File No. 33-52467 CIK #910744
Securities and Exchange CommissionWashington, D. C. 20549
Post-Effective
Amendment No. 1
to
Form S-6
For Registration under the Securities Act of 1933
of Securities of Unit Investment Trusts Registered
on Form N-8B-2
Kemper Defined Funds Series 17
Name and executive office address of Depositor:
Kemper Unit Investment Trusts
(a service of Kemper Securities, Inc.)
77 West Wacker - 29th Floor
Chicago, Illinois 60601
Name and complete address of agent for service:
Robert K. Burke
77 West Wacker - 29th Floor
Chicago, Illinois 60601
( X ) Check box if it is proposed that this filing will
become effective at 2:00 p.m. on April 28, 1995
pursuant to paragraph (b) of Rule 485.
Kemper Defined Funds Corporate Income Series
Kemper Defined Funds Corporate Income Series was formed
for the purpose of providing a high level of current income
through investment in a fixed portfolio consisting primarily of
high yield, high risk corporate debt obligations issued after
July 18, 1984. Certain Series of the Trust may also contain
high yield, high risk dollar denominated foreign corporate debt
obligations if interest thereon is U.S. source income,
sovereign debt obligations or zero coupon U.S. Treasury
obligations. Most of the securities included in the Trust are
commonly known as "junk bonds" and are subject to greater
market fluctuations and potential risk of loss of income and
principal than are investments in lower-yielding, higher rated
fixed income securities. The securities included in each Trust
should be viewed as speculative and an investor should review
his ability to assume the risks associated with speculative
corporate bonds. The payment of income is dependent upon the
continuing ability of the issuers and/or obligors to meet their
respective obligations. See "Trust Portfolio_Risk Factors."
Units of the Trusts 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.
For foreign investors who are not United States citizens
or residents, interest income from a Trust may not be subject
to federal withholding taxes if certain conditions are met.
See "Federal Tax Status."
Sponsor: Kemper Unit Investment Trustsa service of Kemper
Securities, Inc.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This Prospectus is in two parts. The investor is advised to
read and retain both parts of this Prospectus for future
reference.
The date of this Part One Prospectusis that date which is set
forth in Part Two of the Prospectus.
.c.Summary
Public Offering Price. The Public Offering Price per Unit
will be based upon a pro rata share of the bid prices of the
Bonds in a Trust plus or minus a pro rata share of (a) cash, if
any, in the Principal Account held or owned by such Trust
(b) Purchased Interest and (c) Daily Accrued Interest plus the
applicable sales charge. For sales charges, see "Public
Offering of Units_Public Offering Price." The sales charge is
reduced on a graduated scale as set forth under "Public
Offering of Units_Public Offering Price."
Interest and Principal Distributions. Distributions of
the estimated annual interest income to be received by a Trust,
after deduction of estimated expenses, will be made monthly.
See "Unitholders_Distributions to Unitholders" and "Essential
Information" in Part Two of this Prospectus Distributions of
funds, if any, in the Principal Account will be made as
provided in "Unitholders_Distributions to Unitholders."
Reinvestment. Each Unitholder may elect to have
distributions of principal or interest or both automatically
invested without charge in shares of certain Kemper mutual
funds. See "Distribution Reinvestment."
Estimated Long-Term Return and Estimated Current Return.
The Estimated Current Return is calculated by dividing the
estimated net annual interest income per Unit by the Public
Offering Price. The estimated net annual interest income per
Unit will vary with changes in fees and expenses of the
Trustee, Sponsor and Evaluator and with the principal
prepayment, redemption, maturity, exchange or sale of Bonds
while the Public Offering Price will vary with changes in the
offering price of the underlying Bonds and with changes in the
Purchased Interest and Daily Accrued Interest; therefore, there
is no assurance that the present Estimated Current Returns 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 take into account the amortization
of premiums and the accretion of discounts) and estimated
retirement dates of all of the Bonds in a Trust and (2) takes
into account the expenses and sales charge associated with each
Unit. Since the market values and estimated retirement dates
of the Bonds and the expenses of the Trust will change, there
is no assurance that the present Estimated Long-Term Return
will be realized in the future. The Estimated Current Return
and Estimated Long-Term Return are expected to differ because
the calculation of Estimated Long-Term Return reflects the
estimated date and amount of principal returned while Estimated
Current Return calculations include only net annual interest
income and Public Offering Price.
Market for Units. While under no obligation to do so, the
Sponsor intends to 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 Bonds in a Trust Fund plus Purchased Interest and Daily
Accrued Interest.
Special Portfolio Risk Considerations. Each Trust is
comprised primarily of securities rated below investment grade
by Standard & Poor's Ratings Group, Moody's Investors Service,
Inc. or Duff & Phelps Credit Rating Co., which securities are
commonly referred to as "junk bonds." In addition, certain of
the securities in certain of the Trusts may be obligations of
foreign issuers. For special risks associated with the Trusts,
see "Trust Portfolios _ Risk Factors."
.c.The Trust Funds
Each Series of the Trust is a unit investment trust
created by the Sponsor under the name Kemper Defined Funds
Corporate Income Series (the "Trusts" or "Trust Funds," and
each a "Trust"), all of which are similar, and each of which
was created under the laws of the State of Missouri pursuant to
a trust indenture (the "Trust Agreement") between Kemper Unit
Investment Trusts, a service of Kemper Securities, Inc. (the
"Sponsor"), and Investors Fiduciary Trust Company (the
"Trustee").*
Each Trust was formed for the purpose of providing a high
level of current income through investment in a fixed portfolio
consisting primarily of high yield, high risk corporate debt
obligations issued after July 18, 1984. Certain Series of the
Trusts may also contain high yield, high risk dollar
denominated foreign corporate debt obligations, sovereign debt
obligations or zero coupon U.S. Treasury obligations
(collectively, the "Obligations" or "Bonds"). There is, of
course, no guarantee that a Trust Fund's objective will be
achieved.
A Trust Fund may be an appropriate investment vehicle for
investors who desire to participate in a portfolio of
intermediate term taxable fixed income securities issued
primarily by corporate obligors with greater diversification
than investors might be able to acquire individually.
Diversification of the Trust assets will not eliminate the risk
of loss always inherent in the ownership of securities. In
addition, Bonds of the type deposited in the Trust Funds often
are not available in small amounts.
Each Unit offered represents that undivided interest in
the Trust involved as indicated under "Essential Information"
in Part Two of this Prospectus. To the extent that any Units
are redeemed by the Trustee, the fractional undivided interest
in such Trust represented by each unredeemed Unit will increase
or decrease accordingly, although the actual interest in such
Trust represented by such fraction will remain unchanged.
Units will remain outstanding until redeemed upon tender to the
Trustee by Unitholders, which may include the Sponsor, or until
the termination of the Trust Agreement.
An investment in Units should be made with an
understanding of the risks which an investment in fixed rate
debt obligations may entail, including the risk that the value
of the portfolio and hence of the Units will decline with
increases in interest rates. The value of the underlying Bonds
will fluctuate inversely with changes in interest rates. The
uncertain economic conditions of recent years, together with
the fiscal measures adopted to attempt to deal with them, have
resulted in wide fluctuations in interest rates and, thus, in
the value of fixed rate debt obligations generally. The
Sponsor cannot predict the degree to which such fluctuations
will continue in the future. Each Trust is comprised primarily
of securities rated below investment grade by Standard & Poor's
Ratings Group, Moody's Investor Service, Inc., or Duff & Phelps
Credit Rating Co., which securities are commonly referred to as
"junk bonds." For special risks associated with such
securities, see "Trust Portfolio_Risk Factors."
.c.Compensation for Foreign Withholding Tax
Certain of the Bonds in certain Series of the Trusts are
subject to non-U.S. ("foreign") withholding taxes. Certain
issuers of Bonds which are subject to foreign withholding taxes
have generally agreed, subject to certain exceptions, to make
additional payments ("Additional Payments") which together with
other payments are intended to compensate the holder of the
Bond for the imposition of certain withholding taxes. However,
both the calculation of the Additional Payment and whether the
Additional Payment compensates the holder of the Bond for any
related penalties, interest or other charges imposed in
connection with any applicable foreign withholding taxes are
likely to differ from Bond to Bond. Moreover, the Additional
Payment is itself treated as taxable income to Unitholders for
U.S. income tax purposes. The Additional Payment may not be
based upon a "gross-up" formula which would otherwise
compensate an investor for the tax liability triggered by the
receipt of the Additional Payment. For any of these reasons,
an investor may not be adequately compensated for the actual
foreign withholding tax liabilities incurred. If a Trust
obtains a certificate from an issuer evidencing payment of
foreign withholding taxes with respect to a Bond, the Trust
will so notify Unitholders. A Unitholder is required to
include in his gross income the entire amount of interest paid
on his pro rata portion of the Bond including the amount of tax
withheld therefrom and the amount of any Additional Payment.
However, if the foreign tax withheld constitutes an income tax
for which U.S. foreign tax credits may be taken, the Unitholder
may be able to obtain applicable foreign tax credits (subject
to statutory limitations) or deductions. See "Federal Tax
Status."
.c.Federal Tax Status
In the opinion of Chapman and Cutler, special counsel for
the Sponsor, under existing law:
1. Each Series of the Trust is not an association
taxable as a corporation for Federal income tax purposes.
2. Each Unitholder will be considered the owner of a
pro rata portion of each of a Trust's assets for Federal
income tax purposes under Subpart E, Subchapter J of
Chapter 1 of the Internal Revenue Code of 1986 (the
"Code"). Each Unitholder will be considered to have
received his pro rata share of income derived from each
Trust asset when such income is received by a Trust. Each
Unitholder will also be required to include in taxable
income for Federal income tax purposes, original issue
discount with respect to his interest in any Bonds held by
a Trust at the same time and in the same manner as though
the Unitholder were the direct owner of such interest.
