<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 23, 1994
REGISTRATION NO. 33-52239
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
---------------------
AMENDMENT NO. 1
TO
REGISTRATION STATEMENT
ON
FORM S-6
A. EXACT NAME OF TRUST:
KEMPER DEFINED FUNDS SERIES 15
B. NAME OF DEPOSITOR:
KEMPER UNIT INVESTMENT TRUSTS
A SERVICE OF KEMPER SECURITIES, INC.
C. COMPLETE ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES:
KEMPER UNIT INVESTMENT TRUSTS
77 WEST WACKER DRIVE, 5TH FLOOR
CHICAGO, ILLINOIS 60601
D. NAME AND COMPLETE ADDRESS OF AGENT FOR SERVICE:
COPY TO:
C. PERRY MOORE MARK J. KNEEDY
KEMPER UNIT INVESTMENT TRUSTS C/O CHAPMAN AND CUTLER
77 WEST WACKER DRIVE, 5TH FLOOR 111 WEST MONROE STREET
CHICAGO, ILLINOIS 60601 CHICAGO, ILLINOIS 60603
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
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PROPOSED MAXIMUM
TITLE AND AMOUNT OF SECURITIES AGGREGATE AMOUNT OF
BEING REGISTERED OFFERING REGISTRATION FEE
PRICE
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<S> <C> <C> <C>
Kemper Defined Funds Series 15 An indefinite number of Indefinite $500
units of Beneficial (previously paid)
Interest pursuant to
Rule 24f-2 under the
Investment Company Act
of 1940
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</TABLE>
E. APPROXIMATE DATE OF PROPOSED SALE TO PUBLIC:
As soon as practicable after the effective date of the Registration Statement.
/X/ Check box if it is proposed that this filing will become effective at 2 p.m.
on February 23, 1994 pursuant to paragraph (b) of Rule 487.
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<PAGE> 2
KEMPER DEFINED FUNDS SERIES 15
---------------------
CROSS-REFERENCE SHEET
(FORM N-8B-2 ITEMS REQUIRED BY INSTRUCTIONS AS TO THE PROSPECTUS IN FORM S-6)
<TABLE>
<CAPTION>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
----------------------------------------------- -------------------------------------
I. ORGANIZATION AND GENERAL INFORMATION
<S> <C> <C>
1. (a) Name of trust.............................. Prospectus front cover
(b) Title of securities issued................. Prospectus front cover
2. Name and address of each depositor............. Miscellaneous
3. Name and address of trustee.................... Miscellaneous
4. Name and address of principal underwriters..... Public Offering of Units
5. State of organization of trust................. The Trust Funds
6. Execution and termination of trust............. The Trust Funds; Administration of
the Trust Funds
7. Changes of name................................ *
8. Fiscal year.................................... Tax Status
9. Litigation..................................... *
<CAPTION>
II. GENERAL DESCRIPTION OF THE TRUST AND SECURITIES OF THE TRUST
<S> <C> <C>
10. (a) Registered or bearer securities............ Rights of Unitholders
(b) Cumulative or distributive securities...... Administration of the Trust Funds
(c) Redemption................................. Redemption
(d) Conversion, transfer, etc.................. Rights of Unitholders
(e) Periodic payment plan...................... *
(f) Voting rights.............................. Rights of Unitholders
(g) Notice of certificateholders............... Administration of the Trusts Funds
(h) Consents required.......................... Rights of Unitholders; Administration
of the Trust Funds
(i) Other provisions........................... Tax Status
11. Type of securities comprising units............ The Trust Funds; Portfolios
12. Certain information regarding periodic payment
certificates................................. *
13. (a) Load, fees, expenses, etc.................. Essential Information; Public
Offering of Units; Comparison of
Public Offering Price and
Redemption Value; Estimated Current
Return and Estimated Long-Term
Return; Expenses and Charges
(b) Certain information regarding periodic
payment certificates.................... *
(c) Certain percentages........................ Essential Information; Public
Offering of Units
(d) Certain other fees, etc. payable by
holders...................................... Rights of Unitholders
(e) Certain profits receivable by depositor,
principal, underwriters, trustee or
affiliated persons...................... Expenses and Charges; Public Offering
of Units
(f) Ratio of annual charges to income.......... *
14. Issuance of trust's securities................. The Trust Funds; Rights of
Unitholders
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
----------------------------------------------- -------------------------------------
<S> <C> <C>
15. Receipt and handling of payments from
purchasers................................... *
16. Acquisition and disposition of underlying
securities................................... The Trust Funds; Administration of
the Trust Funds
17. Withdrawal or redemption....................... Public Offering of Units; Redemption;
Comparison of Public Offering Price
and Redemption Value
18. (a) Receipt, custody and disposition of
income.................................. Administration of the Trust Funds
(b) Reinvestment of distributions.............. Reinvestment Program
(c) Reserves or special funds.................. Expenses and Charges
(d) Schedule of distributions.................. *
19. Records, accounts and reports.................. Administration of the Trust Funds;
Miscellaneous
20. Certain miscellaneous provisions of trust
agreement
(a) Amendment.................................. Administration of the Trust Funds
(b) Termination................................ Administration of the Trust Funds
(c) and (d) Trustee, removal and successor..... Resignation, Removal and Liability
(e) and (f) Depositor, removal and successor... Resignation, Removal and Liability
21. Loans to security holders...................... *
22. Limitations on liability....................... Resignation, Removal and Liability
23. Bonding arrangements........................... *
24. Other material provisions of trust agreement... *
<CAPTION>
III. ORGANIZATION, PERSONNEL AND AFFILIATED PERSONS OF DEPOSITOR
<S> <C> <C>
25. Organization of depositor...................... Miscellaneous
26. Fees received by depositor..................... See Item 13(a) and 13(e)
27. Business of depositor.......................... Miscellaneous
28. Certain information as to officials and
affiliated persons of depositor.............. Miscellaneous
29. Voting securities of depositor................. Miscellaneous
30. Persons controlling depositor.................. Miscellaneous
31. Payment by depositor for certain services
rendered to trust............................ *
32. Payment by depositor for certain other services
rendered to trust............................ *
33. Remuneration of employees of depositor......... *
34. Remuneration of other persons for certain
services rendered to trust................... *
<CAPTION>
IV. DISTRIBUTION AND REDEMPTION
<S> <C> <C>
35. Distribution of Trust's securities by states... Public Offering of Units
36. Suspension of sales of trust's securities...... *
37. Revocation of authority to distribute.......... *
38. (a) Method of Distribution..................... Public Offering of Units
(b) Underwriting Agreements.................... Public Offering of Units
(c) Selling Agreements......................... Public Offering of Units
39. (a) Organization of principal underwriters..... Miscellaneous
(b) N.A.S.D. membership of principal
underwriters............................... Miscellaneous
40. Certain fees received by principal
underwriters................................. See Items 13(a) and 3(e)
41. (a) Business of principal underwriters......... Miscellaneous
(b) Branch offices of principal underwriters... *
(c) Salesmen of principal underwriters......... *
42. Ownership of trust's securities by certain
persons...................................... *
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
----------------------------------------------- -------------------------------------
<S> <C> <C>
43. Certain brokerage commissions received by
principal underwriters....................... Public Offering of Units
44. (a) Method of valuation........................ Public Offering of Units; Comparison
of Public Offering Price and
Redemption Value
(b) Schedule as to offering price.............. *
(c) Variation in offering price to
certain persons.............................. Public Offering of Units
45. Suspension of redemption rights................ Redemption
46. (a) Redemption valuation....................... Redemption; Public Offering of Units;
Comparison of Public Offering Price
and Redemption Value
(b) Schedule as to redemption price............ *
47. Maintenance of position in underlying
securities................................... Public Offering of Units; Comparison
of Public Offering Price and
Redemption Value; Redemption
<CAPTION>
V. INFORMATION CONCERNING THE TRUSTEE OR CUSTODIAN
<S> <C> <C>
48. Organization and regulation of trustee......... Administration of the Trust Funds;
Miscellaneous
49. Fees and expenses of trustee................... Expenses and Charges
50. Trustee's lien................................. Expenses and Charges
<CAPTION>
VI. INFORMATION CONCERNING INSURANCE OF HOLDERS OF SECURITIES
<S> <C> <C>
51. Insurance of Holders of trust's securities..... *
<CAPTION>
VII. POLICY OF REGISTRANT
<S> <C> <C>
52. (a) Provisions of trust agreement with respect
to selection or elimination of underlying
securities................................... The Trust Funds; Portfolios;
Administration of the Trust Funds
(b) Transactions involving elimination of
underlying securities........................ *
(c) Policy regarding substitution or
elimination of underlying securities......... Administration of the Trust Funds
(d) Fundamental policy not otherwise covered... *
53. Tax status of Trust............................ Tax Status
<CAPTION>
VII. FINANCIAL AND STATISTICAL INFORMATION
<S> <C> <C>
54. Trust's securities during last ten years....... *
55-58. Certain information regarding periodic payment
certificates................................. *
59. Financial statements (Instruction 1(c) to
Form S-6).................................... Statements of Condition; Report of
Independent Certified Public
Accountants
</TABLE>
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* Inapplicable, answer negative or not required
<PAGE> 5
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws
of any such State.
PRELIMINARY PROSPECTUS DATED FEBRUARY 23, 1994
SUBJECT TO COMPLETION
KEMPER DEFINED FUNDS SERIES 15
GNMA PORTFOLIO, SERIES 2 (MIDGET TRUST), AND
GNMA PORTFOLIO, SERIES 3
(EACH SERIES HEREIN IS A UNIT INVESTMENT TRUST)
Each Series of the GNMA Portfolio was formed for the purpose of obtaining safety
of capital and current monthly distributions of interest and principal through
investment in a portfolio primarily consisting of mortgage-backed Securities of
the modified pass-through type. All payments of principal and interest on the
mortgage-backed Securities are fully guaranteed by the Government National
Mortgage Association ("GNMA"). The full faith and credit of the United States is
pledged to the payment of the Securities in each series of the GNMA Portfolios
but the Units themselves of such Series are not backed by such full faith and
credit. Each U.S. Treasury Portfolio, if any, was formed for the purpose of
providing safety of capital and investment flexibility through an investment in
a portfolio of U.S. Treasury Obligations that are backed by the full faith and
credit of the United States Government. Interest income distributed by the U.S.
Treasury Portfolio Series is exempt from state personal income taxes in all
states. Certain Series of the Trust may be available to non-resident aliens and
the income from such Series, provided certain conditions are met, will be exempt
from withholding for U.S. Federal income tax for such foreign investors. A
FOREIGN INVESTOR MUST PROVIDE A COMPLETED W-8 FORM TO HIS FINANCIAL
REPRESENTATIVE OR THE TRUSTEE TO AVOID WITHHOLDING ON HIS ACCOUNT. The value of
the Units, the estimated current return and the estimated long-term return to
new purchasers will fluctuate with the value of the portfolio which will
generally decrease or increase inversely with changes in interest rates.
Units of the Trust are not deposits 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.
Units of the GNMA Portfolio Series are particularly well suited for purchase by
Individual Retirement Accounts, Keogh Plans, pension funds and other tax
deferred retirement plans. Minimum purchase for any Series of the Trust: $1,000
($250 for IRA accounts).
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SPONSOR: KEMPER UNIT INVESTMENT TRUSTS
(A service of Kemper Securities, Inc.)
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE INVESTOR IS ADVISED TO READ AND RETAIN THIS PROSPECTUS FOR FUTURE REFERENCE.
INQUIRIES ABOUT YOUR ACCOUNT SHOULD BE DIRECTED TO THE TRUSTEE AT
1-800-422-2848.
Prospectus dated February 23, 1994
<PAGE> 6
KEMPER DEFINED FUNDS SERIES 15
ESSENTIAL INFORMATION
AT THE OPENING OF BUSINESS ON THE INITIAL DATE OF DEPOSIT
SPONSOR AND EVALUATOR: KEMPER UNIT INVESTMENT TRUSTS, A SERVICE OF
KEMPER SECURITIES, INC.
TRUSTEE: INVESTORS FIDUCIARY TRUST COMPANY
<TABLE>
<CAPTION>
GNMA GNMA
SERIES 2 SERIES 3
----------- -----------
<S> <C> <C>
Public Offering Price per Unit................................................................. $ 10.010 $ 10.189
Principal Amount of Securities per Unit........................................................ $ 10.000 $ 10.000
Estimated Current Return based on Public Offering Price(1)(2)(3)............................... 6.05% 6.44%
Estimated Long-Term Return(1)(2)(3)............................................................ 5.98% 6.53%
Principal Amount of Securities................................................................. $ 500,000 $ 500,000
Number of Units................................................................................ 50,000 50,000
Fractional Undivided Interest per Unit......................................................... 1/50,000 1/50,000
Calculation of Public Offering Price--Less than 10,000 Units:
Aggregate Offering Price of Securities..................................................... $ 482,997 $ 489,325
Aggregate Offering Price of Securities per Unit............................................ $ 9.660 $ 9.787
Purchased Interest(4)...................................................................... none none
Purchased Interest per Unit................................................................ none none
Total Offering Price and Purchased Interest Per Unit(4).................................. $ 9.660 $ 9.787
Plus Sales Charge per Unit(7).............................................................. $ 0.350 $ 0.402
Public Offering Price per Unit(4)............................................................ $ 10.010 $ 10.189
Redemption Price per Unit...................................................................... $ 9.621 $ 9.748
Sponsor's Initial Repurchase Price per Unit.................................................... $ 9.660 $ 9.787
Excess of Public Offering Price per Unit over Redemption Price per Unit........................ $ 0.389 $ 0.441
Excess Public Offering Price per Unit over Sponsor's Initial Repurchase Price per Unit......... $ 0.350 $ 0.402
Calculation of Estimated Net Annual Interest Rate per Unit:
Estimated Annual Interest Rate............................................................. 6.2500% 6.7500%
Less: Estimated Annual Expenses expressed as a percentage.................................. 0.1900% 0.1900%
----------- -----------
Estimated Net Annual Interest Rate......................................................... 6.0600% 6.5600%
Estimated Daily Rate of Net Interest Accrual per Unit.......................................... $ 0.001683 $ 0.001822
Trustee's Annual Fee per $1,000 principal amount of Securities(5).............................. $ 0.8750 $ 0.8750
Trustee's Annual Estimated Expenses per $1,000 principal amount of Securities(5)............... $ 1.4750 $ 1.4750
Interest Payments(6):
First Payment per Unit, representing 29 days................................................. $ 0.04881 $ 0.05284
Sales Charge(7):
As a percentage of Public Offering Price per Unit............................................ 3.500% 3.950%
As a percentage of net amount invested....................................................... 3.623% 4.107%
As a percentage of net amount invested in earning assets..................................... 3.623% 4.107%
Type of GNMA Securities........................................................................ Midget Long Term
Estimated Average Life of GNMA Securities...................................................... 6.5 years 9.2 years
Weighted Average Years to Maturity............................................................. -- --
Evaluator's Maximum Annual Evaluation Fee per $1,000 Principal Amount of Securities............ $ 0.175 $ 0.175
Sponsor's Maximum Annual Surveillance Fee per $1,000 Principal Amount of Securities............ $ 0.250 $ 0.250
Cusip Numbers.................................................................................. 987904757 987904468
- -------------------------
</TABLE>
Evaluations for purposes of sale, purchase or redemption of Units are made as
of the close of business of the Sponsor (3:15 p.m. Central Time) next following
receipt of an order for a sale or purchase of Units or receipt by Investors
Fiduciary Trust Company of Units tendered for redemption.
2
<PAGE> 7
ESSENTIAL INFORMATION--(CONTINUED)
<TABLE>
<S> <C>
Initial Date of Deposit........................................................ February 23, 1994
First Settlement Date.......................................................... March 2, 1994
Mandatory Termination Date..................................................... December 31, 2027
Minimum principal value of the Trust under which Trust Agreement may be
terminated................................................................... 40% of the initial aggregate principal
amount of Securities deposited in the Trust
</TABLE>
- ---------------
(1) The Estimated Current Return and Estimated Long-Term Return are increased
for transactions entitled to a reduced sales charge. See "Public Offering of
Units--Public Offering Price."
(2) The Estimated Current Returns are calculated by dividing the estimated net
annual interest rate per Unit by the Public Offering Price. The estimated
net annual interest rate per Unit will vary with changes in fees and
expenses of the Trustee, the Sponsor and the Evaluator and with the
principal prepayment, redemption, maturity, exchange or sale of Securities
while the Public Offering Price will vary with changes in the offering price
of the underlying Securities and with changes in the Purchased Interest and
Daily Accrued Interest; therefore, there is no assurance that the present
Estimated Current Returns indicated above will be realized in the future.
The 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, in the case of
GNMA Portfolio Series, the estimated average life of all the Securities in
such series or, in the case of US. Treasury Portfolio Series, the estimated
retirement dates of all of the Securities in the applicable series and (2)
takes into account the expenses and sales charge associated with each Trust
Unit. Since the market values and the estimated average lives or estimated
retirement dates, as the case may be, of the Securities and expenses of each
Trust will change, there is no assurance that the present Estimated
Long-Term Returns as indicated above will be realized in the future. The
Estimated Current Returns and Estimated Long-Term Returns are expected to
differ because the calculation of the Estimated Long-Term Returns reflects
the estimated date and amount of principal returned while the Estimated
Current Return calculations includes only the net annual interest rate and
Public Offering Price.
(3) This figure is based on estimated per Unit cash flows. Estimated cash flows
will vary with changes in fees and expenses, with changes in current
interest rates and with the principal prepayment, redemption, maturity,
call, exchange or sale of the underlying Securities and, in the case of GNMA
Portfolio Series, with changes in the average life assumptions of the GNMA
pools. The estimated cash flows to Unitholders for the Trusts are either set
forth under "Estimated Cash Flows to Unitholders" or are available upon
request at no charge from the Sponsor.
(4) Purchased interest is the unpaid interest that has accumulated on the
Securities in a Trust from the later of the last payment date on the
Securities or the date of issuance thereof through the First Settlement Date
of such Trust. In addition, anyone ordering Units after the Initial Date of
Deposit will pay Daily Accrued Interest from the later of the First
Settlement Date or the last Record Date for such Trust to the date of
settlement (five business days after order). Daily Accrued Interest is the
estimated daily rate of net interest accrued on the Securities in a Trust.
(5) See "Expenses and Charges."
(6) Unitholders will receive interest distributions monthly. The Record Date is
the first day of the month, commencing April 1, 1994, and the distribution
date is the fifteenth day of the month, commencing April 15, 1994.
(7) The sales charge as a percentage of the net amount invested in earning
assets will increase as Daily Accrued Interest increases. Transactions
subject to quantity discounts (see "Public Offering of Units--Public
Offering Price") will have reduced sales charges, thereby reducing all
percentages in the table.
3
<PAGE> 8
THE TRUST FUNDS
GENERAL
Kemper Defined Funds Series 15 (GNMA Portfolio, Series 2 and GNMA Portfolio,
Series 3) (the "Trust") is comprised of separate "unit investment trusts"
created under Missouri law pursuant to separate Trust Indenture and Agreements
(hereinafter collectively referred to as the "Indenture")* between Kemper Unit
Investment Trusts, a service of Kemper Securities, Inc. (the "Sponsor") and
Investors Fiduciary Trust Company (the "Trust"). For information regarding the
relationship between the Sponsor and the Trustee, see "Miscellaneous --
Trustee." On the date of this Prospectus (the "Initial Date of Deposit") the
Sponsor deposited the underlying Securities of the Trust with the Trustee at
prices equal to the valuation of such Securities on the offering side of the
market on such date as determined by the Evaluator, and the Trustee delivered to
the Sponsor units of interest ("Units") representing the entire ownership of
such Series of the Trust. Except as otherwise indicated in the "Portfolios," the
Securities so deposited were represented by purchase contracts assigned to the
Trustee together with an irrevocable letter or letters of credit issued by a
commercial bank or banks in the amount necessary to complete the purchase
thereof. Unitholders of the Trust will have the right to have their Units
redeemed at a price based on the aggregate bid side evaluation of the Securities
in the portfolio of the Trust ("Redemption Price per Unit"), if they cannot be
sold in the over-the-counter market which the Sponsor proposes to maintain. See
"Public Offering of Units -- Secondary Market."
The purpose and objective of each Series of the Trust is to provide investors
with an appropriate vehicle to obtain safety of capital and monthly
distributions of interest and principal through investment in a fixed portfolio
of securities primarily consisting of taxable mortgage-backed securities of the
modified pass-through type ("Ginnie Maes") guaranteed by the Government National
Mortgage Association ("GNMA") and backed by the full faith and credit of the
United States in the case of GNMA Portfolio Series and an investment in a fixed,
laddered portfolio of interest-bearing U.S. Treasury Obligations in the case of
U.S. Treasury Portfolio Series. GNMA Portfolio Series 2 and Series 3 also
include zero coupon U.S. Treasury Obligations. In addition, GNMA Foreign
Investors Portfolio Series, if any, which are available only to non-resident
alien investors, have an additional purpose of providing income which is exempt
from withholding for U.S. Federal income taxes for such foreign investors. A
foreign investor must provide a completed W-8 Form to his financial
representative or the Trustee to avoid withholding on his account. See "Tax
Status." The U.S. Treasury Portfolio Series, if any, is also formed for the
purpose of providing protection against changes in interest rates and also
passing through to Unitholders in all states the exemption from state personal
income taxes afforded to direct owners of U.S. obligations. The Securities are
direct obligations of the United States and are backed by its full faith and
credit. For all Series of the Trust value of the Units, the estimated current
return and estimated long-term return to new purchasers will fluctuate with the
value of the Securities included in the portfolio which will generally decrease
or increase inversely with changes in interest rates. See "Tax Status."
As used herein, the term "Securities" or "Portfolio Obligations" means the
Ginnie Maes and zero coupon U.S. Treasury Obligations initially deposited in the
GNMA Portfolio Series of the Trust described herein or the U.S. Treasury
Obligations initially deposited in the U.S. Treasury Portfolio Series of the
Trust and includes all contracts to purchase such Ginnie Maes and U.S. Treasury
Obligations accompanied by an irrevocable letter of credit sufficient to perform
such contracts initially deposited in the Trust Funds and described herein under
"Portfolio" for each Trust and any additional Ginnie Maes and U.S. Treasury
Obligations deposited in the GNMA Portfolio Series or U.S. Treasury Portfolio
Series, respectively, of the Trust following the Initial Date of Deposit.
With the deposit of the Securities in the Trust on the Initial Date of Deposit,
the Sponsor established for each Series a percentage relationship between the
principal amounts of Securities of specified interest rates and ranges of
- ---------------
* To the extent reference is made to the Indenture, any statements herein are
qualified in their entirety by the provisions of said Indenture.
