File No. 33-46376 CIK #885006
Securities and Exchange Commission
Washington, D. C. 20549
Post-Effective
Amendment No. 5
to
Form S-6
For Registration under the Securities Act of 1933 of
Securities of Unit Investment Trusts Registered on
Form N-8B-2
The Kansas Tax-Exempt Trust, Series 51
(Exact Name of Trust)
RANSON & ASSOCIATES, INC.
(Exact Name of Depositor)
120 South Market Street, Suite 450
Wichita, Kansas 67202
(Complete address of Depositor's principal executive offices)
Ranson & Associates, Inc. Chapman and Cutler
Attn: John A. Ranson Attention: Mark J. Kneedy
120 South Market Street, Suite 450 111 West Monroe Street
Wichita, Kansas 67202 Chicago, Illinois 60603
(Name and complete address of agents for service)
( X ) Check if it is proposed that this filing will become
effective on August 9, 1996 pursuant to paragraph (b) of Rule 485.
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THE KANSAS TAX-EXEMPT TRUST, SERIES 51
SUMMARY OF ESSENTIAL FINANCIAL INFORMATION
AS OF JULY 16, 1996
SPONSOR AND EVALUATOR: RANSON & ASSOCIATES, INC.
TRUSTEE: INVESTORS FIDUCIARY TRUST COMPANY, KANSAS CITY, MISSOURI
<S> <C>
GENERAL INFORMATION
Principal Amount of Municipal Bonds $ 2,670,000
Number of Units 3,180
Fractional Undivided Interest in the Trust per Unit 1 / 3,180
Principal Amount of Municipal Bonds per Unit $ 839.62
Public Offering Price:
Aggregate Bid Price of Municipal Bonds in the Portfolio $ 2,788,629
Aggregate Bid Price of Municipal Bonds per Unit $ 876.93
Cash per Unit(1) $ --
Sales Charge 5.82% (5.50% of the Public Offering Price) $ 51.04
Public Offering Price per Unit (exclusive of accrued interest)(2) $ 927.97
Redemption Price per Unit (exclusive of accrued interest) $ 876.93
Excess of Public Offering Price per Unit Over Redemption Price per Unit $ 51.04
Minimum Value of the Trust under which Trust Agreement may be terminated $ 600,000
Original Date of Deposit: April 16, 1992
Mandatory Termination Date: December 31, 2042
Evaluations for purpose of sale, purchase or redemption of Units are made
as of 4:00 P.M. Central time on days of trading on the New York Stock
Exchange next following receipt of an order for a sale or purchase of
Units or receipt by the Trustee of Units tendered for redemption.
SPECIAL PER UNIT INFORMATION
Calculation of Estimated Net Annual Interest Income per Unit:(3)
Estimated Annual Interest Income $ 56.47
Less: Estimated Annual Expense $ 1.89
Estimated Net Annual Interest Income $ 54.58
Estimated Net Monthly Interest Distribution per Unit $ 4.55
Estimated Daily Rate of Net Interest Accrual per Unit $ .1517
Estimated Current Return Based on Public Offering Price(3) 5.88%
Trustee's Annual Fee $ 1.40 (including expenses) per $1,000 principal
amount of Bonds
Annual Evaluation Fee $.25 per $1,000 principal amount of Bonds
Annual Audit Fee Maximum of $0.50 per Unit
Record and Computation Dates FIFTEENTH day of each month
Distribution Dates FIRST day of each month
</TABLE>
[FN]
(1) This amount, if any, represents principal cash which is an asset of the
Trust and is included in the determination of the Public Offering Price.
(2) Units are offered at the Public Offering Price plus accrued interest to
the date of settlement (three business days after purchase). On July 16, 1996,
there was added to the Public Offering Price of $927.97 accrued interest to
the settlement date of July 19, 1996, of $11.34, for a total price of
$939.31 per Unit.
(3) The Estimated Current Return will vary with changes in the Public
Offering Price and there is no assurance that the Estimated Current Return
on the date hereof will be applicable on a subsequent date of purchase. The
Estimated Current Return is increased for transactions entitled to a reduced
sales charge (see "Estimated Current Return" - Part Two).
PROSPECTUS PART ONE
NOTE: Part One of this Prospectus may not be distributed
unless accompanied by Part Two.
Please retain both parts of this Prospectus for future reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE KANSAS TAX- EXEMPT TRUST
SERIES 51
FINANCIAL STATEMENTS
AND SCHEDULE OF INVESTMENTS
YEARS ENDED APRIL 30, 1996, 1995 AND 1994
WITH
INDEPENDENT AUDITORS' REPORT
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THE KANSAS TAX-EXEMPT TRUST
SERIES 51
FINANCIAL STATEMENTS AND SCHEDULE OF INVESTMENTS
YEARS ENDED APRIL 30, 1996, 1995 AND 1994
TABLE OF CONTENTS
<S> <C>
Page
Independent Auditors' Report 1
Financial Statements:
Statement of Assets and Liabilities 2
Statements of Operations 3
Statements of Changes in Net Assets 4
Schedule of Investments and Notes 5-6
Notes to Financial Statements 7-9
</TABLE>
INDEPENDENT AUDITORS' REPORT
Unitholders
The Kansas Tax-Exempt Trust
Series 51
We have audited the accompanying statement of assets and liabilities of
the Kansas Tax-Exempt Trust, Series 51, including the schedule of
investments, as of April 30, 1996, and the related statements of operations
and changes in net assets for each of the three years in the period ended
April 30, 1996. These financial statements are the responsibility of the
Sponsor's management. 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 securities owned as of April 30, 1996
by correspondence with the Trustee. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of The Kansas Tax-Exempt
Trust, Series 51 as of April 30, 1996 and the results of operations and
changes in net assets for each of the three years in the period ended April
30, 1996, in conformity with generally accepted accounting principles.
ALLEN, GIBBS & HOULIK, L.C.
Wichita, Kansas
August 2, 1996
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<CAPTION>
THE KANSAS TAX-EXEMPT TRUST
SERIES 51
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1996
<S> <C> <C>
ASSETS:
Municipal Bonds, at market value (cost $2,678,533) (Note 1) $2,792,936
Cash 20,438
Accrued interest receivable 39,207
__________
Total assets 2,852,581
__________
LIABILITIES AND NET ASSETS:
Accrued liabilities 4,208
Distributions payable to Unitholders 14,495
________
Total liabilities 18,703
________
Net assets, applicable to 3,180 Units outstanding (Note 5):
Cost of Trust assets, exclusive of interest (Note 1) $2,678,533
Unrealized appreciation (Note 2) 114,403
Distributable funds 40,942
__________ __________
Net assets $2,833,878
__________
__________
Value per Unit (3,180 Units) $ 891
__________
__________
</TABLE>
[FN]
The accompanying notes are an integral part of these financial statements.
2
<TABLE>
<CAPTION>
THE KANSAS TAX-EXEMPT TRUST
SERIES 51
STATEMENTS OF OPERATIONS
YEARS ENDED APRIL 30, 1996, 1995 AND 1994
<S> <C> <C> <C>
1996 1995 1994
__________ ____________ __________
Investment income - interest $ 180,404 $ 193,638 $ 202,946
Expenses (Note 3):
Trustee's fees and related expenses 3,408 3,680 3,889
Evaluator's fees 646 723 749
Audit fees 1,590 1,590 1,585
_________ ________ _________
Total expenses 5,644 5,993 6,233
_________ ________ _________
Investment income - net 174,760 187,645 196,713
_________ ________ _________
Realized and unrealized gain (loss) on investments:
Net realized loss (547) (10,663) (182)
Unrealized appreciation (depreciation) 44,241 (54,890) (87,197)
_________ ________ _________
Net gain (loss) on investments 43,964 (65,553) (87,379)
_________ ________ _________
Net increase in net assets resulting
from operations $218,454 $122,092 $109,334
_________ ________ _________
_________ ________ _________
</TABLE>
[FN]
The accompanying notes are an integral part of these financial statements.
3
<TABLE>
<CAPTION>
THE KANSAS TAX-EXEMPT TRUST
SERIES 51
STATEMENTS OF CHANGES IN NET ASSETS
Years Ended April 30, 1996, 1995, and 1994
<S> <C> <C> <C>
1996 1995 1994
__________ ____________ _____________
Operations:
Net investment income $ 174,760 $ 187,645 $ 196,713
Net realized loss on investments (547) (10,663) (182)
Unrealized appreciation (depreciation)
on investments 44,241 (54,890) (87,197)
_________ _________ ___________
218,454 122,092 109,334
Distributions to Unitholders:
Net investment income (includes accrued
interest to carry on called bonds:
1996-$2,622; 1995-$6,608; 1994-$99) 174,767 194,800 196,538
Principal 15,000 295,575 5,000
_________ _________ ___________
Total increase (decrease) in net assets 28,687 (368,283) (92,204)
Net assets:
At the beginning of the period 2,805,191 3,173,474 3,265,678
_________ _________ ___________
At the end of the period
(including distributable funds
applicable to Trust Units: 1996-
$40,942; 1995-$40,949; 1994-$48,104) $2,833,878 $2,805,191 $3,173,474
_________ _________ ___________
_________ _________ ___________
Trust Units outstanding at the end of the period 3,180 3,180 3,180
_________ _________ ___________
_________ _________ ___________
</TABLE>
[FN]
The accompanying notes are an integral part of these financial statements.
4
<TABLE>
THE KANSAS TAX-EXEMPT TRUST
SERIES 51
SCHEDULE OF INVESTMENTS
April 30, 1996
<CAPTION>
NAME OF ISSUER,
AGGREGATE COUPON RATE AND REDEMPTION MARKET
PRINCIPAL(4) MATURITY DATE RATING(1) PROVISIONS(2) VALUE(3)
_________________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
$ 325,000 Unified School District No. 437, Shawnee County, Kansas AAA 1999 @ 100 $ 348,146
(Auburn-Washburn) General Obligation Refunding Bonds,
Series 1992, (FGIC Insured) 6.60% Due 9/1/2009
650,000 CSJ Health System of Wichita, Inc. Revenue Bonds, A 2001 @ 102 680,543
(Remarketing) Series XXV 1985, 7.20% Due 10/1/2015
350,000 City of Wichita, Kansas, Hospital Facilities Improvement AAA 2002 @ 102 366,672
and Refunding Revenue Bonds, Series III-A-3, 1992 (St. 2006 @ 100 S.F.
Francis Regional Medical Center, Inc.) (MBIA Insured)
6.25% Due 10/1/2010
40,000 Cowley County, Kansas and Shawnee County, Kansas AAA 2000 @ 18.83 5,300
GNMA Collateralized Mortgage Revenue Bonds, 1990 2012 @ 48.01 S.F.
Series B (AMBAC Insured), 0.00% Due 6/1/2022(5)
75,000 City of Kansas City, Kansas, Utility System Refunding and AAA 2002 @ 100 77,024
Improvement Revenue Bonds, Series 1992 (AMBAC Insured), 2007 @ 100 S.F.
6.30% Due 9/1/2016
185,000 City of Kansas City, Kansas, GNMA Collateralized Mortgage AAA 2001 @ 103 191,510
Revenue Bonds, Series 1991, 7.35% Due 12/1/2023 2015 @ 100 S.F.