3. Each Unitholder will have a taxable event when a
Bond is disposed of (whether by sale, exchange,
redemption, or payment at maturity) or when the Unitholder
redeems or sells his Units. The cost of the Units to a
Unitholder on the date such Units are purchased is
allocated among the Bonds held in a Trust (in accordance
with the proportion of the fair market values of such
Bonds) in order to determine his tax basis for his pro
rata portion in each Bond. Unitholders must reduce the
tax basis of their Units for their share of accrued
interest received, if any, on Bonds delivered after the
date the Unitholders pay for their Units and,
consequently, such Unitholders may have an increase in
taxable gain or reduction in capital loss upon the
disposition of such Units. Gain or loss upon the sale or
redemption of Units is measured by comparing the proceeds
of such sale or redemption with the adjusted basis of the
Units. If the Trustee disposes of Bonds, gain or loss is
recognized to the Unitholder. The amount of any such gain
or loss is measured by comparing the Unitholders pro rata
share of the total proceeds from such disposition with his
basis for his fractional interest in the asset disposed
of. The basis of each Unit and of each Bond which was
issued with original issue discount (including any U.S.
Treasury obligations) must be increased by the amount of
accrued original issue discount and the basis of each Unit
and of each Bond which was purchased by a Trust at a
premium must be reduced by the annual amortization of bond
premium which the Unitholder has properly elected to
amortize under Section 171 of the Code. The tax cost
reduction requirements of the Code relating to
amortization of bond premium may, under some
circumstances, result in the Unitholder realizing a
taxable gain when his Units are sold or redeemed for an
amount equal to or less than his original cost. The U.S.
Treasury obligations held by a Trust, if any, are treated
as bonds that were originally issued at an original issue
discount provided, pursuant to a Treasury Regulation (the
"Regulation") issued on December 28, 1992, that the amount
of original issue discount determined under Section 1286
of the Code is not less than a "de minimis" amount as
determined thereunder (as discussed below under "Original
Issue Discount"). Because U.S. Treasury obligations
represent interests in "stripped" U.S. Treasury bonds, a
Unitholder's initial cost for his pro rata portion of each
U.S. Treasury obligation held by a Trust (determined at
the time he acquires his Units, in the manner described
above) shall be treated as its "purchase price" by the
Unitholder. Original issue discount is effectively
treated as interest for Federal income tax purposes, and
the amount of original issue discount in this case is
generally the difference between the Bond's purchase price
and its stated redemption price at maturity. A Unitholder
will be required to include in gross income for each
taxable year the sum of his daily portions of original
issue discount attributable to the U.S. Treasury
obligations held by a Trust as such original issue
discount accrues and will, in general, be subject to
Federal income tax with respect to the total amount of
such original issue discount that accrues for such year
even though the income is not distributed to the
Unitholders during such year to the extent it is not less
than a "de minimis" amount as determined under the
Regulation. In general, original issue discount accrues
daily under a constant interest rate method which takes
into account the semi-annual compounding of accrued
interest. In the case of U.S Treasury obligations, this
method will generally result in an increasing amount of
income to the Unitholders each year. Unitholders should
consult their tax advisers regarding the Federal income
tax consequences and accretion of original issue discount.
Limitations on Deductibility of Trust Expenses by
Unitholders. Each Unitholder's pro rata share of each expense
paid by a Trust is deductible by the Unitholder to the same
extent as though the expense had been paid directly by him,
subject to the following limitation. It should be noted that
as a result of the Tax Reform Act of 1986 (the "Act"), certain
miscellaneous itemized deductions, such as investment expenses,
tax return preparation fees and employee business expenses will
be deductible by an individual only to the extent they exceed
2% of such individual's adjusted gross income. Temporary
regulations have been issued which require Unitholders to treat
certain expenses of a Trust as miscellaneous itemized
deductions subject to this limitation.
Acquisition Premium. If a Unitholder's tax basis of his
pro rata portion in any Bonds held by a Trust exceeds the
amount payable by the issuer of the Bond with respect to such
pro rata interest upon the maturity of the Bond, such excess
would be considered "acquisition premium" which may be
amortized by the Unitholder at the Unitholder's election as
provided in Section 171 of the Code. Unitholders should
consult their tax advisors regarding whether such election
should be made and the manner of amortizing acquisition
premium.
Original Issue Discount. Certain of the Bonds in each
Trust may have been acquired with "original issue discount."
In the case of any Bonds in a Trust acquired with "original
issue discount" that exceeds a "de minimis" amount as specified
in the Code, such discount is includable in taxable income of
the Unitholders on an accrual basis computed daily, without
regard to when payments of interest on such Bonds are received.
The Code provides a complex set of rules regarding the accrual
of original issue discount. These rules provide that original
issue discount generally accrues on the basis of a constant
compound interest rate over the term of the Bonds. Unitholders
should consult their tax advisers as in the amount of original
issue discount which accrues.
Special original issue discount rules apply if the
purchase price of the Bond by a Trust exceeds its original
issue price plus the amount of original issue discount which
would have previously accrued based upon its issue price (its
"adjusted issue price"). Similarly these special rules would
apply to a Unitholder if the tax basis of his pro rata portion
of a Bond issued with original issue discount exceeds his pro
rata portion of its adjusted issue price. Unitholders should
also consult their tax advisers regarding these special rules.
It is possible that a Corporate Bond that has been issued
at an original issue discount may be characterized as a
"high-yield discount obligation" within the meaning of
Section 163(e)(5) of the Code. To the extent that such an
obligation is issued at a yield in excess of six percentage
points over the applicable Federal rate, a portion of the
original issue discount on such obligation will be
characterized as a distribution on stock (e.g., dividends) for
purposes of the dividends received deduction which is available
to certain corporations with respect to certain dividends
received by such corporation.
Market Discount. If a Unitholder's tax basis in his pro
rata portion of Bonds is less than the allocable portion of
such Bond's stated redemption price at maturity (or, if issued
with original issue discount, the allocable portion of its
"revised issue price"), such difference will constitute market
discount unless the amount of market discount is "de minimis"
as specified in the Code. Market discount accrues daily
computed on a straight line basis, unless the Unitholder elects
to calculate accrued market discount under a constant yield
method. Unitholders should consult their tax advisors as to
the amount of market discount which accrues.
Accrued market discount is generally includable in taxable
income to the Unitholders as ordinary income for Federal tax
purposes upon the receipt of serial principal payments on the
Bonds, on the sale, maturity or disposition of such Bonds by a
Trust, and on the sale by a Unitholder of Units, unless a
Unitholder elects to include the accrued market discount in
taxable income as such discount accrues. If a Unitholder does
not elect to annually include accrued market discount in
taxable income as it accrues, deductions for any interest
expense incurred by the Unitholder which is incurred to
purchase or carry his Units will be reduced by such accrued
market discount. In general, the portion of any interest
expense which was not currently deductible would ultimately be
deductible when the accrued market discount is included in
income. Unitholders should consult their tax advisers
regarding whether an election should be made to include market
discount in income as it accrues and as to the amount of
interest expense which may not be currently deductible.
Computation of the Unitholder's Tax Basis. The tax basis
of a Unitholder with respect to his interest in a Bond is
increased by the amount of original issue discount (and market
discount, if the Unitholder elects to include market discount,
if any, on the Bonds held by a Trust in income as it accrues)
thereon properly included in the Unitholder's gross income as
determined for Federal income tax purposes and reduced by the
amount of any amortized acquisition premium which the
Unitholder has properly elected to amortize under Section 171
of the Code. A Unitholder's tax basis in his Units will equal
his tax basis in his pro rata portion of all of the assets of
the Trust.
Recognition of Taxable Gain or Loss Upon Disposition of
Obligations by a Trust or Disposition of Units. A Unitholder
will recognize taxable capital gain (or loss) when all or part
of his pro rata interest in a Bond is disposed of in a taxable
transaction for an amount greater (or less) than his tax basis
therefor. Any gain recognized on a sale or exchange and not
constituting a realization of accrued "market discount," and
any loss will, under current taw, generally be capital gain or
loss except in the case of a dealer or financial institution.
As previously discussed, gain realized on the disposition of
the interest of a Unitholder in any Bond deemed to have been
acquired with market discount will be treated as ordinary
income to the extent the gain does not exceed the amount of
accrued market discount not previously taken into income. Any
capital gain or loss arising from the disposition of a Bond by
a Trust or the disposition of Units by a Unitholder wilt be
short-term capital gain or loss unless the Unitholder has held
his Units for more than one year in which case such capital
gain or loss will be long-term. For taxpayers other than
corporations, net capital gains are subject to a maximum
marginal stated tax rate of 28 percent. However, it should be
noted that legislative proposals are introduced from time to
time that affect tax rates and could affect relative
differences at which ordinary income and capital gains are
taxed. The tax cost reduction requirements of the Code
relating to amortization of bond premium may under some
circumstances, result in the Unitholder realizing taxable gain
when his Units are sold or redeemed for an amount equal to or
less than his original cost.
If the Unitholder disposes of a Unit, he is deemed thereby
to have disposed of his entire pro rata interest in all Trust
assets including his pro rata portion of all of the Bonds
represented by the Unit. This may result in a portion of the
gain, if any, on such sale being taxable as ordinary income
under the market discount rules (assuming no election was made
by the Unitholder to include market discount in income as it
accrues) as previously discussed.
"The Revenue Reconciliation Act of 1993" (the "Tax Act")
raised tax rates on ordinary income while capital gains remain
subject to a 28 percent 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.
Foreign Investors. A Unitholder who is a foreign investor
(i.e., an investor other than a U.S. citizen or resident or a
U.S. corporation, partnership, estate or trust) will generally
not be subject to United States federal income taxes, including
withholding taxes, on interest income (including any original
issue discount) on, or any gain from the sale or other
disposition of, his pro rata interest in any Bond or the sale
of his Units provided that all of the following conditions are
met: (i) the interest income or gain is not effectively
connected with the conduct by the foreign investor of a trade
or business within the United States, (ii) either the interest
is United States source income (which is the case for most
securities issued by United States issuers), the Bond is issued
after July 18, 1984 (which is the case for each Bond held by a
Trust), the foreign investor does not own, directly or
indirectly, 10% or more of the total combined voting power of
all classes of voting stock of the issuer of the Bond and the
foreign investor is not a controlled foreign corporation
related (within the meaning of Section 864(d)(4) of the Code)
to the issuer of the Bond, or the interest income is not from
sources within the United States, (iii) with respect to any
gain, the foreign investor (if an individual) is not present in
the United States for 183 days or more during his or her
taxable year, and (iv) the foreign investor provides all
certification which may be required of his status. Foreign
investors should consult their tax advisers with respect to
United States tax consequences of ownership of Units.
