File No. 33-60906 CIK #900511
Securities and Exchange Commission
Washington, D. C. 20549
Post-Effective
Amendment No. 7
to
Form S-6
For Registration under the Securities Act of 1933
of Securities of Unit Investment Trusts Registered
on Form N-8B-2
Kemper Defined Funds Insured Corporate Series 2
Name and executive office address of Depositor:
Ranson & Associates, Inc.
250 North Rock Road, Suite 150
Wichita, Kansas 67206
Name and complete address of agent for service:
Robin Pinkerton
Ranson & Associates, Inc.
250 North Rock Road, Suite 150
Wichita, Kansas 67206
( X ) Check box if it is proposed that this filing will become
effective at 2:00 p.m. on April 28, 2000 pursuant to paragraph (b) of
Rule 485.
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KEMPER INSURED CORPORATE TRUST
KEMPER DEFINED FUNDS INSURED CORPORATE SERIES
EVEREN UNIT INVESTMENT TRUSTS INSURED CORPORATE SERIES
PROSPECTUS PART ONE
Kemper Insured Corporate Trust, Kemper Defined Funds Insured
Corporate Series and EVEREN Unit Investment Trusts Insured Corporate
Series (the "Trusts") were formed for the purpose of providing a high
level of current income through investment in a fixed portfolio
consisting primarily of corporate debt obligations issued after July 18,
1994 by utility companies. Certain Trusts also contain zero coupon U.S.
Treasury obligations.
Insurance guaranteeing the scheduled payment of principal and
interest on all of the Bonds (other than any U.S. Treasury obligations)
in the portfolio listed in Part Two has been obtained directly by the
issuer of such Bonds or by the Sponsor of the Trusts from MBIA Insurance
Corporation. See "Insurance on the Portfolios" and "Portfolio" appearing
in Part Two for each Trust. This insurance is effective so long as the
Bonds are outstanding. As a result of such insurance, the Bonds so
insured in each Trust and the Units of each Trust received on the
original date of deposit a rating of "Aaa" by Moody's Investors Service,
Inc. ("Moody's"). All the Bonds in each Trust have received a rating of
"AAA" by Standard & Poor's, a Division of The McGraw-Hill Companies, Inc.
("Standard & Poor's") as of the original date of deposit. The insurance
does not relate to the Units of the respective Trusts offered hereby or
to their market value. See "Insurance on the Portfolios." No
representation is made as to any insurer's ability to meet its
commitments.
Units of the Trusts are not deposits or obligations of, or
guaranteed by, any bank, and Units are not federally insured or otherwise
protected by the Federal Deposit Insurance Corporation and involve
investment risk including loss of principal. The use of the term
"Insured" in the name of the Trust Funds does not mean that the Units of
the Trusts are insured by any governmental or private organization. The
Units are not insured.
For foreign investors who are not United States citizens or
residents, interest income from each Trust may not be subject to federal
withholding taxes if certain conditions are met. See "Federal Tax
Status."
This Prospectus is in two parts.
Read and retain both parts for future reference.
The date of this Part One is that date which is set forth
in Part Two of the Prospectus.
SPONSOR: RANSON & ASSOCIATES, INC.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COM-MISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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TABLE OF CONTENTS
PAGE
SUMMARY 1
THE TRUST 2
TRUST PORTFOLIOS 2
PORTFOLIO SELECTION 2
RISK FACTORS 3
GENERAL TRUST INFORMATION 6
INSURANCE ON THE PORTFOLIOS 6
RETIREMENT PLANS 8
INDIVIDUAL RETIREMENT ACCOUNT--IRA 8
QUALIFIED RETIREMENT PLANS 9
EXCESS DISTRIBUTIONS TAX 9
DISTRIBUTION REINVESTMENT 9
INTEREST, ESTIMATED LONG-TERM RETURN
AND ESTIMATED CURRENT RETURN 10
FEDERAL TAX STATUS 11
TAX REPORTING AND REALLOCATION 16
PUBLIC OFFERING OF UNITS 16
PUBLIC OFFERING PRICE 16
ACCRUED INTEREST 18
PURCHASED AND DAILY ACCRUED INTEREST 19
PUBLIC DISTRIBUTION OF UNITS 20
PROFITS OF SPONSOR 20
MARKET FOR UNITS 21
REDEMPTION 21
COMPUTATION OF REDEMPTION PRICE 22
UNITHOLDERS 23
OWNERSHIP OF UNITS 23
DISTRIBUTIONS TO UNITHOLDERS 24
STATEMENT TO UNITHOLDERS 25
RIGHTS OF UNITHOLDERS 26
INVESTMENT SUPERVISION 27
ADMINISTRATION OF THE TRUST 27
THE TRUSTEE 27
THE EVALUATOR 28
AMENDMENT AND TERMINATION 29
LIMITATIONS ON LIABILITY 29
EXPENSES OF THE TRUST 30
THE SPONSOR 31
LEGAL OPINIONS 32
INDEPENDENT AUDITORS 32
Essential Information*
Report of Independent Auditors*
Statement of Assets and Liabilities*
Statement of Operations*
Statement of Changes in Net Assets*
Schedule of Investments*
Notes to Schedules of Investments*
Notes to Financial Statements*
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* Information on these items appears in Part Two
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SUMMARY
Public Offering Price. The Public Offering Price per Unit of a
Series of the Trust is equal to a pro rata share of the aggregate bid
prices of the Bonds in such Series plus or minus a pro rata share of
cash, if any, in the Principal Account, held or owned by the Series plus
accrued interest or Purchased Interest and Daily Accrued Interest, as
applicable, plus a sales charge shown under "Public Offering of Units."
The sales charge is reduced on a graduated scale as indicated under
"Public Offering of Units - Public Offering Price."
Interest and Principal Distributions. Distributions of the
estimated annual interest income to be received by a Series of the Trust,
after deduction of estimated expenses, will be made monthly unless the
Unitholder elects to receive such distributions semi-annually (if
available). Distributions will be paid on the Distribution Dates to
Unitholders of record of such Series on the Record Dates set forth for
the applicable option. See "Essential Information" in Part Two.
Unitholders of Kemper Defined Funds Insured Corporate Series or EVEREN
Unit Investment Trusts Insured Corporate Series will receive
distributions monthly.
The distribution of funds, if any, in the Principal Account of each
Series, will be made as provided in "Unitholders-Distributions to
Unitholders."
Reinvestment. Each Unitholder may elect to have distributions of
principal or interest or both automatically invested without charge in
shares of certain Zurich Kemper Investment, Inc. mutual funds. See
"Distribution Reinvestment."
Estimated Current Return and Estimated Long-Term Return. The
Estimated Current Return is calculated by dividing the estimated net
annual interest income per Unit by the Public Offering Price of such
Trust. The estimated net annual interest income per Unit will vary with
changes in fees and expenses of the Trustee, Sponsor and Evaluator and
with the principal prepayment, redemption, maturity, exchange or sale of
Bonds while the Public Offering Price will vary with changes in the bid
price of the underlying Bonds and with changes in accrued interest or
Purchased Interest and Daily Accrued Interest, as applicable; therefore,
there is no assurance that the present Estimated Current Returns will be
realized in the future. Estimated Long-Term Return is calculated using a
formula which (1) takes into consideration, and determines and factors in
the relative weightings of, the market values, yields (which takes into
account the amortization of premiums and the accretion of discounts) and
estimated retirements of all of the Bonds in the Trust and (2) takes into
account the expenses and sales charge associated with each Trust Unit.
Since the market values and estimated retirement dates of the Bonds and
the expenses of the Trust will change, there is no assurance that the
present Estimated Long-Term Return will be realized in the future.
Estimated Current Return and Estimated Long-Term Return are expected to
differ because the calculation of Estimated Long-Term Return reflects the
estimated date and amount of principal returned while Estimated Current
Return calculations include only net annual interest income and Public
Offering Price.
Market for Units. While under no obligation to do so, the Sponsor
intends, subject to change at any time, to maintain a market for the
Units of each Series of the Trust and to continuously offer to repurchase
such Units at prices which are based on the aggregate bid side evaluation
of the Bonds in such Series of the Trust plus accrued interest or
Purchased Interest and Daily Accrued Interest, as applicable.
Risk Factors. An investment in the Trusts should be made with an
understanding of the risks associated therewith, including, among other
factors, the inability of the issuer or an insurer to pay the principal
of or interest on a bond when due, volatile interest rates, early call
provisions and general economic conditions. See "Trust Portfolio-Risk
Factors."
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THE TRUST
Each Series of the Trust is one of a series of unit investment
trusts created by the Sponsor under the name Kemper Insured Corporate
Trust, Kemper Defined Funds Insured Corporate Series or EVEREN Unit
Investment Trusts Insured Corporate Series, all of which are similar, and
each of which was created under the laws of the State of Missouri or New
York pursuant to a Trust Agreement* (the "Trust Agreement"). Ranson &
Associates, Inc. is the Sponsor and Evaluator of the Trusts and is
successor sponsor and evaluator of all unit investment trusts formerly
sponsored by EVEREN Unit Investment Trusts, a service of EVEREN
Securities, Inc. The Bank of New York is the Trustee of the Trusts as
successor to Investors Fiduciary Trust Company.
The objective of each Trust is to provide a high level of current
income through investment in the Bonds. There is, of course, no
guarantee that a Trust's objectives will be achieved.
The Trusts may be appropriate investment vehicles for investors who
desire to participate in a portfolio of taxable fixed income securities
issued primarily by public utilities with greater diversification than
investors might be able to acquire individually. Diversification of a
Trust's assets will not eliminate the risk of loss always inherent in the
ownership of securities. In addition, Bonds of the type deposited in the
Trusts often are not available in small amounts.
An investment in Units should be made with an understanding of the
risks which an investment in fixed rate debt obligations may entail,
including the risk that the value of the portfolio and hence of the Units
will decline with increases in interest rates. The value of the
underlying Bonds will fluctuate inversely with changes in interest rates.
The uncertain economic conditions of recent years, together with the
fiscal measures adopted to attempt to deal with them, have resulted in
wide fluctuations in interest rates and, thus, in the value of fixed rate
debt obligations generally and intermediate and long-term obligations in
particular. The Sponsor cannot predict the degree to which such
fluctuations will continue in the future.
TRUST PORTFOLIOS
Portfolio Selection. The Bonds for each Trust was based largely
upon the experience and judgment of the Sponsor. In making such
selections the Sponsor considered the following factors: (a) the price
of the Bonds relative to other issues of similar quality and maturity;
(b) whether the Bonds were issued by a utility company; (c) the
diversification of the bonds as to location of issuer; (d) the income to
the Unitholders of the Trusts; (e) whether the Bonds were insured or the
availability and cost of insurance for the scheduled payment of principal
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* Reference is made to the Trust Agreement, and any statements contained
herein are qualified in their entirety by the provisions of the Trust
Agreement.
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and interest on the Bonds; (f) in certain Series whether the Bonds were
issued after July 18, 1984 (g) the stated maturity of the bonds.
The Sponsor may not alter the portfolio of a Series of the Trust,
except upon the happening of certain extraordinary circumstances. See
"Investment Supervision." Certain Series of the Trust contain Bonds which
may be subject to optional call or mandatory redemption pursuant to
sinking fund provisions, in each case prior to their stated maturity. A
bond subject to optional call is one which is subject to redemption or
refunding prior to maturity at the option of the issuer, often at a
premium over par. A refunding is a method by which a bond issue is
redeemed, at or before maturity, by the proceeds of a new bond issue. A
bond subject to sinking fund redemption is one which is subject to
partial call from time to time at par from a fund accumulated for the
scheduled retirement of a portion of an issue prior to maturity. Special
or extraordinary redemption provisions may provide for redemption at par
of all or a portion of an issue upon the occurrence of certain
circumstances, which may be prior to the optional call dates shown in the
"Schedules of Investments of the Trust" in Part Two. Redemption pursuant
to optional call provisions is more likely to occur, and redemption
pursuant to special or extraordinary redemption provisions may occur,
when the Bonds have an offering side evaluation which represents a
premium over par, that is, when they are able to be refinanced at a lower
cost. The proceeds from any such call or redemption pursuant to sinking
fund provisions as well as proceeds from the sale of Bonds and from Bonds
which mature in accordance with their terms, unless utilized to pay for
Units tendered for redemption, will be distributed to Unitholders and
will not be used to purchase additional Bonds for the Trust.
Accordingly, any such call, redemption, sale or maturity will reduce the
size and diversity of the Trust and the net annual interest income and
may reduce the Estimated Current Return and the Estimated Long-Term
Return. See "Interest, Estimated Long-Term Return and Estimated Current
Return." The call, redemption, sale or maturity of Bonds also may have
tax consequences to a Unitholder. See "Federal Tax Status." Information
with respect to the call provisions and maturity dates of the Bonds is
contained in "Schedules of Investments."
Risk Factors. Public Utility Issues. Certain of the Bonds in each
Trust are obligations of public utility issuers. In general, public
utilities are regulated monopolies engaged in the business of supplying
light, water, power, heat, transportation or means of communication.