400,000 State of Kansas, Department of Transportation Highway AA 2002 @ 102 428,757
Revenue Bonds, Series 1992, 6.50% Due 3/1/2012 2010 @ 100 S.F.
650,000 City of Burlington, Kansas, Pollution Control Refunding AAA 2001 @ 102 694,984
Revenue Bonds, Series 1991 (Kansas Gas and Electric Company)
(MBIA Insured), 7.00% Due 6/1/2031
___________ __________
$2,675,000 $2,792,936
___________ __________
___________ __________
</TABLE>
[FN]
See accompanying notes to schedule of investments.
The accompanying notes are an integral part of these financial statements.
5
THE KANSAS TAX-EXEMPT TRUST
SERIES 51
NOTES TO SCHEDULE OF INVESTMENTS
1 All ratings are by Standard & Poor's Corporation as of April 30, 1996.
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 in 1996. Unless otherwise
indicated, each issue continues to be redeemable at declining prices
thereafter, but not below par value. "SF" indicates a sinking fund is
established with respect to an issue of Bonds. In addition, certain Bonds
in the trust portfolio may be redeemed in whole or in part other than by
operation of the stated redemption or sinking fund provisions under certain
unusual or extraordinary circumstances specified in the instruments setting
forth the terms and provisions of such bonds. Redemption pursuant to call
provisions generally will, and redemption pursuant to sinking fund provisions
may, occur at times when the redeemed Bonds have a valuation which represents
a premium over the call price or par.
To the extent that the Bonds were deposited in the Trust at a price
higher than the price at which they are redeemed, this will represent a loss
of capital when compared with the original Public Offering Price of the Units.
Conversely, to the extent that the Bonds were acquired at a price lower than
the redemption price, this will represent an increase in capital when
compared with the original Public Offering Price of the Units. Distributions
of net income will generally be reduced by the amount of the income which
would otherwise have been paid with respect to redeemed Bonds and, unless
utilized to pay for Units tendered for redemption, there will be distributed
to Unitholders the principal amount and any premium received on such
redemption. The estimated current return in this event may be affected by
such redemptions.
3 See Note 1 to the accompanying financial statements for a description of
the method of determining cost and market value.
4 At April 30, 1996, the Portfolio of the Trust consists of 8 issues of
Bonds. One of the issues in the Trust is a general obligation of the
governmental entity issuing it or is backed by the taxing power thereof,
representing 12% of principal amount to total Trust. The remaining issues
are payable directly or indirectly from the income of a specific project or
authority and are not supported by the issuer's power to levy taxes. All
the issuer's of the Bonds in the Trust are located in the State of Kansas,
divided by source of revenue (and percentage of principal amount to total
Trust) as follows: Single Family Housing, 2(9%); Utility, 2(27%);
Hospital, 2(37%); and Miscellaneous, 2(27%).
5 This Bond has been purchased at a discount from the par value because
there is no stated interest income thereon. Such bonds are normally described
as "zero coupon" bonds. Over the life of such bonds the value increases such
that upon maturity the holders of such bonds will receive 100% of the principal
amount thereof. Approximately 1% of the aggregate principal amount of the
Bonds in the Trust are "zero coupon" bonds.
The accompanying notes are an integral part of these financial statements.
6
THE KANSAS TAX-EXEMPT TRUST
SERIES 51
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Entity - The Trust is one of a series of unit investment trusts created
under the laws of the State of Missouri pursuant to a Trust Indenture and
Agreement (the "Agreement") dated April 16, 1992, and is registered under
the Investment Company Act of 1940.
Valuation of Municipal Bonds - Municipal Bonds (Bonds) are stated at bid
prices as determined by Ranson & Associates, Inc. (the "Evaluator"). The
aggregate bid prices of the Bonds are determined by the Evaluator based on
(a) current bid prices of the Bonds, (b) current bid prices for comparable
bonds, (c) appraisal, or (d) any combination of the above.
Cost of Municipal Bonds - Cost of the Trust's Bonds was based on the
offering prices of the Bonds on April 16, 1992 (Date of Deposit). The
premium or discount (including any original issue discount) existing at
April 16, 1992, is not being amortized. Realized gain (loss) from Bond
transactions is reported on an identified cost basis.
2. UNREALIZED APPRECIATION
An analysis of net unrealized appreciation at April 30, 1996, follows:
Gross unrealized appreciation $ 114,634
Gross unrealized depreciation (231)
________
$ 114,403
________
________
3. EXPENSES OF THE TRUST
The Evaluator receives an annual fee of $.25 per $1,000 principal amount
of the underlying Bonds in the portfolio of the Trust based on the largest
aggregate amount of Bonds in the Trust at any time during such period. The
Trustee receives for ordinary services an annual fee from the Trust of
$1.40 per $1,000 of principal amount of bonds based on the largest
aggregate amount of Bonds in the Trust at any time during such period. The
Indenture provides for the Trust to be audited on an annual basis at the
expense of the Trust by independent public accountants selected by the
Sponsor. The audit fee paid by the Trust shall not exceed $.50 per Unit on
an annual basis.
4. FEDERAL INCOME TAXES
The Trust is not taxable for Federal income tax purposes. Each Unitholder
is considered to be the owner of a pro rata portion of the Trust and,
accordingly, no provision has been made for Federal income taxes.
(continued)
7
THE KANSAS TAX-EXEMPT TRUST
SERIES 51
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
5. OTHER INFORMATION
Cost to investors - The cost to initial investors of Units of the Trust
was based on the aggregate offering price of the Bonds on the date of an
investor's purchase, plus a sales charge of 5.50% of the Public Offering
Price (equivalent to 5.82% of the net amount invested). The Public
Offering Price for secondary market transactions is based on the aggregate
bid price of the Bonds plus or minus a pro rata share of cash or overdraft
in the Principal Account, if any, on the date of an investor's purchase,
plus a sales charge of 5.50% of the Public Offering Price (equivalent to
5.82% of the net amount invested.)
A reconciliation of the original cost of units to investors to the net
amount applicable to investors as of April 30, 1996, is set forth below:
Original cost to investors $ 3,005,988
Less cost of securities sold or redeemed since
date of deposit (327,455)
Net unrealized appreciation of securities 114,403
_____________
Net amount applicable to investors $ 2,792,936
_____________
_____________
Distributions - Distributions of net interest income to Unitholders are
declared on the 15th of each month and paid on the 1st day of the
succeeding month. An initial distribution to investors of $1.80 per Unit
was paid on August 1, 1992. An aggregate distribution of $4,513 ($1.42
per unit) was distributed to the Sponsor of the Trust representing interest
income from the Date of Deposit to April 24, 1992 (first settlement date).
Redemptions - Units tendered for redemption are redeemed at a price
determined on the basis of bid prices of the securities of the Trust.
No units were redeemed in 1996, 1995 or 1994.
Investment transactions - Proceeds from the sale or call of municipal bonds
were $15,000, $295,575 and $5,000 for 1996, 1995 and 1994, respectively.
(continued)
8
THE KANSAS TAX-EXEMPT TRUST
SERIES 51
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
5. OTHER INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
Selected data for a Unit of the Trust outstanding for each period -
<S> <C> <C> <C>
1996 1995 1994
__________ ____________ ____________
Investment income - interest $ 56.73 $ 60.89 $ 63.82
Expenses 1.77 1.88 1.96
________ ________ ________
Investment income - net 54.96 59.01 61.86
Distributions to Unitholders:
Investment income - net (54.96) (61.26) (61.80)
Principal (4.72) (92.25) (1.57)
Net gain (loss) on investments 13.74 (20.61) (27.48)
________ ________ ________
Increase (decrease) in net asset value 9.02 (115.81) (28.99)
Net asset value:
Beginning of each period 882.14 997.95 1,026.94
________ ________ __________
End of each period, including
distributable funds $891.16 $882.14 $997.95
________ ________ ________
________ ________ ________
</TABLE>
9
CONSENT OF ALLEN, GIBBS & HOULIK, L.C., INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Legal and Auditing
Matters" and to the use of our report dated August 2, 1996 in this Post-
Effective Amendment No. 5 to the Registration Statement (Form S-6 No. 33-
46376) and related Prospectus of The Kansas Tax-Exempt Trust, Series 51.
ALLEN, GIBBS & HOULIK, L.C.
Wichita, Kansas
August 2, 1996
THIS PROSPECTUS MAY BE USED ONLY WHEN ACCOMPANIED BY PART ONE.
BOTH PARTS OF THIS PROSPECTUS SHOULD BE
RETAINED FOR FUTURE REFERENCE.
PROSPECTUS PART TWO
THE KANSAS TAX-EXEMPT TRUST
Available Only to Kansas Residents
THE TRUST. The Trust consists of a portfolio comprised of interest
bearing obligations issued by or on behalf of municipalities or other
governmental authorities in the State of Kansas (the "Bonds" or "Securities").
In the opinion of counsel, interest income to the Trust and to
Certificateholders, with certain exceptions, is exempt under existing law from
Federal and Kansas state income taxes and local Kansas intangible personal
property taxes, but may be subject to the Federal alternative minimum tax and
other state and local taxes. Capital gains, if any, are subject to tax. The
objectives of the Trust include (1) interest income which is exempt from
Federal income taxes, Kansas state income taxes and intangible personal
property taxes levied by Kansas counties, cities and townships, (2)
conservation of capital, and (3) liquidity of investment (see "Objectives of
the Trust"). For a listing of any Bonds subject to the federal alternative
minimum tax see Part One of this Prospectus. The payment of interest and the
preservation of capital are dependent
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is that date as set forth in Part One of this
Prospectus.
RANSON & ASSOCIATES, INC.
Sponsor
upon the continuing ability of the issuers and/or obligors of the Bonds to
meet their respective obligations. Certain of the Bonds are obligations which
derive their payment from mortgage loans. A substantial portion of such bonds
will probably be redeemed prior to their scheduled maturities; any such early
redemption will reduce the aggregate principal amount of the Trust and may
also affect the Estimated Long-Term Return and the Estimated Current Return.
There is no assurance that the Trust's objectives will be met. The Sponsor of
the Trust is Ranson & Associates, Inc., Suite 450, 120 South Market Street,
Wichita, Kansas 67202.
PUBLIC OFFERING PRICE. The secondary market Public Offering Price will
be equal to the aggregate bid price of the Bonds in the portfolio of the Trust
divided by the number of Units outstanding, plus a sales charge as set forth
in Part One of this Prospectus under "Summary of Essential Financial
Information." If the Bonds in the Trust were available for direct purchase by
investors, the purchase price of the Bonds would not include the sales charge
included in the Public Offering Price of the Units. See "Public Offering
Information." In addition, the Public Offering Price will have added to it
the proportionate share of accrued and undistributed interest to the date of
settlement (five business days after order). See "Accrued Interest to Carry."
The value of the Bonds will fluctuate with market and credit conditions,
including any changes in interest rate levels.
THE UNITS. Each Unit represents a fractional undivided interest in the
principal and net income of the Trust. The minimum purchase is one Unit.