It should be noted that the Tax Act includes a provision
which eliminates the exemption from United States taxation,
including withholding taxes, for certain "contingent interest."
The provision applies to interest received after December 31,
1993. No opinion is expressed herein regarding the potential
applicability of this provision and whether United States
taxation or withholding taxes could be imposed with respect to
income derived from the Units as a result thereof. Unitholders
and prospective investors should consult with their tax
advisers regarding the potential effect of this provision on
their investment in Units.
General. Each Unitholder (other than a foreign investor
who has properly provided the certifications described in the
preceding paragraph) will be requested to provide the
Unitholder's taxpayer identification number to the Trustee and
to certify that the Unitholder has not been notified that
payments to the Unitholder are subject to back-up withholding.
If the proper taxpayer identification number and appropriate
certification are not provided when requested, distributions by
a Trust to such Unitholder will be subject to back-up
withholding.
The foregoing discussion relates only to United States
Federal income taxes; Unitholders may be subject to state and
local taxation in other jurisdictions (including a foreign
investor's country of residence). Unitholders should consult
their tax advisers regarding potential state, local, or foreign
taxation with respect to the Units.
.c.Trust Portfolios
.c.Portfolio Selection
The selection of Bonds for each Series of a Trust was
based largely upon the experience and judgment of the Sponsor.
In making such selections the Sponsor considered the following
factors: (a) the price of the Bonds relative to other issues
of similar quality and maturity; (b) the present rating and
credit quality of the issuers of the Bonds and the potential
improvement in the credit quality of such issuers; (c) the
diversification of the Bonds as to location of issuer; (d) the
income to the Unitholders of a Trust; (e) whether the Bonds
were issued after July 18, 1984; and (f) the stated maturity of
the Bonds.
As of the Initial Date of Deposit for each Series, all of
the Bonds in a Trust were rated "Ba" or better by Moody's
Investors Service, Inc. or "BB" or better by Standard & Poor's
Ratings Group or Duff & Phelps Credit Rating Co. See
"Description of Ratings" and "Portfolio" in Part Two of this
Prospectus. Subsequent to the Initial Date of Deposit, a Bond
may cease to be so rated. If this should occur, a Trust would
not be required to eliminate the Bond from the Trust, but such
event may be considered in the Sponsor's determination to
direct the Trustee to dispose of such investment. See
"Investment Supervision."
.c.Risk Factors
General. An investment in Units of a Trust should be made
with an understanding of the risks that an investment in "high
yield," high risk, fixed rate, foreign and domestic corporate
debt obligations or "junk bonds" may entail, including
increased credit risks and the risk that the value of the Units
will decline, and may decline precipitously, with increases in
interest rates. In recent years there have been wide
fluctuations in interest rates and thus in the value of
fixed-rate, debt obligations generally. Securities such as
those included in each Trust are, under most circumstances,
subject to greater market fluctuations and risk of loss of
income and principal than are investments in lower-yielding,
higher rated securities, and their value may decline
precipitously because of increases in interest rates not only
because the increases in rates generally decrease values but
also because increased rates may indicate a slowdown in the
economy and a decrease in the value of assets generally that
may adversely affect the credit of issuers of high yield, high
risk securities resulting in a higher incidence of defaults
among high yield, high risk securities. A slowdown in the
economy, or a development adversely affecting an issuer's
creditworthiness, may result in the issuer being unable to
maintain earnings or sell assets at the rate and at the prices,
respectively, that are required to produce sufficient cash flow
to meet its interest and principal requirements. For an issuer
that has outstanding both senior commercial bank debt and
subordinated high yield, high risk securities, an increase in
interest rates will increase that issuer's interest expense
insofar as the interest rate on the bank debt is fluctuating.
However, many leveraged issuers enter into interest rate
protection agreements to fix or cap the interest rate on a
large portion of their bank debt. This reduces exposure to
increasing rates but reduces the benefit to the issuer of
declining rates. The Sponsor cannot predict future economic
policies or their consequences or, therefore, the course or
extent of any similar market fluctuations in the future. The
portfolios consist of Obligations that, in many cases, do not
have the benefit of covenants that would prevent the issuer
from engaging in capital restructurings or borrowing
transactions in connection with corporate acquisitions,
leveraged buy outs or restructurings that could have the effect
of reducing the ability of the issuer to meet its obligations
and might result in the ratings of the Obligations and the
value of the underlying portfolio being reduced.
The Obligations in each Trust consist of "high yield, high
risk" foreign and domestic corporate bonds and foreign
sovereign debt obligations. "High yield" or "junk" bonds, the
generic names for corporate bonds rated below BBB by Standard &
Poor's Ratings Group or Duff & Phelps Credit Rating Co. or
below Baa by Moody's Investor Service, Inc., are frequently
issued by corporations in the growth stage of their
development, by established companies whose operations or
industries are depressed or by highly leveraged companies
purchased in leveraged buyout transactions. The market for
high yield bonds is very specialized and investors in it have
been predominantly financial institutions. High yield bonds
are generally not listed on a national securities exchange.
Trading of high yield bonds, therefore, takes place primarily
in over-the-counter markets which consist of groups of dealer
firms that are typically major securities firms. Because the
high yield bond market is a dealer market, rather than an
auction market, no single obtainable price for a given bond
prevails at any given time. Prices are determined by
negotiation between traders. The existence of a liquid trading
market for the Obligations may depend on whether dealers will
make a market in the Obligations. There can be no assurance
that a market will be made for any of the Obligations, that any
market for the Obligations will be maintained or of the
liquidity of the Obligations in any markets made. Not all
dealers maintain markets in all high yield bonds. Therefore,
since there are fewer traders in these bonds than there are in
"investment grade" bonds, the bid-offer spread is usually
greater for high yield bonds than it is for investment grade
bonds. The price at which the Securities may be sold to meet
redemptions and the value of a Trust will be adversely affected
if trading markets for the Obligations are limited or absent.
If the rate of redemptions is great, the value of a Trust may
decline to a level that requires liquidation (see
"Administration of the Trusts_Amendment and Termination").
Lower-rated securities tend to offer higher yields than
higher-rated securities with the same maturities because the
creditworthiness of the issuers of lower-rated securities may
not be as strong as that of other issuers. Moreover, if an
Obligation is recharacterized as equity by the internal Revenue
Service for Federal income tax purposes, the issuer's interest
deduction with respect to the Obligation will be disallowed and
this disallowance may adversely affect the issuer's credit
rating. Because investors generally perceive that there are
greater risks associated with the lower-rated securities in a
Trust, the yields and prices of these securities tend to
fluctuate more than higher-rated securities with changes in the
perceived quality of the credit of their issuers. In addition,
the market value of high yield, high risk, fixed-income
securities may fluctuate more than the market value of
higher-rated securities since high yield, high risk,
fixed-income securities tend to reflect short-term credit
development to a greater extent than higher-rated securities.
Lower-rated securities generally involve greater risks of loss
of income and principal than higher-rated securities. Issuers
of lower-rated securities may possess less creditworthiness
characteristics than issuers of higher-rated securities and,
especially in the case of issuers whose obligations or credit
standing have recently been downgraded, may be subject to
claims by debtholders, owners of property leased to the issuer
or others which, if sustained, would make it more difficult for
the issuers to meet their payment obligations. High yield,
high risk bonds are also affected by variables such as interest
rates, inflation rates and real growth in the economy.
Therefore, investors should consider carefully the relative
risks associated with investment in securities which carry
lower ratings.
The value of the Units reflects the value of the portfolio
securities, including the value (if any) of securities in
default. Should the issuer of any Obligation default in the
payment of principal or interest, a Trust may incur additional
expenses seeking payment on the defaulted Obligation. Because
amounts (if any) recovered by a Trust in payment under the
defaulted Obligation may not be reflected in the value of the
Units until actually received by the Trust, and depending upon
when a Unitholder purchases or sells his Units, it is possible
that a Unitholder would bear a portion of the cost of recovery
without receiving any portion of the payment recovered.
High yield, high risk bonds are generally subordinated
obligations. The payment of principal (and premium, if any),
interest and sinking fund requirements with respect to
subordinated obligations of an issuer is subordinated in right
of payment to the payment of senior obligations of the issuer.
Senior obligations generally include most, if not all,
significant debt obligations of an issuer, whether existing at
the time of issuance of subordinated debt or created
thereafter. Upon any distribution of the assets of an issuer
with subordinated obligations upon dissolution, total or
partial liquidation or reorganization of or similar proceeding
relating to the issuer, the holders of senior indebtedness will
be entitled to receive payment in full before holders of
subordinated indebtedness will be entitled to receive any
payment. Moreover, generally no payment with respect to
subordinated indebtedness may be made while there exists a
default with respect to any senior indebtedness. Thus, in the
event of insolvency, holders of senior indebtedness of an
issuer generally will recover more, ratably, than holders of
subordinated indebtedness of that issuer.
Obligations that are rated lower than BBB by Standard &
Poor's or Duff & Phelps or Baa by Moody's, respectively, should
be considered speculative as such ratings indicate a quality of
less than investment grade. Investors should carefully review
the objective of the Trust and consider their ability to assume
the risks involved before making an investment in the Trust.
See "Description of Ratings" for a description of speculative
ratings issued by Standard & Poor's, Duff & Phelps and Moody's.
