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File No. 33-44576
CIK # 882124
Securities and Exchange Commission
Washington, D. C. 20549
Post-Effective
Amendment No. 2
to
Form S-6
For Registration under the Securities Act of 1933
of Securities of Unit Investment Trusts Registered
on Form N-8B-2
KEMPER INSURED CORPORATE TRUST, SERIES 4 AND SERIES 5
Name and executive office address of Depositor:
KEMPER UNIT INVESTMENT TRUSTS
(a service of Kemper Securities, Inc.)
77 West Wacker - 5th Floor
Chicago, Illinois 60601
Name and complete address of agent for service:
C. PERRY MOORE
77 West Wacker - 5th Floor
Chicago, Illinois 60601
X( X ) Check box if it is proposed that this filing will become effective
immediately upon pursuant to paragraph (b) of Rule 485.
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KEMPER INSURED CORPORATE TRUST
AND KEMPER DEFINED FUNDS INSURED CORPORATE SERIES
PART ONE
The date of this Part One is that date
which is set forth in Part Two of the Prospectus
Kemper Insured Corporate Trust and Kemper Defined Funds Insured
Corporate Series (the "Trust") was formed for the purpose of providing a high
level of current income through investment in a fixed portfolio consisting
primarily of corporate debt obligations issued after July 18, 1994 by utility
companies. Certain Series also contain zero coupon U.S. Treasury obligations.
Insurance guaranteeing the scheduled payment of principal and
interest on all of the Bonds (other than any U.S. Treasury obligations) in the
portfolio listed in Part Two has been obtained directly by the issuer of such
Bonds or by the Sponsor of the Trusts from Municipal Bond Investors Assurance
Corporation. See "Insurance on the Portfolios" and Portfolios appearing in
Part Two for each Trust. This insurance is effective so long as the Bonds are
outstanding. As a result of such insurance, the Bonds so insured in each Trust
and the Units of each Trust received on the original date of deposit a rating
of "Aaa" by Moody's Investors Service, Inc. All the Bonds in each Trust have
received a rating of "AAA" by Standard & Poor's Corporation. THE INSURANCE
DOES NOT RELATE TO THE UNITS OF THE RESPECTIVE TRUSTS OFFERED HEREBY OR TO
THEIR MARKET VALUE. See "Insurance on the Portfolios" and "Description of
Securities Ratings." No representation is made as to any insurer's ability to
meet its commitments.
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. The use of the term "Insured" in the name of the Trust Funds does
not mean that the Units of the Trusts are insured by any governmental or
private organization. The Units are not insured.
For foreign investors who are not United States citizens or residents, interest
income from each Trust may not be subject to federal withholding taxes if
certain conditions are met. See "Federal Tax Status."
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
<TABLE>
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PAGE NO.
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<S> <C>
SUMMARY . . . . . . . . . . . . . . . . 1
Public Offering Price . . . . . . . . 1
Interest and Principal Distributions. 1
Reinvestment . . . . . . . . . . . . 1
Estimated Current Return and
Estimated Long-Term Return . . . . 1
Market for Units . . . . . . . . . . 1
THE TRUST . . . . . . . . . . . . . . . 2
TRUST PORTFOLIOS . . . . . . . . . . . 3
Portfolio Risk Information . . . . . 3
INSURANCE ON THE PORTFOLIOS . . . . . . 7
RETIREMENT PLANS . . . . . . . . . . . 9
DISTRIBUTION REINVESTMENT . . . . . . . 10
INTEREST AND ESTIMATED LONG-TERM
AND CURRENT RETURNS . . . . . . . . . 11
FEDERAL TAX STATUS . . . . . . . . . . 11
PUBLIC OFFERING OF UNITS . . . . . . . 16
Public Offering Price . . . . . . . 16
Purchased and Daily
Accrued Interest . . . . . . . . 18
Public Distribution of Units . . . 18
Profits of Sponsor . . . . . . . . 19
MARKET FOR UNITS . . . . . . . . . . . 19
REDEMPTION . . . . . . . . . . . . . . 20
Computation of Redemption Price . . 21
UNITHOLDERS . . . . . . . . . . . . . . 22
Ownership of Units . . . . . . . . 22
Distributions to Unitholders . . . 22
Statement to Unitholders . . . . . 24
Rights of Unitholders . . . . . . . 25
INVESTMENT SUPERVISION . . . . . . . . 25
ADMINISTRATION OF THE TRUST . . . . . . 26
The Trustee . . . . . . . . . . . . 26
The Evaluator . . . . . . . . . . . 27
Amendment and Termination . . . . . 28
Limitations on Liability . . . . . 28
EXPENSES OF THE TRUST . . . . . . . . . 29
THE SPONSOR . . . . . . . . . . . . . . 30
LEGAL OPINIONS . . . . . . . . . . . . 31
INDEPENDENT AUDITORS . . . . . . . . . 31
Essential Information*
Report of Independent Auditors*
Statement of Assets and Liabilities*
Statement of Operations*
Statement of Changes in Net Assets*
Schedule of Investments*
Notes to Schedules of Investments*
Notes to Financial Statements*
</TABLE>
*INFORMATION ON THESE ITEMS APPEARS IN PART TWO
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SUMMARY
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 Bonds in
such Series plus or minus a pro rata share of (a) cash, if any, in the
Principal Account, held or owed by the Series (b) Purchased Interest (if any)
and (c) Daily Accrued Interest plus a sales charge shown under "Public Offering
of Units." 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 semi-annually (if available). 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.
REINVESTMENT. Each Unitholder may elect to have distributions of principal or
interest or both automatically invested without charge in shares of certain
Kemper mutual funds. See "Distribution Reinvestment."
ESTIMATED CURRENT RETURN AND ESTIMATED LONG-TERM RETURN. The Estimated Current
Return is calculated by dividing the estimated net annual interest income per
Unit by the Public Offering Price of such Trust. The estimated net annual
interest income per Unit will vary with changes in fees and expenses of the
Trustee, Sponsor and Evaluator and with the principal prepayment, redemption,
maturity, exchange or sale of Bonds while the Public Offering Price will vary
with changes in the bid price of the underlying Bonds and with changes in the
Purchased Interest (if any) and Daily Accrued Interest; therefore, there is no
assurance that the present Estimated Current Returns will be realized in the
future. Estimated Long-Term Return is calculated using a formula which (1)
takes into consideration, and determines and factors in the relative weightings
of, the market values, yields (which takes into account the amortization of
premiums and the accretion of discounts) and estimated retirements of all of
the Bonds in the Trust and (2) takes into account the expenses and sales charge
associated with each Trust Unit. Since the market values and estimated
retirement dates of the Bonds 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
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Units at prices which are based on the aggregate bid side evaluation of the
Bonds in such Series of the Trust plus Purchased Interest (if any) and Daily
Accrued Interest.
THE TRUST
Each Series of the Trust is one of a series of unit investment trusts created
by the Sponsor under the name Kemper Insured Corporate Trust or Kemper Defined
Funds Insured Corporate 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*
(the "Agreement"). Kemper Unit Investment Trusts, a service of Kemper
Securities, Inc., acts as Sponsor and Investors Fiduciary Trust Company acts as
Trustee.
The objective of each Trust is to provide a high level of current income
through investment in the Bonds. There is, of course, no guarantee that a
Trust's objectives will be achieved.
The Trusts may be appropriate investment vehicles for investors who desire to
participate in a portfolio of taxable fixed income securities issued primarily
by public utilities with greater diversification than investors might be able
to acquire individually. Diversification of a Trust's assets will not
eliminate the risk of loss always inherent in the ownership of securities. In
addition, Bonds of the type deposited in the Trusts often are not available in
small amounts.
An investment in Units 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 Bonds will fluctuate
inversely with changes in interest rates. The uncertain economic conditions of
recent years, together with the fiscal measures adopted to attempt to deal with
them, have resulted in wide fluctuations in interest rates and, thus, in the
value of fixed rate debt obligations generally and intermediate and long-term
obligations in particular. The Sponsor cannot predict the degree to which such
fluctuations will continue in the future.
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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.
TRUST PORTFOLIOS
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PORTFOLIO SELECTION
The Bonds for each Trust was based largely upon the experience and judgment of
the Sponsor. In making such selections the Sponsor considered the following
factors: (a) the price of the Bonds relative to other issues of similar
quality and maturity; (b) whether the Bonds were issued by a utility company;
(c) the diversification of the bonds as to location of issuer; (d) the income
to the Unitholders of the Trusts; (e) whether the Bonds were insured or the
availability and cost of insurance for the scheduled payment of principal and
interest on the Bonds; (f) in certain Series whether the Bonds were issued
after July 18, 1984 (g) the stated maturity of the bonds.
The Sponsor may not alter the portfolio of a Series of the Trust, except upon
the happening of certain extraordinary circumstances. See "Investment
Supervision." Certain Series of the Trust contain Bonds which may be subject to
optional call or mandatory redemption pursuant to sinking fund provisions, in
each case prior to their stated maturity. A bond subject to optional call is
one which is subject to redemption or refunding prior to maturity at the option
of the issuer, often at a premium over par. A refunding is a method by which
a bond issue is redeemed, at or before maturity, by the proceeds of a new bond
issue. A bond subject to sinking fund redemption is one which is subject to
partial call from time to time at par from a fund accumulated for the scheduled
retirement of a portion of an issue prior to maturity. Special or
extraordinary redemption provisions may provide for redemption at par of all or
a portion of an issue upon the occurrence of certain circumstances, which may
be prior to the optional call dates shown in the "Schedules of Investments of
the Trust" in Part Two. Redemption pursuant to optional call provisions is
more likely to occur, and redemption pursuant to special or extraordinary
redemption provisions may occur, when the Bonds have an offering side
evaluation which represents a premium over par, that is, when they are able to
be refinanced at a lower cost. The proceeds from any such call or redemption
pursuant to sinking fund provisions as well as proceeds from the sale of Bonds
and from Bonds which mature in accordance with their terms, unless utilized to
pay for Units tendered for redemption, will be distributed to Unitholders and
will not be used to purchase additional Bonds for the Trust. Accordingly, any
such call, redemption, sale or maturity will reduce the size and diversity of
the Trust and the net annual interest income and may reduce the Estimated
Current Return and the Estimated Long-Term Return. See "Interest, Estimated
Long-Term Return and Estimated Current Return." The call, redemption, sale or
maturity of Bonds also may have tax consequences to a Unitholder. See "Federal
Tax Status." Information with respect to the call provisions and maturity
dates of the Bonds is contained in "Schedules of Investments."
PORTFOLIO RISK INFORMATION. Public Utility Issues. Certain of the aggregate
principal amount of the Bonds in each Trust are obligations of public utility
issuers. In general, public utilities are regulated monopolies engaged in the
business of supplying light, water, power, heat, transportation or means of
communication. Historically, the utilities industry has provided investors in
securities issued by companies in this industry with high levels of
reliability, stability and relative total return on their investments.
However, an investment in the Trusts should be made with an understanding of
the characteristics of such issuers and the risks which such an investment may
entail. General problems of such issuers would include the difficulty in
financing large construction programs in an inflationary period, the
limitations on operations and increased costs and
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delays attributable to environmental considerations, the difficulty of the
capital market in absorbing utility debt, the difficulty in obtaining fuel at
reasonable prices and the effect of energy conservation. All of such issuers
have been experiencing certain of 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 certain of the Bonds in the
portfolio to make payments of principal and/or interest on such Bonds.