DISTRIBUTIONS. Distributions of interest received by the Trust will be
made on a monthly basis (prorated on an annual basis) on the first day of each
month to holders of record on the fifteenth day of the preceding month.
Distributions of funds in the Principal Account, if any, will also be made
monthly on the first day of each month to holders of record on the fifteenth
day of the preceding month. See "Distribution of Interest and Principal."
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. The estimated net annual
interest income per Unit will vary with any changes in fees and expenses of
the Trustee and the Evaluator and with the principal prepayment, redemption,
maturity, exchange or sale of the Bonds. The Public Offering Price will vary
with any changes in the bid prices of the underlying Bonds. There is,
therefore, no assurance that the Estimated Current Return will be realized in
the future. The Estimated Long-Term Return is calculated using a formula
which (1) takes into consideration, and determines and factors in the relative
weightings of, the market values, yields (which takes into account the
amortization of premiums and the accretion of discounts) and 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 retirements 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. The Estimated Current Return and Estimated
Long-Term Return are expected to differ because the calculation of the
Estimated Long-Term Return reflects the estimated date and amount of principal
returned while the Estimated Current Return calculation includes only net
annual interest income and Public Offering Price.
REDEMPTION AND MARKET FOR UNITS. A Certificateholder may redeem Units
at the office of the Trustee, Investors Fiduciary Trust Company (see "Trustee
Information"), at prices based upon the bid prices of the Bonds. In addition,
although not obligated to do so, the Sponsor intends to maintain a secondary
market for the Units at prices based upon the aggregate bid price of the Bonds
in the portfolio of the Trust (see "Redemption and Repurchase of Units").
SUMMARY OF THE TRUST
Each series of The Kansas Tax-Exempt Trust (the "Trust") is one of a
series of unit investment trusts created under the laws of the State of Kansas
or Missouri pursuant to a Trust Indenture and Agreement (the "Indenture")
between Ranson & Associates, Inc., as Sponsor, and Investors Fiduciary Trust
Company, as Trustee.
The Trust consists of a portfolio of interest bearing obligations
issued by or on behalf of the State of Kansas and political subdivisions,
municipalities and authorities thereof, the interest on which is excludable,
in the opinion of recognized bond counsel, from federal gross income, and is
exempt from Kansas state income tax (to Kansas residents) and local Kansas
intangible personal property taxes. However, in the case of corporations,
interest on certain obligations held by the Trust may be subject to the
alternative minimum tax for federal income tax purposes. See "Tax Status
(Federal, State, Capital Gains)." An investment in the Trust should be made
with an understanding of the risks associated with an investment in such
obligations. Fluctuations in interest rates may cause corresponding
fluctuations in the value of the Bonds in the portfolio. The Sponsor cannot
predict whether the value of the Bonds in the portfolio will increase or
decrease.
Each Unit offered represents that fractional undivided interest in the
Trust indicated under "Summary of Essential Financial Information" in Part One
of this Prospectus. To the extent that any Units are redeemed by the Trustee,
the fractional undivided interest in the Trust represented by each unredeemed
Unit will increase, although the actual interest in the Trust represented by
such fraction will remain unchanged. Units in the Trust will remain
outstanding until redeemed upon tender to the Trustee by Certificateholders,
which may include the Sponsor, or until the termination of the Indenture.
The Indenture may be amended at any time by consent of Certificateholders
representing at least 51% of the Units of the Trust then outstanding. The
Indenture may also be amended by the Trustee and the Sponsor without the
consent of any of the Certificateholders (1) to cure any ambiguity or to
correct or supplement any provision thereof which may be defective or
inconsistent, or (2) to make such other provisions as shall not adversely
affect the interest of the Certificateholders, provided, however, that the
Indenture may not be amended to increase the number of Units issuable
thereunder or to permit the deposit or acquisition of bonds either in addition
to, or in substitution for any of the Bonds initially deposited in the Trust
except in connection with the substitution of refunding bonds under certain
circumstances. The Trustee shall advise the Certificateholders of any
amendment promptly after the execution thereof.
The Trust may be terminated at any time by consent of Certificateholders
representing at least 51% of the Units of the Trust then outstanding or by
the Trustee when the value of the Trust, as shown by any semi-annual
evaluation, is less than 20% of the original principal amount of the Trust.
The Indenture will terminate upon the redemption, sale or other disposition of
the last Bond held in the Trust, but in no event shall it continue beyond the
end of the calendar year preceding the fiftieth anniversary of its execution.
Written notice of any termination specifying the time or times at which
Certificateholders may surrender their certificates for cancellation shall be
given by the Trustee to each Certificateholder at the address appearing on the
registration books of the Trust maintained by the Trustee. The Trustee will
begin to liquidate any Bonds held in the Trust within a reasonable period of
time from said notification and shall deduct from the proceeds any accrued
costs, expenses or indemnities provided by the Indenture, including any
compensation due the Trustee, any costs of liquidation and any amounts
required for payment of any applicable taxes, governmental charges or final
operating costs of the Trust.
The Trustee shall then distribute to Certificateholders their pro rata
shares of the remaining balances in the Principal and Interest Accounts
together with a final distribution statement which will be in substantially
the same form as the annual distribution statement (see "Other Rights of
Certificateholders"). Any amount held by the Trustee in any reserve account
will be distributed when the Trustee determines the reserve is no longer
necessary in the same manner as the final distribution from the Principal and
Interest Accounts (see "Distribution of Interest and Principal").
The Sponsor and the Trustee shall be under no liability to Certificateholders
for taking any action or for refraining from any action in good faith pursuant
to the Indenture, or for errors in judgment, but shall be liable only for
their own negligence, lack of good faith or willful misconduct. The Trustee
shall not be liable for depreciation or loss incurred by reason of the sale by
the Trustee of any of the Bonds. In the event of the failure of the Sponsor
to act under the Indenture, the Trustee may act thereunder and shall not be
liable for any action taken by it in good faith under the Indenture.
The Trustee shall not be liable for any taxes or other governmental
charges imposed upon or in respect of the Bonds or upon the interest thereon
or upon it as Trustee under the Indenture or upon or in respect of the Trust
which the Trustee may be required to pay under any present or future law of
the United States of America or of any other taxing authority having
jurisdiction.
Certain of the Bonds in the Trust may be "zero coupon" bonds. Zero
coupon bonds are purchased at a deep discount because the buyer receives only
the right to receive a final payment at the maturity of the bond and does not
receive any periodic interest payments. The effect of owning deep discount
bonds which do not make current interest payments (such as the zero coupon
bonds) is that a fixed yield is earned not only on the original investment but
also, in effect, on all discount earned during the life of such obligation.
This implicit reinvestment of earnings at the same rate eliminates the risk of
being unable to reinvest the income on such obligation at a rate as high as
the implicit yield on the discount obligation, but at the same time eliminates
the holder's ability to reinvest at higher rates in the future. For this
reason, zero coupon bonds are subject to substantially greater price
fluctuations during periods of changing market interest rates than are
securities of comparable quality which pay interest currently. See "Notes to
Trust Portfolio" in Part One of this Prospectus.
DESCRIPTION OF TRUST PORTFOLIO
PORTFOLIO. Since the Trust invests substantially all of its assets in
Kansas municipal securities, the Trust is susceptible to political and
economic factors affecting issuers of Kansas municipal securities. As of
1991, 2,494,566 people lived in Kansas, representing a .69% increase over the
1990 census. Based on these numbers, Kansas ranked thirty-second in the
nation in population size. According to the Kansas Department of Commerce, in
1991 Kansas ranked twenty-first in the nation in terms of per capita income.
Historically, agriculture and mining constituted the principal industries in
Kansas. Since the 1950's, however, manufacturing, governmental services and
the services industry have steadily grown and as of 1993 approximately 15.7%
of Kansas workers were in the manufacturing sector, 23.3% in the services
sector (not including transportation, public utilities, trade, finance,
insurance, and real estate) and 20.8% in the government sector, while the
farming and mining sectors combine for 5.0% of the work force. The 1992
unemployment rate was 4.2%. By constitutional mandate, Kansas must operate
within a balanced budget and public debt may only be incurred for
extraordinary purposes and then only to a maximum of $1 million. As of April
30, 1993, the State of Kansas had no general obligation bonds outstanding.
Certain of the Bonds in the Trust may be obligations which derive their
payment from mortgage loans. Included among these Bonds may be single family
mortgage revenue bonds issued for the purpose of acquiring from originating
financial institutions notes secured by mortgages on residences located within
the issuer's boundaries and owned by persons of low or moderate income. In
view of this an investment in the Trust should be made with an understanding
of the characteristics of such issuers and the risks which such an investment
may entail. Mortgage loans are generally partially or completely prepaid
prior to their final maturities as a result of events such as sale of the
mortgaged premises, default, condemnation or casualty loss. Because these
bonds are subject to extraordinary mandatory redemption in whole or in part
from such prepayments on mortgage loans, a substantial portion of such bonds
will probably be redeemed prior to their scheduled maturities or even prior to
their ordinary call dates. Extraordinary mandatory redemption without premium
could also result from the failure of the originating financial institutions
to make mortgage loans in sufficient amounts within a specified time period.
Additionally, unusually high rates of default on the underlying mortgage loans
may reduce revenues available for the payment of principal of or interest on
such mortgage revenue bonds. These bonds were issued under Section 103A of
the Internal Revenue Code which Section contains certain requirements relating
to the use of the proceeds of such bonds in order for the interest on such
bonds to retain its tax-exempt status. In each case the issuer of the bonds
has covenanted to comply with applicable requirements and bond counsel to such
issuer has issued an opinion that the interest on the bonds is exempt from
federal income tax under existing laws and regulations. Certain issuers of
housing bonds have considered various ways to redeem bonds they have issued
prior to the stated first redemption dates for such bonds. In one situation
an issuer, in reliance on its interpretation of certain language in the
indenture under which one of its bond issues was created, redeemed all of such
issue at par in spite of the fact that such indenture provided that the first
optional redemption was to include a premium over par and could not occur
prior to 1992. In connection with the housing bonds held by the Trust, the
Sponsor at the date of this Prospectus is not aware that any of the respective
issuers of such Bonds are actively considering the redemption of such Bonds
prior to their respective stated initial call dates. For a general discussion
of the effects of Bond prepayments and redemptions on Certificateholders who
acquired Units at a time when such Bonds were valued in excess of the
principal amount or redemption price of such Bonds, see "General" below. For
a general discussion of the effects of Bond prepayments and redemptions on
Certificateholders who acquired Units at a time when such Bonds were valued in
excess of the principal amount or redemption price of such Bonds, see "Bond
Redemptions" below.