Historically, the utilities industry has provided investors in securities
issued by companies in this industry with high levels of reliability,
stability and relative total return on their investments. However, an
investment in the Trusts should be made with an understanding of the
characteristics of such issuers and the risks which such an investment
may entail. General problems of such issuers would include the
difficulty in financing large construction programs in an inflationary
period, the limitations on operations and increased costs and delays
attributable to environmental considerations, the difficulty of the
capital market in absorbing utility debt, the difficulty in obtaining
fuel at reasonable prices and the effect of energy conservation. All of
such issuers have been experiencing certain of these problems in varying
degrees. In addition, federal, state and municipal governmental
authorities may from time to time review existing, and impose additional,
regulations governing the licensing, construction and operation of
nuclear power plants, which may adversely affect the ability of the
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issuers of certain of the Bonds in the portfolio to make payments of
principal and/or interest on such Bonds.
Utilities are generally subject to extensive regulation by state
utility commissions which, for example, establish the rates which may be
charged and the appropriate rate of return on an approved asset base,
which must be approved by the state commissions. Certain utilities have
had difficulty from time to time in persuading regulators, who are
subject to political pressures, to grant rate increases necessary to
maintain an adequate return on investment and voters in many states have
the ability to impose limits on rate adjustments (for example, by
initiative or referendum). Any unexpected limitations could negatively
affect the profitability of utilities whose budgets are planned far in
advance. Also, changes in certain accounting standards currently under
consideration by the Financial Accounting Standards Board could cause
significant write-downs of assets and reductions in earnings for many
investor-owned utilities. In addition, gas pipeline and distribution
companies have had difficulties in adjusting to short and surplus energy
supplies, enforcing or being required to comply with long-term contracts
and avoiding litigation from their customers, on the one hand, or
suppliers, on the other.
Certain of the issuers of the Bonds in a Trust may own or operate
nuclear generating facilities. Governmental authorities may from time to
time review existing, and impose additional, requirements governing the
licensing, construction and operation of nuclear power plants. Nuclear
generating projects in the electric utility industry have experienced
substantial cost increases, construction delays and licensing
difficulties. These have been caused by various factors, including
inflation, high financing costs, required design changes and rework,
allegedly faulty construction, objections by groups and governmental
officials, limits on the ability to finance, reduced forecasts of energy
requirements and economic conditions. This experience indicates that the
risk of significant cost increases, delays and licensing difficulties
remains present through completion and achievement of commercial
operation of any nuclear project. Also, nuclear generating units in
service have experienced unplanned outages or extensions of scheduled
outages due to equipment problems or new regulatory requirements
sometimes followed by a significant delay in obtaining regulatory
approval to return to service. A major accident at a nuclear plant
anywhere, such as the accident at a plant in Chernobyl, U.S.S.R., could
cause the imposition of limits or prohibitions on the operation,
construction or licensing of nuclear units in the United States.
In view of the uncertainties discussed above, there can be no
assurance that any bond issuer's share of the full cost of nuclear units
under construction ultimately will be recovered in rates or of the extent
to which a bond issuer could earn an adequate return on its investment in
such units. The likelihood of a significantly adverse event occurring in
any of the areas of concern described above varies, as does the potential
severity of any adverse impact. It should be recognized, however, that
one or more of such adverse events could occur and individually or
collectively could have a material adverse impact on the financial
condition or the results of operations or on a bond issuer's ability to
make interest and principal payments on its outstanding debt.
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Other general problems of the gas, water, telephone and electric
utility industry (including state and local joint action power agencies)
include difficulty in obtaining timely and adequate rate increases,
difficulty in financing large construction programs to provide new or
replacement facilities during an inflationary period, rising costs of
rail transportation to transport fossil fuels, the uncertainty of
transmission service costs for both interstate and intrastate
transactions, changes in tax laws which adversely affect a utility's
ability to operate profitably, increased competition in service costs,
reductions in estimates of future demand for electricity and gas in
certain areas of the country, restrictions on operations and increased
cost and delays attributable to environmental considerations, uncertain
availability and increased cost of capital, unavailability of fuel for
electric generation at reasonable prices, including the steady rise in
fuel costs and the costs associated with conversion to alternate fuel
sources such as coal, availability and cost of natural gas for resale,
technical and cost factors and other problems associated with
construction, licensing, regulation and operation of nuclear facilities
for electric generation, including among other considerations the
problems associated with the use of radioactive materials and the
disposal of radioactive wastes, and the effects of energy conservation.
Each of the problems referred to could adversely affect the ability of
the issuers of any utility Bonds in a Trust to make payments due on these
Bonds.
In addition, the ability of state and local joint action power
agencies to make payments on bonds they have issued is dependent in large
part on payments made to them pursuant to power supply or similar
agreements. Courts in Washington and Idaho have held that certain
agreements between Washington Public Power Supply System ("WPPSS") and
the WPPSS participants are unenforceable because the participants did not
have the authority to enter into the agreements. While these decisions
are not specifically applicable to agreements entered into by public
entities in other states, they may cause a reexamination of the legal
structure and economic viability of certain projects financed by joint
action power agencies, which might exacerbate some of the problems
referred to above and possibly lead to legal proceedings questioning the
enforceability of agreements upon which payment of these bonds may
depend.
In addition, business conditions of the telephone industry in
general may affect the performance of the Trust Fund. General problems
of telephone companies include regulation of rates for service by the FCC
and various state or other regulatory agencies. However, over the last
several years regulation has been changing, resulting in increased
competition. The new approach is more market oriented, more flexible and
more complicated. For example, Federal and certain state regulators have
instituted "price cap" regulation which couples protection of rate payers
for basic services with flexible pricing for ancillary services. These
new approaches to regulation could lead to greater risks as well as
greater rewards for operating telephone companies such as those in the
Trust Funds. Inflation has substantially increased the operating
expenses and costs of plants required for growth, service, improvement
and replacement of existing plants. Continuing cost increases, to the
extent not offset by improved productivity and revenues from increased
business, would result in a decreasing rate of return and a continuing
need for rate increases. Although allowances are generally made in rate-
making proceedings for cost increases, delays may be experienced in
obtaining the necessary rate increases and there can be no assurance that
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the regulatory agencies will grant rate increases adequate to cover
operating and other expenses and debt service requirements. To meet
increasing competition, telephone companies will have to commit
substantial capital, technological and marketing resources. Telephone
usage, and therefore revenues, could also be adversely affected by any
sustained economic recession. New technology such as cellular service
and fiber optics, will require additional capital outlays. The uncertain
outcomes of future labor agreements may also have a negative impact on
the telephone companies. Each of these problems could adversely affect
the ability of the telephone company issuers of any Bonds in a portfolio
to make payments of principal and interest on their Bonds.
Zero Coupon U.S. Treasury Obligations;. Certain of the Bonds in
certain of the Trusts are "zero coupon" U.S. Treasury bonds. Zero coupon
bonds are purchased at a deep discount because the buyer receives only
the right to receive a final payment at the maturity of the bond and does
not receive any periodic interest payments. The effect of owning deep
discount bonds which do not make current interest payments (such as the
zero coupon bonds) is that a fixed yield is earned not only on the
original investment but also, in effect, on all discount earned during
the life of such income on such obligation at a rate as high as the
implicit yield on the discount obligation, but at the same time
eliminates the holder's ability to reinvest at higher rates in the
future. For this reason, zero coupon bonds are subject to substantially
greater price fluctuations during periods of changing market interest
rates than are securities of comparable quality which pay interest.
General Trust Information. Because certain of the Bonds in each
Trust may from time to time under certain circumstances be sold or
redeemed or will mature in accordance with their terms and because the
proceeds from such events will be distributed to Unitholders and will not
be reinvested, no assurance can be given that a Trust will retain for any
length of time its present size and composition. Neither the Sponsor nor
the Trustee shall be liable in any way for any default, failure or defect
in any Bond. The Trustee will have no power to vary the investment of a
Trust; i.e., the Trustee will have no managerial power to take advantage
of market variations to improve a Unitholder's investment.
To the best of the Sponsor's knowledge, there is no litigation
pending as of the date of this Part One Prospectus in respect of any Bond
which might reasonably be expected to have a material adverse effect on
the Trust Funds. At any time after the date of this Part One Prospectus,
litigation may be instituted on a variety of grounds with respect to the
Bonds. The Sponsor is unable to predict whether any such litigation may
be instituted, or if instituted, whether such litigation might have a
material adverse effect on the Trust Funds. The Sponsor and the Trustee
shall not be liable in any way for any default, failure or defect in any
Bond.
INSURANCE ON THE PORTFOLIOS
All Bonds in each Series of the Trust, except for the U.S. Treasury
obligations, are insured as to the scheduled payment of interest and
principal, either by the Sponsor or by the Bond issuer under a financial
guaranty insurance policy obtained from MBIA Insurance Corporation ("MBIA
Corporation"). See "Schedules of Investments" in Part Two. The premium
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for each such insurance policy has been paid in advance by such issuer or
the Sponsor and each such policy is non-cancelable and will remain in
force so long as the Bonds are outstanding and MBIA Corporation remains
in business. No premiums for such insurance are paid by the Trusts. If
MBIA Corporation is unable to meet its obligations under its policy or if
the rating assigned to the claims-paying ability of MBIA Corporation
deteriorates, no other insurer has any obligation to insure any issue
adversely affected by either of these events.
The aforementioned insurance guarantees the scheduled payment of
principal and interest on all of the Bonds in each Trust, except for the
U.S. Treasury obligations. It does not guarantee the market value of the
Bonds or the value of the Units of a Series of the Trust. This insurance
is effective so long as the Bond is outstanding, whether or not held by a
Trust. Therefore, any such insurance may be considered to represent an
element of market value in regard to the Bonds, but the exact effect, if
any, of this insurance on such market value cannot be predicted.
MBIA Corporation is the principal operating subsidiary of MBIA,
Inc., a New York Stock Exchange listed company. MBIA, Inc. is not
obligated to pay the debts of or claims against MBIA Corporation. MBIA
Corporation, which commenced municipal bond insurance operations on
January 5, 1987, is a limited liability corporation rather than a several
liability association. MBIA Corporation is domiciled in the State of New
York and licensed to do business in all 50 states, the District of
Columbia, the Commonwealth of the Northern Mariana Islands, the
Commonwealth of Puerto Rico, the Virgin Islands of the United States and
the Territory of Guam.
As of September 30, 1996, MBIA Corporation had admitted assets of
$4.3 billion (unaudited), total liabilities of $2.9 billion (unaudited),
and total policyholder's surplus of $1.4 billion (unaudited), prepared in
accordance with statutory accounting practices prescribed or permitted by
insurance regulatory authorities. As of December 31, 1995, MBIA
Corporation had admitted assets of $3.8 billion (audited), total
liabilities of $2.5 billion (audited) and total capital and surplus of
$1.3 billion (audited) determined in accordance with statutory accounting
practices prescribed or permitted by insurance regulatory authorities.
Copies of MBIA Corporation's financial statements prepared in accordance
with statutory accounting practices are available from MBIA Corporation.
The address of MBIA Corporation is 113 King Street, Armonk, New York
10504.
Effective December 31, 1989, MBIA, Inc. acquired Bond Investors
Group, Inc. On January 5, 1990, the Insurer acquired all of the
outstanding stock of Bond Investors Group, Inc., the parent of BIG, now
known as MBIA Insurance Corp. of Illinois. Through a reinsurance
agreement, BIG had ceded all of its net insured risks, as well as its
unearned premium and contingency reserves, to the Insurer and the Insurer
has reinsured BIG's net outstanding exposure.
Moody's Investors Service rates all bonds issues insured by MBIA
"Aaa" and short-term loans "MIG1," both designated to be of the highest
quality. Standard & Poor's rates all new issues insured by MBIA "AAA."
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Because the Bonds in each Series of the Trust (other than the U.S.
Treasury obligations) are insured as to the scheduled payment of
principal and interest and on the basis of the financial condition and
the method of operation of MBIA Corporation, Moody's Investors Service,
Inc., on the original Date of Deposit of each Series, assigned to each
Trust's Units its "AAA" investment rating. This is the highest rating
assigned to securities by such rating agency. These ratings should not
be construed as an approval of the offering of the Units by Standard &
Poor's or as a guarantee of the market value of a Trust or the Units
thereof.
Bonds in a Trust for which insurance has been obtained by the issuer
thereof or by the Sponsor from MBIA Corporation (all of which were rated
"AAA") may or may not have a higher yield than uninsured bonds rated
"AAA" by Standard & Poor's. In selecting Bonds for the portfolio of the
Trusts, the Sponsor has applied the criteria herein before described.
RETIREMENT PLANS
Units of the Trust Funds may be well suited for purchase by
Individual Retirement Accounts, Keogh Plans, pension funds and other
qualified retirement plans, certain of which are briefly described below.
Generally, capital gains and income received under each of the
foregoing plans are deferred from federal taxation. All distributions
from such plans are generally treated as ordinary income but may, in some
cases, be eligible for special income averaging or tax-deferred rollover
treatment. Investors considering participation in any such plan should
review specific tax laws related thereto and should consult their
attorneys or tax advisers with respect to the establishment and
maintenance of any such plan. Such plans are offered by brokerage firms
and other financial institutions. The Trust Funds will waive the $1,000
minimum investment requirement for IRA accounts. The minimum investment
is $250 for tax-deferred plans such as IRA accounts. Fees and charges
with respect to such plans may vary.
Individual Retirement Account--IRA. Any individual under age 70 1/2
may contribute the lesser of $2,000 or 100% of compensation to an IRA
annually. Such contributions are fully deductible if the individual (and
spouse if filing jointly) are not covered by a retirement plan at work.