Utilities are generally subject to extensive regulation by state utility
commissions which, for example, establish the rates which may be charged and
the appropriate rate of return on an approved asset base, which must be
approved by the state commissions. Certain utilities have had difficulty from
time to time in persuading regulators, who are subject to political pressures,
to grant rate increases necessary to maintain an adequate return on investment
and voters in many states have the ability to impose limits on rate adjustments
(for example, by initiative or referendum). Any unexpected limitations could
negatively affect the profitability of utilities whose budgets are planned far
in advance. Also, changes in certain accounting standards currently under
consideration by the Financial Accounting Standards Board could cause
significant write-downs of assets and reductions in earnings for many
investor-owned utilities. In addition, gas pipeline and distribution companies
have had difficulties in adjusting to short and surplus energy supplies,
enforcing or being required to comply with long-term contracts and avoiding
litigation from their customers, on the one hand, or suppliers, on the other.
Certain of the issuers of the Bonds in a Trust may own or operate nuclear
generating facilities. Governmental authorities may from time to time review
existing, and impose additional, requirements governing the licensing,
construction and operation of nuclear power plants. Nuclear generating
projects in the electric utility industry have experienced substantial cost
increases, construction delays and licensing difficulties. These have been
caused by various factors, including inflation, high financing costs, required
design changes and rework, allegedly faulty construction, objections by groups
and governmental officials, limits on the ability to finance, reduced forecasts
of energy requirements and economic conditions. This experience indicates that
the risk of significant cost increases, delays and licensing difficulties
remains present through completion and achievement of commercial operation of
any nuclear project. Also, nuclear generating units in service have
experienced unplanned outages or extensions of scheduled outages due to
equipment problems or new regulatory requirements sometimes followed by a
significant delay in obtaining regulatory approval to return to service. A
major accident at a nuclear plant anywhere, such as the accident at a plant in
Chernobyl, U.S.S.R., could cause the imposition of limits or prohibitions on
the operation, construction or licensing of nuclear units in the United States.
In view of the uncertainties discussed above, there can be no assurance that
any bond issuer's share of the full cost of nuclear units under construction
ultimately will be recovered in rates or of the extent to which a bond issuer
could earn an adequate return on its investment in such units. The likelihood
of a significantly adverse event occurring in any of the areas of concern
described above varies, as does the potential severity
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of any adverse impact. It should be recognized, however, that one or more of
such adverse events could occur and individually or collectively could have a
material adverse impact on the financial condition or the results of operations
or on a bond issuer's ability to make interest and principal payments on its
outstanding debt.
Other general problems of the gas, water, telephone and electric utility
industry (including state and local joint action power agencies) include
difficulty in obtaining timely and adequate rate increases, difficulty in
financing large construction programs to provide new or replacement facilities
during an inflationary period, rising costs of rail transportation to transport
fossil fuels, the uncertainty of transmission service costs for both interstate
and intrastate transactions, changes in tax laws which adversely affect a
utility's ability to operate profitably, increased competition in service
costs, reductions in estimates of future demand for electricity and gas in
certain areas of the country, restrictions on operations and increased cost and
delays attributable to environmental considerations, uncertain availability and
increased cost of capital, unavailability of fuel for electric generation at
reasonable prices, including the steady rise in fuel costs and the costs
associated with conversion to alternate fuel sources such as coal, availability
and cost of natural gas for resale, technical and cost factors and other
problems associated with construction, licensing, regulation and operation of
nuclear facilities for electric generation, including among other
considerations the problems associated with the use of radioactive materials
and the disposal of radioactive wastes, and the effects of energy conservation.
Each of the problems referred to could adversely affect the ability of the
issuers of any utility Bonds in a Trust to make payments due on these Bonds.
In addition, 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 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.
In 1984, AT&T divested its local telephone operations and created seven new
regional holding companies: American Information Technologies Corporation
(known as "Ameritech"), Bell Atlantic Corporation, BellSouth Corporation, NYNEX
Corporation, Pacific Telesis Group, Southwestern Bell Corporation and US West,
Inc. (the "Regional Companies"). The spinoff was effected pursuant to court
approval to implement a consent decree relating to antitrust proceedings
brought by the U.S. Department of Justice. In addition to providing for the
division of assets, work force and stock ownership of the entities that
formerly comprised the Bell System, the reorganization called for the
termination of many business arrangements that previously existed among the
various Bell System companies. In accordance with the consent decree, the
Regional Companies provide local exchange telephone service, including exchange
access for long distance companies, and may provide directory advertising and
new customer equipment. All of the Regional Companies have
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been granted waivers to engage in a broad range of businesses including foreign
consulting, selling real estate, servicing computers and marketing or leasing
office equipment. Guidelines established by the District Court waiver to
prevent unfair competition require that the new ventures be independently
capitalized, separate subsidiaries that together account for less than 10% of
the Regional Company's net annual revenue. The Federal Communications
Commission ("FCC") has subsequently lifted the structural separation
restrictions on marketing customer premises equipment, allowing these
activities to be reintegrated into the mainstream business operations. AT&T
provides interexchange long distance telephone service in competition with
numerous other suppliers, and certain other products and services, and is
responsible for certain customer equipment. Since 1984, the impact of the
reorganization on the financial condition of these companies has not proved as
severe as then expected, mainly due to extensive cost cutting by the Regional
Companies to offset the loss of subsidies from AT&T. The Regional Companies
continue to be prohibited from providing information services, although they
are permitted to provide communications for these services. If the modified
final judgment is further modified to lift this prohibition, the Regional
Companies could have significant opportunities for expansion of business,
although there would also be competitive risks to be assessed. Also, cellular
service is providing an increasing component of the net income of several
Regional Companies. A prohibition against AT&T rendering information services
expired in August 1989.
In addition to the specific circumstances affecting AT&T and the regional
holding companies, business conditions of the telephone industry in general may
affect the performance of the Trust Fund. General problems of telephone
companies include regulation of rates for service by the FCC and various state
or other regulatory agencies. However, over the last several years regulation
has been changing, resulting in increased competition. The new approach is
more market oriented, more flexible and more complicated. For example, Federal
and certain state regulators have instituted "price cap" regulation which
couples protection of rate payers for basic services with flexible pricing for
ancillary services. These new approaches to regulation could lead to greater
risks as well as greater rewards for operating telephone companies such as
those in the Trust Funds. Inflation has substantially increased the operating
expenses and costs of plants required for growth, service, improvement and
replacement of existing plants. Continuing cost increases, to the extent not
offset by improved productivity and revenues from increased business, would
result in a decreasing rate of return and a continuing need for rate increases.
Although allowances are generally made in rate-making proceedings for cost
increases, delays may be experienced in obtaining the necessary rate increases
and there can be no assurance that the regulatory agencies will grant rate
increases adequate to cover operating and other expenses and debt service
requirements. To meet increasing competition, telephone companies will have to
commit substantial capital, technological and marketing resources. Telephone
usage, and therefore revenues, could also be adversely affected by any
sustained economic recession. New technology such as cellular service and
fiber optics, will require additional capital outlays. The uncertain outcomes
of future labor agreements may also have a negative impact on the telephone
companies. Each of these problems could adversely affect the ability of the
telephone company issuers of any Bonds in a portfolio to make payments of
principal and interest on their Bonds.
Zero Coupon U.S. Treasury Obligations. Certain of the Bonds in certain of the
Trusts are "zero coupon" U.S. Treasury bonds. Zero coupon bonds are purchased
at a deep discount because the buyer receives only the
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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 income on such
obligation at a rate as high as the implicit yield on the discount obligation,
but at the same time eliminates the holder's ability to reinvest at higher
rates in the future. For this reason, zero coupon bonds are subject to
substantially greater price fluctuations during periods of changing market
interest rates than are securities of comparable quality which pay interest.
General Trust Information. Because certain of the Bonds in each Trust may from
time to time under certain circumstances be sold or redeemed or will mature in
accordance with their terms and because the proceeds from such events will be
distributed to Unitholders and will not be reinvested, no assurance can be
given that a Trust will retain for any length of time its present size and
composition. Neither the Sponsor nor the Trustee shall be liable in any way
for any default, failure or defect in any Bond. The Trustee will have no power
to vary the investment of a Trust; i.e., the Trustee will have no managerial
power to take advantage of market variations to improve a Unitholder's
investment.
To the best of the Sponsor's knowledge, there is no litigation pending as of
the date of this Part One Prospectus in respect of any Bond which might
reasonably be expected to have a material adverse effect on the Trust Funds.
At any time after the date of this Part One Prospectus, litigation may be
instituted on a variety of grounds with respect to the Bonds. The Sponsor is
unable to predict whether any such litigation may be instituted, or if
instituted, whether such litigation might have a material adverse effect on the
Trust Funds. The Sponsor and the Trustee shall not be liable in any way for
any default, failure or defect in any Bond.
INSURANCE ON THE PORTFOLIOS
All Bonds in each Series of the Trust, except for the U.S. Treasury
obligations, are insured as to the scheduled payment of interest and principal,
either by the Sponsor or by the Bond issuer under a financial guaranty
insurance policy obtained from Municipal Bond Investors Assurance Corporation
("MBIA Corporation"). See "Schedules of Investments" in Part Two. The premium
for each such insurance policy has been paid in advance by such issuer or the
Sponsor and each such policy is non-cancelable and will remain in force so long
as the Bonds are outstanding and MBIA Corporation remains in business. No
premiums for such insurance are paid by the Trusts. If MBIA Corporation is
unable to meet its obligations under its policy or if the rating assigned to
the claims-paying ability of MBIA Corporation deteriorates, no other insurer
has any obligation to insure any issue adversely affected by either of these
events.
The aforementioned insurance guarantees the scheduled payment of principal and
interest on all of the Bonds in each Trust, except for the U.S. Treasury
obligations. It does not guarantee the market value of the Bonds or the value
of the Units of a Series of the Trust. This insurance is effective so long as
the Bond is outstanding, whether or not held by a Trust. Therefore, any such
insurance may be considered to represent an element of market value in regard
to the Bonds, but the exact effect, if any, of this insurance on such
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market value cannot be predicted.
MBIA Corporation is the principal operating subsidiary of MBIA, Inc., a New
York Stock Exchange listed company. MBIA, Inc. is not obligated to pay the
debts of or claims against 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, 1992 MBIA Corporation had admitted assets of $2.6 billion
(audited), total liabilities of $1.7 billion (audited), and total capital and
surplus of $896 million (audited) determined in accordance with statutory
accounting practices prescribed or permitted by insurance regulatory
authorities. As of September 30, 1993, MBIA Corporation had admitted assets of
$3.0 billion (unaudited), total liabilities of $2.0 billion (unaudited), and
total policyholder's surplus of $951 million (unaudited), prepared in
accordance with statutory accounting practices prescribed or permitted by
insurance regulatory authorities. 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, 1989, 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 had 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."
Because the Bonds in each Series of the Trust (other than the U.S. Treasury
obligations) are insured as to the scheduled payment of principal and interest
and on the basis of the financial condition and the method of operation of MBIA
Corporation, Moody's Investors Service, Inc., on the original Date of Deposit
of each Series, assigned to each Trust's Units its "AAA" investment rating.
This is the highest rating assigned to securities by such rating agency. These
ratings should not be construed as an approval of the offering of the Units by
Standard & Poor's Corporation or as a guarantee of the market value of a Trust
or the Units thereof.