Certain of the Bonds in the Trust are hospital revenue bonds. In view
of this, an investment in the Trust should be made with an understanding of
the characteristics of such issuers and the risks which such an investment may
entail. Ratings of bonds issued for health care facilities are often based on
feasibility studies that contain projections of occupancy levels, revenues and
expenses. A facility's gross receipts and net income available for debt
service will be affected by future events and conditions including, among
other things, demand for services and the ability of the facility to provide
the services required, physicians' confidence in the facility, management
capabilities, economic developments in the service area, competition, efforts
by insurers and governmental agencies to limit rates, legislation establishing
state rate-setting agencies, expenses, the cost and possible unavailability of
malpractice insurance, the funding of Medicare, Medicaid and other similar
third party payor programs, and government regulation. Pursuant to recent
Federal legislation, Medicare reimbursements are currently calculated on a
prospective basis utilizing a single nationwide schedule of rates. Prior to
such legislation, Medicare reimbursements were based on the actual costs
incurred by the health facility. The current legislation may adversely affect
reimbursements to hospitals and other facilities for services provided under
the Medicare program. Such adverse changes also may adversely affect the
ratings of the Bonds held in the portfolio of the Trust.
Certain of the Bonds in the Trust may be obligations whose revenues are
primarily derived from the sale of electric energy. Utilities are generally
subject to extensive regulation by state utility commissions which, among
other things, establish the rates which may be charged and the appropriate
rate of Return on an approved asset base. The problems faced by such issuers
include the difficulty in obtaining approval for timely and adequate rate
increases from the governing public utility commission, the difficulty in
financing large construction programs, the limitations on operations and
increased costs and delays attributable to environmental considerations,
increased competition, recent reductions in estimates of future demand for
electricity in certain areas of the country, the difficulty of the capital
market 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 item review existing and impose additional regulations governing the
licensing, construction and operation of nuclear power plants, which may
adversely affect the ability of the issuers of such Bonds to make payments of
principal and/or interest on such Bonds.
Certain of the Bonds in the Trust may be transportation revenue bonds.
Payment on such bonds is dependent on revenues from projects such as tolls on
turnpikes. Therefore, payment may be adversely affected by a reduction in
revenues due to such factors as competition from toll-free vehicular bridges
and roads, increased cost of maintenance, lower cost of alternative modes of
transportation and a reduction in the availability of fuel to motorists or
significant increases in the costs thereof.
Certain of the Bonds in the Trust may be obligations which derive their
payment primarily or solely by revenues from the ownership and operation of
particular facilities, such as correctional facilities, parking facilities,
convention centers, arenas, museums and other facilities owned or used by a
charitable entity. Payment on bonds related to such facilities is, therefore,
primarily or solely dependent on revenues from such projects, including user
fees charges and rents. Such revenues may be affected adversely by increased
construction and maintenance costs or taxes, decreased use, competition from
alternative facilities, reduction or loss of rents or the impact of
environmental considerations.
BOND REDEMPTIONS Because certain of the Bonds in the 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 Certificateholders and will not be reinvested, no assurance can
be given that the 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 has no power
to vary the investments of the Trust, i.e., the Trustee has no managerial
power to take advantage of market variations to improve a Certificateholder's
investment.
Certain of the Bonds in the Trust are subject to redemption prior to
their stated maturity date pursuant to sinking fund provisions, call
provisions or extraordinary optional or mandatory redemption provisions. A
sinking fund is a reserve fund accumulated over a period of time for
retirement of debt. A callable debt obligation is one which is subject to
redemption or refunding prior to maturity at the option of issuer. A
refunding is a method by which a debt obligation is redeemed, at or before
maturity, by the proceeds of a new debt obligation. In general, call
provisions are more likely to be exercised when the offering side valuation is
at a premium over par than when it is at a discount from par. The portfolio
in Part One of this Prospectus contains a listing of the sinking fund and call
provisions, if any, with respect to each of the debt obligations.
Extraordinary optional redemptions and mandatory redemptions result from the
happening of certain events. Generally, events that may permit the
extraordinary optional redemption of Bonds or may require the mandatory
redemption of Bonds include, among others: a final determination that the
interest on the Bonds is taxable; the substantial damage or destruction by
fire or other casualty of the project for which the proceeds of the Bonds were
used; an exercise by a local, state or federal governmental unit of its power
of eminent domain to take all or substantially all of the project for which
the proceeds of the Bonds were used; changes in the economic availability of
raw materials, operating supplies or facilities or technological or other
changes which render the operation of the project for which the proceeds of
the Bonds were used uneconomic; changes in law or an administrative or
judicial decree which renders the performance of the agreement under which the
proceeds of the Bonds were made available to finance the project impossible or
which creates unreasonable burdens or which imposes excessive liabilities,
such as taxes, not imposed on the date the Bonds are issued on the issuer of
the Bonds or the user of the proceeds of the Bonds; an administrative or
judicial decree requires the cessation of a substantial part of the operations
of the project financed with the proceeds of the Bonds; an overestimate of the
costs of the project to be financed with the proceeds of the Bonds resulting
in excess proceeds of the Bonds which may be applied to redeem Bonds; or an
underestimate of a source of funds securing the Bonds resulting in excess
funds which may be applied to redeem Bonds. See "Trust Portfolio" and "Notes
to Trust Portfolio" in Part One. See also "Portfolio" above for possible
redemptions prior to initial stated call dates. Certain of the Bonds in the
Trust may have been purchased by the Trust at premiums over the par value
(principal amount) of such Bonds (see "Trust Portfolio" in Part One). To the
extent Certificateholders acquire their Units at a time Bonds are valued at a
premium over such par value and such Bonds are subsequently redeemed or
prepaid at par or for less than such valuations, Certificateholders will
likely sustain losses in connection with such redemptions or prepayments. For
the tax effects of Bond redemptions generally, see "Tax Status (Federal,
State, Capital Gains)."
GENERAL. To the best knowledge of the Sponsor there is no litigation
pending as of the date of this Prospectus in respect of any Bonds which might
reasonably be expected to have a material adverse effect upon the Trust. At
any time during the life of the Trust, litigation may be initiated on a
variety of grounds with respect to Bonds in the Trust. Such litigation as,
for example, suits challenging the issuance of pollution control revenue bonds
under environmental protection statutes, may affect the validity of such Bonds
or the tax-free nature of the interest thereon. While the outcome of
litigation of such nature can never be entirely predicted, the Trust has
received opinions of bond counsel to the issuing authorities of each Bond on
the date of issuance to the effect that such Bonds have been validly issued
and that the interest thereon is exempt from Federal income tax. In addition,
other factors may arise from time to time which potentially may impair the
ability of issuers to meet the obligations undertaken with respect to the
Bonds.
OBJECTIVES OF THE TRUST
The Trust has been formed to provide residents of the State of Kansas
interest income which is exempt from federal and Kansas state income taxes and
from local Kansas intangible personal property taxes. In addition, the Trust
also has objectives which include conservation of capital and liquidity of
investment. There is no assurance that the Trust's objectives will be met.
In selecting Bonds for the Trust, the following factors, among others,
were considered by the Sponsor: (a) either the Standard & Poor's Corporation
rating of the Bonds was in no case less than "BBB-" or the Moody's Investors
Service, Inc. rating of the Bonds was in no case less than "Baa3" including
provisional or conditional ratings, respectively, or, if not rated, the Bonds
had, in the opinion of the Sponsor, credit characteristics sufficiently
similar to the credit characteristics of interest-bearing tax-exempt
obligations that were so rated as to be acceptable for acquisition by the
Trust (see "Description of Bond Ratings") and (b) the prices of the Bonds
relative to other bonds of comparable quality and maturity. Medium-quality
Bonds (rated BBB or A by S&P or Baa or A by Moody's) are obligations of
issuers that are considered to possess adequate, but not outstanding,
capacities to service the obligations. Investment in medium-quality debt
securities involves greater investment risk, including the possibility of
issuer default or bankruptcy, than investment in higher-quality debt
securities. An economic downturn could severely disrupt this market and
adversely affect the value of outstanding bonds and the ability of the issuers
to repay principal and interest. During a period of adverse economic changes,
including a period of rising interest rates, issuers of such bonds may
experience difficulty in servicing their principal and interest payment
obligations. Medium-quality debt securities tend to be less marketable than
higher-quality debt securities because the market for them is less broad.
During periods of thin trading in these markets, the spread between bind and
asked prices is likely to increase significantly, and the Trust may have
greater difficulty selling the medium-quality debt securities in its
portfolio. After the creation of the Trust, a Bond may cease to be rated or
its rating may be reduced below such minimum standards. Neither event
requires elimination of such Bond from the portfolio but may be considered in
the Sponsor's determination as to whether or not to direct the Trustee to
dispose of the Bond (see "Trustee Information").
The Trust consists of a portfolio of fixed rate, long term debt obligations.
An investment in the Trust should be made with an understanding of the risks
associated with an investment in such obligations. Fluctuations in interest
rates may cause corresponding fluctuations in the value of the Bonds in the
portfolio. The Sponsor cannot predict whether the value of the Bonds in the
portfolio will increase or decrease.
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. The
estimated net annual interest income per Unit will vary with changes in fees
and expenses of the Trustee and the Evaluator and with the principal
prepayment, redemption, maturity, exchange or sale of Securities while the
Public Offering Price will vary with changes in the offering price of the
underlying Securities; therefore, there is no assurance that the present
Estimated Current Return will be realized in the future. Estimated Long-Term
Return is calculated using a formula which (1) takes into consideration, and
determines and factors in the relative weightings of, the market values,
yields (which takes into account the amortization of premiums and the
accretion of discounts) and estimated retirements of all of the Securities in
the Trust and (2) takes into account the expenses and sales charge associated
with each Trust Unit. Since the market values and estimated retirements of
the Securities and the expenses of the Trust will change, there is no
assurance that the present Estimated Long-Term Return will be realized in the
future. Estimated Current Return and Estimated Long-Term Return are expected
to differ because the calculation of Estimated Long-Term Return reflects the
estimated date and amount of principal returned while the Estimated Current
Return calculation includes only net annual interest income and Public
Offering Price.
PUBLIC OFFERING INFORMATION
Units in the Trust are offered at the Public Offering Price which is
based on the bid prices of the Bonds in the portfolio plus a sales charge set
forth in Part One of this Prospectus under "Summary of Essential Financial
Information" plus accrued and undistributed interest to the settlement date
(five business days after order). Units repurchased in the secondary market
may be offered by this Prospectus at the Public Offering Price in the manner
described herein.
Although payment is normally made five business days following the order for
purchase, payment may be made prior thereto. A person will become the owner
of Units on the date of settlement provided payment has been received. Cash,
if any, made available to the Sponsor prior to the date of settlement for the
purchase of Units may be used in the Sponsor's business and may be deemed to
be a benefit to the Sponsor, subject to the limitations of the Securities
Exchange Act of 1934. Units offered by this Prospectus will be distributed to
the public by the Sponsor and certain dealers. Dealers will be allowed a
concession equal to 3.5% of the Public Offering Price; however, resales of
Units by such dealers to the public will be made at the Public Offering Price.
The Sponsor reserves the right to reject, in whole or in part, any order for
the purchase of Units and to change the amount of the concession to dealers
from time to time. The minimum purchase will be one Unit.
ACCRUED INTEREST TO CARRY
Accrued interest to carry consists of two elements. The first element
arises as a result of accrued interest which is the accumulation of unpaid
interest on a bond from the last day on which interest thereon was paid.
