File No. 33-28537CIK#850078
Securities and Exchange Commission
Washington, D. C. 20549
Post-Effective
Amendment No. 5
to
Form S-6
For Registration under the Securities Act of 1933
of Securities of Unit Investment Trusts Registered
on Form N-8B-2
Kemper Tax-Exempt Insured Income Trust Series A-58
Name and executive office address of Depositor:
Kemper Unit Investment Trusts
(a service of Kemper Securities, Inc.)
77 West Wacker - 29th Floor
Chicago, Illinois 60601
Name and complete address of agent for service:
C. Perry Moore
77 West Wacker - 29th Floor
Chicago, Illinois 60601
X( X ) Check box if it is proposed that this filing will
become effective at 2:00 p.m. on August 26, 1994 pursuant to
paragraph (b) of Rule 485.
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KEMPER TAX-EXEMPT INSURED INCOME TRUST
NATIONAL SERIES
KEMPER DEFINED FUNDS
INSURED NATIONAL SERIES
PART ONE
The date of this Part One is that date
which is set forth in Part Two of the Prospectus
Kemper Tax-Exempt Insured Income Trust and Kemper Defined Funds
Insured National Series (the "Trusts" and each a "Trust") were formed for the
purpose of gaining interest income free from Federal income taxes while
conserving capital and diversifying risks by investing in an insured, fixed
portfolio consisting of obligations issued by or on behalf of states of the
United States or counties, municipalities, authorities or political
subdivisions thereof.
Units of the Trust are not deposits or obligations of, or guaranteed
by, any bank, and Units are not federally insured or otherwise protected by the
Federal Deposit Insurance Corporation and involve investment risk including
loss of principal.
Insurance guaranteeing the scheduled payment of principal and
interest on all of the Municipal Bonds in the portfolio listed in Part Two has
been obtained from an independent company by either the Trust, the Sponsor or
the issuer of the Municipal Bonds involved. Insurance obtained by the Sponsor
or a Municipal Bond issuer is effective so long as such Bonds are outstanding.
The insurance, in any case, does not relate to the Units offered hereby or to
their market value. As a result of such insurance, the Units of the Trust
received on the original date of deposit a rating of "AAA" by Standard & Poor's
Corporation or "Aaa" by Moody's Investors Service, Inc. See "Insurance on the
Portfolios" and "Description of Securities Ratings." No representation is made
as to any insurer's ability to meet its commitments.
This Prospectus is in two parts. Read and retain
both parts for future reference.
SPONSOR: KEMPER UNIT INVESTMENT TRUSTS
a service of Kemper Securities, Inc.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
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TABLE OF CONTENTS
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PAGE NO. PAGE NO.
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SUMMARY . . . . . . . . . . . . . . . . . 3 REDEMPTION . . . . . . . . . . . . . 26
The Trust . . . . . . . . . . . . . . 3 Computation of Redemption Price . 28
Insurance . . . . . . . . . . . . . . 3 UNITHOLDERS . . . . . . . . . . . . . 28
Public Offering Price . . . . . . . . 4 Ownership of Units . . . . . . . . 28
Interest and Principal Distributions to Unitholders . . . 29
Distributions . . . . . . . . . . . 4 Statement to Unitholders . . . . . 30
Reinvestment . . . . . . . . . . . . . 4 Rights of Unitholders . . . . . . 31
Estimated Current Return and
Estimated Long-Term Return . . . . . 4 INVESTMENT SUPERVISION . . . . . . . 31
Market for Units . . . . . . . . . . . 5
ADMINISTRATION OF THE TRUST . . . . . 33
THE TRUST . . . . . . . . . . . . . . . . 5 The Trustee . . . . . . . . . . . 33
The Evaluator . . . . . . . . . . 34
PORTFOLIOS . . . . . . . . . . . . . . . 6 Amendment and Termination . . . . 34
Portfolio Risk Information . . . . . . 7 Limitations on Liability . . . . . 35
The Trustee . . . . . . . . . . . 35
INSURANCE ON THE PORTFOLIOS . . . . . . . 12 The Evaluator . . . . . . . . . . 35
Financial Guaranty Insurance Company . 14
AMBAC Indemnity Corporation . . . . . 14 EXPENSES OF THE TRUST . . . . . . . . 36
Municipal Bond Investors Assurance
Corporation . . . . . . . . . . . . 15 THE SPONSOR . . . . . . . . . . . . . 37
Financial Security Assurance . . . . . 15
Capital Guaranty Insurance Company . . 16 LEGAL OPINIONS . . . . . . . . . . . 37
DISTRIBUTION REINVESTMENT . . . . . . . . 18 INDEPENDENT AUDITORS . . . . . . . . 37
INTEREST AND ESTIMATED LONG-TERM DESCRIPTION OF MUNICIPAL BOND
AND CURRENT RETURNS . . . . . . . . . 18 RATINGS . . . . . . . . . . . . . . 38
TAX STATUS OF THE TRUST . . . . . . . . . 19 Essential Information*
Report of Independent Auditors*
PUBLIC OFFERING OF UNITS . . . . . . . . 22 Statement of Assets and Liabilities*
Public Offering Price . . . . . . . . 22 Statement of Operations*
Accrued Interest . . . . . . . . . . . 24 Statement of Changes in Net Assets*
Purchased and Daily Accrued Schedule of Investments*
Interest . . . . . . . . . . . . . . 25 Notes to Schedules of Investments*
Public Distribution of Units . . . . . 25 Notes to Financial Statements*
Profits of Sponsor . . . . . . . . . . 26
*INFORMATION ON THESE ITEMS APPEARS IN PART TWO
MARKET FOR UNITS . . . . . . . . . . . . 26
</TABLE>
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KEMPER TAX-EXEMPT INSURED INCOME TRUST
KEMPER DEFINED FUNDS INSURED NATIONAL SERIES
SUMMARY
THE TRUST. Kemper Tax-Exempt Insured Income Trust and Kemper Defined
Funds Insured National Series (the "Trusts" and each a "Trust") are each a unit
investment trust consisting of a number of diversified portfolios (the
"Series"), each portfolio consisting of obligations ("Municipal Bonds",
"Securities" or "Bonds") issued by or on behalf of states of the United States
or counties, municipalities, authorities or political subdivisions thereof.
The objective of each Series of the Trust is tax-exempt income and
conservation of capital with diversification of risk through investment in an
insured, fixed portfolio of Municipal Bonds. Interest on certain Municipal
Bonds in certain of the National Series will be a preference item for purposes
of the alternative minimum tax. Accordingly, such National Series may be
appropriate only for investors who are not subject to the alternative minimum
tax. There is, of course, no guarantee that the Trust's objective will be
achieved.
All of the Municipal Bonds in a Series of the Trust were rated in the
category "BBB" or better by Standard & Poor's Corporation ("Standard & Poor's")
or "Baa" by Moody's Investors Service, Inc. ("Moody's") on the date such Series
was established (the "Date of Deposit"). Ratings of the Municipal Bonds may
have changed since the Date of Deposit. See "Description of Securities
Ratings" herein and the "Schedule of Investments" in Part Two.
The Units, each of which represents a pro rata undivided fractional
interest in the Municipal Bonds deposited in the appropriate Series of the
Trust, are issued and outstanding Units which have been reacquired by the
Sponsor either by purchase of Units tendered to the Trustee for redemption or
by purchase in the open market. No offering is being made on behalf of the
Trust and any profit or loss realized on the sale of Units will accrue to the
Sponsor and/or the firm reselling such Units.
INSURANCE. Insurance guaranteeing the scheduled payment of principal and
interest on all of the Municipal Bonds in the portfolio of each Series of the
Trust has been obtained by the Trust, the Sponsor or directly by the issuer
from an independent insurance company. Series A through A-24 of the Kemper
Tax-Exempt Insured Income Trust are insured by AMBAC Indemnity Corporation
("AMBAC Indemnity") and Series A-25 and subsequent Series of the Kemper
Tax-Exempt Insured Income Trust and Kemper Defined Funds Insured National
Series are insured by Financial Guaranty Insurance Company ("Financial
Guaranty"), Municipal Bond Investor Assurance Corporation ("MBIA") or other
insurers. Insurance obtained directly by the issuer may be from such companies
or other insurers. See "Insurance on the Portfolio" herein and "Schedule of
Investments" in Part Two. Insurance obtained by the Trust remains in effect
only while the insured Municipal Bonds are retained in the Trust, while
insurance obtained by a Municipal Bond issuer is effective so long as such
Bonds are outstanding. Pursuant to an irrevocable commitment of Financial
Guaranty,
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in the event of a sale of any Bond from Series A-25 or subsequent Series of the
Kemper Tax-Exempt Insured Income Trust covered under the Trust's insurance
policy, the Trustee has the right to obtain permanent insurance for such
Municipal Bond upon the payment of a single predetermined insurance premium
from the proceeds of the sale of such Municipal Bond. The insurance, in either
case, does not relate to the Units offered hereby or to their market value. As
a result of such insurance, the Units of each Series of the Trust received on
the original Date of Deposit a rating of "AAA" from Standard & Poor's. See
"Insurance on the Portfolio." No representation is made as to AMBAC
Indemnity's, Financial Guaranty's, MBIA's or any other insurer's ability to
meet its commitments.
PUBLIC OFFERING PRICE. The Public Offering Price per Unit of a Series of
the Trust is equal to a pro rata share of the aggregate bid prices of the
Municipal Bonds in such Series (plus or minus a pro rata share of cash, if any,
in the Principal Account, held or owned by the Series) plus Purchased Interest,
if any, in the case of Kemper Defined Funds Insured National Series plus a
sales charge shown under "Public Offering of Units." In addition, there will
be added to each transaction an amount equal to the accrued interest from the
last Record Date of such Series to the date of settlement (five business days
after order)(such amount is referred to as Daily Accrued Interest in the case
of Kemper Defined Funds Insured National Series). The sales charge is reduced
on a graduated scale as indicated under "Public Offering of Units -
Public Offering Price."
INTEREST AND PRINCIPAL DISTRIBUTIONS. Distributions of the estimated
annual interest income to be received by a Series of the Trust, after deduction
of estimated expenses, will be made monthly unless the Unitholder elects to
receive such distributions quarterly or semi-annually. Distributions will be
paid on the Distribution Dates to holders of record of such Series on the
Record Dates set forth for the applicable option. See "Essential Information"
in Part Two.
The distribution of funds, if any, in the Principal Account of each
Series, will be made semi-annually to Unitholders of Record on the appropriate
dates. See "Essential Information" in Part Two.
Unitholders of Kemper Defined Funds receive monthly distributions of
interest and principal.
REINVESTMENT. Distributions of interest and principal, including capital
gains, if any, made by a Series of the Trust will be paid in cash unless a
Unitholder elects to reinvest such distributions. See "Distribution
Reinvestment."
ESTIMATED CURRENT RETURN AND ESTIMATED LONG-TERM RETURN. The Estimated
Current Return is calculated by dividing the estimated net annual interest
income per Unit by the Public Offering Price of such Trust. The estimated net
annual interest income per Unit will vary with changes in fees and expenses of
such Trust and with the principal prepayment, redemption, maturity, exchange or
sale of Securities while the Public Offering Price will vary with changes in
the bid price of the underlying Securities and with changes in the Purchased
Interest for Kemper Defined Funds Insured National Series; therefore, there is
no assurance that the present Estimated Current Returns will be realized in the
future. Estimated Long-Term Return is calculated using a formula which (1)
takes into consideration, and determines and factors in the relative weightings
of,
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the market values, yields (which takes into account the amortization of
premiums and the accretion of discounts) and estimated retirements of all of
the Securities in the Trust and (2) takes into account the expenses and sales
charge associated with each Trust Unit. Since the market values and estimated
retirements of the Securities and the expenses of the Trust will change, there
is no assurance that the present Estimated Long-Term Return will be realized in
the future. Estimated Current Return and Estimated Long-Term Return are
expected to differ because the calculation of Estimated Long-Term Return
reflects the estimated date and amount of principal returned while Estimated
Current Return calculations include only net annual interest income and Public
Offering Price.
MARKET FOR UNITS. While under no obligation to do so, the Sponsor
intends, subject to change at any time, to maintain a market for the Units of
each Series of the Trust and to continuously offer to repurchase such Units at
prices which are based on the aggregate bid side evaluation of the Municipal
Bonds in such Series of the Trust. If such a market is not maintained and no
other over-the-counter market is available, Unitholders will still be able to
dispose of their Units through redemption by the Trustee at prices based upon
the aggregate bid price of the Municipal Bonds in such Series of the Trust.
See "Redemption."
THE TRUST
Each Series of the Trust is one of a series of unit investment trusts
created by the Sponsor under the name Kemper Tax-Exempt Insured Income Trust or
Kemper Defined Funds Insured National Series, all of which are similar, and
each of which was created under the laws of the State of Missouri pursuant to a
Trust Agreement*1 (the "Agreement"). Kemper Unit Investment Trusts, a service
of Kemper Securities, Inc., acts as Sponsor and Evaluator and Investors
Fiduciary Trust Company acts as Trustee. For information regarding the
relationship of Kemper Unit Investment Trusts and Investors Fiduciary Trust
Company, see "The Sponsor."
The objectives of the Trust are tax-exempt income and conservation of
capital with diversification of risk through investment in an insured, fixed
portfolio of Municipal Bonds. Interest on certain Municipal Bonds in the
National Series will be a preference item for purposes of the alternative
minimum tax. Accordingly, such National Series may be appropriate only for the
investors who are not subject to the alternative minimum tax. There is, of
course, no guarantee that the Trust's objectives will be achieved.
A Series of the Trust may be an appropriate investment vehicle for
investors who desire to participate in a portfolio of insured, tax-exempt,
fixed income securities with greater diversification than they might be able to
acquire individually. In addition, Municipal Bonds of the type deposited in
the Trust are often not available in small amounts.
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*Reference is made to the Trust Agreement, and any statements contained herein
are qualified in their entirety by the provisions of the Trust Agreement.
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Each Series of the Trust consists of an insured portfolio of interest
bearing obligations issued by or on behalf of states of the United States or
counties, municipalities, authorities or political subdivisions thereof the
interest on which is, in the opinion of bond counsel to the issuing
authorities, exempt from all Federal income taxes under existing law, but may
be subject to state and local taxes. Proceeds from the maturity, redemption or
sale of the Municipal Bonds in a Series of the Trust, unless used to pay for
Units tendered for redemption, will be distributed to Unitholders of such
Series and will not be utilized to purchase replacement or additional Municipal
Bonds for the Series.
The Units, each of which represents a pro rata undivided fractional
interest in the principal amount of Municipal Bonds deposited in a Series of
the Trust, are issued and outstanding Units which have been reacquired by the
Sponsor either by purchase of Units tendered to the Trustee for redemption or
by purchase in the open market. No offering is being made on behalf of the
Trust or any Series thereof and any profit or loss realized on the sale of
Units will accrue to the Sponsor and/or the firm reselling such Units. To the
extent that Units of a Series of the Trust are redeemed, the principal amount
of Municipal Bonds in such Series will be reduced and the undivided fractional
interest represented by each outstanding Unit of the Series will increase. See
"Redemption."
PORTFOLIOS
In selecting the Municipal Bonds which comprise the portfolio of a Series
of the Trust the following requirements, were deemed to be of primary
importance: (a) a minimum rating of "BBB" by Standard & Poor's Corporation or
"Baa" by Moody's Investors Service, Inc. (see "Description of Securities
Ratings"); (b) the price of the Municipal Bonds relative to other issues of
similar quality and maturity; (c) the diversification of the Municipal Bonds as
to purpose of issue; (d) the income to the Unitholders of the Series; and (e)
whether such Municipal Bonds were insured, or the availability and cost of
insurance for the prompt payment of principal and interest, when due, on the
Municipal Bonds; and (f) the dates of maturity of the Municipal Bonds.
Subsequent to the Date of Deposit, a Municipal Bond may cease to be rated
or its rating may be reduced below the minimum required as of the Date of
Deposit. Neither event requires the elimination of such investment from the
portfolio, but may be considered in the Sponsor's determination to direct the
Trustee to dispose of the investment. See "Investment Supervision" herein and
"Schedule of Investments" in Part Two.
The Sponsor may not alter the portfolio of a Series of the Trust, except
that certain of the Municipal Bonds may be sold upon the happening of certain
extraordinary circumstances. See "Investment Supervision."
Certain Series of the Trust contain Municipal Bonds which may be subject
to redemption prior to their stated maturity date pursuant to sinking fund
provisions, call provisions or extraordinary optional or mandatory redemption
provisions or otherwise. A sinking fund is a reserve fund accumulated over a
period of time for retirement of debt. A callable debt obligation is one which
is subject to redemption or refunding prior to maturity at the option of the
issuer. A refunding is a method by which a debt obligation is redeemed at or
before maturity, by the proceeds of a new debt obligation. In general, call
provisions are more likely to be exercised when the offering side valuation is
at a premium over par than when it is at a discount from par. Accordingly, any
such call, redemption, sale or maturity will reduce the size and diversity of
such Series, and the net annual interest income of the Series and may reduce
the Estimated Long-Term Returns and/or Estimated
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Current Return. See "Interest and Estimated Long-Term and Current Returns."
Each Trust portfolio contains a listing of the sinking fund and call
provisions, if any, with respect to each of the debt obligations.
Extraordinary optional redemptions and mandatory redemptions result from the
happening of certain events. Generally, events that may permit the
extraordinary optional redemption of Municipal Bonds or may require the
mandatory redemption of Municipal Bonds include among others: a final
determination that the interest on the Municipal Bonds is taxable; the
substantial damage or destruction by fire or other casualty of the project for
which the proceeds of the Municipal Bonds were used; an exercise by a local,
state or Federal governmental unit of its power of eminent domain to take all
or substantially all of the project for which the proceeds of the Municipal
Bonds were used; changes in the economic availability of raw materials,
operating supplies or facilities or technological or other changes which render
the operation of the project for which the proceeds of the Municipal Bonds were
used uneconomic; changes in law or an administrative or judicial decree which
renders the performance of the agreement under which the proceeds of the
Municipal Bonds were made available to finance the project impossible or which
creates unreasonable burdens or which imposes excessive liabilities, such as
taxes not imposed on the date the Municipal Bonds are issued on the issuer of
the Municipal Bonds or the user of the proceeds of the Municipal Bonds; an
administrative or judicial decree which requires the cessation of a substantial
part of the operations of the project financed with the proceeds of the
Municipal Bonds; an overestimate of the costs of the project to be financed
with proceeds of the Municipal Bonds resulting in excess proceeds of the
Municipal Bonds which may be applied to redeem Municipal Bonds; or an
underestimate of a source of funds securing the Municipal Bonds resulting in
excess funds which may be applied to redeem Municipal Bonds. The Sponsor is
unable to predict all of the circumstances which may result in such redemption
of an issue of Municipal Bonds.
