ----------------
* For any transaction in excess of $1,499,999, please contact the
Sponsor for the applicable sales charge.
The reduced sales charges as shown on the tables above will apply to
all purchases of Units on any one day by the same person from the same
firm, and for this purpose, purchases of Units of one or more Series of
the Trusts 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 charge is also applicable to a trustee
or other fiduciary purchasing Units for a single trust estate or single
fiduciary account.
The Sponsor will also allow purchasers who commit to purchase $1
million or more of a Series units during a 12 month period to do so at
the applicable sales charge for such series pursuant to a letter of
intent, subject to certain restrictions.
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<PAGE>
The Sponsor intends to permit officers, directors and employees of
the Sponsor and Evaluator to purchase Units of any Series of the Trusts
without a sales charge, although a transaction processing fee may be
imposed on such trades. The Sponsor reserves the right to reject, in
whole or in part, any order for the purchase of Units and the right to
charge the amount of the sales charge from time to time.
Units may be purchased at the Public Offering Price less the
concession the Sponsor typically allows to dealers and other selling
agents for purchases (see "Public Distribution of Units") by investors
who purchase Units through registered investment advisers, certified
financial planners or registered broker-dealers who in each case either
charge periodic fees for financial planning, investment advisory or asset
management services, or provide such services in connection with the
establishment of an investment account for which a comprehensive "wrap
fee" charge is imposed.
In addition to the Public Offering Price, the price of a Unit of a
Series of the Kemper Government Securities Trust will include accrued
interest on the Portfolio Obligations from the last Record Date of that
Series of such Trust to the date of settlement for any purchase.
Therefore, accrued interest will generally be added to the value of the
Units of such Trust. If a Unitholder of the Kemper Government Securities
Trust sells all or a portion of his Units, he will receive his
proportionate share of the accrued interest for that Series of the Trusts
from the purchaser of his Units. Similarly, if a Unitholder of the
Kemper Government Securities Trust redeems all or a portion of his Units,
the Redemption Price per Unit will include accrued interest on the
Portfolio Obligations in such Series.
In the case of certain Series of Kemper Defined Funds, the Public
Offering Price includes accrued interest which consists of two elements.
The first element arises as a result of accrued interest which is the
accumulation of unpaid interest on a security from the later of the last
day on which interest thereon was paid or the date of original issuance
of the security. Interest on the Portfolio Obligations in a Trust is
paid monthly or semi-annually to the Trust. The aggregate amount of such
accrued interest on the Portfolio Obligations in a Trust in certain
Series of Kemper Defined Funds to the First Settlement Date of such Trust
is referred to herein as "Purchased Interest." Included in the Public
Offering Price of the Trust Units is Purchased Interest. The second
element of accrued interest arises because the estimated net interest on
the Units in a Trust is accounted for daily on an accrual basis (herein
referred to as "Daily Accrued Interest" for purposes of certain Kemper
Defined Funds Trusts). Because of this, the Units always have an amount
of interest earned but not yet paid or reserved for payment. For this
reason, the Public Offering Price of Units in certain Series of Kemper
Defined Funds will include the proportionate share of Daily Accrued
Interest to the date of settlement. If a Unitholder in certain Series of
Kemper Defined Funds sells or redeems all or a portion of his Units or if
the Portfolio Obligations are sold or otherwise removed or if the Trust
is liquidated, he will receive at that time his proportionate share of
the Purchased Interest and Daily 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 the Trust.
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<PAGE>
In the case of certain other Series of Kemper Defined Funds and all
Series of EVEREN Unit Investment Trusts, the Public Offering Price
includes accrued interest as described in this paragraph. Accrued
interest is the accumulation of unpaid interest on a security from the
last day on which interest thereon was paid. Interest on Securities
generally is paid semi-annually (monthly in the case of Ginnie Maes, if
any) although a Trust accrues such interest daily. Because of this, a
Trust always has an amount of interest earned but not yet collected by
the Trustee. For this reason, with respect to sales settling subsequent
to the First Settlement Date, the Public Offering Price of Units will
have added to it the proportionate share of accrued interest to the date
of settlement. Unitholders will receive on the next distribution date of
a Trust the amount, if any, of accrued interest paid on their Units. In
an effort to reduce the amount of accrued interest which would otherwise
have to be paid in addition to the Public Offering Price in the sale of
Units to the public, the Trustee will advance the amount of accrued
interest as of the First Settlement Date and the same will be distributed
to the Sponsor as the Unitholder of record as of the First Settlement
Date. Consequently, the amount of accrued interest to be added to the
Public Offering Price of Units will include only accrued interest from
the First Settlement Date to the date of settlement, less any
distributions from the Interest Account subsequent to the First
Settlement Date. Because of the varying interest payment dates of the
Securities, accrued interest at any point in time will be greater than
the amount of interest actually received by the Trusts and distributed to
Unitholders. Therefore, there will always remain an item of accrued
interest that is added to the value of the Units. If a Unitholder sells
or redeems all or a portion of his Units, he will be entitled to receive
his proportionate share of the accrued interest from the purchaser of his
Units. Since the Trustee has the use of the funds held in the Interest
Account for distributions to Unitholders and since such Account is non-
interest bearing to Unitholders, the Trustee benefits thereby.
The Public Offering Price on any date will vary from the amount
stated under "Essential Information" in Part Two due to fluctuations in
the valuation of the underlying Portfolio Obligations in such Series of
the Trusts and accrued interest, and, in the case of certain Trusts, the
additions or deletions of Purchased Interest and Daily Accrued Interest.
The aggregate bid prices of the Portfolio Obligations in a Series of
the Trusts, are determined for each Series of the Trusts by the
Evaluator, in the following manner: (a) on the basis of current bid
prices for the Portfolio Obligations, (b) if bid prices are not available
for the Portfolio Obligations, on the basis of current bid prices for
comparable securities, (c) by determining the value of the Portfolio
Obligations on the bid side of the market by appraisal, or (d) by any
combination of the above. The Evaluator may obtain current price
information as to the Portfolio Obligations from investment dealers or
brokers, including the Sponsor. Such evaluations and computations will
be made as of the close of business on each business day and will be
effective for all sales of Units made during the preceding 24-hour
period. Evaluations, for purposes of redemptions by the Trustee, will be
made each business day as of the Evaluation Time stated under "Essential
Information" in Part Two, effective for all redemptions made subsequent
to the last preceding determination.
In connection with the Ginnie Maes deposited in the GNMA Trusts,
there is a period of time beginning on the first day of each month,
during which the total amount of payments (including prepayments, if any)
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<PAGE>
of principal for the preceding month on the various mortgages underlying
each of the Ginnie Maes in the Portfolio of a Series will not yet have
been reported by the issuer to GNMA and made generally available to the
public. During this period, the precise principal amount of the
underlying mortgages remaining outstanding for each Ginnie Mae in the
Portfolios, and therefore the precise principal amount of such Security,
will not be known, although the principal amount outstanding for the
preceding month will be known. Therefore, the exact amount of principal
to be acquired by the Trustee as a holder of such Securities which may be
distributed to Unitholders of such Series with the next monthly
distribution will not be known. The Sponsor does not expect that the
amounts of such prepayments and the differences in such principal amounts
from month to month will be material in relation to a Series of the GNMA
Trusts due to the number of mortgages underlying each Ginnie Mae and the
number of such Ginnie Maes in each Series of the GNMA Trusts. However,
there can be no assurance that they will not be material. For purposes
of the determination by the Evaluator of the bid prices of the Ginnie
Maes in the GNMA Portfolios and for purposes of calculations of accrued
interest on the Units, during the period in each month prior to the time
when the precise amounts of principal of the Ginnie Maes for the month
become publicly available, the Evaluator will base its evaluations and
calculations, which are the basis for calculations of the Public Offering
Price, the Sponsor's Repurchase Price and the Redemption Price per Unit,
upon the principal amount of such Series outstanding for the preceding
month. The Sponsor expects that the differences in such principal
amounts from month to month will not be material to each GNMA Portfolio
Series of the Trusts. Nevertheless, the Sponsor will adopt procedures as
to pricing and evaluation for the Units of each Series of the GNMA
Trusts, with such modifications, if any, deemed necessary by the Sponsor
for the protection of Unitholders, designed to minimize the impact of
such differences upon the calculation of the Public Offering Price per
Unit, the Sponsor's Repurchase Price per Unit and the Redemption Price
per Unit of such Series.
Public Distribution. The Sponsor has qualified Units for sale in
various states. Units will be sold through dealers who are members of
the National Association of Securities Dealers, Inc. and through others.
Such firms receive a discount from the Public Offering Price as indicated
in the tables under "Profit of Sponsor" 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 indicated in the tables under
"Profit of Sponsor" 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 permitted
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. The Sponsor reserves the right to reject,
in whole or in part, any order for the purchase of Units. The Sponsor
reserves the right to change the discounts from time to time. The
difference between the discounts and the sales charge will be retained by
the Sponsor.
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The Sponsor also 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 Series of the Trusts and other unit
investment trusts underwritten by the Sponsor.
While not obligated to do so, the Sponsor intends, subject to change
at any time, to maintain a market for Units of the Series of the Trusts
offered hereby and to continuously offer to purchase said Units at prices
based on the aggregate bid prices of the underlying Portfolio Obligations
in such Series, together with accrued interest to the expected date of
settlement.
The Sponsor may suspend or discontinue purchases of Units at prices
based on the bid prices of Securities in any Series of the Trusts if the
supply of Units exceeds demand, or for other business reasons.
Profits of Sponsor. Sales of Units may be made to or through
dealers or through others at prices which represent discounts from the
Public Offering Price as set forth below. Discounted rates for the GNMA
Portfolio Series are as follows:
<TABLE>
<CAPTION>
GNMA GNMA
Ticket Size* Midget Series Series
- ------------ ------------- ------
<S> <C> <C>
Less than $100,000 2.10% 2.60%
$100,000 to $249,999 2.10 2.60
$250,000 to $499,999 1.80 2.30
$500,000 to $999,999** 1.55 2.05
</TABLE>
- ----------------
* The breakpoint is applied on a Unit basis utilizing a breakpoint
equivalent in the above table of $1.00 per Unit for $1 Units and
$1000 per 100 Units for $10 Units.
** For transactions in excess of this amount, contact the Sponsor for
the applicable rates.
On the sale of Units, the Sponsor will retain the difference between
the discount and the sales charge. The Sponsor may also realize profits
or sustain losses while maintaining a market in the Units, in the amount
of any difference between the prices at which it buys Units and the
prices at which Units are resold after allowing for the discount.
Cash, if any, received by a dealer from Unitholders prior to the
settlement date for a purchase of Units of any Series may be used in such
dealer's business subject to the limitations of Rule 15c3-3 under the
Securities Exchange Act of 1934 and may be of benefit to the dealer.
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TAX STATUS OF THE TRUSTS
Regulated Investment Companies. Each Series of the GNMA Trusts
(except for Kemper Government Securities Trust GNMA Portfolio (Foreign
Investors Trusts) and Kemper Defined Funds, GNMA Portfolio, Series 1) is
an association taxable as a corporation under the Internal Revenue Code
and intends to qualify on a continuing basis for special Federal income
tax treatment as a "regulated investment company" under the Internal
Revenue Code of 1986 (the "Code"). If the Trust so qualifies and timely
distributes to Unitholders 90% or more of its taxable income (without
regard to its net capital gain, i.e., the excess of its long-term capital
gain over its net short-term capital loss), it will not be subject to
Federal income tax on the portion of its taxable income (including any
net capital gain) that it distributes to Unitholders. In addition, to
the extent the Trust distributes to Unitholders at least 98% of its
taxable income (including any net capital gain), it will not be subject
to the 4% excise tax on certain undistributed income of "regulated
investment companies." Each Series of the GNMA Portfolio intends to
timely distribute its taxable income (including any net capital gains) to
avoid the imposition of Federal income tax or the excise tax.
Distributions of the entire net investment income of each Series of such
Trusts is required by the Indenture.
In any taxable year of the Trusts, the distributions of its income,
other than distributions which are designated as capital gain dividends,
will, to the extent of the earnings and profits of such Series,
constitute dividends for Federal income tax purposes which are taxable as
ordinary income to Unitholders. To the extent that the distributions to
a Unitholder in any year exceed the Trust's current and accumulated
earnings and profits, they will be treated as a return of capital and
will reduce the Unitholder's basis in his Units, and to the extent that
they exceed his basis, will be treated as a gain from the sale of his
Units as discussed below. Distributions from each Series of the GNMA
Trusts will not be eligible for the 70% dividends received deduction for
corporations. Although distributions generally will be treated as
distributed when paid, distributions declared in October, November or
December, payable to Unitholders of record on a specified date in one of
those months and paid during January of the following year will be
treated as having been distributed by each Series of such Trusts (and
received by the Unitholders) on December 31 of the year such
distributions are declared. Under the Code, certain miscellaneous
itemized deductions, such as investment expenses, tax return preparation
fees and employee business expenses, will be deductible by individuals
only to the extent they exceed 2% of adjusted gross income.
Miscellaneous itemized deductions subject to this limitation under
present law do not include expenses incurred by the GNMA Trusts, as long
as the Units of such Trusts are held by or for 500 or more persons at all
times during the taxable year or another exception is met. In the event
the Units of any Series of a GNMA Trust are held by fewer than 500
persons, additional taxable income will be realized by the individual
(and other noncorporate) Unitholders in excess of the distributions
received from such Series.