Interest on Bonds in the Trust is paid to the Trustee either monthly or semi-
annually. However, interest on the Bonds in the Trust is accounted for daily
on an accrual basis. Because of this, the Trust always has an amount of
interest earned but not yet collected by the Trustee because of coupons that
are not yet due. For this reason, the Public Offering Price of Units will
have added to it the proportionate share of accrued and undistributed interest
to the date of settlement.
The second element of accrued interest to carry arises because of the
structure of the Interest Account. The Trustee has no cash for distribution
to Certificateholders until it receives interest payments on the Bonds in the
Trust. The Trustee is obligated to advance its own funds, at times, in order
to make interest distributions. The Trustee will recover such advances
without interest or other costs to the Trust from interest payments made on
the Bonds. Interest Account balances are established so that it will not be
necessary on a regular basis for the Trustee to advance its own funds in
connection with such interest distributions. The Interest Account balances
are also structured so that there will generally be positive cash balances and
since the funds held by the Trustee will be used by it to earn interest
thereon, it benefits thereby (see "Expenses of the Trust").
If a Certificateholder sells or redeems all or a portion of his Units
or if the Bonds in the Trust are sold or otherwise removed or if the Trust is
liquidated, he or she will receive at that time his or her proportionate share
of the accrued interest to carry computed to the settlement date in the case
of sale or liquidation and to the date of tender in the case of redemption.
REDEMPTION AND REPURCHASE OF UNITS
Certificateholders may redeem all or a portion of their Units by tender
to the Trustee, at its corporate office in Kansas City, Missouri (see "Trustee
Information"), of the certificates representing Units to be redeemed, duly
endorsed or accompanied by proper instruments of transfer with signature
guaranteed. In order to effect a redemption of Units, Certificateholders must
tender their certificates to the Trustee or provide satisfactory indemnity
required in connection with lost, stolen or destroyed certificates. No
redemption fee will be charged. On the seventh calendar day following such
tender, or if the seventh calendar day is not a business day, on the first
business day prior thereto, the Certificateholder will be entitled to receive
in cash for each Unit tendered an amount equal to the redemption price per
Unit as next computed after receipt by the Trustee of such tender of Units as
determined by the bid price of the Bonds in the Trust on the date of tender
(the "Redemption Price") plus accrued interest to, but not including, the date
of redemption. The price received upon redemption may be more or less than
the amount paid by the Certificateholder depending on the value of the Bonds
on the date of tender. The value of the Bonds will fluctuate with market and
credit conditions, including any changes in interest rate levels.
Accrued interest paid on redemption shall be withdrawn from the Interest
Account or, if the balance therein is insufficient, from the Principal
Account. All other amounts paid on redemption shall be withdrawn from the
Principal Account. In addition, the Trustee is empowered, with certain
recommendations allowed by the Sponsor, to sell Bonds in the portfolio of the
Trust to make funds available for redemption. Units redeemed shall be
cancelled and not be available for reissuance.
The recognized date of tender is deemed to be the date on which Units
are received in proper form by the Trustee prior to 3:00 p.m. Central time.
Units received by the Trustee after 3:00 p.m. will be deemed to have their
recognized date of tender on the next business day on which the New York Stock
Exchange is open for trading and such Units will be deemed to have been
tendered to the Trustee on such day for redemption at the Redemption Price
computed on that day (see "Evaluation of the Trust").
To the extent that Bonds in the portfolio of the Trust are sold to meet
redemptions, the size and diversity of the Trust will be reduced. Such sales
may occur at a time when Bonds might not otherwise be sold which may result in
lower prices received on the Bonds than might be realized under normal trading
conditions.
Under regulations issued by the Internal Revenue Service, the Trustee
will be required to withhold a specified percentage of the principal amount of
a Unit redemption if the Trustee has not been furnished the redeeming
Certificateholder'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 Certificateholder only when filing his or
her tax return. Under normal circumstances the Trustee obtains the
Certificateholder's tax identification number from the selling broker at the
time the certificate is issued, and this number is printed on the certificate
and on distribution statements. If a Certificateholder's tax identification
number does not appear on the certificate or statements, or if it is
incorrect, the Certificateholder should contact the Trustee before presenting
a certificate for redemption to determine what action, if any, is required to
avoid this back-up withholding.
The right of redemption may be suspended and payment postponed for any
period during which the New York Stock Exchange is closed, other than for
customary weekend and holiday closings, or during which the Securities and
Exchange Commission determines that trading on that Exchange is restricted or
an emergency exists, as a result of which disposal or evaluation of the Bonds
is not reasonably practicable, or for such other periods as the Securities and
Exchange Commission may by order permit.
The Trustee shall notify the Sponsor of any tender of Units for redemption.
If the Sponsor's Repurchase Price in the secondary market at that time equals
or exceeds the redemption price, it may purchase such Units by notifying the
Trustee before the close of business on the second succeeding business day and
by making payment therefor to the tendering Certificateholder not later than
the day on which payment would otherwise have been made by the Trustee. The
Public Offering Price of any Units thus acquired by the Sponsor will be in
accord with the procedure described in the then currently effective prospectus
relating to such Units. Units held by the Sponsor may be tendered to the
Trustee for redemption as any other Units. Any profit or loss resulting from
the resale or redemption of such Units will belong to the Sponsor.
Although not obligated to do so, the Sponsor intends to maintain a market
for the Units offered hereby and to offer continuously to purchase such
Units at prices, subject to change at any time, based upon the aggregate bid
prices of the Bonds in the portfolio plus interest accrued to the date of
settlement plus any principal cash on hand, less any amounts representing
taxes or other governmental charges payable out of the Trust and less any
accrued Trust expenses. If the supply of Units exceeds demand or if some
other business reason warrants it, the Sponsor may either discontinue all
purchases of Units or discontinue purchases of Units at such prices. In the
event that a market is not maintained for the Units and the Certificateholder
cannot find another purchaser, a Certificateholder desiring to dispose of his
Units may be able to dispose of such Units only by tendering them to the
Trustee for redemption at the redemption price, which is based upon the
aggregate bid prices of the Bonds in the portfolio. The aggregate bid prices
of the underlying Bonds in the Trust are expected to be less than the related
aggregate offering prices. A Certificateholder who wishes to dispose of his
Units should inquire of his broker as to current market prices in order to
determine whether there is in existence any price in excess of the redemption
price and, if so, the amount thereof.
DISTRIBUTION OF INTEREST AND PRINCIPAL
Interest received by the Trust, including that part of the proceeds
from the disposition of Bonds, if any, which represents accrued interest, is
credited by the Trustee to the Interest Account. Any other receipts are
credited to the Principal Account. Interest received by the Trust will be
distributed on or shortly after the first day of each month on a pro rata
basis to Certificateholders of record as of the preceding record date (which
is the fifteenth day of the month next preceding the distribution). All
distributions will be net of applicable expenses. The pro rata share of cash
in the Principal Account will be computed on the fifteenth day of each month
and will be distributed to Certificateholders as of the first day of the next
succeeding month. Such principal distribution may be combined with any
interest distribution due to the Certificateholder at that time. Proceeds
received from the disposition of any of the Bonds in the portfolio of the
Trust after each record date and prior to the following distribution date will
be held in the Principal Account and not distributed until the next
distribution date. The Trustee is not required to pay interest on funds held
in the Principal or Interest Accounts (but may itself earn interest thereon
and therefore benefit from the use of such funds) nor to make a distribution
from the Principal Account unless the amount available for distribution shall
equal at least $1.00 per Unit.
The distribution to the Certificateholders as of each record date will
be made on the following distribution date or shortly thereafter and shall
consist of an amount substantially equal to the Certificateholder's pro rata
share of the estimated annual income after deducting estimated expenses.
Because interest payments are not received by the Trust at a constant rate
throughout the year, such interest distribution may be more or less than the
amount credited to the Interest Account as of the record date. For the
purpose of minimizing fluctuations in the distributions from the Interest
Account, the Trustee is authorized to advance such amounts as may be necessary
to provide interest distributions of approximately equal amounts. The Trustee
shall be reimbursed, without interest, for any such advances from funds in the
Interest Account on the ensuing record date. A person who purchases Units
will commence receiving distributions only after such person becomes a record
owner. Notification to the Trustee of the transfer of Units is the
responsibility of the purchaser, but in the normal course of business such
notice is provided by the selling broker/dealer.
As of the fifteenth day of each month, the Trustee will deduct from the
Interest Account and, to the extent funds are not sufficient therein, from the
Principal Account, amounts necessary to pay the expenses of the Trust (see
"Expenses of the Trust"). The Trustee may also withdraw from said accounts an
amount, if deemed necessary, to fund a reserve for any governmental charges or
anticipated Trust expenses which may be payable out of the Trust. Amounts so
withdrawn will not be considered a part of the Trust's assets until such time
as the Trustee shall return all or part of the amount withdrawn to the
appropriate accounts. In addition, the Trustee may withdraw from the Interest
and Principal Accounts such amounts as may be necessary to cover redemptions
of Units by the Trustee (See "Description of Trust Portfolio" and "Redemption
and Repurchase of Units").
Funds which are available for future distributions, redemptions and payment
of expenses are held in accounts which are non-interest bearing to
Certificateholders and are available for use by the Trustee pursuant to normal
banking procedures.
DISTRIBUTION REINVESTMENT OPTION
The Sponsor has entered into arrangements with Ranson Managed Portfolios -
The Kansas Municipal Fund (the "Kansas Municipal Fund") and Ranson Managed
Portfolios - The Kansas Insured Municipal Fund-Limited Maturity (the "Kansas
Insured Municipal Fund") which permit any Certificateholder of the Trust to
elect to have each distribution of interest income or principal, including
capital gains, on his Units automatically reinvested in shares of the Kansas
Municipal Fund or the Kansas Insured Municipal Fund, respectively.
The investment objective of the Kansas Municipal Fund and the Kansas Insured
Municipal Fund is to provide its shareholders with a high level of current
income exempt from both federal income tax and Kansas income tax as is
consistent with preservation of capital. The objectives and policies of the
Kansas Municipal Fund and the Kansas Insured Municipal Fund are presented in
more detail in the Kansas Municipal Fund and the Kansas Insured Municipal Fund
prospectuses, respectively. Certificateholders should contact the broker from
whom they obtained this Prospectus to obtain a current prospectus for the
Kansas Municipal Fund and the Kansas Insured Municipal Fund, or they may
obtain a current prospectus by contacting Ranson Capital Corporation at (800)
345-2363.
Certificateholders will be able to reinvest their distributions of
interest income or principal in the Kansas Municipal Fund and the Kansas
Insured Municipal Fund with no sales charge and no minimum investment.
A Certificateholder may at any time, by so notifying the Trustee in
writing, elect to terminate his participation in the Distribution Reinvestment
Option and receive future distributions on his Units in cash. There will be
no charge or other penalty for such termination. The Sponsor and the Kansas
Municipal Fund and the Kansas Insured Municipal Fund each have the right to
terminate the Distribution Reinvestment Option, in whole or in part.