The Sponsor and the Trustee shall not be liable in any way for any
default, failure or defect in any Municipal Bond.
PORTFOLIO RISK INFORMATION. An investment in Units of a Series of the
Trust should be made with an understanding of the risks which an investment in
fixed rate debt obligations may entail, including the risk that the value of
the portfolio and hence of the Units will decline with increases in interest
rates. The value of the underlying Municipal Bonds will fluctuate inversely
with changes in interest rates. The uncertain economic conditions experienced
in the past, together with the fiscal measures adopted to attempt to deal with
them, have resulted in wide fluctuations in interest rates and, thus, in the
value of fixed rate debt obligations generally and long term obligations in
particular. The Sponsor cannot predict whether such fluctuations will continue
in the future.
Certain Series of the Trust contain Municipal Bonds which are general
obligations of a governmental entity that are backed by the taxing power of
such entity. All other Municipal Bonds in the Series of the Trust are revenue
bonds payable from the income of a specific project or authority and are not
supported by the issuer's power to levy taxes. General obligation bonds are
secured by the issuer's pledge of its faith, credit and taxing power for the
payment of principal and interest. Revenue bonds, on the other hand, are
payable only from the revenues derived from a particular facility or class of
facilities or, in some cases, from the proceeds of a special excise or other
specific revenue source. There are, of course, variations in the security of
the different Municipal Bonds in the Series of the Trust, both within a
particular classification and between classifications, depending on numerous
factors.
Certain Series of the Trust contain Municipal Bonds which are obligations
of issuers whose revenues are derived from services provided by hospitals and
other health care facilities, including nursing homes. In view of this an
investment in such Series should be made with an understanding of the
characteristics of such issuers and the risks that such an investment may
entail. Ratings of bonds issued for health care facilities are
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often based on feasibility studies that contain projections of occupancy
levels, revenues and expenses. A facility's gross receipts and net income
available for debt service will be affected by future events and conditions
including, among other things, demand for services and the ability of the
facility to provide the services required, physicians' confidence in the
facility, management capabilities, economic developments in the service area,
competition, efforts by insurers and governmental agencies to limit rates,
legislation establishing state rate-setting agencies, expenses, the cost and
possible unavailability of malpractice insurance, the funding of Medicare,
Medicaid and other similar third party payor programs, and government
regulation. Federal legislation has been enacted which implemented a system of
prospective Medicare reimbursement which may restrict the flow of revenues to
hospitals and other facilities which are reimbursed for services provided under
the Medicare program. Future legislation or changes in the areas noted above,
among other things, would affect all hospitals to varying degrees and,
accordingly, any adverse changes in these areas may adversely affect the
ability of such issuers to make payment of principal and interest on Municipal
Bonds held in such Series. Such adverse changes also may adversely affect the
ratings of the Municipal Bonds held in such Series of the Trust. Hospitals and
other health care facilities are subject to claims and legal actions by
patients and others in the ordinary course of business. Although these claims
are generally covered by insurance, there can be no assurance that a claim will
not exceed the insurance coverage of a health care facility or that insurance
coverage will be available to a facility. In addition, a substantial increase
in the cost of insurance could adversely affect the results of operations of a
hospital or other health care facility. Certain hospital bonds may provide for
redemption at par at any time upon the sale by the issuer of the hospital
facilities to a non-affiliated entity or in other circumstances. For example,
certain hospitals may have the right to call bonds at par if the hospital may
legally be required because of the bonds to perform procedures against
specified religious principles. Certain FHA-insured bonds may provide that all
or a portion of those bonds, otherwise callable at a premium, can be called at
par in certain circumstances. If a hospital defaults upon a bond obligation,
the realization of Medicare and Medicaid receivables may be uncertain and, if
the bond obligation is secured by the hospital facilities, legal restrictions
on the ability to foreclose upon the facilities and the limited alternative
uses to which a hospital can be put may reduce severely its collateral value.
Certain Series of the Trust contain Municipal Bonds which are single
family mortgage revenue bonds, which are issued for the purpose of acquiring
from originating financial institutions notes secured by mortgages on
residences located within the issuer's boundaries and owned by persons of low
or moderate income. Mortgage loans are generally partially or completely
prepaid prior to their final maturities as a result of events such as sale of
the mortgaged premises, default, condemnation or casualty loss. Because these
Municipal Bonds are subject to extraordinary mandatory redemption in whole or
in part from such prepayments of mortgage loans, a substantial portion of such
Municipal Bonds will probably be redeemed prior to their scheduled maturities
or even prior to their ordinary call dates. The redemption price of such
issues may be more or less than the offering price of such Municipal Bonds.
Extraordinary mandatory redemption without premium could also result from the
failure of the originating financial institutions to make mortgage loans in
sufficient amounts within a specified time period or, in some cases, from the
sale by the Municipal Bond issuer of the mortgage loans. Failure of the
originating financial institutions to make mortgage loans would be due
principally to the interest rates on mortgage loans funded from other sources
becoming competitive with the interest rates on the mortgage loans funded with
the proceeds of the single family mortgage revenue bonds. Additionally,
unusually high rates of default on the underlying mortgage loans may reduce
revenues available for the payment of principal of or interest on such mortgage
revenue bonds. Single family mortgage revenue bonds issued after December 31,
1980 were issued under Section 103A of the Internal Revenue Code, which Section
contains certain ongoing requirements relating to the use of the proceeds of
such Bonds in order for the interest on such Municipal Bonds to retain its
tax-exempt status. In each case, the issuer of the Municipal Bonds has
covenanted to comply with applicable ongoing requirements and bond counsel to
such issuer has issued an opinion that the interest on the Municipal Bonds is
exempt from Federal income tax under existing laws and regulations. There can
be no assurances that the ongoing requirements will be met. The failure to
meet these requirements could cause the interest on the Municipal Bonds to
become taxable, possibly retroactively from the date of issuance.
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Certain Series of the Trust contain Municipal Bonds which are obligations
of issuers whose revenues are primarily derived from mortgage loans to housing
projects for low to moderate income families. The ability of such issuers to
make debt service payments will be affected by events and conditions affecting
financed projects, including, among other things, the achievement and
maintenance of sufficient occupancy levels and adequate rental income,
increases in taxes, employment and income conditions prevailing in local labor
markets, utility costs and other operating expenses, the managerial ability of
project managers, changes in laws and governmental regulations, the
appropriation of subsidies and social and economic trends affecting the
localities in which the projects are located. The occupancy of housing
projects may be adversely affected by high rent levels and income limitations
imposed under Federal and state programs. Like single family mortgage revenue
bonds, multi-family mortgage revenue bonds are subject to redemption and call
features, including extraordinary mandatory redemption features, upon
prepayment, sale or non-origination of mortgage loans as well as upon the
occurrence of other events. Certain issuers of single or multi-family housing
bonds have considered various ways to redeem bonds they have issued prior to
the stated first redemption dates for such bonds. In connection with the
housing Municipal Bonds held by the Trust, the Sponsor has not had any direct
communications with any of the issuers thereof, but at the initial Date of
Deposit it was not aware that any of the respective issuers of such Municipal
Bonds were actively considering the redemption of such Municipal Bonds prior to
their respective stated initial call dates. However, there can be no assurance
that an issuer of a Municipal Bond in the Trust will not attempt to so redeem a
Municipal Bond in the Trust.
Certain Series of the Trust contain Municipal Bonds which are obligations
of issuers whose revenues are derived from the sale of water and/or sewerage
services. Water and sewerage bonds are generally payable from user fees.
Problems faced by such issuers include the ability to obtain timely and
adequate rate increases, a decline in population resulting in decreased user
fees, the difficulty of financing large construction programs, the limitations
on operations and increased costs and delays attributable to environmental
considerations, the increasing difficulty of obtaining or discovering new
supplies of fresh water, the effect of conservation programs and the impact of
"no- growth" zoning ordinances. Issuers may have experienced these problems in
varying degrees. Because of the relatively short history of solid waste
disposal bond financing, there may be technological risks involved in the
satisfactory construction or operation of the projects exceeding those
associated with most municipal enterprise projects. Increasing environmental
regulation on the federal, state and local level has a significant impact on
waste disposal facilities. While regulation requires more waste producers to
use waste disposal facilities, it also imposes significant costs on the
facilities. These costs include compliance with frequently changing and
complex regulatory requirements, the cost of obtaining construction and
operating permits, the cost of conforming to prescribed and changing equipment
standards and required methods of operation and the cost of disposing of the
waste residue that remains after the disposal process in an environmentally
safe manner. In addition, waste disposal facilities frequently face
substantial opposition by environmental groups and officials to their location
and operation, to the possible adverse effects upon the public health and the
environment that may be caused by wastes disposed of at the facilities and to
alleged improper operating procedures. Waste disposal facilities benefit from
laws which require waste to be disposed of in a certain manner but any
relaxation of these laws could cause a decline in demand for the facilities'
services. Finally, waste disposal facilities are concerned with many of the
same issues facing utilities insofar as they derive revenues from the sale of
energy to local power utilities.
Certain Series of the Trust contain Municipal Bonds which are
obligations of issuers whose revenues are primarily derived from the sale of
electric energy or natural gas. Utilities are generally subject to extensive
regulation by state utility commissions which, among other things, establish
the rates which may be charged and the appropriate rate of return on an
approved asset base. The problems faced by such issuers include the difficulty
in obtaining approval for timely and adequate rate increases from the governing
public utility commission, the difficulty in financing large construction
programs, the limitations on operations and increased costs and delays
attributable to environmental considerations, increased competition, recent
reductions in estimates of future demand for electricity in certain areas of
the country, the difficulty of the capital market
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in absorbing utility debt, the difficulty in obtaining fuel at reasonable
prices and the effect of energy conservation. Issuers may have experienced
these problems in varying degrees. In addition, Federal, state and municipal
governmental authorities may from time to time review existing and impose
additional regulations governing the licensing, construction and operation of
nuclear power plants, which may adversely affect the ability of the issuers of
such Municipal Bonds to make payments of principal and/or interest on such
Municipal Bonds. The ability of state and local joint action power agencies to
make payments on bonds they have issued is dependent in large part on payments
made to them pursuant to power supply or similar agreements. Courts in
Washington and Idaho have held that certain agreements between the Washington
Public Power Supply System ("WPPSS") and the WPPSS participants are
unenforceable because the participants did not have the authority to enter into
the agreements. While these decisions are not specifically applicable to
agreements entered into by public entities in other states, they may cause a
reexamination of the legal structure and economic viability of certain projects
financed by joint action power agencies, which might exacerbate some of the
problems referred to above and possibly lead to legal proceedings questioning
the enforceability of agreements upon which payment of these bonds may depend.
Certain Series of the Trust contain Municipal Bonds which are industrial
revenue bonds ("IRBs"), including pollution control revenue bonds, which are
tax-exempt securities issued by states, municipalities, public authorities or
similar entities to finance the cost of acquiring, constructing or improving
various industrial projects. These projects are usually operated by corporate
entities. Issuers are obligated only to pay amounts due on the IRBs to the
extent that funds are available from the unexpended proceeds of the IRBs or
receipts or revenues of the issuer under an arrangement between the issuer and
the corporate operator of a project. The arrangement may be in the form of a
lease, installment sale agreement, conditional sale agreement or loan
agreement, but in each case the payments to the issuer are designed to be
sufficient to meet the payments of amounts due on the IRBs. Regardless of the
structure, payment of IRBs is solely dependent upon the creditworthiness of the
corporate operator of the project or corporate guarantor. Corporate operators
or guarantors may be affected by many factors which may have an adverse impact
on the credit quality of the particular company or industry. These include
cyclicality of revenues and earnings, regulatory and environmental
restrictions, litigation resulting from accidents or environmentally-caused
illnesses, extensive competition and financial deterioration resulting from
leveraged buy-outs or takeovers. The IRBs in the Series of the Trust may be
subject to special or extraordinary redemption provisions which may provide for
redemption at par or, with respect to original issue discount bonds, at issue
price plus the amount of original issue discount accreted to the redemption
date plus, if applicable, a premium. The Sponsor cannot predict the causes or
likelihood of the redemption of IRBs or other Municipal Bonds in the Series of
the Trust prior to the stated maturity of such Municipal Bonds.
Certain Series of the Trust contain Municipal Bonds which are obligations
which are payable from and secured by revenues derived from the ownership and
operation of facilities such as airports, bridges, turnpikes, port authorities,
convention centers and arenas. The major portion of an airport's gross
operating income is generally derived from fees received from signatory
airlines pursuant to use agreements which consist of annual payments for
leases, occupancy of certain terminal space and service fees. Airport
operating income may therefore be affected by the ability of the airlines to
meet their obligations under the use agreements. The air transport industry is
experiencing significant variations in earnings and traffic, due to increased
competition, excess capacity, increased costs, deregulation, traffic
constraints and other factors, and several airlines are experiencing severe
financial difficulties. The Sponsor cannot predict what effect these industry
conditions may have on airport revenues which are dependent for payment on the
financial condition of the airlines and their usage of the particular airport
facility. Similarly, payment on Municipal Bonds related to other facilities is
dependent on revenues from the projects, such as user fees from ports, tolls on
turnpikes and bridges and rents from buildings. Therefore, payment may be
adversely affected by reduction in revenues due to such factors as increased
cost of maintenance, decreased use of a facility, lower cost of alternative
modes of transportation, scarcity of fuel and reduction or loss of rents.
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Certain Series of the Trusts contain Municipal Bonds which are
obligations of issuers which are, or which govern the operation of, schools,
colleges and universities and whose revenues are derived mainly from ad valorem
taxes, or for higher education systems, from tuition, dormitory revenues,
grants and endorsements. General problems relating to school bonds include
litigation contesting the state constitutionality of financing public education
in part from ad valorem taxes, thereby creating a disparity in educational
funds available to schools in wealthy areas and schools in poor areas.
Litigation or legislation on this issue may affect the sources of funds
available for the payment of school bonds in the Trusts. General problems
relating to college and university obligations would include the prospect of a
declining percentage of the population consisting of "college" age individuals,
possible inability to raise tuition and fees sufficiently to cover increased
operating costs, the uncertainty of continued receipt of Federal grants and
state funding and new government legislation or regulations which may adversely
affect the revenues or costs of such issuers. All of such issuers have been
experiencing certain of these problems in varying degrees. In addition, the
ability of universities and colleges to meet their obligations is dependent
upon various factors, including the size and diversity of their sources of
revenues, enrollment, reputation, management expertise, the availability and
restrictions on the use of endowments and other funds, the quality and
maintenance costs of campus facilities, and, in the case of public
institutions, the financial condition of the relevant state or other
governmental entity and its policies with respect to education. The
institution's ability to maintain enrollment levels will depend on such factors
as tuition costs, geographic location, geographic diversity and quality of
student body, quality of the faculty and the diversity of program offerings.
Certain Series of the Trust contain Municipal Bonds which are Urban
Redevelopment Bonds ("URBs"). URBs have generally been issued under bond
resolutions pursuant to which the revenues and receipts payable under the
arrangements with the operator of a particular project have been assigned and
pledged to purchasers. In some cases, a mortgage on the underlying project may
have been granted as security for the URBs. Regardless of the structure,
payment of the URBs is solely dependent upon the creditworthiness of the
operator of the project.
Certain of the Municipal Bonds in the Trust may be lease revenue bonds
whose revenues are derived from lease payments made by a municipality or other
political subdivision which is leasing equipment or property for use in its
operation. The risks associated with owning Municipal Bonds of this nature
include the possibility that appropriation of funds for a particular project or
equipment may be discontinued. The Sponsor cannot predict the likelihood of
nonappropriation of funds for these types of lease revenue Municipal Bonds.
Lease revenue Municipal Bonds may also be subject to the risk of abatement in
many states -- rental obligations cease in the event that damage, destruction
or condemnation of the project prevents its use by the lessee. (In these
cases, insurance provisions designed to alleviate this risk become important
credit factors.) In the event of default by the lessee government, there may
be significant legal and/or practical difficulties involved in the re-letting
or sale of the project. Some of these issues, particularly those for equipment
purchase, contain the so-called "substitution safeguard", which bars the lessee
government, in the event its defaults on its rental payments, from the purchase
or use of similar equipment for a certain period of time. This safeguard is
designed to insure that the lessee government will appropriate even though it
is not legally obligated to do so, but its legality remains untested in most,
if not all, states.
Certain Series of the Trust contain "zero coupon" bonds, i.e., an
original issue discount bond that does not provide for the payment of current
interest. Zero coupon bonds are purchased at a deep discount because the buyer
receives only the right to receive a final payment at the maturity of the bond
and does not receive any periodic interest payments. The effect of owning deep
discount bonds which do not make current interest payments (such as the zero
coupon bonds) is that a fixed yield is earned not only on the original
investment but also, in effect, on all discount earned during the life of such
obligation. This implicit reinvestment of earnings at the same rate eliminates
the risk of being unable to reinvest the income on such obligation at a rate
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<PAGE> 12
as high as the implicit yield on the discount obligation, but at the same time
eliminates the holder's ability to reinvest at higher rates in the future. For
this reason, zero coupon bonds are subject to substantially greater price
fluctuations during periods of changing market interest rates than are
securities of comparable quality which pay interest currently. For the Federal
tax consequences of original issue discount bonds such as the zero coupon
bonds, see "Tax Status of the Trust."
Investors should be aware that many of the Municipal Bonds in the Series
of the Trust are subject to continuing requirements such as the actual use of
Municipal Bond proceeds or manner of operation of the project financed from
Municipal Bond proceeds that may affect the exemption of interest on such
Municipal Bonds from Federal income taxation. Although at the time of issuance
of each of the Municipal Bonds in the Series of the Trust an opinion of bond
counsel was rendered as to the exemption of interest on such obligations from
Federal income taxation, there can be no assurance that the respective issuer
or other obligors on such obligations will fulfill the various continuing
requirements established upon issuance of the Municipal Bonds. A failure to
comply with such requirements may cause a determination that interest on such
obligations is subject to Federal income taxation, perhaps even retroactively
from the date of issuance of such Municipal Bonds, thereby reducing the value
of the Municipal Bonds and subjecting Unitholders to unanticipated tax
liabilities.