Zero Coupon U.S. Treasury Obligations. Certain of the
Bonds in a Trust may be "zero coupon" U.S. Treasury bonds. See
footnote (6) in "Notes to Portfolio" in Part Two of this
Prospectus. Zero coupon bonds are purchased at a deep discount
because the buyer receives only the right to receive a final
payment at the maturity of the bond and does not receive any
periodic interest payments. The effect of owning deep discount
bonds which do not make current interest payments (such as the
zero coupon bonds) is that a fixed yield is earned not only on
the original investment but also, in effect, on all discount
earned during the life of such income on such obligation at a
rate as high as the implicit yield on the discount obligation,
but at the same time eliminates the holder's ability to
reinvest at higher rates in the future. For this reason, zero
coupon bonds are subject to substantially greater price
fluctuations during periods of changing market interest rates
than are securities of comparable quality which pay interest.
Foreign Issuers. Certain of the Bonds in a Trust may be
securities of foreign issuers. It is appropriate for investors
in such a Trust to consider certain investment risks that
distinguish investments in Bonds of foreign issuers from those
of domestic issuers. Those investment risks include future
political and economic developments, the possible imposition of
withholding taxes on interest income payable on the Bonds held
in a portfolio, the possible seizure or nationalization of
foreign deposits, the possible establishment of exchange
controls or the adoption of other foreign governmental
restrictions (including expropriation, burdensome or
confiscatory taxation and moratoriums) which might adversely
affect the payment or receipt of payment of amounts due on the
Bonds. Investors should realize that, although a Trust invests
in U.S. dollar denominated investments, the foreign issuers
which operate internationally are subject to currency risks.
The value of Bonds can be adversely affected by political or
social instability and unfavorable diplomatic or other negative
developments. In addition, because many foreign issuers are
not subject to the reporting requirements of the Securities
Exchange Act of 1934, there may, be less publicly available
information about the foreign issuer than a U.S. domestic
issuer. Foreign issuers also are not necessarily subject to
uniform accounting, auditing and financial reporting standards,
practices and requirements comparable to those applicable to
U.S. domestic issuers.
Liquidity. The Bonds in a Trust may not have been
registered under the Securities Act of 1933 and may not be
exempt from the registration requirements of the Act. Most of
the Bonds will not be listed on a securities exchange. Whether
or not the Bonds are listed, the principal trading market for
the Bonds will generally be in the over-the-counter market. As
a result, the existence of a liquid trading market for the
Bonds may depend on whether dealers will make a market in the
Bonds. There can be no assurance that a market will be made
for any of the Bonds, that any market for the Bonds will be
maintained, or of the liquidity of the Bonds in any markets
made. The price at which the Bonds may be sold to meet
redemptions and the value of a Trust will be adversely affected
if trading markets for the Bonds are limited or absent. A
Trust may also contain nonexempt Bonds in registered form which
have been purchased on a private placement basis. Sales of
these Bonds may not be practicable outside the United States,
but can generally be made in U.S. institutions in the private
placement market which may not be as liquid as the general U.S.
securities market. Since the private placement market is less
liquid, the prices received may be less than would have been
received had the markets been broader.
Exchange Controls. On the basis of the best information
available to the Sponsor at the present time none of the Bonds
is subject to exchange control restrictions under existing law
which would materially interfere with payment to a Trust of
amounts due on the Bonds. However, there can be no assurance
that exchange control regulations might not be adopted in the
future which might adversely affect payments to a Trust. In
addition, the adoption of exchange control regulations and
other legal restrictions could have an adverse impact on the
marketability of the Bonds in a Trust and on the ability of a
Trust to satisfy its obligation to redeem Units tendered to the
Trustee for redemption.
Jurisdiction Over, and U.S. Judgments Concerning, Foreign
Obligors. Non-U.S issuers of the Bonds will generally not have
submitted to the jurisdiction of U.S. courts for purposes of
lawsuits relating to those Bonds. If a Trust contains Bonds of
such an issuer, the Trust as a holder of those obligations may
not be able to assert its rights in U.S. courts under the
documents pursuant to which the Bonds are issued. Even if a
Trust obtains a U.S. judgment against a foreign obligor, there
can be no assurance that the judgment will be enforced by a
court in the country in which the foreign obligor is located.
In addition, a judgment for money damages by a court in the
United States if obtained, will ordinarily be rendered only in
U.S. dollars. It is not clear, however, whether, in granting a
judgment, the rate of conversion of the applicable foreign
currency into U.S. dollars would be determined with reference
to the due date or the date the judgment is rendered. Courts
in other countries may have rules that are similar to, or
different from, the rules of the U.S. courts.
.c.General Trust Information
Because certain of the Bonds in the Trusts may from time
to time under certain circumstances be sold or redeemed or will
mature in accordance with their terms and because the proceeds
from such events will be distributed to Unitholders and will
not be reinvested, no assurance can be given that a Trust will
retain for any length of time its present size and composition.
Neither the Sponsor nor the Trustee shall be liable in any way
for any default, failure or defect in any Bond.
The Sponsor may not alter the portfolio of a Trust Fund
except upon the happening of certain extraordinary
circumstances. See "Investment Supervision." Certain of the
Bonds may be subject to optional call or mandatory redemption
pursuant to sinking fund provisions, in each case prior to
their stated maturity. A bond subject to optional call is one
which is subject to redemption or refunding prior to maturity
at the option of the issuer, often at a premium over par. A
refunding is a method by which a bond issue is redeemed, at or
before maturity, by the proceeds of a new bond issue. A bond
subject to sinking fund redemption is one which is subject to
partial call from time to time at par from a fund accumulated
for the scheduled retirement of a portion of an issue prior to
maturity. Special or extraordinary redemption provisions may
provide for redemption at par of all or a portion of an issue
upon the occurrence of certain circumstances, which may be
prior to the optional call dates shown in "Portfolio" in
Part Two of this Prospectus. Redemption pursuant to optional
call provisions is more likely to occur, and redemption
pursuant to special or extraordinary redemption provisions may
occur, when the Bonds have an offering side evaluation which
represents a premium over par, that is, when they are able to
be refinanced at a lower cost. The proceeds from any such call
or redemption pursuant to sinking fund provisions as well as
proceeds from the sale of Bonds and from Bonds which mature in
accordance with their terms, unless utilized to pay for Units
tendered for redemption, will be distributed to Unitholders and
will not be used to purchase additional Bonds for the affected
Trust. Accordingly, any such call, redemption, sale or
maturity will reduce the size and diversity of a Trust and the
net annual interest income and may reduce the Estimated Current
Return and the Estimated Long-Term Return. See "Interest,
Estimated Long-Term Return and Estimated Current Return." The
call, redemption, sale or maturity of Bonds also may have tax
consequences to a Unitholder. See "Federal Tax Status."
Information with respect to the call provisions and maturity
dates of the Bonds is contained in "Portfolio" in Part Two of
this Prospectus.
To the best of the Sponsor's knowledge, there was no
litigation pending as of the Initial Date of Deposit for each
Trust in respect of any Bond which might reasonably be expected
to have a material adverse effect on the related Trust. At any
time after the Initial Date of Deposit, litigation may be
instituted on a variety of grounds with respect to the Bonds.
The Sponsor is unable to predict whether any such litigation
may be instituted, or if instituted, whether such litigation
might have a material adverse effect on the related Trust. The
Sponsor and the Trustee shall not be liable in any way, for any
default, failure or defect in any Bond.
.c.Retirement Plans
Units of the Trust Funds may be well suited for purchase
by Individual Retirement Accounts, Keogh Plans, pension funds
and other qualified retirement plans, certain of which are
briefly described below.
Generally, capital gains and income received under each of
the foregoing plans are deferred from federal taxation. All
distributions from such plans are generally treated as ordinary
income but may, in some cases, be eligible for special income
averaging or tax-deferred rollover treatment. Investors
considering participation in any such plan should review
specific tax laws related thereto and should consult their
attorneys or tax advisers with respect to the establishment and
maintenance of any such plan. Such plans are offered by
brokerage firms and other financial institutions. The Trust
Funds will waive the $1,000 minimum investment requirement for
IRA accounts. The minimum investment is $250 for tax-deferred
plans such as IRA accounts. Fees and charges with respect to
such plans may vary.
Individual Retirement Account_IRA. Any individual under
age 70-1/2 may contribute the lesser of $2,000 or 100% of
compensation to an IRA annually. Such contributions are fully
deductible if the individual (and spouse if filing jointly) are
not covered by a retirement plan at work. The deductible
amount an individual may contribute to an IRA will be reduced
$10 for each $50 of adjusted gross income over $25,000 ($40,000
if married, filing jointly or $0 if married, filing
separately), if either an individual or their spouse (if
married, filing jointly) is an active participant in an
employer maintained retirement plan. Thus, if an individual
has adjusted gross income over $35,000 ($50,000 if married,
filing jointly or $0 if married, filing separately) and if an
individual or their spouse is an active participant in an
employer maintained retirement plan, no IRA deduction is
permitted. Under the Internal Revenue Code of 1986, as amended
(the "Code"), an individual may make nondeductible
contributions to the extent deductible contributions are not
allowed. All distributions from an IRA (other than the return
of certain excess contributions) are treated as ordinary income
for federal income taxation purposes provided that under the
Code an individual need not pay tax on the return of
nondeductible contributions. The amount includable in income
for the taxable year is the portion of the amount withdrawn for
the taxable year as the individual's aggregate deductible IRA
contributions bear to the aggregate balance of all IRAs of the
individual.
A participant's interest in an IRA must be, or commence to
be, distributed to the participant not later than April 1 of
the calendar year following the year during which the
participant attains age 70-1/2. Distributions made before
attainment of age 59-1/2, except in the case of the
participant's death or disability, or where the amount
distributed is to be rolled over to another IRA, or where the
distributions are taken as a series of substantially equal
periodic payments over the participant's life or life
expectancy (or the joint lives or life expectancies of the
participant and the designated beneficiary) are generally
subject to a surtax in an amount equal to 10% of the
distribution. The amount of such periodic payments may not be
modified before the later of five years or attainment of age
59-1/2. Excess contributions are subject to an annual 6%
excise tax.
IRA applications, disclosure statements and trust
agreements are available from the Sponsor upon request.