4
<PAGE> 9
maturities in the related Portfolio. From time to time, pursuant to the
Indenture, following the Initial Date of Deposit the Sponsor may deposit
additional Securities in each Series of the Trust and Units may be continuously
offered for sale to the public by means of this Prospectus resulting in a
potential increase in the outstanding number of Units of such Series. Any
additional Securities deposited in each Series of the Trust will maintain as far
as practicable the original percentage relationship between the principal
amounts of Securities of specified interest rates and ranges of maturities in
the original Portfolio of such Series. Precise duplication of this original
percentage relationship may not be possible because fractions of Securities may
not be purchased, but duplication will continue to be the goal in connection
with any such additional Securities. Under certain circumstances, the Sponsor
may also direct the Trustee to reinvest certain surplus monies in the principal
account of certain GNMA Portfolio Series in additional Ginnie Maes. See
"Portfolio Selection." See "Administration of the Trust Funds--Portfolio
Supervision."
On the Initial Date of Deposit, each Unit represented the fractional undivided
interest in the Securities and estimated net income of the Series of the Trust
set forth under "Essential Information" in the ratio of 100 Units for each
$1,000 face amount of Securities initially deposited in that Series of the
Trust. Because regular payments of principal are to be received and certain of
the Securities from time to time may be redeemed or will mature in accordance
with their terms or may be sold under certain circumstances described herein and
because additional Securities may be deposited into each Series of the Trust
from time to time, each Series of the Trust is not expected to retain its
present size and composition. Units will remain outstanding until redeemed upon
tender to the Trustee by any Unitholder (which may include the Sponsor) or until
the termination of that Series of the Trust pursuant to the Indenture.
The guaranteed payment of principal and interest afforded by both Ginnie Maes
and U.S. Treasuries may make investment in either type of Trust particularly
well suited for purchase by Individual Retirement Accounts, Keogh Plans, pension
funds and other tax-deferred retirement plans. In addition, the ability to buy
Units (minimum purchase $1,000 per Series, $250 for IRA accounts) at a Public
Offering Price of approximately $10.00 per Unit enables such investors to tailor
the dollar amount of their purchases of Units to take maximum possible advantage
of the annual deductions available for contributions to such plans. Investors
should consult with their tax advisers before investing. See "Retirement Plans."
Monthly Distributions. Monthly distributions of principal, prepayments of
principal, if any, and interest received by each GNMA Series and distributions
from the U.S. Treasury Portfolio Series will be paid in cash unless the
Unitholder elects to have them automatically reinvested in any open-end mutual
fund underwritten or advised by an affiliate of the Sponsor, Kemper Financial
Services, Inc. (the "Kemper Funds"), other than those Kemper Funds sold with a
contingent deferred sales charge. Since the portfolio securities and investment
objectives of such Kemper Funds may differ significantly from that of the GNMA,
or U.S. Treasury Portfolios Trust Funds, Unitholders should carefully consider
the consequences before selecting such Kemper Funds for reinvestment. Any such
reinvestment is made at net asset value (that is, without a sales charge).
Investors have the ability to designate that only principal payments (including
prepayments) or only interest payments or both are to be reinvested (see
"Reinvestment Program"). However, because of the small dollar amounts involved
and the fact that the Trust is not required to make a principal distribution
unless the amount in the Principal Account for such Series is equivalent to
$1.00 or more per 100 Units, it is not anticipated that any distribution of
principal will be made until several months after the Initial Date of Deposit.
At that time any principal payments accumulated in an account will be
distributed. Once distributions of principal commence, they will be made in
accordance with the instructions of the investor in any month the amount in the
Principal Account equals or exceeds $1.00 per 100 Units. It should be noted by
foreign purchasers of certain GNMA Portfolios, if offered, that distributions
from the reinvestment fund chosen generally will be subject to U.S. Federal
income tax withholding. Distributions will be made on or about the 15th day of
each month to Unitholders of record on the 1st day of such month, commencing
with the first distribution indicated herein under "Essential Information."
5
<PAGE> 10
Special Considerations. An investment in Units of the GNMA Portfolio Series and
U.S. Treasury Portfolio Series should be made with an understanding of the risks
which an investment in fixed-rate long-term debt obligations and U.S. Treasury
obligations, respectively, may entail, including the risk that the value of the
portfolio and hence of the Units will decline with increases in interest rates.
Some or all of the Securities in the Trust Fund have been purchased at a market
discount. The current returns (coupon interest rate) of such Securities are
lower than the current returns of similar, comparably rated, securities issued
at currently prevailing interest rates.
Estimated Current Return and Estimated Long-Term Return. As of the opening of
business of the Date of Deposit, the Estimated Long-Term Return and Estimated
Current Return, if applicable, for each Trust were as set forth in "Essential
Information." The Estimated Current Return is calculated by dividing the
estimated net annual interest rate per Unit by the Public Offering Price. The
net estimated annual interest rate per Unit will vary with changes in the fees
and expenses of the Trustee, Sponsor and Evaluator and with the exchange,
redemption, sale, scheduled payments, prepayments or maturity of underlying
Securities in the portfolio. The Public Offering Price of the Trust will also
vary with fluctuations in the evaluation of the underlying Securities and with
changes in the Purchased Interest and Daily Accrued Interest; therefore, there
is no assurance that the present Estimated Current Return will be realized in
the future. The Estimated Long-Term Return is calculated using a formula which
(1) takes into consideration, and determines and factors in the relative
weightings of, the market values, yields (which takes into account the
amortization of premiums and the accretion of discounts) and, in the case of the
GNMA Portfolio Series, estimated average life of all of the Securities in such
Series, or in the case of the U.S. Treasury Portfolio Series, the estimated
retirements of all the Securities in such Series and (2) takes into account the
expenses and sales charge associated with each Unit of the Trust. Since the
market values and the estimated average lives or estimated retirements, as the
case may be, of the Securities and the expenses of the Trust will change, it can
be expected that the Estimated Long-Term Returns will fluctuate in the future.
Estimated Current Return and Estimated Long-Term Return are expected to differ
because the calculation of the Estimated Long-Term Return reflects the estimated
date and amount of principal returned while the Estimated Current Return
calculation includes only the net annual interest rate and Public Offering
Price.
Market for Units. After the initial offering period, while under no obligation
to do so, the Sponsor intends to, and certain of the other Underwriters may,
maintain a market for the Units and to offer to repurchase such Units at prices
subject to change at any time which are based on the aggregate bid side
evaluation of the Securities in the Trust Fund plus Purchased Interest and Daily
Accrued Interest.
THE GNMA PORTFOLIO SERIES
Each GNMA Portfolio Series is a unit investment trust whose objectives are to
obtain safety of capital and to provide current monthly distributions of
interest and principal through investment in a fixed portfolio initially
consisting primarily of contracts to purchase taxable mortgage-backed securities
of the modified pass-through type ("Ginnie Maes" or "Securities"), including
so-called "Ginnie Mae II's," which involve larger pools of mortgages and which
have a central paying agent, fully guaranteed as to principal and interest by
the Government National Mortgage Association ("GNMA"). All of the Ginnie Maes in
the Trusts consist of pools of long term mortgages on 1-to 4-family dwellings.
GNMA Portfolio, Series 2 and Series 3 also include certain zero coupon U.S.
Treasury Obligations.
An investment in Units of the GNMA Trust Fund should be made with an
understanding of the risks which an investment in fixed rate long term debt
obligations may entail, including the risk that the value of the portfolio and
hence of the Units will decline with increases in interest rates. The value of
the underlying Securities will fluctuate inversely with changes in interest
rates. In addition, the potential for appreciation of the underlying Securities,
which might otherwise be expected to occur as a result of a decline in interest
rates, may be limited or negated by increased principal prepayments in respect
of the underlying mortgages. The high inflation of prior years, together with
the fiscal measures adopted to attempt to deal with it, have resulted in wide
fluctuations in interest rates and,
6
<PAGE> 11
thus, in the value of fixed rate long term debt obligations generally. The
Sponsor cannot predict whether such fluctuations will continue in the future.
The Securities in the Trust Fund were chosen in part on the basis of their
respective stated maturity dates. The ranges of maturity dates of each of the
Securities contained in the Trust are shown on the "Portfolios." The stated
mandatory termination date of the GNMA Portfolios are set forth under "Essential
Information." See "Life of the Securities and of the GNMA Trust Funds" below.
The GNMA Trust Fund may be an appropriate medium for investors who desire to
participate in a portfolio of taxable fixed income securities offering the
safety of capital provided by securities backed by the full faith and credit of
the United States but who do not wish to invest the minimum $25,000 which is
required for a direct investment in GNMA guaranteed securities.
The portfolio of each GNMA Trust Fund initially consists of contracts to
purchase Ginnie Maes, including so-called Ginnie Mae II's, fully guaranteed as
to payments of principal and interest by the Government National Mortgage
Association. In order for the Ginnie Maes to be eligible for inclusion in GNMA
Foreign Investors Portfolio Series, if any, evidence must be received by the
Sponsor that the underlying mortgages were originated after July 18, 1984.
Although the Sponsor believes that all the underlying mortgages were originated
after July 18, 1984, to the extent that this is not the case, a Foreign Investor
will be subject to withholding for U.S. Federal income taxes on income derived
from mortgages that were originated on or prior to July 18, 1984. See "Tax
Status."
Each group of Ginnie Maes described herein as having a specified range of
maturities includes individual mortgage-backed securities which have varying
ranges of maturities within each range specified under "Essential Information."
Each such group of Ginnie Maes is described as one category of securities
because current market conditions accord no difference in price among the
individual Ginnie Mae securities within such group on the basis of the
difference in the maturity dates of each Ginnie Mae. As long as this market
condition prevails, a purchase of Ginnie Maes with the same coupon rate and a
maturity date within the range mentioned above will be considered an acquisition
of the same Security. In the future, however, the difference in maturity ranges
could affect the market value of the individual Ginnie Maes. At such time, any
additional purchases by a GNMA Portfolio Series of the Trust will take into
account the maturities of the individual Securities.
The GNMA Portfolio Series of the Trust may contain Securities which were
acquired at a market discount. Such Securities trade at less than par value
because the interest rates thereon are lower than interest rates on comparable
debt securities being issued at currently prevailing interest rates. If such
interest rates for newly issued and otherwise comparable securities increase,
the market discount of previously issued securities will increase and if such
interest rates for newly issued comparable securities decline, the market
discount of previously issued securities will decrease, other things being
equal. Market discount attributable to interest rate changes does not indicate a
lack of market confidence in the issue.
Holders of Units will be "at risk" with respect to such Securities (i. e., may
derive either gain or loss from fluctuations in the evaluation of the
Securities) from the date they commit for Units. See "Estimated Current Return
and Estimated Long-Term Return."
The mortgages underlying a Ginnie Mae may be prepaid at any time without
penalty. A lower or higher return on Units may occur depending on whether the
price at which the respective Ginnie Maes were acquired by the GNMA Portfolio
Series of the Trust is lower or higher than par (which represents the price at
which such Ginnie Maes will be redeemed upon prepayment). Redemption of premium
Ginnie Maes at par pursuant to prepayments of mortgages will operate to lower
the current return on Units of such Series outstanding at that time since
premium Ginnie Maes normally carry higher interest coupons than par or discount
Ginnie Maes. If mortgage rates decline in the future, such prepayments may occur
with
7
<PAGE> 12
increasing frequency because, among other reasons, mortgagors may be able to
refinance their outstanding mortgages at lower interest rates. See "Life of the
Securities and of the GNMA Trust Funds."
Set forth below is a brief description of the current method of origination of
Ginnie Maes; the nature of such securities, including the guaranty of GNMA; the
basis of selection and acquisition of the Ginnie Maes included in the GNMA
portfolio; and the expected life of the Ginnie Maes and GNMA Portfolio Series of
the Trust. The "Portfolios" contain information concerning the coupon rate and
range of stated maturities of the Ginnie Maes in the GNMA Portfolio Series of
the Trust.
Origination. The Ginnie Maes included in the GNMA Portfolio Series are backed by
the indebtedness secured by underlying mortgage pools of long-term mortgages on
1-to 4-family dwellings. In the case of GNMA Foreign Investors Portfolio Series,
which may be acquired only by qualified foreign investors, the Sponsor has
acquired only pools containing mortgages which it believes were originated after
July 18, 1984. The pool of mortgages which is to underlie a particular new issue
of Ginnie Maes is assembled by the proposed issuer of such Ginnie Maes. The
issuer is typically a mortgage banking firm, and in every instance must be a
mortgagee approved by and in good standing with the Federal Housing
Administration ("FHA"). In addition, GNMA imposes its own criteria on the
eligibility of issuers, including a net worth requirement.
The mortgages which are to comprise a new Ginnie Mae pool may have been
originated by the issuer itself in its capacity as a mortgage lender or may be
acquired by the issuer from a third party. Such third party may be another
mortgage banker, a banking institution, the Veterans Administration ("VA")
(which in certain instances acts as a direct lender and thus originates its own
mortgages) or one of several governmental agencies. All mortgages in any given
pool will be insured under the National Housing Act, as amended ("FHA-insured")
or Title V of the Housing Act of 1949 ("FMHA-insured") or guaranteed under the
Servicemen's Readjustment Act of 1944, as amended, or Chapter 37 of Title 38,
U.S.C. ("VA-guaranteed"). Such mortgages will have a date for the first
scheduled monthly payment of principal that is not more than one year prior to
the date on which GNMA issues its guaranty commitment as described below, will
have comparable interest rates and maturity dates, and will meet additional
criteria of GNMA. All mortgages in the pools backing the Ginnie Maes contained
in the GNMA Portfolio Series are mortgages on 1-to 4-family dwellings. In
general, the mortgages in these pools provide for monthly payments over the life
of the mortgage (aside from prepayments) designed to repay the principal of the
mortgage over such period, together with interest at the fixed rate of the
unpaid balance.
To obtain GNMA approval of a new pool of mortgages, the issuer will file with
GNMA an application containing information concerning itself, describing
generally the pooled mortgages, and requesting that GNMA approve the issue and
issue its commitment (subject to GNMA's satisfaction with the mortgage documents
and other relevant documentation) to guarantee the timely payment of principal
of and interest on the Ginnie Maes to be issued by the issuer. If the
application is in order, GNMA will issue its commitment and will assign a GNMA
pool number to the pool. Upon completion of the required documentation
(including detailed information as to the underlying mortgages, a custodial
agreement with a Federal or state regulated financial institution satisfactory
to GNMA pursuant to which the underlying mortgages will be held in safekeeping,
and a detailed guaranty agreement between GNMA and the issuer) the issuance of
the Ginnie Maes is permitted. When the Ginnie Maes are issued, GNMA will endorse
its guaranty thereon. The aggregate principal amount of Ginnie Maes issued will
be equal to the then aggregate unpaid principal balances of the pooled
mortgages. The interest rate borne by the Ginnie Maes is currently fixed at 1/2
of 1% below the interest rate of the pooled 1-to 4-family mortgages, the
differential being applied to the payment of servicing and custodial charges as
well as GNMA's guaranty fee.
Ginnie Mae II's consist of jumbo pools of mortgages consisting of pools of
mortgages from more than one issuer. The major advantage of Ginnie Mae II's lies
in the fact that a central paying agent sends one check to the holder on the
required payment date. This greatly simplifies the current procedure of
collecting distributions from each issuer of a Ginnie Mae, since such
distributions are often received late.
8
<PAGE> 13
Nature of Ginnie Maes and GNMA Guaranty. All of the Ginnie Maes in the GNMA
Portfolio Series, including the Ginnie Mae II's, are of the "modified
pass-through" type, i.e., they provide for timely monthly payments to the
registered holders thereof (including a GNMA Portfolio Series of the Trust) of a
pro rata share of the scheduled principal payments on the underlying mortgages,
whether or not collected by the issuers. Such monthly payments will also
include, on a pro rata basis, any prepayments of principal of such mortgages
received and interest (net of the servicing and other charges described above)
on the aggregate unpaid principal balance of such Ginnie Maes, whether or not
the interest on the underlying mortgages has been collected by the issuers.
The Ginnie Maes in the GNMA Portfolio Series are guaranteed as to timely payment
of principal and interest by GNMA. Funds received by the issuers on account of
the mortgages backing the Ginnie Maes in the GNMA Portfolio Series are intended
to be sufficient to make the required payments of principal of and interest on
such Ginnie Maes but, if such funds are insufficient for that purpose, the
guaranty agreements between the issuers and GNMA require the issuers to make
advances sufficient for such payments. If the issuers fail to make such
payments, GNMA will do so.
GNMA is authorized by Section 306(g) of Title III of the National Housing Act to
guarantee the timely payment of principal of and interest on securities which
are based on or backed by a trust or pool composed of mortgages insured by FHA,
the Farmers' Home Administration ("FMHA") or guaranteed by the VA. Section
306(g) provides further that the full faith and credit of the United States is
pledged to the payment of all amounts which may be required to be paid under any
guaranty under such subsection. An opinion of an Assistant Attorney General of
the United States, dated December 9, 1969, states that such guaranties
"constitute general obligations of the United States backed by its full faith
and credit."* GNMA is empowered to borrow from the United States Treasury to the
extent necessary to make any payments of principal and interest required under
such guaranties. Ginnie Maes are backed by the aggregate indebtedness secured by
the underlying FHA-insured, FMHA-insured or VA-guaranteed mortgages and, except
to the extent of funds received by the issuers on account of such mortgages,
Ginnie Maes do not constitute a liability of nor evidence any recourse against
such issuers, but recourse thereon is solely against GNMA. Holders of Ginnie
Maes (such as the GNMA Portfolio Series of the Trust) have no security interest
in or lien on the underlying mortgages.
The GNMA guaranties referred to herein relate only to payment of principal of
and interest on the Ginnie Maes in the portfolio and not to the Units offered
hereby.
Life of the Securities and of the GNMA Trust Funds. Monthly payments of
principal will be made, and additional prepayments of principal may be made, to
the GNMA Trust Funds in respect of the mortgages underlying the Ginnie Maes in
each GNMA Portfolio Series. All of the mortgages in the pools relating to the
Ginnie Maes in each GNMA Portfolio Series are subject to prepayment without any
significant premium or penalty at the option of the mortgagors. It has been the
experience of the mortgage industry that the average life of mortgages
comparable to those contained in the GNMA Portfolio Series, owing to
prepayments, refinancings and payments from foreclosures is considerably less
than the stated maturity for each series set forth in "Essential Information."
In the mid 1970's, published tables for Ginnie Maes utilized a 12 year average
life assumption for Ginnie Mae pools of 26-30 year mortgages on 1-to 4-family
dwellings. This assumption was derived from the FHA experience relating to
prepayments on such mortgages during the period from the mid 1950's to the mid
1970's. This 12 year average life assumption was calculated in respect of a
period during which mortgage lending rates were fairly stable. That assumption
is probably no longer an accurate measure of the life of Ginnie Maes or their
underlying single family mortgage pools. However, current yield tables,
published in 1981, still utilize the 12 year average life assumption and Ginnie
Maes continue to be traded based on this assumption. Recently it has been
observed that mortgages
- ---------------
* Any statement in this Prospectus that a particular Security is backed by the
full faith and credit of the United States is based upon the opinion of an
Assistant Attorney General of the United States and should be so construed.
9
<PAGE> 14
issued at high interest rates have experienced accelerated prepayment rates
which would indicate a shorter average life than 12 years.
A number of factors, including homeowner's mobility, change in family size and
mortgage market interest rates will affect the average life of the Ginnie Maes
in the Trust Funds. For example, Ginnie Maes issued during a period of high
interest rates will be backed by a pool of mortgage loans bearing similarly high
rates. In general, during a period of declining interest rates, new mortgage
loans with interest rates lower than those charged during periods of high rates
will become available. To the extent a homeowner has an outstanding mortgage
with a high rate, he may refinance his mortgage at a lower interest rate or he
may rapidly repay his old mortgage. Should this happen, a Ginnie Mae issued with
a high interest rate may experience a rapid prepayment of principal as the
underlying mortgage loans prepay in whole or in part. Accordingly, there can be
no assurance that the prepayment levels which will be actually realized will
conform to the experience of the FHA, other mortgage lenders or other Ginnie Mae
investors. It is not possible to meaningfully predict prepayment levels
regarding the Ginnie Maes in the Trust Fund. Therefore, the termination of the
Trust Fund might be accelerated as a result of prepayments made as described
herein.
In addition to prepayments as described above, sales of Securities in the Trust
Fund under certain permitted circumstances may result in an accelerated
termination of the Trust Fund. Also, it is possible that, in the absence of a
secondary market for the Units or otherwise, redemptions of Units may occur in
sufficient numbers to reduce the Trust Fund to a size resulting in such
termination. Early termination of the Trust Fund may have important consequences
to the Unitholder; e.g., to the extent that Units were purchased with a view to
an investment of longer duration, the overall investment program of the investor
may require readjustment; or the overall return on investment may be less or
greater than anticipated, depending in part on whether the purchase price paid
for Units represented the payment of an overall premium or a discount,
respectively, above or below the stated principal amounts of the underlying
mortgages. In addition, a capital gain or loss may result for tax purposes from
termination of a GNMA Portfolio Series.
THE U.S. TREASURY PORTFOLIO SERIES.
Each U.S. Treasury Portfolio Series, if any, is a unit investment trust whose
objective is to obtain safety of capital and investment flexibility as well as
current monthly distributions of interest through investment in a fixed,
laddered portfolio initially consisting of contracts to purchase
interest-bearing U.S. Treasury obligations (the "U.S. Treasury Obligations").
The U.S. Treasury Portfolio Series are formed for the purpose of providing
protection against changes in interest rates and also passing through to
Unitholders in all states the exemption from state personal income taxes
afforded to direct owners of U.S. obligations. The U.S. Treasury Portfolio
Series has an additional purpose of providing income which is exempt from
withholding for U.S. Federal income taxes for non-resident alien investors. A
foreign investor must provide a completed W-8 Form to his financial
representative or the Trustee to avoid withholding on his account. The
Securities are direct obligations of the United States and are backed by its
full faith and credit.
An investment in Units of the U.S. Treasury Portfolio Series should be made with
an understanding of the risks which an investment in fixed rate debt obligations
may entail, including the risk that the value of the Portfolio and hence of the
Units will fluctuate inversely with changes in interest rates. The high
inflation of prior years, together with the fiscal measures adopted to attempt
to deal with it, have resulted in wide fluctuations in interest rates and, thus,
in the value of fixed rate long term debt obligations generally. The Sponsor
cannot predict whether such fluctuations will continue in the future.