Distributions of the Trusts' net capital gain which the Trusts
designate as capital gain dividends will be taxable to Unitholders
thereof as long-term capital gains, regardless of the length of time the
Units have been held by a Unitholder. However, if a Unitholder receives
a long-term capital gain dividend (or is allocated a portion of the
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Trust's undistributed long-term capital gain) and sells his Units at a
loss prior to holding them for 6 months, such loss will be
recharacterized as long-term capital loss to the extent of such long-term
capital gain received as a dividend or allocated to a Unitholder.
Distributions in partial liquidation, reflecting the proceeds of
prepayments, redemptions, maturities (including monthly mortgage payments
of principal in GNMA Series) or sales of Portfolio Obligations from a
Series of such Trusts (exclusive of net capital gain) will not be taxable
to Unitholders of such Series to the extent that they represent a return
of capital for tax purposes. The portion of distributions which
represents a return of capital will, however, reduce a Unitholder's basis
in his Units, and to the extent they exceed the basis of his Units will
be taxable as a capital gain. A Unitholder may recognize a taxable gain
or loss when his Units are sold or redeemed. Such gain or loss will
generally constitute either a long-term or short-term capital gain or
loss depending upon the length of time the Unitholder has held his Units.
Any loss on Units held six months or less will be treated as long-term
capital loss to the extent of any long-term capital gains dividends
received (or deemed to have been received) by the Unitholder with respect
to such Units. For taxpayers other than corporations, net capital gains
are presently subject to a maximum stated marginal 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. A
capital loss is long-term if the asset is held for more than one year and
short-term if held for one year or less.
"The Revenue Reconciliation Act of 1993" (the "Tax Act") raised tax
rates on ordinary income while capital gains remain subject to a 28%
maximum stated rate for taxpayers other than corporations. Because some
or all capital gains are taxed at a comparatively lower rate under the
Tax Act, the Tax Act includes a provision that recharacterizes capital
gains as ordinary income in the case of certain financial transactions
that are "conversion transactions" effective for transactions entered
into after April 30, 1993. Unitholders and prospective investors should
consult with their tax advisers regarding the potential effect of this
provision on their investment in Units. If a Ginnie Mae or Fannie Mae
has been purchased by a GNMA Trust at a market discount (i.e., for a
purchase price less than its stated redemption price at maturity (or if
issued with original issue discount, its "revised issue price")) unless
the amount of market discount is "de minimis" as specified in the Code
each payment of principal on such security will generally constitute
ordinary income to such Series of the Trust to the extent of any accrued
market discount unless the Trust elects to include the accrued market
discount in taxable income as it accrues. In the case of a Ginnie Mae,
the amount of market discount that is deemed to accrue each month shall
generally be the amount of discount that bears the same ratio to the
total amount of remaining market discount that the amount of interest
paid during the accrual period (each month) bears to the total amount of
interest remaining to be paid on the Ginnie Mae as of the beginning of
the accrual period.
Each Unitholder of each Series of the GNMA Trusts shall receive an
annual statement describing the tax status of the distributions paid by
such Series of such Trust.
Each Unitholder will be requested to provide the Unitholder's
taxpayer identification number to the Trustee and to certify that the
Unitholder has not been notified that payments to the Unitholder are
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<PAGE>
subject to back-up withholding. If the proper taxpayer identification
number and appropriate certification are not provided when requested,
distributions by the Trust to such Unitholder (including amounts received
upon the redemption of Units) will be subject to back-up withholding.
The foregoing discussion relates only to the Federal income tax
status of the Trust and to the tax treatment of distributions by the
Trust to United States Unitholders.
A Unitholder who is a foreign investor (i.e., an investor other than
a United States citizen or resident or a United States corporation,
partnership, estate or trust) should be aware that, generally, subject to
applicable tax treaties, distributions from the Trust which constitute
dividends for Federal income tax purposes (other than dividends which the
Trust designates as capital gain dividends) will be subject to United
States income taxes, including withholding taxes. However, distributions
received by a foreign investor from the Trust that are designated by the
Trust as capital gain dividends should not be subject to United States
Federal income taxes, including withholding taxes, if all of the
following conditions are met (i) the capital gain dividend is not
effectively connected with the conduct by the foreign investor of a trade
or business within the United States, (ii) the foreign investor (if an
individual) is not present in the United States for 183 days or more
during his or her taxable year, and (iii) the foreign investor provides
all certification which may be required of his status (foreign investors
may contact the Sponsor to obtain a Form W-8 which must be filed with the
Trustee and refiled every three calendar years thereafter). Foreign
investors should consult their tax advisers with respect to United States
tax consequences of ownership of Units. Units in the Trust and Trust
distributions may also be subject to state and local taxation and
Unitholders should consult their tax advisers in this regard.
U.S. Treasury Portfolio Series. In the opinion of Chapman and
Cutler, counsel for the Sponsor:
(1) Each Series of the U.S. Treasury Portfolio is not an
association taxable as a corporation for Federal income tax
purposes; each Unitholder will be treated as the owner of a pro rata
portion of the U.S. Treasury Portfolio Series of the Trust under the
Code and income of such Series will be treated as the income of the
Unitholders under the Code. Each Unitholder will be considered to
have received his or her pro rata share of income derived from each
Series asset when such income is considered to be received by each
U.S. Treasury Portfolio Series.
(2) Each Unitholder will have a taxable event when the U.S.
Treasury Portfolio Series disposes of a U.S. Treasury Obligation, 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 the U.S. Treasury Portfolio Series, if any, on
U.S. Treasury Obligations delivered after the Unitholder pay for
their Units to the extent that such interest accrued on such U.S.
Treasury Obligations before the date each U.S. Treasury Portfolio
Series acquired ownership of the U.S. Treasury Obligations (and the
amount of this reduction may exceed the amount of accrued interest
paid to the seller) and, consequently, such Unitholders may have an
-26-
<PAGE>
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 U.S. Treasury Obligations (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, amortized bond premium and accrued
market discount (if the Unitholder has elected to include such
market discount in income as it accrues), if any) is determined by
apportioning the cost of the Units among each of the U.S. Treasury
Portfolio Series assets ratably according to value as of the
valuation date nearest the date of acquisition of the Units. The
tax basis reduction requirements of said Code relating to
amortization of bond premium may, under some circumstances, result
in the Unitholder realizing a taxable gain when his Units are sold
or redeemed for an amount equal to or less than his original cost.
(3) Certain Series of the U.S. Treasury Portfolio Series
contain Stripped Treasury Securities. The basis of each Unit and of
each U.S. Treasury Obligation which was issued with original issue
discount must be increased by the amount of accrued original issue
discount and the basis of each Unit and of each U.S. Treasury
Obligation which was purchased by such Trusts at a premium must be
reduced by the annual amortization of bond premium which the
Unitholder has properly elected to amortize under Section 171 of the
Code. A Trust may contain certain "zero coupon" Securities (the
"Stripped Treasury Securities") that are treated as bonds that were
originally issued at an original issue discount provided, pursuant
to a Treasury Regulation (the "Regulation") issued on December 28,
1992, that the amount of original issue discount determined under
Section 1286 of the Code is not less than a "de minimis" amount as
determined thereunder. Because the Stripped Treasury Securities
represent interests in "stripped" U.S. Treasury bonds, a
Unitholder's initial cost for his pro rata portion of each Stripped
Treasury Securities held by the Trust (determined at the time he
acquires his Units, in the manner described above) shall be treated
as its "purchase price" by the Unitholder. Original issue discount
is effectively treated as interest for Federal income tax purposes,
and the amount of original issue discount in this case is generally
the difference between the bond's purchase price and its stated
redemption price at maturity. A Unitholder will be required to
include in gross income for each taxable year the sum of his daily
portions of original issue discount attributable to the Stripped
Treasury Securities held by the U.S. Treasury Portfolio Series as
such original issue discount accrues and will, in general, be
subject to Federal income tax with respect to the total amount of
such original issue discount that accrues for such year even though
the income is not distributed to the Unitholders during such year to
the extent it is not less than a "de minimis" amount as determined
under the Regulation. To the extent that the amount of such
discount is less than the respective "de minimis" amount, such
discount shall be treated as zero. In general, original issue
discount accrues daily under a constant interest rate method which
takes into account the semi-annual compounding of accrued interest.
-27-
<PAGE>
In the case of the Stripped Treasury Securities, this method will
generally result in an increasing amount of income to the
Unitholders each year. Unitholders should consult their tax
advisers regarding the Federal income tax consequences and accretion
of original issue discount.
(4) The Unitholder's aliquot share of the total proceeds
received on the disposition of, or principal paid with respect to, a
U.S. Treasury Obligation held by the U.S. Treasury Portfolio Series
will constitute ordinary income (which will be treated as interest
income for most purposes) to the extent it does not exceed the
accrued market discount on such U.S. Treasury Obligation issued that
has not previously been included in taxable income by such
Unitholder. A Unitholder may generally elect to include market
discount in income as such discount accrues. In general, market
discount is the excess, if any, of the Unitholder's pro rata portion
of the outstanding principal balance of a U.S. Treasury Obligation
over the Unitholder's initial tax basis for such pro rata portion,
determined at the time such Unitholder acquires his Units. However,
market discount with respect to any U.S. Treasury Obligation will
generally be considered zero if it amounts to less than 0.25% of the
obligation's stated redemption price at maturity times the number of
years to maturity. The market discount rules do not apply to
Stripped Treasury Securities because they are stripped debt
instruments subject to special original issue discount rules as
discussed above. If a Unitholder sells his Units, gain, if any,
will constitute ordinary income to the extent of the aggregate of
the accrued market discount on the Unitholder's pro rata portion of
each U.S. Treasury Obligation that is held by the U.S. Treasury
Portfolio Series that has not previously been included in taxable
income by such Unitholder. In general, market discount accrues on a
ratable basis unless the Unitholder elects to accrue such discount
on a constant interest rate basis. However, a Unitholder should
consult his own tax adviser regarding the accrual of market
discount. The deduction by a Unitholder for any interest expense
incurred to purchase or carry Units will be reduced by the amount of
any accrued market discount that has not yet been included in
taxable income by such Unitholder. In general, the portion of any
interest expense which is not currently deductible would be
ultimately deductible when the accrued market discount is included
in income. Unitholders should consult their tax advisers regarding
whether an election should be made to include market discount in
income as it accrues and as to the amount of interest expense which
may not be currently deductible.
(5) The Code provides that "miscellaneous itemized deductions"
are allowable only to the extent that they exceed two percent of an
individual taxpayer's adjusted gross income. Miscellaneous itemized
deductions subject to this limitation under present law include a
Unitholder's pro rata share of expenses paid by the applicable
Series of the U.S. Treasury Portfolio Series, including fees of the
Trustee, and the Evaluator, but does not include amortizable bond
premium on U.S. Treasury Obligations held by the U.S. Treasury
Portfolio Series.
"The Revenue Reconciliation Act of 1993" (the "Tax Act") raised tax
rates on ordinary income while capital gains remain subject to a 28%
-28-
<PAGE>
maximum stated rate for taxpayers other than corporations. Because some
or all capital gains are taxed at a comparatively lower rate under the
Tax Act, the Tax Act includes a provision that recharacterizes capital
gains as ordinary income in the case of certain financial transactions
that are "conversion transactions" effective for transactions entered
into after April 30, 1993. Unitholders and prospective investors should
consult with their tax advisers regarding the potential effect of this
provision on their investment in Units.
The tax basis of a Unitholder with respect to his interest in a U.S.
Treasury Obligation is increased by the amount of original issue discount
(and market discount, if the Unitholder elects to include market
discount, if any, on the U.S. Treasury Obligations held by the Trust in
income as it accrues) thereon properly included in the Unitholder's gross
income as determined for Federal income tax purposes and reduced by the
amount of any amortized acquisition premium which the Unitholder has
properly elected to amortize under Section 171 of the Code. A
Unitholder's tax basis in his Units will equal his tax basis in is pro
rata portion of all of the asset of the Trust.
A Unitholder will recognize taxable capital gain (or loss) when all
or part of his pro rata interest in a U.S. Treasury Obligation is
disposed of in a taxable transaction for an amount greater (or less) than
his tax basis therefor. Any gain recognized on a sale or exchange and
not constituting a realization of accrued "market discount," and any loss
will, under current law, generally be capital gain or loss except in the
case of a dealer or financial institution. As previously discussed, gain
realized on the disposition of the interest of a Unitholder in any U.S.
Treasury Obligation deemed to have been acquired with market discount
will be treated as ordinary income to the extent the gain does not exceed
the amount of accrued market discount not previously taken into income.
Any capital gain or loss arising from the disposition of a U.S. Treasury
Obligation by the Trust or the disposition of Units by a Unitholder will
be short-term capital gain or loss unless the Unitholder has held his
Units for more than one year in which case such capital gain or loss will
be long-term. The tax basis reduction requirements of the Code relating
to amortization of bond premium may under some circumstances, result in
the Unitholder realizing taxable gain when his Units are sold or redeemed
for an amount equal to or less than his original cost.