Qualified Retirement Plans. Units of a Trust may be
purchased by qualified pension or profit sharing plans
maintained by corporations, partnerships or sole proprietors.
The maximum annual contribution for a participant in a money
purchase pension plan or to paired profit sharing and pension
plans is the 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 eligible for tax-deferred rollover treatment.
In general, for lump sum distributions the excess distributions
over $750,000 (as adjusted) will be subject to the 15% tax.
The Trustee, Investors Fiduciary Trust Company, has agreed
to act as custodian for certain retirement plan accounts. An
annual fee of $12.00 per account, if not paid separately, will
be assessed by the Trustee and paid through the liquidation of
shares of the reinvestment account. An individual wishing the
Trustee to act as custodian must complete a Kemper UIT/IRA
application and forward it along with a check made payable to
Investors Fiduciary Trust Company. Certificates for Individual
Retirement Accounts cannot be issued.
.c.Distribution Reinvestment
Each Unitholder of a Trust may elect to have distributions
of principal (including capital gains, if any) or interest or
both automatically invested without charge in shares of any
open-end mutual fund underwritten or advised by an affiliate of
the Sponsor, Kemper Financial Services, Inc. which is
registered in the Unitholder's state of residence (the "Kemper
Funds"), other than those Kemper Funds sold with a contingent
deferred sales charge.
If individuals indicate they wish to participate in the
Reinvestment Program but do not designate a reinvestment fund,
the Program Agent referred to below will contact such
individuals to determine which reinvestment fund or funds they
wish to elect. Since the portfolio securities and investment
objectives of such Kemper Funds generally will differ
significantly from those of the Trust Funds, Unitholders should
carefully consider the consequences before selecting such
Kemper Funds for reinvestment. Detailed information with
respect to the investment objectives and the management of the
Funds is contained in their respective prospectuses, which can
be obtained from the Sponsor upon request. An investor should
read the prospectus of the reinvestment fund selected prior to
making the election to reinvest. Unitholders who desire to
have such distributions automatically reinvested should inform
their broker at the time of purchase or should file with the
Program Agent a written notice of election.
Unitholders who are receiving distributions in cash may
elect to participate in distribution reinvestment by filing
with the Program Agent an election to have such distributions
reinvested without charge. Such election must be received by
the Program Agent at least ten days prior to the Record Date
applicable to any distribution in order to be in effect for
such Record Date. Any such election shall remain in effect
until a subsequent notice is received by the Program Agent.
See "Unitholders_Distributions to Unitholders."
The Program Agent is Investors Fiduciary Trust Company.
All inquiries concerning participation in distribution
reinvestment should be directed to the Program Agent at P.O.
Box 419430, Kansas City, Missouri 64173-0216, telephone (816)
474-8786.
.c.Interest, Estimated Long-Term Return and Estimated Current
Return
As of the opening of business on the date indicated
therein, the Estimated Long-Term Return and the Estimated
Current Return for each Trust Fund were as set forth in the
"Essential Information" in Part Two of this Prospectus.
Estimated Current Return is calculated by dividing the
estimated net annual interest income per Unit by the Public
Offering Price. The estimated net annual interest income per
Unit will vary with changes in fees and expenses of the
Trustee, the Sponsor and the Evaluator and with the principal
prepayment, redemption, maturity, exchange or sale of the Bonds
while the Public Offering Price will vary with changes in the
offering price of the underlying Bonds and with changes in the
Purchased Interest and Daily Accrued Interest; therefore, there
is no assurance that the present Estimated Current Return will
be realized in the future. Estimated Long-Term Return is
calculated using a formula which (1) takes into consideration,
and determines and factors in the relative weightings of, the
market values, yields (which takes into account the
amortization of premiums and the accretion of discounts) and
estimated retirements of all the Bonds in a Trust and (2) takes
into account the expenses and sales charge associated with each
Trust Unit. Since the market values and estimated retirements
of the Bonds and the expenses of a Trust will change, there is
no assurance that the present Estimated Long-Term Return will
be realized in the future. Estimated Current Return and
Estimated Long-Term Return are expected to differ because the
calculation of Estimated Long-Term Return reflects the
estimated date and amount of principal returned while Estimated
Current Return calculations include only net annual interest
income and Public Offering Price.
.c.Public Offering of Units
.c2.Public Offering Price;. Units of each Trust Fund are
offered at the Public Offering Price thereof. The Public
Offering Price is based on the aggregate bid side evaluations
of the Bonds in each 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) cash, if any, in the Principal
Account held or owned by such Trust Fund, (b) Purchased
Interest and (c) Daily Accrued Interest plus a sales charge
based upon the dollar weighted average maturity of such Trust
Fund.
The sales charge is based upon the dollar weighted average
maturity of a Trust Fund and is determined in accordance with
the table set forth below. For purposes of this computation,
Bonds will be deemed to mature on their expressed maturity
dates unless: (a) the Bonds have been called for redemption or
funds or securities have been placed in escrow to redeem them
on an earlier call date, in which case such call date will be
deemed to be the date upon which they mature; or (b) such Bonds
are subject to a "mandatory tender," in which case such
mandatory, tender will be deemed to be the date upon which they
mature. The effect of this method of sales charge computation
will be that different sales charge rates will be applied to a
Trust Fund based upon the dollar weighted average maturity of
such Trust Fund's portfolio, in accordance with the following
schedule:
Dollar Weighted AverageYears to Maturity
Percent ofPublic OfferingPrice
Percent ofNet AmountInvested
0 to .99 years 0.00% 0.000%
1 to 1.99 years 2.00 2.041
2 to 3.99 years 3.50 3.627
4 to 9.99 years 4.50 4.712
10 or more years 5.50 5.820
The sales charge per Unit will be reduced as set forth
below:
Dollar Weighted Average Years to Maturity*
2 to 3.99 4 to 9.99 10 or more
Dollar Amount of Trade
Sales Charge (Percent of Public Offering Price)
$1,000 to $99,999 3.50% 4.50% 5.50%
$100,000 to $499,999 3.25 4.25 5.00
$500,000 to $999,999 3.00 4.00 4.50
$1,000,000 or more 2.75 3.75 4.00
* If the dollar weighted average maturity of a Trust Fund is
from 1 to 1.99 years, the sales charge is 2% and 1.5% of
the Public Offering Price for purchases of $1,000 to
$249,999 and $250,000 or more, respectively.
The reduced sales charges resulting from quantity
discounts as shown on the table above will apply to all
purchases of Units on any one day by the same purchaser from
the same dealer and for this purpose purchases of Units of a
Trust Fund 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
charges will also be applicable to a trust or other fiduciary
purchasing for a single trust estate or single fiduciary
account.
The Sponsor intends to permit officers, directors and
employees of the Sponsor and Evaluator and at the discussion
the Sponsor registered representatives of selling firms to
purchase Units of a Trust without a sales charge, although a
transaction processing fee may be imposed on such trades.
The Public Offering Price per Unit of a Trust Fund on the
date of this Prospectus or on any subsequent date will vary
from the amount stated under "Essential Information" in
Part Two of this Prospectus in accordance with fluctuations in
the prices of the underlying Bonds and the amount of accrued
interest on the Units. The aggregate bid side evaluations of
the Bonds shall be determined (a) on the basis of current bid
prices of the Bonds, (b) if bid price is not available for any
particular Bond, on the basis of current bid prices for
comparable bonds, (c) by determining the value of Bonds on the
bid side of the market by appraisal, or (d) by any combination
of the above.
The foregoing evaluations and computations shall be made
as of the evaluation time stated under "Essential Information"
in Part Two of this Prospectus, on each business day effective
for all sales made during the preceding 24-hour period.
The interest on the Bonds deposited in a Trust Fund, less
the related estimated fees and expenses, is estimated to accrue
in the annual amounts per Unit set forth under "Essential
Information" in Part Two of this Prospectus. The amount of net
interest income which accrues per Unit may change as Bonds
mature or are redeemed, exchanged or sold, or as the expenses
of a Trust Fund change or the number of outstanding Units of a
Trust Fund changes.
Although payment is normally made five business days
following the order for purchase, payment may be made prior
thereto. A person will become the owner of Units on the date
of settlement provided payment has been received. Cash, if
any, made available to the Sponsor prior to the date of
settlement for the purchase of Units may be used in the
Sponsor's business and may be deemed to be a benefit to the
Sponsor, subject to the limitations of the Securities Exchange
Act of 1934. 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.
.c2.Purchased and Daily Accrued Interest;. Accrued
interest consists of two elements. The first element arises as
a result of accrued interest which is the accumulation of
unpaid interest on a bond from the later of the last day on
which interest thereon was paid or the date of original
issuance of the bond. Interest on the coupon Bonds in a Trust
Fund is paid semi-annually to such Trust. A portion of the
aggregate amount of such accrued interest on the Bonds in a
Trust to the First Settlement Date of such Trust is referred to
herein as "Purchased Interest." Included in the Public
Offering Price of Trust Units is the Purchased Interest. In an
effort to reduce the amount of Purchased Interest which would
otherwise have to be paid by Unitholders, the Trustee may have
advanced a portion of the accrued interest to the Sponsor as
the Unitholder of record as of the First Settlement Date. The
second element of accrued interest arises because the estimated
net interest on the Units in a Trust Fund is accounted for
daily on an accrual basis (herein referred to as "Daily Accrued
Interest"). Because of this, the Units always have an amount
of interest earned but not yet paid or reserved for payment.
For this reason, the Public Offering Price of Units will
include the proportionate share of Daily Accrued Interest to
the date of settlement.
If a Unitholder sells or redeems all or a portion of his
Units or if the Bonds are sold or otherwise removed or if a
Trust Fund is liquidated, he will receive at that time his
proportionate share of the Purchased Interest and Daily Accrued
Interest computed to the settlement date in the case of sale or
liquidation and to the date of tender in the case of redemption
in a Trust Fund.
.c2.Public Distribution of Units;. The Sponsor has
qualified the Units for sale in a number of states. Units will
be sold through dealers who are members of the National
Association of Securities Dealers, Inc. and through others.