The deductible amount an individual may contribute to an IRA will be
reduced $10 for each $50 of adjusted gross income over $25,000 ($40,000
if married, filing jointly or $0 if married, filing separately), if
either an individual or their spouse (if married, filing jointly) is an
active participant in an employer maintained retirement plan. Thus, if
an individual has adjusted gross income over $35,000 ($50,000 if married,
filing jointly or $0 if married, filing separately) and if an individual
or their spouse is an active participant in an employer maintained
retirement plan, no IRA deduction is permitted. Under the Internal
Revenue Code of 1986, as amended (the "Code"), an individual may make
nondeductible contributions to the extent deductible contributions are
not allowed. All distributions from an IRA (other than the return of
certain excess contributions) are treated as ordinary income for federal
income taxation purposes provided that under the Code an individual need
not pay tax on the return of nondeductible contributions. The amount
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includable in income for the taxable year is the portion of the amount
withdrawn for the taxable year as the individual's aggregate deductible
IRA contributions bear to the aggregate balance of all IRAs of the
individual.
A participant's interest in an IRA must be, or commence to be,
distributed to the participant not later than April 1 of the calendar
year following the year during which the participant attains age 70 1/2.
Distributions made before attainment of age 59 1/2, except in the case of
the participant's death or disability, or where the amount distributed is
to be rolled over to another IRA, or where the distributions are taken as
a series of substantially equal periodic payments over the participant's
life or life expectancy (or the joint lives or life expectancies of the
participant and the designated beneficiary) are generally subject to a
surtax in an amount equal to 10% of the distribution. The amount of such
periodic payments may not be modified before the later of five years or
attainment of age 59 1/2. Excess contributions are subject to an annual
6% excise tax.
IRA applications, disclosure statements and trust agreements are
available from the Sponsor upon request.
Qualified Retirement Plans. Units of a Trust may be purchased by
qualified pension or profit sharing plans maintained by corporations,
partnerships or sole proprietors. The maximum annual contribution for a
participant in a money purchase pension plan or to paired profit sharing
and pension plans is the lessor of 25% of compensation or $30,000.
Prototype plan documents for establishing qualified retirement plans are
available from the Sponsor upon request.
Excess Distributions Tax. In addition to the other taxes due by
reason of a plan distribution, a tax of 15% may apply to certain
aggregate distributions from IRAs, Keogh plans, and corporate retirement
plans to the extent such aggregate taxable distributions exceed specified
amounts (generally $150,000, as adjusted) during a tax year. This 15%
tax will not apply to distributions on account of death, qualified
domestic relations orders or amounts eligible for tax-deferred rollover
treatment. In general, for lump sum distributions the excess
distributions over $750,000 (as adjusted) will be subject to the 15% tax.
The Trustee, has agreed to act as custodian for certain retirement
plan accounts. An annual fee, if not paid separately, will be assessed
by the Trustee and paid through the liquidation of shares of the
reinvestment account. An individual wishing the Trustee to act as
custodian must complete a Ranson UIT/IRA application and forward it along
with a check made payable to the Trustee. Certificates for Individual
Retirement Accounts cannot be issued.
DISTRIBUTION REINVESTMENT
Each Unitholder of a Trust may elect to have distributions of
principal (including capital gains, if any) or interest or both
automatically invested without charge in shares of any open-end mutual
fund registered in such Unitholder's state of residence which is
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underwritten or advised by Zurich Kemper Investments, Inc. (the "Kemper
Funds"), other than those Kemper Funds sold with a contingent deferred
sales charge.
If individuals indicate they wish to participate in the Reinvestment
Program but do not designate a reinvestment fund, the Program Agent
referred to below will contact such individuals to determine which
reinvestment fund or funds they wish to elect. Since the portfolio
securities and investment objectives of such Kemper Funds may differ
significantly from that of the Trust Funds, Unitholders should carefully
consider the consequences before selecting such Kemper Funds for
reinvestment. Detailed information with respect to the investment
objectives and the management of the Funds is contained in their
respective prospectuses, which can be obtained from any Trust Underwriter
upon request. An investor should read the prospectus of the reinvestment
fund selected prior to making the election to reinvest. Unitholders who
desire to have such distributions automatically reinvested should inform
their broker at the time of purchase or should file with the Program
Agent a written notice of election.
Unitholders who are receiving distributions in cash may elect to
participate in distribution reinvestment by filing with the Program Agent
an election to have such distributions reinvested without charge. Such
election must be received by the Program Agent at least ten days prior to
the Record Date applicable to any distribution in order to be in effect
for such Record Date. Any such election shall remain in effect until a
subsequent notice is received by the Program Agent. See "Distributions
to Unitholders."
The Program Agent is the Trustee. All inquiries concerning
participation in distribution reinvestment should be directed to the
Program Agent at its unit investment trust division office.
INTEREST, ESTIMATED LONG-TERM RETURN AND ESTIMATED CURRENT RETURN
As of the opening of business on the date indicated therein, the
Estimated Long-Term Returns and the Estimated Current Returns for each
Series of the Trust were as set forth under "Essential Information" for
the applicable Trust in Part Two of this Prospectus. Estimated Current
Returns are calculated by dividing the estimated net annual interest
income per Unit by the Public Offering Price. The estimated net annual
interest income per Unit will vary with changes in fees and expenses of
the Trustee, the Sponsor and the Evaluator and with the principal
prepayment, redemption, maturity, exchange or sale of Bonds while the
Public Offering Price will vary with changes in the offering price of the
underlying Bonds and with changes in accrued interest or Purchased
Interest and Daily Accrued Interest, as applicable; therefore, there is
no assurance that the present Estimated Current Returns will be realized
in the future. Estimated Long-Term Returns are calculated using a
formula which (1) takes into consideration, and determines and factors in
the relative weightings of, the market values, yields (which takes into
account the amortization of premiums and the accretion of discounts) and
estimated retirements of all of the Bonds in a Trust and (2) takes into
account the expenses and sales charge associated with each Trust Unit.
Since the market values and estimated retirements of the Bonds and the
expenses of the Trust will change, there is no assurance that the present
Estimated Long-Term Returns will be realized in the future. Estimated
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Current Returns and Estimated Long-Term Returns are expected to differ
because the calculation of Estimated Long-Term Returns reflects the
estimated date and amount of principal returned while Estimated Current
Returns calculations include only net annual interest income and Public
Offering Price.
FEDERAL TAX STATUS
For purposes of the following discussion and opinions, it is assumed
that each of the obligations is debt for Federal income tax purposes. In
the opinion of Chapman and Cutler, special counsel for the Sponsor, under
existing law:
1. Each Trust is not an association taxable as a corporation
for Federal income tax purposes.
2. Each Unitholder of the Trust is considered to be the owner
of a pro rata portion of each of a Trust's assets for Federal income
tax purposes under Subpart E, Subchapter J of Chapter 1 of the
Internal Revenue Code of 1986 (the "Code"); and the income will be
treated as income of the Unitholders. Each Unitholder will be
considered to have received his pro rata share of income derived
from each Trust asset when such income is considered to be received
by a Trust. Each Unitholder will also be required to include in
taxable income for Federal income tax purposes, original issue
discount with respect to his interest in any Bonds held by a Trust
at the same time and in the same manner as though the Unitholder
were the direct owner of such interest.
3. Each Unitholder will have a taxable event when a Bond is
disposed of (whether by sale, exchange, liquidation, redemption, or
payment at maturity) or when the Unitholder redeems or sells his
Units. A Unitholder's tax basis in his Units will equal his tax
basis in his pro rata portion of all the assets of the Trust. Such
basis is determined (before the adjustments described below) by
apportioning the tax basis for the Units among each of the Trust
assets according to value as of the valuation date nearest the date
of acquisition of the Units. Unitholders must reduce the tax basis
of their Units for their share of accrued interest received, if any,
on Bonds delivered after the date the Unitholders pay for their
Units to the extent such interest accrued on such Bonds before the
date the Trust acquired ownership of the Bonds (and the amount of
this reduction may exceed the amount of accrued interest paid to the
sellers) and, consequently, such Unitholders may have an increase in
taxable gain or reduction in capital loss upon the disposition of
such Units. Gain or loss upon the sale or redemption of Units is
measured by comparing the proceeds of such sale or redemption with
the adjusted basis of the Units. If the Trustee disposes of Bonds
(whether by sale, exchange, payment at maturity, redemption or
otherwise), gain or loss is recognized to the Unitholder (subject to
various nonrecognition provisions of the Code). The amount of any
such gain or loss is measured by comparing the Unitholders pro rata
share of the total proceeds from such disposition with his basis for
his fractional interest in the asset disposed of. The basis of each
Unit and of each Bond which was issued with original issue discount
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(or which has market discount) (including any U.S. Treasury
obligations) must be increased by the amount of accrued original
issue discount (and accrued market discount if the Unitholder elects
to include market discount in income as it accrues) and the basis of
each Unit and of each Bond which was purchased by a Trust at a
premium must be reduced by the annual amortization of bond premium
which the Unitholder has properly elected to amortize under
Section 171 of the Code. The tax basis reduction requirements of
the Code relating to amortization of bond premium may, under some
circumstances, result in the Unitholder realizing a taxable gain
when his Units are sold or redeemed for an amount equal to or less
than his original cost. The U.S. Treasury obligations held by a
Trust, if any, are treated as bonds that were originally issued at
an original issue discount provided, pursuant to a Treasury
Regulation (the "Regulation") issued on December 28, 1992, that the
amount of original issue discount determined under Section 1286 of
the Code is not less than a "de minimis" amount as determined
thereunder (as discussed below under "Original Issue Discount").
Because U.S. Treasury obligations represent interests in "stripped"
U.S. Treasury bonds, a Unitholder's initial cost for his pro rata
portion of each U.S. Treasury obligation held by a Trust (determined
at the time he acquires his Units, in the manner described above)
shall be treated as its "purchase price" by the Unitholder.
Original issue discount is effectively treated as interest for
Federal income tax purposes, and the amount of original issue
discount in this case is generally the difference between the Bond's
purchase price and its stated redemption price at maturity. A
Unitholder will be required to include in gross income for each
taxable year the sum of his daily portions of original issue
discount attributable to the Bonds held by a Trust as such original
issue discount accrues and will, in general, be subject to Federal
income tax with respect to the total amount of such original issue
discount that accrues for such year even though the income is not
distributed to the Unitholders during such year to the extent it is
not less than a "de minimis" amount as determined under the
Regulation. To the extent the amount of such discount is less than
the respective "de minimis" amount, such discount shall be treated
as zero. In general, original issue discount accrues daily under a
constant interest rate method which takes into account the semi-
annual compounding of accrued interest. In the case of U.S Treasury
obligations, this method will generally result in an increasing
amount of income to the Unitholders each year. Unitholders should
consult their tax advisers regarding the Federal income tax
consequences and accretion of original issue discount.
Limitations on Deductibility of Trust Expenses by Unitholders. Each
Unitholder's pro rata share of each expense paid by a Trust is deductible
by the Unitholder to the same extent as though the expense had been paid
directly by him. It should be noted that as a result of the Tax Reform
Act of 1986 (the "Act"), certain miscellaneous itemized deductions, such
as investment expenses, tax return preparation fees and employee business
expenses will be deductible by an individual only to the extent they
exceed 2% of such individual's adjusted gross income. Unitholders may be
required to treat some or all of the expenses paid by a Trust as
miscellaneous itemized deductions subject to this limitation.
Premium. If a Unitholder's tax basis of his pro rata portion in any
Bonds held by a Trust exceeds the amount payable by the issuer of the
Bond with respect to such pro rata interest upon the maturity of the
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Bond, such excess would be considered premium which may be amortized by
the Unitholder at the Unitholder's election as provided in Section 171 of
the Code. Unitholders should consult their tax advisors regarding
whether such election should be made and the manner of amortizing
premium.
Original Issue Discount. Certain of the Bonds in each Trust may
have been acquired with "original issue discount." In the case of any
Bonds in a Trust acquired with "original issue discount" that exceeds a
"de minimis" amount as specified in the Code or in the case of U.S.
Treasury obligations as specified in the Regulation, such discount is
includable in taxable income of the Unitholders on an accrual basis
computed daily, without regard to when payments of interest on such Bonds
are received. The Code provides a complex set of rules regarding the
accrual of original issue discount. These rules provide that original
issue discount generally accrues on the basis of a constant compound
interest rate over the term of the Bonds. Unitholders should consult
their tax advisers as to the amount of original issue discount which
accrues.
Special original issue discount rules apply if the purchase price of
the Bond by a Trust exceeds its original issue price plus the amount of
original issue discount which would have previously accrued based upon
its issue price (its "adjusted issue price"). Similarly these special
rules would apply to a Unitholder if the tax basis of his pro rata
portion of a Bond issued with original issue discount exceeds his pro
rata portion of its adjusted issue price. Unitholders should also
consult their tax advisers regarding these special rules.
It is possible that a corporate Bond that has been issued at an
original issue discount may be characterized as a "high-yield discount
obligation" within the meaning of Section 163(e)(5) of the Code. To the
extent that such an obligation is issued at a yield in excess of six
percentage points over the applicable Federal rate, a portion of the
original issue discount on such obligation will be characterized as a
distribution on stock (e.g., dividends) for purposes of the dividends
received deduction which is available to certain corporations with
respect to certain dividends received by such corporation.