If the Unitholder disposes of a Unit, he is deemed thereby to have
disposed of his entire pro rata interest in all Trust assets including
his pro rata portion of the U.S. Treasury Obligations represented by the
Unit. This may result in a portion of the gain, if any, on such sale
being taxable as ordinary income under the market discount rules
(assuming no election was made by the Unitholder to include market
discount in income as it accrues) as previously discussed.
The Sponsor believes that Unitholders who are individuals will not
be subject to any state personal income taxes on the interest received by
a U.S. Treasury Portfolio Series and distributed to them. However,
Unitholders (including individuals) may be subject to state and local
taxes on any capital gains (or market discount treated as ordinary
income) derived from a U.S. Treasury Portfolio Series and to other state
and local taxes (including corporate income or franchise taxes, personal
property or intangibles taxes, and estate or inheritance taxes) on their
Units or the income derived therefrom. In addition, individual
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<PAGE>
Unitholders (and any other Unitholders which are not subject to state and
local taxes on the interest income derived from U.S. Treasury Portfolio
Series) will probably not be entitled to a deduction for state and local
tax purposes for their share of the fees and expenses paid by a U.S.
Treasury Portfolio Series, for any amortized bond premium or for any
interest on indebtedness incurred to purchase or carry their Units.
Therefore, even though the Sponsor believes that interest income from a
U.S. Treasury Portfolio Series is exempt from state personal income taxes
in all states, Unitholders should consult their own tax advisers with
respect to state and local taxation of the purchase, ownership and
disposition of Units.
A Unitholder of a U.S. Treasury Portfolio Series who is not a
citizen or resident of the United States or a United States domestic
corporation (a "Foreign Investor") will not be subject to U.S. Federal
income taxes, including withholding taxes on amounts distributed from the
U.S. Treasury Portfolio Series (including any original issue discount)
on, or any gain from the sale or other disposition of, his Units or the
sale or disposition of any U.S. Treasury Obligations by the Trustee,
provided that (i) the interest income or gain is not effectively
connected with the conduct by the Foreign Investor of a trade or business
within the United States, (ii) with respect to any gain, the Foreign
Investor (if an individual) is not present in the United States for 183
days or more during the taxable year, and (iii) the Foreign Investor
provides the required certification of his status and of the matters
contained in clauses (i) and (ii) above, and further provided that the
exemption from withholding for U.S. Federal income taxes for interest on
any U.S. Treasury Obligation shall only apply to the extent the U.S.
Treasury Obligation was issued after July 18, 1984.
Unless an applicable treaty exemption applies and proper
certification is made, amounts otherwise distributable by the U.S.
Treasury Portfolio Series to a Foreign Investor will generally be subject
to withholding taxes under Section 1441 of the Code unless the Unitholder
timely provides his financial representative or the Trustee with a
statement that (i) is signed by the Unitholder under penalties of
perjury, (ii) certifies that such Unitholder is not a United States
person, or in the case of an individual, that he is neither a citizen nor
a resident of the United States, and (iii) provides the name and address
of the Unitholder. The statement may be made, at the option of the
person otherwise required to withhold, on Form W-8 or on a substitute
form that is substantially similar to Form W-8. If the information
provided on the statement changes, the beneficial owner must so inform
the person otherwise required to withhold within 30 days of such change.
Foreign Unitholders should consult their own tax advisers with
respect to the foreign and United States tax consequences on ownership of
Units.
It should be remembered that even if distributions are reinvested
they are still treated as distributions for income tax purposes.
It should also be remembered that Unitholders of Series holding
Stripped Treasury Securities will be required for Federal income tax
purposes to include amounts in ordinary gross income in advance of the
receipt of the cash attributable to such income.
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<PAGE>
Each Unitholder (other than a foreign investor who has properly
provided the certifications described above) will be requested to provide
the Unitholder's taxpayer identification number to the Trustee and to
certify that the Unitholder has not been notified by the Internal Revenue
Service that payments to the Unitholder are subject to back-up
withholding. If the proper taxpayer identification number and
appropriate certification are not provided when requested, distributions
by a Trust to such Unitholder will be subject to back-up withholding.
Kemper Government Securities Trust, GNMA Portfolio (Foreign
Investors Trust) and Kemper Defined Funds, GNMA Portfolio, Series 1. In
the opinion of Chapman and Cutler, counsel for the Sponsor:
(1) Each GNMA Portfolio Series is not an associate
taxable as a corporation for Federal income tax purposes; each
Unitholder will be treated as the owner of a pro rata portion of the
GNMA Portfolio Series of the respective Trust under the Code and
income of such Series will be treated as the income of the
Unitholders under the Code. Each Unitholder will be considered to
have received his or her pro rata share of income derived from each
GNMA Portfolio Series asset when income is received by a GNMA
Portfolio Series.
(2) Each Unitholder will have a taxable event when a GNMA
Portfolio Series disposes of a Security, 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
GNMA Portfolio Series, if any, on Securities delivered after the
Unitholders pay for their Units to the extent that such interest
accrued on such Securities before the date each GNMA Portfolio
Series acquired ownership of the GNMA Portfolio Series (and the
amount of this reduction may exceed the amount of accrued interest
paid to the seller) and, consequently, such Unitholders may have an
increase in taxable gain or reduction in capital loss upon the
disposition of such Units. 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 Securities (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 for
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, amortized bond premium and accrued
market discount (if the Unitholder has elected to include such
market discount in income as it accrues), if any) is determined by
apportioning the cost of the Units among each of a GNMA Portfolio
Series assets ratably according to value as of the valuation date
nearest the date of acquisition of the Units. The tax basis
reduction requirements of said Code relating to amortization of bond
premium may, under some circumstances, result in the Unitholder
realizing a taxable gain when his Units are sold or redeemed for an
amount equal to or less than his original cost.
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(3) Each GNMA Portfolio Series contains Stripped Treasury
Securities. The basis of each Unit and of each U.S. Treasury
Obligation which was issued with original issue discount must be
increased by the amount of accrued original issue discount and the
basis of each Unit and of each U.S. Treasury Obligation which was
purchased by such Trusts at a premium must be reduced by the annual
amortization of bond premium which the Unitholder has properly
elected to amortize under Section 171 of the Code. The Stripped
Treasury Securities held by the Trusts are treated as bonds that
were originally issued at an original issue discount provided,
pursuant to a Treasury Regulation (the "Regulation") issued on
December 28, 1992, that the amount of original issue discount
determined under Section 1286 of the Code is not less than a "de
minimis" amount as determined thereunder. Because the Stripped
Treasury Securities represent interests in "stripped" U.S. Treasury
bonds, a Unitholder's initial cost for his pro rata portion of each
Stripped Treasury Security held by a Trust (determined at the time
he acquires his Units, in the manner described above) shall be
treated as its "purchase price" by the Unitholder. Original issue
discount is effectively treated as interest for Federal income tax
purposes, and the amount of original issue discount in this case is
generally the difference between the bond's purchase price and its
stated redemption price at maturity. A Unitholder will be required
to include in gross income for each taxable year the sum of his
daily portions of original issue discount attributable to the
Stripped Treasury Securities held by a Trust as such original
discount accrues and will, in general, be subject to Federal income
tax with respect to the total amount of such original issue discount
that accrues for such year even though the income is not distributed
to the Unitholders during such year to the extent it is not less
than a "de minimis" amount as determined under the Regulation. To
the extent that the amount of such discount is less than the
respective "de minimis" amount such discount shall be treated as
zero. In general, original issue discount accrues daily under a
constant interest rate method which takes into account the semi-
annual compounding of accrued interest. In the case of the Stripped
Treasury Securities this method will generally result in an
increasing amount of income to the Unitholders each year.
Unitholders should consult their tax advisers regarding the Federal
income tax consequences and accretion of original issue discount.
(4) The Unitholder's aliquot share of the total proceeds
received on the disposition of, or principal paid with respect to, a
Security held by a Trust will constitute ordinary income (which will
be treated as interest income for most purposes) to the extent it
does not exceed the accrued market discount on such Security that
has not previously been included in taxable income by such
Unitholder. A Unitholder may generally elect to include market
discount in income as such discount accrues. In general, market
discount is the excess, if any, of the Unitholder's pro rata portion
of the outstanding principal balance of a Security over the
Unitholder's initial tax basis for such pro rata portion, determined
at the time such Unitholder acquires his Units. However, market
discount with respect to any Security will generally be considered
zero if it amounts to less than 0.25% of the obligation's stated
redemption price at maturity times the number of years to maturity.
The market discount rules do not apply to Stripped Treasury
Securities because they are stripped debt instruments subject to
special original issue discount rules as discussed above. If a
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Unitholder sells his Units, gain, if any, will constitute ordinary
income to the extent of the aggregate of the accrued market discount
on the Unitholder's pro rata portion of each Security issued that is
held by a Trust that has not previously been included in taxable
income by such Unitholder. In general, market discount accrues on a
ratable basis unless the Unitholder elects to accrue such discount
on a constant interest rate basis. However, a Unitholder should
consult his own tax adviser regarding the accrual of market
discount. The deduction by a Unitholder for any interest expense
incurred to purchase or carry Units will be reduced by the amount of
any accrued market discount that has not yet been included in
taxable income by such Unitholder. In general, the portion of any
interest expense which is not currently deductible would be
ultimately deductible when the accrued market discount is included
in income. Unitholders should consult their tax advisers regarding
whether an election should be made to include market discount in
income as it accrues and as to the amount of interest expense which
may not be currently deductible.
(5) The Code provides that "miscellaneous itemized deductions"
are allowable only to the extent that they exceed two percent of an
individual taxpayer's adjusted gross income. Miscellaneous itemized
deductions subject to this limitation under present law include a
Unitholder's pro rata share paid by the Trust, including fees of the
Trustee and the Evaluator but does not include amortizable bond
premium on Securities held by the Trusts.
"The Revenue Reconciliation Act of 1993" (the "Tax Act") raised tax
rates on ordinary income while capital gains remain subject to a 28%
maximum stated rate for taxpayers other than corporations. Because some
or all capital gains are taxed at a comparatively lower rate under the
Tax Act, the Tax Act included a provision that recharacterizes capital
gains as ordinary income in the case of certain financial transactions
that are "conversion transactions" effective for transactions entered
into after April 30, 1993. Unitholders and prospective investors should
consult with their tax advisers regarding the potential effect of this
provision on their investment in Units.
A Unitholder of a GNMA Portfolio Series who is not a citizen or
resident of the United States or a United States domestic corporation (a
"Foreign Investor") will generally not be subject to U.S. Federal income
taxes, including withholding taxes on amounts distributed from the Trusts
(including any original issue discount) on, or any gain from the sale or
other disposition of, his Units or the sale or disposition of any
Securities by the Trustee, provided that (i) the interest income or gain
is not effectively connected with the conduct by the Foreign Investor of
a trade or business within the United States, (ii) with respect to any
gain, the Foreign Investor (if an individual) is not present in the
United States for 183 days or more during the taxable year, and (iii) the
Foreign Investor provides the required certification of his status and of
the matters contained in clauses (i) and (ii) above, and further provided
that the exemption from withholding for U.S. Federal income taxes for
interest on any Stripped Treasury Security shall only apply to the extent
the Stripped Treasury Security was issued after July 18, 1984 and for
interest on any Ginnie Mae to the extent the mortgages underlying such
Ginnie Mae were originated after July 18, 1984.
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Unless an applicable treaty exemption applies and proper
certification is made, amounts otherwise distributable by the Trusts to a
Foreign Investor will generally be subject to withholding taxes under
Section 1441 of the Code unless the Unitholder timely provides his
financial representative or the Trustee with a statement that (i) is
signed by the Unitholder under penalties of perjury, (ii) certifies that
such Unitholder is not a United States person, or in the case of an
individual, that he is neither a citizen nor a resident of the United
States, and (iii) provides the name and address of the Unitholder. The
statement may be made, at the option of the person otherwise required to
withhold, on Form W-8 or on a substitute form that is substantially
similar to Form W-8. If the information provided on the statement
changes, the beneficial owner must so inform the person otherwise
required to withhold within 30 days of such change.
The foregoing discussions relate only to Federal income taxes on
distributions by the Trusts; such distributions may also be subject to
state and local taxation. Unitholders should consult their own tax
advisers regarding questions of state and local taxation applicable to
the Units.
Foreign Unitholders should consult their own tax advisers with
respect to the foreign and United States tax consequences or ownership of
Units.
It should be remembered that even if distributions are reinvested,
they are still treated as distributions for income tax purposes.
It should also be remembered that Unitholders may be required for
Federal income tax purposes to include amounts in ordinary gross income
in advance of the receipt of the cash attributable to such income.
Each Unitholder (other than a foreign investor who has properly
provided the certifications described above) will be requested to provide
the Unitholder's taxpayer identification number to the Trustee and to
certify that the Unitholder has not been notified that payments to the
Unitholder are subject to back-up withholding. If the proper taxpayer
identification number and appropriate certification are not provided when
requested, distributions by a Trust to such Unitholder will be subject to
back-up withholding.
Foreign Investors Trust - Each Kemper Government Securities Trust,
GNMA Portfolio Series of Midget Foreign Investors Trust, which is
available only to non-resident alien investors, is not an association
taxable as a corporation for Federal income tax purposes and income
received by such Series will be treated as the income of the Unitholders.
A Unitholder of a Series of a Midget Foreign Investors Trust who is
not a citizen or resident of the United States or a United States
domestic corporation (a "Foreign Investor") will not be subject to U.S.