Bonds in a Trust for which insurance has been obtained by the issuer thereof or
by the Sponsor from MBIA Corporation (all of which were rated "AAA") may or may
not have a higher yield than uninsured bonds rated
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"AAA" by Standard & Poor's Corporation. In selecting Bonds for the portfolio
of the Trusts, the Sponsor has applied the criteria herein before described.
RETIREMENT PLANS
Units of the Trust Funds may be well suited for purchase by Individual
Retirement Accounts, Keogh Plans, pension funds and other qualified retirement
plans, certain of which are briefly described below.
Generally, capital gains and income received under each of the foregoing plans
are deferred from federal taxation. All distributions from such plans are
generally treated as ordinary income but may, in some cases, be eligible for
special income averaging or tax-deferred rollover treatment. Investors
considering participation in any such plan should review specific tax laws
related thereto and should consult their attorneys or tax advisers with respect
to the establishment and maintenance of any such plan. Such plans are offered
by brokerage firms and other financial institutions. The Trust Funds will
waive the $1,000 minimum investment requirement for IRA accounts. The minimum
investment is $250 for tax-deferred plans such as IRA accounts. Fees and
charges with respect to such plans may vary.
INDIVIDUAL RETIREMENT ACCOUNT--IRA. Any individual under age 70 1/2 may
contribute the lesser of $2,000 or 100% of compensation to an IRA annually.
Such contributions are fully deductible if the individual (and spouse if filing
jointly) are not covered by a retirement plan at work. The deductible amount
an individual may contribute to an IRA will be reduced $10 for each $50 of
adjusted gross income over $25,000 ($40,000 if married, filing jointly or $0 if
married, filing separately), if either an individual or their spouse (if
married, filing jointly) is an active participant in an employer maintained
retirement plan. Thus, if an individual has adjusted gross income over $35,000
($50,000 if married, filing jointly or $0 if married, filing separately) and if
an individual or their spouse is an active participant in an employer
maintained retirement plan, no IRA deduction is permitted. Under the Internal
Revenue Code of 1986, as amended (the "Code"), an individual may make
nondeductible contributions to the extent deductible contributions are not
allowed. All distributions from an IRA (other than the return of certain
excess contributions) are treated as ordinary income for federal income
taxation purposes provided that under the Code an individual need not pay tax
on the return of nondeductible contributions. The amount includable in income
for the taxable year is the portion of the amount withdrawn for the taxable
year as the individual's aggregate deductible IRA contributions bear to the
aggregate balance of all IRAs of the individual.
A participant's interest in an IRA must be, or commence to be, distributed to
the participant not later than April 1 of the calendar year following the year
during which the participant attains age 70 1/2. Distributions made before
attainment of age 59 1/2, except in the case of the participant's death or
disability, or where the amount distributed is to be rolled over to another
IRA, or where the distributions are taken as a series of substantially equal
periodic payments over the participant's life or life expectancy (or the joint
lives or life expectancies of the participant and the designated beneficiary)
are generally subject to a surtax in an amount equal to 10% of the
distribution. The amount of such periodic payments may not be modified before
the later
9
<PAGE> 12
of five years or attainment of age 59 1/2. Excess contributions are subject to
an annual 6% excise tax.
IRA applications, disclosure statements and trust agreements are available from
the Sponsor upon request.
QUALIFIED RETIREMENT PLANS. Units of a Trust may be purchased by qualified
pension or profit sharing plans maintained by corporations, partnerships or
sole proprietors. The maximum annual contribution for a participant in a
money purchase pension plan or to paired profit sharing and pension plans is
the lessor of 25% of compensation or $30,000. Prototype plan documents for
establishing qualified retirement plans are available from the Sponsor upon
request.
EXCESS DISTRIBUTIONS TAX. In addition to the other taxes due by reason of a
plan distribution, a tax of 15% may apply to certain aggregate distributions
from IRAs, Keogh plans, and corporate retirement plans to the extent such
aggregate taxable distributions exceed specified amounts (generally $150,000,
as adjusted) during a tax year. This 15% tax will not apply to distributions
on account of death, qualified domestic relations orders or amounts eligible
for tax-deferred rollover treatment. In general, for lump sum distributions
the excess distributions over $750,000 (as adjusted) will be subject to the 15%
tax.
The Trustee, Investors Fiduciary Trust Company, has agreed to act as custodian
for certain retirement plan accounts. An annual fee of $12.00 per account, if
not paid separately, will be assessed by the Trustee and paid through the
liquidation of shares of the reinvestment account. An individual wishing the
Trustee to act as custodian must complete a Kemper UIT/IRA application and
forward it along with a check made payable to Investors Fiduciary Trust
Company. Certificates for Individual Retirement Accounts cannot be issued.
DISTRIBUTION REINVESTMENT
Each Unitholder of a Trust may elect to have distributions of principal
(including capital gains, if any) or interest or both automatically invested
without charge in shares of any open-end mutual fund underwritten or advised by
an affiliate of the Sponsor, Kemper Financial Services, Inc. (the "Kemper
Funds"), other than those Kemper Funds sold with a contingent deferred sales
charge.
If individuals indicate they wish to participate in the Reinvestment Program
but do not designate a reinvestment fund, the Program Agent referred to below
will contact such individuals to determine which reinvestment fund or funds
they wish to elect. 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 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 any Trust Underwriter upon
request. An investor should read the prospectus of the reinvestment fund
selected prior to making the election to reinvest. Unitholders who desire
10
<PAGE> 13
to have such distributions automatically reinvested should inform their broker
at the time of purchase or should file with the Program Agent a written notice
of election.
Unitholders who are receiving distributions in cash may elect to participate in
distribution reinvestment by filing with the Program Agent an election to have
such distributions reinvested without charge. Such election must be received
by the Program Agent at least ten days prior to the Record Date applicable to
any distribution in order to be in effect for such Record Date. Any such
election shall remain in effect until a subsequent notice is received by the
Program Agent. See "Distributions to Unitholders."
The Program Agent is Investors Fiduciary Trust Company. All inquiries
concerning participation in distribution reinvestment should be directed to the
Program Agent at P.O. Box 419430, Kansas City, Missouri 64173-0216, telephone
(816) 474-8786.
INTEREST AND ESTIMATED LONG-TERM RETURN AND ESTIMATED CURRENT RETURN
As of the opening of business on the date indicated therein, the Estimated
Long-Term Returns and the Estimated Current Returns for each Series of the
Trust were as set forth under "Essential Information" for the applicable Trust
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 Trustee, the Sponsor and the Evaluator
and with the principal prepayment, redemption, maturity, exchange or sale of
Bonds while the Public Offering Price will vary with changes in the offering
price of the underlying Bonds and with changes in the Purchased Interest (if
any) and Daily Accrued Interest; 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 Bonds
in a 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
Bonds 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.
FEDERAL TAX STATUS
At the time of closing for the Trust, 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
United States federal income tax
11
<PAGE> 14
purposes.
Each Unitholder will be considered the owner of a pro rata portion of each of
the Trust assets for Federal income tax purposes under Subpart E, Subchapter J
of Chapter 1 of the Internal Revenue Code (the "Code"). Each Unitholder will
be considered to have received his pro rata share of interest derived from each
Trust asset when such interest is received by the Trust. Each Unitholder will
also be required to include in taxable income for federal income tax purposes,
original issue discount with respect to his interest in any Bonds held by the
Trust at the same time and in the same manner as though the Unitholder were the
direct owner of such interest.
Each Unitholder will have a taxable event when a Bond is disposed of (whether
by sale, exchange, redemption, or payment at maturity) or when the Unitholder
redeems or sells his Units. The cost of the Units to a Unitholder on the date
such Units are purchased is allocated among the Bonds held in the Trust (in
accordance with the proportion of the fair market values of such Bonds) in
order to determine his tax basis for his pro rata portion in each Bond.
Unitholders must reduce the tax basis of their Units for their share of accrued
interest received, if any, on Bonds delivered after the date the Unitholders
pay for their Units 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, 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 his basis for
his fractional interest in the asset disposed of. The basis of each Unit and
of each Bond which was issued with original issue discount (including Treasury
obligations) must be increased by the amount of accrued original issue discount
and the basis of each Unit and of each Bond which was purchased by the Trust at
a premium must be reduced by the annual amortization of bond premium which the
Unitholder has properly elected to amortize under Section 171 of the Code. The
tax cost reduction requirements of the Code relating to amortization of bond
premium may, under some circumstances, result in the Unitholder realizing a
taxable gain when his Units are sold or redeemed for an amount equal to or less
than his original cost. Any U.S. Treasury obligations held by the Trust are
treated as bonds that were originally issued at an original issue discount
provided, pursuant to a Treasury Regulation (the "Regulation") issued on
December 28, 1992, that the amount of original issue discount determined under
Section 1286 of the Code is not less than a "de minimis" amount as determined
thereunder (as discussed below under "Original Issue Discount"). Because the
U.S. Treasury obligations represent interests in "stripped" U.S. Treasury
bonds, a Unitholder's initial cost for his pro rata portion of each U.S.
Treasury obligation held by a Trust (determined at the time he acquires his
Units, in the manner described above) shall be treated as its "purchase price"
by the Unitholder. Original issue discount is effectively treated as interest
for federal income tax purposes, and the amount of original issue discount in
this case is generally the difference between the Bond's purchase price and its
stated redemption price at maturity. A Unitholder will be required to include
in gross income for each taxable year the sum of his daily portions of original
issue discount attributable to the U.S. Treasury obligations held by a Trust as
such original issue discount accrues and will, in general, be subject to
Federal income tax with respect to the total amount of such original issue
discount that accrues for such year even though the income is not distributed
to the Unitholders during such year to the extent it is not less than a "de
minimis" amount as determined under the Regulation. In general, original issue
discount accrues daily under a constant interest
12
<PAGE> 15
rate method which takes into account the semi-annual compounding of accrued
interest. In the case of U.S. Treasury obligations, this method will generally
result in an increasing amount of income to the Unitholders each year.
Unitholders should consult their tax advisers regarding the federal income tax
consequences and accretion of original issue discount.
LIMITATIONS ON DEDUCTIBILITY OF TRUST EXPENSES BY UNITHOLDERS. Each
Unitholder's pro rata share of each expense paid by a Trust is deductible by
the Unitholder to the same extent as though the expense had been paid directly
by him, subject to the following limitation. It should be noted that as a
result of the Tax Reform Act of 1986 (the "Act"), certain miscellaneous
itemized deductions, such as investment expenses, tax return preparation fees
and employee business expenses will be deductible by an individual only to the
extent they exceed 2% of such individual's adjusted gross income. Temporary
regulations have been issued which require Unitholders to treat certain
expenses of a Trust as miscellaneous itemized deductions subject to this
limitation.
ACQUISITION PREMIUM. If a Unitholder's tax basis of his pro rata portion in
any Bonds held by a Trust exceeds the amount payable by the issuer of the Bond
with respect to such pro rata interest upon the maturity of the Bond, such
excess would be considered "acquisition premium" which may be amortized by the
Unitholder at the Unitholder's election as provided in Section 171 of the Code.
Unitholders should consult their tax advisors regarding whether such election
should be made and the manner of amortizing acquisition premium.