In selecting Securities for deposit in the U.S. Treasury Portfolio Series, the
following factors, among others, were considered by the Sponsor: (i) the prices
of the Securities relative to other comparable Securities; (ii) the maturities
of these Securities; and (iii) whether the Securities were issued after July 18,
1984.
10
<PAGE> 15
The U.S. Treasury Portfolio Series may be an appropriate medium for investors
who desire to participate in a portfolio of taxable fixed income securities
offering the safety of capital provided by an investment backed by the full
faith and credit of the United States. In addition, many investors may benefit
from the exemption from state and local personal income taxes that will pass
through the U.S. Treasury Portfolio Series to Unitholders in virtually all
states.
The Portfolios initially consists of contracts to purchase U.S. Treasury
Obligations fully secured by the full faith and credit of the United States,
certain of which have been purchased at a market discount or premium. Certain
Securities may have been purchased on a when, as and if issued basis. Interest
on these Securities begins accruing to the benefit of holders on their
respective dates of delivery. Unitholders will be "at risk" with respect to
these Securities (i.e. may derive either gain or loss from fluctuations in the
offering side evaluation of the Securities) from the date they commit for Units.
The Trusts consists of the U.S. Treasury Securities (or contracts to purchase
the Securities) listed in the Portfolio as may continue to be held from time to
time in the Trust and any additional Securities deposited in the Funds in
connection with the sale of additional Units to the public as described above,
together with the accrued and undistributed interest thereon and undistributed
cash realized from the sale or redemption of Securities (see "Administration of
the Trust Funds--Portfolio Supervision"). Neither the Sponsor nor the Trustee
shall be liable in any way for any default, failure or defect in any of the
Securities. However, should any contract deposited in connection with the sale
of additional Units fail, the Sponsor shall, on or before the next following
Distribution Day, deposit additional Securities or cause to be refunded the
attributable sales charge, plus the attributable cost of Securities to such U.S.
Treasury Portfolio Series plus accrued interest if any (at the coupon rate of
the relevant Security to the date the Sponsor is notified of the failure).
The Indenture authorizes the Sponsor to increase the size and the number of
Units of the U.S. Treasury Portfolio Series by the deposit of additional
Securities and the issue of a corresponding number of additional Units
subsequent to the Initial Date of Deposit maintaining, as close as practicable,
the original percentage relationship among the principal amounts of Securities
of specified interest rates and maturities.
On the Initial Date of Deposit each Unit represented the fractional undivided
interest in the U.S. Treasury Portfolio Series set forth under "Essential
Information". Thereafter, if any Units are redeemed by the Trustee the face
amount of Securities in the U.S. Treasury Portfolio Series will be reduced by
amounts allocable to redeemed Units, and the fractional undivided interest
represented by each Unit in the balance will be increased. However, if
additional Units are issued by the U.S. Treasury Portfolio Series (through
deposit of Securities by the Sponsor in connection with the sale of additional
Units), the aggregate value of Securities in the U.S. Treasury Portfolio Series
will be increased by amounts allocable to additional Units, and the fractional
undivided interest represented by each Unit in the balance will be decreased.
Units will remain outstanding until redeemed upon tender to the Trustee by any
Unitholder (which may include the Sponsor) or until the termination of the
Indenture.
11
<PAGE> 16
KEMPER DEFINED FUNDS SERIES 15
GNMA PORTFOLIO, SERIES 2
PORTFOLIO
AS OF THE INITIAL DATE OF DEPOSIT: FEBRUARY 23, 1994
- --------------------------------------------------------------------------------
Government National Mortgage Association, Modified Pass-Through Mortgage-Backed
Securities and U.S. Treasury Securities*
<TABLE>
<CAPTION>
Cost of
Range of Securities
Face Stated of
Amount Issuer Coupon Maturities(1) Trust(2)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 350,000 GNMA 7.00% 2008 to 2009 $ 360,938
75,000 GNMA 9.00 2001 to 2003 80,250
75,000 U.S. Treasury 0.00(3) 05/15/2003 41,809
- --------- ---------
$ 500,000 $ 482,997
- --------- ---------
- --------- ---------
</TABLE>
SEE "NOTES TO PORTFOLIOS."
KEMPER DEFINED FUNDS SERIES 15
GNMA PORTFOLIO, SERIES 3
PORTFOLIO
AS OF THE DATE OF DEPOSIT: FEBRUARY 23, 1994
- --------------------------------------------------------------------------------
Government National Mortgage Association, Modified Pass-Through Mortgage-Backed
Securities and U.S. Treasury Securities*
<TABLE>
<CAPTION>
Cost of
Securities
Face of
Amount Issuer Coupon Maturities Trust(2)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 450,000 GNMA 7.50% 2022 to 2024 $ 464,063
50,000 U.S. Treasury 0.00(3) 11/15/2004 25,262
- --------- ------------ ---------
$ 500,000 $ 489,325
- --------- ---------
- --------- ---------
</TABLE>
SEE "NOTES TO PORTFOLIOS."
12
<PAGE> 17
NOTES TO PORTFOLIOS
(1) The principal amount of Securities listed as having the range of maturities
shown is an aggregate of individual Securities having varying ranges of
maturities within that shown. They are listed as one category of Securities
with a single range of maturities because of current market conditions that
accord no difference in price among the Securities grouped together on the
basis of the difference in their maturity ranges. At some time in the
future, however, the difference in maturity ranges could affect the market
value of the individual Securities.
(2) All Securities are represented by contracts to purchase such Securities.
During the initial offering period, evaluations of Securities are made on
the basis of current offering side evaluations of the Securities. The
aggregate offering price is greater than the aggregate bid price of the
Securities, which is the basis on which Redemption Prices will be determined
for purposes of redemption of Units after the initial offering period. Other
information regarding the Securities in the Trust Funds, at the opening of
business on the Initial Date of Deposit, is as follows:
<TABLE>
<CAPTION>
Annual
Profit or Interest
Cost of Securities (Loss) to Income to Bid Side Value
Trust Fund to Sponsor Sponsor Trust of Securities
- ------------------------------------------------- ------------------ --------- ----------- --------------
<S> <C> <C> <C> <C>
GNMA Series 2.................................... $482,073 $ 924 $31,250 $481,032
GNMA Series 3.................................... $488,171 $ 1,154 $33,750 $487,377
</TABLE>
(3) This Security has been purchased at a deep discount from the par value
because there is little or no stated interest income thereon. Securities
which pay no interest are normally described as "zero coupon" bonds. Over
the life of Securities purchased at a deep discount the value of such
Securities will increase such that upon maturity the holders of such
Securities will receive 100% of the principal amount thereof.
------------------------
*In addition to the information as to the GNMA modified pass-through
mortgage-backed Securities set forth under "Portfolios," the Trustee will
furnish Unitholders a statement listing the name of issuer, pool number,
interest rate, maturity date and principal amount for each such Security in the
portfolio upon written request.
------------------------
13
<PAGE> 18
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
UNITHOLDERS
KEMPER DEFINED FUNDS SERIES 15 (GNMA PORTFOLIO, SERIES 2, AND GNMA PORTFOLIO,
SERIES 3)
We have audited the accompanying statements of condition, including the
portfolios, of Kemper Defined Funds Series 15 (GNMA Portfolio, Series 2, and
GNMA Portfolio, Series 3) as of the opening of business on February 23, 1994.
These statements of condition are the responsibility of the Trust Funds'
Sponsor. Our responsibility is to express an opinion on these statements of
condition based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statements of condition are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the statements of condition. Our procedures
included confirmation of the letter of credit held by the Trustee on February
23, 1994. An audit also includes assessing the accounting principles used and
significant estimates made by the Sponsor, as well as evaluating the overall
statements of condition presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the statements of condition referred to above present fairly, in
all material respects, the financial position of Kemper Defined Funds Series 15
(GNMA Portfolio, Series 2, and GNMA Portfolio, Series 3) at the opening of
business on February 23, 1994, in conformity with generally accepted accounting
principles.
GRANT THORNTON
Chicago, Illinois
February 23, 1994
14
<PAGE> 19
KEMPER DEFINED FUNDS SERIES 15,
GNMA PORTFOLIO, SERIES 2, AND GNMA PORTFOLIO, SERIES 3
STATEMENTS OF CONDITION
OF THE OPENING OF BUSINESS ON FEBRUARY 23, 1994, THE INITIAL DATE OF DEPOSIT
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GNMA GNMA
PORTFOLIO PORTFOLIO
SERIES 2 SERIES 3
--------- ---------
<S> <C> <C>
INVESTMENT IN SECURITIES
Contracts to purchase Securities(1)........................................ $ 482,997 $ 489,325
Purchased interest to date of settlement on Securities(1).................. -- --
--------- ---------
Total.................................................................... $ 482,997 $ 489,325
--------- ---------
--------- ---------
INTEREST OF UNITHOLDERS
Interest of Unitholders --
Units of fractional undivided interest outstanding:...................... 50,000 50,000
Cost to investors(2)..................................................... $ 500,500 $ 509,450
Less: Gross underwriting commission(2)................................... 17,503 20,125
--------- ---------
Net interest to Unitholders(2)............................................. $ 482,997 $ 489,325
--------- ---------
--------- ---------
</TABLE>
- -------------------------
NOTES:
(1) The aggregate value of the Securities listed in each Portfolio and their
cost to the Trust are the same. The value of the Securities is determined
by Muller Data Corporation on the bases set forth under "Public Offering of
Units--Public Offering Price." The contracts to purchase Securities are
collateralized by an irrevocable letter of credit of $972,322 which has
been deposited with the Trustee. Of this amount, $972,322 relates to the
offering price of Securities to be purchased and $0 relates to purchased
interest on such Securities to the expected dates of delivery.
(2) The aggregate public offering price includes a sales charge for each Trust
as set forth under "Essential Information," assuming all single
transactions involve less than 10,000 Units. For single transactions
involving 10,000 or more Units, the sales charge is reduced (see "Public
Offering of Units--Public Offering Price") resulting in an equal reduction
in both the Cost to investors and the Gross underwriting commission while
the Net interest to Unitholders remains unchanged.
15
<PAGE> 20
ESTIMATED CASH FLOWS TO UNITHOLDERS
The table below sets forth the per 100 Units estimated distributions of interest
and principal to Unitholders. The table assumes a constant prepayment rate on
the Initial Date of Deposit. The table also assumes no changes in the current
interest rates, no exchanges, redemptions, or sales of the underlying securities
prior to their maturity or expected retirement date and assumes that the
prepayment rate will not change. To the extent the foregoing assumptions change,
actual distributions will vary.
GNMA PORTFOLIO, SERIES 2
<TABLE>
<CAPTION>
ESTIMATED ESTIMATED
INTEREST PRINCIPAL
DATE DISTRIBUTION DISTRIBUTION
- -------------------------- ------------ ------------
<S> <C> <C>
April 1994 $4.881 $ 10.701
May 1994 $4.984 $ 10.547
June 1994 $4.917 $ 10.396
July 1994 $4.851 $ 10.249
August 1994 $4.786 $ 10.104
September 1994 $4.722 $ 9.962
October 1994 $4.659 $ 9.823
November 1994 $4.597 $ 9.687
December 1994 $4.536 $ 9.554
January 1995 $4.476 $ 9.424
February 1995 $4.417 $ 9.296
March 1995 $4.359 $ 9.171
April 1995 $4.301 $ 9.048
May 1995 $4.245 $ 8.927
June 1995 $4.189 $ 8.810
July 1995 $4.134 $ 8.694
August 1995 $4.080 $ 8.581
September 1995 $4.026 $ 8.470
October 1995 $3.974 $ 8.361
November 1995 $3.922 $ 8.254
December 1995 $3.870 $ 8.149
January 1996 $3.820 $ 8.047
February 1996 $3.770 $ 7.946
March 1996 $3.721 $ 7.847
April 1996 $3.673 $ 7.751
May 1996 $3.625 $ 7.656
June 1996 $3.578 $ 7.562
July 1996 $3.531 $ 7.471
August 1996 $3.485 $ 7.381
September 1996 $3.440 $ 7.294
October 1996 $3.396 $ 7.207
November 1996 $3.351 $ 7.123
December 1996 $3.308 $ 7.039
January 1997 $3.265 $ 6.958
February 1997 $3.223 $ 6.878
March 1997 $3.181 $ 6.799
April 1997 $3.139 $ 6.722
May 1997 $3.098 $ 6.646
June 1997 $3.058 $ 6.572
July 1997 $3.018 $ 6.499
August 1997 $2.979 $ 6.427
<CAPTION>
ESTIMATED ESTIMATED
INTEREST PRINCIPAL
DATE DISTRIBUTION DISTRIBUTION
- -------------------------- ------------ ------------
<S> <C> <C>
September 1997 $2.940 $ 6.357
October 1997 $2.902 $ 6.287
November 1997 $2.864 $ 6.219
December 1997 $2.826 $ 6.153
January 1998 $2.789 $ 6.087
February 1998 $2.753 $ 6.023
March 1998 $2.716 $ 5.959
April 1998 $2.681 $ 5.897
May 1998 $2.645 $ 5.836
June 1998 $2.610 $ 5.776
July 1998 $2.576 $ 5.717
August 1998 $2.541 $ 5.658
September 1998 $2.508 $ 5.601
October 1998 $2.474 $ 5.545
November 1998 $2.441 $ 5.490
December 1998 $2.408 $ 5.435
January 1999 $2.376 $ 5.382
February 1999 $2.344 $ 5.329
March 1999 $2.312 $ 5.278
April 1999 $2.281 $ 5.227
May 1999 $2.250 $ 5.177
June 1999 $2.219 $ 5.128
July 1999 $2.189 $ 5.079
August 1999 $2.159 $ 5.031
September 1999 $2.129 $ 4.984
October 1999 $2.100 $ 4.938
November 1999 $2.071 $ 4.893
December 1999 $2.042 $ 4.848
January 2000 $2.013 $ 4.804
February 2000 $1.985 $ 4.760
March 2000 $1.957 $ 4.717
April 2000 $1.920 $ 4.675
May 2000 $1.902 $ 4.634
June 2000 $1.875 $ 4.593
July 2000 $1.848 $ 4.552
August 2000 $1.821 $ 4.513
September 2000 $1.795 $ 4.473
October 2000 $1.768 $ 4.435
November 2000 $1.743 $ 4.397
December 2000 $1.717 $ 4.359
January 2001 $1.691 $ 4.322
</TABLE>
16
<PAGE> 21
<TABLE>
<CAPTION>
ESTIMATED ESTIMATED
INTEREST PRINCIPAL
DATE DISTRIBUTION DISTRIBUTION
- -------------------------- ------------ ------------
<S> <C> <C>
February 2001 $1.666 $ 4.286
March 2001 $1.641 $ 4.250
April 2001 $1.616 $ 4.215
May 2001 $1.592 $ 4.180
June 2001 $1.568 $ 4.145
July 2001 $1.543 $ 4.111
August 2001 $1.520 $ 4.078
September 2001 $1.496 $ 4.045
October 2001 $1.472 $ 4.012
November 2001 $1.449 $ 3.980
December 2001 $1.426 $ 3.948
January 2002 $1.403 $ 3.917
February 2002 $1.380 $ 3.886
March 2002 $1.358 $ 3.855
April 2002 $1.336 $ 3.825
May 2002 $1.314 $ 3.795
June 2002 $1.292 $ 3.766
July 2002 $1.270 $ 3.737
August 2002 $1.248 $ 3.708
September 2002 $1.227 $ 3.680
October 2002 $1.206 $ 3.652
November 2002 $1.185 $ 3.624
December 2002 $1.164 $ 3.597
January 2003 $1.143 $ 3.570
February 2003 $1.122 $ 3.543
March 2003 $1.102 $ 3.517
April 2003 $1.082 $ 3.491
May 2003 $1.085 $153.465
June 2003 $1.065 $ 3.440
July 2003 $1.046 $ 3.414
August 2003 $1.026 $ 3.390
September 2003 $1.007 $ 3.234
October 2003 $ .988 $ 3.215
November 2003 $ .970 $ 3.196
December 2003 $ .952 $ 3.177
January 2004 $ .934 $ 3.158
February 2004 $ .916 $ 3.140
March 2004 $ .898 $ 3.121
April 2004 $ .880 $ 3.103
May 2004 $ .863 $ 3.084
June 2004 $ .845 $ 3.066
July 2004 $ .828 $ 3.048
August 2004 $ .811 $ 3.030
September 2004 $ .793 $ 3.012
October 2004 $ .776 $ 2.995
November 2004 $ .759 $ 2.977
December 2004 $ .742 $ 2.959
January 2005 $ .726 $ 2.942
February 2005 $ .709 $ 2.925
<CAPTION>
ESTIMATED ESTIMATED
INTEREST PRINCIPAL
DATE DISTRIBUTION DISTRIBUTION
- -------------------------- ------------ ------------
<S> <C> <C>
March 2005 $ .692 $ 2.907
April 2005 $ .676 $ 2.890
May 2005 $ .659 $ 2.873
June 2005 $ .643 $ 2.856
July 2005 $ .627 $ 2.839
August 2005 $ .611 $ 2.823
September 2005 $ .595 $ 2.806
October 2005 $ .579 $ 2.790
November 2005 $ .563 $ 2.773
December 2005 $ .547 $ 2.757
January 2006 $ .532 $ 2.741
February 2006 $ .516 $ 2.724
March 2006 $ .501 $ 2.708
April 2006 $ .485 $ 2.692
May 2006 $ .470 $ 2.677
June 2006 $ .455 $ 2.661
July 2006 $ .440 $ 2.645
August 2006 $ .425 $ 2.630
September 2006 $ .410 $ 2.614
October 2006 $ .395 $ 2.599
November 2006 $ .380 $ 2.584
December 2006 $ .365 $ 2.568
January 2007 $ .351 $ 2.553
February 2007 $ .336 $ 2.538
March 2007 $ .322 $ 2.523
April 2007 $ .308 $ 2.509
May 2007 $ .293 $ 2.494
June 2007 $ .279 $ 2.479
July 2007 $ .265 $ 2.465
August 2007 $ .251 $ 2.450
September 2007 $ .237 $ 2.436
October 2007 $ .223 $ 2.422
November 2007 $ .210 $ 2.407
December 2007 $ .196 $ 2.393
January 2008 $ .182 $ 2.379
February 2008 $ .169 $ 2.365
March 2008 $ .155 $ 2.351
April 2008 $ .142 $ 2.338
May 2008 $ .129 $ 2.324
June 2008 $ .116 $ 2.310
July 2008 $ .103 $ 2.297
August 2008 $ .089 $ 2.283
September 2008 $ .077 $ 2.270
October 2008 $ .064 $ 2.257
November 2008 $ .051 $ 2.244
December 2008 $ .038 $ 2.230
January 2009 $ .025 $ 2.217
February 2009 $ .013 $ 2.204
</TABLE>
17
<PAGE> 22
RATING OF UNITS
Standard & Poor's Corporation ("Standard & Poor's") has rated the Units of each
Series of the Trust "AAA." This is the highest rating assigned by Standard &
Poor's. Standard & Poor's has been compensated by the Sponsor for its services
in rating Units of the Trust Funds.
A Standard & Poor's Corporation's rating (as described by Standard & Poor's) on
the units of an investment trust (hereinafter referred to collectively as
"units" or "trust") is a current assessment of creditworthiness with respect to
the investments held by such trust. This assessment takes into consideration the
financial capacity of the issuers and of any guarantors, insurers, lessees, or
mortgagors with respect to such investments. The assessment, however, does not
take into account the extent to which trust expenses or portfolio asset sales
for less than the trust's purchase price will reduce payment to the Unitholder
of the interest and principal required to be paid on the portfolio assets. In
addition, the rating is not a recommendation to purchase, sell, or hold units,
inasmuch as the rating does not comment as to market price of the units or
suitability for a particular investor.
Trusts rated "AAA" are composed exclusively of assets that are rated "AAA" by
Standard & Poor's or have, in the opinion of Standard & Poor's, credit
characteristics comparable to assets rated "AAA," or certain short-term
investments. Standard & Poor's defines its "AAA" rating for such assets as the
highest rating assigned by Standard & Poor's to a debt obligation. Capacity to
pay interest and repay principal is very strong.
PORTFOLIO SELECTION
In selecting Ginnie Maes and U.S. Treasury Obligations for deposit in the
appropriate Trust Funds, the following factors, among others, were considered by
the Sponsor: (i) the types of such obligations available; (ii) the prices and
yields of such obligations relative to other comparable obligations, including
the extent to which such obligations are traded at a premium or at a discount
from par; and (iii) the maturities of such obligations.
Each Series of the Trust consists of such of the unamortized principal amount of
the Portfolio Obligations listed under the appropriate Trust Fund's "Portfolio"
(or contracts to purchase such obligations) as may continue to be held from time
to time in such Series of the Trust and any additional obligations acquired and
held by such Series of the Trust pursuant to the provisions of the Indenture
(including provisions with respect to deposits of Portfolio Obligations in
connection with the issuance of additional Units) together with accrued and
undistributed interest thereon and undistributed cash representing payments and
prepayments of principal and proceeds realized from the disposition of Portfolio
Obligations. Neither the Sponsor nor the Trustee shall be liable in any way for
any default, failure or defect in any of the Portfolio Obligations. However,
should any contract deposited hereunder (or to be deposited in connection with
the issuance of additional Units), fail, the Sponsor shall, on or before the
next following Distribution Date, unless substantially all of the moneys held in
such Series of the Trust to cover such purchase are reinvested in substitute
Portfolio Obligations in accordance with the Indenture, cause to be refunded to
the Unitholders of that Series the attributable sales charge, plus the
attributable cost of the Portfolio Obligations to that Series of the Trust, plus
accrued interest, if any, at the coupon rate of the relevant Portfolio
Obligations to the date the Sponsor is notified of the failure.
Each Series of the Trust may contain "zero coupon" U.S. Treasury Obligations.
See footnote (6) in "Notes to Portfolios." Zero coupon obligations are purchased
at a deep discount because the buyer receives only the right to receive a final
payment at the maturity of the obligations and does not receive any periodic
interest payments. The effect of owning deep discount obligations which do not
make current interest payments (such as the zero coupon obligations) is that a
fixed yield is earned not only on the original investment but also, in effect,
on all discount earned during the life of such income on such obligation at a
rate as high as the implicit yield on the discount obligation, but at the same
time eliminates the holder's ability to reinvest at higher rates in the future.
For this reason, zero coupon obligations are subject to substantially greater
price fluctuations during periods of changing market interest rates than are
securities of comparable quality which pay interest.
A-1
<PAGE> 23
Because regular payments of principal are to be received and certain of the
Securities from time to time may be redeemed or will mature in accordance with
their terms or may be sold under certain circumstances described herein, the
GNMA Portfolio Series of the Trust referred to herein are not expected to retain
their present size and composition.