Federal bankruptcy statutes relating to the adjustment of debts of
political subdivisions and authorities of states of the United States provide
that, in certain circumstances, such subdivisions or authorities may be
authorized to initiate bankruptcy proceedings without prior notice to or
consent of creditors, which proceedings could result in material and adverse
modification or alteration of the rights of holders of obligations issued by
such subdivisions or authorities.
Certain issues of the Municipal Bonds in some Series of the Trust
represent "moral obligations" of a governmental entity other than the issuer.
In the event that the issuer of the Municipal Bond defaults in the repayment
thereof, such other governmental entity lawfully may, but is not obligated to,
discharge the obligation of the issuer to repay such Municipal Bond. If an
issuer of moral obligation bonds is unable to meet its obligations, the
repayment of such Municipal Bonds becomes a moral commitment but not a legal
obligation of the state or municipality in question. Even though the state may
be called on to restore any deficits in capital reserve funds of the agencies
or authorities which issued the bonds, any restoration generally requires
appropriation by the State legislature and accordingly does not constitute a
legally enforceable obligation or debt of the state. The agencies or
authorities generally have no taxing power.
To the best of the Sponsor's knowledge, as of the date of this
Prospectus, there is no litigation pending with respect to any Municipal Bond
which might reasonably be expected to have a material adverse effect on the
Trust or any Series thereof. Although the Sponsor is unable to predict whether
any litigation may be instituted, or if instituted, whether such litigation
might have a material adverse effect on the Trust or any Series, the Trust
received copies of the opinions of bond counsel given to the issuing
authorities at the time of original delivery of each of the Municipal Bonds to
the effect that the Municipal Bonds had been validly issued and that the
interest thereon is exempt from Federal income taxes.
INSURANCE ON THE PORTFOLIOS
All Municipal Bonds in the portfolios of each Series of the Trust are
insured as to payment of interest and principal, when due, either by a policy
obtained by the Trust, the Sponsor or by the Bond issuer. Series A through A-24
of the Kemper Tax-Exempt Insured Income Trust are insured by AMBAC Indemnity
and
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<PAGE> 13
Series A-25 and subsequent Series of the Kemper Tax-Exempt Insured Income Trust
and Kemper Defined Funds Insured National Series are insured by Financial
Guaranty, MBIA and other insurers. The insurance policy obtained by the Trust
for a Series is non-cancelable and will continue in force so long as such
Series of the Trust is in existence, the insurer and/or the reinsures referred
to below remain in business and the Municipal Bonds described in the policy
continue to be held in such Series of the Trust. The premium for any insurance
policy or policies obtained by an issuer of Municipal Bonds has been paid in
advance by such issuer and any such policy or policies are non-cancelable and
will remain in force so long as the Municipal Bonds so insured are outstanding
and the insurer and/or insurers referred to below remain in business. In those
instances where Municipal Bond insurance is obtained by the Sponsor or the
issuer directly from an insurer, no premiums for insurance are paid by the
Trust and such bonds are not covered by the Trust's policy. Non-payment of
premiums on the policy obtained by the Trust will not result in the
cancellation of such insurance but will force the insurer to take action
against the Trustee to recover premium payments due it. Premium rates for each
issue of Municipal Bonds protected by the policy obtained by the Trust are
fixed for the life of the appropriate Series of the Trust.
The aforementioned insurance guarantees the scheduled payment of
principal and interest on all of the Municipal Bonds as they fall due. It does
not guarantee the market value of the Municipal Bonds or the value of the Units
of a Series of the Trust. The insurance obtained by the Trust is only
effective as to Municipal Bonds owned by and held in a Series of the Trust and
the price which an individual pays on acquisition of Units, or receives on
redemption or resale of Units, does not, except as indicated below, include any
element of value for the insurance obtained by the Trust. Unitholders should
recognize that in order to receive any benefit from the portfolio insurance
obtained by the Trust they must be owners of the Units of a Series of the Trust
at the time the Trustee becomes entitled to receive any payment from the
insurer for such Series. Insurance obtained by the issuer of a Municipal Bond
is effective so long as the Municipal Bond is outstanding, whether or not held
by a Series of the Trust.
Pursuant to an irrevocable commitment of Financial Guaranty, the Trustee,
upon the sale of a Municipal Bond from Series A-25 (or any subsequent Series)
of the Kemper Tax-Exempt Insured Income Trust or Kemper Defined Funds Insured
National Series covered under the Trust's insurance policy, has the right to
obtain permanent insurance (the "Permanent Insurance") with respect to such
Municipal Bond (i.e., insurance to the maturity of the Municipal Bond
regardless of the identity of the holder thereof) upon the payment of a single
predetermined insurance premium from the proceeds of the sale of such Municipal
Bond. Accordingly, every Municipal Bond in Series A-25 (or subsequent Series)
of the Kemper Tax-Exempt Insured Income Trust or Kemper Defined Funds Insured
National Series is eligible to be sold on an insured basis. It is expected
that the Trustee will exercise the right to obtain Permanent Insurance with
respect to Municipal Bonds in such Series only if upon such exercise the Trust
would receive net proceeds (i.e., the value of such Municipal Bond if sold as
an insured Municipal Bond less the insurance premium attributable to the
Permanent Insurance) from such sale in excess of the sale proceeds if such
Municipal Bond was sold on an uninsured basis. The insurance premium with
respect to each Municipal Bond is determined based upon the insurability of
each Municipal Bond as of the Date of Deposit and will not be increased or
decreased for any change in the creditworthiness of such Municipal Bond's
issuer.
Insurance obtained by the Trust, under normal circumstances, has no
effect on the price or redemption value of Units. It is the present intention
of the Evaluator to attribute a value to such insurance for the purpose of
computing the price or redemption value of Units only in circumstances where
the credit quality of an underlying Municipal Bond has significantly
deteriorated. Insurance obtained by the issuer of a Municipal Bond is
effective so long as such Municipal Bond is outstanding. Therefore, any such
insurance may be considered to represent an element of market value in regard
to the Municipal Bonds thus insured, but the exact effect, if any, of this
insurance on such market value cannot be predicted.
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<PAGE> 14
The value to be added to such Municipal Bonds shall be an amount equal to
the excess, if any, by which the net proceeds realized from the sale of the
Municipal Bonds on an insured basis exceeds the sum of (i) the net proceeds
realizable from the sale of the Municipal Bonds on an uninsured basis plus (ii)
in the case of Series A-25 and subsequent Series of the Kemper Tax-Exempt
Insured Income Trust or Kemper Defined Funds Insured National Series the
premium attributable to the Permanent Insurance. The portfolio insurance
obtained by the Trust from AMBAC Indemnity for Series A through A-24 of the
Kemper Tax-Exempt Insured Income Trust is applicable only while the Municipal
Bonds remain in the Trust's portfolio. Consequently, the price received by the
Trust upon the disposition of any such Municipal Bond will reflect a value
placed upon it by the market as an uninsured obligation rather than a value
resulting from the insurance. Due to this fact, the Sponsor will not direct
the Trustee to dispose of Municipal Bonds in Series A through A-24 of the
Kemper Tax-Exempt Insured Income Trust which are in default or imminent danger
of default but to retain such Municipal Bonds in the portfolio so that if a
default in the payment of interest or principal occurs the Trust may realize
the benefits of the insurance.
The Sponsor will instruct the Trustee not to sell Municipal Bonds from
Series A-25 or subsequent Series of the Kemper Tax-Exempt Insured Income Trust
or Kemper Defined Funds Insured National Series to effect redemptions or for
any reason but rather to retain them in the portfolio unless value attributable
to the Permanent Insurance can be realized upon sale. See "Investment
Supervision."
FINANCIAL GUARANTY INSURANCE COMPANY. Financial Guaranty is a
wholly-owned subsidiary of FGIC Corporation (the "Corporation"), a Delaware
holding company. The Corporation is a wholly-owned subsidiary is General
Electric Capital Corporation ("GECC"). Neither the Corporation nor GECC is
obligated to pay the debt of or the claims against Financial Guaranty.
Financial Guaranty is domiciled in the State of New York and is subject to
regulation by the State of New York Insurance Department. As of December 31,
1993, the total capital and surplus of Financial Guaranty was approximately
$777,000,000. Copies of Financial Guaranty's financial statements, prepared on
the basis of statutory accounting principles, and the Corporation's financial
statements, prepared on the basis of generally accepted accounting principles,
may be obtained by writing to Financial Guaranty at 115 Broadway, New York, New
York 10006, Attention: Communications Department or to the New State Insurance
Department at 160 West Broadway, 18th Floor, New York, New York 10013,
Attention: Property Companies Bureau (telephone number (212) 621-0389).
Financial Guaranty's telephone number is (212) 312-3000.
In addition, Financial Guaranty Insurance Company is currently authorized
to write insurance in 49 states and the District of Columbia.
The information relating to Financial Guaranty contained above has been
furnished by such corporation. The financial information contained herein with
respect to such corporation is unaudited but appears in reports or other
materials filed with state insurance regulatory authorities and is subject to
audit and review by such authorities. No representation is made herein as to
the accuracy or adequacy of such information or as to the absence of material
adverse changes in such information subsequent to the date thereof but the
Sponsor is not aware that the information herein is inaccurate or incomplete.
AMBAC INDEMNITY CORPORATION. AMBAC Indemnity Corporation ("AMBAC") is a
Wisconsin-domiciled stock insurance company, regulated by the office of
Commissioner of Insurance of Wisconsin, and licensed to do business in 50
states, the District of Columbia and the Commonwealth of Puerto Rico, with
admitted assets (unaudited) of approximately $1,936,000,000 and statutory
capital (unaudited) of approximately $1,096,000,000 as of September 30, 1993.
Statutory capital consists of statutory contingency reserve and
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<PAGE> 15
policyholders' surplus. AMBAC Indemnity is a wholly-owned subsidiary of AMBAC
Inc., a 100% publicly held company. Moody's Investors Service, Inc. and
Standard & Poor's Corporation have both assigned a AAA claims-paying ability
rating to AMBAC. Copies of AMBAC's financial statements prepared in accordance
with statutory accounting standards are available from AMBAC. The address of
AMBAC's administrative offices and its telephone number are One State Street
Plaza, 17 Floor, New York, New York 10004 and (212) 668-0340. AMBAC has
entered into quota share reinsurance agreements under which a percentage of the
insurance underwritten pursuant to certain municipal bank insurance programs of
AMBAC Indemnity has been and will be assumed by a number of foreign and
domestic unaffiliated reinsures.
MUNICIPAL BOND INVESTORS ASSURANCE CORPORATION. Municipal Bond Investors
Assurance Corporation ("MBIA Corporation") is the principal operating
subsidiary of MBIA, Inc., a New York Stock Exchange listed Company. MBIA, Inc.
is obligated to pay the debts of or claims against MBIA Corporation. MBIA
Corporation, which commenced municipal bond insurance operations on January 5,
1987, is a limited liability corporation rather than a several liability
association. MBIA Corporation is domiciled in the State of New York and
licensed to do business in all 50 states, the District of Columbia and the
Commonwealth of Puerto Rico.
As of December 31, 1993 MBIA Corporation had admitted assets of $3.1
billion (audited), total liabilities of $2.1 billion (audited), and total
capital and surplus of $978 million (audited) prepared in accordance with
statutory accounting practices prescribed or permitted by insurance regulatory
authorities. Standard & Poor's Corporation has rated the claims-paying ability
of MBIA "AAA". Copies of MBIA Corporation's financial statements prepared in
accordance with statutory accounting practices are available from MBIA
Corporation. The address of MBIA Corporation is 113 King Street, Armonk, New
York 10504.
Effective December 31, 1993, MBIA Inc. acquired Bond Investors Group,
Inc. On January 5, 1990, the Insurer acquired all of the outstanding stock of
Bond Investors Group, Inc., the parent of BIG, now known as MBIA Insurance
Corp. of Illinois. Through a reinsurance agreement, BIG has ceded all of its
net insured risks, as well as its unearned premium and contingency reserves, to
the Insurer and the Insurer has reinsured BIG's net outstanding exposure.
Moody's Investors Service rates all bonds issues insured by MBIA "Aaa"
and short-term loans "MIG1," both designated to be of the highest quality.
Standard & Poor's Corporation rates all new issues insured by MBIA "AAA."
FINANCIAL SECURITY ASSURANCE. Financial Security Assurance ("Financial
Security" or "FSA") is a monoline insurance company incorporated on March 16,
1984 under the laws of the State of New York. The operations of Financial
Security commenced on July 25, 1985, and Financial Security received its New
York State insurance license on September 23, 1985. Financial Security and its
two wholly-owned subsidiaries are licensed to engage in financial guaranty
insurance business in 47 states, the District of Columbia and Puerto Rico.
Financial Security and its subsidiaries are engaged exclusively in the
business of writing financial guaranty insurance, principally in respect of
asset-backed and other collateralized securities offered in domestic and
foreign markets. Financial Security and its subsidiaries also write financial
guaranty insurance in respect of municipal and other obligations and reinsure
financial guaranty insurance policies written by other leading insurance
companies. In general, financial guaranty insurance consists of the issuance
of a guaranty of scheduled payments of an issuer's securities, thereby
enhancing the credit rating of these securities, in consideration for payment
of a premium to the insurer.
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<PAGE> 16
Financial Security is 91.6% owned by U S West, Inc., and 8.4% owned by
Tokio Marine and Fire Insurance Co., Ltd. ("Tokio Marine"). U S West, Inc.
operates businesses involved in communications, data solutions, marketing
services and capital assets, including the provision of telephone services in
14 states in the western and midwestern United States. Tokio Marine is the
largest property and casualty insurance company in Japan. No shareholder of
Financial Security is obligated to pay any debt of Financial Security or any
claim under any insurance policy issued by Financial Security or to make any
additional contribution to the capital of Financial Security.
As of March 31, 1993 the total policyholders' surplus and contingency
reserves and the total unearned premium reserve, respectively, of Financial
Security and its consolidated subsidiaries were, in accordance with statutory
accounting principles, approximately $479,110,000 (unaudited) and $220,078,000
(unaudited), and the total shareholders' equity and the unearned premium
reserve, respectively of Financial Security and its consolidated subsidiaries
were, in accordance with generally accepted accounting principles,
approximately $628,119,000 (unaudited) and $202,493,000 (unaudited).
Copies of Financial Security's financial statements may be obtained by
writing of Financial Security at 350 Park Avenue, New York, New York 10022,
attention Communications Department. Financial Security's and its telephone
number is (212) 826-0100.
Pursuant to an intercompany agreement, liabilities on financial guaranty
insurance written by Financial Security or either of its subsidiaries are
reinsured among such companies at an agreed-upon percentage substantially
proportional to their respective capital, surplus and reserves, subject to
applicable statutory risk limitations. In addition, Financial Security
reinsures a portion of its liabilities under certain of its financial guaranty
insurance policies with unaffiliated reinsures under various quota share
treaties and on a transaction-by-transaction basis. Such reinsurance is
utilized by Financial Security as a risk management device and to comply with
certain statutory and rating agency requirements; it does not alter or limit
Financial Security's obligations under any financial guaranty insurance policy.
Financial Security's claims-paying ability is rated "Aaa" by Moody's
Investors Service, Inc., and "AAA" by Standard & Poor's Corporation, Nippon
Investors Service Inc., Duff & Phelps Inc. and Australian Ratings Pty. Ltd.
Such ratings reflect only the views of the respective rating agencies, are not
recommendations to buy, sell or hold securities and are subject to revision or
withdrawal at any time by such rating agencies.
CAPITAL GUARANTY INSURANCE COMPANY. Capital Guaranty Insurance Company
("Capital Guaranty" or "CGIC") is a "Aaa/AAA" rated monoline stock insurance
company incorporated in the State of Maryland, and is a wholly-owned subsidiary
of Capital Guaranty Corporation, a Maryland insurance holding company. Capital
Guaranty Corporation is a publicly owned company whose shares are traded on the
New York Stock Exchange.
Capital Guaranty Corporation is authorized to provide insurance in 49
states, the District of Columbia and three U.S. territories. Capital Guaranty
focuses on insuring municipal securities and provides policies which guaranty
the timely payment of principal and interest when due for payment on new issue
and secondary market issue municipal bond transactions. Capital Guaranty's
claims-paying ability is rated "Triple-A" by both Moody's and Standard &
Poor's.
As of September 30, 1993, Capital Guaranty had $13.6 billion in net
exposure outstanding. The total statutory policyholders' surplus and
contingency reserve of Capital Guaranty was $181,383,432 (unaudited) and
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the total admitted assets were $270,021,126 (unaudited) as reported to the
Insurance Department of the State of Maryland as of September 30, 1993.
Financial statements for Capital Guaranty Insurance Company, that have
been prepared in accordance with statutory insurance accounting standards, are
available upon request. The address of Capital Guaranty's headquarters is
Steuart Tower, 22nd Floor, One Market Plaza, San Francisco, CA 94105-1413 and
the telephone number is (415) 955-8000.
In order to be in a Series of the Trust, Municipal Bonds must be insured
by the issuer thereof or be eligible for the insurance obtained by the Series
of the Trust. In determining eligibility, the company insuring the portfolio
has applied its own standards which correspond generally to the standards it
normally uses in establishing the insurability of new issues of municipal bonds
and which are not necessarily the criteria used in regard to the selection of
Municipal Bonds by the Sponsor. To the extent the standards of the insurer are
more restrictive than those of the Sponsor, the previously stated Trust
investment criteria have been limited.
On the date shown under "Essential Information" in Part Two, the
Estimated Long-Term and Current Returns per Unit for the Trust, after payment
of the insurance premium, if any, were as indicated. The Estimated Long-Term
and Current Returns per Unit for a trust with an identical portfolio without
the insurance obtained by the Trust would have been higher on such date.