ORIGINAL ISSUE DISCOUNT. Certain of the Bonds of a Trust may have been
acquired with "original issue discount." In the case of any Bonds of a Trust
acquired with "original issue discount" that exceeds a "de minimis" amount as
specified in the Code or in the case of the U.S. Treasury obligations as
specified in the Regulation, such discount is includable in taxable income of
the Unitholders on an accrual basis computed daily, without regard to when
payments of interest on such Bonds are received. The Code provides a complex
set of rules regarding the accrual of original issue discount. These rules
provide that original issue discount generally accrues on the basis of a
constant compound interest rate over the term of the Bonds. Unitholders should
consult their tax advisers as to the amount of original issue discount which
accrues.
Special original issue discount rules apply if the purchase price of a Bond by
a Trust exceeds its original issue price plus the amount of original issue
discount which would have previously accrued based upon its issue price (its
"adjusted issue price"). Unitholders should also consult their tax advisers
regarding these special rules. Similarly these special rules would apply to a
Unitholder if the tax basis of his pro rata portion of a Bond issued with
original issue discount exceeds his pro rata portion of its adjusted issue
price.
MARKET DISCOUNT. If a Unitholder's tax basis in his pro rata portion of Bonds
is less than the allocable portion of such Bond's stated redemption price at
maturity (or, if issued with original issue discount, the allocable portion of
its "revised issue price"), such difference will constitute market discount
unless the
13
<PAGE> 16
amount of market discount is "de minimis" as specified in the Code. Market
discount accrues daily computed on a straight line basis, unless the Unitholder
elects to calculate accrued market discount under a constant yield method. The
market discount rules do not apply to the U.S. Treasury obligations because
they are stripped debt instruments subject to special original issue discount
rules as discussed above. Unitholders should consult their tax advisers as to
the amount of market discount which accrues.
Accrued market discount is generally includable in taxable income to the
Unitholders as ordinary income for federal tax purposes upon the receipt of
serial principal payments on the Bonds, on the sale, maturity or disposition of
such Bonds by a Trust, and on the sale by a Unitholder of Units, unless a
Unitholder elects to include the accrued market discount in taxable income as
such discount accrues. If a Unitholder does not elect to annually include
accrued market discount in taxable income as it accrues, deductions for any
interest expenses incurred by the Unitholder which are incurred to purchase or
carry his Units will be reduced by such accrued market discount. In general,
the portion of any interest expense which was not currently deductible would
ultimately be deductible when the accrued market discount is included in
income. Unitholders should consult their tax advisers regarding whether an
election should be made to include market discount in income as it accrues and
as to the amount of interest expense which may not be currently deductible.
COMPUTATION OF THE UNITHOLDER'S TAX BASIS. The tax basis of a Unitholder with
respect to his interest in a Bond is increased by the amount of original issue
discount (and market discount, if the Unitholder elects to include market
discount, if any, on the Bonds held by a Trust in income as it accrues) thereon
properly included in the Unitholder's gross income as determined for Federal
income tax purposes and reduced by the amount of any amortized acquisition
premium which the Unitholder has properly elected to amortize under Section 171
of the Code. A Unitholder's tax basis in his Units will equal his tax basis in
his pro rata portion of all of the assets of the Trust.
RECOGNITION OF TAXABLE GAIN OR LOSS UPON DISPOSITION OF OBLIGATIONS BY A TRUST
OR DISPOSITION OF UNITS. A Unitholder will recognize taxable capital gain (or
loss) when all or part of his pro rata interest in a Bond is disposed of in a
taxable transaction for an amount greater (or less) than his tax basis
therefor. Any gain recognized on a sale or exchange and not constituting a
realization of accrued "market discount," and any loss will, under current law,
generally be capital gain or loss except in the case of a dealer or financial
institution. As previously discussed, gain realized on the disposition of the
interest of a Unitholder in any Bond deemed to have been acquired with market
discount will be treated as ordinary income to the extent the gain does not
exceed the amount of accrued market discount not previously taken into income.
Any capital gain or loss arising from the disposition of a Bond by a Trust or
the disposition of Units by a Unitholder will be short-term capital gain or
loss unless the Unitholder has held his Units for more than one year in which
case such capital gain or loss will be long-term. For taxpayers other than
corporations, net capital gains are 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. The tax cost
reduction requirements of the Code relating to amortization of bond premium may
under some circumstances, result in the Unitholder
14
<PAGE> 17
realizing taxable gain when his Units are sold or redeemed for an amount equal
or less than his original cost.
If the Unitholder disposes of a Unit, he is deemed thereby to have disposed of
his entire pro rata interest in all Trust assets including his pro rata portion
of all of the Bonds represented by the Unit. This may result in a portion of
the gain, if any, on such sale being taxable as ordinary income under the
market discount rules (assuming no election was made by the Unitholder to
include market discount in income as it accrues) as previously discussed.
"The Revenue Reconciliation Act of 1993" (the "Tax Act") raised tax rates on
ordinary income while capital gains remain subject to a 28% maximum stated
rate. Because some or all capital gains are taxed at a comparatively lower rate
under the Tax Act, the Tax Act includes a provision that recharacterizes
capital gains as ordinary income in the case of certain financial transactions
that are "conversion transactions" effective for transactions entered into
after April 30, 1993. Unit holders and prospective investors should consult
with their tax advisers regarding the potential effect of this provision on
their investment in Units.
FOREIGN INVESTORS. In connection with certain Series of the Trust (see
"Essential Information" in Part Two), a Unitholder of such Series who is a
foreign investor (i.e., an investor other than a U.S. citizen or resident or a
U.S. corporation, partnership, estate or trust) will not be subject to United
States federal income taxes, including withholding taxes, on interest income
on, or any gain from the sale or other disposition of, his pro rata interest in
any Bond or the sale of his Units provided that all of the following conditions
are met: (i) the interest income or gain is not effectively connected with the
conduct by the foreign investor of a trade or business within the United
States, (ii) the interest is United States source income (which is the case for
most securities issued by United States issuers), the Bond is issued after July
18, 1984 (which is the case for each Bond held by such Series of the Trust),
the foreign investor does not own, directly or indirectly, 10% or more of the
total combined voting power of all classes of voting stock of the issuer of the
Bond and the foreign investor is not a controlled foreign corporation related
(within the meaning of Section 864(d)(4) of the Code) to the issuer of the
Bond, (iii) with respect to any gain, the foreign investor (if an individual)
is not present in the United States for 183 days or more during his or her
taxable year and (iv) the foreign investor provides all certification which may
be required of his status. Foreign investors should consult their tax advisers
with respect to United States tax consequences of ownership of Units.
It should be noted that the Tax Act includes a provision which would
eliminate the exemption from United States taxation, including withholding
taxes, for certain "contingent interest." The provision applies to interest
received after December 31, 1993. No opinion is expressed herein regarding the
potential applicability of this provision and whether United States taxation or
withholding taxes could be imposed with respect to income derived from the
Units as a result thereof. Unit holders and prospective investors should
consult with their tax advisers regarding the potential effect of this
provision on their investment in Units.
GENERAL. Each Unitholder (other than a foreign investor who has properly
provided the certifications
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<PAGE> 18
described in the preceding paragraph) will be requested to provide the
Unitholder's taxpayer identification number to the Trustee and to certify that
the Unitholder has not been notified that payments to the Unitholder are
subject to back-up withholding. If the proper taxpayer identification number
and appropriate certification are not provided when requested, distributions by
the Trust to such Unit-holder will be subject to back-up withholding.
The foregoing discussion relates only to United States federal income taxes;
Unitholders may be subject to state and local taxation in other jurisdictions
(including a foreign investor's country of residence). Unitholders should
consult their tax advisers regarding potential state, local or foreign taxation
with respect to the Units.
PUBLIC OFFERING OF UNITS
PUBLIC OFFERING PRICE. Units of each Series of the Trust are offered at the
Public Offering Price. The Public Offering Price per Unit of a Series is equal
to the aggregate bid side evaluation of the Bonds in the Series' portfolio (as
determined pursuant to the terms of a contract with the Evaluator, Muller Data
Corporation, a non-affiliated firm regularly engaged in the business of
evaluating, quoting or appraising comparable securities), plus or minus (a)
cash, if any, in the Principal Account, held or owed by the Series, (b)
Purchased Interest (if any) and (c) Daily Accrued Interest, divided by the
number of outstanding Units of that Series of the Trust, plus the sales charge
applicable. The sales charge is based upon the dollar weighted average
maturity of a Trust and is determined in accordance with the table set forth
below. For purposes of this computation, Bonds will be deemed to mature on
their expressed maturity dates unless: (a) the 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 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 a Trust based upon the
dollar weighted average maturity of such Trust's portfolio, in accordance with
the following schedule:
<TABLE>
<CAPTION>
PERCENT OF NET
DOLLAR WEIGHTED AVERAGE PUBLIC OFFERING AMOUNT
YEARS TO MATURITY PRICE INVESTED
- ---------------------------- ------------------ ----------------
<S> <C> <C>
0 to .99 years . . . . . . . . . . . . . . . . . . 0.00% 0.000%
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:
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<PAGE> 19
<TABLE>
<CAPTION>
DOLLAR WEIGHTED AVERAGE
YEARS TO MATURITY*1
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 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 purchaser from the same firm in
the amounts stated herein, 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 Trust 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 due to fluctuations in the prices of
the underlying Bonds. The aggregate bid side evaluation of the Bonds shall be
determined (a) on the basis of current bid prices of the Bonds, (b) if bid
prices are not available for any particular Bond, on the basis of current bid
prices for comparable bonds, (c) by determining the value of the Bonds on the
bid side of the market by appraisal, or (d) by any combination of the above.
The value of insurance obtained by an issuer of Bonds or by the Sponsor is
reflected and included in the market value of such Bonds.
* If the dollar weighted average maturity of a Trust is under
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> 20
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 Bonds in each Series of the Trust, less the related
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 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. If a Unitholder desires to have certificates representing Units
purchased, such certificates will be delivered as soon as possible following a
written request therefor. For information with respect to redemption of Units
purchased, but as to which certificates requested have not been received, see
"Redemption" below.
PURCHASED AND DAILY ACCRUED INTEREST. Accrued interest consists of two
elements. The first element arises as a result of accrued interest which is
the accumulation of unpaid interest on a bond from the 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 a Trust Fund is paid semi-annually to the
Trust. A portion of the aggregate amount of such accrued interest on the Bonds
in a Trust to the First Settlement Date of the Trust is referred to herein as
"Purcased Interest." Included in the Public Offering Price of the Trust Units
of the Kemper Defined Funds Insured Corporate Series 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
Settlement Date. The second element of accrued interest arises because the
estimated net interest on the 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 a Trust Fund is liquidated, he will
receive at that time his proportionate share of the Purchased Interest (if any)
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 a Trust
Fund.
PUBLIC DISTRIBUTION OF UNITS. The Sponsor has qualified Units for sale in a
number of 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 Trusts available to their customers on an agency
basis. A portion of the sales charge paid by their customers is retained by or
18
<PAGE> 21
remitted to the banks in the amounts 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.
<TABLE>
<CAPTION>
DOLLAR WEIGHTED AVERAGE YEARS TO MATURITY*
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 2.5
</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 Trust 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 Bonds in a 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, 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
- --------------
* If the dollar weighted average maturity of a Trust is from 2 to 3.99 years,
the concession or agency commission is 1.00% of the Public Offering Price.