THE UNITS
On the Initial Date of Deposit, each Unit represented the fractional undivided
interest in the appropriate Series of the Trust set forth for such Series under
"Essential Information" above in the ratio of one Unit for each $10.00 principal
amount of Portfolio Obligations in the Series. Thereafter, if any Units are
redeemed by the Trustee, the principal amount of Portfolio Obligations in such
Series will be reduced by amounts allocable to redeemed Units, and the
fractional undivided interest represented by each Unit in the balance will be
increased. However, if additional Units are issued by a Series of the Trust (in
connection with the deposit by the Sponsor of additional Portfolio Obligations),
the aggregate value of Portfolio Obligations in such Series of the Trust will be
increased by amounts allocable to additional Units, and the fractional undivided
interest represented by each Unit in the balance will be decreased. Units will
remain outstanding until redeemed upon tender to the Trustee by any Unitholder
(which may include the Sponsor) or until the termination of the Series. See
"Redemption" and "Administration of the Trust Funds--Termination."
ESTIMATED CURRENT RETURN AND ESTIMATED LONG-TERM RETURN
As of the opening of business on the Initial Date of Deposit, the Estimated
Current Return and the Estimated Long-Term Return for each Series were as set
forth in "Essential Information" for each Trust. Estimated Current Return is
calculated by dividing the estimated net annual interest rate per Unit by the
Public Offering Price. The estimated net annual interest rate per Unit will vary
with changes in fees and expenses of the Trustee, the Sponsor and the Evaluator
and with the principal prepayment, redemption, maturity, exchange or sale of
Securities while the Public Offering Price will vary with changes in the
offering price of the underlying Securities and with changes in Purchased
Interest and Daily Accrued Interest; therefore, there is no assurance that the
present Estimated Current Return will be realized in the future. The Estimated
Long-Term Return is calculated using a formula which (1) takes into
consideration, and determines and factors in the relative weightings of, the
market values, yields (which takes into account the amortization of premiums and
the accretion of discounts) and, in the case of GNMA Portfolio Series, the
estimated average life of all the Securities in such Series or, in the case of
U.S. Treasury Portfolio Series, the estimated retirements of all of the
Securities in such Series and (2) takes into account the expenses and sales
charge associated with each Trust Unit. Since the market values and the
estimated average lives or estimated retirements, as the case may be, of the
Securities and the expenses of the Trust will change, there is no assurance that
the present Estimated Long-Term Return will be realized in the future. The
Estimated Current Return and Estimated Long-Term Return are expected to differ
because the calculation of the Estimated Long-Term Return reflects the estimated
dates and amounts of principal returned while the Estimated Current Return
calculations include only net annual interest rates and Public Offering Price.
Payments received in respect of the mortgages underlying the Ginnie Maes in each
series of the GNMA Portfolio will consist of a portion representing interest and
a portion representing principal. Although the aggregate monthly payment made by
the obligor on each mortgage remains constant (aside from optional prepayments
of principal), in the early years most of each such payment will represent
interest, while in later years, the proportion representing interest will
decline and the proportion representing principal will increase. However, by
reason of optional prepayments, principal payments in the earlier years on the
mortgages underlying the Ginnie Maes may be substantially in excess of those
required by the amortization schedules of such mortgages. Therefore, principal
payments in later years may be substantially less since the aggregate unpaid
principal balances of such underlying mortgages may have been greatly reduced.
To the extent that the underlying mortgages bearing higher interest rates in the
Trust Funds are prepaid faster than the other underlying mortgages, the net
annual interest rate per Unit and
A-2
<PAGE> 24
the Estimated Current Return on the Units of such Series can be expected to
decline. Monthly payments to the Unitholders will reflect all of the foregoing
factors.
PUBLIC OFFERING OF UNITS
PUBLIC OFFERING PRICE. Units of each Trust Fund are offered at the Public
Offering Price thereof. During the initial offering period, the Public Offering
Price per Unit is equal to the aggregate of the offering side evaluations of the
Securities in a Trust Fund (as determined, pursuant to the terms of a contract
with the Evaluator, by Muller Data Corporation, a non-affiliated firm regularly
engaged in the business of evaluating, quoting or appraising comparable
securities), plus or minus a pro rata share of (a) cash, if any, in the
Principal Account held or owed by a Trust Fund, (b) Purchased Interest and (c)
Daily Accrued Interest plus the applicable sales charge referred to in the table
below divided by the number of outstanding Units of such Trust Fund. The Public
Offering Price for secondary market transactions, on the other hand, is based on
the bid side evaluations of the Securities in a Trust Fund plus or minus (a)
cash, if any, in the Principal Account held or owned by the Trust Fund, (b)
Purchased Interest and (c) Daily Accrued Interest plus a sales charge based upon
the dollar weighted average maturity of the Trust Fund. The sales charges for
primary sales for each Series of the Trust and for secondary sales of the GNMA
Portfolio Series are set forth in "Essential Information." The sales charges for
secondary sales for the U.S. Treasury Portfolios are set forth below.
The sales charge per Unit for GNMA Portfolio Series will be reduced pursuant to
the following graduated scale:
<TABLE>
<CAPTION>
MIDGET TRUST LONG-TERM TRUST
------------------------- -------------------------
PERCENT OF PERCENT OF PERCENT OF PERCENT OF
OFFERING NET AMOUNT OFFERING NET AMOUNT
TICKET SIZE* PRICE INVESTED PRICE INVESTED
- ------------------------------------------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Less than $100,000............................... 3.50 3.627 3.95 4.112
$100,000 to $249,999............................. 3.25 3.359 3.70 3.842
$250,000 to $499,999............................. 2.85 2.934 3.35 3.466
$500,000 to $999,999............................. 2.60 2.669 3.10 3.199
$1,000,000 or more............................... Negotiated Negotiated
</TABLE>
The sales charge per Unit for U.S. Treasury Portfolio Series will be reduced
pursuant to the following graduated scale:
<TABLE>
<CAPTION>
WEIGHTED AVERAGE YEARS TO MATURITY
-----------------------------------------------------
0 TO 4.99 5 TO 9.99
------------------------- -------------------------
PERCENT OF PERCENT OF PERCENT OF PERCENT OF
OFFERING NET AMOUNT OFFERING NET AMOUNT
TICKET SIZE* PRICE INVESTED PRICE INVESTED
- ------------------------------------------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Less than $500,000............................... 1.75 1.781 2.95 3.040
$500,000 to $999,999............................. 1.50 1.523 2.50 2.564
$1,000,000 to 1,499,999**........................ 1.25 1.266 2.00 2.041
</TABLE>
- ------------
*The breakpoint sales charges are also applied on a Unit basis utilizing a
breakpoint equivalent in the above tables of $10 per Unit and will be applied on
whichever basis is more favorable to the investor.
**For any transactions in excess of $1,499,999 the Sponsor intends to negotiate
the applicable sales charge and such charge will be disclosed to any such
purchaser.
A-3
<PAGE> 25
In connection with secondary market transactions of the U.S. Treasury
Portfolios, the sales charge per Unit will be reduced as set forth below:
<TABLE>
<CAPTION>
SECONDARY
----------------------------------------------------------
DOLLAR WEIGHTED AVERAGE YEARS TO MATURITY*
----------------------------------------------------------
0-1.99 2-2.99 3-4.99 5-6.99 7-9.99
DOLLAR AMOUNT OF TRADE YEARS YEARS YEARS YEARS YEARS
- --------------------------------------- ---- ---- ---- ---- ------
SALES CHARGE (PERCENT OF PUBLIC OFFERING PRICE)
<S> <C> <C> <C> <C> <C>
Less than $500,000..................... 1.25% 1.50% 1.75% 2.25% 3.00%
$500,000-$999,999...................... 1.00 1.25 1.50 1.75 2.50
$1,000,000-$1,499,999.................. 1.00 1.00 1.25 1.50 2.00
</TABLE>
- ------------
*For any transaction in excess of $1,499,999 the Sponsor intends to negotiate
the applicable sales charge and such charges will be disclosed to any such
purchaser.
The reduced sales charges as shown on the tables above will apply to all
purchases of Units on any one day by the same purchaser from the same firm, and
for this purpose, purchases of Units of these Series will be aggregated with
concurrent purchases of Units of any other unit investment trust that may be
offered by the Sponsor. Additionally, Units purchased in the name of a spouse or
child (under 21) of such purchaser will be deemed to be additional purchases by
such purchaser. The reduced sales charge will also be applicable to a trust or
other fiduciary purchasing for a single trust estate or single fiduciary
account. The Sponsor will also allow purchasers who commit to purchase $1
million or more of the Series' units during a 12 month period to do so at the
applicable reduced sales charge for such series pursuant to a letter of intent,
subject to certain restrictions.
The Sponsor intends to permit officers, directors and employees of the Sponsor
and Evaluator to purchase Units of each Series without a sales charge, although
a transaction processing fee may be imposed on such trades.
The Sponsor reserves the right to reject, in whole or in part, any order for the
purchase of Units and the right to change the amount of the sales charge from
time to time.
The Public Offering Price includes accrued interest. Accrued interest consists
of two elements. The first element arises as a result of accrued interest which
is the accumulation of unpaid interest on a security from the later of the last
day on which interest thereon was paid or the date of original issuance of the
security. Interest on the Securities in the Trust Fund is paid monthly or
semi-annually to the Trust. The aggregate amount of such accrued interest on the
Securities in the 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. 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 Securities are sold or otherwise removed or if the Trust Fund is
liquidated, he will receive at that time his proportionate share of the
Purchased Interest and Daily Accrued Interest computed to the settlement date in
the case of sale or liquidation and to the date of tender in the case of
redemption in the Trust Fund.
The Public Offering Price of any Series on the date of this Prospectus or on any
subsequent date will vary from the Public Offering Price set forth under
"Essential Information" for such Series in accordance with fluctuations in the
valuation of the underlying Portfolio Obligations in such Series of the Trust
and the addition or deletion of Purchased Interest and Daily Accrued Interest.
During the initial offering period and thereafter, the aggregate bid or offering
prices of the Securities in each Series of the Trust, as is appropriate, shall
be determined for the Trust by the Evaluator, in the following manner: (a) on
the basis of current bid or offering prices for the Portfolio Obligations, (b)
if bid or offering prices are not available for the Portfolio Obligations, on
the basis of current bid or offering prices for comparable securities, (c) by
determining
A-4
<PAGE> 26
the value of the Portfolio Obligations on the bid or offering side of the market
by appraisal, or (d) by any combination of the above. The Evaluator may obtain
current price information as to the Portfolio Obligations from investment
dealers or brokers. Such evaluations and computations will be made as of the
close of business on each business day commencing with the Initial Date of
Deposit of the Portfolio Obligations and will be effective for all sales of
Units made during the preceding 24-hour period. Evaluations, for purposes of
redemptions by the Trustee, will be made each business day as of the Evaluation
Time stated under "Essential Information," for such Series effective for all
redemptions made subsequent to the last preceding determination.
In connection with the Ginnie Maes deposited in the GNMA Portfolio Series of the
Trust, there is a period of time beginning on the first day of each month,
during which the total amount of payments (including prepayments, if any) of
principal for the preceding month on the various mortgages underlying each of
the Securities in the Trust Fund will not yet have been reported by the issuer
to GNMA and made generally available to the public. During this period, the
precise principal amount of the underlying mortgages remaining outstanding for
each Security in the Trust Fund, and therefore the precise principal amount of
such Security, will not be known, although the principal amount outstanding for
the preceding month will be known. Therefore, the exact amount of principal to
be acquired by the Trustee as a holder of such Securities which may be
distributed to Unitholders of such Series with the next monthly distribution
will not be known. The Sponsor does not expect that the amounts of such
prepayments and the differences in such principal amounts from month to month
will be material in relation to the GNMA Portfolio Series due to the number of
mortgages underlying each Security and the number of such Securities in the GNMA
Portfolio Series of the Trust. However, there can be no assurance that they will
not be material. For purposes of the determination by the Evaluator of the
offering prices and bid prices of the Securities in each GNMA Portfolio Series
and for purposes of calculations of accrued interest on the Units, during the
period in each month prior to the time when the precise amounts of principal of
the Ginnie Maes for the month become publicly available, the Evaluator will base
its evaluations and calculations, which are the basis for calculations of the
Public Offering Price, the Sponsor's Repurchase Price in the secondary market
and the Redemption Price per Unit of each GNMA Portfolio Series, upon the
principal amount of such Series outstanding for the preceding month. The Sponsor
expects that the differences in such principal amounts from month to month will
not be material to each GNMA Portfolio Series of the Trust. Nevertheless, the
Sponsor will adopt procedures as to pricing and evaluation for the Units of each
GNMA Portfolio Series, with such modifications, if any, deemed necessary by the
Sponsor for the protection of Unitholders, designed to minimize the impact of
such differences upon the calculation of the Public Offering Price per Unit, the
Sponsor's Repurchase Price per Unit in the secondary market and the Redemption
Price per Unit of such Series.
On the business day indicated under "Essential Information" the Public Offering
Price per Unit and the Sponsor's Initial Repurchase Price per Unit (based on the
offering side evaluation of the Portfolio Obligations) of the Trust Fund
exceeded the Redemption Price per Unit (based upon the bid side evaluation of
the Portfolio Obligations).
INITIAL PUBLIC DISTRIBUTION. During the initial offering period (i) for Units
issued on the Initial Date of Deposit and (ii) for additional Units issued after
such date in respect of additional Ginnie Maes or U.S. Treasury Obligations
deposited by the Sponsor, Units of each Series will be distributed to the public
at the Public Offering Price, which is based on the offering prices of the
Portfolio Obligations in such Series, plus (a) cash, if any, in the Principal
Account held or owned by a Trust Fund, (b) Purchased Interest and (c) Daily
Accrued Interest, by means of this Prospectus through various dealers and
through others. The initial offering period is 30 days. The initial offering
period may be extended by the Sponsor for up to five additional successive 30
day periods (i.e., until 180 days after the Initial Date of Deposit) for each
Series. Units of a Series reacquired by the Sponsor during the initial offering
period may be resold at the then current Public Offering Price. Upon the
termination of the initial offering period of a Series, unsold Units or Units
acquired by the Sponsor in the secondary market referred to below may be offered
to the public by this Prospectus at the then current Public Offering Price of
such Series, which is based on the bid prices of the Portfolio Obligations, plus
Purchased Interest and Daily Accrued Interest.
A-5
<PAGE> 27
The Sponsor intends to qualify Units for sale (in any state in which
qualification is deemed necessary by the Sponsor) through dealers who are
members of the National Association of Securities Dealers, Inc. and through
others. The Sponsor does not intend to qualify Units of any Series for sale in
any foreign country and this Prospectus does not constitute an offer to sell
Units in any country where Units cannot lawfully be sold without registration.
SECONDARY MARKET. After the initial offering period, while not obligated to do
so, the Sponsor intends, subject to change at any time, to maintain a market for
Units of each Series of the Trust offered hereby and to continuously offer to
purchase said Units at prices based on the aggregate bid prices of the
underlying Portfolio Obligations, together with Purchased Interest and Daily
Accrued Interest to the expected date of settlement. To the extent that a
secondary market is maintained during the initial offering period, the prices at
which Units of a Series of the Trust will be repurchased will be based upon the
aggregate offering side evaluation of the Portfolio Obligations in such Series.
The aggregate bid prices of the underlying Portfolio Obligations in each Series
of the Trust, upon which the Sponsor's Repurchase Price and the Redemption Price
are based, are expected to be less than the related aggregate offering prices
(which is the evaluation method used during the initial public offering period).
Accordingly, Unitholders who wish to dispose of their Units should inquire of
their bank or broker as to current market prices in order to determine whether
there is in existence any price in excess of the Redemption Price and, if so,
the amount thereof.
The offering price of any Units acquired by the Sponsor will be in accord with
that described in the currently effective Prospectus describing such Units. Any
profit or loss resulting from the resale of such Units, after allowance of a
discount to the dealer or other entity which makes the sale, will belong to the
Sponsor. The Sponsor may suspend or discontinue purchases of Units of any Series
of the Trust at prices based on the bid prices of the Portfolio Obligations in
such Series if the supply of Units exceeds demand, or for other business
reasons.
PROFITS OF SPONSOR. Sales of Units may be made to or through dealers or through
others at prices which represent discounts from the Public Offering Price as set
forth below. Discounted rates for each GNMA Portfolio Series are as follows:
<TABLE>
<CAPTION>
MIDGET TRUST
--------------------------------------------------------------
PRIMARY MARKET
-------------------------------------------------
VOLUME DISCOUNTS**
------------------------------------
FIRM SALES FIRM SALES FIRM SALES
OR SALE OR SALE OR SALE
REGULAR ARRANGEMENTS ARRANGEMENTS ARRANGEMENTS SECONDARY
CONCESSION ($250,000 ($500,000 ($1,000,000 MARKET
OR AGENCY TO TO OR ----------
DOLLAR AMOUNT OF TRADE* COMMISSION $499,999) $999,999) MORE) ALL SALES
-------------------------------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$0 to $99,999......................... 2.10% 2.15% 2.20% 2.25% 2.10%
$100,000 to $249,999.................. 2.00 2.05 2.10 2.20 2.10
$250,000 to $499,999.................. 1.75 1.80 1.80 1.85 1.80
$500,000 to $999,999.................. 1.50 1.55 1.55 1.60 1.55
$1,000,000 or more.................... Negotiated Negotiated Negotiated Negotiated Negotiated
</TABLE>
A-6
<PAGE> 28
<TABLE>
<CAPTION>
LONG-TERM TRUST
--------------------------------------------------------------
PRIMARY MARKET
-------------------------------------------------
VOLUME DISCOUNTS**
------------------------------------
FIRM SALES FIRM SALES FIRM SALES
OR SALE OR SALE OR SALE
REGULAR ARRANGEMENTS ARRANGEMENTS ARRANGEMENTS SECONDARY
CONCESSION ($250,000 ($500,000 ($1,000,000 MARKET
OR AGENCY TO TO OR ----------
DOLLAR AMOUNT OF TRADE* COMMISSION $499,999) $999,999) MORE) ALL SALES
-------------------------------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$0 to $99,999......................... 2.50% 2.60% 2.65% 2.70% 2.60%
$100,000 to $249,999.................. 2.50 2.55 2.60 2.65 2.60
$250,000 to $499,999.................. 2.25 2.30 2.30 2.35 2.30
$500,000 to $999,999.................. 2.00 2.05 2.05 2.10 2.05
$1,000,000 or more.................... Negotiated Negotiated Negotiated Negotiated Negotiated
</TABLE>
- ------------
*The breakpoint discount are also applied on a Unit basis utilizing a
breakpoint equivalent in the above table of $1,000 per 100 Units.
**Volume discounts will be given to firms who reach cumulative firm sales or
sales arrangement levels of at least $250,000 from the initial date of the
offering through October 9, 1993. After a firm has met the minimum $250,000
volume level, volume discounts will be given on all trades originated from or
by that firm, including those placed prior to reaching the $250,000 level, and
will continue to be given during the entire initial offering period.
The discounted rates for each U.S. Treasury Portfolio Series are as follows:
<TABLE>
<CAPTION>
PRIMARY MARKET
------------------------------------------------------------
VOLUME DISCOUNTS**
----------------------------
REGULAR CONCESSION FIRM SALES OR
OR AGENCY SALE ARRANGEMENTS
COMMISSION ($1,000,000 OR MORE)
---------------------------- ----------------------------
DOLLAR AMOUNT OF TRADE* 0-4.99 YEARS 5-9.99 YEARS 0-4.99 YEARS 5-9.99 YEARS
----------------------------------------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
$0 to $499,999................................. 1.00% 1.75% 1.05% 2.00%
$500,000 to $999,999........................... .90 1.50 .95 1.60
$1,000,000 to $1,499,000....................... .75 1.25 .80 1.30
$1,500,000 or more............................. Negotiated Negotiated
</TABLE>
<TABLE>
<CAPTION>
SECONDARY MARKET
--------------------------------------------------------------
DOLLAR WEIGHTED AVERAGE YEARS TO MATURITY
0-1.99 2-2.99 3-4.99 5-6.99 7-9.99
---------- ---------- ---------- ---------- ----------
--------------------------------------------------------------
DISCOUNT PER UNIT
DOLLAR AMOUNT OF TRADE (PERCENT OF PUBLIC OFFERING PRICE)
-------------------------------------- --------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Less than $500,000.................... .75% 1.00% 1.00% 1.25% 2.00%
$500,000 to $999,999.................. .50 .75 .90 1.00 1.75
$1,000,000 to $1,499,999.............. .50 .50 .75 .75 1.50
$1,500,000 or more.................... Negotiated Negotiated Negotiated Negotiated Negotiated
</TABLE>
- ------------
*The breakpoint discounts are also applied on a Unit basis utilizing a
breakpoint equivalent in the above tables of $1,000 per 100 Units.
**Volume discounts will be given to firms who reach cumulative firm sales or
sales arrangement levels of at least $250,000 from the initial date of the
offering through October 9, 1993. After a firm has met the minimum $250,000
volume level, volume discounts will be given on all trades originated from or
by that firm, including those placed prior to reaching the $250,000 level, and
will continue to be given during the entire initial offering period.
The Sponsor reserves the right to change the discounts set forth above from time
to time. In addition to such discounts, the Sponsor may, from time to time, pay
or allow an additional discount, in the form of cash or other compensation, to
dealers employing registered representatives who sell, during a specified time
period, a minimum dollar amount of Units of the Trust and other unit investment
trusts underwritten by the Sponsor.
A-7
<PAGE> 29
Certain commercial banks are making Units of each Series of the Trust available
to their customers on an agency basis. A portion of the sales charge paid by
their customers is retained by or remitted to the banks in the amounts shown in
the table above. 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. The Sponsor reserves the right to
change the discounts from time to time. The difference between the discounts and
the sales charge will be retained by the Sponsor.
The Sponsor also may have realized a profit (or sustained a loss) on the deposit
of the Portfolio Obligations in each Series of the Trust representing the
difference between the cost of the Portfolio Obligations to the Sponsor and the
cost of the Portfolio Obligations to the Trust. See "Portfolios." During the
initial offering period and thereafter to the extent additional Units continue
to be issued and offered for sale to the public, the Sponsor may realize
additional profit or sustain a loss due to daily fluctuations in the offering
prices of the Portfolio Obligations in the Series of the Trust and thus in the
Public Offering Price of Units received by the Sponsor.
The Sponsor may also realize profits or sustain losses while maintaining a
secondary market in the Units of the Series of the Trust, in the amount of any
difference between the prices at which it buys Units and the prices at which
Units are resold after allowing for the discount (such prices include a sales
charge) or the prices at which the Sponsor redeems such Units (based on the bid
side of the Portfolio Obligations in such Series of the Trust), as the case may
be.