An objective of the portfolio insurance obtained by the Trust is to
obtain a higher yield on the portfolio of the Series of the Trust than would be
available if all the Municipal Bonds in such portfolio had Standard & Poor's
"AAA" rating and/or Moody's "Aaa" rating(s), while having the protection of
insurance of prompt payment of interest and principal, when due, on the
Municipal Bonds. There is, of course, no certainty that this result will be
achieved. Municipal Bonds in a Series of the Trust which have been insured by
the issuer (all of which are rated "AAA" by Standard & Poor's and/or "Aaa" by
Moody's) may or may not have a higher yield than uninsured bonds rated "AAA" by
Standard & Poor's or "Aaa" by Moody's. In selecting such Municipal Bonds for
the portfolio, the Sponsor has applied the criteria described above.
In the event of nonpayment of interest or principal, when due, in respect
of a Municipal Bond, the appropriate insurer shall make such payment not later
than 30 days after it has been notified that such nonpayment has occurred or is
threatened (but not earlier than the date such payment is due). The insurer,
as regards any payment it may make, will succeed to the rights of the Trustee
in respect thereof.
The Internal Revenue Service has issued a letter ruling which holds, in
effect, that insurance proceeds representing maturity interest on defaulted
municipal obligations paid to municipal bond funds substantially similar to the
Trust, under policy provisions substantially identical to the policies
described herein, will be excludable from Federal gross income under Section
103(a)(1) of the Internal Revenue Code. Holders of Units in the Trust should
discuss with their tax advisers the degree of reliance which they may place on
this letter ruling. Furthermore, Chapman and Cutler, Counsel for the Sponsor,
have given an opinion to the effect that such payment of proceeds would be
excludable from Federal gross income to the same extent that such interest
would have been so excludable if paid by the issuer of the defaulted
obligations. See "Tax Status of the Trust."
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DISTRIBUTION REINVESTMENT
Each Unitholder of a Trust Fund may elect to have distributions of
principal (including capital gains, if any) or interest or both automatically
invested without charge in shares of any mutual fund underwritten or advised by
Kemper Financial Services, Inc., an affiliate of the sponsor, (the "Kemper
Funds") which is registered in the Unitholder's state of residence, other than
those Kemper Funds sold with a contingent deferred sales charge. Since the
portfolio securities and investment objectives of such Kemper Funds may differ
significantly from that of the Trust Funds, Unitholders should carefully
consider the consequences, including the fact that distributions from such
Kemper Funds may be taxable, before selecting such Kemper Funds for
reinvestment. Detailed information with respect to the investment objectives
and the management of the Funds is contained in their respective prospectuses,
which can be obtained from and appropriate Trust Fund Underwriter upon request.
An investor should read the prospectus of the reinvestment fund selected prior
to making the election to reinvest. Unitholders who desire to have such
distributions automatically reinvested should inform their broker at the time
of purchase or should file with the Program Agent referred to below a written
notice of election.
Unitholders who are receiving distributions in cash may elect to
participate in distribution reinvestment by filing with the Program Agent an
election to have such distributions reinvested without charge. Such election
must be received by the Program Agent at least ten days prior to the Record
Date applicable to any distribution in order to be in effect for such Record
Date. Any such election shall remaining effect until a subsequent notice is
received by the Program Agent (See "Distributions to Unitholders").
The Program Agent is Investors Fiduciary Trust Company. All inquiries
concerning participation in distribution reinvestment should be directed to the
Program Agent at P.O. Box 419430, Kansas City, Missouri 64173-0216, telephone
(816) 474-8786.
INTEREST AND ESTIMATED LONG-TERM AND CURRENT RETURNS
As of the opening of business on the date indicated therein, the
Estimated Current Returns, if applicable, and the Estimated Long-Term Returns
for the Trust were as set forth under "Essential Information" in Part Two of
this Prospectus. Estimated Current Returns are calculated by dividing the
estimated net annual interest income per Unit by the Public Offering Price.
The estimated net annual interest income per Unit will vary with changes in
fees and expenses of the Trust and with the principal prepayment, redemption,
maturity, exchange or sale of Securities while the Public Offering Price will
vary with changes in the offering price of the underlying Securities and with
changes in Purchased Interest for Kemper Defined Funds; therefore, there is no
assurance that the present Estimated Current Returns will be realized in the
future. Estimated Long-Term Returns are calculated using a formula which (1)
takes into consideration, and determines and factors in the relative weightings
of, the market values, yields (which takes into account the amortization of
premiums and the accretion of discounts) and estimated retirements of all of
the Securities in the Trust and (2) takes into account the expenses and sales
charge associated with the Trust Unit. Since the market values and estimated
retirements of the Securities and the expenses of the Trust will change, there
is no assurance that the present Estimated Long-Term Returns will be realized
in the future. Estimated Current Returns and Estimated Long-Term Returns are
expected to differ because the calculation of Estimated Long-Term Returns
reflects the estimated date and amount of principal returned while Estimated
Current Returns calculations include only net annual interest income and Public
Offering Price.
-18-
<PAGE> 19
TAX STATUS OF THE TRUST
All Municipal Bonds in the Trust were accompanied by copies of opinions
of bond counsel given to the issuers thereof at the time of original delivery
of the Municipal Bonds to the effect that the interest thereon is exempt from
all Federal income taxes. In connection with the offering of Units of the
Trust Funds, neither the Sponsor, the Trustee, the auditors nor their
respective counsel have made any review of the proceedings relating to the
issuance of the Municipal Bonds or the basis for such opinions. Gain realized
on the sale or redemption of the Municipal Bonds by the Trustee or of a Unit by
a Unitholder is, however, includable in gross income for Federal income tax
purposes. Such gain does not include any amounts received in respect of
accrued interest or earned original issue discount. It should be noted that
under recently enacted legislation described below that subjects accretion of
market discount on tax-exempt bonds to taxation as ordinary income, gain
realized on the sale or redemption of Municipal Bonds by the Trustee or of
Units by a Unitholder that would have been treated as capital gain under prior
law is treated as ordinary income to the extent it is attributable to accretion
of market discount. Market discount can arise based on the price a Trust Fund
pays for Municipal Bonds or the price a Unitholder pays for his or her Units.
In addition, bond counsel to the issuing authorities rendered opinions as to
the exemption of interest on such Bonds, when held by residents of the state in
which the issuers of such bonds are located, from state income taxes and, where
applicable, local income taxes.
Neither the Sponsor, the Trustee, the Independent Auditors nor their
respective counsel, have made any review of the proceedings relating to the
issuance of the Municipal Bonds or the bases for such opinions. However, bond
counsel to the issuing authorities rendered opinions as to the exemption of
interest on such Bonds, when held by residents of the state in which the
issuers of such bonds are located, from state income taxes and, where
applicable, local income taxes.
At the time of closing for the Trusts, Chapman and Cutler, counsel for
the Sponsor, rendered an opinion under then existing law substantially to the
effect that:
Each series of the Trust is not an association taxable as a corporation for
federal income tax purposes and interest and accrued original issue discount
on Bonds which is excludable from gross income under the Internal Revenue
Code of 1986 (the "Code") will retain its status when distributed to
Unitholders, except to the extent such interest is subject to the
alternative minimum tax, an additional tax on branches of foreign
corporations and the environmental tax (the "Superfund Tax"), as noted
below.
Each Unitholder is considered to be the owner of a pro rata portion of each
asset of the respective Series of the Trust in the proportion that the
number of Units of such Trust held by him bears to the total number of Units
outstanding of such Trust under subpart E, subchapter J of chapter 1 of the
Code and will have a taxable event when such Trust disposes of a Bond, or
when the Unitholder redeems or sells his Units. Unitholders must reduce the
tax basis of their Units for their share of accrued interest received by a
Trust, if any, on Bonds delivered after the Unitholders pay for their Units
to the extent that such interest accrued on such Bonds during the period
from the Unitholder's settlement date to the date such Bonds are delivered
to a Trust 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 Bonds (whether by sale, payment on
maturity, redemption or otherwise), gain or loss is recognized to the
Unitholder. The amount of any such gain or loss is measured by comparing
the Unitholder's pro rata share of the total proceeds from such disposition
with the Unitholder's basis for his or her fractional interest in the asset
disposed of. In the case of a Unitholder who purchases Units, such basis
(before adjustment for earned original issue discount and amortized bond
premium, if any) is determined by apportioning the cost of the Units among
each of the Trust's assets ratably according to value as of the date of
acquisition of the Units. The tax cost reduction requirements of the Code
relating to
-19-
<PAGE> 20
amortization of bond premium may, under some circumstances, result in the
Unitholder realizing a taxable gain when his Units are sold or redeemed for
an amount equal to his original cost.
Any proceeds paid under individual insurance policies obtained by issuers of
Bonds or under any insurance policies obtained by the Trust or the Sponsor
which represent maturing interest on defaulted obligations held by the
Trustee will be excludable from Federal gross income if, and to the same
extent as, such interest would have been so excludable if paid in the normal
course by the issuer of the defaulted obligations.
Sections 1288 and 1272 of the Internal Revenue Code of 1986 (the "Code")
provide a complex set of rules governing the accrual of original issue
discount. These rules provide that original issue discount accrues either on
the basis of a constant compound interest rate or ratably over the term of the
Municipal Bond, depending on the date the Municipal Bond was issued. In
addition, special rules apply if the purchase price of a Municipal Bond exceeds
the original issue price plus the amount of original issue discount which would
have previously accrued based upon its issue price (its "adjusted issue
price"). The application of these rules will also vary depending on the value
of the Municipal Bond on the date a Unitholder acquires his Units, and the
price the Unitholder pays for his Units. Investors with questions regarding
these Code sections should consult with their tax advisers.
"The Revenue Reconciliation Act of 1993" (the "Tax Act") subjects
tax-exempt bonds to the market discount rules of the Code effective for bonds
purchased after April 30, 1993. In general, market discount is the amount (if
any) by which the stated redemption price at maturity exceeds an investor's
purchase price (except to the extent that such difference, if any, is
attributable to original issue discount not yet accrued). Under the Tax Act,
accretion of market discount is taxable as ordinary income; under prior law the
accretion had been treated as capital gain. Market discount that accretes
while a Trust Fund holds a Municipal Bond would be recognized as ordinary
income by the Unitholders when principal payments are received on the Municipal
Bond, upon sale or at redemption (including early redemption), or upon sale or
redemption of his or her Units, unless a Unitholder elects to include market
discount in taxable income as it accrues. The market discount rules are
complex and Unitholders should consult their tax advisers regarding these rules
and their application.
In the case of all Unitholders (both individuals and corporations),
interest on all or certain Bonds held by certain Series of the Trusts may be
treated as an item of tax preference for purposes of computing the alternative
minimum tax. Accordingly, investments in Units may subject Unitholders to (or
result in increased liability under) the alternative minimum tax. Due to the
complexity of the alternative minimum tax, Unitholders are urged to consult
their tax advisers regarding the impact, if any, of the alternative minimum
tax.
In addition, in the case of certain corporations, the alternative minimum
tax and the Superfund Tax depend upon the corporation's alternative minimum
taxable income, which is the corporation's taxable income with certain
adjustments. One of the adjustment items used in computing the alternative
minimum taxable income and the Superfund Tax of a corporation (other than an S
Corporation, Regulated Investment Company, Real Estate Investment Trust, or
REMIC) is an amount equal to 75% of the excess of such corporation's "adjusted
current earnings" over an amount equal to its alternative minimum taxable
income (before such adjustment item and the alternative tax net operating loss
deduction). "Adjusted current earnings" includes all tax-exempt interest,
including interest on all of the Bonds in a Trust. Unitholders are urged to
consult their tax advisers with respect to the particular tax consequences to
them including the corporate alternative minimum tax, the Superfund Tax and the
branch profits tax imposed by Section 884 of the Code.
-20-
<PAGE> 21
Counsel for the Sponsor has also advised that under Section 265 of the
Code, interest on indebtedness incurred or continued to purchase or carry Units
of a Trust is not deductible for Federal income tax purposes. The Internal
Revenue Service has taken the position that such indebtedness need not be
directly traceable to the purchase or carrying of Units (however, these rules
generally do not apply to interest paid on indebtedness incurred to purchase or
improve a personal residence). Also, under Section 265 of the Code, certain
financial institutions that acquire units would generally not be able to
deduct any of the interest expense attributable to ownership of such Units.
Investors with questions regarding these issues should consult with their tax
advisers.
In the case of certain Municipal Bonds in certain Series of the Trust,
the opinions of bond counsel indicate that interest on such securities received
by a "substantial user" of the facilities being financed with the proceeds of
these securities or persons related thereto, for periods while such securities
are held by such a user or related person, will not be excludable from Federal
gross income, although interest on such securities received by others would be
excludable from Federal gross income. "Substantial user" and "related person"
are defined under U.S. Treasury Regulations. Any person who believes that he
or she may be a "substantial user" or a "related person" as so defined should
contact his or her tax adviser.
Under existing law, the Trusts are not associations taxable as a
corporation and the income of the Trusts will be treated as the income of the
Unitholders under the income tax laws of the State of Missouri.
All statements of law in the Prospectus concerning exclusion from gross
income for Federal, state or other tax purposes are the opinions of counsel and
are to be so construed.
At the respective times of issuance of the Bonds, opinions relating to
the validity thereof and to the exclusion of interest thereon from Federal
gross income are rendered by bond counsel to the respective issuing
authorities. Neither the Sponsor nor Chapman and Cutler has made any special
review for the Trust Funds of the proceedings relating to the issuance of the
Bonds or of the basis for such opinions.
For taxpayers other than corporations, net capital gains are presently
subject to a maximum marginal stated tax rate of 28 percent. However, it
should be noted that legislative proposals are introduced from time to time
that affect tax rates and could affect relative differences at which ordinary
income and capital gains are taxed. Under the Code, taxpayers must disclose to
the Internal Revenue Service the amount of tax-exempt interest earned during
the year.
Section 86 of the Code, in general, provides that fifty percent of Social
Security benefits are includible in gross income to the extent that the sum of
"modified adjusted gross income" plus fifty percent of the Social Security
benefits received exceeds a "base amount." The base amount is $25,000 for
unmarried taxpayers, $32,000 for married taxpayers filing a joint return and
zero for married taxpayers who do not live apart at all times during the
taxable year and who file separate returns. Modified adjusted gross income is
adjusted gross income determined without regard to certain otherwise allowable
deductions and exclusions from gross income and by including tax-exempt
interest. To the extent that Social Security benefits are includible in gross
income, they will be treated as any other item of gross income.
-21-
<PAGE> 22
In addition, under the Tax Act, for taxable years beginning after
December 31,1993, up to 85 percent of Social Security benefits are includible
in gross income to the extent that the sum of "modified adjusted gross income"
plus fifty percent of Social Security benefits received exceeds an "adjusted
base amount." The adjusted base amount is $34,000 for married taxpayers,
$44,000 for married taxpayers filing a joint return and zero for married
taxpayers who do not live apart at all times during the taxable year and who
file separate returns.
Although tax-exempt interest is included in modified adjusted gross
income solely for the purpose of determining what portion, if any, of Social
Security benefits will be included in gross income, no tax-exempt interest,
including that received from the Trust, will be subject to tax. A taxpayer
whose adjusted gross income already exceeds the base amount or the adjusted
base amount must include fifty percent or eighty-five percent, respectively of
his Social Security benefits in gross income whether or not he receives any
tax-exempt interest. A taxpayer whose modified adjusted gross income (after
inclusion of tax-exempt interest) does not exceed the base amount need not
include any Social Security benefits in gross income.
For a discussion of the state tax status of income earned on Units of a
state trust, see the discussion of tax status for the applicable trust. Except
as noted therein, the exemption of interest on state and local obligations for
Federal income tax purposes discussed above does not necessarily result in
exemption under the income or other tax laws of any state or city. The laws of
the several states vary with respect to the taxation of such obligations.
All statements in the Prospectus concerning exemption from Federal, state
or other taxes are the opinions of counsel and are to be construed.
PUBLIC OFFERING OF UNITS
PUBLIC OFFERING PRICE. Units of each Series of the Trust are offered at
the Public Offering Price, plus accrued interest to the expected settlement
date (Daily Accrued Interest for Kemper Defined Funds). The Public Offering
Price per Unit of a Series is equal to the aggregate bid side evaluation of the
Municipal Bonds in the Series' portfolio (as determined pursuant to the terms
of a contract with the Evaluator, by Muller Data Corporation, a non-affiliated
firm regularly engaged in the business of evaluating, quoting or appraising
comparable securities), plus or minus cash, if any, in the Principal Account,
held or owned by the Series, divided by the number of outstanding Units of that
Series of the Trust, plus Purchased Interest in the case of Kemper Defined
Funds, plus the sales charge applicable. The sales charge is based upon the
dollar weighted average maturity of the Trust and is determined in accordance
with the table set forth below. For purposes of this computation, Municipal
Bonds will be deemed to mature on their expressed maturity dates unless: (a)
the Municipal Bonds have been called for redemption or funds or securities have
been placed in escrow to redeem them on an earlier call date, in which case
such call date will be deemed to be the date upon which they mature; or (b)
such Municipal Bonds are subject to a "mandatory tender", in which case such
mandatory tender will be deemed to be the date upon which they mature. The
effect of this method of sales charge computation will be that different sales
charge rates will be applied to the Trust based upon the dollar weighted
average maturity of such Trust's portfolio, in accordance with the following
schedule:
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<PAGE> 23
<TABLE>
<CAPTION>
PERCENT OF PERCENT OF NET
DOLLAR WEIGHTED AVERAGE PUBLIC OFFERING AMOUNT
YEARS TO MATURITY PRICE INVESTED
- ----------------------- -------------- --------------
<S> <C> <C>
1 to 3.99 years . . . . . . . . . . . . . . . 2.00% 2.041%
4 to 7.99 years . . . . . . . . . . . . . . . 3.50 3.627
8 to 14.99 years . . . . . . . . . . . . . . 4.50 4.712
15 or more years . . . . . . . . . . . . . . 5.50 5.820
</TABLE>
The sales charge per Unit will be reduced as set forth below:
<TABLE>
<CAPTION>
DOLLAR WEIGHTED AVERAGE YEARS TO MATURITY*2
4 TO 7.99 8 TO 14.99 15 OR MORE
--------------------------------------------------------
AMOUNT OF INVESTMENT SALES CHARGE (% OF PUBLIC OFFERING PRICE)
- -------------------- -----------------------------------------
<S> <C> <C> <C>
$1,000 to $99,999 . . . . . . . . . . . . . . 3.50% 4.50% 5.50%
$100,000 to $499,999 . . . . . . . . . . . . 3.25 4.25 5.00
$500,000 to $999,999 . . . . . . . . . . . . 3.00 4.00 4.50
$1,000,000 or more . . . . . . . . . . . . . 2.75 3.75 4.00
</TABLE>
The reduced sales charge as shown on the preceding charts will apply to
all purchases of Units on any one day by the same purchases from the same
dealer, and for this purpose, purchases of Units of a Series of the Trust will
be aggregated with concurrent purchases of Units of any other unit investment
trust that may be offered by the Sponsor. Additionally, Units purchased in the
name of a spouse or child (under 21) of such purchaser will be deemed to be
additional purchases by such purchaser. The reduced sales charge will also be
applicable to a trust or other fiduciary purchasing for a single trust estate
or single fiduciary account.