19
<PAGE> 22
determined by the Evaluator, based on the aggregate bid prices of the
underlying Bonds of such Series, together with Purchased Interest (if any) and
Daily Accrued Interest to the expected date of settlement. Accordingly,
Unitholders who wish to dispose of their Units should inquire of their broker
or bank as to the current market price of the Units prior to making a tender
for redemption to the Trustee.
REDEMPTION
If more favorable terms do not exist in the over-the-counter market
described above, Unitholders of a Series of the Trust may cause their Units to
be redeemed by the Trustee by making a written request to the Trustee,
Investors Fiduciary Trust Company, P.O. Box 419430, Kansas City, Missouri
64173-0216 and, in the case of Units evidenced by a certificate, by tendering
such certificate to the Trustee, properly endorsed or accompanied by a written
instrument or instruments of transfer in form satisfactory to the Trustee.
Unitholders must sign such written request, and such certificate or transfer
instrument, exactly as their names appear on the records of the Trustee and on
any certificate representing the Units to be redeemed. If the amount of the
redemption is $25,000 or less and the proceeds are payable to the Unitholder(s)
of record at the address of record, no signature guarantee is necessary for
redemptions by individual account owners (including joint owners). Additional
documentation may be requested, and a signature guarantee is always required,
from corporations, executors, administrators, trustees, guardians or
associations. The signatures must be guaranteed by a participant in the
Securities Transfer Agents Medallion Program ("STAMP") or such other signature
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. The price received upon
redemption might be more or less than the amount paid by the Unitholder
depending on the value of the Bonds in the portfolio at the time of redemption.
Under regulations issued by the Internal Revenue Service, the Trustee is
required to withhold a certain 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.
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<PAGE> 23
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 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 Bonds would not
otherwise be sold and might result in lower prices than might otherwise be
realized. To the extent 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 the Sponsor 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 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 Bonds is not reasonably practicable or it is not
reasonably practicable fairly to determine the value of the underlying Bonds in
accordance with the Trust Agreement; or (3) for such other period as the
Securities and Exchange Commission may by order permit. The Trustee is not
liable to any person in any way for any loss or damage which may result from
any such suspension or postponement.
COMPUTATION OF REDEMPTION PRICE. The Redemption Price for Units of each
Series of the Trust is computed by the Evaluator as of the Evaluation Time
stated under "Essential Information" in Part Two next occurring after the
tendering of a Unit for redemption and on any other business day desired by it,
by
A. adding (1) the cash on hand in such Series of the Trust; (2)
the aggregate value of the Bonds held in such Series of the Trust,
as determined by the Evaluator on the basis of bid prices therefor;
and (3) Purchased Interest (if any) and Daily Accrued Interest on
the Bonds in that Series of the Trust as of the date of
computation;
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
21
<PAGE> 24
(including legal and auditing fees), the Evaluator, the Sponsor
and bond counsel, if any; (3) cash held for distribution to
Unitholders of record as of the business day prior to the
evaluation being made; and (4) other liabilities incurred by such
Series 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 the Trust will not be evidenced
by a certificate unless a Unitholder or the Unitholder's registered
broker/dealer makes a written request to the Trustee.
Units are transferable by making a written request to the Trustee and, in
the case of Units evidenced by a certificate, presenting and surrendering such
certificate to the Trustee properly endorsed or accompanied by a written
instrument or instruments of transfer which should be sent by registered or
certified mail for the protection of the Unitholder. Unitholders must sign
such written request, and such certificate or transfer instrument (if
applicable), 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 program in addition to, or in
substitution for, STAMP, as may be accepted by the Trustee.
Units may be purchased and certificates, if requested, will be issued in
denominations of one Unit or any whole unit multiple thereof subject to any
minimum investment requirement established by the Sponsor from time to time.
However, in connection with qualified plans in which Investors Fiduciary Trust
Company acts as Trustee, fractional units (to three decimal places) will be
permitted. 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 not more than 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 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 or one-half (depending on the distribution
option selected) of such holders' pro rata share of the net estimated
22
<PAGE> 25
net annual interest income to the Interest Account for such Series of the
Trust, after deducting estimated expenses.
Persons who purchase Units of the Trust between a Record Date and a
Distribution Date will receive their first distribution on the second
Distribution Date following their purchase of Units. All distributions of
principal and interest will be paid in cash unless a Unitholder has elected to
reinvest principal and/or interest payments in shares of one of the
reinvestment funds. See "Distribution Reinvestment." Interest distributions
per Unit for each Series will be in the amounts shown under "Essential
Information" in the applicable Part Two and may change as underlying Municipal
Bonds are redeemed, paid or sold, or as expenses of such Series of the Trust
change or the number of outstanding Units of such Series of the Trust changes.
Since interest on 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
Trust 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.
Because 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 a sale or to the date of tender in the case of a
redemption.
Unitholders purchasing Units will initially receive distributions in
accordance with the election of the prior owner. Unitholders desiring to
change their distribution option may do so by sending written notice to the
Trustee, together with their certificate (if one was issued). Certificates
should only be sent by registered or certified mail to minimize the possibility
of loss. If written notice and any certificate are received by the Trustee not
later than January 1 or July 1 of a year, the change will become effective on
January 2 for distributions commencing with February 15 or August 15,
respectively, of that year. If notice is not received by the Trustee, the
Unitholder will be deemed to have elected to continue with the same option for
the subsequent twelve months.
Principal Distributions. In addition, the Trustee will distribute on each
Distribution Date or shortly thereafter, to each Unitholder of record on the
preceding Record Date, an amount substantially equal to such holders' pro rata
share of the cash balance, if any, in the Principal Account of such Series
computed as of
23
<PAGE> 26
the close of business on the preceding Record Date. However, no distribution
will be required if the balance in the Principal Account of such Series is less
than $1.00 per Unit.
STATEMENT TO UNITHOLDERS. With each distribution, the Trustee will furnish
or cause to be furnished to each Unitholder a statement of the amount of
interest and the amount of other receipts, if any, which are being distributed,
expressed in each case as a dollar amount per Unit.
The accounts of each Series of the Trust are required to be audited, at the
Series' expense, annually 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 Bonds in such Series
including amounts received as a portion of the proceeds of
any disposition of the Bonds;
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 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
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 Bonds in such Series and the net proceeds received
therefrom excluding any portion credited to the Interest Account;
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<PAGE> 27
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
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 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 Agreement 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 Bonds, except in the special circumstances noted below.
Thus, with the exception of the redemption or maturity of Bonds
25
<PAGE> 28
in accordance with their terms, and/or the sale of 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 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 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 Sponsor is required to instruct the Trustee to reject any offer made by
an issuer of the Bonds to issue new obligations in exchange or substitution for
any of such Bonds pursuant to a refunding or refinancing 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 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.
ADMINISTRATION OF THE TRUST
THE TRUSTEE. The Trustee, Investors Fiduciary Trust Company, is a trust
company specializing in investment related services, organized and existing
under the laws of Missouri, having its trust office at 127 West 10th Street,
Kansas City, Missouri 64105. The Trustee is subject to supervision and
examination by the Division of Finance of the State of Missouri and the Federal
Deposit Insurance Corporation. Investors Fiduciary Trust Company is 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 Trust Agreements, reference is
made to the material set forth under "Unitholders."
In accordance with the Trust Agreements, the Trustee shall keep proper
records of all transactions at its office. Such records shall include the name
and address of, and the number of Units held by, every
26
<PAGE> 29
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 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 Bonds comprising each Trust Fund.
Under the Trust Agreements, the Trustee or any successor trustee may resign
and be discharged of the trust created by the Trust Agreements by executing an
instrument in writing and filing the same with the Sponsor.
The Trustee or successor trustee must mail a copy of the notice of
resignation to all Unitholders then of record, not less than sixty days before
the date specified in such notice when such resignation is to take effect. The
Sponsor upon receiving notice of such resignation is obligated to appoint a
successor trustee promptly. If, upon such resignation, no successor trustee
has been appointed and has accepted the appointment within thirty days after
notification, the retiring Trustee may apply to a court of competent
jurisdiction for the appointment of a successor. In case the Trustee becomes
incapable of acting or is adjudged a bankrupt or is taken over by public
authorities, the Sponsor may remove the Trustee and appoint a successor trustee
as provided in the Trusts 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 $2,000,000.
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 Bonds in the Trusts 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
27
<PAGE> 30
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 written 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
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 Bonds held in
such Series, but in no event later than the Mandatory Termination Date set
forth under "Essential Information" in Part Two for each Trust. 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 (40% of the aggregate
principal amount of Bonds deposited in the Trust), 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 period
after termination, the Trustee will sell any 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.
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 Bonds.
The Trustee: The Trust Agreements provides that the Trustee shall be under
no liability for any action taken in good faith in reliance upon prima facie
properly executed documents or for the disposition of
28
<PAGE> 31
monies, Bonds, or certificates except by reason of its own gross negligence,
bad faith or willful misconduct, nor shall the Trustee be liable or responsible
in any way for depreciation or loss incurred by reason of the sale by the
Trustee of any Bonds. In the event that the Sponsor 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 Bonds or upon the
interest thereon. In addition, the Trust Agreements contains 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.
EXPENSES OF THE TRUST
The Sponsor will not charge any Series of the Trust fees for services
performed as Sponsor, except the Sponsor shall receive an annual surveillance
fee for services performed for such Trust Funds in an amount not to exceed the
amount shown under "Essential Information" in Part Two for performing portfolio
surveillance services for each Trust. Such fee (which is based on the largest
number of Units outstanding during each year) may exceed the actual costs of
providing such surveillance services for a Trust, but at no time will the total
amount received for portfolio surveillance services rendered to such Series in
any calendar year exceed the aggregate cost to the Sponsor for providing such
services. The foregoing fees may be increased without approval of the
Unitholders by amounts not exceeding proportionate increases under the category
"All Services Less Rent of Shelter" in the Consumer Price Index published by
the United States Department of Labor or, if such category is no longer
published, in a comparable category. The Sponsor paid all the expenses of
creating and establishing the Trust, including the cost of the initial
preparation, printing and execution of the Prospectus, Trust Agreements and the
certificates, legal and accounting expenses, advertising and selling expenses,
payment of closing fees, expenses of the Trustee, initial evaluation fees and
other out-of-pocket expenses.
The Trustee receives for its services the fee set forth under "Essential
Information" appearing in Part Two. The Trustee fee which is calculated
monthly is based on the largest aggregate principal amount of Bonds in each
Trust Fund at any time during the period. 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's fee is payable
on or before each Distribution Date. See "Unitholders-Distributions to
Unitholders."
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<PAGE> 32
For evaluation of Bonds in a Series of the Trust, the Evaluator receives a
fee payable monthly, calculated on an annual rate as set forth under "Essential
Information" in Part Two, based upon the largest aggregate principal amount of
Bonds in such Series of the Trust at any time during such monthly period.
The Trustee's fees, the Evaluator's fees and the surveillance fees are
deducted 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, but not including any fees and
expenses charged by any agent for custody and safeguarding of 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 not resulting from gross negligence, bad faith or willful
misconduct on its part; (f) indemnification of the Sponsor for any loss,
liability or expense incurred in acting as Sponsor of such Series of the Trust
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 by a lien on the assets of the Series of
the Trust.
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, 5th 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).
30
<PAGE> 33
If at any time the Sponsor shall fail to perform any of its duties under the
Trust Agreements 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 Trust Agreements and liquidate the Trust or any Series thereof as provided
therein or (c) continue to act as Trustee without terminating the Trust
Agreements.