TAX STATUS (FEDERAL, STATE, CAPITAL GAINS)
At the respective times of issuance of the Bonds, opinions relating to
the validity thereof, to the exemption of interest thereon from federal and
Kansas income taxation and to the exemption from local Kansas intangible
personal property taxes were rendered by bond counsel to the respective
issuing authorities. Gain realized on the sale or redemption of the Bonds by
the Trustee or of a Unit by a Certificateholder is, however, includable in
gross income for federal and Kansas state income tax purposes. It should be
noted in this connection that such gain does not include any amounts received
in respect of accrued interest or earned original issue discount, if any. It
should be noted that under recently enacted legislation described below that
subjects accretion of market discount on tax-exempt bonds to taxation as
ordinary income, gain realized on the sale or redemption of Bonds by the
Trustee or of Units by a Certificateholder that would have been treated as
capital gain under prior law is treated as ordinary income to the extent it is
attributable to accretion of market discount. Market discount can arise based
on the price the Trust pays for Bonds or the price a Certificateholder pays
for his or her Units. Neither the Sponsor nor its counsel have made any
special review for the Trust of the proceedings relating to the issuance of
the Bonds or of the bases for such opinions.
In the opinion of Chapman and Cutler, counsel for the Sponsor, under
existing law:
(1) the Trust is not an association taxable as a corporation
for federal income tax purposes and interest and accrued original issue
discount on the Bonds which is excludable from gross income under the
Internal Revenue Code of 1986 (the "Code") will retain its status when
distributed to Certificateholders. A Certificateholder's share of the
interest on certain Bonds in the Trust will be included as an item of
tax preference for both individuals and corporations subject to the
alternative minimum tax ("AMT Bonds"). In the case of certain
corporations owning Units, interest and accrued original issue discount
with respect to Bonds other than AMT Bonds held by the Trust may be
subject to the alternative minimum tax, an additional tax on branches
of foreign corporations and the environmental tax (the "Superfund Tax");
(2) exemption of interest and accrued original issue
discount on any Bonds for federal income tax purposes does not
necessarily result in tax exemption under the laws of the several
states as such laws vary with respect to the taxation of such Bonds and
in many states all or a part of such interest and accrued original
issue discount may be subject to tax; and
(3) each Certificateholder is considered to be the owner of
a pro rata portion of the Trust under subpart E, subchapter J of
chapter 1 of the Code and will have a taxable event when the Trust
disposes of a Bond or when the Certificateholder redeems or sells
Units. Gain or loss upon the sale or redemption of Units is measured
by comparing the proceeds of such sale or redemption with the adjusted
basis of the Units. If the Trustee disposes of Bonds (whether by sale,
payment on maturity, redemption or otherwise), gain or loss is
recognized to the Certificateholder. The amount of any such gain or
loss is measured by comparing the Certificateholder's pro rata share of
the total proceeds from such disposition with Certificateholder's basis
for his or her fractional interest in the asset disposed of. In the
case of a Certificateholder who purchases Units, such basis (before
adjustment for earned original issue discount and amortized bond
premium, if any) is determined by apportioning the cost of the Units
among each of the Trust assets ratably according to value as of the
date of acquisition of the Units. The basis of each Unit and of each
Bond which was issued with original issue discount must be increased by
the amount of accrued original issue discount and the basis of each
Unit and of each Bond which was purchased by the Trust at a premium
must be reduced by the annual amortization of Bond premium. The tax
cost reduction requirements of said Code relating to amortization of
bond premium may, under some circumstances, result in the
Certificateholder realizing a taxable gain when his Units are sold or
redeemed for an amount equal to his original cost. A Certificateholder
will realize a taxable gain when his Units are sold or redeemed for an
amount greater than his adjusted basis in his Units at the time of such
sale or redemption.
Sections 1288 and 1272 of the Code provide a complex set of rules
governing the accrual of original issue discount. These rules provide that
original issue discount accrues either on the basis of a constant compound
interest rate or ratably over the term of the Bond, depending on the date the
Bond was issued. In addition, special rules apply if the purchase price of a
Bond exceeds the original issue price plus the amount of original issue
discount which accrued to prior owners. The application of these rules will
also vary depending on the value of the Bond on the date a Certificateholder
acquires his Units and the price the Certificateholder pays for his Units.
Investors with questions regarding these Code sections should consult with
their tax advisers. See "Trust Portfolio" in Part One for information
relating to Bonds, if any, issued at an original issue discount.
"The Revenue Reconciliation Act of 1993" (the "Tax Act") subjects tax-
exempt bonds to the market discount rules of the Code effective for bonds
purchased after April 30, 1993. In general, market discount is the amount (if
any) by which the stated redemption price at maturity exceeds an Investor's
purchase price (except to the extent that such difference, if any, is
attributable to original issue discount not yet accrued). Under the Tax Act,
accretion of market discount is taxable as ordinary income; under prior law
the accretion had been treated as capital gain. Market discount that accretes
while the Trust holds a Bond would be recognized as ordinary income by the
Certificateholders when principal payments are received on the Bond, upon sale
or at redemption (including early redemption) or upon the sale of redemption
of the Units, unless a Certificateholder elects to include market discount in
taxable income as it accrues. The market discount rules are complex and
Certificateholders should consult their tax advisers regarding these rules and
their application.
Interest on certain "specified private activity bonds" held by the
Trust will be treated as an item of tax preference for purposes of computing
the alternative minimum tax of all Certificateholders of the Trust, including
individuals. As a result, such interest income may be subject to the
alternative minimum tax. The Trust will annually supply Certificateholders
with information regarding the amount of Trust income attributable to those
"specified private activity bonds" held by the Trust that give rise to a
specific item of tax preference. Certificateholders should consult their tax
adviser regarding the potential application of the alternative minimum tax and
the impact of a portion of the Trust's income being characterized as a tax
preference.
For purposes of computing the alternative minimum tax for individuals
and corporations and the Superfund Tax for corporations, interest on certain
private activity bonds (which includes most industrial and housing revenue
bonds) issued on or after August 8, 1986 such as the AMT Bonds, is included as
an item of tax preference.
In the case of corporations, for taxable years beginning after December
31, 1986, the alternative minimum tax and the Superfund Tax depend upon the
corporation's alternative minimum taxable income, which is the corporation's
taxable income with certain adjustments. One of the adjustment items used in
computing the alternative minimum taxable income and the Superfund Tax of a
corporation (other than an S Corporation, Regulated Investment Company, Real
Estate Investment Trust, or REMIC) is an amount equal to 75% of the excess of
such corporation's "adjusted current earnings" over an amount equal to its
alternative minimum taxable income (before such adjustment item and the
alternative tax net operating loss deduction). "Adjusted current earnings"
includes all tax exempt interest, including interest on the Bonds in the
Trust. Corporate Certificateholders are urged to consult their tax advisers
with respect to the particular tax consequences to them, including the
corporate alternative minimum tax, Superfund Tax and the branch profits tax
imposed by Section 884 of the Code.
The Code provides that interest on indebtedness incurred or continued
to purchase or carry obligations, the interest on which is wholly exempt from
federal income taxes, is not deductible. Because each Certificateholder is
treated for federal income tax purposes as the owner of a pro rata share of
the Bonds owned by the Trust, interest on borrowed funds used to purchase or
carry Units of the Trust will not be deductible for federal income tax
purposes. Under rules used by the Internal Revenue Service for determining
when borrowed funds are considered used for the purpose of purchasing or
carrying particular assets, the purchase of Units may be considered to have
been made with borrowed funds even though the borrowed funds are not directly
traceable to the purchase of Units. However, these rules generally do not
apply to interest paid on indebtedness incurred for expenditures of a personal
nature such as a mortgage incurred to purchase or improve a personal
residence. Federally tax-exempt income, including income on Units of the
Trust, will be taken into consideration in computing the portion, if any, of
social security benefits received that will be included in a taxpayer's gross
income subject to federal income tax. It should be noted that under the Tax
Act, the portion of social security benefits subject to inclusion in taxable
income has been raised for taxable years starting in 1994. Under Section 265
of the Code, certain financial institutions that acquire Units would generally
not be able to deduct any of the interest expense attributable to ownership of
such Units. Investors with questions regarding these issues should consult
with their tax advisers.
For taxpayers other than corporations, net capital gains are subject to
a maximum federal rate of 28 percent. However, it should be noted that
legislative proposals are made from time to time that affect tax rates and
could affect relative differences at which ordinary income and capital gains
are taxed.
Under the code, taxpayers must disclose to the Internal Revenue Service
the amount of tax-exempt interest earned during the year.
In the case of certain of the Bonds in the Trust, the opinions of bond
counsel indicate that interest on such securities received by a "substantial
user" of the facilities being financed with the proceeds of these securities,
or persons related thereto, for periods while such securities are held by such
a user or related person, will not be excludable from federal gross income,
although interest on such securities received by others would be excludable
from federal gross income. "Substantial user" and "related person" are
defined under U.S. Treasury Regulations. Any person who believes that he or
she may be a "substantial user" or a "related person" as so defined should
contact his or her tax adviser.
In the opinion of Chapman and Cutler, counsel for the Sponsor, assuming
interest on the Bonds is excludable from gross income under Section 103 of the
Internal Revenue Code of 1986 as amended, under existing Kansas law;
The Trust is not an association taxable as a corporation for Kansas
income tax purposes;
Each Certificateholder of the Trust will be treated as the owner of a
pro rata portion of the Trust, and the income and deductions of the Trust will
therefore be treated as income of the Certificateholder under Kansas law;
Interest on Bonds issued after December 31, 1987 by the State of Kansas
or any of its political subdivisions will be exempt from income taxation
imposed on individuals, corporations and fiduciaries (other than insurance
companies, banks, trust companies or savings and loan associations) however,
interest on Bonds issued prior to January 1, 1988 by the State of Kansas or
any of its political subdivisions will not be exempt from income taxation
imposed on individuals, corporations and fiduciaries (other than insurance
companies, banks, trust companies or savings and loan associations) unless the
laws of the State of Kansas authorizing the issuance of such Bonds
specifically exempt the interest on the Bonds from income taxation by the
State of Kansas;
Interest on Bonds issued by the State of Kansas or any of its political
subdivisions will be subject to the tax imposed on banks, trust companies and
savings and loan associations under Article 11, Chapter 79 of the Kansas
statutes;
Interest on Bonds issued by the State of Kansas or any of its political
subdivisions will be subject to the tax imposed on insurance companies under
Article 40, Chapter 28 of the Kansas statutes unless the laws of the State of
Kansas authorizing the issuance of such Bonds specifically exempt the interest
on the Bonds from income taxation by the State of Kansas; interest on the
Bonds which is exempt from Kansas income taxation when received by the Trust
will continue to be exempt when distributed to a Certificateholder (other than
a bank, trust company or savings and loan association);
Each Certificateholder of the Trust will recognize gain or loss for
Kansas income tax purposes if the Trustee disposes of a Bond (whether by sale,
exchange, payment on maturity, retirement or otherwise) or if the
Certificateholder redeems or sells Units of the Trust to the extent that such
transaction results in a recognized gain or loss for federal income tax
purposes; and
Interest received by the Trust on the Bonds is exempt from intangibles
taxation imposed by any counties, cities and townships pursuant to present
Kansas law.
No opinion is expressed regarding whether the gross earnings derived
from the Units is subject to intangibles taxation imposed by any counties,
cities and townships pursuant to present Kansas law.