The Sponsor intends to permit officers, directors and employees of the
Sponsor and Evaluator and, at the discretion of the Sponsor, registered
representatives of selling firms to purchase Units of the Trusts without a
sales charge, although a transaction processing fee may be imposed on such
trades.
The Public Offering Price on the date shown on the cover page of Part Two
of the Prospectus or on any subsequent date will vary from the amounts stated
under "Essential Information" in Part Two in accordance with fluctuations in
the prices of the underlying Municipal Bonds. The aggregate bid side
evaluation of the Municipal Bonds shall be determined (a) on the basis of
current bid prices of the Municipal Bonds, (b) if bid prices are not available
for any particular Municipal Bond, on the basis of current bid prices for
comparable bonds, (c) by determining the value of the Municipal Bonds on the
bid side of the market by appraisal, or (d) by any combination of the above.
Except as described in "Insurance on the Portfolios" above, the Evaluator will
not attribute any value to the insurance obtained by the Trust. On the other
hand, the value of insurance obtained by an issuer of Municipal Bonds or by the
Sponsor is reflected and included in the market value of such Municipal Bonds.
- -----------
*If the dollar weighted average maturity of a Trust is from 1 to 3.99 years,
the sales charge is 2% and 1.5% of the Public Offering Price for purchases of
$1 to $249,999 and $250,000 or more, respectively.
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<PAGE> 24
In any case, the Evaluator will consider the ability of an insurer to
meet its commitments under the Trust's insurance policy (if any). For example,
if the Trust were to hold the Municipal Bonds of a municipality which had
significantly deteriorated in credit quality, the Evaluator would first
consider in its evaluation the market price of the Municipal Bonds at their
lower credit rating. The Evaluator would also attribute a value to the
insurance feature of the Municipal Bonds which would be equal to the difference
between the market value of such Municipal Bonds and the market value of bonds
of a similar nature which were of investment grade rating. It is the position
of the Sponsor that this is a fair method of valuing insured Municipal Bonds
and reflects a proper valuation method in accordance with the provisions of the
Investment Company Act of 1940. For a description of the circumstances under
which a full or partial suspension of the right of Unitholders to redeem their
Units may occur, see "Redemption."
The foregoing evaluations and computations shall be made as of the
Evaluation Time stated under "Essential Information" in Part Two, on each
business day effective for all sales made during the preceding 24-hour period,
and for purposes of resales and repurchases of Units.
The interest on the Municipal Bonds in each Series of the Trust, less the
estimated fees and expenses, is estimated to accrue in the annual amounts per
Unit set forth under "Essential Information" in Part Two. The amount of net
interest income which accrues per Unit may change as Municipal Bonds mature or
are redeemed, exchanged or sold, or as the expenses of a Series of the Trust
change or as the number of outstanding Units of such Series changes.
Payment for Units must be made on or before the fifth business day
following purchase (the "settlement date"). A purchaser becomes the owner of
Units on the settlement date. If a Unitholder desires to have certificates
representing Units purchased, such certificates will be delivered as soon as
possible following his written request therefor. For information with respect
to redemption of Units purchased, but as to which certificates requested have
not been received, see "Redemption" below.
The following section "Accrued Interest" applies to Unitholders of Kemper
Tax-Exempt Insured Income Trust:
ACCRUED INTEREST. Accrued Interest consists of two elements. The first
arises as a result of accrued interest which is the accumulation of unpaid
interest on a bond from the last day on which interest thereon was paid.
Interest on Bonds in the Trust Funds is actually paid either monthly or
semi-annually to the Trust Fund. However, interest on the Bonds in the Trust
Funds is accounted for daily on an accrual basis. Because of this, a Trust
Fund always has an amount of interest earned but not yet collected by the
Trustee because of coupons that are not yet due. For this reason, the Public
Offering Price of Units will have added to it the proportionate share of
accrued and undistributed interest to the date of settlement.
The Trustee will advance the amount of accrued interest as of the First
Settlement Date and the same will be distributed to Sponsor. Such advance will
be repaid to the Trustee through the first receipts of interest received on the
Municipal Bonds. Consequently, the amount of accrued interest to be added to
the Public Offering Price of Units will include only accrued interest arising
after the First Settlement Date of a Trust Fund, less any distributions from
the Interest Account subsequent to this First Settlement Date. Since the First
Settlement Date is the date of settlement for anyone ordering Units on the Date
of Deposit, no accrued interest will be added to the Public Offering Price of
Units ordered on the Date of Deposit.
-24-
<PAGE> 25
The second element of accrued interest arises because of the structure of
the Interest Account. The Trustee has no cash for distribution to Unitholders
until it receives interest payments on the Bonds in a Trust Fund. The Trustee
is obligated to provide its own funds, at times, in order to advance interest
distributions. The Trustee will recover these advancements when such interest
is received. Interest Account balances are established so that it will not be
necessary on a regular basis for the Trustee to advance its own funds in
connection with such interest distributions. The Interest Account balances are
also structured so that there will generally be positive cash balances and
since the funds held by the Trustee will be used by it to earn interest
thereon, it benefits thereby (see "Expenses of the Trust").
Accrued interest is computed as of the initial Record Date of the Trust
Funds. On the date of the first distribution of interest to Unitholders after
the First Settlement Date, the interest collected by the Trustee will be
sufficient to repay its advances, to allow for accrued interest under the
monthly, quarterly and semi-annual plans of distribution and to generate enough
cash to commence distributions to Unitholders. If a Unitholder sells or
redeems all or a portion of his Units or if the Bonds in a Trust Fund are sold
or otherwise removed or if a Trust Fund is liquidated, he will receive at that
time his proportionate share of the accrued interest computed to the settlement
date in the case of sale or liquidation and to the of tender in the case of
redemption in such Trust Fund.
The following section "Purchased and Daily Accrued Interest" applies to
Unitholders of Kemper Defined Funds Insured National Series:
PURCHASED AND DAILY ACCRUED INTEREST. Accrued interest consist of two
elements. The first element arises as a result of accrued interest which is
the accumulation of unpaid interest on a bond from the later of the last day on
which interest thereon was paid or the date of original issuance of the bond.
Interest on the coupon Bonds in the Trust fund is paid semi-annually to the
Trust. A portion of the aggregate amount of such accrued interest on the Bonds
in the Trust to the First Settlement Date of the Trust Units is the Purchased
Interest. In an effort to reduce the amount of Purchased Interest which would
otherwise have to be paid by Unitholders, the Trustee may advance a portion of
the accrued interest to the Sponsor as the Unitholder of record as of the First
Units in the Trust Fund is accounted for daily on an accrual basis (herein
referred to as "Daily Accrued Interest"). 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 will include the
proportionate share of Daily Accrued Interest to the date of settlement.
If a Unitholder sells or redeems all or a portion of his Units or if the
bonds are sold or otherwise removed or if the Trust Fund is liquidated, he will
receive at that time his proportionate share of the Purchase 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
Fund.
PUBLIC DISTRIBUTION OF UNITS. The Sponsor has qualified Units for sale
in all states. Units will be sold through dealers who are members of the
National Association of Securities Dealers, Inc. and through others. Sales may
be made to or through dealers at prices which represent discounts from the
Public Offering Price as set forth in the table 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 the amount shown in the table below. Under the
Glass-Steagall Act, banks are prohibited from underwriting Trust Units;
however, the Glass-Steagall Act does permit certain agency transactions and the
banking regulators have indicated that these particular agency transactions are
permitted under such Act. In addition, state securities laws on this issue may
differ from the interpretations of Federal law expressed herein and banks and
financial institutions may be required to register as dealers pursuant to state
law.
-25-
<PAGE> 26
<TABLE>
<CAPTION>
DOLLAR WEIGHTED AVERAGE YEARS TO MATURITY*3
4 TO 7.99 8 TO 14.99 15 OR MORE
----------------------------------------------------------
DISCOUNT PER UNIT
AMOUNT OF INVESTMENT (% OF PUBLIC OFFERING PRICE)
- -------------------- ----------------------------
<S> <C> <C> <C>
$1,000 to $99,999 2.00% 3.00% 4.00%
$100,000 to $499,999 1.75 2.75 3.50
$500,000 to $999,999 1.50 2.50 3.00
$1,000,000 or more 1.25 2.25 2.50
</TABLE>
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 Trusts and other unit
investment trusts underwritten by the Sponsor.
The Sponsor reserves the right to change the levels of discounts at any
time. The difference between the discount and the sales charge will be
retained by the Sponsor.
The Sponsor reserves the right to reject, in whole or in part, any order
for the purchase of Units.
PROFITS OF SPONSOR. The Sponsor will retain a portion of the sales
charge on each Unit sold, representing the difference between the Public
Offering Price of the Units and the discounts allowed to firms selling such
Units. The Sponsor may realize additional profit or loss as a result of the
possible change in the daily evaluation of the Municipal Bonds in the Trust,
since the value of its inventory of Units may increase or decrease.
MARKET FOR UNITS
While not obligated to do so, the Sponsor intends to, and certain of the
Underwriters may, subject to change at any time, maintain a market for Units of
each Series of the Trust offered hereby and to continuously offer to purchase
said Units at prices, as determined by the Evaluator, based on the aggregate
bid prices of the underlying Municipal Bonds of such Series, together with
accrued interest to the expected date of settlement. Unitholders who wish to
dispose of their Units should inquire of their broker or bank as to the current
market price of the Units in order to determine whether there is in existence
any price in excess of the Redemption Price and, if so, the amount thereof.
REDEMPTION
A Unitholder who does not dispose of Units in the secondary market
described above may cause their Units to be redeemed by the Trustee by making a
written request to the Trustee, Investors Fiduciary Trust Company, P.O. Box
419430, Kansas City, Missouri 64173-0216 and, in the case of Units evidenced by
a certificate, by tendering such certificate to the Trustee, properly endorsed
or accompanied
- ------------
*If the dollar weighted average maturity of a Trust is from 1 to 3.99 years,
the concession or agency commission is 1.00% of the Public Offering Price.
-26-
<PAGE> 27
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
redemptions by individual account owners (including joint owners). Additional
documentation may be requested, and a signature guarantee is always required,
from corporations, executors, administrators, trustees, guardians or
associations. The signatures must be guaranteed by a participant in the
Securities Transfer Agents Medallion Program ("STAMP") or such other guarantee
program in addition to, or in substitution for, STAMP, as may be accepted by
the Trustee. A certificate should only be sent by registered or certified mail
for the protection of the Unitholder. Since tender of the certificate is
required for redemption when one has been issued, Units represented by a
certificate cannot be redeemed until the certificate representing such Units
has been received by the purchaser.
Redemption shall be made by the Trustee on the seventh calendar day
following the day on which a tender for redemption is received, or if the
seventh calendar day is not a business day, on the first business day prior
thereto (the "Redemption Date"), by payment of cash equivalent to the
Redemption Price for that Series of the Trust, determined as set forth below
under "Computation of Redemption Price," as of the evaluation time stated under
"Essential Information" in Part Two, next following such tender, multiplied by
the number of Units being redeemed. Any Units redeemed shall be cancelled and
any undivided fractional in the Trust Fund extinguished. The price received
upon redemption might be more or less than the amount paid by the Unitholder
depending on the value of the Municipal Bonds in the portfolio at the time of
redemption. Any Units redeemed shall be cancelled and any undivided fractional
interest in that Series of the Trust will be extinguished.
Under regulations issued by the Internal Revenue Service, the Trustee is
required to withhold a specified percentage of the principal amount of a Unit
redemption if the Trustee has not been furnished the redeeming Unitholder's tax
identification number in the manner required by such regulations. Any amount
so withheld is transmitted to the Internal Revenue Service and may be recovered
by the Unitholder only when filing a tax return. Under normal circumstances
the Trustee obtains the Unitholder's tax identification number from the selling
broker. However, any time a Unitholder elects to tender Units for redemption,
such Unitholder should make sure that the Trustee has been provided a certified
tax identification number in order to avoid this possible "back-up
withholding." In the event the Trustee has not been previously provided such
number, one must be provided at the time redemption is requested.
Any amounts paid on redemption representing interest shall be withdrawn
from the Interest Account of such Series to the extent that funds are available
for such purpose. All other amounts paid on redemption shall be withdrawn from
the Principal Account of such Series. The Trustee is empowered to sell
Municipal Bonds from the portfolio of a Series in order to make funds available
for the redemption of Units of such Series. Such sale may be required when
Municipal Bonds would not otherwise be sold and might result in lower prices
than might otherwise be realized. To the extent Municipal Bonds are sold, the
size and diversity of that Series of the Trust will be reduced.
The Trustee is irrevocably authorized in its discretion, if an
Underwriter does not elect to purchase any Units tendered for redemption, in
lieu of redeeming such Units, to sell such Units in the over-the-counter market
for the account of tendering Unitholders at prices which will return to such
Unitholders amounts in cash, net after brokerage commissions, transfer taxes
and other charges, equal to or in excess
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of the Redemption Price for such Units. In the event of any such sale, the
Trustee shall pay the net proceeds thereof to the Unitholders on the day they
would otherwise be entitled to receive payment of the Redemption Price.
The right of redemption may be suspended and payment postponed (1) for
any period during which the New York Stock Exchange is closed, other than
customary weekend and holiday closings, or during which (as determined by the
Securities and Exchange Commission) trading on the New York Stock Exchange is
restricted; (2) for any period during which an emergency exists as a result of
which disposal by the Trustee of Municipal Bonds is not reasonably practicable
or it is not reasonably practicable to fairly determine the value of the
underlying Municipal Bonds in accordance with the Trust Agreements; or (3) for
such other period as the Securities and Exchange Commission may by order
permit. Because insurance obtained by certain Series of the Trust terminates
as to Bonds which are sold by the Trustee and because the insurance obtained by
such Series of the Trust does not have a realizable cash value which can be
used by the Trustee to meet redemptions of Units, under certain circumstances
the Sponsor may apply to the Securities and Exchange Commission for an order
permitting a full or partial suspension of the right of Unitholders to redeem
their Units if a significant portion of the Bonds in the portfolio is in
default in payment of principal or interest or in significant risk of such
default. The Trustee is not liable to any person or in any way for any loss or
damage which may result from any such suspension or postponement.
COMPUTATION OF REDEMPTION PRICE. The Redemption Price for Units of each
Series of the Trust is computed by the Evaluator as of the evaluation time
stated under "Essential Information" in Part Two next occurring after the
tendering of a Unit for redemption and on any other business day desired by it,
by:
A. adding (1) the cash on hand in such Series of the Trust other than
cash depositier in the Trust Funds to purchase Municipal Bonds not applied to
the purchase of such Bonds; (2) the aggregate value of the Municipal Bonds held
in such Series of the Trust, as determined by the Evaluator on the basis of bid
prices therefor; (3) interest accrued and unpaid on the Municipal Bonds in that
Series of the Trust as of the date of computation; and
B. deducting therefrom (1) amounts representing any applicable taxes or
governmental charges payable out of that Series of the Trust and for which no
deductions have been previously made for the purpose of additions to the
Reserve Account described under "Expenses of the Trust"; (2) amounts
representing estimated accrued expenses of that Series of the Trust including,
but not limited to, fees and expenses of the Trustee (including legal and
auditing fees and insurance costs), the Evaluator, the Sponsor and bond
counsel, if any; (3) cash held for distribution to Unitholders of record as of
the business day prior to the evaluation being made; and (4) other liabilities
incurred by such Series of the Trust; and
C. finally, dividing the results of such computation by the number of
Units of such Series of the Trust outstanding as of the date thereof.
UNITHOLDERS
OWNERSHIP OF UNITS. Ownership of Units of a Trust will not be evidenced
by certificates unless a Unitholder, the Unitholder's registered broker/dealer
or the clearing agent 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
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<PAGE> 29
endorsed or accompanied by a written instrument or instruments of transfer
which should be sent registered or certified mail for the protection of the
Unitholder. Unitholders must sign such written request, and such certificate
or transfer instrument, exactly as their names appear on the records of the
Trustee and on any certificate representing the Units to be transferred. Such
signatures must be guaranteed by a participant in the Securities Transfer
Agents Medallion Program ("STAMP") or such other signature guarantee program in
addition to, or in substitution for, STAMP, as may be accepted by the Trustee.
Units may be purchased and certificates, if requested, will be issued in
denominations of one Unit or any multiple thereof subject to any minimum
investment requirement established by the Sponsor from time to time. Any
Certificate issued will be numbered serially for identification, issued in
fully registered form and will be transferable only on the books of the
Trustee. The Trustee may require a Unitholder to pay a reasonable fee, to be
determined in the sole discretion of the Trustee, for each certificate
re-issued or transferred, and to pay any governmental charge that may be
imposed in connection with each such transfer or interchange. The Trustee at
the present time does not intend to charge for the normal transfer or
interchange of certificates. Destroyed, stolen, mutilated or lost certificates
will be replaced upon delivery to the Trustee of satisfactory indemnity
(generally amounting to 3% of the market value of the Units), affidavit of
loss, evidence of ownership and payment of expenses incurred.
DISTRIBUTIONS TO UNITHOLDERS. Interest Distributions: Interest received
by a Series of the Trust, including any portion of the proceeds from a
disposition of Municipal Bonds which represents accrued interest, is credited
by the Trustee to the Interest Account for such Series. All other receipts are
credited by the Trustee to a separate Principal Account for such Series.