Market Discount. If a Unitholder's tax basis in his pro rata
portion of Bonds is less than the allocable portion of such Bond's stated
redemption price at maturity (or, if issued with original issue discount,
the allocable portion of its "revised issue price"), such difference will
constitute market discount unless the amount of market discount is "de
minimis" as specified in the Code. Market discount accrues daily
computed on a straight line basis, unless the Unitholder elects to
calculate accrued market discount under a constant yield method. The
market discount rules do not apply to U.S. Treasury obligations because
they are stripped debt instruments subject to special original issue
discount rules as discussed above. Unitholders should consult their tax
advisors regarding whether such election should be made and as to the
amount of market discount which accrues.
Accrued market discount is generally includable in taxable income to
the Unitholders as ordinary income for Federal tax purposes upon the
receipt of serial principal payments on the Bonds, on the sale, maturity
or disposition of such Bonds by a Trust, and on the sale by a Unitholder
of Units, unless a Unitholder elects to include the accrued market
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discount in taxable income as such discount accrues. If a Unitholder
does not elect to annually include accrued market discount in taxable
income as it accrues, deductions for any interest expense incurred by the
Unitholder which is incurred to purchase or carry his Units will be
reduced by such accrued market discount. In general, the portion of any
interest expense which was not currently deductible would ultimately be
deductible when the accrued market discount is included in income.
Unitholders should consult their tax advisers regarding whether an
election should be made to include market discount in income as it
accrues and as to the amount of interest expense which may not be
currently deductible.
Computation of the Unitholder's Tax Basis. The tax basis of a
Unitholder with respect to his interest in a Bond is increased by the
amount of original issue discount (and market discount, if the Unitholder
elects to include market discount, if any, on the Bonds held by a Trust
in income as it accrues) thereon properly included in the Unitholder's
gross income as determined for Federal income tax purposes and reduced by
the amount of any amortized premium which the Unitholder has properly
elected to amortize under Section 171 of the Code. A Unitholder's tax
basis in his Units will equal his tax basis in his pro rata portion of
all of the assets of the Trust.
Recognition of Taxable Gain or Loss upon Disposition of Obligations
by a Trust or Disposition of Units. A Unitholder will recognize taxable
capital gain (or loss) when all or part of his pro rata interest in a
Bond is disposed of in a taxable transaction for an amount greater (or
less) than his tax basis therefor subject to various non-recognition
provisions of the Code. As previously discussed, gain realized on the
disposition of the interest of a Unitholder in any Bond deemed to have
been acquired with market discount will be treated as ordinary income to
the extent the gain does not exceed the amount of accrued market discount
not previously taken into income. Any capital gain or loss arising from
the disposition of a Bond by a Trust or the disposition of Units by a
Unitholder will generally be short-term capital gain or loss unless the
Unitholder has held his Units for more than one year in which case such
capital gain or loss will be generally long-term. For taxpayers other
than corporations, net capital gains (which is defined as net long-term
capital gain over net short-term capital loss for a taxable year) are
subject to a maximum marginal stated tax rate of 28 percent. However, it
should be noted that legislative proposals are introduced from time to
time that affect tax rates and could affect relative differences at which
ordinary income and capital gains are taxed. The tax basis reduction
requirements of the Code relating to amortization of bond premium may
under some circumstances, result in the Unitholder realizing taxable gain
when his Units are sold or redeemed for an amount equal to or less than
his original cost.
"The Revenue Reconciliation Act of 1993" (the "Tax Act") raised tax
rates on ordinary income while capital gains remain subject to a 28
percent maximum stated rate for taxpayers other than corporations.
Because some or all capital gains are taxed at a comparatively lower rate
under the Tax Act, the Tax Act includes a provision that recharacterizes
capital gains as ordinary income in the case of certain financial
transactions that are "conversion transactions" effective for
transactions entered into after April 30, 1993. Unitholders and
prospective investors should consult with their tax advisers regarding
the potential effect of this provision on their investment in Units.
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If the Unitholder disposes of a Unit, he is deemed thereby to have
disposed of his entire pro rata interest in all Trust assets including
his pro rata portion of all of the Bonds represented by the Unit. This
may result in a portion of the gain, if any, on such sale being taxable
as ordinary income under the market discount rules (assuming no election
was made by the Unitholder to include market discount in income as it
accrues) as previously discussed.
Foreign Investors. A Unitholder who is a foreign investor (i.e., an
investor other than a U.S. citizen or resident or a U.S. corporation,
partnership, estate or trust) will generally not be subject to United
States federal income taxes, including withholding taxes, on interest
income (including any original issue discount) on, or any gain from the
sale or other disposition of, his pro rata interest in any Bond or the
sale of his Units provided that all of the following conditions are met:
(i) the interest income or gain is not effectively connected with the
conduct by the foreign investor of a trade or business within the United
States, (ii) if the interest is United States source income (which is the
case for most securities issued by United States issuers), the Bond is
issued after July 18, 1984 (which is the case for each Bond held by a
Trust), then the foreign investor does not own, directly or indirectly,
10% or more of the total combined voting power of all classes of voting
stock of the issuer of the Bond and the foreign investor is not a
controlled foreign corporation related (within the meaning of
Section 864(d)(4) of the Code) to the issuer of the Bond, (iii) with
respect to any gain, the foreign investor (if an individual) is not
present in the United States for 183 days or more during his or her
taxable year, and (iv) the foreign investor provides all certification
which may be required of his status (foreign investors may contact the
Sponsor to obtain a Form W-8 which must be filed with the Trustee and
refiled every three calendar years thereafter). Foreign investors should
consult their tax advisers with respect to United States tax consequences
of ownership of Units.
It should be noted that the Tax Act includes a provision which
eliminates the exemption from United States taxation, including
withholding taxes, for certain "contingent interest." The provision
applies to interest received after December 31, 1993. No opinion is
expressed herein regarding the potential applicability of this provision
and whether United States taxation or withholding taxes could be imposed
with respect to income derived from the Units as a result thereof.
Unitholders and prospective investors should consult with their tax
advisers regarding the potential effect of this provision on their
investment in Units.
General. Each Unitholder (other than a foreign investor who has
properly provided the certifications described in the preceding
paragraph) will be requested to provide the Unitholder's taxpayer
identification number to the Trustee and to certify that the Unitholder
has not been notified that payments to the Unitholder are subject to back-
up withholding. If the proper taxpayer identification number and
appropriate certification are not provided when requested, distributions
by a Trust to such Unitholder including amounts received upon the
redemption of the Units will be subject to back-up withholding.
The foregoing discussion relates only to United States Federal
income taxes; Unitholders may be subject to state and local taxation in
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other jurisdictions (including a foreign investor's country of
residence). Unitholders should consult their tax advisers regarding
potential state, local, or foreign taxation with respect to the Units.
TAX REPORTING AND REALLOCATION
Because the Trusts receive interest and makes monthly distributions
based upon a Trust's expected total collections of interest and any
anticipated expenses, certain tax reporting consequences may arise. A
Trust is required to report Unitholder information to the Internal
Revenue Service ("IRS"), based upon the actual collection of interest by
such Trust on the securities in such Trust, without regard to such
Trust's expenses or to such Trust's payments to Unitholders during the
year. If distributions to Unitholders exceed interest collected, the
difference will be reported as a return of principal which will reduce a
Unitholder's cost basis in its Units (and its pro rata interest in the
securities in a Trust). A Unitholder must include in taxable income the
amount of income reported by a Trust to the IRS regardless of the amount
distributed to such Unitholder. If a Unitholder's share of taxable
income exceeds income distributions made by a trust to such Unitholder,
such excess is in all likelihood attributable to the payment of
miscellaneous expenses of such Trust which will not be deductible by an
individual Unitholder as an itemized deduction except to the extent that
the total amount of certain itemized deductions, such as investments
expenses (which would include the Unitholder's share of Trust expenses),
tax return preparation fees and employee business expenses, exceeds 2% of
such Unitholders's adjusted gross income. Alternatively, in certain
cases, such excess may represent an increase in the Unitholder's tax
basis in the Units owned. Investors with questions regarding these
issues should consult with their tax advisers.
PUBLIC OFFERING OF UNITS
Public Offering Price. Units of each Series of the Trust are
offered at the Public Offering Price. The Public Offering Price per Unit
of a Series is equal to the aggregate bid side evaluation of the Bonds in
the Series' portfolio (as determined pursuant to the terms of a contract
with the Evaluator, Cantor Fitzgerald & Co., a non-affiliated firm
regularly engaged in the business of evaluating, quoting or appraising
comparable securities), plus or minus (a) cash, if any, in the Principal
Account, held or owed by the Series, (b) Purchased Interest (if any) and
(c) Daily Accrued Interest, divided by the number of outstanding Units of
that Series of the Trust, plus the sales charge applicable. The sales
charge is based upon the dollar weighted average maturity of a Trust and
is determined in accordance with the table set forth below. For purposes
of this computation, Bonds will be deemed to mature on their expressed
maturity dates unless: (a) the Bonds have been called for redemption or
funds or securities have been placed in escrow to redeem them on an
earlier call date, in which case such call date will be deemed to be the
date upon which they mature; or (b) such Bonds are subject to a
"mandatory tender," in which case such mandatory tender will be deemed to
be the date upon which they mature. The effect of this method of sales
charge computation will be that different sales charge rates will be
applied to a Trust based upon the dollar weighted average maturity of
such Trust's portfolio, in accordance with the following schedule:
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<TABLE>
<CAPTION>
PERCENT OF
DOLLAR PUBLIC
WEIGHTED AVERAGE OFFERING AMOUNT
YEARS TO MATURITY PRICE INVESTED
----------------- ------------- --------------
<S> <C> <C>
0 to .99 years 0.00% 0.00%
1 to 3.99 years 2.00 2.041
4 to 7.99 years 3.50 3.627
8 to 14.99 years 4.50 4.712
15 or more years 5.50 5.820
</TABLE>
The sales charge per Unit will be reduced as set forth below:
<TABLE>
<CAPTION>
DOLLAR WEIGHTED AVERAGE
YEARS TO MATURITY*
4 TO 7.99 8 TO 14.99 15 OR MORE
--------- ---------- ----------
AMOUNT OF INVESTMENT SALES CHARGE (% OF PUBLIC OFFERING PRICE)
- -------------------- -----------------------------------------
<S> <C> <C> <C>
$1 to $99,999 3.50% 4.50% 5.50%
$100,000 to $499,999 3.25 4.25 5.00
$500,000 to $999,999 3.00 4.00 4.50
$1,000,000 or more 2.75 3.75 4.00
</TABLE>
- -----------------
*If the dollar weighted average maturity of a Trust is from 1 to
3.99 years, the sales charge is 2% and 1.5% of the Public Offering Price
for purchases of $1 to $249,999 and $250,000 or more, respectively.
The reduced sales charge as shown on the preceding charts will apply
to all purchases of Units on any one day by the same purchaser from the
same firm in the amounts stated herein, and for this purpose, purchases
of Units of a Series of the Trust will be aggregated with concurrent
purchases of Units of any other unit investment trust that may be offered
by the Sponsor. Additionally, Units purchased in the name of a spouse or
child (under 21) of such purchaser will be deemed to be additional
purchases by such purchaser. The reduced sales charge will also be
applicable to a trust or other fiduciary purchasing for a single trust
estate or single fiduciary account.
Units may be purchased at the Public Offering Price less the
concession the Sponsor typically allows to dealers and other selling
agents for purchases (see "Public Distribution of Units") by investors
who purchase Units through registered investment advisers, certified
financial planners or registered broker-dealers who in each case either
charge periodic fees for financial planning, investment advisory or asset
management services, or provide such services in connection with the
establishment of an investment account for which a comprehensive "wrap
fee" charge is imposed.
The Sponsor intends to permit officers, directors and employees of
the sponsor and Evaluator and, at the discretion of the Sponsor,
registered representatives of selling firms to purchase Units of the
Trust without a sales charge, although a transaction processing fee may
be imposed on such trades.
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The Public Offering Price on the date shown on the cover page of
Part Two of the Prospectus or on any subsequent date will vary from the
amounts stated under "Essential Information" in Part Two due to
fluctuations in the prices of the underlying Bonds. The aggregate bid
side evaluation of the Bonds shall be determined (a) on the basis of
current bid prices of the Bonds, (b) if bid prices are not available for
any particular Bond, on the basis of current bid prices for comparable
bonds, (c) by determining the value of the Bonds on the bid side of the
market by appraisal, or (d) by any combination of the above. The value of
insurance obtained by an issuer of Bonds or by the Sponsor is reflected
and included in the market value of such Bonds.
The foregoing evaluations and computations shall be made as of the
Evaluation Time stated under "Essential Information" in Part Two, on each
business day effective for all sales made during the preceding 24-hour
period, and for purposes of resales and repurchases of Units.
The interest on the Bonds in each Series of the Trust, less the
related estimated fees and expenses, is estimated to accrue in the annual
amounts per Unit set forth under "Essential Information" in Part Two.
The amount of net interest income which accrues per Unit may change as
Bonds mature or are redeemed, exchanged or sold, or as the expenses of a
Series of the Trust change or as the number of outstanding Units of such
Series changes.
Payment for Units must be made on or before the third business day
following purchase. If a Unitholder desires to have certificates
representing Units purchased, such certificates will be delivered as soon
as possible following a written request therefor. For information with
respect to redemption of Units purchased, but as to which certificates
requested have not been received, see "Redemption" below.
Accrued Interest. Included in the Public Offering Price of Units
for certain series of Kemper Defined Funds Insured Corporate Series and
all EVEREN Unit Investment Trusts Insured Corporate Series is accrued
interest as described herein. Accrued interest consists of two elements.