Although payment is normally made five business days following the order for
purchase, payment may be made prior thereto. A person will become the owner of
Units on the First Settlement Date or any date of settlement thereafter provided
payment has been received. Cash, if any, made available to the Sponsor prior to
the date of settlement for the purchase of Units may be used in the Sponsor's
business and may be deemed to be a benefit to the Sponsor, subject to the
limitations of the Securities Exchange Act of 1934. If a Unitholder desires to
have certificates representing Units purchased, such certificates will be
delivered as soon as possible following his written request therefor. For
information with respect to redemption of Units purchased, but as to which
certificates requested have not been received, see "Redemption" below.
Cash, if any, received by a dealer from Unitholders prior to the settlement date
for a purchase of Units of any Series may be used in such dealer's business
subject to the limitations of Rule 15c3-3 under the Securities Exchange Act of
1934 and may be of benefit to the dealer.
TAX STATUS
GNMA PORTFOLIO SERIES
In the opinion of Chapman and Cutler, counsel for the Sponsor, under existing
law:
(1) Each GNMA Portfolio Series is not an association taxable as a corporation
for Federal income tax purposes; each Unitholder will be treated as the owner of
a pro rata portion of the GNMA Portfolio Series of the respective Trust under
the Code and income of such Series will be treated as the income of the
Unitholders under the Code.
(2) Each Unitholder will have a taxable event when a GNMA Portfolio Series
disposes of a Security, or when the Unitholder redeems or sells his Units.
Unitholders must reduce the tax basis of their Units for their share of accrued
interest received by a GNMA Portfolio Series, if any, on Securities delivered
after the Unitholders pay for their Units to the extent that such interest
accrued on such Securities during the period from the Unitholder's settlement
date to the date such Securities are delivered to such GNMA Portfolio Series
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
A-8
<PAGE> 30
basis of the Units. If the Trustee disposes of Securities (whether by sale,
payment on maturity, redemption or otherwise), gain or loss is recognized to the
Unitholder. The amount of any such gain or loss is measured by comparing the
Unitholder's pro rata share of the total proceeds from such disposition with the
Unitholder's basis for his or her fractional interest in the asset disposed of.
In the case of a Unitholder who purchases Units, such basis (before adjustment
for earned original issue discount, amortized bond premium and accrued market
discount (if the Unitholder has elected to include such market discount in
income as it accrues), if any) is determined by apportioning the cost of the
Units among each of a GNMA Portfolio Series assets ratably according to value as
of the date of acquisition of the Units. The tax cost reduction requirements of
said Code relating to amortization of bond premium may, under some
circumstances, result in the Unitholder realizing a taxable gain when his Units
are sold or redeemed for an amount equal to his original cost.
(3) Each GNMA Portfolio Series contains Stripped Treasury Securities. The
Stripped Treasury Securities held by the Trusts are treated as bonds that were
originally issued at an original issue discount provided, pursuant to a Treasury
Regulation (the "Regulation") issued on December 28, 1992, that the amount of
original issue discount determined under Section 1286 of the Code is not less
than a "de minimis" amount as determined thereunder. Because the Stripped
Treasury Securities represent interests in "stripped" U.S. Treasury bonds, a
Unitholder's initial cost for his pro rata portion of each Stripped Treasury
Security held by a Trust (determined at the time he acquires his Units, in the
manner described above) shall be treated as its "purchase price" by the
Unitholder. Original issue discount is effectively treated as interest for
Federal income tax purposes, and the amount of original issue discount in this
case is generally the difference between the bond's purchase price and its
stated redemption price at maturity. A Unitholder will be required to include in
gross income for each taxable year the sum of his daily portions of original
issue discount attributable to the Stripped Treasury Securities held by a Trust
as such original issue discount accrues and will, in general, be subject to
Federal income tax with respect to the total amount of such original issue
discount that accrues for such year even though the income is not distributed to
the Unitholders during such year to the extent it is not less than a "de
minimis" amount as determined under the Regulation. In general, original issue
discount accrues daily under a constant interest rate method which takes into
account the semi-annual compounding of accrued interest. In the case of the
Stripped Treasury Securities, this method will generally result in an increasing
amount of income to the Unitholders each year. Unitholders should consult their
tax advisers regarding the Federal income tax consequences and accretion of
original issue discount.
(4) The Unitholder's aliquot share of the total proceeds received on the
disposition of, or principal paid with respect to, a Security held by a Trust
will constitute ordinary income (which will be treated as interest income for
most purposes) to the extent it does not exceed the accrued market discount on
such Security issued after July 18, 1984 that has not previously been included
in taxable income by such Unitholder. A Unitholder may generally elect to
include market discount in income as such discount accrues. In general, market
discount is the excess, if any, of the Unitholder's pro rata portion of the
outstanding principal balance of a Security over the Unitholder's initial tax
cost for such pro rata portion, determined at the time such Unitholder acquires
his Units. However, market discount with respect to any Security will generally
be considered zero if it amounts to less than 0.25% of the obligation's stated
redemption price at maturity times the number of years to maturity. The market
discount rules do not apply to Stripped Treasury Securities because they are
stripped debt instruments subject to special original issue discount rules as
discussed above. If a Unitholder sells his Units, gain, if any, will constitute
ordinary income to the extent of the aggregate of the accrued market discount on
the Unitholder's pro rata portion of each Security issued after July 18, 1984
that is held by a Trust that has not previously been included in taxable income
by such Unitholder. In general, market discount accrues on a ratable basis
unless the Unitholder elects to accrue such discount on a constant interest rate
basis. However, a Unitholder should consult his own tax adviser regarding the
accrual of market discount. The deduction by a Unitholder for any interest
expense incurred to purchase or carry Units will be reduced by the amount of any
accrued market discount that has not yet been included in taxable income by such
Unitholder. In general, the portion of any interest expense which is not
currently deductible would be ultimately deductible when the accrued market
discount is included in income.
A-9
<PAGE> 31
(5) The Code provides that "miscellaneous itemized deductions" are allowable
only to the extent that they exceed two percent of an individual taxpayer's
adjusted gross income. Miscellaneous itemized deductions subject to this
limitation under present law include a Unitholder's pro rata share of expenses
paid by the Trust, including fees of the Trustee and the Evaluator but does not
include amortizable bond premium on Securities held by the Trusts.
"The Revenue Reconciliation Act of 1993" (the "Tax Act") raised tax rates on
ordinary income while capital gains remain subject to a 28% maximum stated rate.
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.
A Unitholder of a GNMA Portfolio Series who is not a citizen or resident of the
United States or a United States domestic corporation (a "Foreign Investor")
will generally not be subject to U.S. Federal income taxes, including
withholding taxes on amounts distributed from the Trusts (including any original
issue discount) on, or any gain from the sale or other disposition of, his Units
or the sale or disposition of any Securities by the Trustee, provided that (i)
the interest income or gain is not effectively connected with the conduct by the
Foreign Investor of a trade or business within the United States, (ii) with
respect to any gain, the Foreign Investor (if an individual) is not present in
the United States for 183 days or more during the taxable year, and (iii) the
Foreign Investor provides the required certification of his status and of the
matters contained in clauses (i) and (ii) above, and further provided that the
exemption from withholding for U.S. Federal income taxes for interest on any
Stripped Treasury Security shall only apply to the extent the Stripped Treasury
Security was issued after July 18, 1984 and for interest on any Ginnie Mae to
the extent the mortgages underlying such Ginnie Mae were originated after July
18, 1984.
Amounts otherwise distributable by the Trusts to a Foreign Investor will
generally be subject to withholding taxes under Section 1441 of the Code unless
the Unitholder timely provides his financial representative or the Trustee with
a statement that (i) is signed by the Unitholder under penalties of perjury,
(ii) certifies that such Unitholder is not a United States person, or in the
case of an individual, that he is neither a citizen nor a resident of the United
States, and (iii) provides the name and address of the Unitholder. The statement
may be made, at the option of the person otherwise required to withhold, on Form
W-8 or on a substitute form that is substantially similar to Form W-8. If the
information provided on the statement changes, the beneficial owner must so
inform the person otherwise required to withhold within 30 days of such change.
The foregoing discussions relate only to Federal income taxes on distributions
by the Trusts; such distributions may also be subject to state and local
taxation. Unitholders should consult their own tax advisers regarding questions
of state and local taxation applicable to the Units.
Foreign Unitholders should consult their own tax advisers with respect to the
foreign and United States tax consequences or ownership of Units.
It should be remembered that even if distributions are reinvested, they are
still treated as distributions for income tax purposes.
It should also be remembered that Unitholders may be required for Federal income
tax purposes to include amounts in ordinary gross income in advance of the
receipt of the cash attributable to such income.
Each Unitholder (other than a foreign investor who has properly provided the
certifications described above) will be requested to provide the Unitholder's
taxpayer identification number to the Trustee and to certify that the Unitholder
has not been notified that payments to the Unitholder are subject to back-up
withholding. If the proper taxpayer identification number and appropriate
certification are not provided when requested, distributions by a Trust to such
Unitholder will be subject to back-up withholding.
A-10
<PAGE> 32
U.S. TREASURY PORTFOLIO SERIES
In the opinion of Chapman and Cutler, counsel for the Sponsor, under existing
law:
(1) The U.S. Treasury Portfolio Series, if any, are not associations taxable as
corporations for Federal income tax purposes; each Unitholder will be treated as
the owner of a pro rata portion of a U.S. Treasury Portfolio Series of the Trust
under the Code and income of such Series will be treated as the income of the
Unitholders under the Code:
(2) Each Unitholder will have a taxable event when a U.S. Treasury Portfolio
Series disposes of a U.S. Treasury Obligation, or when the Unitholder redeems or
sells his Units. Unitholders must reduce the tax basis of their Units for their
share of accrued interest received by a U.S. Treasury Portfolio Series, if any,
on U.S. Treasury Obligations delivered after the Unitholders pay for their Units
to the extent that such interest accrued on such U.S. Treasury Obligations
during the period from the Unitholder's settlement date to the date such U.S.
Treasury Obligations are delivered to a U.S. Treasury Portfolio Series 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 U.S.
Treasury Obligations (whether by sale, payment on maturity, redemption or
otherwise), gain or loss is recognized to the Unitholder. The amount of any such
gain or loss is measured by comparing the Unitholder's pro rata share of the
total proceeds from such disposition with the Unitholder's basis for his or her
fractional interest in the asset disposed of. In the case of a Unitholder who
purchases Units, such basis (before adjustment for earned original issue
discount, amortized bond premium and accrued market discount (if the Unitholder
has elected to include such market discount in income as it accrues), if any) is
determined by apportioning the cost of the Units among each of a U.S. Treasury
Portfolio Series assets ratably according to value as of the date of acquisition
of the Units. The tax cost reduction requirements of said Code relating to
amortization of bond premium may, under some circumstances, result in the
Unitholder realizing a taxable gain when his Units are sold or redeemed for an
amount equal to his original cost.
(3) The U.S. Treasury Portfolio Series contain Stripped Treasury Securities. The
Stripped Treasury Securities held by a Trust are treated as bonds that were
originally issued at an original issue discount provided, pursuant to a
Regulation (the "Regulation") issued on December 28, 1992, that the amount of
original issue discount determined under Section 1286 of the Code is not less
than a "de minimis" amount as determined thereunder. Because the Stripped
Treasury Securities represent interests in "stripped" U.S. Treasury bonds, a
Unitholder's initial cost for his pro rata portion of each Stripped Treasury
Security held by the Trust (determined at the time he acquires his Units, in the
manner described above) shall be treated as its "purchase price" by the
Unitholder. Original issue discount is effectively treated as interest for
Federal income tax purposes, and the amount of original issue discount in this
case is generally the difference between the bond's purchase price and its
stated redemption price at maturity. A Unitholder will be required to include in
gross income for each taxable year the sum of his daily portions of original
issue discount attributable to the Stripped Treasury Securities held by a Trust
as such original issue discount accrues and will, in general, be subject to
Federal income tax with respect to the total amount of such original issue
discount that accrues for such year even though the income is not distributed to
the Unitholders during such year to the extent it is not less than a "de
minimis" amount as determined under the Regulation. In general, original issue
discount accrues daily under a constant interest rate method which takes into
account the semi-annual compounding of accrued interest. In the case of the
Stripped Treasury Securities, this method will generally result in an increasing
amount of income to the Unitholders each year. Unitholders should consult their
tax advisers regarding the Federal income tax consequences and accretion of
original issue discount.
(4) The Unitholder's aliquot share of the total proceeds received on the
disposition of, or principal paid with respect to, a U.S. Treasury Obligation
held by a Trust will constitute ordinary income (which will be treated as
interest income for most purposes) to the extent it does not exceed the accrued
market discount on such U.S. Treasury Obligation issued after July 18, 1984 that
has not previously been included in taxable income by such
A-11
<PAGE> 33
Unitholder. A Unitholder may generally elect to include market discount in
income as such discount accrues. In general, market discount is the excess, if
any, of the Unitholder's pro rata portion of the outstanding principal balance
of a U.S. Treasury Obligation over the Unitholder's initial tax cost for such
pro rata portion, determined at the time such Unitholder acquires his Units.
However, market discount with respect to any U.S. Treasury Obligation will
generally be considered zero if it amounts to less than 0.25% of the
obligation's stated redemption price at maturity times the number of years to
maturity. The market discount rules do not apply to Stripped Treasury Securities
because they are stripped debt instruments subject to special original issue
discount rules as discussed above. If a Unitholder sells his Units, gain, if
any, will constitute ordinary income to the extent of the aggregate of the
accrued market discount on the Unitholder's pro rata portion of each U.S.
Treasury Obligation issued after July 18, 1984 that is held by the Trust that
has not previously been included in taxable income by such Unitholder. In
general, market discount accrues on a ratable basis unless the Unitholder elects
to accrue such discount on a constant interest rate basis. However, a Unitholder
should consult his own tax adviser regarding the accrual of market discount. The
deduction by a Unitholder for any interest expense incurred to purchase or carry
Units will be reduced by the amount of any accrued market discount that has not
yet been included in taxable income by such Unitholder. In general, the portion
of any interest expense which is not currently deductible would be ultimately
deductible when the accrued market discount is included in income.
(5) The Code provides that "miscellaneous itemized deductions" are allowable
only to the extent that they exceed two percent of an individual taxpayer's
adjusted gross income. Miscellaneous itemized deductions subject to this
limitation under present law include a Unitholder's pro rata share of expenses
paid by the Trust, including fees of the Trustee and the Evaluator but does not
include amortizable bond premium on U.S. Treasury Obligations held by the Trust.
"The Revenue Reconciliation Act of 1993" (the "Tax Act") raised tax rates on
ordinary income while capital gains remain subject to a 28% maximum stated rate.
Because some or all capital gains are taxed at a comparatively lower rate under
the Tax Act, the Tax Act includes a provision that recharacterizes capital gains
as ordinary income in the case of certain financial transactions that are
"conversion transactions" effective for transactions entered into after April
30, 1993. Unitholders and prospective investors should consult with their tax
advisers regarding the potential effect of this provision on their investment in
Units.
The Sponsor believes that Unitholders who are individuals will not be subject to
any state personal income taxes on the interest received by the U.S. Treasury
Portfolio Series and distributed to them. However, Unitholders (including
individuals) may be subject to state and local taxes on any capital gains (or
market discount treated as ordinary income) derived from the U.S. Treasury
Portfolio Series and to other state and local taxes (including corporate income
or franchise taxes, personal property or intangibles taxes, and estate or
inheritance taxes) on their Units or the income derived therefrom. In addition,
individual Unitholders (and any other Unitholders which are not subject to state
and local taxes on the interest income derived from the U.S. Treasury Portfolio
Series) will probably not be entitled to a deduction for state and local tax
purposes for their share of the fees and expenses paid by the U.S. Treasury
Portfolio Series, for any amortized bond premium or for any interest on
indebtedness incurred to purchase or carry their Units. Therefore, even though
the Sponsor believes that interest income from the U.S. Treasury Portfolio
Series is exempt from state personal income taxes in all states Unitholders
should consult their own tax advisers with respect to state and local taxation.
A Unitholder of the U.S. Treasury Portfolio Series who is not a citizen or
resident of the United States or a United States domestic corporation (a
"Foreign Investor") will generally not be subject to U.S. Federal income taxes,
including withholding taxes on amounts distributed from the Trust (including any
original issue discount) on, or any gain from the sale or other disposition of,
his Units or the sale or disposition of any U.S. Treasury Obligations by the
Trustee, provided that (i) the interest income or gain is not effectively
connected with the conduct by the Foreign Investor of a trade or business within
the United States, (ii) with respect to any gain, the Foreign Investor (if an
individual) is not present in the United States for 183 days or more during the
taxable year, and (iii) the Foreign
A-12
<PAGE> 34
Investor provides the required certification of his status and of the matters
contained in clauses (i) and (ii) above, and further provided that the exemption
from withholding for U.S. Federal income taxes for interest on any U.S. Treasury
Obligation shall only apply to the extent the U.S. Treasury Obligation was
issued after July 18, 1984.
Amounts otherwise distributable by the Trust to a Foreign Investor will
generally be subject to withholding taxes under Section 1441 of the Code unless
the Unitholder timely provides his financial representative or the Trustee with
a statement that (i) is signed by the Unitholder under penalties of perjury,
(ii) certifies that such Unitholder is not a United States person, or in the
case of an individual, that he is neither a citizen nor a resident of the United
States, and (iii) provides the name and address of the Unitholder. The statement
may be made, at the option of the person otherwise required to withhold, on Form
W-8 or on a substitute form that is substantially similar to Form W-8. If the
information provided on the statement changes, the beneficial owner must so
inform the person otherwise required to withhold within 30 days of such change.
Foreign Unitholders should consult their own tax advisers with respect to the
foreign and United States tax consequences or ownership of Units.
It should be remembered that even if distributions are reinvested, they are
still treated as distributions for income tax purposes.
It should also be remembered that Unitholders may be required for Federal income
tax purposes to include amounts in ordinary gross income in advance of the
receipt of the cash attributable to such income.
Each Unitholder (other than a foreign investor who has properly provided the
certifications described above) will be requested to provide the Unitholder's
taxpayer identification number to the Trustee and to certify that the Unitholder
has not been notified that payments to the Unitholder are subject to back-up
withholding. If the proper taxpayer identification number and appropriate
certification are not provided when requested, distributions by the Trust to
such Unitholder will be subject to back-up withholding.
RETIREMENT PLANS
As indicated under "Tax Status" above, Unitholders of U.S. Treasury Portfolio
Series will be required for Federal income tax purposes to include amounts in
ordinary gross income in advance of the receipt of the cash attributable to such
income. Therefore, purchase of Units may be appropriate only for an account
which can pay taxes with other funds in advance of the receipt of the cash
attributable to such income or for Individual Retirement Accounts, Keogh plans,
pension funds and other qualified retirement plans, certain of which are briefly
described below.
Additionally, GNMA Portfolio Series 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. Each Series of the Trust will
waive the $1,000 minimum investment requirement for IRA accounts. The minimum
investment is $250 for tax-defined 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
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married, filing separately), if either an individual or their spouse (if
married, filing jointly) is an active participant in an employer maintained
retirement plan. Thus, if an individual has adjusted gross income over $35,000
($50,000 if married, filing jointly or $0 if married, filing separately) and if
an individual or their spouse is an active participant in an employer maintained
retirement plan, no IRA deduction is permitted. Under the Code, an individual
may make nondeductible contributions to the extent deductible contributions are
not allowed. All distributions from an IRA (other than the return of certain
excess contributions) are treated as ordinary income for Federal income taxation
purposes provided that under the Code an individual need not pay tax on the
return of nondeductible contributions, the amount includable in income for the
taxable year is the portion of the amount withdrawn for the taxable year as the
individual's aggregate nondeductible IRA contributions bear to the aggregate
balance of all IRAs of the individual.
A participant's interest in an IRA must be, or commence to be, distributed to
the participant not later than April 1 of the calendar year following the year
during which the participant attains 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 the GNMA Portfolio Series and the U.S.
Treasury Portfolio Series may be purchased by qualified pension or profit
sharing plans maintained by corporations, partnerships or sole proprietors. The
maximum annual contribution for a participant in a money purchase pension plan
or to paired profit sharing and pension plans is the lesser of 25% of
compensation or $30,000. Prototype plan documents for establishing qualified
retirement plans are available from the Sponsor upon request.
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 rolled over to
an eligible plan. In general, for lump sum distributions the excess distribution
over $750,000 (as adjusted) will be subject to the 15% tax.
The Trustee, Investors Fiduciary Trust Company ("IFTC"), has agreed to act as
custodian for certain retirement plan accounts. An annual fee of $12.00 per
account, if not paid separately, will be assessed by the Trustee and paid
through the liquidation of shares of the reinvestment account. An individual
wishing IFTC to act as custodian must complete a Kemper UIT/IRA application and
forward it along with a check made payable to Investors Fiduciary Trust Company.
Certificates for Individual Retirement Accounts can not be issued.
REINVESTMENT PROGRAM
Each Unitholder of the 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 mutual fund underwritten or advised by an
affiliate of the Sponsor, Kemper Financial Services, Inc. (the "Kemper Funds"),
other than those Kemper Funds sold with a contingent deferred sales charge.
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.
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Detailed information with respect to the investment objectives and management of
these Kemper Funds is contained in their respective prospectuses, which can be
obtained from the Sponsor or an investor's financial representative upon
request. An investor should read the appropriate prospectus prior to making the
election to reinvest. Unitholders who desire to have their distributions
automatically reinvested should inform their financial representative at the
time of purchase or should file with the Program Agent referred to below a
written notice of such election.
Unitholders who initially elect to receive distributions in cash may elect to
participate in the reinvestment program by filing with the Program Agent an
election to have such distributions reinvested without charge. The election must
be received by the Program Agent at least ten days prior to the Record Date
applicable to any distribution in order to be in effect for such distribution.
The election to participate in the reinvestment program shall remain in effect
until a subsequent notice is received in writing by the Program Agent. See
"Administration of the Trust Funds--Distributions from the Interest, Principal
and Capital Gains Accounts."
The Program Agent is Investors Fiduciary Trust Company. All inquiries concerning
participation in distribution reinvestment should be directed to the Program
Agent at P.O. Box 419430, Kansas City, Missouri 64173-0216, telephone
816-474-8786.
Unitholders of each Series of the Trust participating in IRAs, Keogh Plans and
other tax deferred retirement plans, may find it highly advantageous to
participate in the Reinvestment Program in order to keep the monies in the
account fully invested at all times. Should reinvestment be selected, an account
with an identical registration to that established at the time the Trust Units
are purchased will be set up in the reinvestment fund selected by the investor.