During each year the distributions to the Unitholders of each Series of the
Trust as of each Record Date (see "Essential Information" in Part Two) will be
made on the following Distribution Date or shortly thereafter and shall consist
of an amount substantially equal to one-twelfth, one-fourth or one-half
(depending on the distribution option selected except in Series of Kemper
Defined Funds in which case only monthly distributions are available) of such
Unitholders' pro rata share of the estimated net annual interest income to the
Interest Account for such Series of the Trust. However, the interest to which
Unitholders of a Series of the Trust are entitled will at most times exceed the
amount available for distribution, there will almost always remain an item of
accrued interest that is added to the daily value of the Units of such Series.
If Unitholders of a Series sell or redeem all or a portion of their Units they
will be paid their proportionate share of the accrued interest of such Series
to, but not including, the fifth business day after the date of sale or to the
date of tender in the case of a redemption.
Persons who purchase Units between a Record Date and a Distribution Date
will receive their first distribution on the Second Distribution Date following
the purchase of their Units. Since interest on Municipal Bonds in each Series
of the Trust is payable at varying intervals, usually in semiannual
installments, and distributions of income are made to Unitholders of a Series
of the Trust at what may be different intervals from receipt of interest, the
interest accruing to such Series of the Trust may not be equal to the amount of
money received and available for distribution from the Interest Account of such
Series. Therefore, on each Distribution Date the amount of interest actually
on deposit in the Interest Account and available for distribution may be
slightly more or less than the interest distribution made. In order to
eliminate fluctuations in interest distributions resulting from such variances,
the Trustee is authorized by the Agreement to advance such amounts as may be
necessary to provide interest distributions of approximately equal amounts.
The Trustee will be reimbursed, without interest, for any such advances from
funds available in the Interest Account of such Series.
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<PAGE> 30
Unitholders purchasing Units will initially receive distributions in
accordance with the election of the prior owner. Unitholders desiring to
change their distribution option, if applicable, may do so by sending written
notice to the Trustee, together with their certificate (if one was issued).
Certificates should only be sent by registered or certified mail to minimize
the possibility of loss. If written notice and any certificate are received by
the Trustee not later than January 1 of a year, the change will become
effective on January 2 for distributions commencing with February 15 of that
year. If notice is not received by the Trustee, the Unitholder will be deemed
to have elected to continue with the same option for the subsequent twelve
months.
Principal Distributions. The Trustee will distribute on each semi-annual
Distribution Date (or in the case of Kemper Defined Funds, on each Distribution
Date) or shortly thereafter, to each Unitholder of Record of the Trust on the
preceding Record Date, an amount substantially equal to such Unitholder's pro
rata share of the cash balance, if any, in the Principal Account of such Trust
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 Unit (or $.001 per Unit for certain Series). Except for Series
of Kemper Tax-Exempt Insured Income Trust, if such balance is between $5.00 and
$10.00 per Unit, distributions will be made on each quarterly Distribution
Date; and if such balance exceeds $10.00 per Unit, such amounts will be
distributed on the next monthly Distribution Date.
STATEMENT TO UNITHOLDERS. With each distribution, the Trustee will
furnish or cause to be furnished each Unitholder a statement of the amount of
interest and the amount of other receipts, if any, which are being distributed,
expressed in each case as a dollar amount per Unit.
The accounts of each Series of the Trust are required to be audited
annually, at the Series' expense, by independent auditors designated by the
Sponsor, unless the Trustee determines that such an audit would not be in the
best interest of the Unitholders of such Series of the Trust. The accountants'
report will be furnished by the Trustee to any Unitholder of such Series of the
Trust upon written request.
Within a reasonable period of time after the end of each calendar year,
the Trustee shall furnish to each person who at any time during the calendar
year was a Unitholder of a Series of the Trust a statement covering the
calendar year, setting forth:
A. As to the Interest Account:
1. The amount of interest received on the Municipal Bonds in
such Series and the percentage of such amount by states and territories in
which the issuers of such Municipal Bonds are located;
2. The amount paid from the Interest Account of such Series
representing accrued interest of any Units redeemed;
3. The deductions from the Interest Account of such Series for
applicable taxes, if any, fees and expenses (including insurance costs and
auditing fees) of the Trustee, the Evaluator, the Sponsor and bond counsel, if
any;
4. Any amounts credited by the Trustee to a Reserve Account for
such Series described under "Expenses of the Trust"; and
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5. The net amount remaining after such payments and deductions,
expressed both as a total dollar amount and a dollar amount per Unit
outstanding on the last business day of such calendar year.
B. As to the Principal Account:
1. The dates of the maturity, liquidation or redemption of any
of the Municipal Bonds in such Series and the net proceeds received therefrom
excluding any portion credited to the Interest Account;
2. The amount paid from the Principal Account of such Series
representing the principal of any Units redeemed;
3. The deductions from the Principal Account of such Series for
payment of applicable taxes, if any, fees and expenses (including insurance
costs and auditing expenses) of the Trustee, the Evaluator, the Sponsor and of
bond counsel, if any;
4. Any amounts credited by the Trustee to a Reserve Account for
such Series described under "Expenses of the Trust"; and
5. The net amount remaining after distributions of principal and
deductions, expressed both as a dollar amount and as a dollar amount per Unit
outstanding on the last business day of such calendar year.
C. The following information:
1. A list of the Municipal Bonds in such Series as of the last
business day of such calendar year;
2. The number of Units of such Series outstanding on the last
business day of such calendar year;
3. The Redemption Price of such Series based on the last Trust
Evaluation made during such calendar year;
4. The amount actually distributed during such calendar year
from the Interest and Principal Accounts of such Series separately stated,
expressed both as total dollar amounts and as dollar amounts per Unit of such
Series outstanding on the Record Date for each such distribution.
RIGHTS OF UNITHOLDERS. A Unitholder may at any time tender Units to the
Trustee for redemption. No Unitholder of a Series shall have the right to
control the operation and management of such Series or of the Trust in any
manner, except to vote with respect to amendment of the Trust Agreements or
termination of such Series of the Trust. The death or incapacity of any
Unitholder will not operate to terminate the Series or the Trust nor entitle
legal representatives or heirs to claim an accounting or to bring any action or
proceeding in any court for partition or winding up of such Series or the
Trust.
INVESTMENT SUPERVISION
The Sponsor may not alter the portfolio of the Trust by the purchase,
sale or substitution of Municipal Bonds, except in the special circumstances
noted below. Thus, with the exception of the
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redemption or maturity of Municipal Bonds in accordance with their terms,
and/or the sale of Municipal Bonds to meet redemption requests, the assets of
the Trust will remain unchanged under normal circumstances.
The Sponsor may direct the Trustee to dispose of Municipal Bonds the
value of which has been affected by certain adverse events, including
institution of certain legal proceedings, a decline in their price or the
occurrence of other market factors, including advance refunding, so that in the
opinion of the Sponsor the retention of such Municipal Bonds in a Series of the
Trust would be detrimental to the interest of the Unitholders of such Series.
The proceeds from any such sales, exclusive of any portion which represents
accrued interest, will be credited to the Principal Account for distribution to
the Unitholders.
The portfolio insurance obtained by the Trust from AMBAC Indemnity for
Series A through A-24 of the Kemper Tax-Exempt Insured Income Trust is
applicable only while the Municipal Bonds remain in the portfolio of a Series
of the Trust. Consequently, the price received by such Series of the Trust
upon the disposition of any such Municipal Bond will reflect a value placed
upon it by the market as an uninsured obligation rather than a value resulting
from the insurance. Due to this fact, the Sponsor will not direct the Trustee
to dispose of Municipal Bonds in Series A through A-24 of the Kemper Tax-Exempt
Insured Income Trust which are in default or imminent danger of default but to
retain such Municipal Bonds in the portfolio so that if a default in the
payment of interest or principal occurs, the Trust may realize the benefits of
the insurance.
Pursuant to an irrevocable commitment of Financial Guaranty, the Trustee,
at the time of the sale of a Municipal Bond covered under the Trust's insurance
policy with respect to Series A-25 and subsequent Series of the Kemper
Tax-Exempt Insured Income Trust, has the right to obtain permanent insurance
with respect to such Municipal Bond (i.e., insurance to maturity of the
Municipal Bond regardless of the identity of the holder thereof) (the
"Permanent Insurance") upon the payment of a single predetermined insurance
premium from the proceeds of the sale of such Municipal Bond. Accordingly,
every Municipal Bond in such Series of the Trust is eligible to be sold on an
insured basis. It is expected that the Trustee will exercise the right to
obtain Permanent Insurance for Municipal Bonds in Series A-25 and subsequent
Series of the Kemper Tax-Exempt Insured Income Trust only if upon such exercise
a Series of the Trust would receive net proceeds (i.e., the value of such
Municipal Bond if sold as an insured bond less the insurance premium
attributable to the Permanent Insurance) from such sale in excess of the sale
proceeds if such Municipal Bond were sold on an uninsured basis. The insurance
premium with respect to each Municipal Bond in such Series is determined based
upon the insurability of each Municipal Bond as of the initial Date of Deposit
and will not be increased or decreased for any change in the creditworthiness
of such Municipal Bond's issuer.
The Trustee is permitted to utilize the option to obtain Permanent
Insurance available on Series A-25 and subsequent Series of the Kemper
Tax-Exempt Insured Income Trust only in circumstances where the value added to
the Municipal Bonds exceeds the costs of acquiring such Permanent Insurance.
Unless such Permanent Insurance may be obtained at an acceptable price, the
Sponsor will not direct the Trustee to dispose of Municipal Bonds which are in
default or imminent danger of default but to retain such Municipal Bonds in the
portfolio so that the Trust may realize the benefits of the insurance on the
portfolio.
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The Sponsor is required to instruct the Trustee to reject any offer made
by an issuer of Municipal Bonds to issue new obligations in exchange or
substitution for any of such Municipal Bonds pursuant to a refunding financing
plan except that the Sponsor may instruct the Trustee to accept or reject such
an offer or to take any other action with respect thereto as the Sponsor may
deem proper if (1) the issuer is in default with respect to such Bonds or (2)
in the written opinion of the Sponsor the issuer will probably default with
respect to such Bonds in the reasonably foreseeable future. Any obligation so
received in exchange or substitution will be held by the Trustee subject to the
terms and conditions of the Trust Agreement to the same extent as Bonds
originally deposited thereunder. Within five days after the deposit of
obligations in exchange or substitution for underlying Bonds, the Trustee is
required to give notice thereof to each Unitholder, identifying the Bonds
eliminated and the Bonds substituted therefor.
The Trustee may sell Municipal Bonds designated by the Sponsor from a
Series of the Trust for the purpose of redeeming Units of such Series tendered
for redemption and the payment of expenses. See "Redemption".
ADMINISTRATION OF THE TRUST
THE TRUSTEE. The Trustee, Investors Fiduciary Company, is a trust
company specializing in investment related services, organized and existing
under the laws of Missouri, having its trust office at 127 West 10th Street,
Kansas City, Missouri 64105. The Trustee is subject to supervision and
examination by the Division of Finance of the State of Missouri and the Federal
Deposit Insurance Corporation. Investors Fiduciary Trust Company is jointly
owned by DST Systems, Inc. and Kemper Financial Services, Inc., an affiliate of
the Sponsor. See "The Sponsor."
The Trustee, whose duties are ministerial in nature, has not participated
in selecting the portfolio of any Series of the Trust. For information
relating to the responsibilities of the Trustee under the Agreement, reference
is made to the material set forth under "Unitholders."
In accordance with the Trust Agreements, the Trustee shall keep records
of all transactions at its office. Such records shall include the name and
address of, and the number of Units held by, every Unitholder of each Series.
The books and records with respect to a Series of the Trust shall be open to
inspection by any Unitholder of such Series at all reasonable times during the
usual business hours. The Trustee shall make such annual or other reports as
may from time to time be required under any applicable state or Federal
statute, rule or regulation. The Trustee shall keep a certified copy or
duplicate original of the Trust Agreements on file in its office available for
inspection at all reasonable times during usual business hours by any
Unitholder, together with a current list of the Municipal Bonds held in each
Series of the Trust. Pursuant to the Trust Agreements, the Trustee may employ
one or more agents for the purpose of custody and safeguarding of Municipal
Bonds comprising the portfolios.
Under the Trust Agreements, the Trustee or any successor trustee may
resign and be discharged of its duties created by the Trust Agreements by
executing an instrument in writing and filing the same with the Sponsor.
The Trustee or successor trustee must mail a copy of the notice of
resignation to all Unitholders then of record, not less than sixty days before
the date specified in such notice when such resignation
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is to take effect. The Sponsor upon receiving notice of such resignation is
obligated to appoint a successor trustee promptly. If, upon such resignation,
no successor trustee has been appointed and has accepted the appointment within
thirty days after notification, the retiring Trustee may apply to a court of
competent jurisdiction for the appointment of a successor. In case the Trustee
becomes incapable of acting or is adjudged a bankrupt or is taken over by
public authorities, the Sponsor may remove the Trustee and appoint a successor
trustee as provided in the Trust Agreements. Notice of such removal and
appointment shall be mailed to each Unitholder by the Sponsor. Upon execution
of a written acceptance of such appointment by a successor trustee, all the
rights, powers, duties and obligations of the original Trustee shall vest in
the successor. The Trustee shall be a corporation organized under the laws of
the United States or any state thereof, which is authorized under such laws to
exercise trust powers. The Trustee shall have at all times an aggregate
capital, surplus and undivided profits of not less than $5,000,000.
THE EVALUATOR. Kemper Unit Investment Trusts, a service of Kemper
Securities, Inc., the Sponsor, also serves as Evaluator. The Evaluator may
resign or be removed by the Trustee, in which event the Trustee is to use its
best efforts to appoint a satisfactory successor. Such resignation or removal
shall become effective upon acceptance of appointment by the successor
evaluator. If, upon resignation of the Evaluator, no successor has accepted
appointment within thirty days after notice of resignation, the Evaluator may
apply to a court of competent jurisdiction for the appointment of a successor.
Notice of such resignation or removal and appointment shall be mailed by the
Trustee to each Unitholder. At the present time, pursuant to a contract with
the Evaluator, Muller Data Corporation, a non-affiliated firm regularly engaged
in the business of evaluating, quoting or appraising comparable securities,
provides portfolio evaluations of the Municipal Bonds in the Trust which are
then reviewed by the Evaluator. In the event the Sponsor is unable to obtain
current evaluations from Muller Data Corporation, it may make its own
evaluations or it may utilize the services of any other non-affiliated
evaluator or evaluators it deems appropriate.
AMENDMENT AND TERMINATION. The Trust Agreements may be amended by the
Trustee and the Sponsor without the consent of any of the Unitholders: (1) to
cure any ambiguity or to correct or supplement any provision which may be
defective or inconsistent; (2) to change any provision thereof as may be
required by the Securities and Exchange Commission or any successor
governmental agency; or (3) to make such provisions as shall not adversely
affect the interests of the Unitholders. The Trust Agreements may also be
amended in any respect by the Sponsor and the Trustee, or any of the provisions
thereof may be waived, with the consent of the holders of Units representing 66
- - 2/3% of the Units then outstanding, provided that no such amendment or waiver
will reduce the interest in a Series of the Trust of any Unitholder without the
consent of such Unitholder or reduce the percentage of Units required to
consent to any such amendment or waiver without the consent of all Unitholders.
In no event shall the Trust Agreements be amended to increase the number of
Units issuable thereunder or to permit, except in accordance with the
provisions of the Trust Agreements, the acquisition of any Municipal Bonds in
addition to or in substitution for those in the Trust. The Trustee shall
promptly notify Unitholders of the substance of any such amendment.
The Trust Agreements provide that a Series of the Trust shall terminate
upon the maturity, redemption or other disposition, of the last of the
Municipal Bonds held in such Series. If the value of a Series of the Trust
shall be less than the applicable minimum Trust value stated under "Essential
Information" in Part Two the Trustee may, in its discretion, and shall, when so
directed by the Sponsor, terminate such Series of the Trust. A Series of the
Trust may be terminated at any time by the holders of Units representing
66-2/3% of the Units of such Series then outstanding. In the event of
termination, written notice thereof will be sent by the Trustee to all
Unitholders of such Series. Within a reasonable
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period after termination, the Trustee will sell any Municipal Bonds remaining
in such Series of the Trust and, after paying all expenses and charges incurred
by such Series of the Trust, will distribute to Unitholders of such Series
(upon surrender for cancellation of certificates for Units, if issued) their
pro rata share of the balances remaining in the Interest and Principal Accounts
of such Series.
Notwithstanding the foregoing, in connection with final distributions to
Unitholders, it should be noted that because the portfolio insurance obtained
by Series A through A-24 of the Kemper Tax-Exempt Insured Income Trust is
applicable only while Bonds so insured are held by such Series of the Trust,
the price to be received by such Series of the Trust upon the disposition of
any such Bond which is in default by reason of nonpayment of principal or
interest, will not reflect any value based on such insurance. Therefore, in
connection with any liquidation of such Series it shall not be necessary for
the Trustee to, and the Trustee does not currently intend to, dispose of any
Bond or Bonds if retention of such Bond or Bonds, until due, shall be deemed to
be in the best interest of Unitholders, including, but not limited to
situations in which a Bond or Bonds so insured are in default and situations in
which a Bond or Bonds so insured have a deteriorated market price resulting
from a significant risk of default. All proceeds received, less applicable
expenses, from insurance on defaulted Bonds not disposed of at the date of
termination will ultimately be distributed to Unitholders of record as of such
date of termination as soon as practicable after the date such defaulted Bond
or Bonds become due and applicable insurance proceeds have been received by the
Trustee.
LIMITATIONS ON LIABILITY. The Sponsor: The Sponsor is liable for the
performance of its obligations arising from its responsibilities under the
Trust Agreements, but will be under no liability to the Unitholders for taking
any action or refraining from any action in good faith pursuant to the Trust
Agreements or for errors in judgment, except in cases of its own gross
negligence, bad faith or willful misconduct. The Sponsor shall not be liable
or responsible in any way for depreciation or loss incurred by reason of the
sale of any Municipal Bonds.