Federal income taxes, including withholding taxes on amounts distributed
from a Trust (including any original issue discount) on, or any gain from
the sale or other disposition of, his Units or the sale or disposition of
any Ginnie Mae by the trustee, provided that (i) the interest income or
gain is not effectively connected with the conduct by the Foreign
Investor of a trade or business within the United States, (ii) with
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respect to any gain, the Foreign Investor (if an individual) is not
present in the United States for 183 days or more during the taxable
year, and (iii) the Foreign Investor provides the required certification
of his status and of the matters contained in clauses (i) and (ii) above,
and further provided that the exemption from withholding for U.S. Federal
income taxes for interest on any Ginnie Mae shall only apply to the
extent the mortgages underlying the Ginnie Mae were originated after
July 18, 1984.
Interest income received by the Trust is subject to withholding
taxes under Section 1441 of the Code prior to distribution of such
interest income to each Unitholder unless the Unitholder provides his
financial representative or the Trustee with a statement that (i) is
signed by the Unitholder under penalties of perjury, (ii) certifies that
such Unitholder is not a United States person, or in the case of an
individual, that he is neither a citizen nor a resident of the United
States, and (iii) provides the name and address of the Unitholder. The
statement may be made, at the option of the person otherwise required to
withhold, on Form W-8 or on a substitute form that is substantially
similar to Form W-8. If the information provided on the statement
changes, the beneficial owner must so inform the person otherwise
required to withhold within 30 days of such change.
The foregoing discussions relate only to Federal income taxes on
distributions by each Series of a Trust; such distributions may also be
subject to state and local taxation. Unitholders should consult their
own tax advisers regarding questions of state and local taxation
applicable to the Units. Foreign Unitholders should consult their own
tax advisers with respect to United States Federal income tax
consequences or ownership of Units.
It should be remembered that even if distributions are reinvested,
they are still treated as distributions for income tax purposes.
RETIREMENT PLANS
As indicated under "Tax Status of the Trusts" above, Unitholders of
a U.S. Treasury Portfolio Series will be required for Federal income tax
purposes to include amounts in ordinary gross income in advance of the
receipt of the cash attributable to such income. Therefore, purchase of
Units may be appropriate only for an account which can pay taxes with
other funds in advance of the receipt of the cash attributable to such
income or for Individual Retirement Accounts, Keogh plans, pension funds
and other qualified retirement plans, certain of which are briefly
described below.
The various Series of the Trusts which are not Foreign Investors
Trusts, may be well suited for purchase by Individual Retirement
Accounts, Keogh Plans, pension funds and other qualified retirement
plans, certain of which are briefly described below.
Generally, capital gains and income received in each of the
foregoing plans are deferred from Federal taxation. All distributions
from such plans are generally treated as ordinary income but may, in some
cases, be eligible for special income averaging or tax-deferred rollover
treatment. Investors considering participation in any such plan should
review specific tax laws related thereto and should consult their
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attorneys or tax advisers with respect to the establishment and
maintenance of any such plan. Such plans are offered by brokerage firms
and other financial institutions. Each Series of the Trusts will waive
the $1,000 minimum investment requirement for IRA accounts. The minimum
investment is $250 for tax-deferred plans such as IRA accounts. Fees and
charges with respect to such plans may vary.
Individual Retirement Account - IRA. Any individual under age
70-1/2 may contribute the lesser of $2,000 or 100% of compensation to an
IRA annually. Such contributions are fully deductible if the individual
(and spouse if filing jointly) are not covered by a retirement plan at
work. The deductible amount an individual may contribute to an IRA will
be reduced $10 for each $50 of adjusted gross income over $25,000
($40,000 if married, filing jointly or $0 if married, filing separately),
if either an individual or their spouse (if married, filing jointly) is
an active participant in an employer maintained retirement plan. Thus,
if an individual has adjusted gross income over $35,000 ($50,000 if
married, filing jointly or $0 if married, filing separately) and if an
individual or their spouse is an active participant in an employer
maintained retirement plan, no IRA deduction is permitted. Under the
Code, an individual may make nondeductible contributions to the extent
deductible contributions are not allowed. All distributions from an IRA
(other than the return of certain excess contributions) are treated as
ordinary income for Federal income taxation purposes provided that under
the Code an individual need not pay tax on the return of nondeductible
contributions, the amount includable in income for the taxable year is
the portion of the amount withdrawn for the taxable year as the
individual's aggregate nondeductible IRA contributions bear to the
aggregate balance of all IRAs of the individual.
A participant's interest in an IRA must be, or commence to be,
distributed to the participant not later than April 1 of the calendar
year following the year during which the participant attains at 70-1/2.
Distributions made before attainment of age 59-1/2, except in the case of
the participant's death or disability, or where the amount distributed is
to be rolled over to another IRA, or where the distributions are taken as
a series of substantially equal periodic payments over the participant's
life or life expectancy (or the joint lives or life expectancies of the
participant and the designated beneficiary) are generally subject to a
surtax in an amount equal to 10% of the distribution. The amount of such
periodic payments may not be modified before the later of five years or
attainment of age 59-1/2. Excess contributions are subject to an annual
6% excise tax.
IRA applications, disclosure statement and trust agreements are
available from the Sponsor upon request.
Qualified Retirement Plans. Units of a Series of the Trust which
are not Foreign Investors Trusts may be purchased by qualified pension or
profit sharing plans maintained by corporations, partnerships or sole
proprietors. The maximum annual contribution for a participant in a
money purchase pension plan or to paired profit sharing and pension plans
is the lesser of 25% of compensation or $30,000. Prototype plan
documents for establishing qualified retirement plans are available from
the Sponsor upon request.
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Excess Distributions Tax. In addition to the other taxes due by
reason of a plan distribution, a tax of 15% may apply to certain
aggregate distributions from IRAs, Keogh plans, and corporate retirement
plans to the extent such aggregate taxable distributions exceed specified
amounts (generally $150,000, as adjusted) during a tax year. This 15%
tax will not apply to distributions on account of death, qualified
domestic relations orders or amounts eligible for tax-deferred rollover
treatment. In general, for lump sum distributions the excess
distribution over $750,000 (as adjusted) will be subject to the 15% tax.
The Trustee has agreed to act as custodian for certain retirement
plan accounts. An annual fee per account, if not paid separately, will
be assessed by the Trustee and paid through the liquidation of shares of
the retirement account. An individual wishing the Trustee to act as
custodian must complete a Ranson UIT/IRA application and forward it along
with a check made payable to the Trustee. Certificates for Individual
Retirement Accounts can not be issued.
DISTRIBUTION REINVESTMENT
Each Unitholder of the Trust may elect, at the time of purchase, 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 Zurich Kemper Investments, Inc. (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 Trusts,
Unitholders should carefully consider the consequences before selecting
such Kemper Funds for reinvestment.
Detailed information with respect to the investment objectives and
management of these Kemper Funds is contained in their respective
prospectuses, which can be obtained from the Sponsor or an investor's
financial representative upon request. An investor should read the
appropriate prospectus prior to making the election to reinvest.
Unitholders who desire to have their distributions automatically
reinvested should inform their financial representative at the time of
purchase or should file with the Program Agent referred to below a
written notice of such election.
Unitholders who initially elect to receive distributions in cash may
elect to participate in the reinvestment program by filing with the
Program Agent an election to have such distributions reinvested without
charge. The 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 distribution. The election to participate in the
reinvestment program shall remain in effect until a subsequent notice is
received in writing by the Program Agent. See "Administration of the
Trust-Distributions from the Interest, Principal and Capital Gains
Accounts."
The Program Agent is the Trustee. All inquiries concerning
participation in the Reinvestment Plan should be directed to the Program
Agent its unit investment trust office.
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Unitholders participating in IRA's, Keogh Plans and other tax
deferred retirement plans, may find it highly advantageous to participate
in the Reinvestment Program in order to keep the monies in the account
fully invested at all times. Should reinvestment be selected, an account
with an identical registration to that established at the time the Trust
Units are purchased will be set up in the reinvestment Fund selected by
the investor. Investors should consult with their plan custodian as to
the appropriate disposition of distributions. If participants in IRA's,
Keogh Plans and other tax deferred retirement plans do not elect a
reinvestment option, cash distributions will be sent to the custodian of
the retirement plan and will not be sent to the investor, since payments
to the investor would constitute a distribution from the plan which would
result in tax penalties for premature withdrawals from such programs.
See "Retirement Plans."
REDEMPTION
Right of Redemption. It may be possible, in some cases, for Units
to be sold in the over-the-counter market for a higher price than the
Redemption Value for such Units. Therefore, a Unitholder who wishes to
dispose of his Units is advised to inquire through his financial
representative as to current market prices for Units in order to
determine if there is an over-the-counter price in excess of Redemption
Value per Unit or the Sponsor's Repurchase Price for such Series of the
Trust.
A Unitholder who does not dispose of Units in the secondary market
described above may cause Units to be redeemed by the Trustee by making a
written request to the Trustee, The Bank of New York, 101 Barclay Street,
New York, New York 10286 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 the
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
redemption by individual account owners (including joint owners) or
fiduciary accounts where the fiduciary is named in the account
registration. Additional documentation may be requested, and a signature
guarantee is always required, from corporations, executors,
administrators, trustees, guardians or associations. If required, the
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. 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 such Units has been received by the purchaser.
Redemption shall be made by the Trustee on the third business day
following the day on which a tender for redemption is received (the
"Redemption Date") by payment of cash equivalent to the Redemption Value
of such Series, determined as set forth below under "Computation of
Redemption Value," next following such tender, multiplied by the number
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of Units of such Series being redeemed. Any Units redeemed shall be
cancelled and any undivided fractional interest in such Series of the
Trusts extinguished. The price received upon redemption might be more or
less than the amount paid by the Unitholder depending on the value of the
Portfolio Obligations in the Portfolio of the Series at the time of
redemption.
During the period in which the Sponsor maintains a market for Units,
the Sponsor has the right to repurchase any Unit presented for tender to
the Trustee for redemption no later than the close of business on the
second business day following such presentation.
The Trustee is irrevocably authorized in its discretion, if the
Sponsor does not elect to repurchase any Unit tendered for redemption or
if the Sponsor itself tenders Units for redemption, in lieu of redeeming
Units presented for tender at the Redemption Value, to sell such Units in
the over-the-counter market for the account of a tendering Unitholder at
prices which will return to the Unitholder monies, net after brokerage
commissions, transfer taxes and other charges, equal to or in excess of
the Redemption Value for such Units. In the event of any such sale, the
Trustee will pay the net proceeds thereof to the Unitholder on the day he
would otherwise be entitled to receive payment of the Redemption Value.
Any amounts to be paid on redemption representing interest shall be
withdrawn from the Interest Account of such Series to the extent funds
are available. All other amounts paid on redemption shall be withdrawn
from the Principal Account of such Series. The Trustee is authorized by
the Indenture to sell Portfolio Obligations from a Series in order to
provide funds for redemption. To the extent Portfolio Obligations are
sold, the size of that Series of the Trusts will be reduced. Portfolio
Obligations will be sold by the Trustee so as to maintain, as closely as
practicable, the original percentage relationship between the principal
amounts of the Portfolio Obligations in such Series. The Portfolio
Obligations to be sold for purposes of redeeming Units will be selected
from a list supplied by the Sponsor. The Portfolio Obligations will be
chosen for this list by the Sponsor on the basis of such market and
credit factors as it may determine are in the best interests of such
Series of the Trust. Provision is made under the Indenture for the
Sponsor to specify minimum face amounts in which blocks of Portfolio
Obligations are to be sold in order to obtain the best price available.
While such minimum amounts may vary from time to time in accordance with
market conditions, it is anticipated that the minimum face amounts which
would be specified would range from $25,000 to $100,000. Sales may be
required at a time when the Portfolio Obligations would not otherwise be
sold and might result in lower prices than might otherwise be realized.
Moreover, due to the minimum principal amount in which Portfolio
Obligations may be required to be sold, the proceeds of such sales may
exceed the amount necessary for payment of Units redeemed. To the extent
not used to meet other redemption requests in such Series, such excess
proceeds will be distributed pro rata to all remaining Unitholders of
record of such Series, unless reinvested in substitute Portfolio
Obligations. See "Administration of the Trust - Portfolio Supervision."
Computation of Redemption Value. The value of a Unit of a Series of
the Trust is determined as of the Evaluation Time stated under "Essential
Information" in Part Two (a) semiannually, on June 30 and December 31 of
each year (or the last business day prior thereto), (b) on any business
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day as of the Evaluation Time next following the tender of any Unit and
(c) on any other business day desired by the Sponsor or the Trustee,
(1) by adding:
a. The aggregate bid side evaluation of the Portfolio
Obligations in a Series of the Trust, as determined by the
Evaluator;
b. Cash on hand in such Series of the Trusts, other than
money deposited to purchase contract obligations or money
credited to the Reserve Account; and
c. Accrued but unpaid interest on the Portfolio
Obligations in such Series to the redemption date.