The first element arises as a result of accrued interest which is the
accumulation of unpaid interest on a bond from the last day on which
interest thereon was paid. Interest on the Bonds is actually paid either
monthly or semi-annually to a Trust. However, interest on the Bonds is
accounted for daily on an accrual basis. Because of this, a 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 of certain Trusts will have added to it the
proportionate share of accrued and undistributed interest to the date of
settlement.
The Trustee advanced the amount of accrued interest on the First
Settlement Date and the same was distributed to the Sponsor. Such
advance was repaid to the Trustee through the first receipts of interest
received on the Bonds. Consequently, the amount of accrued interest
added to the Public Offering Price of Units of certain Trusts included
only accrued interest arising after the First Settlement Date of a Trust,
less any distributions from the Interest Account subsequent to this First
Settlement Date. Since the First Settlement Date was the date of
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settlement for anyone who ordered Units on the Date of Deposit, no
accrued interest was added to the Public Offering Price of Units ordered
on the Date of Deposit.
The second element of accrued interest arises because of the
structure of the Interest Account. The Trustee has no cash for
distribution to Unitholders until it receives interest payments on the
Bonds in a Trust. The Trustee is obligated to provide its own funds, at
times, in order to advance interest distributions. The Trustee will
recover these advancements when such interest is received. Interest
Account balances are established so that it will not be necessary on a
regular basis for the Trustee to advance its own funds in connection with
such interest distributions. The Interest Account balances are also
structured so that there will generally be positive cash balances and
since the funds held by the Trustee will be used by it to earn interest
thereon, it benefits thereby (see "Expenses of the Trust").
Accrued interest is computed as of the initial record date of the
Trusts. On the date of the first distribution of interest to Unitholders
after the First Settlement Date, the interest collected by the Trustee
will be sufficient to repay its advances, to allow for accrued interest
under the monthly, quarterly and semi-annual plans of distribution and to
generate enough cash to commence distributions to Unitholders. If a
Unitholder sells or redeems all or a portion of his Units or if the Bonds
in a Trust are sold or otherwise removed or if a Trust is liquidated, he
will receive at that time his proportionate share of the accrued interest
computed to the settlement date in the case of sale or liquidation and to
the date of tender in the case of redemption of such Trust.
Purchased and Daily Accrued Interest. Included in the Public
Offering Price of Units for certain series of Kemper Defined Funds
Insured Corporate Series is accrued interest as described herein.
Accrued interest consists of two elements. The first element arises as a
result of accrued interest which is the accumulation of unpaid interest
on a bond from the later of the last day on which interest thereon was
paid or the date of original issuance of the bond. Interest on the coupon
Bonds in a Trust Fund is paid semi-annually to the Trust. A portion of
the aggregate amount of such accrued interest on the Bonds in a Trust to
the First Settlement Date of the Trust is referred to herein as
"Purchased Interest." Included in the Public Offering Price of the Trust
Units is the Purchased Interest. In an effort to reduce the amount of
Purchased Interest which would otherwise have to be paid by Unitholders,
the Trustee may advance a portion of the accrued interest to the Sponsor
as the unitholder of record as of the First Settlement Date. The second
element of accrued interest arises because the estimated net interest on
the Units in the Trust Fund is accounted for daily on an accrual basis
(herein referred to as "Daily Accrued Interest"). Because of this, the
Units always have an amount of interest earned but not yet paid or
reserved for payment. For this reason, the Public Offering Price of
Units will include the proportionate share of Daily Accrued Interest to
the date of settlement.
If a unitholder sells or redeems all or a portion of his Units or if
the Bonds are sold or otherwise removed or if a Trust Fund is liquidated,
he will receive at that time his proportionate share of the Purchased
Interest (if any) and Daily Accrued Interest computed to the settlement
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<PAGE>
date in the case of sale or liquidation and to the date of tender in the
case of redemption in a Trust Fund.
Accrued Interest;. Included in the Public Offering Price of Units
for Kemper Insured Corporate Trust series is accrued interest as
described herein. Accrued interest is the accumulation of unpaid
interest on a security from the last day on which interest thereon was
paid. Interest on Securities generally is paid semi-annually although a
Trust accrues such interest daily. Because of this, a Trust always has
an amount of interest earned but not yet collected by the Trustee. For
this reason, with respect to sales settling subsequent to the First
Settlement Date, the Public Offering Price of Units will have added to it
the proportionate share of accrued interest to the date of settlement.
Unitholders will receive on the next distribution date of a Trust the
amount, if any, of accrued interest paid on their Units.
In an effort to reduce the amount of accrued interest which would
otherwise have to be paid in addition to the Public Offering Price in the
sale of Units to the public, the Trustee will advance the amount of
accrued interest as of the First Settlement Date and the same will be
distributed to the Sponsor as the Unitholder of record as of the First
Settlement Date. Consequently, the amount of accrued interest to be
added to the Public Offering Price of Units will include only accrued
interest from the First Settlement Date to the date of settlement, less
any distributions from the Interest Account subsequent to the First
Settlement Date.
Because of the varying interest payment dates of the Securities,
accrued interest at any point in time will be greater than the amount of
interest actually received by the Trusts and distributed to Unitholders.
Therefore, there will always remain an item of accrued interest that is
added to the value of the Units. If a Unitholder sells or redeems all or
a portion of his Units, he will be entitled to receive his proportionate
share of the accrued interest from the purchaser of his Units. Since the
Trustee has the use of the funds held in the Interest Account for
distributions to Unitholders and since such Account is non-interest-
bearing to Unitholders, the Trustee benefits thereby.
Public Distribution of Units. The Sponsor has qualified Units for
sale in a number of states. Units will be sold through dealers who are
members of the National Association of Securities Dealers, Inc. and
through others. Sales may be made to or through dealers at prices which
represent discounts from the Public Offering Price as set forth in the
table below. Certain commercial banks are making Units of the Trusts
available to their customers on an agency basis. A portion of the sales
charge paid by their customers is retained by or remitted to the banks in
the amounts shown in the table below. Under the Glass-Steagall Act,
banks are prohibited from underwriting Trust Units; however, the Glass-
Steagall Act does permit certain agency transactions and the banking
regulators have indicated that these particular agency transactions are
permitted under such Act. In addition, state securities laws on this
issue may differ from the interpretations of Federal law expressed herein
and banks and financial institutions may be required to register as
dealers pursuant to state law.
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<TABLE>
<CAPTION>
DOLLAR WEIGHTED AVERAGE
YEARS TO MATURITY*
4 TO 7.99 8 TO 14.99 15 OR MORE
--------- ---------- ----------
AMOUNT OF INVESTMENT Discount per Unit (% of Public Offering Price)
- -------------------- ----------------------------------------------
<S> <C> <C> <C>
$1,000 to $99,999 2.00% 3.00% 4.00%
$100,000 to $499,999 1.75 2.75 3.50
$500,000 to $999,999 1.50 2.50 3.00
$1,000,000 or more 1.25 2.25 2.50
</TABLE>
- ---------------------
*If the dollar weighted average maturity of a Trust is from 1 to
3.99 years, the concession or agency commission is 1.00% of the Public
Offering Price.
In addition to such discounts, the Sponsor may, from time to time,
pay or allow an additional discount, in the form of cash or other
compensation, to dealers employing registered representatives who sell,
during a specified time period, a minimum dollar amount of Units of the
Trust and other unit investment trusts underwritten by the Sponsor.
The Sponsor reserves the right to change the levels of discounts at
any time. The difference between the discount and the sales charge will
be retained by the Sponsor.
The Sponsor reserves the right to reject, in whole or in part, any
order for the purchase of Units.
Profits of Sponsor. The Sponsor will retain a portion of the sales
charge on each Unit sold, representing the difference between the Public
Offering Price of the Units and the discounts allowed to firms selling
such Units. The Sponsor may realize additional profit or loss as a
result of the possible change in the daily evaluation of the Bonds in a
Trust, since the value of its inventory of Units may increase or
decrease.
MARKET FOR UNITS
While not obligated to do so, the Sponsor intends to, subject to
change at any time, maintain a market for Units of each Series of the
Trust offered hereby and to continuously offer to purchase said Units at
prices, as determined by the Evaluator, based on the aggregate bid prices
of the underlying Bonds of such Series, together with Purchased Interest
(if any) and Daily Accrued Interest to the expected date of settlement.
Accordingly, Unitholders who wish to dispose of their Units should
inquire of their broker or bank as to the current market price of the
Units prior to making a tender for redemption to the Trustee.
REDEMPTION
If more favorable terms do not exist in the over-the-counter market
described above, Unitholders of a Series of the Trust may cause their
Units to be redeemed by the Trustee by making a written request to the
Trustee, The Bank of New York, 101 Barclay Street, New York, New York
10286 and, in the case of Units evidenced by a certificate, by tendering
such certificate to the Trustee, properly endorsed or accompanied by a
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<PAGE>
written instrument or instruments of transfer in form satisfactory to the
Trustee. Unitholders must sign such written request, and such certificate
or transfer instrument, exactly as their names appear on the records of
the Trustee and on any certificate representing the Units to be redeemed.
If the amount of the redemption is $25,000 or less and the proceeds are
payable to the Unitholder(s) of record at the address of record, no
signature guarantee is necessary for redemptions by individual account
owners (including joint owners). Additional documentation may be
requested, and a signature guarantee is always required, from
corporations, executors, administrators, trustees, guardians or
associations. The signatures must be guaranteed by a participant in the
Securities Transfer Agents Medallion Program ("STAMP") or such other
signature program in addition to, or in substitution for, STAMP, as may
be accepted by the Trustee. A certificate should only be sent by
registered or certified mail for the protection of the Unitholder. Since
tender of the certificate is required for redemption when one has been
issued, Units represented by a certificate cannot be redeemed until the
certificate representing such Units has been received by the purchaser.
Redemption shall be made by the Trustee on the third business day
following the day on which a tender for redemption is received, (the
"Redemption Date"), by payment of cash equivalent to the Redemption Price
for that Series of the Trust, determined as set forth below under
"Computation of Redemption Price," as of the Evaluation Time stated under
"Essential Information" in Part Two, next following such tender,
multiplied by the number of Units being redeemed. The price received
upon redemption might be more or less than the amount paid by the
Unitholder depending on the value of the Bonds in the portfolio at the
time of redemption.
Under regulations issued by the Internal Revenue Service, the
Trustee is required to withhold a certain percentage of the principal
amount of a Unit redemption if the Trustee has not been furnished the
redeeming Unitholder's tax identification number in the manner required
by such regulations. Any amount so withheld is transmitted to the
Internal Revenue Service and may be recovered by the Unitholder only when
filing a tax return. Under normal circumstances the Trustee obtains the
Unitholder's tax identification number from the selling broker. However,
any time a Unitholder elects to tender Units for redemption, such
Unitholder should make sure that the Trustee has been provided a
certified tax identification number in order to avoid this possible "back-
up withholding." In the event the Trustee has not been previously
provided such number, one must be provided at the time redemption is
requested.
Any amounts paid on redemption representing interest shall be
withdrawn from the Interest Account of such Series to the extent that
funds are available for such purpose. All other amounts paid on
redemption shall be withdrawn from the Principal Account of such Series.
The Trustee is empowered to sell Bonds from the portfolio of a Series in
order to make funds available for the redemption of Units of such Series.
Such sale may be required when Bonds would not otherwise be sold and
might result in lower prices than might otherwise be realized. To the
extent Bonds are sold, the size and diversity of that Series of the Trust
will be reduced.
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<PAGE>
The Trustee is irrevocably authorized in its discretion, if the
Sponsor does not elect to purchase any Units tendered for redemption, in
lieu of redeeming such Units, to sell such Units in the over-the-counter
market for the account of tendering Unitholders at prices which will
return to such Unitholders amounts in cash, net after brokerage
commissions, transfer taxes and other charges, equal to or in excess of
the Redemption Price for such Units. In the event of any such sale, the
Trustee shall pay the net proceeds thereof to the Unitholders on the day
they would otherwise be entitled to receive payment of the Redemption
Price.
The right of redemption may be suspended and payment postponed (1)
for any period during which the New York Stock Exchange is closed, other
than customary weekend and holiday closings, or during which (as
determined by the Securities and Exchange Commission) trading on the New
York Stock Exchange is restricted; (2) for any period during which an
emergency exists as a result of which disposal by the Trustee of Bonds is
not reasonably practicable or it is not reasonably practicable fairly to
determine the value of the underlying Bonds in accordance with the Trust
Agreement; or (3) for such other period as the Securities and Exchange
Commission may by order permit. The Trustee is not liable to any person
in any way for any loss or damage which may result from any such
suspension or postponement.
Computation of Redemption Price. The Redemption Price for Units of
each Series of the Trust is computed by the Evaluator as of the
Evaluation Time stated under "Essential Information" in Part Two next
occurring after the tendering of a Unit for redemption and on any other
business day desired by it, by
A. adding (1) the cash on hand in such Series of the Trust;
(2) the aggregate value of the Bonds held in such Series of the
Trust, as determined by the Evaluator on the basis of bid prices
therefor; and (3) accrued interest or Purchased Interest and Daily
Accrued Interest (as applicable) on the Bonds in that Series of the
Trust as of the date of computation;
B. deducting therefrom (1) amounts representing any
applicable taxes or governmental charges payable out of that Series
of the Trust and for which no deductions have been previously made
for the purpose of additions to the Reserve Account described under
"Expenses of the Trust"; (2) amounts representing estimated accrued
expenses of that Series of the Trust including, but not limited to,
fees and expenses of the Trustee (including legal and auditing
fees), the Evaluator, the Sponsor and bond counsel, if any; (3) cash
held for distribution to Unitholders of record as of the business
day prior to the evaluation being made; and (4) other liabilities
incurred by such Series of the Trust; and
C. finally, dividing the results of such computation by the
number of Units of such Series of the Trust outstanding as of the
date thereof.