The Trustee: The Trust Agreements provide that the Trustee shall be
under no liability for any action taken in good faith in reliance upon prima
facie properly executed documents or for the disposition of monies, Municipal
Bonds, or certificates except by reason of its own gross negligence, bad faith
or willful misconduct, nor shall the Trustee be liable or responsible in any
way for depreciation or loss incurred by reason of the sale by the Trustee of
any Municipal Bonds. In the event that the Sponsor shall fail to act, the
Trustee may act and shall not be liable for any such action taken by it in good
faith. The Trustee shall not be personally liable for any taxes or other
governmental charges imposed upon or in respect of the Municipal Bonds or upon
the interest thereon. In addition, the Trust Agreements contain other
customary provisions limiting the liability of the Trustee.
The Evaluator: The Trustee and Unitholders may rely on any evaluation
furnished by the Evaluator and shall have no responsibility for the accuracy
thereof. The Trust Agreements provide that the determinations made by the
Evaluator shall be made in good faith upon the basis of the best information
available to it, provided, however, that the Evaluator shall be under no
liability to the Trustee or Unitholders for errors in judgment, but shall be
liable only for its gross negligence, lack of good faith or willful misconduct.
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EXPENSES OF THE TRUST
The Sponsor will charge each Series a surveillance fee for services
performed for such Series in an amount not to exceed that amount set forth in
"Essential Information" in Part Two but in no event will such compensation,
when combined with all compensation received from other unit investment trusts
for which the Sponsor both acts as sponsor and provides portfolio surveillance,
exceed the aggregate cost to the Sponsor for providing such services. Such fee
shall be based on the total number of Units of each Series outstanding as of
the January Record Date for any annual period. The Sponsor paid all the
expenses of creating and establishing the Trust, including the cost of the
initial preparation, printing and execution of the Prospectus, Agreement and
the certificates, legal and accounting expenses, advertising and selling
expenses, payment of closing fees, expenses of the Trustee, initial evaluation
fees and other out-of-pocket expenses.
The Trustee receives for its services a fee calculated on the basis of
the annual rate set forth under "Essential Information in Part Two, based on
the largest aggregate principal amount of Municipal Bonds in such Series at any
time during the monthly, quarterly or semi-annual period, as appropriate.
Funds that are available for future distributions, redemptions and payment of
expenses are held in accounts which are non-interest bearing to Unitholders and
are available for use by the Trustee pursuant to normal banking procedures;
however, the Trustee is also authorized by the Trust Agreements to make from
time to time certain non-interest bearing advances to the Trust Funds. The
Trustee also receives indirect benefits to the extent that it holds funds on
deposit in the various non-interest bearing accounts created pursuant to the
Agreement; however, the Trustee is also authorized by the Agreement to make
from time to time certain non-interest bearing advances to the Trust. See
"Unitholders-Distributions to Unitholders."
For evaluation of Municipal Bonds in a Series of the Trust, the Evaluator
receives a fee, payable monthly, calculated on the basis of an annual rate as
set forth under "Essential Information" in Part Two, based upon the largest
aggregate principal amount of Municipal Bonds in such Series of the Trust at
any time during such monthly period.
The Trustee's and Evaluator's fees are payable monthly on or before each
Distribution Date by deductions from the Interest Account of each Series to the
extent funds are available and then from the Principal Account of such Series.
Such fees may be increased without approval of Unitholders by amounts not
exceeding a proportionate increase in the Consumer Price Index entitled "All
Services Less Rent of Shelter", published by the United States Department of
Labor, or any equivalent index substituted therefor.
The following additional charges are or may be incurred by a Series of
the Trust: (a) fees for the Trustee's extraordinary services; (b) expenses of
the Trustee (including legal and auditing expenses and insurance costs, but not
including any fees and expenses charged by any agent for custody and
safeguarding of Municipal Bonds) and of bond counsel, if any; (c) various
governmental charges; (d) expenses and costs of any action taken by the Trustee
to protect the Trust or such Series, or the rights and interests of the
Unitholders; (e) indemnification of the Trustee for any loss, liability or
expense incurred by it in the administration of such Series of the Trust
without gross negligence, bad faith or willful misconduct on its part; (f)
indemnification of the Sponsor for any loss, liability or expense incurred in
acting in that capacity without gross negligence, bad faith or willful
misconduct; and (g) expenditures incurred in contacting Unitholders upon
termination of the Series. The fees and expenses set forth herein are payable
out of such Series of the Trust and, when owed to the Trustee, are secured
-36-
<PAGE> 37
by a lien on the assets of the Series of the Trust. Fees or charges relating
to the Trust shall be allocated to each Trust Fund in the same ratio as the
principal amount of such Trust Fund bears to the total principal amount of all
Trust Funds in the Trust. Fees or charges relating solely to a particular
Trust Fund shall be charged only to such Trust Fund.
Fees and expenses of a Series of the Trust shall be deducted from the
Interest Account of such Series, or, to the extent funds are not available in
such Account, from the Principal Account of such Series. The Trustee may
withdraw from the Principal Account or the Interest Account of such Series such
amounts, if any, as it deems necessary to establish a reserve for any taxes or
other governmental charges or other extraordinary expenses payable out of that
Series of the Trust. Amounts so withdrawn shall be credited to a separate
account maintained for such Series known as the Reserve Account and shall not
be considered a part of such Series when determining the value of the Units of
such Series until such time as the Trustee shall return all or any part of such
amounts to the appropriate account.
THE SPONSOR
The Sponsor, Kemper Unit Investment Trusts, with an office at 77 West
Wacker Drive, 29th Floor, Chicago, Illinois 60601, (800) 621-5024, is a service
of Kemper Securities, Inc., which is a wholly-owned subsidiary of Kemper
Financial Companies, Inc., which, in turn, is a wholly-owned subsidiary of
Kemper Corporation. The Sponsor acts as underwriter of a number of other
Kemper unit investment trusts and will act as underwriter of any other unit
investment trust created by the Sponsor in the future. As of January 31, 1994,
the total stockholder's equity of Kemper Securities, Inc. was approximately
$261,673,436 (unaudited).
If at any time the Sponsor shall fail to perform any of its duties
under the Agreement or shall become incapable of acting or shall be adjudged a
bankrupt or insolvent or its affairs are taken over by public authorities, then
the Trustee may (a) appoint a successor sponsor at rates of compensation deemed
by the Trustee to be reasonable and not exceeding such reasonable amounts as
may be prescribed by the Securities and Exchange Commission, or (b) terminate
the Agreement and liquidate the Trust or any Series thereof as provided therein
or (c) continue to act as Trustee without terminating the Agreement.
The foregoing financial information with regard to the Sponsor relates to
the Sponsor only and not to this Trust or any Series. Such information is
included in this Prospectus only for the purposes of informing investors as to
the financial responsibility of the Sponsor and its ability to carry out its
contractual obligations with respect to the Series of the Trust. More
comprehensive financial information can be obtained upon request from the
Sponsor.
LEGAL OPINIONS
The legality of the Units offered hereby and certain matters relating to
Federal tax law were originally passed upon by Chapman and Cutler, 111 West
Monroe Street, Chicago, Illinois 60603, as counsel for the Sponsor.
INDEPENDENT AUDITORS
The statement of net assets, including the schedule of investments,
appearing in Part Two of this Prospectus and Registration Statement, with
information pertaining to the specific Series of the Trust to
-37-
<PAGE> 38
which such statement relates, has been audited by Ernst & Young, independent
auditors, as set forth in their report appearing in Part Two and is included in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
DESCRIPTION OF MUNICIPAL BOND RATINGS*4
STANDARD & POOR'S CORPORATION. - A brief description of the applicable
Standard & Poor's Corporation rating symbols and their meanings follows:
A Standard & Poor's corporate or municipal bond rating is a current
assessment of the creditworthiness of an obligor with respect to a specific
debt obligation. This assessment may take into consideration obligers such as
guarantors, insurers, or lessees.
The bond rating is not a recommendation to purchase, sell or hold a
security, inasmuch as it does not comment as to market price or suitability for
a particular investor.
The ratings are based on current information furnished by the issuer and
obtained by Standard & Poor's from other sources it considers reliable.
Standard & Poor's does not perform an audit in connection with any rating and
may, on occasion, rely on unaudited financial information. The ratings may be
changed, suspended, or withdrawn as a result of changes in, or unavailability
of, such information, or for other circumstances.
The ratings are based, in varying degrees, on the following
considerations:
I. Likelihood of default - capacity and willingness of the
obligor as to the timely payment of interest and repayment of principal in
accordance with the terms of the obligation;
II. Nature of and provisions of the obligation;
III. Protection afforded by, and relative position of, the
obligation in the event of bankruptcy, reorganization or other arrangement,
under the laws of bankruptcy and other laws affecting creditors' rights.
AAA - Bonds rated AAA have the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay principal is
extremely strong.
AA - Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in small degree.
A - Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than bonds in higher rated
categories.
- ------------
*As published by the rating companies.
-38-
<PAGE> 39
BBB - Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay interest and repay
principal for bonds in this category than for bonds in higher rated categories.
Plus (+) or Minus (-): The ratings from "AA" to "A" may be modified by
the addition of a plus or minus sign to show relative standing within the major
rating categories.
Provisional Ratings: The letter "p" indicates the rating is provisional.
A provisional rating assumes the successful completion of the project being
financed by the bonds being rated and indicates that payment of debt service
requirements is largely or entirely dependent upon the successful and timely
completion of the project. This rating, however, while addressing credit
quality subsequent to completion of the project, makes no comment on the
likelihood of, or the risk of default upon failure of, such completion. The
investor should exercise his own judgment with respect to such likelihood and
risk.
MOODY'S INVESTORS SERVICE, INC. -- A brief description of the applicable
Moody's Investors Service, Inc. rating symbols and their meanings follow:
Aaa - Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Their safety is so absolute that with the occasional exception of oversupply in
a few specific instances, characteristically, their market value is affected
solely by money market fluctuations.
Aa - Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuations of
protective elements may be of greater amplitude or there may be other elements
present which make the long term risks appear somewhat larger than in Aaa
securities. Their market value is virtually immune to all but money market
influences, with the occasional exception of oversupply in a few specific
instances.
A - Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment sometime in the future.
The market value of A-rated bonds may be influenced to some degree by economic
performance during a sustained period of depressed business conditions, but,
during periods of normalcy, A-rated bonds frequently move in parallel with Aaa
and Aa obligations, with the occasional exception of oversupply in a few
specific instances.
A1 - Bonds which are rated A1 offer the maximum in security within their
quality group, can be bought for possible upgrading in quality, and
additionally, afford the investor an opportunity to gauge more precisely the
relative attractiveness of offerings in the market place.
-39-
<PAGE> 40
Baa - Bonds which are rated Baa are considered as lower medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and, in fact, have speculative characteristics as
well. The market value of Baa-rated bonds is more sensitive to changes in
economic circumstances and, aside from occasional speculative factors applying
to some bonds of this class, Baa market valuations move in parallel with Aaa,
Aa and A obligations during periods of economic normalcy, except in instances
of oversupply.
Conditional Ratings: Bonds rated "Con(-)" are ones for which the
security depends upon the completion of some act or the fulfillment of some
condition. These are bonds secured by (a) earnings of projects under
construction, (b) earnings of projects unseasoned in operation experience, (c)
rentals which begin when facilities are completed, or (d) payments to which
some other limiting condition attaches. Parenthetical rating denotes probable
credit stature upon completion of construction or elimination of basis of
condition.
Note: Moody's applies numerical modifiers, 1, 2, and 3 in each generic
rating classification from Aa through B in certain areas of its bond rating
system. The modifier 1 indicates that the security ranks in the higher end of
its generic rating category; the modifier 2 indicates a mid-range ranking; and
the modifier 3 indicates that the issue ranks in the lower end of its generic
rating category.
-40-
<PAGE>
Kemper Tax-Exempt Insured Income Trust
Series A-58
Part Two
Dated August 26, 1994
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY
IS A CRIMINAL OFFENSE.
NOTE: Part Two of this Prospectus May Not Be Distributed unless
Accompanied by
Part One.
<PAGE>
Kemper Tax-Exempt Insured Income Trust
Series A-58
Essential Information
As of July 13, 1994
Sponsor and Evaluator: Kemper Unit Investment
Trusts
Trustee: Investors Fiduciary Trust
Company
<TABLE>
<CAPTION>
General Information
<S>
<C>
Principal Amount of Municipal Bonds
$13,035,000
Number of Units
16,410
Fractional Undivided Interest in the Trust per Unit
1/16,410
Principal Amount of Municipal Bonds per Unit
$794.33
Public Offering Price:
Aggregate Bid Price of Municipal Bonds in the Portfolio
$13,070,393
Aggregate Bid Price of Municipal Bonds per Unit
$796.49
Cash per Unit (1)
$62.76
Sales Charge 4.712% (4.5% of Public Offering Price)
$40.49
Public Offering Price per Unit (exclusive of accrued
interest) (2)
$899.74
Redemption Price per Unit (exclusive of accrued interest)
$859.25
Excess of Public Offering Price per Unit Over Redemption
Price per Unit
$40.49
Minimum Value of the Trust under which Trust Agreement
may be terminated
$2,955,000
</TABLE>
Date of Trust
May 17, 1989
Mandatory Termination Date
December 31, 2039
Annual Evaluation Fee: $.30 per $1,000 principal amount of
Municipal Bonds.
Evaluations for purpose of sale, purchase or redemption of Units
are made as
of the close of business of the Sponsor next following receipt of
an order for
a sale or purchase of Units or receipt by Investors Fiduciary
Trust Company of
Units tendered for redemption.
[FN]
1. This amount, if any, represents principal cash or overdraft
which is an
asset or liability of the Trust and is included in the Public
Offering Price.
2. Units are offered at the Public Offering Price plus accrued
interest to
the date of settlement (five business days after purchase). On
July 13, 1994,
there was added to the Public Offering Price of $899.74, accrued
interest to
the settlement date of July 20, 1994 of $13.18, $13.25 and $13.32
for a total
price of $912.92, $912.99 and $913.06 for the monthly, quarterly
and
semiannual distribution options, respectively.
<PAGE>
Kemper Tax-Exempt Insured Income Trust
Series A-58
Essential Information (continued)
As of July 13, 1994
Sponsor and Evaluator: Kemper Unit Investment
Trusts
Trustee: Investors Fiduciary Trust
Company
<TABLE>
<CAPTION>
Special Information Based on Various Distribution Options
Monthly Quarterly
Semiannual
<S> <C> <C>
<C>
-------- --------
--------
Calculation of Estimated Net Annual
Interest Income per Unit (3):
Estimated Annual Interest Income $68.5344 $68.5344
$68.5344
Less: Estimated Annual Expense 1.5337 1.2513
.9768
-------- --------
--------
Estimated Net Annual Interest Income $67.0007 $67.2831
$67.5576
======== ========
========
Calculation of Interest Distribution
per Unit:
Estimated Net Annual Interest Income $67.0007 $67.2831
$67.5576
Divided by 12, 4 and 2, respectively $5.5834 $16.8208
$33.7788
Estimated Daily Rate of Net Interest
Accrual per Unit $.1861 $.1869
$.1877
Estimated Current Return Based on Public
Offering Price (3) 7.45% 7.48%
7.51%
Estimated Long-Term Return (3) 5.45% 5.48%
5.51%
</TABLE>
Trustee's Annual Fees and Expenses (including Evaluator's Fee):
$1.5337,
$1.2513 and $.9768 ($.5003, $.5158 and $.4227 of which represent
expenses) per
Unit under the monthly, quarterly and semiannual distribution
options,
respectively.
Record and Computation Dates: First day of the month, as
follows: monthly -
each month; quarterly - January, April, July and October;
semiannual - January
and July.
Distribution Dates: Fifteenth day of the month, as follows:
monthly - each
month; quarterly - January, April, July and October; semiannual -
January and
July.
[FN]
3. The Estimated Long-Term Return and Estimated Current Return
will vary.
For detailed explanation, see Part One of this prospectus.
<PAGE>
Report of Independent Auditors
Unitholders
Kemper Tax-Exempt Insured Income Trust
Series A-58
We have audited the accompanying statement of assets and
liabilities,
including the schedule of investments, of Kemper Tax-Exempt
Insured Income
Trust Series A-58 as of April 30, 1994, and the related
statements of
operations and changes in net assets for each of the three years
in the period
then ended. These financial statements are the responsibility of
the Trust's
sponsor. Our responsibility is to express an opinion on these
financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing
standards. Those standards require that we plan and perform the
audit to
obtain reasonable assurance about whether the financial
statements are free of
material misstatement. An audit includes examining, on a test
basis, evidence
supporting the amounts and disclosures in the financial
statements. Our
procedures included confirmation of investments owned as of April
30, 1994, by
correspondence with the custodial bank. An audit also includes
assessing the
accounting principles used and significant estimates made by the
sponsor, as
well as evaluating the overall financial statement presentation.
We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in
all material respects, the financial position of Kemper
Tax-Exempt Insured
Income Trust Series A-58 at April 30, 1994, and the results of
its operations
and the changes in its net assets for each of the three years in
the period
then ended in conformity with generally accepted accounting
principles.