Sales may be made to or through dealers at prices which
represent discounts from the Public Offering Price as set forth
below. Certain commercial banks are making Units of the Trust
Funds available to their customers on an agency basis. A
portion of the sales charge paid by their customers is retained
by or remitted to the banks in the amounts shown in the table
below. Under the Glass-Steagall Act, banks are prohibited from
underwriting Trust Fund 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 set forth below 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 Trusts and other unit
investment trusts created by the Sponsor. The difference
between the discount and the sales charge will be retained by
the Sponsor.
Dollar Weighted Average Years to Maturity*
2 to 3.99 4 to 9.99 10 or more
Dollar Amount of Trade
Discount per Unit(Percent of Public Offering Price)
$1,000 to $99,999 2.00% 3.00% 4.00%
$100,000 to $499,999 1.75 2.75 3.50
$500,000 to $999,999 1.50 2.50 3.00
$1,000,000 or more 1.25 2.25 2.50
* If the dollar weighted average maturity of a Trust Fund
is from 1 to 1.99 years, the concession or agency commission
is 1.00% of the Public Offering Price.
The Sponsor reserves the right to reject, in whole or in
part, any order for the purchase of Units.
.c2.Profits of Sponsor;. The Sponsor will receive gross
sales charges equal to the percentage of the Public Offering
Price of the Units of a Trust stated under "Public Offering
Price" and will pay a fixed portion of such sales charges to
dealers and agents. The Sponsor may also realize additional
profit or loss as a result of the possible change in the daily
evaluation of the Bonds in a Trust, since the value of its
inventory may increase or decrease.
.c.Market for Units
While not obligated to do so, the Sponsor intends to,
subject to change at any time, maintain a market for Units of
the Trusts offered hereby and to continuously offer to purchase
said Units at prices, determined by the Evaluator, based on the
aggregate bid prices of the underlying Bonds, together with
Purchased Interest and Daily Accrued Interest to the expected
dates of settlement. Unitholders who wish to dispose of their
Units should inquire of their 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 resold 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 will belong to the
Sponsor. The Sponsor may suspend or discontinue purchases of
Units if the supply of Units exceeds demand, or for other
business reasons.
.c.Redemption
A Unitholder who does not dispose of Units as 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 redemptions by
individual account owners (including joint owners). Additional
documentation may be requested, and a signature guarantee is
always required, from corporations, executors, administrators,
trustees, guardians or associations. The signatures must be
guaranteed by a participant in the Securities Transfer Agents
Medallion Program ("STAMP") or such other signature guaranty
program in addition to, or in substitution for, STAMP, as may
be accepted by the Trustee. A certificate should only be sent
by registered or certified mail for the protection of the
Unitholder. Since tender of the certificate is required for
redemption when one has been issued, Units represented by a
certificate cannot be redeemed until the certificate
representing such Units has been received by the purchasers.
Redemption shall be made by the Trustee on the seventh
calendar day following the day on which a tender for redemption
is received, or if the seventh calendar day is not a business
day, on the first business day prior thereto (the "Redemption
Date") by payment of cash equivalent to the Redemption Price
for the Trust Fund, determined as set forth below under
"Computation of Redemption Price," as of the evaluation time
stated under "Essential Information" in Part Two of this
Prospectus, next following such tender, multiplied by the
number of Units being redeemed. Any Units redeemed shall be
cancelled and any undivided fractional interest in a Trust Fund
extinguished. The price received upon redemption might be more
or less than the amount paid by the Unitholder depending on the
value of the Bonds in a Trust Fund at the time of redemption.
Under regulations issued by the Internal Revenue Service,
the Trustee is required to withhold a certain percentage of the
principal amount of a Unit redemption if the Trustee has not
been furnished the redeeming Unitholder's tax identification
number in the manner required by such regulations. Any amount
so withheld is transmitted to the internal Revenue Service and
may be recovered by the Unitholder only when filing a tax
return. Under normal circumstances the Trustee obtains the
Unitholder's tax identification number from the selling broker.
However, any time a Unitholder elects to tender Units for
redemption, such Unitholder should make sure that the Trustee
has been provided a certified tax identification number in
order to avoid this possible "backup withholding." In the
event the Trustee has not been previously provided such number,
one must be provided at the time redemption is requested.
Any amounts paid on redemption representing interest shall
be withdrawn from the Interest Account to the extent that funds
are available for such purpose. All other amounts paid on
redemption shall be withdrawn from the Principal Account. The
Trustee is empowered to sell Bonds in order to make funds
available for the redemption of Units. Such sale may be
required when Bonds would not otherwise be sold and might
result in lower prices than might otherwise be realized. To
the extent Bonds are sold, the size and diversity of a Trust
Fund will be reduced.
The right of redemption may be suspended and payment
postponed (1) for any period during which the New York Stock
Exchange is closed, other than customary weekend and holiday
closings, or during which (as determined by the Securities and
Exchange Commission) trading on the New York Stock Exchange is
restricted; (2) for any period during which an emergency exists
as a result of which disposal by the Trustee of Bonds is not
reasonably practicable or it is not reasonably practicable to
fairly determine the value of the underlying Bonds in
accordance with the Trust Agreement; or (3) for such other
period as the Securities and Exchange Commission may by order
permit. The Trustee is not liable to any person in any way for
any loss or damage which may result from any such suspension or
postponement.
Computation of Redemption Price. The Redemption Price for
Units is computed by the Evaluator as of the evaluation time
stated under "Essential Information" in Part Two of this
Prospectus next occurring after the tendering of a Unit for
redemption and on any other business day desired by it, by:
A. adding: (1) the cash on hand in a Trust other
than cash deposited in such Trust to purchase Bonds not
applied to the purchase of such Bonds; (2) the aggregate
value of each issue of the Bonds held in such Trust as
determined by the Evaluator on the basis of bid prices
therefor; and (3) Purchased and Daily Accrued Interest;
B. deducting therefrom (1) amounts representing any
applicable taxes or governmental charges payable out of
such Trust Fund and for which no deductions have been
previously made for the purpose of additions to the
Reserve Account described under "Expenses of the Trusts";
(2) an amount representing estimated accrued expenses of
such Trust Fund, including but not limited to fees and
expenses of the Trustee (including legal and auditing
fees), the Sponsor and the Evaluator; (3) cash held for
distribution to Unitholders of record as of the business
day prior to the evaluation being made; and (4) other
liabilities incurred by such Trust Fund; and
C. finally dividing the results of such computation
by the number of Units of such Trust Fund outstanding as
of the date thereof.
.c.Unitholders
.c2.Ownership of Units;. Ownership of Units of a 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 by registered or
certified mail for the protection of the Unitholder.
Unitholders must sign such written request, and such
certificate or transfer instrument (if applicable), exactly as
their names appear on the records of the Trustee and on any
certificate representing the Units to be transferred. Such
signatures must be guaranteed by a participant in the
Securities Transfer Agents Medallion Program ("STAMP") or such
other signature guaranty program in addition to, or in
substitution for, STAMP, as may be accepted by the Trustee. In
certain instances the Trustee may require additional documents
such as, but not limited to, trust instruments, certificates of
death, appointments as executor or administrator or
certificates of corporate authority.
Units may be purchased and certificates, if requested,
will be issued in denominations of one Unit or any whole Unit
multiple thereof subject to any minimum investment requirement
established by the Sponsor from time to time. However, in
connection with qualified plans in which Investors Fiduciary
Trust Company acts as trustee, fractional units (to three
decimal places) will be permitted. Any certificate issued will
be numbered serially for identification, issued in fully
registered form and will be transferable only on the books of
the Trustee. The Trustee may require a Unitholder to pay a
reasonable fee, to be determined in the sole discretion of the
Trustee, for each certificate re-issued or transferred and to
pay any governmental charge that may be imposed in connection
with each such transfer or interchange. The Trustee at the
present time does not intend to charge for the normal transfer
or interchange of certificates. Destroyed, stolen, mutilated
or lost certificates will be replaced upon delivery to the
Trustee of satisfactory indemnity (generally amounting to 3% of
the market value of the Units), affidavit of loss, evidence of
ownership and payment of expenses incurred.
.c2.Distributions to Unitholders;. Interest received by a
Trust, including any portion of the proceeds from a disposition
of Bonds which represents accrued interest, is credited by the
Trustee to the Interest Account for such Trust. All other
receipts are credited by the Trustee to a separate Principal
Account for such Trust. Assuming a Trust Fund retains its
original size and composition, after deduction of the fees and
expenses of the Trustee, Sponsor and Evaluator and
reimbursements (without interest) to the Trustee for any
amounts advanced to such Trust Fund, the Trustee will normally
distribute on each Interest Distribution Date (the fifteenth of
the month) or shortly thereafter to Unitholders of record of
such Trust Fund on the preceding Record Date (the first day of
each month), an amount substantially equal to one-twelfth of
such Unitholders' pro rata share of the estimated net annual
interest income to the Interest Account.
Persons who purchase Units between a Record Date and a
Distribution Date will receive their first distribution on the
second Distribution Date following their purchase of Units.
Since interest on the Bonds is payable at varying intervals,
usually in semi-annual installments, and distributions of
income are made to Unitholders at different intervals from
receipt of interest, the interest accruing to a Trust Fund 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 and available for distribution may be
slightly more or less than the interest distribution made. In
order to eliminate fluctuations in interest distributions
resulting from such variances, the Trustee is authorized by the
Trust Agreement to advance such amounts as may be necessary to
provide interest distributions of approximately equal amounts.
The Trustee will be reimbursed, without interest, for any such
advances from funds available in the Interest Account.
The Trustee will distribute on each Distribution Date or
shortly thereafter, to each Unitholder of record of each Trust
Fund on the preceding Record Date, an amount substantially
equal to such Unitholder's pro rata share of the cash balance,
if any, in the Principal Account 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.
.c2.Statements to Unitholders;. With each distribution,
the Trustee will furnish or cause to be furnished to each
Unitholder a statement of the amount of interest and the amount
of other receipts, if any, which are being distributed,
expressed in each case as a dollar amount per Unit.