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<PAGE>
UNITHOLDERS
Ownership of Units. Ownership of Units of the Trust will not be
evidenced by a certificate unless a Unitholder or the Unitholder's
registered broker/dealer makes a written request to the Trustee.
Units are transferable by making a written request to the Trustee
and, in the case of Units evidenced by a certificate, presenting and
surrendering such certificate to the Trustee properly endorsed or
accompanied by a written instrument or instruments of transfer which
should be sent by registered or certified mail for the protection of the
Unitholder. Unitholders must sign such written request, and such
certificate or transfer instrument (if applicable), exactly as their
names appear on the records of the Trustee and on any certificate
representing the Units to be transferred. Such signatures must be
guaranteed by a participant in the Securities Transfer Agents Medallion
Program ("STAMP") or such other signature program in addition to, or in
substitution for, STAMP, as may be accepted by the Trustee.
Units may be purchased and certificates, if requested, will be
issued in denominations of one Unit or any whole unit multiple thereof
subject to any minimum investment requirement established by the Sponsor
from time to time. Any certificate issued will be numbered serially for
identification, issued in fully registered form and will be transferable
only on the books of the Trustee. The Trustee may require a Unitholder to
pay a reasonable fee to be determined in the sole discretion of the
Trustee, for each certificate re-issued or transferred, and to pay any
governmental charge that may be imposed in connection with each such
transfer or interchange. The Trustee at the present time does not intend
to charge for the normal transfer or interchange of certificates.
Destroyed, stolen, mutilated or lost certificates will be replaced upon
delivery to the Trustee of satisfactory indemnity (generally amounting to
not more than 3% of the market value of the Units), affidavit of loss,
evidence of ownership and payment of expenses incurred.
Distributions to Unitholders. Interest Distributions. Interest
received by a Series of the Trust, including any portion of the proceeds
from a disposition of Bonds which represents accrued interest, is
credited by the Trustee to the Interest Account for such Series. All
other receipts are credited by the Trustee to a separate Principal
Account for such Series. During each year the distributions to the
Unitholders of each Series of the Trust as of each Record Date (see
"Essential Information" in Part Two) will be made on the following
Distribution Date or shortly thereafter and shall consist of an amount
substantially equal to one-twelfth or one-half (depending on the
distribution option selected) of such holders' pro rata share of the net
estimated net annual interest income to the Interest Account for such
Series of the Trust, after deducting estimated expenses.
Persons who purchase Units of the Trust between a Record Date and a
Distribution Date will receive their first distribution on the second
Distribution Date following their purchase of Units. All distributions
of principal and interest will be paid in cash unless a Unitholder has
elected to reinvest principal and/or interest payments in shares of one
of the reinvestment funds. See "Distribution Reinvestment." Interest
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<PAGE>
distributions per Unit for each Series will be in the amounts shown under
"Essential Information" in the applicable Part Two and may change as
underlying Bonds are redeemed, paid or sold, or as expenses of such
Series of the Trust change or the number of outstanding Units of such
Series of the Trust changes.
Since interest on Bonds in each Series of the Trust is payable at
varying intervals, usually in semiannual installments, and distributions
of income are made to Unitholders of a Series of the Trust at what may be
different intervals from receipt of interest, the interest accruing to
such Series of the Trust may not be equal to the amount of money received
and available for distribution from the Interest Account of such Series.
Therefore, on each Distribution Date the amount of interest actually on
deposit in the Interest Account and available for distribution may be
slightly more or less than the interest distribution made. In order to
eliminate fluctuations in interest distributions resulting from such
variances, the Trustee is authorized by the Trust Agreement to advance
such amounts as may be necessary to provide interest distributions of
approximately equal amounts. The Trustee will be reimbursed, without
interest, for any such advances from funds available in the Interest
Account of such Series.
Because the interest to which Unitholders of a Series of the Trust
are entitled will at most times exceed the amount available for
distribution, there will almost always remain an item of accrued interest
that is added to the daily value of the Units of such Series. If
Unitholders of a Series sell or redeem all or a portion of their Units
they will be paid their proportionate share of the accrued interest of
such Series to, but not including, the fifth business day after the date
of a sale or to the date of tender in the case of a redemption.
Unitholders purchasing Units will initially receive distributions in
accordance with the election of the prior owner. Unitholders desiring to
change their distribution option may do so by sending written notice to
the Trustee, together with their certificate (if one was issued).
Certificates should only be sent by registered or certified mail to
minimize the possibility of loss. If written notice and any certificate
are received by the Trustee not later than January 1 or July 1 of a year,
the change will become effective on January 2 for distributions
commencing with February 15 or August 15, respectively, of that year. If
notice is not received by the Trustee, the Unitholder will be deemed to
have elected to continue with the same option for the subsequent twelve
months.
Principal Distributions;. In addition, the Trustee will distribute
on each Distribution Date or shortly thereafter, to each Unitholder of
record on the preceding Record Date, an amount substantially equal to
such holders' pro rata share of the cash balance, if any, in the
Principal Account of such Series computed as of the close of business on
the preceding Record Date. However, no distribution will be required if
the balance in the Principal Account of such Series is less than $1.00
per Unit.
Statement to Unitholders. With each distribution, the Trustee will
furnish or cause to be furnished to each Unitholder a statement of the
amount of interest and the amount of other receipts, if any, which are
being distributed, expressed in each case as a dollar amount per Unit.
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<PAGE>
The accounts of each Series of the Trust are required to be audited,
at the Series' expense, annually by independent auditors designated by
the Sponsor, unless the Trustee determines that such an audit would not
be in the best interest of the Unitholders of such Series of the Trust.
The accountants' report will be furnished by the Trustee to any
Unitholder of such Series of the Trust upon written request.
Within a reasonable period of time after the end of each calendar
year, the Trustee shall furnish to each person who at any time during the
calendar year was a Unitholder of a Series of the Trust a statement
covering the calendar year, setting forth:
A. As to the Interest Account:
1. The amount of interest received on the Bonds in such
Series including amounts received as a portion of the proceeds
of any disposition of the Bonds;
2. The amount paid from the Interest Account of such
Series representing accrued interest of any Units redeemed;
3. The deductions from the Interest Account of such
Series for applicable taxes, if any, fees and expenses
(including auditing fees) of the Trustee, the Evaluator, the
Sponsor and bond counsel, if any;
4. Any amounts credited by the Trustee to a Reserve
Account for such Series described under "Expenses of the
Trust"; and
5. The net amount remaining after such payments and
deductions, expressed both as a total dollar amount and a
dollar amount per Unit outstanding on the last business day of
such calendar year.
B. As to the Principal Account:
1. The dates of the maturity, liquidation or redemption
of any of the Bonds in such Series and the net proceeds
received therefrom excluding any portion credited to the
Interest Account;
2. The amount paid from the Principal Account of such
Series representing the principal of any Units redeemed;
3. The deductions from the Principal Account of such
Series for payment of applicable taxes, if any, fees and
expenses (including auditing expenses) of the Trustee, the
Evaluator, the Sponsor and of bond counsel, if any;
4. Any amounts credited by the Trustee to a Reserve
Account for such Series described under "Expenses of the
Trust"; and
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<PAGE>
5. The net amount remaining after distributions of
principal and deductions, expressed both as a dollar amount and
as a dollar amount per Unit outstanding on the last business
day of such calendar year.
C. The following information:
1. A list of the Bonds in such Series as of the last
business day of such calendar year;
2. The number of Units of such Series outstanding on the
last business day of such calendar year;
3. The Redemption Price of such Series based on the last
Trust Evaluation made during such calendar year;
4. The amount actually distributed during such calendar
year from the Interest and Principal Accounts of such Series
separately stated, expressed both as total dollar amounts and
as dollar amounts per Unit of such Series outstanding on the
Record Date for each such distribution.
Rights of Unitholders. A Unitholder may at any time tender Units to
the Trustee for redemption. No Unitholder of a Series shall have the
right to control the operation and management of such Series or of the
Trust in any manner, except to vote with respect to amendment of the
Trust Agreement or termination of such Series of the Trust. The death or
incapacity of any Unitholder will not operate to terminate the Series or
the Trust nor entitle legal representatives or heirs to claim an
accounting or to bring any action or proceeding in any court for
partition or winding up of such Series or the Trust.
INVESTMENT SUPERVISION
The Sponsor may not alter the portfolio of the Trust by the
purchase, sale or substitution of Bonds, except in the special
circumstances noted below. Thus, with the exception of the redemption or
maturity of Bonds in accordance with their terms, and/or the sale of
Bonds to meet redemption requests, the assets of the Trust will remain
unchanged under normal circumstances.
The Sponsor may direct the Trustee to dispose of Bonds the value of
which has been affected by certain adverse events, including institution
of certain legal proceedings, a decline in their price or the occurrence
of other market factors, including advance refunding, so that in the
opinion of the Sponsor the retention of such Bonds in a Series of the
Trust would be detrimental to the interest of the Unitholders of such
Series. The proceeds from any such sales, exclusive of any portion which
represents accrued interest, will be credited to the Principal Account
for distribution to the Unitholders.
The Sponsor is required to instruct the Trustee to reject any offer
made by an issuer of the Bonds to issue new obligations in exchange or
-27-
<PAGE>
substitution for any of such Bonds pursuant to a refunding or refinancing
plan, except that the Sponsor may instruct the Trustee to accept or
reject such an offer or to take any other action with respect thereto as
the Sponsor may deem proper if (1) the issuer is in default with respect
to such Bonds or (2) in the written opinion of the Sponsor the issuer
will probably default with respect to such Bonds in the reasonably
foreseeable future. Any obligation so received in exchange or
substitution will be held by the Trustee subject to the terms and
conditions of the Trust Agreement to the same extent as Bonds originally
deposited thereunder. Within five days after the deposit of obligations
in exchange or substitution for underlying Bonds, the Trustee is required
to give notice thereof to each Unitholder, identifying the Bonds
eliminated and the Bonds substituted therefor.
The Trustee may sell Bonds designated by the Sponsor from a Series
of the Trust for the purpose of redeeming Units of such Series tendered
for redemption and the payment of expenses.
ADMINISTRATION OF THE TRUST
The Trustee. The Trustee is The Bank of New York, a trust company
organized under the laws of New York. The Bank of New York has its unit
investment trust division offices at 101 Barclay Street, New York, New
York 10286, telephone 1-800-701-8178. The Bank of New York is subject to
supervision and examination by the Superintendent of Banks of the State
of New York and the Board of Governors of the Federal Reserve System, and
its deposits are insured by the Federal Deposit Insurance Corporation to
the extent permitted by law.
The Trustee, whose duties are ministerial in nature, has not
participated in selecting the portfolio of any Series of the Trust. For
information relating to the responsibilities of the Trustee under the
Trust Agreements, reference is made to the material set forth under
"Unitholders."
In accordance with the Trust Agreements, the Trustee shall keep
proper records of all transactions at its office. Such records shall
include the name and address of, and the number of Units held by, every
Unitholder of each Series. The books and records with respect to a
Series of the Trust shall be open to inspection by any Unitholder of such
Series at all reasonable times during the usual business hours. The
Trustee shall make such annual or other reports as may from time to time
be required under any applicable state or Federal statute, rule or
regulation. The Trustee shall keep a certified copy or duplicate
original of the Trust Agreements on file in its office available for
inspection at all reasonable times during usual business hours by any
Unitholder, together with a current list of the Bonds held in each Series
of the Trust. Pursuant to the Trust Agreements, the Trustee may employ
one or more agents for the purpose of custody and safeguarding of Bonds
comprising each Trust Fund.
Under the Trust Agreements, the Trustee or any successor trustee may
resign and be discharged of the trust created by the Trust Agreements by
executing an instrument in writing and filing the same with the Sponsor.
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The Trustee or successor trustee must mail a copy of the notice of
resignation to all Unitholders then of record, not less than sixty days
before the date specified in such notice when such resignation is to take
effect. The Sponsor upon receiving notice of such resignation is
obligated to appoint a successor trustee promptly. If, upon such
resignation, no successor trustee has been appointed and has accepted the
appointment within thirty days after notification, the retiring Trustee
may apply to a court of competent jurisdiction for the appointment of a
successor. The Sponsor may at any time remove the Trustee with or
without cause and appoint a successor trustee as provided in the Trust
Agreements. Notice of such removal and appointment shall be mailed to
each Unitholder by the Sponsor. Upon execution of a written acceptance
of such appointment by a successor trustee, all the rights, powers,
duties and obligations of the original Trustee shall vest in the
successor.
The Trustee shall be a corporation organized under the laws of the
United States or any state thereof, which is authorized under such laws
to exercise trust powers. The Trustee shall have at all times an
aggregate capital, surplus and undivided profits of not less than
$5,000,000.
The Evaluator. Ranson & Associates, Inc., the Sponsor, also serves
as Evaluator. The Evaluator may resign or be removed by the Trustee, in
which event the Trustee is to use its best efforts to appoint a
satisfactory successor. Such resignation or removal shall become
effective upon acceptance of appointment by the successor evaluator. If,
upon resignation of the Evaluator, no successor has accepted appointment
within thirty days after notice of resignation, the Evaluator may apply
to a court of competent jurisdiction for the appointment of a successor.