Ernst & Young LLP
Kansas City, Missouri
August 12, 1994
<PAGE>
Kemper Tax-Exempt Insured Income Trust
Series A-58
Statement of Assets and Liabilities
April 30, 1994
<TABLE>
<CAPTION>
<S> <C>
<C>
Assets
Municipal Bonds, at value (cost $14,777,844)
(Note 1)
$14,280,135
Accrued interest
394,621
- -----------
14,674,756
Liabilities and net assets
Cash overdraft
29,488
Accrued liabilities
1,803
- -----------
31,291
Net assets, applicable to 16,410 Units outstanding
(Note 5):
Cost of Trust assets, exclusive of interest
(Note 1) $14,777,844
Unrealized depreciation (Note 2) (497,709)
Distributable funds 363,330
-----------
- -----------
Net assets
$14,643,465
===========
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
Kemper Tax-Exempt Insured Income Trust
Series A-58
Statement of Operations
<TABLE>
<CAPTION>
Year ended
April 30
1994 1993
1992
<S> <C> <C>
<C>
---------- ----------
- ----------
Investment income - interest $1,271,515 $1,294,945
$1,294,949
Expenses:
Trustee's fees and related expenses 18,131 18,267
18,164
Evaluator's fees 4,377 4,433
4,433
---------- ----------
- ----------
Total expenses 22,508 22,700
22,597
---------- ----------
- ----------
Net investment income 1,249,007 1,272,245
1,272,352
Realized and unrealized gain (loss) on
investments:
Realized loss (65,860) -
-
Unrealized appreciation
(depreciation) during the year (820,736) 181,286
53,003
---------- ----------
- ----------
Net gain (loss) on investments (886,596) 181,286
53,003
---------- ----------
- ----------
Net increase in net assets resulting
from operations $362,411 $1,453,531
$1,325,355
========== ==========
==========
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
Kemper Tax-Exempt Insured Income Trust
Series A-58
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year ended
April 30
1994 1993
1992
<S> <C> <C>
<C>
----------- -----------
- -----------
Operations:
Net investment income $1,249,007 $1,272,245
$1,272,352
Realized loss on investments (65,860) -
-
Unrealized appreciation (depreciation)
on investments during the year (820,736) 181,286
53,003
----------- -----------
- -----------
Net increase in net assets resulting
from operations 362,411 1,453,531
1,325,355
Distributions to Unitholders:
Net investment income (1,263,364) (1,275,055)
(1,273,033)
Principal from investment
transactions (762,245) -
-
----------- -----------
- -----------
Total increase (decrease) in net assets (1,663,198) 178,476
52,322
Net assets:
At the beginning of the year 16,306,663 16,128,187
16,075,865
----------- -----------
- -----------
At the end of the year (including
distributable funds applicable to
Trust Units of $363,330, $377,732
and $380,542 at April 30, 1994, 1993
and 1992, respectively) $14,643,465 $16,306,663
$16,128,187
=========== ===========
===========
Trust Units outstanding at the end
of the year 16,410 16,410
16,410
=========== ===========
===========
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
<TABLE>
Kemper Tax-Exempt
Insured Income Trust
Series
A-58
Schedule of
Investments
April 30,
1994
<CAPTION>
Coupon
Maturity Redemption Principal
Name of Issuer and Title of Bond(5)(6) Rate
Date Provisions(2) Rating(1) Amount(4) Value(3)
<S> <C> <C>
<C> <C> <C> <C>
-------
- ---------- -------------- --------- ----------- -----------
+City of Austin, Texas, Combined Utility Systems 9.375%
5/15/2005 2000 @ 100 AAA $400,000 $485,424
Revenue Bonds, Series 1985 A. Insured by
Financial Guaranty Insurance Company (FGIC).
Burke County, Georgia, Development Authority, 12.00
10/01/2014 1994 @ 102 AAA 1,000,000 1,051,580
Pollution Control Revenue Bonds, Georgia Power
Company Plant, Vogtle Project, 3rd Series.
Insured by Bond Investors Guaranty Insurance
Company (BIG).
Burke County, Georgia, Development Authority, 10.125
6/01/2015 1995 @ 102 AAA 1,105,000 1,192,991
Pollution Control Revenue Bonds, Georgia Power
Company Plant, Vogtle Project, 1st Series.
Insured by FGIC.
+Columbus, Georgia, Medical Center, Hospital 9.25
7/01/2010 1995 @ 102 AAA 500,000 541,070
Authority Revenue Refunding Bonds. Insured
by BIG.
+Jackson County, Missouri, Industrial Development 9.375
6/01/2009 1995 @ 100 AAA 1,000,000 1,059,770
Authority, Hospital Revenue Bonds, St. Joseph
Hospital, Kansas City, Missouri. Insured
by BIG.
+Kenton County, Kentucky, Hospital Facilities 9.10
11/01/2000 1995 @ 102 AAA 130,000 142,420
Revenue Bonds, St. Elizabeth Medical Center.
Insured by AMBAC Indemnity Corporation (AMBAC).
Lower Colorado River Authority, Texas, Revenue 5.00
1/01/2014 2013 @ 100 S.F. AAA 725,000 618,817
Refunding Bonds. Insured by FGIC.
1997 @ 100
Mercer County, North Dakota, Pollution Control 10.50
6/30/2013 2009 @ 100 S.F. AAA 1,000,000 1,061,220
Revenue Bonds, Basin Electric Power Cooperative.
1994 @ 102
Insured by AMBAC.
+Meridian, Colorado, Metropolitan District, 9.15
12/01/2000 1994 @ 102 AAA 1,000,000 1,090,540
Revenue Bonds. Insured by AMBAC.
Metropolitan Fair & Exposition Authority, Illinois, 5.00
6/01/2015 2012 @ 100 S.F. AAA 875,000 741,466
Dedicated State Tax Revenue Bonds, Series 1986 A.
1997 @ 100
Insured by BIG.
Metropolitan Nashville Airport Authority, Tennessee, 9.75
7/01/2015 2005 @ 100 S.F. AAA 1,000,000 1,079,590
Airport Revenue Bonds. Insured by FGIC.
1995 @ 102
Monroe County, Michigan, Pollution Control Revenue 9.625
12/01/2015 1995 @ 103 AAA 1,000,000 1,105,220
Bonds, Detroit Edison Company, Series 1985 A.
Insured by AMBAC.
+St. Louis, Missouri, Airport Revenue Bonds, 10.00
7/01/2005 1994 @ 103 AAA 1,000,000 1,040,000
Lambert Field - St. Louis International Airport.
Insured by FGIC.
+Saint Mary Hospital Authority, Bucks County, 9.40
7/01/2014 1995 @ 102 AAA 500,000 539,940
Pennsylvania, Hospital Revenue Bonds, Franciscan
Health System. Insured by BIG.
+Sam Rayburn, Texas, Municipal Power Agency, Power 9.25
9/01/2008 1995 @ 102 AAA 1,500,000 1,634,715
Supply System Revenue Bonds. Insured by Municipal
Bond Investors Assurance Corporation (MBIA).
+San Antonio, Texas, Electric and Gas Revenue Bonds, 8.625
2/01/2014 1996 @ 101.5 AAA 550,000 595,282
Series 1986 A. Insured by MBIA.
South Montgomery, Indiana, Building Improvement 0.00
1/01/2009 Non-Callable AAA 750,000 300,090
Bonds, School Building Cooperation. Insured
by AMBAC. (7)
----------- -----------
$14,035,000 $14,280,135
=========== ===========
</TABLE>
[FN]
See accompanying notes to Schedule of Investments.
<PAGE>
Kemper Tax-Exempt Insured Income Trust
Series A-58
Notes to Schedule of Investments
1. All ratings are by Standard & Poor's Corporation, unless
marked with the
symbol "*", in which case the rating is by Moody's Investors
Service, Inc.
The symbol "NR" indicates Bonds for which no rating is available.
2. There is shown under this heading the year in which each
issue of Bonds is
initially redeemable and the redemption price for that year or,
if currently
redeemable, the redemption price currently in effect; unless
otherwise
indicated, each issue continues to be redeemable at declining
prices
thereafter, but not below par value. In addition, certain Bonds
in the
Portfolio may be redeemed in whole or in part other than by
operation of the
stated redemption or sinking fund provisions under certain
unusual or
extraordinary circumstances specified in the instruments setting
forth the
terms and provisions of such Bonds. "S.F." indicates a sinking
fund is
established with respect to an issue of Bonds. Redemption
pursuant to call
provisions generally will, and redemption pursuant to sinking
fund provisions
may, occur at times when the redeemed Bonds have a valuation
which represents
a premium over the call price or par.
To the extent that the Bonds were deposited in the Trust at a
price higher
than the price at which they are redeemed, this will represent a
loss of
capital when compared with the original Public Offering Price of
the Units.
To the extent that the Bonds were acquired at a price lower than
the
redemption price, this may represent an increase in capital when
compared with
the original Public Offering Price of the Units. Distributions
of net income
will generally be reduced by the amount of the income which would
otherwise
have been paid with respect to redeemed Bonds and, unless
utilized to pay for
Units tendered for redemption, there will be distributed to
Unitholders the
principal amount and any premium received on such redemption. In
this event
the estimated current return and estimated long-term return may
be affected by
such redemptions.
3. See Note 1 to the accompanying financial statements for a
description of
the method of determining cost and value.
<PAGE>
Kemper Tax-Exempt Insured Income Trust
Series A-58
Notes to Schedule of Investments
(continued)
4. At April 30, 1994, the Portfolio of the Trust consists of 17
obligations
issued by entities located in 11 states. All of the issues are
payable from
the income of a specific project or authority and are not
supported by an
issuer's power to levy taxes. The sources of payment for the
revenue bonds
are divided as follows: Electrical Systems, 3; Hospital and
Health Care, 4;
Airport, 2; Pollution Control, 4; Gas and Electric, 1; Schools,
1; Water,
1; Miscellaneous, 1. Approximately 29% of the aggregate
principal amount of
Bonds in the Trust are obligations of issuers whose revenues are
derived
primarily from pollution control. Approximately 92% of the
aggregate
principal amount of Bonds in the Trust are subject to call by the
issuers
within five years after April 30, 1994.
5. Insurance on the Bonds in the Trust was obtained by the
issuers of such
Bonds.
6. Those securities preceded by (+) are secured by, and payable
from,
escrowed U.S. Government securities.
7. This Bond has been purchased at a discount from the par value
because
there is no stated interest income thereon. Such Bond is
normally described
as a "zero coupon" Bond. Over the life of the Bond the value
increases, so
that upon maturity, the holders of the Bond will receive 100% of
the principal
amount thereof.
[FN]
See accompanying notes to financial statements.
<PAGE>
Kemper Tax-Exempt Insured Income Trust
Series A-58
Notes to Financial Statements
1. Significant Accounting Policies
Valuation of Municipal Bonds
Municipal Bonds (Bonds) are stated at bid prices as determined by
Kemper Unit
Investment Trusts (A Service of Kemper Securities, Inc.), the
"Evaluator" and
sponsor of the Trust. The aggregate bid prices of the Bonds are
determined by
the Evaluator based on (a) current bid prices of the Bonds, (b)
current bid
prices for comparable bonds, (c) appraisal, or (d) any
combination of the
above. (See Note 5 - Insurance.)
Cost of Municipal Bonds
Cost of the Trust's Bonds was based on the offering prices of the
Bonds on
May 17, 1989 (Date of Deposit). The premium or discount
(including any
original issue discount) existing at May 17, 1989, is not being
amortized.
Realized gain (loss) from Bond transactions is reported on an
identified cost
basis.
2. Unrealized Appreciation and Depreciation
Following is an analysis of net unrealized depreciation at April
30, 1994:
<TABLE>
<CAPTION>
<S>
<C>
Gross unrealized depreciation
$(795,971)
Gross unrealized appreciation
298,262
- ----------
Net unrealized depreciation
$(497,709)
==========
</TABLE>
3. Transactions with Affiliates
The Trustee, Investors Fiduciary Trust Company, is 50% owned by
Kemper
Financial Services, Inc., an affiliate of Kemper Unit Investment
Trusts. On
July 19, 1994, State Street Boston Corporation announced that it
had signed a
letter of intent to acquire Investors Fiduciary Trust Company.
The
acquisition is not expected to have an effect on the operation of
the Trust.
Prior to January 1, 1992, the Trustee's fee (not including the
reimbursement
of out-of-pocket expenses), calculated monthly, was at the annual
rate of
$1.08, $.86 and $.60 under the monthly, quarterly and semiannual
distribution
options, respectively, per $1,000 principal amount of Bonds in
the Trust,
based on the largest aggregate principal amount of Bonds in the
Trust at any
time during such monthly, quarterly or semiannual periods.
Effective
January 1, 1992, such fees were revised to $1.2083, $.86 and
$.6479 under the
monthly, quarterly and semiannual distribution options,
respectively. The
Evaluator received a fee, payable monthly, at an annual rate of
$.30 per
$1,000 principal amount of Bonds, based on the largest aggregate
principal
amount of Bonds in the Trust at any time during such monthly
period.
<PAGE>
Kemper Tax-Exempt Insured Income Trust
Series A-58
Notes to Financial Statements (continued)
4. Federal Income Taxes
The Trust is not an association taxable as a corporation for
federal income
tax purposes. Each Unitholder is considered to be the owner of a
pro rata
portion of the Trust under Subpart E, Subchapter J of Chapter 1
of the
Internal Revenue Code of 1986, as amended. Accordingly, no
provision has been
made for federal income taxes.
5. Other Information
Cost to Investors
The cost to initial investors of Units of the Trust was based on
the aggregate
offering price of the Bonds on the date of an investor's
purchase, plus a
sales charge of 4.9% of the Public Offering Price (equivalent to
5.152% of the
net amount invested). The Public Offering Price for secondary
market
transactions is based on the aggregate bid price of the Bonds
plus or minus a
pro rata share of cash or overdraft in the Principal Account, if
any, on the
date of an investor's purchase, plus a sales charge of 4.5% of
the Public
Offering Price (equivalent to 4.712% of the net amount invested).
Insurance
Insurance guaranteeing the payment of all principal and interest
on the Bonds
in the portfolio has been obtained from independent companies by
the
respective issuers of such Bonds. Insurance obtained by a Bond
issuer is
effective as long as such Bonds are outstanding. As a result of
such
insurance, the Units of the Trust have received a rating of "AAA"
by Standard
& Poor's Corporation. No representation is made as to any
insurer's ability
to meet its commitments.
<PAGE>
Kemper Tax-Exempt Insured Income Trust
Series A-58
Notes to Financial Statements (continued)
5. Other Information (continued)
Distributions
Distributions of net investment income to Unitholders are
declared and paid in
accordance with the option (monthly, quarterly or semiannual)
selected by the
investor. Such income distributions, on a record date basis, are
as follows:
<TABLE>
<CAPTION>
Year ended Year ended
Year ended
Distribution April 30, 1994 April 30, 1993
April 30, 1992
Plan Per Unit Total Per Unit Total Per
Unit Total
<S> <C> <C> <C> <C> <C>
<C>
-------- ---------- -------- ----------
- -------- ----------
Monthly $76.25 $753,528 $77.31 $750,452
$77.31 $749,018
Quarterly 76.54 62,809 77.61 65,230
77.61 60,942
Semiannual 77.89 447,027 77.89 459,373
77.89 463,073
---------- ----------
----------
$1,263,364 $1,275,055
$1,273,033
========== ==========
==========
</TABLE>
<PAGE>
<TABLE>
Kemper Tax-Exempt
Insured Income Trust
Series
A-58
Notes to Financial
Statements (continued)
5. Other Information (continued)
Selected data for a Unit of the Trust outstanding throughout each
year -
<CAPTION>
Monthly
Quarterly Semiannual
Year ended April 30
Year ended April 30 Year ended April 30
1994 1993 1992
1994 1993 1992 1994 1993 1992
<S> <C> <C> <C>
<C> <C> <C> <C> <C> <C>
-------- ------- -------
- -------- ------- ------- -------- --------- -------
Investment income - interest $77.48 $78.91 $78.91
$77.48 $78.91 $78.91 $77.48 $78.91 $78.91
Expenses 1.58 1.61 1.60
1.29 1.31 1.30 1.01 1.03 1.02
-------- ------- -------
- -------- ------- ------- -------- --------- -------
Net investment income 75.90 77.30 77.31
76.19 77.60 77.61 76.47 77.88 77.89
Distributions to Unitholders:
Net investment income (76.25) (77.31) (77.31)
(76.54) (77.61) (77.61) (77.89) (77.89) (77.89)
Principal from investment
transactions (46.45) - -
(46.45) - - (46.45) - -
Net gain (loss) on investments (54.02) 11.05 3.23
(54.02) 11.05 3.23 (54.02) 11.05 3.23
-------- ------- -------
- -------- ------- ------- -------- --------- -------
Change in net asset value (100.82) 11.04 3.23
(100.82) 11.04 3.23 (101.89) 11.04 3.23
Net asset value:
Beginning of the year 986.75 975.71 972.48
986.86 975.82 972.59 1,006.43 995.39 992.16
-------- ------- -------
- -------- ------- ------- -------- --------- -------
End of the year, including
distributable funds $885.93 $986.75 $975.71
$886.04 $986.86 $975.82 $904.54 $1,006.43 $995.39
======== ======= =======
======== ======= ======= ======== ========= =======
</TABLE>
<PAGE>
Consent of Independent Auditors
We consent to the reference to our firm under the caption
"Independent
Auditors" and to the use of our report dated August 12, 1994, in
this Post-
Effective Amendment to the Registration Statement (Form S-6) and
related
Prospectus of Kemper Tax-Exempt Insured Income Trust Series A-58
dated
August 26, 1994.
Ernst & Young LLP
Kansas City, Missouri
August 26, 1994
<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 Tax-Exempt Insured Income Trust Series A-58,
certifies that it meets all of the
requirements for effectiveness of this registration statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has
duly caused this Amendment to the Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Chicago, and State of Illinois, on the
26th day of August, 1994.
Kemper Tax-Exempt Insured Income Trust Series A-58
Registrant
By: Kemper Unit Investment Trusts
(a service of Kemper Securities, Inc.)
Depositor
By: C. Perry Moore
Attorney-In-Fact
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below on
August 26, 1994 by the following persons, who constitute a
majority
of the Board of Directors of Kemper Securities, Inc.
Signature Title
James R. Boris Chairman and Chief Executive Officer
James R. Boris
Donald F. Eller Senior Executive Vice President and Director
Donald F. Eller
Stanley R. Fallis Senior Executive Vice President, Chief
Financial
Stanley R. Fallis Officer and Director
Frank V. Geremia Senior Executive Vice President and Director
Frank V. Geremia
David B. Mathis Director
David B. Mathis
Robert T. Jackson Director
Robert T. Jackson
Jay B. Walters Senior Executive Vice President and Director
Jay B. Walters
Frederick C. Hosken Senior Executive Vice President and Director
Frederick C. Hosken
Charles M. Kierscht Director
Charles M. Kierscht
Arthur J. McGivern Director
Arthur J. McGivern
C. Perry Moore
C. Perry Moore signs this document pursuant to power of attorney
filed with the Securities and Exchange Commission with (a)
Amendment No. 1 to the Registration Statement on Form S-6 for
Kemper Tax-Exempt Insured Income Trust, Series A-70 and
Multi-State Series 28 and Kemper Tax-Exempt Income Trust,
Multi-State Series 42 (Registration No. 33-35425, (b) Amendment
No. 1 to the Registration Statement of Form S-6 for Kemper
Tax-Exempt Insured Income Trust, Series A-72 and Multi-State
Series 30 (Registration No. 33-37178) and (c) Amendment No. 1 to
the Registration Statement of Form S-6 for Kemper Tax-Exempt
Insured Income Trust, Multi-State Series 51 (Registration No.
33-48398).