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 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.
31
<PAGE> 2
Kemper Insured Corporate Trust
Series 4
Part Two
Dated April 29, 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> 3
Kemper Insured Corporate Trust
Series 4
Essential Information
As of April 4, 1994
Sponsor and Evaluator: Kemper Unit Investment Trusts
Trustee: Investors Fiduciary Trust Company
<TABLE>
<S> <C>
GENERAL INFORMATION
Principal Amount of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,365,000
Number of Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,396,615
Fractional Undivided Interest in the Trust per Unit . . . . . . . . . . . . . . . . . . . 1/13,396,615
Principal Amount of Bonds per 1,000 Units . . . . . . . . . . . . . . . . . . . . . . . . $ 699
Public Offering Price per 1,000 Units:
Aggregate Value of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,077,172
Aggregate Value of Bonds per 1,000 Units . . . . . . . . . . . . . . . . . . . . . . . $ 678
Principal Cash per 1,000 Units (1) . . . . . . . . . . . . . . . . . . . . . . . . . . $ --
Plus Sales Charge of 4.5% (4.712% of the net amount invested) . . . . . . . . . . . . . $ 32
Public Offering Price per 1,000 Units (exclusive of accrued interest) (2) . . . . . . . $ 710
Redemption Price per 1,000 Units (exclusive of accrued interest) . . . . . . . . . . . . $ 678
</TABLE>
<TABLE>
<S> <C>
Date of Trust Agreement and Initial Date of
Deposit . . . . . . . . . . . . . . . . . February 26, 1992
Mandatory Termination Date . . . . . . . . . December 31, 2042
Weighted Average Stated Maturity of Bonds . . 8.7 years
Evaluator's Annual Evaluation Fee . . . . . . $.30 per $1,000 principal amount of Bonds.
Sponsor's Annual Portfolio Surveillance Fee . $.25 per $1,000 principal amount of Bonds.
Trustee's Annual Fee (including estimated
expenses) . . . . . . . . . . . . . . . . $.937 and $.117 per 1,000 Units for monthly and semiannual
distribution options, respectively (includes $.91 and $.51 of
Trustee's annual fee per $1,000 principal amount of Bonds and
$.17 and $.02 of out-of-pocket expenses per 1,000 Units for
monthly and semiannual distribution options, respectively).
Record and Computation Dates . . . . . . . . First day of the month as follows: monthly -- each month;
semiannually -- January and July.
Distribution Dates . . . . . . . . . . . . . Fifteenth day of the month as follows: monthly -- each
month; semiannually -- January and July.
</TABLE>
i
<PAGE> 4
<TABLE>
<CAPTION>
SPECIAL DISTRIBUTION PLAN INFORMATION
MONTHLY SEMIANNUAL
-----------------------------------
<S> <C> <C>
Calculation of Estimated Net Annual Interest
Income per 1,000 Units:
Estimated Annual Interest Income . . . . . . . . . . . . . . . . . $48.3238 $48.3238
Less: Estimated Annual Expense . . . . . . . . . . . . . . . . . 1.4187 1.0421
-----------------------------------
Estimated Net Annual Interest Income . . . . . . . . . . . . . . . $46.9051 $47.2817
-----------------------------------
-----------------------------------
Divided by 12 and 2, respectively . . . . . . . . . . . . . . . . . $ 3.9088 $23.6409
Estimated Daily Rate of Net Interest Accrual
per 1,000 Units . . . . . . . . . . . . . . . . . . . . . . . . . . $ .1303 $ .1313
Estimated Current Return Based on Public
Offering Price (3) . . . . . . . . . . . . . . . . . . . . . . . . 6.61% 6.66%
Estimated Long-Term Return (3) . . . . . . . . . . . . . . . . . . . 6.85% 6.90%
</TABLE>
<TABLE>
<S> <C>
Minimum principal value of the Trust
under which Trust Agreement may
be terminated . . . . . . . . . . . . . . . . . . . . . . 40% of the aggregate principal amount of Bonds
deposited in the Trust ($5,856,000).
</TABLE>
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 April 4, 1994,
accrued interest to the settlement date of April 11, 1994 of $8.00 per
1,000 Units for monthly and $21.00 per 1,000 Units for semiannual
distribution options, was added to the Public Offering Price of $710.00 for
a total price of $718.00 for monthly and $731.00 for semiannual
distribution options.
3. The Estimated Current Return and Estimated Long-Term Return will vary with
changes in the Public Offering Price and there is no assurance that such
returns on the date hereof will be applicable on a subsequent date of
purchase. These estimated returns are increased for transactions entitled
to a reduced sales charge (see "Public Offering of Units -- Public Offering
Price" -- Part One).
ii
<PAGE> 5
Report of Independent Auditors
Unitholders
Kemper Insured Corporate Trust
Series 4
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of Kemper Insured Corporate Trust Series 4 as of
December 31, 1993, and the related statements of operations and changes in net
assets for the year then ended and for the period from February 26, 1992 (Date
of Initial Deposit) to December 31, 1992. These financial statements are the
responsibility of the Trust's sponsor. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of investments owned as of December 31, 1993,
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 Insured Corporate Trust
Series 4 at December 31, 1993, and the results of its operations and the
changes in its net assets for the year then ended and for the period from
February 26, 1992 to December 31, 1992, in conformity with generally accepted
accounting principles.
/s/ ERNST & YOUNG
ERNST & YOUNG
Kansas City, Missouri
April 15, 1994
1
<PAGE> 6
Kemper Insured Corporate Trust
Series 4
Statement of Assets and Liabilities
December 31, 1993
<TABLE>
<S> <C> <C>
ASSETS
Corporate Securities, at value (cost $11,167,535) (Note 1) $12,076,496
Interest receivable 240,745
Cash 5,229
----------------
Total assets 12,322,470
LIABILITIES AND NET ASSETS
Accrued liabilities 3,866
Net assets, applicable to 13,968,861 Units outstanding (Note 5):
Cost of Trust assets, exclusive of interest (Note 1) $11,167,535
Unrealized appreciation (Note 2) 908,961
Distributable funds 242,108
---------------------------------
Net assets $12,318,604
----------------
----------------
</TABLE>
See accompanying notes to financial statements.
2
<PAGE> 7
Kemper Insured Corporate Trust
Series 4
Statement of Operations
<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED FEBRUARY 26,
DECEMBER 31, 1992 TO
1993 DECEMBER 31, 1992
------------------------------------
<S> <C> <C>
Investment income -- interest $ 993,797 $ 731,940
Expenses:
Trustee's fees and related expenses 16,014 11,840
Evaluator's and portfolio surveillance fees 7,687 5,733
------------------------------------
Total expenses 23,701 17,573
------------------------------------
Net investment income 970,096 714,367
Realized and unrealized gain on investments:
Net realized gain 99,120 --
Unrealized appreciation on investments during
the period 447,118 461,843
------------------------------------
Net gain on investments 546,238 461,843
------------------------------------
Net increase in net assets resulting from operations $1,516,334 $1,176,210
------------------------------------
------------------------------------
</TABLE>
See accompanying notes to financial statements.
3
<PAGE> 8
Kemper Insured Corporate Trust
Series 4
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
PERIOD FROM
FEBRUARY 26,
YEAR ENDED 1992 TO
DECEMBER 31, DECEMBER 31,
1993 1992
--------------------------------------
<S> <C> <C>
Operations:
Net investment income $ 970,096 $ 714,367
Net realized gain on investments 99,120 --
Unrealized appreciation on investments during
the period 447,118 461,843
--------------------------------------
Net increase in net assets resulting from operations 1,516,334 1,176,210
Distributions to Unitholders:
Net investment income (1,054,552) (383,373)
Principal from investment transactions (2,340,945) (118,812)
--------------------------------------
Total distributions to Unitholders (3,395,497) (502,185)
Capital transactions:
Issuance of 14,640,000 Units -- 14,194,828
Redemption of 671,139 Units (671,086) --
--------------------------------------
Total increase (decrease) in net assets (2,550,249) 14,868,853
Net assets:
Beginning of the period 14,868,853 --
--------------------------------------
End of the period (including distributable funds
applicable to Trust Units of $242,108 and $313,215
at December 31, 1993 and 1992, respectively) $12,318,604 $14,868,853
--------------------------------------
--------------------------------------
Trust Units outstanding at the end of the period 13,968,861 14,640,000
--------------------------------------
--------------------------------------
</TABLE>
See accompanying notes to financial statements.
4
<PAGE> 9
Kemper Insured Corporate Trust
Series 4
Schedule of Investments
December 31, 1993
<TABLE>
<CAPTION>
REDEMPTION PRINCIPAL
NAME OF ISSUER(5) COUPON RATE MATURITY DATE PROVISIONS(2) RATING(1) AMOUNT(4) VALUE(3)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Commonwealth Edison Company 8.00 % 10/15/2003 1994 @ 102.48 AAA $ 1,500,000 $ 1,555,125
Connecticut Light & Power Company 7.625 4/01/2003 1994 @ 101.81 AAA 1,875,000 1,915,894
Consolidated Edison Company of New York 7.625 3/01/2004 Non-Callable AAA 1,875,000 2,090,138
Public Service Electric & Gas Company 7.625 2/01/2000 Non-Callable AAA 1,500,000 1,636,080
Southern California Edison Capital Company 7.375 12/15/2003 1996 @ 101.36 AAA 1,500,000 1,626,645
Tennessee Valley Authority 6.875 1/15/2002 1995 @ 103.62 AAA 1,875,000 1,946,812
U.S. Treasury Securities (6) 0.00 11/15/2002 Non-Callable AAA 765,000 454,770
Virginia Electric & Power Company 8.00 3/01/2004 Non-Callable AAA 750,000 851,032
------------------------------
$11,640,000 $12,076,496
------------------------------
------------------------------
</TABLE>
See accompanying notes to Schedule of Investments.
5
<PAGE> 10
Kemper Insured Corporate Trust
Series 4
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. The prices at which the Bonds
may be redeemed or called prior to maturity may or may not include a
premium and, in certain cases, may be less than the cost of the Bonds to
the Trust. In addition, certain Bonds in the Portfolio may be redeemed in
whole or in part other than by operation of the stated redemption
provisions under certain unusual or extraordinary circumstances specified
in the instruments setting forth the terms and provisions of such Bonds.
3. See Note 1 to the accompanying financial statements for a description of
the method of determining cost and value.
4. At December 31, 1993, the Portfolio of the Trust consists of 7 obligations
issued by public utility companies and 1 U.S. Treasury Security.
Approximately 58% of the aggregate principal amount of Bonds in the Trust
are subject to call by the issuers within five years after December 31,
1993.
5. All corporate Bonds in the Trust are insured by Municipal Bond Investors
Assurance Corporation. The insurance was obtained either directly by the
issuer of the Bonds or by the Trust's sponsor.
6. 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.
See accompanying notes to financial statements.
6
<PAGE> 11
Kemper Insured Corporate Trust
Series 4
Notes to Financial Statements
1. SIGNIFICANT ACCOUNTING POLICIES
VALUATION OF SECURITIES
Corporate Securities and the zero coupon obligation 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 Securities are determined by the Evaluator based on (a) current bid prices
of the Securities, (b) current bid prices for comparable securities, (c)
appraisal, or (d) any combination of the above. (See Note 5 -- Insurance.)