The accounts are required to be audited annually, at the
related Trust Fund's expense, by independent auditors
designated by the Sponsor, unless the Trustee determines that
such an audit would not be in the best interest of the
Unitholders. The accountants' report will be furnished by the
Trustee to any Unitholder upon written request. Within a
reasonable period of time after the end of each calendar year,
the Trustee shall furnish to each person who at any time during
the calendar year was a Unitholder a statement for such
Unitholder's Trust, covering the calendar year, setting forth:
A. As to the Interest Account: (1) The amount of
interest received on the Bonds, including amounts received
as a portion of the proceeds of any disposition of the
Bonds; (2) the amount paid from the Interest Account
representing accrued interest of any Units redeemed;
(3) the deductions from the Interest Account for applicable
taxes, if any, fees and expenses (including auditing fees)
of the Trustee, the Sponsor and the Evaluator; (4) any
amounts credited by the Trustee to the Reserve Account
described under "Expenses of the Trusts"; and (5) the net
amount remaining after such payments and deductions,
expressed both as a total dollar amount and a dollar
amount per Unit outstanding on the last business day of
such calendar year; and
B. As to the Principal Account: (1) The dates of the
maturity, liquidation or redemption of any of the Bonds
and the net proceeds received therefrom excluding any
portion credited to the Interest Account; (2) the amount
paid from the Principal Account representing the principal
of any Units redeemed; (3) the deductions from the
Principal Account for payment of applicable taxes, if any,
fees and expenses (including auditing fees) of the
Trustee, the Sponsor and the Evaluator; (4) any amounts
credited by the Trustee to the Reserve Account described
under "Expenses of the Trusts"; and (5) the net amount
remaining after distributions of principal and deductions,
expressed both as a dollar amount and as a dollar amount
per Unit outstanding on the last business day of the
calendar year; and
C. The following information: (1) A list of the
Bonds as of the last business day of such calendar year;
(2) the number of Units outstanding on the last business
day of such calendar year; (3) the Redemption Price based
on the last evaluation made during such calendar year; and
(4) the amount actually distributed during such calendar
year from the Interest and Principal Accounts separately
stated, expressed both as total dollar amounts and as
dollar amounts per Unit outstanding on the Record Dates
for each such distribution.
.c2.Rights of Unitholders;. A Unitholder may at any time
tender Units to the Trustee for redemption. The death or
incapacity of any Unitholder will not operate to terminate a
Trust nor entitle legal representatives or heirs to claim an
accounting or to bring any action or proceeding in any court
for partition or winding up of a Trust.
No Unitholder shall have the right to control the
operation and management of a Trust in any manner, except to
vote with respect to the amendment of the Trust Agreement or
termination of the related Trust.
.c.Investment Supervision
The Sponsor may not alter the portfolio of a Trust by the
purchase, sale or substitution of Bonds, except in the special
circumstances noted below. Thus, with the exception of the
redemption or maturity of Bonds in accordance with their terms,
the assets of a Trust Fund will remain unchanged under normal
circumstances.
The Sponsor may direct the Trustee to dispose of Bonds the
value of which has been affected by certain adverse events
including institution of certain legal proceedings or decline
in price or the occurrence of other market factors, including
advance refunding, so that in the opinion of the Sponsor the
retention of such Bonds in a Trust Fund would be detrimental to
the interest of the Unitholders. The proceeds from any such
sales, exclusive of any portion which represents accrued
interest, will be credited to the Principal Account of a Trust
Fund for distribution to the Unitholders.
The Sponsor is required to instruct the Trustee to reject
any offer made by an issuer of Bonds to issue new obligations
in exchange or substitution for any of such Bonds pursuant to a
refunding or refinancing plan, except that the Sponsor may
instruct the Trustee to accept or reject such an offer or to
take any other action with respect thereto as the Sponsor may
deem proper if (1) the issuer is in default with respect to
such Bonds or (2) in the written opinion of the Sponsor the
issuer will probably default with respect to such Bonds in the
reasonably foreseeable future. Any obligation so received in
exchange or substitution will be held by the Trustee subject to
the terms and conditions of the Trust Agreement to the same
extent as Bonds originally deposited thereunder. Within five
days after the deposit of obligations in exchange or
substitution for underlying Bonds, the Trustee is required to
give notice thereof to each Unitholder, identifying the Bonds
eliminated and the Bonds substituted therefor.
The Trustee may sell Bonds, designated by the Sponsor,
from a Trust Fund for the purpose of redeeming Units of such
Trust Fund tendered for redemption and the payment of expenses.
.c.Administration of the Trusts
.c2.The Trustee;. The Trustee, Investors Fiduciary Trust
Company, is a trust company specializing in investment related
services, organized and existing under the laws of Missouri,
having its trust office at 127 West 10th Street, Kansas City,
Missouri 64105. The Trustee is subject to supervision and
examination by the Division of Finance of the State of Missouri
and the Federal Deposit Insurance Corporation. Investors
Fiduciary Trust Company is owned by State Street Boston
Corporation.
The Trustee, whose duties are ministerial in nature, has
not participated in selecting the portfolio of any Trust. For
information relating to the responsibilities of the Trustee
under the Trust Agreement, reference is made to the material
set forth under "Unitholders."
In accordance with the Trust Agreement, 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 a Trust. Such books and records
shall be open to inspection by any Unitholder of the related
Trust Fund at all reasonable times during usual business hours.
The Trustee shall make such annual or other reports as may from
Time to lime be required under any applicable state or federal
statute, rule or regulation. The Trustee shall keep a
certified copy or duplicate original of the Trust Agreement on
file in its office available for inspection at all reasonable
times during usual business hours by any Unitholder, together
with a current list of the Bonds held in each Trust Fund.
Pursuant to the Trust Agreement, the Trustee may employ one or
more agents for the purpose of custody and safeguarding of the
Bonds comprising a Trust Fund.
Under the Trust Agreement, the Trustee or any successor
trustee may resign and be discharged of the trust created by
the Trust Agreement by executing an instrument in writing and
filing the same with the Sponsor.
The Trustee or successor trustee must mail a copy of the
notice of resignation to all Unitholders then of record, not
less than 60 days before the date specified in such notice when
such resignation is to take effect. The Sponsor upon receiving
notice of such resignation is obligated to appoint a successor
trustee promptly. If, upon such resignation, no successor
trustee has been appointed and has accepted the appointment
within 30 days after notification, the retiring Trustee may
apply to a court of competent jurisdiction for the appointment
of a successor. In case the Trustee becomes incapable of
acting or is adjudged a bankrupt or is taken over by public
authorities, the Sponsor may remove the Trustee and appoint a
successor trustee as provided in the Trust Agreement. Notice
of such removal and appointment shall be mailed to each
Unitholder by the Sponsor. Upon execution of a written
acceptance of such appointment by such successor trustee, all
the rights, powers, duties and obligations of the original
Trustee shall vest in the successor. The Trustee must be a
corporation organized under the laws of the United States, or
any state thereof, be authorized under such laws to exercise
trust powers and have at all times an aggregate capital,
surplus and undivided profits of not less than $5,000,000.
.c2.The Sponsor;. The Sponsor, Kemper Unit Investment
Trusts, with an office at 77 West Wacker Drive, 29th Floor,
Chicago, Illinois 60601, (800) 621-5024, is a service of Kemper
Securities, Inc., which is a wholly-owned subsidiary of Kemper
Financial Companies, Inc. which, in turn, is a wholly-owned
subsidiary of Kemper Corporation. The Sponsor acts as
underwriter of a number of other Kemper unit investment trusts
and will act as underwriter of any other unit investment trust
products developed by the Sponsor in the future. As of
January 31, 1994, the total stockholder's equity of Kemper
Securities, Inc. was $261,673,436 (unaudited).
If at any time the Sponsor shall fail to perform any of
its duties under the Trust Agreement or shall become incapable
of acting or shall be adjudged a bankrupt or insolvent or shall
have its affairs taken over by public authorities, then the
Trustee may (a) appoint a successor sponsor at rates of
compensation deemed by the Trustee to be reasonable and not
exceeding such reasonable amounts as may be prescribed by the
Securities and Exchange Commission, or (b) terminate the Trust
Agreement and liquidate a Trust Fund as provided therein or
(c) continue to act as Trustee without terminating the Trust
Agreement.
The foregoing financial information with regard to the
Sponsor relates only to the Sponsor and not to any Trust Fund.
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 with respect to the Trust Funds. More
comprehensive financial information can be obtained upon
request from the Sponsor.
.c2.The Evaluator;. The Sponsor also serves as Evaluator.
The Evaluator may resign or be removed by the Trustee in which
event the Trustee is to use its best efforts to appoint a
satisfactory successor. Such resignation or removal shall
become effective upon acceptance of appointment by the
successor evaluator. If upon resignation of the Evaluator no
successor has accepted appointment within 30 days after notice
of resignation, the Evaluator may apply to a court of competent
jurisdiction for the appointment of a successor. Notice of
such resignation or removal and appointment shall be mailed by
the Trustee to each Unitholder. At the present time, pursuant
to a contract with the Evaluator, Muller Data Corporation, a
non-affiliated firm regularly engaged in the business of
evaluating, quoting or appraising comparable securities,
provides portfolio evaluations of the Bonds in each Trust Fund
which are then reviewed by the Evaluator. In the event the
Sponsor is unable to obtain current evaluations from Muller
Data Corporation, it may make its own evaluations or it may
utilize the services of any other non-affiliated evaluator or
evaluators it deems appropriate.
.c2.Amendment and Termination;. The Trust Agreement may
be amended by the Trustee and the Sponsor without the consent
of any of the Unitholders: (1) to cure any ambiguity or to
correct or supplement any provision which may be defective or
inconsistent; (2) to change any provision thereof as may be
required by the Securities and Exchange Commission or any
successor governmental agency; or (3) to make such provisions
as shall not adversely affect the interests of the Unitholders
(as determined in good faith by the Sponsor and the Trustee).