(2) and then deducting from the resulting figure: amounts
representing any applicable taxes or governmental charges payable by
such Series of the Trusts for the purpose of making an addition to
the reserve account (as defined in the Indenture), amounts
representing estimated accrued expenses (including audit fees) of
the Series, amounts representing unpaid fees and expenses of the
Trustee, the Sponsor (if applicable), counsel and the Evaluator and
monies held for distribution to Unitholders of record of such Series
as of the business day prior to the evaluation being made on the
days or dates set forth above;
(3) and then dividing the result of the above computation by
the total number of Units of such Series outstanding on the date of
evaluation. The resulting figure equals the Redemption Value for
each Unit of such Series. The Evaluator will determine the
aggregate current bid price evaluation of the Portfolio Obligations
in each Series of the Trusts as set forth under "Public Offering of
Units - Public Offering Price."
Postponement of Redemption. The right of redemption of any Series
may be suspended and payment of the Redemption Value per Unit postponed
for more than seven calendar days following a tender of Units for
redemption for any period (as determined by the Securities and Exchange
Commission) during which the New York Stock Exchange is closed, other
than for customary weekend and holiday closings, or during which trading
on that Exchange is restricted or an emergency exists as a result of
which disposal or evaluation of the Portfolio Obligations is not
reasonably practicable, or for such other periods as the Securities and
Exchange Commission may by order permit. The Trustee is not liable to
any person in any way for any loss or damage which may result from any
such suspension or postponement.
RIGHTS OF UNITHOLDERS
Unitholders. A Unitholder is deemed to be a beneficiary of the
Series of the Trusts which he purchased and is vested with all right,
title and interest in the appropriate Series of the Trusts, each of which
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was created by the Indenture. A Unitholder may at any time tender his
Units to the Trustee for redemption.
Ownership of Units. Ownership of Units of a Series of the Trusts
will not be evidenced by Certificates unless a Unitholder or the
Unitholder's registered broker/dealer 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, by
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.
Certificates will be issued in denominations of 1,000 Units (100
Units for Kemper Defined Funds and EVEREN Unit Investment Trusts) or any
whole number of Units in excess thereof. The Trustee may require a
Unitholder to pay a reasonable fee, to be determined in the sole
discretion of the Trustee, for each certificate reissued or transferred
and to pay any governmental charge that may be imposed in connection with
each such transfer or exchange. The Trustee at the present time does not
intend to charge for the normal transfer or exchange 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, if appropriate,
evidence of ownership and payment of expenses incurred. Any mutilated
certificate must be presented to the Trustee before a substitute
certificate will be issued.
Certain Limitations. The death or incapacity of any Unitholder (or
the dissolution of the Sponsor) will not operate to terminate the Trusts
or any Series thereof nor entitle the legal representatives or heirs of
such Unitholder to claim an accounting or to take any other action or
proceeding in any court for a partition or winding up of the Trusts or
any Series thereof.
No Unitholder shall have the right to vote except with respect to
removal of the Trustee or amendment and termination of the Trust or of
the Series of which they are a Unitholder. See "Administration of the
Trust - Amendment" and "Administration of the Trust - Termination."
Unitholders shall have no right to control the operation or
administration of the Trust or any Series thereof in any manner, except
upon the vote of Unitholders representing 66-2/3% of the Units of a
Series outstanding for purposes of amendment, termination or discharge of
the Trustee, all as provided in the Indenture; however, no Unitholder
shall ever be under any liability to any third party for any action taken
by the Trustee, Evaluator or Sponsor.
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EXPENSES AND CHARGES
Initial Expenses. All expenses and charges incurred prior to or in
establishment of the Series of the Trusts, including the cost of the
initial preparation, printing and execution of the Indenture and the
certificate, the initial fees of the Trustee and the Evaluator, initial
legal and auditing expenses, the cost of the preparation and printing of
the Prospectus and all other advertising and selling expenses were paid
by the Sponsor.
Fees. The Sponsor will receive no fee from the Trusts or any Series
thereof for its services as such. However, the Sponsor does receive a
portfolio surveillance fee, which is earned for portfolio supervisory
services, at the rate set forth under "Essential Information" in Part Two
for the appropriate Series, computed monthly on the basis of the largest
principal amount of Portfolio Obligations in such Series of the Trusts at
any time during the preceding month. The portfolio surveillance fee,
which may not exceed the amount set forth under "Essential Information"
in Part Two, may exceed the actual costs of providing portfolio
supervisory services for these Series of the Trusts, but at no time will
the total amount the Sponsor receives for supervisory services rendered
to all unit investment trusts sponsored by the Sponsor in any calendar
year exceed the aggregate cost of providing such services in that year.
The Trustee will receive for its services under the Indenture the
fee set forth in Part Two under "Essential Information," computed monthly
on the basis of the largest principal amount of Portfolio Obligations in
such Series at any time during the preceding month. In no event will the
Trustee be paid less than $2,000 per Series in any one year.
For evaluation of Portfolio Obligations in a Series of the Trusts,
the Evaluator shall receive the fee set forth in Part Two under
"Essential Information," computed monthly on the basis of the largest
aggregate principal amount of Portfolio Obligations in such Series at any
time during the preceding month.
The Trustee's fees, Sponsor's portfolio surveillance fees and the
Evaluator's fees are payable monthly on or before each Distribution Date
from the Interest Account of each Series to the extent funds are
available and thereafter from the Principal Account of such Series. Any
of such fees may be increased without approval of the Unitholders in
proportion to increases under the category "All Services Less Rent of
Shelter" in the Consumer Price Index published by the United States
Department of Labor or if such category is no longer published, in a
comparable category. The Trustee also receives benefits to the extent
that it holds funds on deposits in various non-interest bearing accounts
created under the Indenture.
Other Charges. The following additional charges are or may be
incurred by a Series of the Trusts as more fully described in the
Indenture: (a) fees of the Trustee for 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 the Portfolio Obligations) and of counsel designated by the
Sponsor, (c) various governmental charges, (d) expenses and costs of any
action taken by the Trustee to protect the Series of the Trusts and the
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rights and interests of the Unitholders thereof, (e) indemnification of
the Trustee for any loss, liability or expense incurred by it in the
administration of the Series of the Trusts without gross negligence, bad
faith, willful malfeasance or willful misconduct on its part or reckless
disregard of its obligations and duties, (f) indemnification of the
Sponsor for any losses, liabilities and expenses incurred in acting as
Sponsor under the Indenture without gross negligence, bad faith, willful
malfeasance or willful misconduct or reckless disregard of its
obligations and duties, and (g) expenditures incurred in contacting
Unitholders upon termination of such Series of the Trusts.
The fees and expenses set forth herein are payable out of a Series
of the Trusts and when so paid by or owing to the Trustee are secured by
a lien on such Series. If the balances in the Interest and Principal
Accounts are insufficient to provide for amounts payable by any Series of
the Trusts, the Trustee has the power to sell Portfolio Obligations from
such Series to pay such amounts. To the extent Portfolio Obligations are
sold, the size of that Series of the Trusts will be reduced and the
proportions of the types of Portfolio Obligations will change. Such
sales might be required at a time when Portfolio Obligations would not
otherwise be sold and might result in lower prices than might otherwise
be realized. Moreover, due to the minimum principal amount in which
Portfolio Obligations may be required to be sold, the proceeds of such
sales may exceed the amount necessary for the payment of such fees and
expenses.
DISTRIBUTIONS FROM THE INTEREST, PRINCIPAL AND CAPITAL GAINS ACCOUNTS.
GNMA Trust. The terms of the Ginnie Maes provide for payment to the
holders thereof (including the Series of the GNMA Trust) on the fifteenth
day of each month (the 25th day in the case of Ginnie Mae II's) of
amounts collected by or due to the issuers thereof with respect to the
underlying mortgages during the preceding month. The Trustee will
collect the interest due each Series on the Securities therein as it
becomes payable and credit such interest to a separate Interest Account
created by the Indenture for such Series.
Distributions will be made to each Unitholder of record of each
Series of the GNMA Trust on the appropriate Distribution Date and will
consist of an amount substantially equal to such Unitholder's pro rata
share of the cash balances in the Interest Account, the Principal Account
and the Capital Gains Account, if any, of such Series computed as of the
close of business on the preceding Record Date.
U.S. Treasury Portfolio Series. The terms of the U.S. Treasury
Obligations (other than Stripped Treasury Securities) provide for semi-
annual payments of interest on or about the 15th day of the designated
months. Interest received by a U.S. Treasury Portfolio Series, including
any portion of the proceeds from a disposition of the U.S. Treasury
Obligations which represents accrued interest, is credited by the Trustee
to the Interest Account for such Trust Fund. All other receipts are
credited by the Trustee to a separate Principal Account for such Trust
Fund.
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Since interest on the U.S. Treasury Obligations (other than Stripped
Treasury Securities) in U.S. Treasury Portfolio Series is payable in semi-
annual installments, and distributions of income are made to Unitholders
at different intervals from receipt of interest, the interest accruing to
Unitholders in the U.S. Treasury Portfolio Series may not be equal to the
amount of money received and available for distribution from the Interest
Account. Therefore, on each Distribution Date the amount of interest
actually deposited in the Interest Account of a U.S. Treasury Portfolio
Series 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 Indenture 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 for such U.S. Treasury Portfolio
Series.
Stripped Treasury Securities are sold at a deep discount because the
buyer of those securities obtains only the right to receive a future
fixed payment on the security and not any rights to periodic interest
payments thereon. Purchasers of these Securities acquire, in effect,
discount obligations that are economically identical to the "zero-coupon
bonds" that have been issued by corporations. Zero coupon bonds are debt
obligations which do not make any periodic payments of interest prior to
maturity and accordingly are issued at a deep discount.
Under generally accepted accounting principles, a holder of a
security purchased at a discount normally must report as an item of
income for financial accounting purposes the portion of the discount
attributable to the applicable reporting period. The calculation of this
attributable income would be made on the "interest" method which
generally will result in a lesser amount of includable income in earlier
periods and a correspondingly larger amount in later periods. For
Federal income tax purposes, the inclusion will be on a basis that
reflects the effective compounding of accrued but unpaid interest
effectively represented by the discount. Although this treatment is
similar to the "interest" method described above, the "interest" method
may differ to the extent that generally accepted accounting principles
permit or require the inclusion of interest on the basis of a compounding
period other than the semi-annual period. See "Tax Status of the
Trusts."
The Trustee will distribute on each Distribution Date or shortly
thereafter, to each Unitholder of record of U.S. Treasury Portfolio
Series on the preceding Record Date, an amount substantially equal to
such holder's pro rata share of the cash balance, if any, in the
Principal Account of U.S. Treasury Portfolio Series computed as of the
close of business on the preceding Record Date. However, no distribution
will be required if the balance in the Principal Account is less than
$1.00 per 1,000 Units (or in the case of certain Trusts, less than $1.00
per 100 Units). Notwithstanding the foregoing, the Trustee will make a
distribution to Unitholders of all principal relating to maturing
Treasury Obligations within seven business days of the date of each such
maturity.
General. Distributions for an IRA, Keogh or other tax-deferred
retirement plan will not be sent to the individual Unitholder. These
distributions will go directly to the custodian of the plan to avoid the
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penalties associated with premature withdrawals from such accounts. See
"Retirement Plans."
All funds collected or received will be held by the Trustee in
trust, without interest to Unitholders, as part of the appropriate Series
of the Trusts or the Reserve Account for such Series referred to below
until required to be disbursed in accordance with the provisions of the
Indenture. Such funds will be segregated on the trust ledger of the
Trustee so long as such practice preserves a valid preference of
Unitholders of such Series under the bankruptcy laws of the United
States, or if such preference is not preserved, the Trustee shall handle
such funds in such other manner as shall constitute the segregation and
holding thereof in trust within the meaning of the Investment Company Act
of 1940, as the same may from time to time be amended. To the extent
permitted by the Indenture and applicable banking regulations, such funds
are available for use by the Trustee pursuant to normal banking
procedures.
The first distribution for persons who purchase Units between a
Record Date and a Distribution Date will be made on the second
Distribution Date following their purchase of Units.
The Trustee is authorized by the Indenture to withdraw from the
Principal and/or Interest Accounts of each Series such amounts as it
deems necessary to establish a reserve for any taxes or other
governmental charges that may be payable out of such Series of the Trust,
which amounts will be deposited in a separate Reserve Account. If the
Trustee determines that the amount in the Reserve Account is greater than
the amount necessary for payment of any taxes or other governmental
charges, it will promptly deposit the excess back in the Account from
which it was withdrawn.
ADMINISTRATION OF THE TRUST
Records and Accounts. In accordance with the Indenture, 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, each
Unitholder of each Series of the Trusts. 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 Indenture on
file in its office available for inspection at all reasonable time during
usual business hours by any Unitholder of such Series, together with a
current list of the Portfolio Obligations held in each Series of the
Trusts. Pursuant to the Indenture, the Trustee may employ one or more
agents for the purpose of custody and safeguarding of the Portfolio
Obligations comprising the Portfolios.
Portfolio Supervision. The Indenture permits the Sponsor to direct
the Trustee to dispose of any Portfolio Obligation in a Series of the
Trusts upon the happening of any of the following events:
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(1) Default in the payment of principal or interest on any of
the Portfolio Obligations when due and payable,
(2) Institution of legal proceedings seeking to restrain or
enjoin the payment of any of the Portfolio Obligations or attacking
their validity,
(3) A breach of covenant or warranty which could adversely
affect the payment of debt service on the Portfolio Obligations,
(4) Default in the payment of principal or interest on any
other outstanding obligation guaranteed or backed by the full faith
and credit of the United States of America,
(5) A decline in market price to such an extent or such other
market credit or other factors exist, as in the opinion of the
Sponsor would make retention of any of the Portfolio Obligations
detrimental to the Trusts or any Series thereof and to the interests
of the Unitholders,
(6) An offer is made to refund or refinance any of the
Portfolio Obligations, or
(7) Termination of the Trusts or any Series thereof.