Investors should consult with their plan custodian as to the appropriate
disposition of distributions. If participants in IRAs, Keogh plans and other tax
deferred retirement plans do not elect a reinvestment option, cash distributions
will be sent to the custodian of the retirement plan and not to the investors,
since payments to the investors would constitute a distribution from the plan
which would result in tax penalties for premature withdrawals from such
programs. See "Retirement Plans."
REDEMPTION
RIGHT OF REDEMPTION. It may be possible, in some cases, for Units of a Series of
the Trust to be sold in the over-the-counter market for a higher price than the
Redemption Value for such Units. Therefore, a Unitholder who wishes to dispose
of his Units is advised to inquire through his financial representative as to
current market prices for Units in order to determine if there is an
over-the-counter price in excess of the Redemption Value per Unit or the
Sponsor's Repurchase Price for such Series of the Trust.
A Unitholder who does not dispose of Units in the secondary market described
above may cause Units to be redeemed by the Trustee by making a written request
to the Trustee, Investors Fiduciary Trust Company, P.O. Box 419430, Kansas City,
Missouri 64173-0216 and, in the case of Units evidenced by a certificate, by
tendering such certificate to the Trustee, properly endorsed or accompanied by a
written instrument or instruments of transfer in form satisfactory to the
Trustee. Unitholders must sign the request, and such certificate or transfer
instrument, exactly as their names appear on the records of the Trustee and on
any certificate representing the Units to be redeemed. If the amount of the
redemption is $25,000 or less and the proceeds are payable to the Unitholder(s)
of record at the address of record, no signature guarantee is necessary for
redemption by individual account owners (including joint owners) or fiduciary
accounts where the fiduciary is named in the account registration. Additional
documentation may be requested, and a signature guarantee is always required,
from corporations, executors, administrators, Trustees, guardians or
associations. If required, the signatures must be guaranteed by a participant in
the Securities Transfer Agents Medallion Program ("STAMP") or such other
signature guarantee program in addition to or in substitution for STAMP as may
be accepted by the Trustee. A certificate should only be sent by registered or
certified mail for the protection of the Unitholder. Since tender of the
certificate is required for redemption when
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one has been issued, Units represented by a certificate cannot be redeemed until
the certificate representing such Units has been received by the purchaser.
Redemption shall be made by the Trustee on the seventh calendar day following
the day on which a tender for redemption is received, or if the seventh calendar
day is not a business day, on the first business day prior thereto (the
"Redemption Date") by payment of cash equivalent to the Redemption Value,
determined as set forth below under "Computation of Redemption Value," as of the
evaluation time stated under "Essential Information," for the appropriate Series
next following such tender, multiplied by the number of Units of such Series
being redeemed. Any Units redeemed shall be cancelled and any undivided
fractional interest in such Series of the Trust extinguished. The price received
upon redemption might be more or less than the amount paid by the Unitholder
depending on the value of the Portfolio Obligations in such Series at the time
of redemption.
During the period in which the Sponsor maintains a secondary market for Units of
a Series of the Trust, the Sponsor has the right to repurchase any Unit
presented for tender to the Trustee for redemption no later than the close of
business on the second business day following such presentation.
The Trustee is irrevocably authorized in its discretion, if the Sponsor does not
elect to repurchase any Unit tendered for redemption or if the Sponsor itself
tenders Units for redemption, in lieu of redeeming Units presented for tender at
the Redemption Value, to sell such Units in the over-the-counter market for the
account of a tendering Unitholder at prices which will return to the Unitholder
monies, net after brokerage commissions, transfer taxes and other charges, equal
to or in excess of the Redemption Value for such Units. In the event of any such
sale, the Trustee will pay the net proceeds thereof to the Unitholder on the day
he would otherwise be entitled to receive payment of the Redemption Value.
Any amounts to be paid on redemption representing interest shall be withdrawn
from the Interest Account of such Series to the extent funds are available. All
other amounts paid on redemption shall be withdrawn from the Principal Account
of such Series. The Trustee is authorized by the Indenture to sell Portfolio
Obligations in order to provide funds for redemption. To the extent Portfolio
Obligations are sold, the size of that Series of the Trust will be reduced.
Portfolio Obligations will be sold by the Trustee so as to maintain, as closely
as practicable, the original percentage relationship between the principal
amounts of the Portfolio Obligations in such Series. The Portfolio Obligations
to be sold for purposes of redeeming Units will be selected from a list supplied
by the Sponsor. The Portfolio Obligations will be chosen for this list by the
Sponsor on the basis of such market and credit factors as it may determine are
in the best interests of such Series of the Trust. Provision is made under the
Indenture for the Sponsor to specify minimum face amounts in which blocks of
Portfolio Obligations are to be sold in order to obtain the best price
available. While such minimum amounts may vary from time to time in accordance
with market conditions, it is anticipated that the minimum face amounts which
would be specified would range from $25,000 to $100,000. Sales may be required
at a time when the Portfolio Obligations would not otherwise be sold and might
result in lower prices than might otherwise be realized. Moreover, due to the
minimum principal amount in which Portfolio Obligations may be required to be
sold, the proceeds of such sales may exceed the amount necessary for payment of
Units redeemed. To the extent not used to meet other redemption requests in such
Series, such excess proceeds will be distributed pro rata to all remaining
Unitholders of record of such Trust, unless reinvested in substitute Portfolio
Obligations. See "Administration of the Trust Funds--Portfolio Supervision."
COMPUTATION OF REDEMPTION VALUE. The value of each Series of the Trust is
determined as of the Evaluation Time stated under "Essential Information" for
the appropriate Series above (a) semiannually, on June 30 and December 31 of
each year (or the last business day prior thereto), (b) on any business day as
of the Evaluation Time next following the tender of any Unit and (c) on any
other business day desired by the Sponsor or the Trustee, (1) by adding:
a. The aggregate bid side evaluation of the Portfolio Obligations in
such Series of the Trust, as determined by the Evaluator;
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b. Cash on hand in such Series of the Trust, other than money
deposited to purchase contract obligations or money credited to the Reserve
Account; and
c. Accrued but unpaid interest on the Portfolio Obligations in such
Series of the Trust to the redemption date.
(2) and then deducting from the resulting figure: amounts representing any
applicable taxes or governmental charges payable by such Series of the Trust for
the purpose of making an addition to the reserve account (as defined in the
Indenture, the "Reserve Account"), amounts representing estimated accrued
expenses (including audit fees) of such Series of the Trust, amounts
representing unpaid fees and expenses of the Trustee, Sponsor (if applicable),
counsel and the Evaluator and monies held for distribution to Unitholders of
record of such Series as of the business day prior to the evaluation being made
on the days or dates set forth above;
(3) and then dividing the result of the above computation by the total number of
Units of such Series outstanding on the date of evaluation. The resulting figure
equals the Redemption Value for each Unit of such Series. The Evaluator will
determine the aggregate current bid price evaluation of the Securities in each
Series of the Trust as set forth under "Public Offering of Units--Public
Offering Price."
POSTPONEMENT OF REDEMPTION. The right of redemption of any Series may be
suspended and payment of the Redemption Value per Unit postponed for more than
seven calendar days following a tender of Units for redemption for any period
(as determined by the Securities and Exchange Commission) during which the New
York Stock Exchange is closed, other than for customary weekend and holiday
closings, or during which trading on that Exchange is restricted or an emergency
exists as a result of which disposal or evaluation of the Portfolio Obligations
is not reasonably practicable, or for such other periods as the Securities and
Exchange Commission may by order permit. The Trustee is not liable to any person
or in any way for any loss or damage that may result from any such suspension or
postponement.
COMPARISON OF PUBLIC OFFERING PRICE AND REDEMPTION VALUE
The Public Offering Price of Units of each Series of the Trust in the initial
offering period is determined on the basis of current offering prices for the
Portfolio Obligations in such Series (see "Public Offering of Units," herein),
while the Redemption Value and Sponsor's Repurchase Price for Units of such
Series is determined on the basis of current bid prices for the Portfolio
Obligations. On the business day indicated under "Essential Information" for the
appropriate Series, the Public Offering Price (which includes a sales charge) of
each Series exceeded the Redemption Value thereof by the amount indicated under
"Essential Information" for such Series. The bid prices for the Portfolio
Obligations may be expected to be less than the offering prices. Under current
market conditions the bid prices for Ginnie Maes are expected to be
approximately 1/4 to 1/2 of 1% lower in the case of such Securities backed by
mortgages on 1-to 4-family dwellings. Under current market conditions the bid
prices for U.S. Treasury Obligations are expected to be approximately 1/8 to
1/4 of 1% lower than the offer price of such obligations. On the business day
indicated under "Essential Information" for the appropriate Series the bid side
evaluation was lower than the offering side evaluation by the amount set forth
in the "Portfolio" for the appropriate Series. For this reason, among others
(including fluctuations in the market prices of such Portfolio Obligations and
the fact that the Public Offering Price of each Series includes the sales
charge), the amount realized by a Unitholder upon any redemption of Units may be
less than the price paid by him for such Units.
RIGHTS OF UNITHOLDERS
UNITHOLDERS. A Unitholder is deemed to be a beneficiary of the Series of the
Trust which he purchased and is vested with all right, title and interest in the
appropriate Series of the Trust, each of which was created by the Indenture. A
Unitholder may at any time tender his Units to the Trustee for redemption.
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OWNERSHIP OF UNITS. Ownership of Units of a Series of the Trust will not be
evidenced by certificates unless a Unitholder or the Unitholder's registered
broker/dealer makes a written request to the Trustee. Units are transferable by
making a written request to the Trustee and, in the case of Units evidenced by a
certificate, by presenting and surrendering such certificate to the Trustee
properly endorsed or accompanied by a written instrument or instruments of
transfer which should be sent registered or certified mail for the protection of
the Unitholder. Unitholders must sign such written request, and such certificate
or transfer instrument, exactly as their names appear on the records of the
Trustee and on any certificate representing the Units to be transferred. Such
signatures must be guaranteed by a commercial bank or trust company, savings and
loan association or by a member firm of a national securities exchange.
Certificates will be issued in denominations of 100 Units or any number of Units
in excess thereof. The Trustee may require a Unitholder to pay a reasonable fee,
to be determined in the sole discretion of the Trustee, for each certificate
re-issued or transferred and to pay any governmental charge that may be imposed
in connection with each such transfer or exchange. The Trustee at the present
time does not intend to charge for the normal transfer or exchange of
certificates. Destroyed, stolen, mutilated or lost certificates will be replaced
upon delivery to the Trustee of satisfactory indemnity (generally amounting to
3% of the market value of the Units), affidavit of loss, if appropriate,
evidence of ownership and payment of expenses incurred. Any mutilated
certificate must be presented to the Trustee before a substitute certificate
will be issued.
CERTAIN LIMITATIONS. The death or incapacity of any Unitholder (or the
dissolution of the Sponsor) will not operate to terminate the Trust or any
Series thereof nor entitle the legal representatives or heirs of such Unitholder
to claim an accounting or to take any other action or proceeding in any court
for a partition or winding up of the Trust or any Series thereof.
No Unitholder shall have the right to vote except with respect to removal of the
Trustee or amendment and termination of the Trust or of the Series of which they
are a Unitholder. See "Administration of the Trust Funds-- Amendment" and
"Administration of the Trust Funds--Termination." Unitholders shall have no
right to control the operation or administration of the Trust or any Series
thereof in any manner, except upon the vote of Unitholders representing 66 2/3%
of the Units of a Series outstanding for purposes of amendment, termination or
discharge of the Trustee, all as provided in the Indenture; however, no
Unitholder shall ever be under any liability to any third party for any action
taken by the Trustee, Evaluator or Sponsor.
EXPENSES AND CHARGES
INITIAL EXPENSES. All expenses and charges incurred prior to or in establishment
of the Trust, including the cost of the initial preparation, printing and
execution of the Indenture and the certificates, the initial fees of the Trustee
and the Evaluator, initial legal and auditing expenses, the cost of the
preparation and printing of this Prospectus and all other advertising and
selling expenses have been, or will be, paid by the Sponsor.
FEES. The Sponsor will receive no fee from the Trust for its services as such.
However, in the case of each Series of the Trust, the Sponsor does receive a
portfolio surveillance fee, which is earned for portfolio supervisory services,
at the rate set forth under "Essential Information" for the appropriate Series
per $1,000 principal amount of Portfolio Obligations in such Series of the
Trust, computed monthly on the basis of the largest principal amount of
Portfolio Obligations in such Series of the Trust at any time during the
preceding month. The portfolio surveillance fee, which may not exceed the amount
set forth under "Essential Information" may exceed the actual costs of providing
portfolio supervisory services for these Series of the Trust, but at no time
will the total amount the Sponsor receives for supervisory services rendered to
all unit investment trusts sponsored by the Sponsor in any calendar year exceed
the aggregate cost of providing such services in that year.
The Trustee will receive for its services under the Indenture the fee set forth
under "Essential Information" for the appropriate Series per $1,000 principal
amount of Portfolio Obligations in such Series of the Trust, computed
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monthly on the basis of the largest principal amount of Portfolio Obligations in
such Series of the Trust at any time during the preceding month. In no event
will the Trustee be paid less than $2,000 per Series in any one year.
For evaluation of Portfolio Obligations in a Series, the Evaluator shall receive
the fee set forth under "Essential Information" for the appropriate Series per
$1,000 principal amount of Portfolio Obligations in such Series of the Trust,
computed monthly on the basis of the largest aggregate principal amount of
Portfolio Obligations in such Series of the Trust at any time during the
preceding month.
The Trustee's fees, Sponsor's portfolio surveillance fees and the Evaluator's
fees are payable monthly on or before each Distribution Date from the Interest
Account to the extent funds are available and thereafter from the Principal
Account. Any of such fees may be increased without approval of the Unitholders
in proportion to increases under the category "All Services Less Rent of
Shelter" in the Consumer Price Index published by the United States Department
of Labor or if such category is no longer published, in a comparable category.
The Trustee also receives benefits to the extent that it holds funds on deposit
in various non-interest bearing accounts created under the Indenture.
OTHER CHARGES. The following additional charges are or may be incurred by the
Trust or any Series thereof as more fully described in the Indenture: (a) fees
of the Trustee for extraordinary services, (b) expenses of the Trustee
(including legal and auditing expenses, but not including any fees and expenses
charged by any agent for custody and safeguarding the Portfolio Obligations) and
of counsel designated by the Sponsor, (c) various governmental charges, (d)
expenses and costs of any action taken by the Trustee to protect the Trust or a
Series of the Trust and the rights and interests of the Unitholders thereof, (e)
indemnification of the Trustee for any loss, liability or expense incurred by it
in the administration of the Trust or any Series thereof without gross
negligence, bad faith, wilful malfeasance or wilful misconduct on its part or
reckless disregard of its obligations and duties, (f) indemnification of the
Sponsor for any losses, liabilities and expenses incurred in acting as Sponsor
under the Indenture without gross negligence, bad faith, wilful malfeasance or
wilful misconduct or reckless disregard of its obligations and duties, and (g)
expenditures incurred in contacting Unitholders upon termination of the Trust or
any Series thereof.
The fees and expenses set forth herein are payable out of each Series of the
Trust and when so paid by or owing to the Trustee are secured by a lien on such
Series. If the balances in the Interest and Principal Accounts are insufficient
to provide for amounts payable by any Series of the Trust, the Trustee has the
power to sell Portfolio Obligations from such Series to pay such amounts. To the
extent Portfolio Obligations are sold, the size of such Series of the Trust will
be reduced and the proportions of the types of Portfolio Obligations will
change. Such sales might be required at a time when Portfolio Obligations would
not otherwise be sold and might result in lower prices than might otherwise be
realized. Moreover, due to the minimum principal amount in which Portfolio
Obligations may be required to be sold, the proceeds of such sales may exceed
the amount necessary for the payment of such fees and expenses.
ADMINISTRATION OF THE TRUST FUNDS
RECORDS AND ACCOUNTS. In accordance with the Indenture, the Trustee shall keep
records of all transactions at its office. Such records shall include the name
and address of, and the number of Units held by, every Unitholder of each Series
of the Trust. Such books and records shall be open to inspection by any
Unitholder of such Series at all reasonable times during the usual business
hours. The Trustee shall make such annual or other reports as may from time to
time be required under any applicable state or Federal statute, rule or
regulation. The Trustee shall keep a certified copy or duplicate original of the
Indenture on file in its office available for inspection at all reasonable times
during usual business hours by any Unitholder, together with a current list of
the Securities held in each Series of the Trust. Pursuant to the Indenture, the
Trustee may employ one or more agents for the purpose of custody and
safeguarding of the Portfolio Obligations comprising the Trust Funds.
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DISTRIBUTIONS FROM THE INTEREST, PRINCIPAL AND CAPITAL GAINS ACCOUNTS.
Ginnie Mae Series. The terms of the Ginnie Maes provide for payment to the
holders thereof (including each Series of the Trust) on the fifteenth day of
each month of amounts collected by or due to the issuers thereof with respect to
the underlying mortgages during the preceding month.
The Trustee will collect the interest due the Series on the Securities therein
as it becomes payable and credit such interest to a separate Interest Account
for such Series created by the Indenture.
Distributions will be made to each Unitholder of record of each Series of the
Trust on the appropriate Distribution Date (see "Essential Information") and
will consist of an amount substantially equal to such Unitholder's pro rata
share of the cash balances, if any, in the Interest Account, the Principal
Account and any Capital Gains Account of such Series, computed as of the close
of business on the preceding Record Date.
U.S. Treasury Portfolio Series. Except for the Stripped Treasury Securities
included in each Series, the terms of the U.S. Treasury Obligations provide for
semi-annual payments of interest on the 15th day of the month. Interest received
by a Series of the U.S. Treasury Portfolio is credited by the Trustee to the
Interest Account for such Trust Fund. All other receipts are credited by the
Trustee to a separate Principal Account for such Trust Fund. Since interest on
the U.S. Treasury Obligations in U.S. Treasury Portfolio Series is payable in
semi-annual installments, and distributions of income are made to Unitholders at
different intervals from receipt of interest, the interest accruing to U.S.
Treasury Portfolio Series may not be equal to the amount of money received and
available for distribution from the Interest Account. Therefore, on each
Distribution Date the amount of interest actually deposited in the Interest
Account of U.S. Treasury Portfolio Series and available for distribution may be
slightly more or less than the interest distribution made. In order to eliminate
fluctuations in interest distributions resulting from such variances, the
Trustee is authorized by the Indenture to advance such amounts as may be
necessary to provide interest distributions of approximately equal amounts. The
Trustee will be reimbursed, without interest, for any such advances from funds
available in the Interest Account for U.S. Treasury Portfolio Series.
Stripped Treasury Securities are sold at a deep discount because the buyer of
those securities obtains only the right to receive a future fixed payment on the
security and not any rights to periodic interest payments thereon. Purchasers of
these Securities acquire, in effect, discount obligations that are economically
identical to the "zero-coupon bonds" that have been issued by corporations. Zero
coupon bonds are debt obligations which do not make any periodic payments of
interest prior to maturity and accordingly are issued at a deep discount.
Under generally accepted accounting principles, a holder of a security purchased
at a discount normally must report as an item of income for financial accounting
purposes the portion of the discount attributable to the applicable reporting
period. The calculation of this attributable income would be made on the
"interest" method which generally will result in a lesser amount of includible
income in earlier periods and a correspondingly larger amount in later periods.
For Federal income tax purposes, the inclusion will be on a basis that reflects
the effective compounding of accrued but unpaid interest effectively represented
by the discount. Although this treatment is similar to the "interest" method
described above, the "interest" method may differ to the extent that generally
accepted accounting principles permit or require the inclusion of interest on
the basis of a compounding period other than the semi-annual period. See "Tax
Status."
The Trustee will distribute on each Distribution Date or shortly thereafter, to
each Unitholder of record of a Series of the U.S. Treasury Portfolio on the
preceding Record Date, an amount substantially equal to such holder's pro rata
share of the cash balance, if any, in the Principal Account of the related U.S.
Treasury Portfolio computed as of the close of business on the preceding Record
Date. However, no distribution will be required if the balance in the Principal
Account is less than $1.00 per 100 Units. Notwithstanding the foregoing, the
Trustee will make a distribution to Unitholders of all principal relating to
maturing Treasury Obligations within seven business days of the date of each
such maturity.
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General. Distributions for an IRA, Keogh or other tax-deferred retirement plan
will not be sent to the individual Unitholder. These distributions will go
directly to the custodian of the plan to avoid the penalties associated with
premature withdrawals from such accounts. See "Retirement Plans."
All funds collected or received will be held by the Trustee in trust, without
interest to Unitholders, as part of the appropriate Series of the Trust or the
Reserve Accounts referred to below until required to be disbursed in accordance
with the provisions of the Indenture. Such funds will be segregated on the trust
ledger of the Trustee so long as such practice preserves a valid preference of
Unitholders of such Series of the Trust under the bankruptcy laws of the United
States, or if such preference is not preserved, the Trustee shall handle such
funds in such other manner as shall constitute the segregation and holding
thereof in trust within the meaning of the Investment Company Act of 1940, as
the same may be from time to time amended. To the extent permitted by the
Indenture and applicable banking regulations, such funds are available for use
by the Trustee pursuant to normal banking procedures.
The first distribution, if any, for persons who purchase Units between a Record
Date and a Distribution Date will be made on the second Distribution Date
following their purchase of Units.
The Trustee is authorized by the Indenture to withdraw from the Principal and/or
Interest Accounts of each Series such amounts as it deems necessary to establish
a reserve for any taxes or other governmental charges that may be payable out of
such Series of the Trust, which amounts will be deposited in a separate Reserve
Account. If the Trustee determines that the amount in the Reserve Account is
greater than the amount necessary for payment of any taxes or other governmental
charges, it will promptly deposit the excess back into the Account from which it
was withdrawn.
PORTFOLIO SUPERVISION. The Indenture permits the Sponsor to direct the Trustee
to dispose of any Portfolio Obligation in a Series of the Trust upon the
happening of any of the following events:
1. Default in the payment of principal or interest on any of the
Portfolio Obligations when due and payable,
2. Institution of legal proceedings seeking to restrain or enjoin the
payment of any of the Portfolio Obligations or attacking their validity,
3. A breach of covenant or warranty which could adversely affect the
payment of debt service on the Portfolio Obligations,
4. Default in the payment of principal or interest on any other
outstanding obligation guaranteed or backed by the full faith and credit of
the United States of America,
5. A decline in market price to such an extent, or such other market
credit or other factors exist, as in the opinion of the Sponsor would make
retention of any of the Portfolio Obligations detrimental to the Trust or
any Series thereof and to the interests of the Unitholders,
6. An offer is made to refund or refinance any of the Portfolio
Obligations in the Trust Funds, or
7. Termination of the Trust or any Series thereof.
The Trustee shall also sell any Portfolio Obligation in a Series of the Trust if
there is a default in the payment of principal and interest on such Portfolio
Obligation and no provision for payment is made therefore and the Sponsor fails
to instruct the Trustee to sell or hold such Portfolio Obligation within thirty
days after notice to the Sponsor from the Trustee of such default. The Trustee
shall not be liable for any depreciation or loss by reason of any sale of
Portfolio Obligations or by reason of the failure of the Sponsor to give
directions to the Trustee.