Notice of such resignation or removal and appointment shall be mailed by
the Trustee to each Unitholder. At the present time, pursuant to a
contract with the Evaluator, Cantor Fitzgerald & Co., a non-affiliated
firm regularly engaged in the business of evaluating, quoting or
appraising comparable securities, provides portfolio evaluations of the
Bonds in the Trusts which are then reviewed by the Evaluator. In the
event the Sponsor is unable to obtain current evaluations from Cantor
Fitzgerald & Co., it may make its own evaluations or it may utilize the
services of any other non-affiliated evaluator or evaluators it deems
appropriate.
Amendment and Termination. The Trust Agreements may be amended by
the Trustee and the Sponsor without the consent of any of the
Unitholders: (1) to cure any ambiguity or to correct or supplement any
provision which may be defective or inconsistent; (2) to change any
provision thereof as may be required by the Securities and Exchange
Commission or any successor governmental agency; or (3) to make such
provisions as shall not adversely affect the interests of the
Unitholders. The Trust Agreements may also be amended in any respect by
the Sponsor and the Trustee, or any of the provisions thereof may be
waived, with the written consent of the holders of Units representing 66-
2/3% of the Units then outstanding, provided that no such amendment or
waiver will reduce the interest in a Series of the Trust of any
Unitholder without the consent of such Unitholder or reduce the
percentage of Units required to consent to any such amendment or waiver
without the consent of all Unitholders. In no event shall the Trust
Agreements be amended to increase the number of Units issuable thereunder
or to permit, except in accordance with the provisions of the Trust
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Agreements, the acquisition of any Bonds in addition to or in
substitution for those in the Trust. The Trustee shall promptly notify
Unitholders of the substance of any such amendment.
The Trust Agreements provide that a Series of the Trust shall
terminate upon the maturity, redemption or other disposition, of the last
of the Bonds held in such Series, but in no event later than the
Mandatory Termination Date set forth under "Essential Information" in
Part Two for each Trust. If the value of a Series of the Trust shall be
less than the applicable minimum Trust value stated under "Essential
Information" in Part Two (40% of the aggregate principal amount of Bonds
deposited in the Trust), the Trustee may, in its discretion, and shall,
when so directed by the Sponsor, terminate such Series of the Trust. A
Series of the Trust may be terminated at any time by the holders of Units
representing 66-2/3% of the Units of such Series then outstanding. In
the event of termination, written notice thereof will be sent by the
Trustee to all Unitholders of such Series. Within a reasonable period
after termination, the Trustee will sell any Bonds remaining in such
Series of the Trust and, after paying all expenses and charges incurred
by such Series of the Trust, will distribute to Unitholders of such
Series (upon surrender for cancellation of certificates for Units, if
issued) their pro rata share of the balances remaining in the Interest
and Principal Accounts of such Series.
Limitations on Liability. The Sponsor: The Sponsor is liable for
the performance of its obligations arising from its responsibilities
under the Trust Agreements, but will be under no liability to the
Unitholders for taking any action or refraining from any action in good
faith pursuant to the Trust Agreements or for errors in judgment, except
in cases of its own gross negligence, bad faith or willful misconduct.
The Sponsor shall not be liable or responsible in any way for
depreciation or loss incurred by reason of the sale of any Bonds.
The Trustee: The Trust Agreements provides that the Trustee shall
be under no liability for any action taken in good faith in reliance upon
prima facie properly executed documents or for the disposition of monies,
Bonds, or certificates except by reason of its own negligence, bad faith
or willful misconduct, nor shall the Trustee be liable or responsible in
any way for depreciation or loss incurred by reason of the sale by the
Trustee of any Bonds. In the event that the Sponsor shall fail to act,
the Trustee may act and shall not be liable for any such action taken by
it in good faith. The Trustee shall not be personally liable for any
taxes or other governmental charges imposed upon or in respect of the
Bonds or upon the interest thereon. In addition, the Trust Agreements
contains other customary provisions limiting the liability of the
Trustee.
The Evaluator: The Trustee and Unitholders may rely on any
evaluation furnished by the Evaluator and shall have no responsibility
for the accuracy thereof. The Trust Agreements provide that the
determinations made by the Evaluator shall be made in good faith upon the
basis of the best information available to it, provided, however, that
the Evaluator shall be under no liability to the Trustee or Unitholders
for errors in judgment, but shall be liable only for its gross
negligence, lack of good faith or willful misconduct.
-30-
<PAGE>
EXPENSES OF THE TRUST
The Sponsor will not charge any Series of the Trust fees for
services performed as Sponsor, except the Sponsor shall receive an annual
surveillance fee for services performed for such Trust Funds in an amount
not to exceed the amount shown under "Essential Information" in Part Two
for performing portfolio surveillance services for each Trust. Such fee
(which is based on the largest number of Units outstanding during each
year) may exceed the actual costs of providing such surveillance services
for a Trust, but at no time will the total amount received for portfolio
surveillance services rendered to such Series in any calendar year exceed
the aggregate cost to the Sponsor for providing such services. The
foregoing fees may be increased without approval of the Unitholders by
amounts not exceeding proportionate increases under the category "All
Services Less Rent of Shelter" in the Consumer Price Index published by
the United States Department of Labor or, if such category is no longer
published, in a comparable category. The Sponsor paid all the expenses
of creating and establishing the Trust, including the cost of the initial
preparation, printing and execution of the Prospectus, Trust Agreements
and the certificates, legal and accounting expenses, advertising and
selling expenses, payment of closing fees, expenses of the Trustee,
initial evaluation fees and other out-of-pocket expenses.
The Trustee receives for its services the fee set forth under
"Essential Information" appearing in Part Two. The Trustee fee which is
calculated monthly is based on the largest aggregate principal amount of
Bonds in each Trust Fund at any time during the period. Funds that are
available for future distributions, redemptions and payment of expenses
are held in accounts which are non-interest bearing to Unitholders and
are available for use by the Trustee pursuant to normal banking
procedures; however, the Trustee is also authorized by the Trust
Agreements to make from time to time certain non-interest bearing
advances to the Trust Funds. The Trustee's fee is payable on or before
each Distribution Date. See "Unitholders-Distributions to Unitholders."
For evaluation of Bonds in a Series of the Trust, the Evaluator
receives a fee payable monthly, calculated on an annual rate as set forth
under "Essential Information" in Part Two, based upon the largest
aggregate principal amount of Bonds in such Series of the Trust at any
time during such monthly period.
The Trustee's fees, the Evaluator's fees and the surveillance fees
are deducted from the Interest Account of each Series to the extent funds
are available and then from the Principal Account of such Series. Such
fees may be increased without approval of Unitholders by amounts not
exceeding a proportionate increase in the Consumer Price Index entitled
"All Services Less Rent of Shelter", published by the United States
Department of Labor, or any equivalent index substituted therefor.
The following additional charges are or may be incurred by a Series
of the Trust: (a) fees for the Trustee's extraordinary services; (b)
expenses of the Trustee (including legal and auditing expenses, but not
including any fees and expenses charged by any agent for custody and
safeguarding of Bonds) and of bond counsel, if any; (c) various
governmental charges; (d) expenses and costs of any action taken by the
Trustee to protect the Trust or such Series, or the rights and interests
-31-
<PAGE>
of the Unitholders; (e) indemnification of the Trustee for any loss,
liability or expense incurred by it in the administration of such Series
of the Trust not resulting from gross negligence, bad faith or willful
misconduct on its part; (f) indemnification of the Sponsor for any loss,
liability or expense incurred in acting as Sponsor of such Series of the
Trust without gross negligence, bad faith or willful misconduct; and (g)
expenditures incurred in contacting Unitholders upon termination of the
Series. The fees and expenses set forth herein are payable out of such
Series of the Trust and, when owed to the Trustee, are secured by a lien
on the assets of the Series of the Trust.
Fees and expenses of a Series of the Trust shall be deducted from
the Interest Account of such Series, or, to the extent funds are not
available in such Account, from the Principal Account of such Series.
The Trustee may withdraw from the Principal Account or the Interest
Account of such Series such amounts, if any, as it deems necessary to
establish a reserve for any taxes or other governmental charges or other
extraordinary expenses payable out of that Series of the Trust. Amounts
so withdrawn shall be credited to a separate account maintained for such
Series known as the Reserve Account and shall not be considered a part of
such Series when determining the value of the Units of such Series until
such time as the Trustee shall return all or any part of such amounts to
the appropriate account.
THE SPONSOR
Ranson & Associates, Inc., the Sponsor of the Trusts, is an
investment banking firm created in 1995 by a number of former owners and
employees of Ranson Capital Corporation. On November 26, 1996, Ranson &
Associates, Inc. purchased all existing unit investment trusts sponsored
by EVEREN Securities, Inc. Accordingly, Ranson & Associates is the
successor sponsor to unit investment trusts formerly sponsored by EVEREN
Unit Investment Trusts, a service of EVEREN Securities, Inc. Ranson &
Associates, is also the sponsor and successor sponsor of Series of The
Kansas Tax-Exempt Trust and Multi-State Series of The Ranson Municipal
Trust. Ranson & Associates, Inc. is the successor to a series of
companies, the first of which was originally organized in Kansas in 1935.
During its history, Ranson & Associates, Inc. and its predecessors have
been active in public and corporate finance and have sold bonds and unit
investment trusts and maintained secondary market activities relating
thereto. At present, Ranson & Associates, Inc., which is a member of the
National Association of Securities Dealers, Inc., is the sponsor to each
of the above-named unit investment trusts and serves as the financial
advisor and as an underwriter for issuers in the Midwest and Southwest,
especially in Kansas, Missouri and Texas. The Company's offices are
located at 250 North Rock Road, Suite 150, Wichita, Kansas 67206-2241.
If at any time the Sponsor shall fail to perform any of its duties
under the Trust Agreements or shall become incapable of acting or shall
be adjudged a bankrupt or insolvent or its affairs are taken over by
public authorities, then the Trustee may (a) appoint a successor sponsor
at rates of compensation deemed by the Trustee to be reasonable and not
exceeding such reasonable amounts as may be prescribed by the Securities
and Exchange Commission, or (b) terminate the Trust Agreements and
-32-
<PAGE>
liquidate the Trust or any Series thereof as provided therein or (c)
continue to act as Trustee without terminating the Trust Agreements.
The foregoing financial information with regard to the Sponsor
relates to the Sponsor only and not to this Trust or any Series. Such
information is included in this Prospectus only for the purposes of
informing investors as to the financial responsibility of the Sponsor and
its ability to carry out its contractual obligations with respect to the
Series of the Trust. More comprehensive financial information can be
obtained upon request from the Sponsor.
LEGAL OPINIONS
The legality of the Units offered hereby and certain matters
relating to federal tax law were passed upon by Chapman and Cutler, 111
West Monroe Street, Chicago, Illinois 60603, as counsel for the Sponsor.
INDEPENDENT AUDITORS
The statement of net assets, including the schedule of investments,
appearing in Part Two of this Prospectus and Registration Statement, with
information pertaining to the specific Series of the Trust to which such
statement relates, has been audited by Ernst & Young LLP, independent
auditors, as set forth in their report appearing in Part Two and is
included in reliance upon such report given upon the authority of such
firm as experts in accounting and auditing.
-33-
<PAGE>
Kemper Defined Funds
Insured Corporate Series 2
Part Two
Dated April 28, 2000
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
NOTE: Part Two of this Prospectus May Not Be Distributed Unless Accompanied by
Part One.
<PAGE>
Kemper Defined Funds
Insured Corporate Series 2
Essential Information
As of December 31, 1999
Sponsor and Evaluator: Ranson & Associates, Inc.
Trustee: The Bank of New York Co.
<TABLE>
<CAPTION>
General Information
<S> <C>
Principal Amount of Securities $39,825,000
Number of Units 4,655,948
Fractional Undivided Interest in the Trust per Unit 1/4,655,948
Principal Amount of Securities per Unit $8.554
Calculation of Public Offering Price:
Aggregate Bid Price of Securities in the Trust $33,845,026
Aggregate Bid Price of Securities per Unit $7.269
Principal Cash per Unit (1) $(.038)
Accrued Interest per Unit through settlement date of January 5, 2000 $.113
Total Price including Accrued Interest per Unit $7.344
Sales Charge of 5.50% of Public Offering Price
(5.820% of net amount invested) per Unit $.427
Public Offering Price per Unit $7.771
Redemption Price per Unit $7.344
Calculation of Estimated Net Annual Interest Income per Unit:
Estimated Annual Interest Income $.5753
Less: Estimated Annual Expense $.0143
Estimated Net Annual Interest Income $.5610
Daily Rate at which Estimated Annual Interest Income Accrues per Unit $.001558
Estimated Current Return Based on Public Offering Price (2) 7.22%
Estimated Long-Term Return (2) 7.61%
</TABLE>
[FN]
1. This amount, if any, represents principal cash or overdraft which is an
asset or liability of the Trust and is included in the Public Offering Price.
2. The Estimated Current Return and Estimated Long-Term Return will vary with
changes in the Public Offering Price and there is no assurance that such returns
on the date hereof will be applicable on a subsequent date of purchase. These
estimated returns are increased for transactions entitled to a reduced sales
charge (see "Public Offering of Units - Public Offering Price" - Part One).