The Trustee shall also sell any Portfolio Obligation in a Series of
the Trusts if there is a default in the payment of principal and interest
on such Portfolio Obligation and no provision for payment is made
therefor and the Sponsor fails to instruct the Trustee to sell or hold
such Portfolio Obligation within thirty days after notice to the Sponsor
from the Trustee of such default. The Trustee shall not be liable for
any depreciation or loss by reason of any sale of Portfolio Obligations
or by reason of the failure of the Sponsor to give directions to the
Trustee.
Amounts received by a Series of the Trusts upon the sale of any
Portfolio Obligation under the conditions set forth above will be
deposited in the Principal Account, Interest Account or Capital Gains
Account for such Series, as appropriate, when received and pursuant to
the Sponsor's instructions will be either distributed by the Trustee on
the next Distribution Date to Unitholders of record of such Series on the
Record Date prior to such Distribution Date.
Reports to Unitholders. With each distribution, the Trustee will
furnish or cause to be furnished to the Unitholders of each Series a
statement of the amount of interest and other receipts, if any,
distributed, expressed in each case as a dollar amount per Unit of such
Series.
The accounts of each Series of the Trusts are required to be audited
annually, at such Series' expense, by independent certified public
accountants designated by the Sponsor, unless the Trustee determines that
such an audit would not be in the best interest of the Unitholders of
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that Series of the Trust. The accountants' report will be furnished by
the Trustee to any Unitholder of such Series upon written request.
Within a reasonable period of time after the end of each calendar
year, the Trustee will furnish to each person who at any time during such
calendar year was a Unitholder of record of a Series of the Trusts a
statement setting forth for the applicable Series:
(1) As to the Interest Account for such Series:
(a) the amount of interest received on the Portfolio
Obligations, including amounts received as a portion of the
proceeds of any disposition of Portfolio Obligations;
(b) the amount paid from the Interest Account
representing accrued interest for any Units redeemed and
amounts paid or reserved for purchases of substitute Portfolio
Obligations;
(c) the deductions from the Interest Account for
applicable taxes or other governmental charges, if any, and
fees and expenses of the Trustee (including auditing fees), the
Sponsor, the Evaluator and counsel;
(d) the deductions from the Interest Account for payment
into the Reserve Account; and
(e) the net amount remaining after such payments and
deductions expressed both as a total dollar amount and as a
dollar amount per Unit or appropriate multiple thereof
outstanding on the last business day of such calendar year.
(2) As to the Principal Account for such Series:
(a) the dates of the sale, maturity, liquidation or
redemption of any of the Portfolio Obligations and the net
proceeds received therefrom, excluding any portion credited to
the Interest Account;
(b) the amount paid from the Principal Account
representing the principal of any Units redeemed and amounts
paid or reserved for purchases of substitute Portfolio
Obligations;
(c) the deductions from the Principal Account, if any,
for payment of applicable taxes or other governmental charges,
fees and expenses of the Trustee (including auditing fees), the
Sponsor, the Evaluator and counsel;
(d) the deductions from the Principal Account for payment
into the Reserve Account; and
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(e) the net amounts remaining after such payments and
deductions expressed both as a total dollar amount and as a
dollar amount per Unit or appropriate multiple thereof
outstanding on the last business day of such calendar year.
(3) The following information with respect to such Series:
(a) a list of the Portfolio Obligations, as appropriate,
as of the last business day of such calendar year grouped by
coupon and maturity range;
(b) the number of Units outstanding on the last business
day of such calendar year;
(c) the Unit Value (as defined in the Indenture) based on
the last Trust evaluation made during such calendar year; and
(d) the amounts actually distributed during such calendar
year from the Interest and Principal Accounts, separately
stated, expressed both as total dollar amounts and as dollar
amounts per Unit or appropriate multiple thereof outstanding on
the Record Dates for such distributions.
Amendments. The Indenture and the Agreement with respect to each
Series may be amended by the Trustee and the Sponsor without the consent
of Unitholders (a) to cure any ambiguity or to correct or supplement any
provision thereof which may be defective or inconsistent, (b) to change
any provision thereof as may be required by the Securities and Exchange
Commission or any successor governmental agency, (c) for those Trusts
that have qualified as "regulated investment companies," to add or change
any provision thereof which may be necessary or advisable for the
continuing qualification as a regulated investment company under the
Internal Revenue Code of 1986 and (d) to make such other provisions as
shall not adversely affect the interest of the Unitholders (as determined
in good faith by the Sponsor and the Trustee); provided, however, that
the Indenture may also be amended with respect to any Series by the
Sponsor and the Trustee (or the performance of any of the provisions of
the Indenture may be waived) with the consent of holders of Units
representing 66-2/3% of the Units then outstanding of such Series for the
purposes of adding any provisions to or changing in any manner or
eliminating any of the provisions of the Indenture of such Series or of
modifying in any manner the rights of Unitholders thereof. However, the
Indenture may not be amended, without the consent of the holders of all
Units of a Series then outstanding, so as (1) to permit, except in
accordance with the terms and conditions of the Indenture, the
acquisition of any Portfolio Obligations other than those specified in
the Indenture, or (2) to reduce the aforesaid percentage of Units of a
Series the holders of which are required to consent to certain of such
amendments and may not be amended so as to reduce the interest in such
Series represented by Units without the consent of the holder of such
Units. The Trustee shall promptly notify Unitholders of the substance of
any such amendment.
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Termination. The Indenture provides that a Series of the Trusts
will terminate after the maturity, redemption, sale or other disposition
of the last of the Portfolio Obligations held in such Series. If the
value of a Series of the Trusts, as shown by an evaluation, is less than
forty percent (40%) of the par value of the Portfolio Obligations
deposited in such Series of the Trust, the Trustee shall, if directed by
the Sponsor in writing, terminate such Series. A Series of the Trust may
also be terminated at any time by the written consent of holders of
66-2/3% of the Units of such Series outstanding.
Upon termination, the Trustee will sell the Portfolio Obligations
then held in the appropriate Series of the Trust and credit the moneys
derived from such sale to the Principal Capital Gains and Interest
Accounts thereof. The Trustee will then, after deduction of any fees and
expenses of such Series and payment into the Reserve Account of any
amount required for taxes or other governmental charges that may be
payable by such Series, distribute to each Unitholder of such Series,
only upon surrender for cancellation of his certificate, if issued, after
due notice of such termination, such Unitholder's pro rata share in the
Interest, Capital Gains and Principal Accounts for such Series. The sale
of Portfolio Obligations in a Series of the Trusts upon termination may
result in a lower amount than might otherwise be realized if such sale
were not required at such time. For this reason, among others, the
amount realized by a Unitholder upon termination may be less than the
principal amount of Portfolio Obligations represented by the Units held
by such Unitholder.
RESIGNATION, REMOVAL AND LIABILITY
Regarding the Trustee. The Trustee shall be under no liability for
any action taken in good faith in reliance on prima facie properly
executed documents or for the disposition of moneys or Portfolio
Obligations from any Series of the Trust, nor shall the Trustee be liable
or responsible in any way for depreciation or loss incurred by reason of
the disposition of any Portfolio Obligations by the Trustee. However,
the Trustee shall be liable for willful malfeasance, willful misconduct,
bad faith or gross negligence in the performance of its duties or by
reason of its reckless disregard of its obligations and duties under the
Indenture. In the event of a failure of the Sponsor to act, the Trustee
may act under the Indenture and shall not be liable for any action taken
by it in good faith. The Trustee shall not be personally liable for any
taxes or other governmental charges imposed upon a Series of the Trust or
in respect of the Portfolio Obligations or the interest thereon. The
Indenture also contains other customary provisions limiting the liability
of the Trustee and providing for the indemnification of the Trustee for
any loss or claim accruing to it without gross negligence, bad faith,
willful misconduct, willful malfeasance or reckless disregard of its
duties and obligations under the Indenture on its part.
The Trustee or any successor may resign by executing an instrument
in writing, filing the same with the Sponsor and mailing a copy of such
notice or resignation to all Unitholders then of record. Upon receiving
such notice the Sponsor will use its best efforts to appoint a successor
Trustee promptly. The Sponsor may at any time remove the Trustee with or
without cause and appoint a successor as provided in the Indenture. If
within 30 days of the resignation of a Trustee no successor has been
appointed or, if appointed, has not accepted the appointment, the
retiring Trustee may apply to a court of competent jurisdiction for the
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appointment of a successor. The resignation or removal of a Trustee
becomes effective only when the successor Trustee accepts its appointment
as such or when a court of competent jurisdiction appoints a successor
Trustee.
Regarding the Sponsor. The Sponsor shall be under no liability to
the Series of the Trust or to Unitholders for taking any action or for
refraining from any action in good faith or for errors in judgment, nor
shall the Sponsor be liable or responsible in any way for depreciation or
loss incurred by reason of the disposition of any Portfolio Obligation.
The Sponsor will, however, be liable for its own willful malfeasance,
willful misconduct, bad faith, gross negligence or reckless disregard of
its duties and obligations under the Indenture.
If at any time the Sponsor shall resign under the Indenture or shall
fail or be incapable of performing its duties thereunder or shall become
bankrupt or its affairs are taken over by public authorities, the
Indenture directs the Trustee to either (1) appoint a successor sponsor
or sponsors at rates of compensation deemed reasonable by the Trustee and
not exceeding amounts prescribed by the Securities and Exchange
Commission or (2) continue to act as sponsor itself without terminating
the Indenture.
Regarding the Evaluator. The Trustee, Sponsor and Unitholders may
rely on any evaluation furnished by the Evaluator and shall have no
responsibility for the accuracy thereof. Determinations by the Evaluator
under the Indenture shall be made in good faith upon the basis of the
best information available to it, provided, however, that the Evaluator
shall be under no liability to the Trustee, Sponsor or Unitholders for
errors in judgment. The Evaluator shall, however, be liable for its own
willful malfeasance, bad faith, gross negligence or reckless disregard of
its obligations and duties under the Indenture.
The Evaluator may resign or may be removed by the Sponsor and the
Trustee, and the Sponsor and the Trustee are to use their best efforts to
appoint a satisfactory successor. Such resignation or removal shall
become effective upon the acceptance of appointment by the successor
Evaluator. If upon resignation of the Evaluator no successor accepts
appointment within thirty days after notice of resignation, the Evaluator
may apply to a court of competent jurisdiction for the appointment of a
successor.
MISCELLANEOUS
Sponsor. Ranson & Associates, Inc., the Sponsor of the Trusts, is
an investment banking firm created in 1995 by a number of former owners
and employees of Ranson Capital Corporation. On November 26, 1996,
Ranson & Associates, Inc. purchased all existing unit investment trusts
sponsored by EVEREN Securities, Inc. Accordingly, Ranson & Associates is
the successor sponsor to unit investment trusts formerly sponsored by
EVEREN Unit Investment Trusts, a service of EVEREN Securities, Inc.
Ranson & Associates, is also the sponsor and successor sponsor of Series
of The Kansas Tax-Exempt Trust and Multi-State Series of The Ranson
Municipal Trust. Ranson & Associates, Inc. is the successor to a series
of companies, the first of which was originally organized in Kansas in
1935. During its history, Ranson & Associates, Inc. and its predecessors
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have been active in public and corporate finance and have sold bonds and
unit investment trusts and maintained secondary market activities
relating thereto. At present, Ranson & Associates, Inc., which is a
member of the National Association of Securities Dealers, Inc., is the
sponsor to each of the above-named unit investment trusts and serves as
the financial advisor and as an underwriter for issuers in the Midwest
and Southwest, especially in Kansas, Missouri and Texas. The Company's
offices are located at 250 North Rock Road, Suite 150, Wichita, Kansas
67206-2241.
The foregoing information with regard to the Sponsor relates to the
Sponsor only and not to any Series of the 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 shown herein. More comprehensive
financial information can be obtained from the Sponsor upon request.
Trustee. The Trustee is The Bank of New York, a trust company
organized under the laws of New York. The Bank of New York has its unit
investment trust division offices at 101 Barclay Street, New York, New
York 10286, telephone 1-800-701-8178. The Bank of New York is subject to
supervision and examination by the Superintendent of Banks of the State
of New York and the Board of Governors of the Federal Reserve System, and
its deposits are insured by the Federal Deposit Insurance Corporation to
the extent permitted by law.
The Trustee, whose duties are ministerial in nature, has not
participated in selecting the Portfolio Obligations. For information
relating to the responsibilities of the Trustee under the Indenture,
reference is made to the material set forth under "Administration of the
Trust."
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 financial statements appearing in Part Two of this Prospectus
and Registration Statement, with information pertaining to the specific
Series of the Trusts 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 are included in reliance upon such report given
upon the authority of such firm as experts in auditing and accounting.
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Kemper Government Securities Trust
GNMA Portfolio Series 12
Part Two
Dated April 30, 1997
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 Government Securities Trust
GNMA Portfolio Series 12
Essential Information
As of December 31, 1996
Sponsor and Evaluator: Ranson & Associates, Inc.