COST OF SECURITIES
Cost of the Trust's Securities is based on the offering prices of the
Securities on the dates of deposit of such Securities acquired during the
primary sales period, plus amortization of original issue discount and market
discount or premium for the zero coupon obligation. The premium or discount
for the fixed rate obligations is not being amortized. Realized gain (loss)
from Security transactions is reported on an identified cost basis.
INVESTMENT INCOME
Interest income consists of amortization of original issue discount and market
discount or premium on the zero coupon obligation and interest accrued as
earned on the fixed rate obligations.
2. UNREALIZED APPRECIATION AND DEPRECIATION
Following is an analysis of net unrealized appreciation at December 31, 1993:
Gross unrealized appreciation $908,961
Gross unrealized depreciation --
-------------
Net unrealized appreciation $908,961
-------------
-------------
7
<PAGE> 12
Kemper Insured Corporate Trust
Series 4
Notes to Financial Statements (continued)
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.
Payments to the Trustee included Trustee fees at an annual rate of $.91 and
$.51 under the monthly and semiannual distribution options, respectively, per
$1,000 principal amount of underlying Securities in the Trust through
December 31, 1993, calculated monthly, based on the largest aggregate principal
amount of Securities in the Trust at any time during the monthly or semiannual
period and reimbursement of out-of-pocket expenses at an annual rate of $.17
and $.02 per 1,000 Units under the monthly and semiannual distribution options,
respectively, through December 31, 1993, calculated monthly, based on the
largest number of Trust Units outstanding at any time during the monthly or
semiannual period.
The annual Evaluator's fee and portfolio surveillance fee, calculated monthly,
are $.30 and $.25, respectively, per $1,000 principal amount of Securities in
the Trust based on the largest aggregate principal amount of Securities in the
Trust at any time during the month.
4. FEDERAL INCOME TAXES
The Trust is not an association taxable as a corporation for federal 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 Securities on the date of an investor's purchase, plus or
minus a pro rata share of cash or overdraft in the Principal Account and
accrued interest, plus a sales charge of 4.0% of the Public Offering Price
(equivalent to 4.167% of the net amount invested). The Public Offering Price
for secondary market transactions is based on the aggregate bid prices of the
Securities plus or minus a pro rata share of cash or overdraft in the Principal
Account and accrued interest, 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).
8
<PAGE> 13
Kemper Insured Corporate Trust
Series 4
Notes to Financial Statements (continued)
5. OTHER INFORMATION (CONTINUED)
INSURANCE
Insurance guaranteeing the payment of all principal and interest on the
corporate Bonds in the portfolio has been obtained from an independent company
by the issuer of the Bonds involved or by the Trust's sponsor. Insurance
obtained by the Trust's sponsor or 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.
DISTRIBUTIONS
Distributions of net investment income to Unitholders are declared and paid in
accordance with the option (monthly or semiannual) selected by the investor.
Such income distributions, on a record date basis, are as follows:
<TABLE>
<CAPTION>
YEAR ENDED PERIOD FROM FEBRUARY 26,
DECEMBER 31, 1993 1992 TO DECEMBER 31, 1992
DISTRIBUTION ----------------------------------------------------------------------------
PLAN PER 1,000 UNITS TOTAL PER 1,000 UNITS TOTAL
------------ ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Monthly $68.62 $ 840,920 $31.99 $352,751
Semiannual 72.24 204,098 9.92 30,622
---------- --------
$1,045,018 $383,373
---------- --------
---------- --------
</TABLE>
In addition, the Trust redeemed Units with proceeds from the sale of
Bonds as follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1993
----------------
<S> <C>
Principal portion $671,086
Net interest accrued 9,534
----------------
$680,620
----------------
----------------
Units 671,139
----------------
----------------
</TABLE>
9
<PAGE> 14
Kemper Insured Corporate Trust
Series 4
Notes to Financial Statements (continued)
5. OTHER INFORMATION (CONTINUED)
Selected data per 1,000 Units of the Trust outstanding during each period --
<TABLE>
<CAPTION>
MONTHLY SEMIANNUAL
--------------------------------------------------------------------------
PERIOD FROM PERIOD FROM
FEBRUARY 26, FEBRUARY26,
YEAR ENDED 1992 TO YEAR ENDED 1992 TO
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1993 1992 1993 1992
--------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment income -- interest $ 69.26 $ 59.47 $ 69.26 $ 59.47
Expenses 1.71 1.38 1.18 .96
--------------------------------------------------------------------------
Net investment income 67.55 58.09 68.08 58.51
Distributions to Unitholders:
Net investment income (68.62) (31.99) (72.24) (9.92)
Principal from investment transactions (168.64) (9.91) (168.64) (3.08)
--------------------------------------------------------------------------
Total distributions to Unitholders (237.26) (41.90) (240.88) (13.00)
Net gain on investments 36.85 41.76 36.85 41.76
--------------------------------------------------------------------------
Change in net asset value (132.86) 57.95 (135.95) 87.27
Net asset value:
Beginning of the period 1,009.95 952.00* 1,039.27 952.00*
--------------------------------------------------------------------------
End of the period, including distributable funds $ 877.09 $1,009.95 $ 903.32 $1,039.27
--------------------------------------------------------------------------
--------------------------------------------------------------------------
* Value at Date of Initial Deposit (February 26, 1992).
</TABLE>
10
<PAGE> 15
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Independent
Auditors" and to the use of our report dated April 15, 1994, in this
Post-Effective Amendment to the Registration Statement (Form S-6) and related
Prospectus of Kemper Insured Corporate Trust Series 4 dated April 29, 1994.
/s/ ERNST & YOUNG
ERNST & YOUNG
Kansas City, Missouri
April 29, 1994
<PAGE> 16
Kemper Insured Corporate Trust
Series 5
Part Two
Dated April 29, 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> 17
Kemper Insured Corporate Trust
Series 5
Essential Information
As of April 4, 1994
Sponsor and Evaluator: Kemper Unit Investment Trusts
Trustee: Investors Fiduciary Trust Company
<TABLE>
<S> <C>
GENERAL INFORMATION
Principal Amount of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 35,145,000
Number of Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46,256,842
Fractional Undivided Interest in the Trust per Unit . . . . . . . . . . . . . . . . . . . . 1/46,256,842
Principal Amount of Bonds per 1,000 Units . . . . . . . . . . . . . . . . . . . . . . . . . $ 760
Public Offering Price per 1,000 Units:
Aggregate Value of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 33,921,220
Aggregate Value of Bonds per 1,000 Units . . . . . . . . . . . . . . . . . . . . . . . . $ 733
Principal Cash per 1,000 Units (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3
Plus Sales Charge of 5.5% (5.820% of the net amount invested) . . . . . . . . . . . . . . $ 43
Public Offering Price per 1,000 Units (exclusive of accrued interest) (2) . . . . . . . . $ 779
Redemption Price per 1,000 Units (exclusive of accrued interest) . . . . . . . . . . . . . $ 736
</TABLE>
<TABLE>
<S> <C>
Date of Trust Agreement and Initial
Date of Deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . February 26, 1992
Mandatory Termination Date . . . . . . . . . . . . . . . . . . . . . . . . December 31, 2042
Weighted Average Stated Maturity of Bonds . . . . . . . . . . . . . . . . . 27.4 years
Evaluator's Annual Evaluation Fee . . . . . . . . . . . . . . . . . . . . . $.30 per $1,000 principal amount of Bonds.
Sponsor's Annual Portfolio
Surveillance Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . $.25 per $1,000 principal amount of Bonds.
Trustee's Annual Fee (including estimated expenses) . . . . . . . . . . . . $.734 and $.106 per 1,000 Units for monthly and
semiannual distribution options, respectively
(includes $.91 and $.51 of Trustee's annual fee per
$1,000 principal amount of Bonds and $.17 and $.02
of out-of-pocket expenses per 1,000 Units for
monthly and semiannual distribution options,
respectively).
Record and Computation Dates . . . . . . . . . . . . . . . . . . . . . . . First day of the month as follows: monthly -- each
month; semiannually -- January and July.
Distribution Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fifteenth day of the month as follows: monthly --
each month; semiannually -- January and July.
</TABLE>
i
<PAGE> 18
SPECIAL DISTRIBUTION PLAN INFORMATION
<TABLE>
<CAPTION>
MONTHLY SEMIANNUAL
--------------------------
<S> <C> <C>
Calculation of Estimated Net Annual Interest
Income per 1,000 Units:
Estimated Annual Interest Income . . . . . . . . . . . . . . . . . . . $60.8336 $60.8336
Less: Estimated Annual Expense . . . . . . . . . . . . . . . . . . . 1.3761 .9151
--------------------------
Estimated Net Annual Interest Income . . . . . . . . . . . . . . . . . $59.4575 $59.9185
--------------------------
--------------------------
Divided by 12 and 2, respectively . . . . . . . . . . . . . . . . . . . . $ 4.9548 $29.9593
Estimated Daily Rate of Net Interest Accrual per 1,000 Units . . . . . . $ .1652 $ .1664
Estimated Current Return Based on Public
Offering Price (3) . . . . . . . . . . . . . . . . . . . . . . . . . . 7.66% 7.72%
Estimated Long-Term Return (3) . . . . . . . . . . . . . . . . . . . . . 7.69% 7.75%
</TABLE>
<TABLE>
<S> <C>
Minimum principal value of the Trust under which
Trust Agreement may be terminated . . . . . . 40% of the aggregate principal amount of Bonds deposited in
the Trust ($19,360,000).
</TABLE>
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 April 4, 1994,
accrued interest to the settlement date of April 11, 1994 of $10.00 per
1,000 Units for monthly and $25.00 per 1,000 Units for semiannual
distribution options, was added to the Public Offering Price of $779.00 for
a total price of $789.00 for monthly and $804.00 for semiannual
distribution options.
3. The Estimated Current Return and Estimated Long-Term Return will vary with
changes in the Public Offering Price and there is no assurance that such
returns on the date hereof will be applicable on a subsequent date of
purchase. These estimated returns are increased for transactions entitled
to a reduced sales charge (see "Public Offering of Units -- Public Offering
Price" -- Part One).
ii
<PAGE> 19
Report of Independent Auditors
Unitholders
Kemper Insured Corporate Trust
Series 5
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of Kemper Insured Corporate Trust Series 5 as of
December 31, 1993, and the related statements of operations and changes in net
assets for the year then ended and for the period from February 26, 1992 (Date
of Initial Deposit) to December 31, 1992. These financial statements are the
responsibility of the Trust's sponsor. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of investments owned as of December 31, 1993,
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 Insured Corporate Trust
Series 5 at December 31, 1993, and the results of its operations and the
changes in its net assets for the year then ended and for the period from
February 26, 1992 to December 31, 1992, in conformity with generally accepted
accounting principles.
/s/ ERNST & YOUNG
ERNST & YOUNG
Kansas City, Missouri
April 15, 1994
1
<PAGE> 20
Kemper Insured Corporate Trust
Series 5
Statement of Assets and Liabilities
December 31, 1993
<TABLE>
<S> <C> <C>
ASSETS
Corporate Securities, at value (cost $34,978,698) (Note 1) $37,525,328
Cash 3,630,395
Interest receivable 1,104,917
-----------
42,260,640
LIABILITIES AND NET ASSETS
Accrued liabilities 15,094
Net assets, applicable to 47,800,000 Units outstanding (Note 5):
Cost of Trust assets, exclusive of interest (Note 1) $34,978,698
Unrealized appreciation (Note 2) 2,546,630
Distributable funds 4,720,218
----------------------------
Net assets $42,245,546
-----------
-----------
</TABLE>
See accompanying notes to financial statements.