Amounts received by a Series of the Trust upon the sale of any Portfolio
Obligation under the conditions set forth above will be deposited in the
Principal Account, Interest Account or Capital Gains Account for such Series, as
A-21
<PAGE> 43
appropriate, when received and pursuant to the Sponsor's instructions will be
distributed by the Trustee on the next Distribution Date to Unitholders of
record of such Series on the Record Date prior to such Distribution Date.
REPORTS TO UNITHOLDERS. With each distribution, the Trustee will furnish or
cause to be furnished to the Unitholders of such Series a statement of the
amount of interest and other receipts, if any, distributed, expressed in each
case as a dollar amount per Unit.
The accounts of each Series of the Trust are required to be audited annually, at
the Trust's expense, by independent certified public accountants designated by
the Sponsor, unless the Trustee determines that such an audit would not be in
the best interest of the Unitholders. The accountants' report will be furnished
by the Trustee to any Unitholder of such Series upon written request.
Within a reasonable period of time after the end of each calendar year, the
Trustee will furnish to each person who at any time during such calendar year
was a Unitholder of record of a Series of the Trust a statement setting forth
for the applicable Series:
1. As to the Interest Account:
(a) the amount of interest received on the Portfolio Obligations,
including amounts received as a portion of the proceeds of any disposition
of Portfolio Obligations;
(b) the amount paid from the Interest Account representing accrued
interest for any Units redeemed and amounts paid or reserved for purchases
of substitute Portfolio Obligations;
(c) the deductions from the Interest Account for applicable taxes or
other governmental charges, if any, and fees and expenses of the Trustee
(including auditing fees), the Sponsor, the Evaluator and counsel;
(d) the deductions from the Interest Account for payment into the
Reserve Account; and
(e) the net amount remaining after such payments and deductions
expressed both as a total dollar amount and as a dollar amount per 100
Units outstanding on the last business day of such calendar year.
2. As to the Principal Account:
(a) the dates of the sale, maturity, liquidation or redemption of any
of the Portfolio Obligations and the net proceeds received therefrom,
excluding any portion credited to the Interest Account;
(b) the amount paid from the Principal Account representing the
principal of any Units redeemed and amounts paid or reserved for purchases
of substitute Portfolio Obligations;
(c) the deductions from the Principal Account, if any, for payment of
applicable taxes or other governmental charges, fees and expenses of the
Trustee (including auditing fees), the Sponsor, the Evaluator and counsel;
(d) the deductions from the Principal Account for payment into the
Reserve Account; and
(e) the net amount remaining after such payments and deductions
expressed both as a total dollar amount and as a dollar amount per 100
Units outstanding on the last business day of such calendar year.
3. The following information:
(a) a list of the Portfolio Obligations, as appropriate, as of the
last business day of such calendar year grouped by coupon and maturity
range;
(b) the number of Units outstanding on the last business day of such
calendar year;
(c) the Unit Value (as defined in the Indenture) based on the last
Trust evaluation made during such calendar year; and
(d) the amounts actually distributed during such calendar year from
the Interest, Principal and Capital Gains Accounts, separately stated,
expressed both as total dollar amounts and as dollar amounts per 100 Units
outstanding on the Record Dates for such distributions.
A-22
<PAGE> 44
AMENDMENT. The Indenture may be amended by the Trustee and the Sponsor without
the consent of Unitholders (a) to cure any ambiguity or to correct or supplement
any provision thereof which may be defective or inconsistent, (b) to change any
provision thereof as may be required by the Securities and Exchange Commission
or any successor governmental agency, and (c) to make such other provisions as
shall not adversely affect the interest of the Unitholders (as determined in
good faith by the Sponsor and the Trustee); provided, however, that the
Indenture may also be amended with respect to any Series by the Sponsor and the
Trustee (or the performance of any of the provisions of the Indenture may be
waived) with the consent of holders of Units representing 66 2/3% of the Units
then outstanding of such Series for the purposes of adding any provisions to or
changing in any manner or eliminating any of the provisions of the Indenture or
of modifying in any manner the rights of Unitholders thereof. However, the
Indenture may not be amended, without the consent of the holders of all Units of
a Series then outstanding, so as (1) to permit, except in accordance with the
terms and conditions of the Indenture, the acquisition of any Portfolio
Obligations other than those specified in the Indenture, or (2) to reduce the
aforesaid percentage of Units of a Series the holders of which are required to
consent to certain of such amendments and may not be amended so as to reduce the
interest in such Series represented by Units without the consent of the holder
of such Units. The Trustee shall promptly notify Unitholders of the substance of
any such amendment.
TERMINATION. The Indenture provides that a Series of the Trust will terminate
shortly after the maturity, redemption, sale or other disposition of the last of
the Portfolio Obligations held in such Series. See "Essential Information" for
each Series. If the value of a Series of the Trust as shown by an evaluation is
less than forty percent (40%) of the par value of the Portfolio Obligations
deposited in such Series, the Trustee shall, if directed by the Sponsor in
writing, terminate such Series of the Trust. The Trust or any Series thereof may
also be terminated at any time by the written consent of holders of Units
representing 66 2/3% of the Units then outstanding of such Series.
Upon termination, the Trustee will sell the Portfolio Obligations then held in
the appropriate Series of the Trust and credit the moneys derived from such sale
to the Principal, Capital Gains and Interest Accounts thereof. The Trustee will
then, after deduction of any fees and expenses of such Series and payment into
the Reserve Account of any amount required for taxes or other governmental
charges that may be payable by such series of the Trust, distribute to each
Unitholder of such Series, only upon surrender for cancellation of his
certificate, if issued, after due notice of such termination, such Unitholder's
pro rata share in the Interest, Capital Gains and Principal Accounts. The sale
of Portfolio Obligations in a Series of the Trust upon termination may result in
a lower amount than might otherwise be realized if such sale were not required
at such time. For this reason, among others, the amount realized by a Unitholder
upon termination may be less than the principal amount of Portfolio Obligations
represented by the Units held by such Unitholder.
RESIGNATION, REMOVAL AND LIABILITY
REGARDING THE TRUSTEE. The Trustee shall be under no liability for any action
taken in good faith in reliance on prima facie properly executed documents or
for the disposition of moneys or Securities from any Series of the Trust, nor
shall the Trustee be liable or responsible in any way for depreciation or loss
incurred by reason of the disposition of any Portfolio Obligations by the
Trustee. However, the Trustee shall be liable for wilful malfeasance, wilful
misconduct, bad faith or gross negligence in the performance of its duties or by
reason of its reckless disregard of its obligations and duties under the
Indenture. In the event of a failure of the Sponsor to act, the Trustee may act
under the Indenture and shall not be liable for any action taken by it in good
faith. The Trustee shall not be personally liable for any taxes or other
governmental charges imposed upon the Trust or any Series thereof or in respect
of the Portfolio Obligations or the interest thereon. The Indenture also
contains other customary provisions limiting the liability of the Trustee and
providing for the indemnification of the Trustee for any loss or claim accruing
to it without gross negligence, bad faith, wilful misconduct, wilful malfeasance
or reckless disregard of its duties and obligations under the Indenture on its
part.
A-23
<PAGE> 45
The Trustee or any successor may resign by executing an instrument in writing,
filing the same with the Sponsor and mailing a copy of such notice or
resignation to all Unitholders then of record. Upon receiving such notice the
Sponsor will use its best efforts to appoint a successor Trustee promptly. If
the Trustee becomes incapable of acting or becomes bankrupt or its affairs are
taken over by public authorities, the Sponsor may remove the Trustee and appoint
a successor as provided in the Indenture. If within 30 days of the resignation
of a Trustee no successor has been appointed or, if appointed, has not accepted
the appointment, the retiring Trustee may apply to a court of competent
jurisdiction for the appointment of a successor. The resignation or removal of a
Trustee becomes effective only when the successor Trustee accepts its
appointment as such or when a court of competent jurisdiction appoints a
successor Trustee.
REGARDING THE SPONSOR. The Sponsor shall be under no liability to the Trust or
to Unitholders for taking any action or for refraining from any action in good
faith or for errors in judgment, nor shall the Sponsor be liable or responsible
in any way for depreciation or loss incurred by reason of the disposition of any
Portfolio Obligations. The Sponsor will, however, be liable for its own wilful
malfeasance, wilful misconduct, bad faith, gross negligence or reckless
disregard of its duties and obligations under the Indenture.
If at any time the Sponsor shall resign under the Indenture or shall fail or be
incapable of performing its duties thereunder or shall become bankrupt or its
affairs are taken over by public authorities, the Indenture directs the Trustee
to either (1) appoint a successor Sponsor or Sponsors at rates of compensation
deemed reasonable by the Trustee not exceeding amounts prescribed by the
Securities and Exchange Commission, or (2) continue to act as Sponsor itself
without terminating the Indenture.
REGARDING THE EVALUATOR. The Trustee, Sponsor and Unitholders may rely on any
evaluation furnished by the Evaluator and shall have no responsibility for the
accuracy thereof. Determinations by the Evaluator under the indenture shall be
made in good faith upon the basis of the best information available to it,
provided, however, that the Evaluator shall be under no liability to the
Trustee, Sponsor or Unitholders for errors in judgment. The Evaluator shall,
however, be liable for its own wilful malfeasance, bad faith, gross negligence
or reckless disregard of its obligations and duties under the Indenture.
The Evaluator may resign or may be removed by the Sponsor and the Trustee, and
the Sponsor and the Trustee are to use their best efforts to appoint a
satisfactory successor. Such resignation or removal shall become effective upon
the acceptance of appointment by the successor Evaluator. If upon resignation of
the Evaluator no successor accepts appointment within thirty days after notice
of resignation, the Evaluator may apply to a court of competent jurisdiction for
the appointment of a successor.
MISCELLANEOUS
SPONSOR. The Sponsor, Kemper Unit Investment Trusts, with an office at 77 West
Wacker Drive, 5th Floor, Chicago, Illinois 60601 (800)621-5024, is a service of
Kemper Securities, Inc., which is a wholly owned subsidiary of Kemper Financial
Companies, Inc. which, in turn, is a wholly-owned subsidiary of Kemper
Corporation. The Sponsor will act as underwriter of any other unit investment
trust products developed by the Sponsor in the future. As of April 30, 1993, the
total stockholder's equity of Kemper Securities, Inc. was $426,125,017
(unaudited).
The foregoing information with regard to the Sponsor relates to the Sponsor only
and not to the Trust. Such information is included in this Prospectus only for
the purpose of informing investors as to the financial responsibility of the
Sponsor and its ability to carry out its contractual obligations shown herein.
More comprehensive financial information can be obtained from the Sponsor upon
request.
TRUSTEE. The Trustee, Investors Fiduciary Trust Company, is a trust company
specializing in investment related services, organized and existing under the
laws of Missouri, having its trust office at 127 West 10th Street, Kansas City,
Missouri 64105. The Trustee is subject to supervision and examination by the
Division of Finance of the State
A-24
<PAGE> 46
of Missouri and the Federal Deposit Insurance Corporation. Investors Fiduciary
Trust Company is jointly owned by DST Systems, Inc. and Kemper Financial
Services, Inc., an affiliate of the Sponsor.
The Trustee, whose duties are ministerial in nature, has not participated in
selecting any of the Securities in the Trust Funds. For information relating to
the responsibilities of the Trustee under the Indenture, reference is made to
the material set forth under "Administration of the Trust Funds."
LEGAL OPINION. The legality of the Units offered hereby and certain matters
relating to Federal tax law have been passed upon by Chapman and Cutler, 111
West Monroe Street, Chicago, Illinois 60603, as counsel for the Sponsor.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The statements of condition, including the portfolios, of the Kemper Defined
Funds Series 5 appearing in this Prospectus and Registration Statement have been
audited by Grant Thornton, independent certified public accountants, as set
forth in their report thereon appearing elsewhere herein, and are included in
reliance upon such report and upon the authority of such firm as experts in
accounting and auditing.
A-25
<PAGE> 47
- -------------------------------------------------------------------------
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KEMPER
DEFINED
FUNDS.
GOVERNMENT
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- -------------------------------------------------------------------------
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PROSPECTUS
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GNMA PORTFOLIO
SERIES 2 - MIDGET
GNMA PORTFOLIO
SERIES 3
FEBRUARY 23, 1994
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KEMPER UNIT INVESTMENT TRUSTS
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<PAGE> 48
<TABLE>
<CAPTION>
CONTENTS PAGE
----
<S> <C>
ESSENTIAL INFORMATION.......................... 2
THE TRUST FUNDS................................ 4
General...................................... 4
GNMA Portfolio Series........................ 6
U.S. Treasury Portfolio Series............... 10
PORTFOLIOS..................................... 12
NOTES TO PORTFOLIOS............................ 13
REPORT OF INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS.................................. 14
STATEMENT OF CONDITIONS........................ 15
ESTIMATED CASH FLOWS TO UNITHOLDERS............ 16
RATING OF UNITS................................ A-1
PORTFOLIO SELECTION............................ A-1
THE UNITS...................................... A-2
ESTIMATED CURRENT RETURN AND ESTIMATED
LONG-TERM RETURN............................. A-2
PUBLIC OFFERING OF UNITS....................... A-3
Public Offering Price........................ A-3
Initial Public Distribution.................. A-5
Secondary Market............................. A-6
Profits of Sponsor........................... A-6
TAX STATUS..................................... A-8
RETIREMENT PLANS............................... A-13
REINVESTMENT PROGRAM........................... A-14
REDEMPTION..................................... A-15
Right of Redemption.......................... A-15
Computation of Redemption Value.............. A-16
Postponement of Redemption................... A-17
COMPARISON OF PUBLIC OFFERING PRICE AND
REDEMPTION VALUE............................. A-17
RIGHTS OF UNITHOLDERS.......................... A-17
Unitholders.................................. A-17
Ownership of Units........................... A-18
Certain Limitations.......................... A-18
EXPENSES AND CHARGES........................... A-18
Initial Expenses............................. A-18
Fees......................................... A-18
Other Charges................................ A-19
ADMINISTRATION OF THE TRUST FUNDS.............. A-19
Records and Accounts......................... A-19
Distributions from the Interest, Principal
and Capital Gains Accounts................. A-20
Portfolio Supervision........................ A-21
Reports to Unitholders....................... A-22
Amendment.................................... A-23
Termination.................................. A-23
RESIGNATION, REMOVAL AND LIABILITY............. A-23
Regarding the Trustee........................ A-23
Regarding the Sponsor........................ A-24
Regarding the Evaluator...................... A-24
MISCELLANEOUS.................................. A-24
Sponsor...................................... A-24
Trustee...................................... A-24
Legal Opinion................................ A-25
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS....... A-25
</TABLE>
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THIS PROSPECTUS DOES NOT CONTAIN ALL
OF THE INFORMATION SET FORTH IN THE
REGISTRATION STATEMENT AND EXHIBITS
RELATING THERETO, FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION,
WASHINGTON, D.C. UNDER THE
SECURITIES ACT OF 1933 AND THE
INVESTMENT COMPANY ACT OF 1940, AND
TO WHICH REFERENCE IS MADE.
- --------------------------------------------------------------------------
NO PERSON IS AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN
THIS PROSPECTUS AND ANY INFORMATION
OR REPRESENTATION NOT CONTAINED
HEREIN MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE TRUST,
THE TRUSTEE, OR THE SPONSOR. THE
TRUST IS REGISTERED AS A UNIT
INVESTMENT TRUST UNDER THE
INVESTMENT COMPANY ACT OF 1940. SUCH
REGISTRATION DOES NOT IMPLY THAT THE
TRUST OR THE UNITS HAVE BEEN
GUARANTEED, SPONSORED, RECOMMENDED
OR APPROVED BY THE UNITED STATES OR
ANY STATE OR ANY AGENCY OR OFFICER
THEREOF.
- --------------------------------------------------------------------------
THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER TO SELL, OR A SOLICITATION
OF AN OFFER TO BUY, SECURITIES IN
ANY STATE TO ANY PERSON TO WHOM IT
IS NOT LAWFUL TO MAKE SUCH OFFER IN
SUCH STATE.
<PAGE> 49
CONTENTS OF REGISTRATION STATEMENT
This Amended Registration Statement comprises the following papers and
documents:
The facing sheet
The Cross-Reference Sheet
The Prospectus
The signatures
The following exhibits:
<TABLE>
<S> <C>
1.1 (a) -- Form of Trust Indenture and Agreement for GNMA Portfolio, Series 2 and GNMA Portfolio,
Series 3.
1.1.1 (a) -- Standard Terms and Conditions of Trust for GNMA Portfolio, Series 2 and GNMA
Portfolio, Series 3. Reference is made to Exhibit 1.1.1(a) to the Registration
Statement on Form S-6 with respect to Kemper Government Securities Trust (Registration
No. 33-26754) as filed on February 14, 1989.
1.2 -- Certificate of Incorporation of Kemper Unit Investment Trusts. Reference is made to
Exhibit 1.2 to the Registration Statement on Form S-6, with respect to Kemper
Government Securities Trust (Registration No. 33-26754) as filed on February 14, 1989
and Kemper Defined Funds Series 9 (Registration No. 33-56012) as filed on November 3,
1993.
1.3 -- By-laws of Kemper Unit Investment Trusts. Reference is made to Exhibit 1.3 to the
Registration Statement on Form S-6, with respect to Kemper Government Securities Trust
(Registration No. 33-26754) as filed on February 14, 1989 and Kemper Defined Funds
Series 9 (Registration No. 33-56012) as filed on November 3, 1993.
2.1 -- Form of Certificate of Ownership (pages three to nine, inclusive, of the Standard
Terms and Conditions of Trust included as Exhibits 1.1.1(a).
3.1 -- Opinion of counsel to the Sponsor as to legality of the securities being registered
including a consent to the use of its name under the headings "Tax Status" and "Legal
Opinions" in the Prospectus and opinion of counsel as to Federal income tax status of
the securities included in the Trust.
4.1 -- Consent of Standard & Poor's Corporation.
4.2 -- Consent of Muller Data Corporation.
4.3 -- Consent of Grant Thornton.
6.1 -- List of Officers and Directors of Depositor. Reference is made to Exhibit 6.1 to the
Registration Statement on Form S-6 with respect to Kemper Tax-Exempt Insured Income
Trust, Multi-State Series 31 (Registration No. 33-48544) as filed on July 15, 1992.
7.1 -- Power of Attorney. Reference is made to Exhibit 7.1 to the Registration Statement with
respect to Kemper Tax-Exempt Insured Income Trust, Series A-90 and Multi-State Series
65 (Registration No. 33-59086).
</TABLE>
S-1
<PAGE> 50
SIGNATURES
The Registrant, Kemper Defined Funds Series 15 hereby identifies Kemper
Government Securities Trust, Series 39 (GNMA Portfolio) Series 40 (GNMA
Portfolio) and Series 41 (U.S. Treasury Portfolio) and Kemper Defined Funds
Insured National Series 1 for purposes of the representations required by Rule
487 and represents the following:
(1) that the portfolio securities deposited in the series as to the
securities of which this Registration Statement is being filed do not
differ materially in type or quality from those deposited in such previous
series;
(2) that, except to the extent necessary to identify the specific
portfolio securities deposited in, and to provide essential financial
information for, the series with respect to the securities of which this
Registration Statement is being filed, this Registration Statement does not
contain disclosures that differ in any material respect from those
contained in the registration statements for such previous series as to
which the effective date was determined by the Commission or the Staff; and
(3) that it has complied with Rule 460 under the Securities Act of
1933.
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Kemper Defined Funds Series 15 has duly caused this Amendment to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Chicago, and State of Illinois, on the 22nd day
of February, 1994.
KEMPER DEFINED FUNDS SERIES 15
Registrant
By: KEMPER SECURITIES, INC.
Depositor
By: /s/ C. PERRY MOORE
C. Perry Moore
S-2
<PAGE> 51
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below on February 22, 1994 by the following persons,
who constitute a majority of the Board of Directors of Kemper Securities, Inc.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ---------------------------------------------- ----------------------------------------------
<S> <C>
JAMES R. BORIS Chairman and Chief Executive Officer
- ----------------------------------------------
James R. Boris
DONALD F. ELLER Senior Executive Vice President and Director
- ----------------------------------------------
Donald F. Eller
STANLEY R. FALLIS Senior Executive Vice President, Chief
- ---------------------------------------------- Financial Officer and Director
Stanley R. Fallis
FRANK V. GEREMIA Senior Executive Vice President and Director
- ----------------------------------------------
Frank V. Geremia
DAVID B. MATHIS Director
- ----------------------------------------------
David B. Mathis
ROBERT T. JACKSON Director
- ----------------------------------------------
Robert T. Jackson
JAY B. WALTERS Senior Executive Vice President and Director
- ----------------------------------------------
Jay B. Walters
FREDERICK C. HOSKEN Senior Executive Vice President and Director
- ----------------------------------------------
Frederick C. Hosken
CHARLES M. KIERSCHT Director
- ----------------------------------------------
Charles M. Kierscht
ARTHUR J. McGIVERN Director
- ----------------------------------------------
Arthur J. McGivern
/s/ C. PERRY MOORE
----------------------------------------------
C. Perry Moore
</TABLE>
C. Perry Moore signs this document pursuant to Power of Attorney filed with the
Securities and Exchange Commission with (a) Amendment No. 1 to the Registration
Statement on Form S-6 for Kemper Tax-Exempt Insured Income Trust, Series A-70
and Multi-State Series 28 and Kemper Tax-Exempt Income Trust, Multi-State Series
42 (Registration No. 33-35425), and (b) Amendment No. 1 to the Registration
Statement on Form S-6 for Kemper Tax-Exempt Insured Income Trust, Series A-72
and Multi-State Series 30 (Registration No. 33-37178) and (c) Amendment No. 1 to
the Registration Statement on Form S-6 for Kemper Tax Exempt Insured Income
Trust, Multi-State Series 51 (Registration No. 33-48398).