Trustee: The Bank of New York Co.
<TABLE>
<CAPTION>
General Information
<S> <C>
Principal Amount of Securities $5,180,545
Number of Units 82,410,415
Fractional Undivided Interest in the Trust per Unit 1/82,410,415
Principal Amount of Securities per 1,000 Units $63
Calculation of Public Offering Price:
Aggregate Value of Securities in the Trust $5,774,013
Aggregate Value of Securities per 1,000 Units $70
Principal Cash per 1,000 Units (1) $(1)
Sales Charge of 3.95% of Public Offering Price (4.112% of
net amount invested) per 1,000 Units $3
Public Offering Price per 1,000 Units $72
Accrued Interest per 1,000 Unit through settlement date of
January 6, 1997 $-
Total Price per 1,000 Units $72
Redemption Price per 1,000 Units $69
Calculation of Estimated Net Annual Interest Income per 1,000 Units:
Estimated Annual Interest Income $7.19
Less: Estimated Annual Expense $.30
Estimated Net Annual Interest Income $6.89
Daily Rate at which Estimated Annual Interest Income Accrues
per 1,000 Units $.0191
Estimated Current Return Based on Public Offering Price (2) 9.45%
Estimated Long-Term Return (2) 7.50%
</TABLE>
[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. The Estimated Current Return and Estimated Long-Term Return will vary with
changes in the Public Offering Price and there is no assurance that such
returns on the date hereof will be applicable on a subsequent date of
purchase. These estimated returns are increased for transactions entitled to
a reduced sales charge (see "Public Offering of Units - Public Offering
Price" - Part One).
3. See Note 1 to the accompanying financial statements of the Trust regarding a
change in ownership of Kemper Unit Investment Trusts and Kemper Securities, Inc.
<PAGE>
Kemper Government Securities Trust
GNMA Portfolio Series 12
Essential Information (continued)
As of December 31, 1996
Sponsor and Evaluator: Ranson & Associates, Inc.
Trustee: The Bank of New York Co.
Record and Distribution Date Record Date is the first of each month and
distributions to Unitholders on such
record dates will be made on the
last day of the month.
Distribution Dates No distribution (other than capital
gains distributions) need be made
from the Principal Account if the
balance therein, excluding capital
gains, is less than $1.00 per 1,000
Units.
Trustee's Annual Fee $.24 per 1,000 Units (includes
(including estimated expenses) $1.308 of Trustee's annual fee
per $1,000 principal amount of
underlying Securities and $.16
of out-of-pocket expenses per 1,000
Units).
Evaluator's Annual Fee $.175 per $1,000 principal amount of
underlying Securities.
Date of Trust Agreement and July 1, 1986
Initial Deposit
Mandatory Termination Date December 31, 2036
Discretionary Liquidation Amount The Trust may be terminated if the
value thereof is less than
$46,244,866 (40% of the par value
of the Securities deposited in the
Trust).
<PAGE>
Report of Independent Auditors
Unitholders
Kemper Government Securities Trust
GNMA Portfolio Series 12
We have audited the accompanying statement of assets and liabilities of Kemper
Government Securities Trust GNMA Portfolio Series 12, including the schedule of
investments, as of December 31, 1996, and the related statements of operations
and changes in net assets for each of the three years in the period then ended.
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, 1996, 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 Government Securities
Trust GNMA Portfolio Series 12 at December 31, 1996, and the results of its
operations and changes in its net assets for the periods indicated above in
conformity with generally accepted accounting principles.
Ernst & Young LLP
Kansas City, Missouri
March 31, 1997
<PAGE>
Kemper Government Securities Trust
GNMA Portfolio Series 12
Statement of Assets and Liabilities
December 31, 1996
<TABLE>
<CAPTION>
<S> <C> <C>
Assets
GNMA Securities, at value (cost $5,590,550) $5,774,013
Interest receivable 49,183
Cash 87,856
---------
Total assets 5,911,052
Liabilities and net assets
Accrued liabilities 5,600
Due to Unitholders 127
---------
5,727
Net assets, applicable to 82,410,415 Units outstanding:
Cost of Trust assets, exclusive of interest $5,590,550
Unrealized appreciation 183,463
Distributable funds 131,312
--------- ---------
Net assets $5,905,325
=========
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
Kemper Government Securities Trust
GNMA Portfolio Series 12
Statements of Operations
<TABLE>
<CAPTION>
Year ended December 31
1996 1995 1994
<S> <C> <C> <C>
--------- --------- ---------
Investment income - interest $677,564 $751,158 $828,254
Expenses:
Trustee's fees and related expenses 27,499 28,270 31,901
Evaluator's fees and portfolio
surveillance fees 1,071 1,371 1,997
--------- --------- ---------
Total expenses 28,570 29,641 33,898
--------- --------- ---------
Net investment income 648,994 721,517 794,356
Realized and unrealized gain (loss) on
investments:
Realized gain (loss) (122,495) 945 9,144
Unrealized appreciation (depreciation)
during the year (49,869) 231,085 (601,866)
--------- --------- ---------
Net gain (loss) on investments (172,364) 232,030 (592,722)
--------- --------- ---------
Net increase in net assets resulting
from operations $476,630 $953,547 $201,634
========= ========= =========
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
<PAGE>
Kemper Government Securities Trust
GNMA Portfolio Series 12
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Year ended December 31
1996 1995 1994
<S> <C> <C> <C>
--------- --------- ---------
Operations:
Net investment income $648,994 $721,517 $794,356
Realized gain (loss) on investments (122,495) 945 9,144
Unrealized appreciation (depreciation)
on investments during the year (49,869) 231,085 (601,866)
--------- --------- ---------
Net increase in net assets resulting
from operations 476,630 953,547 201,634
Distributions to Unitholders:
Net investment income (668,238) (721,517) (794,355)
Tax Return of Capital (1,418,809) (1,483,791) (5,513,279)
--------- --------- ---------
Total distributions to Unitholders (2,087,047) (2,205,308) (6,307,634)
Capital transactions:
Redemption of 3,402,559 Units - - (371,523)
Redemption of 2,143,974 Units - (211,450) -
Redemption of 5,101,383 Units (396,932) - -
--------- --------- ---------
Total decrease in net assets (2,007,349) (1,463,211) (6,477,523)
Net assets:
At the beginning of the year 7,912,674 9,375,885 15,853,408
--------- --------- ---------
At the end of the period (including
distributable funds applicable to
Trust Units of $131,312, $231,432 and
$195,175 at December 31, 1996, 1995
1994, respectively) $5,905,325 $7,912,674 $9,375,885
========= ========= =========
Trust Units outstanding at the end of
the year 82,410,415 87,511,798 89,655,772
========= ========= =========
Net asset value per 1,000 Units at the end of the year $71.68
$90.42 $104.58
========= ========= =========
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
<TABLE>
Kemper Government Securities Trust
GNMA Portfolio Series 12
Schedule of Investments
December 31, 1996
Government National Mortgage Association
Modified Pass-Through Mortgage-Backed Securities
<CAPTION>
Principal Range of Stated
Amount Coupon Maturities (1) Value
--------- ---------- --------------- ----------
<S> <C> <C> <C>
$3,145,185 11.000% 12/15/09-3/15/16 $3,472,238
2,035,360 12.000% 11/15/11-11/15/15 2,301,775
--------- ---
$5,180,545 $5,774,013
========= =========
</TABLE>
[FN]
Note to Schedule of Investments
1. The principal amount of Securities listed as having the range of maturities
shown is an aggregate of individual Securities having varying stated maturities
within that shown. They are listed as one category of Securities with a single
range of maturities because current market conditions do not accord a
significant difference in price among the Securities grouped together on the
basis of the differences in their stated maturities. At some time in the
future, however, the differences in stated maturities could affect the market
value of the individual Securities.
See accompanying notes to financial statements.
<PAGE>
Kemper Government Securities Trust
GNMA Portfolio Series 12
Notes to Financial Statements
1. Significant Accounting Policies
Trust Sponsor and Evaluator
From the Trust's date of deposit through November 26, 1996, the Trust's sponsor
and evaluator was EVEREN Unit Investment Trusts (EVEREN), or its predecessor
entity, Kemper Unit Investment Trusts. On that date, Zurich Kemper Investments,
Inc. acquired EVEREN and assigned substantially all of its unit investment trust
business to Ranson & Associates, Inc., which serves as the Trust's sponsor and
evaluator.
Valuation of Securities
GNMA Securities are stated at bid prices as determined by Ranson & Associates,
Inc. The aggregate bid prices of the Securities are determined by the Evaluator
based on (a) current bid prices of the Securities, (b) current bid prices for
comparable securities, (c) appraisal, or (d) any combination of the above.
Cost of Securities
Cost of the Trust's Securities is based on the offering prices of the Securities
on the dates of deposit of such Securities acquired during the primary sales
period. The premium or discount, if any, is recognized as an adjustment of
investment income on a pro rata basis as principal repayments are received.
Realized gain (loss) from Security transactions is reported on an identified
cost basis.
2. Unrealized Appreciation and Depreciation
Following is an analysis of net unrealized appreciation at December 31, 1996:
<TABLE>
<CAPTION>
<S> <C>
Gross unrealized appreciation $183,463
Gross unrealized depreciation -
----------
Net unrealized appreciation $183,463
=========
</TABLE>
3. Federal Income Taxes
The Trust is organized as a regulated investment company under Subchapter M of
the Internal Revenue Code of 1986, as amended (the "Code"). It is the Trust's
policy to comply with the special provisions of the Code available to regulated
investment companies. Such provisions were complied with and, therefore, no
federal income tax provision is required. The accumulated net realized capital
loss on sales of investments for federal income tax purposes at December 31,
1996, amounting to $275,248 is available to offset future taxable gains. If not
applied, the carryover expires beginning in 1997.
4. Other Information
Cost to Investors
The cost to initial investors of Units of the Trust was based on the aggregate
offering price of the Securities on the date of an investor's purchase, plus or
minus a pro rata share of cash or overdraft in the Principal Account and accrued
interest, plus a sales charge of 3.75% of the Public Offering Price (equivalent
to 3.896% of the net amount invested). The Public Offering Price for secondary
market transactions is based on the aggregate bid price of the Securities plus
or minus a pro rata share of cash or overdraft in the Principal Account and
accrued interest on the date of an investor's purchase, plus a sales charge of
3.95% of the Public Offering Price (equivalent to 4.112% of the net amount
invested).
<PAGE>
Kemper Government Securities Trust
GNMA Portfolio Series 12
Notes to Financial Statements (continued)
Distributions
Distributions of net investment income to Unitholders are declared and paid
monthly. Income distributions per 1,000 Units on a record date basis are $7.79,
$9.59 and $13.14 for the years ended December 31, 1996, 1995 and 1994,
respectively. In addition, distribution of principal related to the sale or
call of securities is $16.54, $15.41 and $54.77 per 1,000 Units for the years
ended December 31, 1996, 1995 and 1994, respectively.
5. Change of Trustee
On March 1, 1996, The Bank of New York Co. assumed all trustee responsibilities
from Investors Fiduciary Trust Company.
<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 March 31, 1997, in this Post-Effective
Amendment to the Registration Statement (Form S-6) and related Prospectus of
Kemper Government Securities Trust GNMA Portfolio Series 12 dated April 30,
1997.
Ernst & Young LLP
Kansas City, Missouri
April 30, 1997
<PAGE>
Kemper Government Securities Trust
GNMA Portfolio Series 13
Part Two
Dated April 30, 1997
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 Government Securities Trust
GNMA Portfolio Series 13
Essential Information
As of December 31, 1996
Sponsor and Evaluator: Ranson & Associates, Inc.
Trustee: The Bank of New York Co.
<TABLE>
<CAPTION>
General Information
<S> <C>
Principal Amount of Securities $3,690,085
Number of Units 69,062,022
Fractional Undivided Interest in the Trust per Unit 1/69,062,022
Principal Amount of Securities per 1,000 Units $53
Calculation of Public Offering Price:
Aggregate Value of Securities in the Trust $3,823,788
Aggregate Value of Securities per 1,000 Units $55
Principal Cash per 1,000 Units (1) $(2)
Sales Charge of 3.95% of Public Offering Price (4.112%
of net amount invested) per 1,000 Units $2
Public Offering Price per 1,000 Units $55
Accrued Interest per 1,000 Units through settlement date of
January 6, 1997 $-
Total Price per 1,000 Units $55
Redemption Price per 1,000 Units $53
Calculation of Estimated Net Annual Interest Income per 1,000 Units:
Estimated Annual Interest Income $5.25
Less: Estimated Annual Expense $.23
Estimated Net Annual Interest Income $5.02
Daily Rate at which Estimated Annual Interest Income Accrues
per 1,000 Units $.0139
Estimated Current Return Based on Public Offering Price (2) 8.68%
Estimated Long-Term Return (2) 6.56%
</TABLE>
[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. The Estimated Current Return and Estimated Long-Term Return will vary with
changes in the Public Offering Price and there is no assurance that such
returns on the date hereof will be applicable on a subsequent date of
purchase. These estimated returns are increased for transactions entitled to
a reduced sales charge (see "Public Offering of Units - Public Offering
Price" - Part One).
3. See Note 1 to the accompanying financial statements of the Trust regarding a
change in ownership of Kemper Unit Investment Trusts and Kemper Securities, Inc.