2
<PAGE> 21
Kemper Insured Corporate Trust
Series 5
Statement of Operations
<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED FEBRUARY 26, 1992
DECEMBER 31, TO DECEMBER 31,
1993 1992
-------------------------------------
<S> <C> <C>
Investment income -- interest $3,693,225 $2,569,883
Expenses:
Trustee's fees and related expenses 52,479 36,789
Evaluator's and portfolio surveillance fees 25,820 18,112
-----------------------------
Total expenses 78,299 54,901
-----------------------------
Net investment income 3,614,926 2,514,982
Realized and unrealized gain on investments:
Net realized gain 277,400 --
Unrealized appreciation during the period 1,195,203 1,351,427
-----------------------------
Net gain on investments 1,472,603 1,351,427
-----------------------------
Net increase in net assets resulting from operations $5,087,529 $3,866,409
-----------------------------
-----------------------------
</TABLE>
See accompanying notes to financial statements.
3
<PAGE> 22
Kemper Insured Corporate Trust
Series 5
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED FEBRUARY 26, 1992
DECEMBER 31, TO DECEMBER 31,
1993 1992
---------------------------------
<S> <C> <C>
Operations:
Net investment income $ 3,614,926 $ 2,514,982
Net realized gain on investments 277,400 --
Unrealized appreciation on investments during the period 1,195,203 1,351,427
-------------------------------
Net increase in net assets resulting from operations 5,087,529 3,866,409
Distributions to Unitholders:
Net investment income (3,816,578) (1,306,644)
Principal from investment transactions (8,307,182) (458,917)
-------------------------------
Total distributions to Unitholders (12,123,760) (1,765,561)
Capital transactions:
Issuance of 48,400,000 Units -- 47,699,329
Redemption of 600,000 Units (518,400) --
-------------------------------
Total increase (decrease) in net assets (7,554,631) 49,800,177
Net assets:
Beginning of the period 49,800,177 --
-------------------------------
End of the period (including distributable funds applicable to Trust
Units of $4,720,218 and $1,279,665 at December 31, 1993 and 1992,
respectively) $42,245,546 $49,800,177
-------------------------------
-------------------------------
Trust Units outstanding at the end of the period 47,800,000 48,400,000
-------------------------------
-------------------------------
</TABLE>
See accompanying notes to financial statements.
4
<PAGE> 23
Kemper Insured Corporate Trust
Series 5
Schedule of Investments
December 31, 1993
<TABLE>
<CAPTION>
REDEMPTION PRINCIPAL
NAME OF ISSUER(5) COUPON RATE MATURITY DATE PROVISIONS(2) RATING(1) AMOUNT(4) VALUE(3)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Commonwealth Edison Company 8.625% 2/01/2022 2002 @ 103.84 AAA $ 8,000,000 $ 9,173,360
Duke Power Company 8.375 12/01/2021 1994 @ 104.04 AAA 4,000,000 4,182,080
Florida Power & Light Company 8.50 1/01/2022 1994 @ 107.65 AAA 10,000,000 10,808,600
Public Service Electric & Gas Company 8.75 2/01/2022 1997 @ 107.04 AAA 8,000,000 8,736,800
Southern California Edison Company 8.625 4/15/2019 1994 @ 105.63 AAA 4,000,000 4,243,320
U.S. Treasury Securities (6) 0.00 11/15/2020 Non-Callable AAA 2,400,000 381,168
----------------------------------
$36,400,000 $37,525,328
----------------------------------
----------------------------------
</TABLE>
See accompanying notes to Schedule of Investments.
5
<PAGE> 24
Kemper Insured Corporate Trust
Series 5
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. The prices at which the Bonds
may be redeemed or called prior to maturity may or may not include a
premium and, in certain cases, may be less than the cost of the Bonds to
the Trust. In addition, certain Bonds in the Portfolio may be redeemed in
whole or in part other than by operation of the stated redemption
provisions under certain unusual or extraordinary circumstances specified
in the instruments setting forth the terms and provisions of such Bonds.
3. See Note 1 to the accompanying financial statements for a description of
the method of determining cost and value.
4. At December 31, 1993, the Portfolio of the Trust consists of 5 obligations
issued by public utility companies and 1 U.S. Treasury Security.
Approximately 71% of the aggregate principal amount of Bonds in the Trust
are subject to call by the issuers within five years after December 31,
1993.
5. All corporate Bonds in the Trust are insured by Municipal Bond Investors
Assurance Corporation. The insurance was obtained either directly by the
issuer of the Bonds or by the Trust's sponsor.
6. 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.
See accompanying notes to financial statements.
6
<PAGE> 25
Kemper Insured Corporate Trust
Series 5
Notes to Financial Statements
1. SIGNIFICANT ACCOUNTING POLICIES
VALUATION OF SECURITIES
Corporate Securities and the zero coupon obligation 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 Securities are determined by the Evaluator based on (a) current bid prices
of the Securities, (b) current bid prices for comparable securities, (c)
appraisal, or (d) any combination of the above. (See Note 5 -- Insurance.)
COST OF SECURITIES
Cost of the Trust's Securities is based on the offering prices of the
Securities on the dates of deposit of such Securities acquired during the
primary sales period, plus amortization of original issue discount and market
discount or premium for zero coupon obligations. The premium or discount for
the fixed rate obligations is not being amortized. Realized gain (loss) from
Security transactions is reported on an identified cost basis.
INVESTMENT INCOME
Interest income consists of amortization of original issue discount and market
discount or premium on the zero coupon obligation and interest accrued as
earned on the fixed rate obligations.
2. UNREALIZED APPRECIATION AND DEPRECIATION
Following is an analysis of net unrealized appreciation at December 31, 1993:
<TABLE>
<S> <C>
Gross unrealized appreciation $2,546,630
Gross unrealized depreciation --
----------
Net unrealized appreciation $2,546,630
----------
----------
</TABLE>
7
<PAGE> 26
Kemper Insured Corporate Trust
Series 5
Notes to Financial Statements (continued)
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.
Payments to the Trustee included Trustee fees at an annual rate of $.91 and
$.51 under the monthly and semiannual distribution options, respectively, per
$1,000 principal amount of underlying Securities in the Trust through December
31, 1993, calculated monthly, based on the largest aggregate principal amount
of Securities in the Trust at any time during the monthly or semiannual period
and reimbursement of out-of-pocket expenses at an annual rate of $.17 and $.02
per 1,000 Units under the monthly and semiannual distribution options,
respectively, through December 31, 1993, calculated monthly, based on the
largest number of Trust Units outstanding at any time during the monthly or
semiannual period.
The annual Evaluator's fee and portfolio surveillance fee, calculated
monthly, are $.30 and $.25, respectively, per $1,000 principal amount of
Securities in the Trust based on the largest aggregate principal amount of
Securities in the Trust at any time during the month.
4. FEDERAL INCOME TAXES
The Trust is not an association taxable as a corporation for federal 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 Securities on the date of an investor's purchase, plus or
minus a pro rata share of cash or overdraft in the Principal Account and
accrued interest, plus a sales charge of 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 prices of the
Securities plus or minus a pro rata share of cash or overdraft in the Principal
Account and accrued interest, if any, on the date of an investor's purchase,
plus a sales charge of 5.5% of the Public Offering Price (equivalent to 5.820%
of the net amount invested).
8
<PAGE> 27
Kemper Insured Corporate Trust
Series 5
Notes to Financial Statements (continued)
5. OTHER INFORMATION (CONTINUED)
INSURANCE
Insurance guaranteeing the payment of all principal and interest on the
corporate Bonds in the portfolio has been obtained from an independent company
by the issuer of the Bonds involved or by the Trust's sponsor. Insurance
obtained by the Trust's sponsor or 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.
DISTRIBUTIONS
Distributions of net investment income to Unitholders are declared and paid in
accordance with the option (monthly or semiannual) selected by the investor.
Such income distributions, on a record date basis, are as follows:
<TABLE>
<CAPTION>
YEAR ENDED PERIOD FROM FEBRUARY 26, 1992
DECEMBER 31, 1993 TO DECEMBER 31, 1992
DISTRIBUTION -------------------------------------------------------------------------------
PLAN PER 1,000 UNITS TOTAL PER 1,000 UNITS TOTAL
-------------- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Monthly $77.87 $2,888,620 $35.82 $1,196,622
Semiannual 82.58 921,358 11.03 110,022
---------- ----------
$3,809,978 $1,306,644
---------- ----------
---------- ----------
</TABLE>
In addition, the Trust redeemed Units with proceeds from the sale of Bonds as
follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31, 1993
--------------------
<S> <C>
Principal portion $518,400
Net interest accrued 6,600
--------
$525,000
--------
--------
Units 600,000
--------
--------
</TABLE>
9
<PAGE> 28
Kemper Insured Corporate Trust
Series 5
Notes to Financial Statements (continued)
5. OTHER INFORMATION (CONTINUED)
Selected data per 1,000 Units of the Trust outstanding during each period --
<TABLE>
<CAPTION>
MONTHLY SEMIANNUAL
---------------------------------------------------------------------------
PERIOD FROM PERIOD FROM
FEBRUARY 26, FEBRUARY 26,
YEAR ENDED 1992 TO YEAR ENDED 1992 TO
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1993 1992 1993 1992
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment income -- interest $ 76.36 $ 68.22 $ 76.36 $ 68.22
Expenses 1.69 1.38 1.17 .95
---------------------------------------------------------------------------
Net investment income 74.67 66.84 75.19 67.27
Distributions to Unitholders:
Net investment income (77.87) (35.82) (82.58) (11.03)
Principal from investment transactions (171.12) (12.58) (171.12) (3.87)
---------------------------------------------------------------------------
Total distributions to Unitholders (248.99) (48.40) (253.70) (14.90)
Net gain on investments 30.35 45.61 30.35 45.61
---------------------------------------------------------------------------
Change in net asset value (143.97) 64.05 (148.16) 97.98
Net asset value:
Beginning of the period 1,021.05 957.00* 1,054.98 957.00*
---------------------------------------------------------------------------
End of the period, including distributable funds $ 877.08 $1,021.05 $ 906.82 $1,054.98
---------------------------------------------------------------------------
---------------------------------------------------------------------------
</TABLE>
* Value at Date of Initial Deposit (February 26, 1992).
10
<PAGE> 29
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Independent
Auditors" and to the use of our report dated April 15, 1994, in this
Post-Effective Amendment to the Registration Statement (Form S-6) and related
Prospectus of Kemper Insured Corporate Trust Series 5 dated April 29, 1994.
/s/ ERNST & YOUNG
ERNST & YOUNG
Kansas City, Missouri
April 29, 1994
<PAGE> 30
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> 31
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, The
Registrant, Kemper Insured Corporate Trust, Series 4 and Series 5, 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 28th day of April, 1994.
KEMPER INSURED CORPORATE TRUST,
SERIES 4 AND SERIES 5
Registrant
By: Kemper Unit Investment Trusts
(a service of Kemper Securities,
Inc.)
Depositor
By /s/ C. Perry Moore
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 April 28,
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
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).