<PAGE>
Kemper Defined Funds
Insured Corporate Series 2
Essential Information (continued)
As of December 31, 1999
Sponsor and Evaluator: Ranson & Associates, Inc.
Trustee: The Bank of New York Co.
Record and Distribution Date Record Date is the first of each month
and distributions to Unitholders on
such record dates will be made on the
15th day of the month.
Distribution Dates No distribution (other than capital
gains distributions) need be made from
the Principal Account if the balance
therein, excluding capital gains, is
less than $1.00 per 100 Units.
Trustee's Annual Fee
(including estimated expenses) $.98 per 100 Units (includes $.83 of
Trustee's annual fee per $1,000
principal amount of underlying
Securities and $.15 of out-of-pocket
expenses per 100 Units).
Evaluator's Annual Fee $.30 per $1,000 principal amount of
underlying Securities.
Surveillance Fee $.25 per $1,000 principal amount of
underlying Securities.
Date of Trust Agreement and
Initial Deposit July 21, 1993
Mandatory Termination Date December 31, 2027
Weighted Average Stated
Maturity of Bonds 24.31 years
Discretionary Liquidation Amount The Trust may be terminated if the value
thereof is less than $20,090,000 (40% of
the par value of the Securities
deposited in the Trust).
<PAGE>
Report of Independent Auditors
Unitholders
Kemper Defined Funds
Insured Corporate Series 2
We have audited the accompanying statement of assets and liabilities of Kemper
Defined Funds Insured Corporate Series 2, including the schedule of investments,
as of December 31, 1999, and the related statements of operations and changes in
net assets for each of the three years in the period then ended. These inancial
statements are the responsibility of the Trust's sponsor. Our responsibility is
to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
Our procedures included confirmation of investments owned as of December 31,
1999, by correspondence with the custodial bank. An audit also includes
assessing the accounting principles used and significant estimates made by the
sponsor, as well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Kemper Defined Funds Insured
Corporate Series 2 at December 31, 1999, and the results of its operations and
changes in its net assets for the periods indicated above in conformity with
accounting principles generally accepted in the United States.
Ernst & Young LLP
Kansas City, Missouri
April 14, 2000
<PAGE>
Kemper Defined Funds
Insured Corporate Series 2
Statement of Assets and Liabilities
December 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
Assets
Corporate Securities, at value (cost $38,350,473) $33,845,026
Interest receivable 762,294
---------
Total assets 34,607,320
Liabilities and net assets
Cash overdraft 176,278
Accrued liabilities 5,136
Due to unitholders 14,272
---------
195,686
Net assets, applicable to 4,655,948 Units outstanding:
Cost of Trust assets, exclusive of interest $38,350,473
Unrealized depreciation (4,505,447)
Distributable funds 566,608
--------- ---------
Net assets $34,411,634
=========
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
Kemper Defined Funds
Insured Corporate Series 2
Statements of Operations
<TABLE>
<CAPTION>
Year ended December 31
1999 1998 1997
<S> <C> <C> <C>
--------- --------- ---------
Investment income - interest $2,952,908 $3,379,096 $3,371,784
Expenses:
Trustee's fees and related expenses 49,619 50,344 52,658
Evaluator's and portfolio
surveillance fees 23,767 26,287 26,875
--------- --------- ---------
Total expenses 73,386 76,631 79,533
--------- --------- ---------
Net investment income 2,879,522 3,302,465 3,292,251
Realized and unrealized gain (loss) on
investments:
Realized loss on investments (70,212) (4,665) (49,110)
Unrealized appreciation (depreciation)
during the year (4,418,756) 753,856 2,315,056
--------- --------- ---------
Net gain (loss) on investments (4,488,968) 749,191 2,265,946
--------- --------- ---------
Net increase in net assets resulting
from operations $(1,609,446) $4,051,656 $5,558,197
========= ========= =========
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
Kemper Defined Funds
Insured Corporate Series 2
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Year ended December 31
1999 1998 1997
<S> <C> <C> <C>
--------- --------- ---------
Operations:
Net investment income $2,879,522 $3,302,465 $3,292,251
Realized loss on investments (70,212) (4,665) (49,110)
Unrealized appreciation (depreciation)
on investments during the year (4,418,756) 753,856 2,315,056
--------- --------- ---------
Net increase (decrease) in net assets
resulting from operations (1,609,446) 4,051,656 5,558,197
Distributions to Unitholders:
Net investment income (2,885,766) (3,222,645) (3,288,296)
Principal distribution (7,367,886) - -
--------- --------- ---------
Total distributions to Unitholders (10,253,652) (3,222,645) (3,288,296)
Capital transactions:
Redemption of 100,337 Units - - (945,555)
Redemption of 57,259 Units - (550,368) -
Redemption of 90,174 Units (710,066) - -
--------- --------- ---------
Total increase (decrease) in net assets (12,573,164) 278,643 1,324,346
Net assets:
At the beginning of the year 46,984,798 46,706,155 45,381,809
--------- --------- ---------
At the end of the year (including
distributable funds applicable to
Trust Units of $566,608, $797,606
and $814,298 at December 31, 1999,
1998 and 1997, respectively) $34,411,634 $46,984,798 $46,706,155
========= ========= =========
Trust Units outstanding at the end of
the year 4,655,948 4,746,122 4,803,381
========= ========= =========
Net asset value per Unit at the end of
the year $7.39 $9.90 $9.72
========= ========= =========
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
<TABLE>
Kemper Defined Funds
Insured Corporate Series 2
Schedule of Investments
December 31, 1999
<CAPTION>
Coupon Maturity Redemption Principal
Name of Issuer (4) Rate Date Provisions(2) Rating(1) Amount Value(3)
<S> <C> <C> <C> <C> <C> C>
- --------------------- --- --- ----- --- --------- ---
Florida Power & Light Company 7.625% 6/01/2024 2000 @ 104.11 AAA $7,065,000 $6,642,584
Houston Lighting & Power Company 7.500 7/01/2023 2003 @ 103.51 AAA 7,015,000 6,502,624
Pacific Gas & Electric Company 7.250 8/01/2026 2003 @ 103.63 AAA 4,633,000 4,183,275
Duquesne Light Company 7.625 4/15/2023 2000 @ 105.02 AAA 4,725,000 4,446,320
Niagara Mohawk Power Company 7.875 4/01/2024 2003 @ 102.99 AAA 5,515,000 5,199,818
Texas Utilities Electric Company 7.625 7/01/2025 2003 @ 102.69 AAA 5,040,000 4,660,689
Texas Utilities Electric Company 7.625 7/01/2025 2003 @ 102.69 AAA 1,300,000 1,202,162
U.S. Treasury Strip Securities (5) 0.000 8/15/2022 Non-Callable AAA 4,532,000 1,007,554
--------- ---------
$39,825,000 $33,845,026
========= =========
</TABLE>
[FN]
See accompanying notes to Schedule of Investments.
<PAGE>
Kemper Defined Funds
Insured Corporate Series 2
Notes to Schedule of Investments
1. All ratings are by Standard & Poor's Corporation, unless marked with the
symbol "*", in which case the rating is by Moody's Investors Service, Inc. The
symbol "NR" indicates Bonds for which no rating is available.
2. There is shown under this heading the year in which each issue of Bonds is
initially redeemable and the redemption price for that year or, if currently
redeemable, the redemption price currently in effect; unless otherwise
indicated, each issue continues to be redeemable at declining prices thereafter,
but not below par value. The prices at which the Bonds may be redeemed or
called prior to maturity may or may not include a premium and, in certain cases,
may be less than the cost of the Bonds in the Trust. In addition, certain Bonds
in the Trust 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.
3. See Note 1 to the accompanying financial statements for a description of the
method of determining cost and value.
4. All Corporate Bonds are insured either by the issuer of the Bonds or by the
sponsor under a policy obtained from Municipal Bond Investors Assurance
Corporation. The insurance policy has been paid in advance by such issuer or
the sponsor and each such policy is non-cancelable and will remain in force so
long as the Bonds are outstanding. Therefore, the Corporate Bonds are rated AAA
by Standard & Poor's Corporation and Aaa by Moody's Investors Service, Inc.
5. This Security has been purchased at a discount from the par value because
there is no stated interest income thereon. Such Security is normally described
as a "zero coupon" Security. Over the life of the Security the value increases,
so that upon maturity, the holders of the Security will receive 100% of the
principal amount thereof.
See accompanying notes to financial statements.
<PAGE>
Kemper Defined Funds
Insured Corporate Series 2
Notes to Financial Statements
1. Significant Accounting Policies
Trust Sponsor and Evaluator
Ranson & Associates, Inc. serves as the Trust's sponsor and evaluator.
Valuation of Securities
Corporate Securities and the zero coupon obligation are stated at bid prices as
determined by Ranson & Associates, Inc. The aggregate bid prices of the
Securities are determined by the Evaluator based on (a) current bid prices of
the Securities, (b) current bid prices for comparable securities, (c) appraisal,
(d) insurance or (e) any combination of the above. (See Note 4 - Insurance.)
Cost of Securities
Cost of the Trust's Securities is based on the offering prices of the Securities
on the dates of deposit of such Securities acquired during the primary sales
period plus amortization of original issue discount for the zero coupon
obligations. The premium or discount for fixed rate obligations is not being
amortized. Realized gain (loss) from Security transactions is reported on an
identified cost basis.
Investment Income
Interest income consists of amortization of original issue discount on the zero
coupon obligation and interest accrued as earned on the fixed rate obligations.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires the Trust's sponsor to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from such
estimates.
2. Unrealized Appreciation and Depreciation
Following is an analysis of net unrealized depreciation at December 31, 1999:
<TABLE>
<CAPTION>
<S> <C>
Gross unrealized appreciation $-
Gross unrealized depreciation (4,505,447)
----------
Net unrealized depreciation $(4,505,447)
=========
</TABLE>
3. Federal Income Taxes
The Trust is not an association taxable as a corporation for federal income tax
purposes. Each Unitholder is considered to be the owner of a pro rata portion
of the Trust under Subpart E, Subchapter J of Chapter 1 of the Internal Revenue
Code of 1986, as amended. Accordingly, no provision has been made for federal
income taxes.
<PAGE>
Kemper Defined Funds
Insured Corporate Series 2
Notes to Financial Statements (continued)
4. Other Information
Cost to Investors
The cost to original investors of Units of the Trust was based on the aggregate
offering price of the Securities on the date of an investor's purchase, plus or
minus a pro rata share of cash or overdraft in the Principal Account, and daily
accrued interest, plus a sales charge of 4.20% of the Public Offering Price
(equivalent to 4.384% of the net amount invested). The Public Offering Price
for secondary market transactions is based on the aggregate bid prices of the
Securities plus or minus a pro rata share of cash or overdraft in the Principal
Account, and daily accrued interest on the date of an investor's purchase, plus
a sales charge of 5.50% of the Public Offering Price (equivalent to 5.820% of
the net amount invested).
Insurance
Insurance guaranteeing the payment of all principal and interest on the Bonds in
the portfolio has been obtained from an independent company by the issuer of the
Bonds involved or by the Trust's sponsor. Insurance obtained by the Trust's
sponsor or a Bond issuer is effective as long as such Bonds are outstanding. As
a result of such insurance, the Units of the Trust have received a rating of
"AAA" by Standard & Poor's Corporation. No representation is made as to any
insurer's ability to meet its commitments.
Distributions
Distributions of net investment income to Unitholders are declared and paid
monthly. Income distributions per Unit on a record date basis, are $.61, $.67
and $.67 for the years ended December 31, 1999, 1998 and 1997, respectively. In
addition, distribution of principal related to the sale or call of securities is
$1.55 per Unit for the year ended December 31, 1999.
<PAGE>
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Independent Auditors"
and to the use of our report dated April 14, 2000, in this Post-Effective
Amendment to the Registration Statement (Form S-6) and related Prospectus of
Kemper Defined Funds Insured Corporate Series 2 dated April 28, 2000.
Ernst & Young LLP
Kansas City, Missouri
April 28, 2000
<PAGE>
Contents of Post-Effective Amendment
To Registration Statement
This Post-Effective amendment to the Registration Statement comprises the
following papers and documents:
The facing sheet
The prospectus
The signatures
The Consent of Independent Accountants
<PAGE>
Signatures
Pursuant to the requirements of the Securities Act of 1933, The Registrant,
Kemper Defined Funds Insured Corporate Series 2, certifies that it meets all of
the requirements for effectiveness of this registration statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this Amendment
to the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Wichita, and State of Kansas, on the
28th day of April, 2000.
Kemper Defined Funds Insured Corporate Series 2
Registrant
By: Ranson & Associates, Inc.
Depositor
By: Robin Pinkerton
President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed below on April 28, 2000 by the
following persons, who constitute a majority of the Board of Directors of Ranson
& Associates, Inc.
Signature Title
Douglas K. Rogers Executive Vice and President and Director
Douglas K. Rogers
Alex R. Meitzner Chairman of the Board and Director
Alex R. Meitzner
Robin K. Pinkerton President, Secretary, Treasurer and
Robin K. Pinkerton Director
Robin Pinkerton
An executed copy of each of the related powers of attorney was filed with
the Securities and Exchange Commission in connection with the Registration
Statement on Form S-6 of The Kansas Tax-Exempt Trust, Series 51 (File No. 33-
46376) and Series 52 (File No. 33-47687) and the same are hereby incorporated
herein by this reference.