In addition, in the opinion of Chapman and Cutler, under Missouri law,
as presently enacted and construed:
(i) The Trust is not an association taxable as a corporation
for Missouri income tax purposes.
(ii) The Certificateholders of the Trust will be treated as
the owners of a pro rata portion of the Trust and the income of the
Trust will therefore be treated as income of the Certificateholders
under Missouri law.
(iii) The Trust will not be subject to the Kansas City,
Missouri Earnings and Profits Tax and each Certificateholder's share of
the Trust will not generally be subject to the Kansas City, Missouri
Earnings and Profits Tax or the City of St. Louis Earnings Tax (except
in the case of certain Certificateholders, including corporations,
otherwise subject to the St. Louis City Earnings Tax).
All statements of law in the Prospectus concerning exemption from
federal, state or other taxes are the opinion of counsel and are to be so
construed.
EXPENSES OF THE TRUST
The Sponsor will not receive any fees in connection with activities
relating to the Trust. However, for regularly evaluating the portfolio of the
Trust, the Evaluator (which is the Sponsor) will receive the annual fee
indicated in "Summary of Essential Financial Information" in Part One of this
Prospectus. Such fee is calculated based on the largest aggregate principal
amount of Bonds in the Trust at any time during such period.
The Trustee will receive for ordinary services the annual fee from the
Trust indicated in "Summary of Essential Financial Information" in Part One of
this Prospectus. Such fee is calculated based on the largest aggregate
principal amount of Bonds in the Trust at any time during such period. Both
the Trustee's fee and the evaluation fee paid to the Sponsor may be adjusted
without prior approval from Certificateholders, provided that all adjustments
upward will not exceed the cumulative percentage increase of the United States
Department of Labor's Consumer Price Index or, if such index is no longer
published, in a comparable index. Since the Trustee has the use of the funds
being held in the Principal and Interest Accounts for future distributions,
payment of expenses and redemptions and since such Accounts are non-interest
bearing to Certificateholders, the Trustee benefits thereby. Part of the
Trustee's compensation for its services to the Trust is expected to result
from the use of these funds. For a discussion of the services rendered by the
Trustee pursuant to its obligations under the Indenture, see "Trustee
Information" and "Other Rights of Certificateholders."
The following is a summary of expenses of the Trust which, when owed to
the Trustee, are secured by a lien on the assets of the Trust: (1) the
expenses and costs of any action undertaken by the Trustee to protect the
Trust and the rights and interests of the Certificateholders; (2) any taxes
and other governmental charges upon the Bonds or any part of the Trust (no
such taxes or charges are currently being levied or, to the knowledge of the
Sponsor, contemplated); (3) amounts payable to the Trustee as fees for
ordinary recurring services and for extraordinary non-recurring services
rendered pursuant to the Indenture and all disbursements and expenses
including counsel fees (including fees of counsel which the Trustee may
retain) and auditing fees sustained or incurred by the Trustee in connection
therewith; and (4) any losses or liabilities accruing to the Trustee without
negligence, bad faith or willful misconduct on its part. The Trustee is
empowered to sell Bonds in order to pay these amounts if funds are not
available in the Interest and Principal Accounts. Costs of disbursement
(including postage, checks and handling) of interest, principal and redemption
distributions will be paid by the Trustee and will not be charged to the
Trust.
EVALUATION OF THE TRUST
The Public Offering Price and the Redemption Price per Unit are based
on the bid prices per Unit of the Bonds in the portfolio of the Trust plus
accrued interest. The Public Offering Price per Unit also includes a sales
charge as set forth in Part One of this Prospectus under "Summary of Essential
Financial Information." While the Trustee has the power to determine the
Public Offering Price per Unit and the Redemption Price per Unit when Units
are tendered for redemption, such authority has been delegated to the
Evaluator which determines the Public Offering Price per Unit and the
Redemption Price per Unit on a daily basis as of 3:00 p.m. Central time on
days the New York Stock Exchange is open (and on any other days on which
Sponsor secondary market transactions or redemptions occur). With each
evaluation the Public Offering Price per unit and Redemption Price per Unit is
adjusted commensurate with such evaluation and prices will be effective for
all orders for purchases, sales or redemptions received at or prior to 3:00
p.m. Central time on each such day. Orders received by the Trustee or Sponsor
after that time, or on a day when no evaluation is made, will be held until
the next determination of price. Each evaluation of the Trust has been and
will be determined on the basis of cash on hand in the Trust or money in the
process of being collected, the value of the Bonds in the portfolio of the
Trust based on the bid prices of the Bonds and interest accrued thereon not
subject to collection less any taxes or governmental charges payable, any
accrued expenses of the Trust and any cash held for distribution to
Certificateholders. The result of that computation is then divided by the
number of Units outstanding as of the date thereof to determine the per Unit
value of the Trust.
The Evaluator may determine the value of the Bonds in the portfolio of the
Trust (1) on the basis of current bid prices of the Bonds obtained from
dealers or brokers who customarily deal in bonds comparable to those held in
the Trust; (2) if bid prices are not available for any of the Bonds, on the
basis of bid prices for comparable bonds; (3) by causing the value of the
Bonds to be determined by others engaged in the practice of evaluating,
quoting or appraising comparable bonds; or (4) by any combination of the above.
OTHER RIGHTS OF CERTIFICATEHOLDERS
The Trustee shall furnish Certificateholders in connection with each
distribution a statement of the amount of interest and, if any, the amount of
other receipts (received since the preceding distribution) being distributed,
expressed in each case as a dollar amount representing the pro rata share of
each Unit outstanding. 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 registered Certificateholder a statement (1) as
to the Interest Account: interest received (including amounts representing
interest received upon any disposition of Bonds), deductions for fees and
expenses of the Trust and for redemptions of Units, if any, and the balance
remaining after such distributions and deductions, expressed in each case both
as a total dollar amount and as a dollar amount representing the pro rata
share of each Unit outstanding on the last business day of such calendar year;
(2) as to the Principal Account: the dates of disposition of any Bonds and the
net proceeds received therefrom (excluding any portion representing accrued
interest), the amount paid for redemptions of Units, if any, deductions for
payment of applicable taxes and fees and expenses of the Trustee, and the
balance remaining after such distributions and deductions expressed both as a
total dollar amount and as a dollar amount representing the pro rata share of
each Unit outstanding on the last business day of such calendar year; (3) a
list of the Bonds held and the number of Units outstanding on the last
business day of such calendar year; (4) the Redemption Price based upon the
last computation thereof made during such calendar year; and (5) amounts
actually distributed during such calendar year from the Interest Account and
from the Principal Account, separately stated, expressed both as total dollar
amounts and as dollar amounts representing the pro rata share of each Unit
outstanding.
For Series 4 and subsequent series, the Indenture requires the Trust to
be audited on an annual basis at the expense of the Trust by independent
auditors selected by the Sponsor. For Series 1 through 3, while the Indenture
does not require a Trust audit on an annual basis at the expense of the Trust,
the Trustee has determined that such an audit is in the best interests of
Certificateholders and, therefore, it is expected that each year such an audit
will be performed. The Trustee shall not be required (in the case of Series 4
and subsequent series), however, and does not intend (in the case of Series 1
through 3) to cause such an audit to be performed if its cost to the Trust
shall exceed certain specified amounts (not exceeding $.50 per Unit) on an
annual basis. Certificateholders may obtain a copy of such audited financial
statements upon request.
In order to comply with federal and state tax reporting requirements,
Certificateholders will be furnished, upon request to the Trustee, evaluations
of the Bonds in the Trust furnished to it by the Evaluator.
The Trustee is authorized to treat as the record owner of Units that
person who is registered as such owner on the books of the Trustee. Ownership
of Units of the Trust is evidenced by separate registered certificates
executed by the Trustee and the Sponsor. Certificates are transferable by
presentation and surrender to the Trustee properly endorsed or accompanied by
a written instrument or instruments of transfer. A Certificateholder must
sign exactly as his name appears on the face of the certificate with the
signature guaranteed by a participant in the Securities Transfer Agents
Medallion Program ("STAMP") or such other signature guarantee program in
addition to, or in substitution for, STAMP as may be accepted by the Trustee.
In certain instances the Trustee may require additional documents such as, but
not limited to, trust instruments, certificates of death, appointments as
executor or administrator or certificates of corporate authority.
Certificates will be issued in denominations of one Unit or any multiple
thereof. Destroyed, stolen, mutilated or lost certificates will be replaced
upon delivery to the Trustee of satisfactory indemnity, evidence of ownership
and payment of expenses incurred. Mutilated certificates must be surrendered
to the Trustee for replacement. Although no such charge is now made or
contemplated, the Trustee may require a Certificateholder to pay a reasonable
fee to be determined by the Trustee for each certificate reissued or
transferred and to pay any governmental charge that may be imposed in
connection with each such transfer or interchange.
SPONSOR INFORMATION
Ranson & Associates, Inc., an investment banking firm created in 1995
by a number of former owners and employees of Ranson Capital Corporation, is
the sponsor and successor sponsor of Series 1-78 of The Kansas Tax-Exempt
Trust and Multi-State Series 1-6 of The Ranson Municipal Trust and is the
Sponsor of the Trust. Ranson & Associates, Inc. is the successor to a series
of companies, the first of which was originally organized in Kansas in 1935.
During its history, Ranson & Associates, Inc. and its predecessors have been
active in public and corporate finance and has sold bonds and unit investment
trusts and maintained secondary market activities relating thereto. At
present, Ranson & Associates, Inc., which is a member of the National
Association of Securities Dealers, Inc., is the Sponsor to each of the
above-named unit investment trusts and serves as the financial advisor and as
an underwriter for issuers in the Midwest and Southwest, especially in Kansas,
Missouri and Texas.
The Company's offices are currently located at 120 South Market, Suite 450,
Wichita, Kansas 67202. As of January 15, 1996, the total unaudited
stockholders' equity of Ranson & Associates, Inc. was $355,000. (This
paragraph relates only to the Sponsor and not to any Series of The Kansas Tax-
Exempt Trust or to any other dealer. The information is included herein only
for the purpose of informing investors as to the financial responsibility of
the Sponsor and its ability to carry out its contractual obligations. More
detailed financial information will be made available by the Sponsor upon
request.)
As stated under "Redemption and Repurchase of Units," the Sponsor
intends to maintain a secondary market for the Units of the Trust. In so
maintaining a market, the Sponsor will realize profits or sustain losses in
the amount of any difference between the price at which Units are purchased
and the price at which Units are resold (which price is based on the bid
prices of the Bonds in the Trust and includes a sales charge as set forth in
Part One of this Prospectus under "Summary of Essential Financial
Information"). In addition, the Sponsor will also realize profits or sustain
losses resulting from a redemption of such repurchased Units at a price above
or below the purchase price for such Units.
If the Sponsor shall fail to perform any of its duties under the Indenture or
become incapable of acting or become bankrupt or its affairs are taken over by
public authorities, then the Trustee may (i) appoint a successor Sponsor at
rates of compensation deemed by the Trustee to be reasonable and not exceeding
amounts prescribed by the Securities and Exchange Commission, (ii) terminate
the Indenture and liquidate the Trust as provided therein or (iii) continue to
act as Trustee without terminating the Indenture.