S-3
<PAGE> 1
MEMORANDUM
KEMPER DEFINED FUNDS SERIES 15
The Prospectus and the Indenture filed with Amendment No. 1 of the
Registration Statement on Form S-6 have been revised to reflect information
regarding the deposit of securities on February 23, 1994, and to set forth
certain statistical data based thereon and certain minor corrections and
completions. An effort has been made to set forth below each of the changes
and also to reflect same in the marked counterparts of the Prospectus submitted
with the Amendment.
THE PROSPECTUS
Page 1. The date of the prospectus and series number has been changed.
Pages 2-3. The "Essential Information" section has been completed.
Page 12 The Portfolios have been completed.
Page 14. The Report of Independent Certified Public Accountants has been
completed.
Page 15. The Statements of Condition have been completed.
Back cover. The date and series number have been completed.
<PAGE> 1
Exhibit 1.1(a)
TRUST AGREEMENT
KEMPER DEFINED FUNDS SERIES 15
GNMA PORTFOLIO, SERIES 2 AND
GNMA PORTFOLIO, SERIES 3
This Trust Agreement dated as of February 23, 1994 between Kemper Unit
Investment Trusts, a service of Kemper Securities, Inc., as Depositor, and
Investors Fiduciary Trust Company, as Trustee, sets forth certain provisions in
full and incorporates other provisions by reference to the document entitled
"Kemper Government Securities Trust, GNMA Portfolio, Series 30 (Foreign
Investors Trust) and Subsequent Series of Foreign Investors Trust, Standard
Terms and Conditions of Trust, Effective February 14, 1989" (herein called the
"Standard Terms and Conditions of Trust"), and such provisions as are set forth
in full and such provisions as are incorporated by reference constitute a
single instrument.
WITNESSETH THAT:
In consideration of the premises and of the mutual agreements herein
contained, the Depositor and the Trustee agree as follows:
PART I
STANDARD TERMS AND CONDITIONS OF TRUST
Subject to the provisions of Part II hereof, all the provisions
contained in the Standard Terms and Conditions of Trust are herein incorporated
by reference in their entirety and shall be deemed to be a part of this
instrument as fully and to the same extent as though said provisions had been
set forth in full in this instrument.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
The following special terms and conditions are hereby agreed to:
A. The Securities deposited in the Trust pursuant to Section
2.01 of this Trust Agreement are set forth in the Schedule hereto.
B. The aggregate number of Units outstanding for GNMA
Portfolio, Series 2 and GNMA Portfolio, Series 3 on February 23, 1994
is 50,000 and 50,000, respectively. The initial fractional undivided
interest in and
<PAGE> 2
ownership of the Trusts represented by each Unit
thereof shall be 1/50,000 and 1/50,000, respectively. Documents
representing this number of Units for each Trust are being delivered
by the Trustee to the Depositor pursuant to Section 2.03 of this Trust
Agreement.
C. The Percentage Ratio required to be set forth by Section
1.02 of this Trust Agreement is as follows:
GNMA Portfolio, Series 2 - 70% of the aggregate
principal amount of the Trust is comprised of 7% coupon Ginnie
Maes maturing within a range of 2008 through 2009,15% of the
aggregate principal amount of the Trust is comprised of 9%
coupon Ginnie Maes maturing within a range of 2001 through 2003,
15% of the aggregate principal amount of the Trust is comprised of
0% coupon U.S. Treasury obligations maturing in May 15, 2003.
GNMA Portfolio, Series 3 - 90% of the aggregate
principal amount of the Trust is comprised of 7.5% coupon Ginnie
Maes maturing within a range of 2022 through 2024, 10% of the
aggregate principal amount of the Trust is comprised of 0% coupon
U.S. Treasury obligations maturing in November 15, 2004.
D. Distribution Dates for each GNMA Portfolio Series shall be
the 15th day of each month for each Unitholder of Record on the lst
day of the month, commencing with April 15, 1994.
E. Record Dates for each GNMA Portfolio Series shall be the
lst day of each month in each year, commencing with April 1, 1994.
F. The Discretionary Liquidation Amount for the Trust shall
be forty per centum (40%) of the face value of the Securities
deposited in the Trust pursuant to Section 2.01 of this Trust
Agreement.
G. The Mandatory Termination Date for the Trust shall be
December 31, 2027.
-2-
<PAGE> 3
H. The Evaluator's compensation as referred to in Section
4.03 of this Trust Agreement shall be an annual fee of $0.175 per
$1,000 principal amount of Securities in the Trust, payable monthly.
I. The Trustee's Compensation Rate pursuant to Section 6.04
of this Trust Agreement shall be an annual fee computed as $1.275 per
$1,000 Units payable monthly (including $0.875 of Trustees annual fee
per $1000 principal amount of underlying Securities); however, in no
event shall the Trustee receive compensation in any one year from the
Trust of less than $2,000 for such annual compensation.
J. The Initial Date of Deposit for the Trust is February 23,
1994.
K. The minimum principal amount of any Securities to be sold
by the Trustee pursuant to Section 5.02(d) of this Trust Agreement for
the redemption of Units shall be $25,000.
L. The Depositor's surveillance fee referred to in Section
3.16 of this Trust Agreement shall be an annual fee of $0.25 per
$1,000 principal amount of Securities for each Trust.
PART III
The Trustee will be required to advance out of its own funds and pay
to the Sponsor a sum equal to the accrued interest, if any, on each Security to
the First Settlement Date. The Trustee will be reimbursed for such
advancements out of the Trust, pursuant to Section 3.02 of this Trust
Agreement, from the income received on such Securities.
-3-
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement
to be duly executed.
KEMPER UNIT INVESTMENT TRUSTS,
A service of Kemper Securities, Inc.
Depositor
By C. Perry Moore
Attorney in Fact
INVESTORS FIDUCIARY TRUST COMPANY
Trustee
By Ron Puett
Operations Officer
<PAGE> 5
SCHEDULE TO TRUST AGREEMENT
SECURITIES INITIALLY DEPOSITED
KEMPER DEFINED FUNDS SERIES 15
GNMA PORTFOLIO, SERIES 2 AND
GNMA PORTFOLIO, SERIES 3
(Note: Incorporated herein and made a part hereof for the Fund is the
"Portfolio" for each Trust as set forth in the Prospectus.)
<PAGE> 1
Exhibit 3.1
CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
February 23, 1994
Kemper Unit Investment Trusts
77 West Wacker Drive, 5th Floor
Chicago, Illinois 60601
Re: Kemper Defined Funds Series 15
Gentlemen:
We have served as counsel for Kemper Unit Investment Trusts, a service
of Kemper Securities, Inc., as Sponsor and Depositor of Kemper Defined Funds
Series 15 (the "Fund") in connection with the preparation, execution and
delivery of the Trust Agreement dated the date of this opinion between Kemper
Unit Investment Trusts, as Depositor, and Investors Fiduciary Trust Company, as
Trustee, pursuant to which the Depositor has delivered to and deposited the
Securities listed in the Schedules to each Trust Agreement with the Trustee and
pursuant to which the Trustee has issued to or on the order of the Depositor
certificates representing Units of fractional undivided interest in and
ownership of each Trust in the Fund (hereinafter referred to as the "Units"),
created under said Trust Agreements.
In connection therewith we have examined such pertinent records and
documents and matters of law as we have deemed necessary in order to enable us
to express the opinions hereinafter set forth.
Based upon the foregoing, we are of the opinion that:
1. The execution and delivery of each Trust Agreement and the
execution and issuance of certificates evidencing the Units in each
Trust in the Fund have been duly authorized; and
2. The certificates evidencing the Units in each Trust in the
Fund, when duly executed and delivered by the Depositor and the
Trustee in accordance with the aforementioned Trust Agreements, will
constitute valid and binding obligations of such Trusts and the
Depositor in accordance with the terms thereof.
<PAGE> 2
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement (File No. 33-52239) relating to the Units referred to
above and to the use of our name and to the reference to our firm in said
Registration Statement and in the related Prospectus.
Respectfully submitted,
CHAPMAN AND CUTLER
<PAGE> 3
CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
February 23, 1994
Kemper Unit Investment Trusts
77 West Wacker Drive, 5th Floor
Chicago, Illinois 60601
Investors Fiduciary Trust Company
127 West 10th Street
Kansas City, Missouri 64105
Re: Kemper Defined Funds Series 15
GNMA Portfolio, Series 2 and GNMA Portfolio, Series 3
Gentlemen:
We have acted as counsel for Kemper Unit Investment Trusts, a service
of Kemper Securities, Inc., Depositor of Kemper Defined Funds Series 15, GNMA
Portfolio, Series 2 and GNMA Portfolio, Series 3 (the "Trusts"), in connection
with the issuance of Units of fractional undivided interest in the Trusts,
under a Trust Agreement, dated February 23, 1994 (the "Indenture"), between
Kemper Unit Investment Trusts, as Depositor, and Investors Fiduciary Trust
Company, as Trustee.
In this connection, we have examined the Registration Statement, the
form of Prospectus proposed to be filed with the Securities and Exchange
Commission, the Indenture and such other instruments and documents as we have
deemed pertinent.
The Trusts will contain Ginnie Maes and Stripped U.S. Treasury
Securities (collectively, the "Securities").
Based upon the foregoing and upon an investigation of such matters of
law as we consider to be applicable we are of the opinion that, under existing
Federal income tax law:
(i) Each Trust is not an association taxable as a
corporation but will be governed by the provisions of Subchapter J
(relating to Trusts) of Chapter 1, Internal Revenue Code of 1986 (the
"Code").
(ii) Each Unitholder will be considered the owner of a pro
rata portion of each Security in the respective Trust and will be
considered to have received the interest on his pro rata portion of
each Security when interest on such Security is received by the
respective Trust. Each Unitholder will also be required to include in
<PAGE> 4
taxable income for federal income tax purposes, original issue discount with
respect to his interest in any Security held by a Trust which was issued with
original issue discount at the same time and in the same manner as though the
Unitholder were the direct owner of such interest. Original issue discount
will be treated as zero with respect to the Securities if it is "de minimis"
within the meaning of Section 1273 of the Code and, based upon a Treasury
Regulation (the "Regulation") which was issued on December 28, 1992 regarding
the stripped bond rules of the Code, original issue discount with respect to a
Stripped Treasury Security will be treated as zero if it is "de minimis" as
determined thereunder.
(iii) Each Unitholder will be considered the owner of a pro rata
portion of each asset in the respective Trust. The total cost to a Unitholder
of his Units, including sales charges, is allocated among his pro rata portion
of each asset held by a Trust (in proportion to the fair market values thereof
on the date the Unitholder purchases Units) in order to determine his initial
tax basis for his pro rata portion of each asset held by a Trust. The Stripped
Treasury Securities are treated as bonds that were originally issued at an
original issue discount. Because the Stripped Treasury Securities represent
interests in "stripped" U.S. Treasury bonds, a Unitholder's initial cost for
his pro rata portion of each Stripped Treasury Security held by a Trust
(determined at the time he acquires his units, in the manner described above)
shall be treated as its "purchase price" by the Unitholder. Under the special
rules relating to stripped bonds, original issue discount applicable to the
Stripped Treasury Securities is effectively treated as interest for Federal
income tax purposes and the amount of original issue discount in this case is
generally the difference between the bond's purchase price and its stated
redemption price at maturity. A Unitholder will be required to include in
gross income for each taxable year the sum of his daily portions of original
issue discount attributable to the Stripped Treasury Securities held by the
Trusts 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 greater than or equal
to the "de minimis" amount described above. 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 Stripped Treasury Securities
this method will generally result in an increasing amount of income to the
Unitholders each year. A Unitholder's tax basis for his pro rata portion of
each asset held by a Trust may be subject to adjustment as discussed in
paragraph (v) hereof.
(iv) The Unitholder's aliquot share of the total proceeds received
on the disposition, of, or principal paid with respect to a Security held by a
Trust will constitute ordinary income (which will be treated as interest income
for most purposes) to the extent it does not exceed the accrued market discount
on such Security issued after July 18, 1984 that has not previously been
included in taxable
<PAGE> 5
income by such Unitholder. A Unitholder may generally elect to include
market discount in income as such discount accrues. In general, market
discount is the excess, if any, of the Unitholder's pro rata portion of the
outstanding principal balance of a Security over the Unitholder's initial tax
cost for such pro rata portion, determined at the time such Unitholder acquires
his Units. However, market discount with respect to any Security will
generally be considered zero if it amounts to less than 0.25% of the
obligation's stated redemption price at maturity times the number of years to
maturity. The market discount rules do not apply to Stripped Treasury
Securities because they are stripped debt instruments subject to special
original issue discount rules as discussed above. If a Unitholder sells his
Units, gain, if any, will constitute ordinary income to the extent of the
aggregate of the accrued market discount on the Unitholder's pro rata portion
of each Security issued after July 18, 1984 that is held by the Trusts that has
not previously been included in taxable income by such Unitholder. In general,
market discount accrues on a ratable basis unless the Unitholder elects to
accrue such discount on a constant interest rate basis. However, no opinion is
expressed herein regarding the precise manner in which market discount accrues.
The deduction by a Unitholder for any interest expense incurred to purchase or
carry Units will be reduced by the amount of any accrued market discount that
has not yet been included in taxable income by such Unitholder. In general,
the portion of any interest expense which is not currently deducible would be
ultimately deductible when the accrued market discount is included in income.
(v) As discussed in paragraph (iv) hereof, if a Unitholder sells
his Units, gain, if any, will constitute ordinary income to the extent of the
aggregate of the accrued market discount (which has not previously been
included in such Unitholder's taxable income) with respect to the Unitholder's
pro rata portion of each Security held by a Trust. Any other gains (or losses)
will be capital gains (or losses) except in the case of a dealer or a financial
institution, and will be long-term if the Unitholder has held his Units for
more than one year. A Unitholder will recognize taxable gains (or losses) (a)
upon redemption or sale of his Units, (b) if the Trustee disposes of an asset
or (c) upon receipt by the Trustee of payments of principal on the Securities.
The amount of any such gain (or loss) is measured by comparing the Unitholder's
pro rata share of the total proceeds from the transaction with his adjusted tax
basis in his Units or his pro rata interest in the asset as the case may be,
and then reducing such gain, if any, to the extent characterized as ordinary
income resulting from accrued market discount as discussed above. A
Unitholder's tax basis in his Units and his pro rata portion of each of the
underlying assets of a Trust may be adjusted to reflect the accrual of market
discount (if the Unitholder has elected to include such discount in income as
it accrues), original issue discount and amortized bond premium, if any. The
tax cost reduction requirements of said Code relating to amortization of bond
premium may, under some circumstances, result in the Unitholder realizing a
taxable gain when his Units are sold or redeemed for an amount equal to his
original cost. In addition, Unitholders must reduce the tax basis of their
Units and their pro rata portion of the underlying assets of a Trust for their
share of accrued interest received
<PAGE> 6
by a Trust, if any, on Securities delivered after the Unitholders pay for their
Units to the extent that such interest accrued on such Securities during the
period from the Unitholder's settlement date to the date such Securities are
delivered to a Trust and, consequently, such Unitholders may have an increase
in taxable gain or reduction in capital loss upon the disposition of such Units
or such Securities.
(vi) The Code provides that "miscellaneous itemized deductions" are
allowable only to the extent that they exceed two percent of an individual
taxpayer's adjusted gross income. Miscellaneous itemized deductions subject to
this limitation under present law include a Unitholder's pro rata share of
expenses paid by a Trust, including fees of the Trustee and the Evaluator but
does not include amortizable bond premium on Securities held by the Trusts.
(vii) A Unitholder who is not a citizen or resident of the United
States or a United States domestic corporation (a "Foreign Unitholder") will
generally not be subject to United States Federal income taxes, including
withholding taxes on the interest income on, or any gain from the sale or
disposition of, his Units or the sale or disposition of a Security by the
Trustee, provided that (i) the interest income or gain is not effectively
connected with the conduct by the Foreign Unitholder of a trade or business
within the United States, (ii) with respect to any gain, the Foreign Unitholder
(if an individual) is not present in the United States for 183 days or more
during the taxable year, and (iii) the Foreign Unitholder provides the required
certification of his status and of the matters contained in clauses (i) and
(ii) above, and further provided that the exemption from United States Federal
income taxes, including withholding taxes, for interest on any Ginnie Mae shall
only apply to the extent the mortgages underlying the Ginnie Mae originated
after July 18, 1984 and for interest on any Stripped Treasury Security issued
after July 18, 1984.
(viii) Interest income received by a Trust is subject to withholding
taxes under Section 1441 of the Code prior to distribution of such interest
income to each Unitholder unless the Unitholder provides his financial
representative or the Trustee with a statement that (i) is signed by the
Foreign Unitholder under penalties of perjury, (ii) certifies that such Foreign
Unitholder is not a United States person, or in the case of an individual, that
he is neither a citizen nor a resident of the United States, and (iii) provides
the name and address of the Foreign Unitholder, and further provided that the
mortgages underlying the Ginnie Mae originated after July 18, 1984 and the
Stripped Treasury Security was issued after July 18, 1984. In addition,
amounts that are subject to Form 1099-B reporting pursuant to Section 6045 of
the Code will be subject to backup withholding under Section 3406 of the Code
prior to distribution of such amounts to each Foreign Unitholder unless the
Unitholder, in addition to the statements provided in the immediately preceding
sentence, also certifies that (i) if an individual, he has not been and does
not intend to be present in the United States for 183 days or more during the
calendar year and (ii) in the case of both individuals and non-individual
Foreign Unitholders, gains, if any, from
<PAGE> 7
ownership of Units are not effectively connected with the conduct by the
Foreign Unitholder of a United States trade or business. The statements may be
made, at the option of the person otherwise required to withhold, on a Form W-8
or on a substitute form that is substantially similar to Form W-8. The
statements must be prepared, renewed and retained in accordance with the
procedures prescribed in Section 1.6049-5(b)(2)(iv) and Section 1.6045-1(g)(1).
If the information provided on the statement changes, the beneficial owner must
so inform the person otherwise required to withhold within 30 days of such
change. The United States person otherwise required to deduct and withhold tax
under Section 1441 who receives such statements must make an information return
on Form 1042S of the payment with respect to which each such statement is
required for the calendar year in which the payment is made. Any tax withheld
under Section 3406 of the Code is subject to general procedures for
withholding, deposit, payment and reporting applicable to wages.
For taxable years beginning after December 31, 1986 and before January
1, 1996, certain corporations may be subject to the environmental tax (the
"Superfund Tax") imposed by Section 59A of the Code. Interest received from,
and gains recognized from the disposition of, a Security by the Trusts or the
sale of Units by a Unitholder will be included by such corporations in the
computation of the Superfund Tax.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement (File No. 33-52239) relating to the Units referred to
above and to the use of our name and to the reference to our firm in said
Registration Statement and in the related Prospectus.
Very truly yours,
CHAPMAN AND CUTLER
<PAGE> 1
Exhibit 4.1
[Standard & Poor's Corporation logo]
Municipal Finance Department
February 23, 1994
Mr. Michael J. Thoms
Vice President
Kemper Unit Investment Trusts
77 West Wacker Drive
5th Floor
Chicago, Illinois 60601-1994
RE: Kemper Defined Funds Series 15 GNMA Portfolio, Series 2 and GNMA Portfolio,
Series 3 (SEC Reg. #33-52239)
Dear Mr. Thoms:
Pursuant to your request for a Standard & Poor's rating on the units of
the above captioned trust, we have reviewed the information presented to us and
have assigned an "AAA" rating to the units in the trust. The rating is a direct
reflection of the portfolio of the trust, which will be composed solely of
mortgage-backed securities fully guaranteed as to principal and interest by the
Government National Mortgage Association (GNMA) and the full faith and credit
of the United States is pledged to the payment of the securities in the trust.
You have permission to use the name of Standard & Poor's Corporation
and the above-assigned rating in connection with your dissemination of
information relating to these units, provided that it is understood that the
rating is not a "market" rating nor a recommendation to buy, hold, or sell the
units of the trust. Further, it should be understood the rating does not take
into account the extent to which fund expenses or portfolio asset sales for
less than the fund's purchase price will reduce payment to the unit holders of
the interest and principal required to be paid on the portfolio assets. S&P
reserves the right to advise its own clients, subscribers, and the public of
the rating. S&P relies on the sponsor and its counsel, accountants, and other
experts for the accuracy and completeness of the information submitted in
connection with the rating. S&P does not independently verify the truth or
accuracy of any such information.
This letter evidences our consent to the use of the name of Standard &
Poor's Corporation and the above-assigned rating in the registration statement
or prospectus relating to the units or the trust. However, this letter should
not be construed as a consent by us, within the meaning of Section 7 of the
Securities Act of 1933, to the use of the name of Standard & Poor's Corporation
in connection with the ratings assigned to the securities contained in the
trust. You are hereby authorized to file a copy of this letter with the
Securities and Exchange Commission.
Please be certain to send us three copies of your final prospectus as
soon as it becomes available. Should we not receive them within a reasonable
time after the closing or should they not conform to the representations made
to us, we reserve the right to withdraw the rating.
We are pleased to have had the opportunity to be of service to you. Our
bill will be sent to you within one month. If we can be of further help, please
do not hesitate to call upon us.
Sincerely,
Standard & Poor's Corporation
VAT:jmm
<PAGE> 1
EXHIBIT 4.2
[MULLER DATA LOGO]
Kemper Capital Markets, Inc.
Unit Investment Trusts
77 West Wacker Drive - 5th Floor
Chicago, Illinois 60601-1994
RE: Kemper Defined Funds GNMA Portfolio Series 2
Kemper Defined Funds GNMA Portfolio Series 3
Gentlemen:
We have examined Registration Statement File No. 33-52239 for the above
captioned trust. We hereby acknowledge that Muller Data Corporation is
currently acting as the evaluator for the trust. We hereby consent to the use
in the Registration Statement of the reference to Muller Data Corporation as
evaluator.
In addition, we hereby confirm that the ratings indicated in the Registration
Statement for the respective bonds comprising the trust portfolio are the
ratings indicated in our Muniview data base as of the date of the Evaluation
Report.
You are hereby authorized to file a copy of this letter with the Securities and
Exchange Commission.
Sincerely
[SIG]
Neil Edelstein
Executive Vice President
[Letterhead/Logo]
<PAGE> 1
EXHIBIT 4.3
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS' CONSENT
We have issued our report dated February 23, 1994 on the statements of
condition and related bond portfolios of Kemper Defined Funds Series 15, (GNMA
Portfolio, Series 2 and GNMA Portfolio, Series 3) as of February 23, 1994
contained in the Registration Statement on Form S-6 and in the Prospectus. We
consent to the use of our report in the Registration Statement and in the
Prospectus and to the use of our name as it appears under the caption
"Independent Certified Public Accountants".
GRANT THORNTON
Chicago, Illinois
February 23, 1994