<PAGE>
Kemper Government Securities Trust
GNMA Portfolio Series 13
Essential Information (continued)
As of December 31, 1996
Sponsor and Evaluator: Ranson & Associates, Inc.
Trustee: The Bank of New York Co.
Record and Distribution Date Record Date is the first of each month and
distributions to Unitholders on such
record dates will be made on the
last day of the month.
Distribution Dates No distribution (other than capital
gains distributions) need be made
from the Principal Account if the
balance therein, excluding capital
gains, is less than $1.00 per 1,000
Units.
Trustee's Annual Fee
(including estimated expenses) $.18 per 1,000 Units (includes
$1.308 of Trustee's annual fee
per $1,000 principal amount of
underlying Securities and $.11 of
out-of-pocket expenses per 1,000
Units).
Evaluator's Annual Fee $.175 per $1,000 principal amount of
underlying Securities.
Date of Trust Agreement and July 1, 1986
Initial Deposit
Mandatory Termination Date December 31, 2036
Discretionary Liquidation Amount The Trust may be terminated if the
value thereof is less than
$33,222,283 (40% of the par value of
the Securities deposited in the
Trust).
<PAGE>
Report of Independent Auditors
Unitholders
Kemper Government Securities Trust
GNMA Portfolio Series 13
We have audited the accompanying statement of assets and liabilities of Kemper
Government Securities GNMA Portfolio Series 13, including the schedule of
investments, as of December 31, 1996, and the related statements of operations
and changes in net assets for each of the three years in the period then ended.
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, 1996, 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 Government Securities
GNMA Portfolio Series 13 at December 31, 1996, and the results of its operations
and changes in its net assets for the periods indicated above in conformity with
generally accepted accounting principles.
Ernst & Young LLP
Kansas City, Missouri
March 31, 1997
<PAGE>
Kemper Government Securities Trust
GNMA Portfolio Series 13
Statement of Assets and Liabilities
December 31, 1996
<TABLE>
<CAPTION>
<S> <C> <C>
Assets
GNMA Securities, at value (cost $3,867,319) $3,823,788
Interest receivable 30,242
Cash 28,615
---------
Total assets 3,882,645
Liabilities and net assets
Accrued liabilities 4,632
Due to Unitholders 2,791
---------
7,423
Net assets, applicable to 69,062,022 Units outstanding:
Cost of Trust assets, exclusive of interest $3,867,319
Unrealized depreciation (43,531)
Distributable funds 51,434
--------- ---------
Net assets $3,875,222
=========
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
Kemper Government Securities Trust
GNMA Portfolio Series 13
Statements of Operations
<TABLE>
<CAPTION>
Year ended December 31
1996 1995 1994
<S> <C> <C> <C>
--------- --------- ---------
Investment income - interest $458,021 $577,145 $759,438
Expenses:
Trustee's fees and related expenses 19,808 22,062 25,026
Evaluator's fees and portfolio
surveillance fees 855 1,305 1,906
--------- --------- ---------
Total expenses 20,663 23,367 26,932
--------- --------- ---------
Net investment income 437,358 553,778 732,506
Realized and unrealized gain (loss) on
investments:
Realized loss (105,189) (338) (3,969)
Unrealized appreciation (depreciation)
during the year (12,342) 215,315 (550,570)
--------- --------- ---------
Net gain (loss) on investments (117,531) 214,977 (554,539)
--------- --------- ---------
Net increase in net assets resulting
from operations $319,827 $768,755 $177,967
========= ========= =========
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
Kemper Government Securities Trust
GNMA Portfolio Series 13
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Year ended December 31
1996 1995 1994
<S> <C> <C> <C>
--------- --------- ---------
Operations:
Net investment income $437,358 $553,778 $732,506
Realized loss on investments (105,189) (338) (3,969)
Unrealized appreciation (depreciation)
on investments during the year (12,342) 215,315 (550,570)
--------- --------- ---------
Net increase in net assets resulting
from operations 319,827 768,755 177,967
Distributions to Unitholders:
Net investment income (457,256) (553,778) (732,506)
Tax return of capital (1,993,196) (2,473,645) (5,153,052)
--------- --------- ---------
Total distributions to Unitholders (2,450,452) (3,027,423) (5,885,558)
Capital transactions:
Redemption of 930,448 Units - - (106,071)
Redemption of 395,376 Units - (33,212) -
Redemption of 7,031,261 Units (484,669) - -
--------- --------- ---------
Total decrease in net assets (2,615,294) (2,291,880) (5,813,662)
Net assets:
At the beginning of the year 6,490,516 8,782,396 14,596,058
--------- --------- ---------
At the end of the period (including
distributable funds applicable to
Trust Units of $51,434, $200,260 and
$290,886 at December 31, 1996, 1995
1994, respectively) $3,875,222 $6,490,516 $8,782,396
========= ========= =========
Trust Units outstanding at the end of
the year 69,062,022 76,093,283 76,488,659
========= ========= =========
Net asset value per 1,000 Units at
the end of the year $56.11 $85.30 $114.82
========= ========= =========
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
<TABLE>
Kemper Government Securities Trust
GNMA Portfolio Series 13
Schedule of Investments
December 31, 1996
Government National Mortgage Association
Modified Pass-Through Mortgage-Backed Securities
<CAPTION>
Principal Range of Stated
Amount Coupon Maturities (1) Value
--------- --- --------------- ---
<S> <C> <C> <C>
$2,586,305 9.500% 4/15/98-12/15/01 $2,681,782
1,103,780 10.500% 12/15/97-4/15/01 1,142,006
--------- ---
$3,690,085 $3,823,788
========= =========
</TABLE>
Note to Schedule of Investments
1. The principal amount of Securities listed as having the range of maturities
shown is an aggregate of individual Securities having varying stated maturities
within that shown. They are listed as one category of Securities with a single
range of maturities because current market conditions do not accord a
significant difference in price among the Securities grouped together on the
basis of the differences in their stated maturities. At some time in the
future, however, the differences in stated maturities could affect the market
value of the individual Securities.
See accompanying notes to financial statements.
<PAGE>
Kemper Government Securities Trust
GNMA Portfolio Series 13
Notes to Financial Statements
1. Significant Accounting Policies
Trust Sponsor and Evaluator
From the Trust's date of deposit through November 26, 1996, the Trust's sponsor
and evaluator was EVEREN Unit Investment Trusts (EVEREN), or its predecessor
entity, Kemper Unit Investment Trusts. On that date, Zurich Kemper Investments,
Inc. acquired EVEREN and assigned substantially all of its unit investment trust
business to Ranson & Associates, Inc., which serves as the Trust's sponsor and
evaluator.
Valuation of Securities
GNMA Securities are stated at bid prices as determined by Ranson & Associates,
Inc. The aggregate bid prices of the Securities are determined by the Evaluator
based on (a) current bid prices of the Securities, (b) current bid prices for
comparable securities, (c) appraisal, or (d) any combination of the above.
Cost of Securities
Cost of the Trust's Securities is based on the offering prices of the Securities
on the dates of deposit of such Securities acquired during the primary sales
period. The premium or discount, if any, is recognized as an adjustment of
investment income on a pro rata basis as principal repayments are received.
Realized gain (loss) from Security transactions is reported on an identified
cost basis.
2. Unrealized Appreciation and Depreciation
Following is an analysis of net unrealized depreciation at December 31, 1996:
<TABLE>
<CAPTION>
<S> <C>
Gross unrealized appreciation $-
Gross unrealized depreciation (43,531)
----------
Net unrealized depreciation $(43,531)
=========
</TABLE>
3. Federal Income Taxes
The Trust is organized as a regulated investment company under Subchapter M of
the Internal Revenue Code of 1986, as amended (the "Code"). It is the Trust's
policy to comply with the special provisions of the Code available to regulated
investment companies. Such provisions were compiled with and, therefore, no
federal income tax provision is required. The accumulated net realized capital
loss on sales of investments for federal income tax purposes at December 31,
1996, amounting to $190,916 is available to offset future taxable gains. If not
applied, the carryover expires beginning in 1997.
4. Other Information
Cost to Investors
The cost to original investors of Units of the Trust was based on the aggregate
offering price of the Securities on the date of an investor's purchase, plus or
minus a pro rata share of cash on overdraft in the Principal Account and accrued
interest, plus a sales charge of 3.25% of the Public Offering Price (equivalent
to 3.359% of the net amount invested). The Public Offering Price for secondary
market transactions is based on the aggregate bid price of the Securities plus
or minus a pro rata share of cash or overdraft in the Principal Account, and
accrued interest on the date of an investor's purchase, plus a sales charge of
3.95% of the Public Offering Price (equivalent to 4.112% of the net amount
invested).
<PAGE>
Kemper Government Securities Trust
GNMA Portfolio Series 13
Notes to Financial Statements (continued)
Distributions
Distributions of net investment income to Unitholders are declared and paid
monthly. Income distributions per 1,000 Units on a record date basis are $6.25,
$9.04 and $13.02 for the years ended December 31, 1996, 1995 and 1994,
respectively. In addition, distribution of principal related to the sale or
call of securities is $26.08, $30.54 and $62.99 per 1,000 Units for the years
ended December 31, 1996, 1995 and 1994, respectively.
5. Change of Trustee
On March 1, 1996, The Bank of New York Co. assumed all trustee responsibilities
from Investors Fiduciary Trust Company.
<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 March 31, 1997, in this Post-Effective
Amendment to the Registration Statement (Form S-6) and related Prospectus of
Kemper Government Securities Trust GNMA Portfolio Series 13 dated April 30,
1997.
Ernst & Young LLP
Kansas City, Missouri
April 30, 1997
<PAGE>
Contents of Post-Effective Amendment
To 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 Government Securities Trust GNMA
Portfolio, Series 12 and Series 13, 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 Wichita, and State of
Kansas, on the 30th day of April, 1997.
Kemper Government Securities Trust
GNMA Portfolio, Series 12 and
Series 13
Registrant
By: Ranson & Associates, Inc.
Depositor
By: Robin Pinkerton
President
Pursuant to the requirements of the Securities Act of 1933,
this Amendment to the Registration Statement has been signed
below on April 30, 1997 by the following persons, who constitute
a majority of the Board of Directors of Ranson & Associates, Inc.
Signature Title
Douglas K. Rogers Executive Vice and President and Director
Douglas K. Rogers
Alex R. Meitzner Chairman of the Board and Director
Alex R. Meitzner
Robin K. Pinkerton President, Secretary, Treasurer and
Robin K. Pinkerton Director
Robin Pinkerton
An executed copy of each of the related powers of attorney
was filed with the Securities and Exchange Commission in
connection with the Registration Statement on Form S-6 of The
Kansas Tax-Exempt Trust, Series 51 (File No. 33-46376) and
Series 52 (File No. 33-47687) and the same are hereby
incorporated herein by this reference.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM KEMPER GOVERNMENT SECURITIES TRUST GNMA PORTFOLIO SERIES 12
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<SERIES>
<NUMBER> 12
<NAME> KEMPER GOVERNMENT SECURITIES TRUST GNMA PORTFOLIO SERIES 12
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-END> Dec-31-1996
<INVESTMENTS-AT-COST> 5,590,550
<INVESTMENTS-AT-VALUE> 5,774,013
<RECEIVABLES> 49,183
<ASSETS-OTHER> 87,856
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 5,911,052
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5,727
<TOTAL-LIABILITIES> 5,727
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 5,721,862
<SHARES-COMMON-STOCK> 82,410,415
<SHARES-COMMON-PRIOR> 87,511,798
<ACCUMULATED-NII-CURRENT> 47,167
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 183,463
<NET-ASSETS> 5,905,325
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 677,564
<OTHER-INCOME> 0
<EXPENSES-NET> 28,570
<NET-INVESTMENT-INCOME> 648,994
<REALIZED-GAINS-CURRENT> (122,495)
<APPREC-INCREASE-CURRENT> (49,869)
<NET-CHANGE-FROM-OPS> 476,630
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 668,238
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 1,418,809
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 3,752,295
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (2,007,349)
<ACCUMULATED-NII-PRIOR> 64,296
<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>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM KEMPER GOVERNMENT SECURITIES TRUST GNMA PORTFOLIO SERIES 13
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<SERIES>
<NUMBER> 13
<NAME> KEMPER GOVERNMENT SECURITIES TRUST GNMA PORTFOLIO SERIES 13
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-END> Dec-31-1996
<INVESTMENTS-AT-COST> 3,867,319
<INVESTMENTS-AT-VALUE> 3,823,788
<RECEIVABLES> 30,242
<ASSETS-OTHER> 28,615
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,882,645
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 7,423
<TOTAL-LIABILITIES> 7,423
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,918,753
<SHARES-COMMON-STOCK> 69,062,022
<SHARES-COMMON-PRIOR> 76,093,283
<ACCUMULATED-NII-CURRENT> 23,713
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (43,531)
<NET-ASSETS> 3,875,222
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 458,021
<OTHER-INCOME> 0
<EXPENSES-NET> 20,663
<NET-INVESTMENT-INCOME> 437,358
<REALIZED-GAINS-CURRENT> (105,189)
<APPREC-INCREASE-CURRENT> (12,342)
<NET-CHANGE-FROM-OPS> 319,827
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 457,256
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 1,993,196
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 7,031,253
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (2,615,294)
<ACCUMULATED-NII-PRIOR> 48,508
<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>