TRUSTEE INFORMATION
The Trustee, Investors Fiduciary Trust Company, is a trust company
specializing in investment 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. The Trustee is jointly owned by DST Systems, Inc. and Kemper
Financial Services, Inc.
The duties of the Trustee are primarily ministerial in nature. It did
not participate in the selection of Bonds for the Trust portfolio. The
Trustee is empowered to sell, for the purpose of redeeming Units tendered by
any Certificateholder and for the payment of expenses for which funds may not
be available, such of the Bonds as are designated by the Sponsor as the
Trustee in its sole discretion may deem necessary. The Sponsor is empowered,
but not obligated, to direct the Trustee to dispose of Bonds upon default in
payment of principal or interest, institution of certain legal proceedings,
default under other documents adversely affecting debt service, default in
payment of principal or interest on other obligations of the same issuer,
decline in projected income pledged for debt service on revenue bonds or
decline in price or the occurrence of other market or credit factors,
including advance refunding (i.e., the issuance of refunding securities and
the deposit of the proceeds thereof in trust or escrow to retire the refunded
securities on their respective redemption dates), so that in the opinion of
the Sponsor the retention of such Bonds would be detrimental to the interest
of the Certificateholders. The Sponsor is required to instruct the Trustee to
reject any offer made by an issuer of any of the Bonds to issue new
obligations in exchange or substitution for any Bond 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 Bond or (2) in the written opinion of the Sponsor the issuer
will probably default with respect to such Bond 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 Indenture 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 Certificateholder,
identifying the Bonds eliminated and the Bonds substituted therefor. Except
as stated herein, the acquisition by the Trust of any securities other than
the Bonds initially deposited is not permitted.
If any default in the payment of principal or interest on any Bond
occurs and no provision for payment is made therefor within 30 days, the
Trustee is required to notify the Sponsor thereof. If the Sponsor fails to
instruct the Trustee to sell or to hold such Bond within 30 days after
notification by the Trustee to the Sponsor of such default, the Trustee may in
its discretion sell the defaulted Bond and not be liable for any depreciation
or loss thereby incurred.
In accordance with the Indenture, the Trustee shall keep proper books
of record and account of all transactions at its office for the Trust. Such
records shall include the name and address of, and the certificates issued by
the Trust to, every Certificateholder of the Trust. Such books and records
shall be open to inspection by any Certificateholder at all reasonable times
during the Trustee's 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 is required to keep
a certified copy or duplicate original of the Indenture on file in its office
available for inspection at all reasonable times during its usual business
hours by any Certificateholder, together with a current list of the Bonds held
in the Trust.
Under the Indenture, the Trustee or any successor trustee may resign
and be discharged of the trust created by the Indenture 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
Certificateholders then of record, not less than 60 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 30 days after notification,
the retiring Trustee may apply to a court of competent jurisdiction for the
appointment of a successor. The Sponsor may remove the Trustee and appoint a
successor trustee as provided in the Indenture at any time with or without
cause. Notice of such removal and appointment shall be mailed to each
Certificateholder by the Sponsor. Upon execution of a written acceptance of
such appointment by such successor trustee, all the rights, powers, duties and
obligations of the original trustee shall vest in the successor. The
resignation or removal of a Trustee becomes effective only when the successor
trustee accepts its appointment as such or when a court of competent
jurisdiction appoints a successor trustee.
Any corporation into which a Trustee may be merged or with which it may
be consolidated, or any corporation resulting from any merger or consolidation
to which a Trustee shall be a party, shall be the successor trustee. The
Trustee must be a corporation organized under the laws of the United States,
or any state thereof, be authorized under such laws to exercise trust powers
and have at all times an aggregate capital, surplus and undivided profits of
not less than $5,000,000.
LEGAL AND AUDITING MATTERS
The legality of the Units offered hereby and certain matters relating
to federal and Kansas tax law have been passed upon by Chapman and Cutler,
Chicago, Illinois, as special counsel for the Sponsor.
The statement of net assets, including the Trust portfolio, of the
Trust, included in Part One of this Prospectus and Registration Statement have
been examined by Allen, Gibbs & Houlik, independent auditors, as set forth in
their report appearing in Part One of this Prospectus, and is included in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
DESCRIPTION OF BOND RATINGS
STANDARD & POOR'S CORPORATION. A description of the applicable
Standard & Poor's Corporation rating symbols and their meanings follows:
A Standard & Poor's corporate or municipal bond rating is a current
assessment of the creditworthiness of an obligor with respect to a specific
debt obligation. This assessment may take into consideration obligors such as
guarantors, insurers or lessees.
The bond rating is not a recommendation to purchase, sell or hold a
security, inasmuch as it does not comment as to market price or suitability
for a particular investor.
The ratings are based on current information furnished by the issuer or
obtained by Standard & Poor's from other sources it considers reliable.
Standard and Poor's does not perform an audit in connection with any rating
and may, on occasion, rely on unaudited financial information. The ratings
may be changed, suspended or withdrawn as a result of changes in, or
unavailability of, such information, or for other circumstances.
The ratings are based, in varying degrees, on the following considerations:
1) Likelihood of default-capacity and willingness of the
obligor as to the timely payment of interest and repayment of principal
in accordance with the terms of the obligation;
2) Nature of and provisions of the obligation; and
3) Protection afforded by, and relative position of, the
obligation in the event of bankruptcy, reorganization or other
arrangements under the laws of bankruptcy and other laws affecting
creditors' rights.
AAA-This is the highest rating assigned by Standard & Poor's to a debt
obligation. Capacity to pay interest and repay principal is extremely strong.
AA-Bonds rated AA have a very strong capacity to pay interest and repay
principal, and differ from the highest rated issues only in small degree.
A-Bonds rated A have a strong capacity to pay interest and repay
principal, although they are somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions than bonds in higher rated
categories.
BBB-Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay interest and repay
principal for bonds in this category than for bonds in the higher rated
categories.
Plus (+) or Minus (-): The ratings from "AA" to "BB" may be modified
by the addition of a plus or minus sign to show relative standing within the
major rating categories.
PROVISIONAL RATINGS. The letter "p" indicates that the rating is
provisional. A provisional rating assumes the successful completion of the
project being financed by the issuance of the bonds being rated and indicates
that payment of debt service requirements is largely or entirely dependent
upon the successful and timely completion of the project. This rating,
however, while addressing credit quality subsequent to completion of the
project, makes no comment on the likelihood of, or the risk of default upon
failure of, such completion. Accordingly, the investor should exercise his
own judgment with respect to such likelihood and risk.
L: The letter "L" indicates that the rating pertains to the principal amount
of those bonds where the underlying deposit collateral is fully insured by the
Federal Savings & Loan Insurance Corp. or the Federal Deposit Insurance Corp.
MOODY'S INVESTORS SERVICE, INC. A brief description of the applicable
Moody's Investors Service, Inc. rating symbols and their meanings follows:
Aaa-Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred
to as "gilt edge." Interest payments are protected by a large, or by an
exceptionally stable, margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such issues.
Their safety is so absolute that, with the occasional exception of oversupply
in a few specific instances, characteristically, their market value is
affected solely by money market fluctuations.
Aa-Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuations of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities. Their market value is virtually immune to all but money market
influences, with the occasional exception of oversupply in a few specific
instances.
A-Bonds which are rated A possess favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may
be present which suggest a susceptibility to impairment sometime in the
future. The market value of A-rated bonds may be influenced to some degree by
economic performance during a sustained period of depressed business
conditions, but, during periods of normalcy, A-rated bonds frequently move in
parallel with Aaa and Aa obligations, with the occasional exception of
oversupply in a few specific instances.
Baa-Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well. The market value of Baa-rated bonds is more sensitive to changes in
economic circumstances, and aside from occasional speculative factors applying
to some bonds of this class, Baa market valuations move in parallel with Aaa,
Aa and A obligations during periods of economic normalcy, except in instances
of oversupply.
Moody's bond rating symbols may contain numerical modifiers of a
generic rating classification. The modifier 1 indicates that the bond ranks
at the high end of its category; the modifier 2 indicates a mid-range ranking;
and the modifier 3 indicates that the issue ranks in the lower end of its
generic rating category.
Con. (-)-Bonds for which the security depends upon the completion of
some act or the fulfillment of some condition are rated conditionally. These
are bonds secured by (a) earnings of projects under construction, (b) earnings
of projects unseasoned in operation experience, (c) rentals which begin when
facilities are completed, or (d) payments to which some other limiting
condition attaches. Parenthetical rating denotes probable credit stature upon
completion of construction or elimination of basis of condition.
No person is authorized to give any information or to make any
representations not contained in this Prospectus; and any information or
representation not contained herein must not be relied upon as having been
authorized by the Trust, or the Sponsor or any dealer. This Prospectus does
not constitute an offer to sell, or a solicitation of an offer to buy,
securities in any state to any person to whom it is not lawful to make such
offer in such state.
This Prospectus contains information concerning the Trust and the
Sponsor, but does not contain all of the information set forth in the
registration statement and exhibits relating thereto, which the Trust has
filed with the Securities and Exchange Commission, Washington, D.C., under the
Securities Act of 1933 and the Investment Company Act of 1940, and to which
reference is hereby made.
TABLE OF CONTENTS
TITLE PAGE
General Summary of Information 1
Summary of the Trust 2
Description of Trust Portfolio 4
Objectives of the Trust 8
Estimated Current Return and Estimated Long-Term Return 9
Public Offering Information 9
Accrued Interest to Carry 10
Redemption and Repurchase of Units 10
Distribution of Interest and Principal 12
Distribution Reinvestment Option 13
Tax Status (Federal, State, Capital Gains) 14
Expenses of the Trust 19
Evaluation of the Trust 20
Other Rights of Certificateholders 20
Sponsor Information 22
Trustee Information 23
Legal and Auditing Matters 24
Description of Bond Ratings 25
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
S-1
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, The Kansas Tax-Exempt Trust, Series 51, 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 Post-Effective Amendment to its Registration Statement to be
signed on its behalf by the undersigned thereunto duly authorized, and its
seal to be hereunto affixed and attested, all in the City of Wichita and State
of Kansas on the 9th day of August, 1996.
THE KANSAS TAX-EXEMPT TRUST, SERIES 51
(Registrant)
By RANSON & ASSOCIATES, INC.
(Depositor)
Attest John A. Ranson
----------------------
President and Director
(Seal)
Pursuant to the requirements of the Securities Act of 1933, this Post
Effective Amendment to the Registration Statement has been signed below by the
following persons in the capacities on August 9, 1996:
Signature Title
John A. Ranson President and Director )
)
Alex R. Meitzner Chairman of the Board )
)
)
Robin K. Pinkerton Secretary, Treasurer and )
Director ) John A. Ranson
----------------------
President and Director
* An executed copy of each of the related powers of attorney was filed with
the Securities and Exchange Commission in connection with the Registration
Statement on Form S-6 of The Kansas Tax-Exempt Trust, Series 51 (File No. 33-
46376) and Series 52 (33-47687) and the same are hereby incorporated herein by
this reference.
S-2
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