The Trust Agreement may also be amended in any respect by the
Sponsor and the Trustee, or any of the provisions thereof may
be waived, with the consent of the holders of Units
representing 66-1/3% of the Units then outstanding of a Trust
Fund, provided that no such amendment or waiver will reduce the
interest of any Unitholder thereof without the consent of such
Unitholder or reduce the percentage of Units required to
consent to any such amendment or waiver without the consent of
all Unitholders of the related Trust. Except in accordance
with the provisions of the Trust Agreement, in no event shall
the Trust Agreement be amended to increase the number of Units
of the Trust issuable thereunder or to permit the acquisition
of any Bonds in addition to or in substitution for those
initially deposited in a Trust Fund (other than as provided in
the Trust Agreement). The Trustee shall promptly notify
Unitholders of the substance of any such amendment.
The Trust Agreement provides that a Trust Fund shall
terminate upon the maturity, redemption or other disposition of
the last of the Bonds held in such Trust Fund, but in no event
later than the Mandatory Termination Date set forth under
"Essential Information" in Part Two of this Prospectus. If the
value of a Trust Fund shall be less than the applicable minimum
value stated under "Essential Information" in Part Two of this
Prospectus (40% of the aggregate principal amount of Bonds
deposited in such Trust), the Trustee may, in its discretion,
and shall, when so directed by the Sponsor, terminate such
Trust Fund. A Trust Fund may be terminated at any time by the
holders of Units representing 66-2/3% of the Units thereof then
outstanding. In the event of termination of a Trust Fund,
written notice thereof will be sent by the Trustee to all
Unitholders of such Trust Fund. Within a reasonable period
after termination, the Trustee will sell any Bonds remaining in
such Trust Fund and, after paying all expenses and charges
incurred by such Trust Fund, will distribute to Unitholders
thereof (upon surrender for cancellation of certificates for
Units, if issued) their pro rata share of the balances
remaining in the Interest and Principal Accounts of such Trust
Fund.
.c2.Limitations on Liability;. The Sponsor: The Sponsor
is liable for the performance of its obligations arising from
its responsibilities under the Trust Agreement, but will be
under no liability to the Unitholders for taking any action or
refraining from any action in good faith pursuant to the Trust
Agreement or for errors in judgment, except in cases of its own
gross negligence, bad faith or willful misfeasance in the
performance of its duties or by reason of its reckless
disregard of its obligations and duties under the Trust
Agreement. The Sponsor shall not be liable or responsible in
any way for depreciation or loss incurred by reason of the sale
of any Bonds.
The Trustee: The Trust Agreement provides that the
Trustee shall be under no liability for any action taken in
good faith in reliance upon prima facie properly executed
documents or for the disposition of monies, Bonds or
certificates except by reason of its own gross negligence, bad
faith or willful misfeasance in the performance of its duties
or by reason of its reckless disregard of its obligations and
duties under the Trust Agreement. The Trustee shall not be
liable or responsible in any way for depreciation or loss
incurred by reason of the sate by the Trustee of any Bonds. In
the event that the Sponsor shall fail to act, the Trustee may
act and shall not be liable for any such action taken by it in
good faith. The Trustee shall not be personally liable for any
taxes or other governmental charges imposed upon or in respect
of the Bonds or upon the interest thereon.
The Evaluator: The Trustee and Unitholders may rely on
any evaluation furnished by the Evaluator and shall have no
responsibility for the accuracy thereof. The Trust Agreement
provides that the determinations made by the Evaluator shall be
made in good faith upon the basis of the best information
available to it, provided, however, that the Evaluator shall be
under no liability to the Trustee or Unitholders for errors in
judgment, but shall be liable only for its gross negligence,
bad faith or willful misfeasance in the performance of its
duties or by reason of its reckless disregard of its
obligations and duties under the Trust Agreement.
.c.Expenses of the Trusts
The Sponsor will not charge the Trusts any fees for
services performed as Sponsor, except that the Sponsor shall
receive an annual surveillance fee, which is not to exceed the
amount set forth under "Essential Information" in Part Two of
this Prospectus for providing portfolio surveillance services
for the Trusts. Such fee (which is based on the largest number
of Units outstanding during each year) may exceed the actual
costs of providing such surveillance services for a Trust, but
at no time will the total amount received for portfolio
surveillance services rendered to a Trust and to any other unit
investment trusts sponsored by the Sponsor for which it
provides portfolio surveillance services in any calendar year
exceed the aggregate cost to the Sponsor of supplying such
services in such year. The foregoing fees may be increased
without approval of the Unitholders by amounts not exceeding
proportionate increases under the category "All Services Less
Rent of Shelter" in the Consumer Price Index published by the
United States Department of Labor or, if such category is no
longer published, in a comparable category. The Sponsor will
receive a portion of the sales commissions paid in connection
with the purchase of Units and will retain the profits, if any,
related to the deposit of Bonds in a Trust Fund. The Sponsor
has borne all the expenses of creating and establishing the
Trusts including the cost of the initial preparation, printing
and execution of the Prospectus, Trust Agreement and
certificates, legal and accounting expenses, advertising and
selling expenses, payment of closing fees, the expenses of the
Trustee, evaluation fees relating to the deposit and other
out-of-pocket expenses.
The Trustee receives for its services the fee set forth
under "Essential Information" in Part Two of this Prospectus.
The Trustee's fee which is calculated monthly is based on the
largest aggregate principal amount of Bonds in each Trust Fund
at any time during the period. Funds that are available for
future distributions, redemptions and payment of expenses are
held in accounts which are non-interest bearing to Unitholders
and are available for use by the Trustee pursuant to normal
banking procedures; however, the Trustee is also authorized by
the Trust Agreement to make from time to time certain
non-interest bearing advances to a Trust Fund. The Trustee's
fee is payable on or before each Distribution Date. See
"Unitholders_Distributions to Unitholders."
For evaluation of the Bonds, the Evaluator shall receive a
fee, payable monthly, calculated on the basis of that annual
rate set forth under "Essential Information" in Part Two of
this Prospectus based upon the largest aggregate principal
amount of Bonds in the related Trust Fund at any time during
such monthly period.
The Trustee's fees, the Evaluator's fees and the
surveillance fees are deducted from the Interest Account of the
appropriate Trust Fund to the extent funds are available and
then from the Principal Account of such Trust. Such fees may
be increased without approval of Unitholders by amounts not
exceeding a proportionate increase in the Consumer Price index
entitled "All Services Less Rent of Shelter," published by the
United States Department of Labor, or any equivalent index
substituted therefor.
The following additional charges are or may be incurred by
a Trust Fund: (a) fees for the Trustee's extraordinary
services; (b) expenses of the Trustee (including legal and
auditing expenses, but not including any fees and expenses
charged by any agent for custody and safeguarding of Bonds);
(c) various governmental charges; (d) expenses and costs of any
action taken by the Trustee to protect such Trust or the rights
and interests of the Unitholders; (e) indemnification of the
Trustee for any loss, liability or expense incurred by it in
the administration of such Trust not resulting from gross
negligence, bad faith or willful misconduct on its part;
(f) indemnification of the Sponsor for any loss, liability or
expense incurred in acting in that capacity without gross
negligence, bad faith or willful misconduct; and
(g) expenditures incurred in contacting Unitholders upon
termination of such Trust Fund. The fees and expenses set
forth herein are payable out of a Trust and, when owing to the
Trustee, are secured by a lien on such Trust.
Fees and expenses of a Trust Fund shall be deducted from
the Interest Account thereof, or, to the extent funds are not
available in such Account, from the Principal Account. The
Trustee may withdraw from the Principal Account or the Interest
Account such amounts, if any, as it deems necessary to
establish a reserve for any taxes or other governmental charges
or other extraordinary expenses payable out of a Trust.
Amounts so withdrawn shall be credited to a separate account
maintained for each Trust Fund known as the Reserve Account and
shall not be considered a part of the Trust Fund when
determining the value of the Units until such time as the
Trustee shall return all or any part of such amounts to the
appropriate account.
.c.Legal Opinions
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.
.c.Independent Auditors
The statement of net assets, including the schedule of
investments, appearing in Part Two of this Prospectus, with
information pertaining to the specific Trust to which such
statement relates, has been audited by Ernst & Young LLP,
independent auditors, as set forth in their report appearing in
Part Two of this Prospectus, and is included herein in reliance
upon the authority of said firm as experts in accounting and
auditing.
.c.Description of Ratings;*
Standard & Poor's Ratings Group. _ A brief description of
the applicable Standard & Poor's Ratings Group, a Division of
McGraw-Hill, Inc., ("Standard & Poor's") rating symbols and
their meanings follow:
A Standard & Poor's corporate or municipal bond rating is
a current assessment of the creditworthiness of an obligor with
respect to a specific debt obligation. This assessment may
take into consideration obligors such as guarantors, insurers,
or lessees.
The bond rating is not a recommendation to purchase, sell
or hold a security, inasmuch as it does not comment as to
market price or suitability for a particular investor.
The ratings are based on current information furnished by
the issuer and obtained by Standard & Poor's from other sources
it considers reliable. Standard & Poor's does not perform an
audit in connection with any rating and may, on occasion, rely
on unaudited financial information. The ratings may be
changed, suspended, or withdrawn as a result of changes in, or
unavailability of, such information, or for other
circumstances.
The ratings are based, in varying degrees, on the
following considerations:
I. Likelihood of default _ capacity and willingness
of the obligor as to the timely payment of interest and
repayment of principal in accordance with the terms of the
obligation;
II. Nature of and provisions of the obligation;
III. Protection afforded by, and relative position
of, the obligation in the event of bankruptcy,
reorganization or other arrangement, under the laws of
bankruptcy and other laws affecting creditors' rights.
AAA _ Bonds rated AAA have the highest rating assigned by
Standard & Poor's to a debt obligation. Capacity to pay
interest and repay principal is extremely strong.
AA _ Bonds rated AA have a very strong capacity to pay
interest and repay principal and differ from the highest rated
issues only in small degree.
A _ Bonds rated A have a strong capacity to pay interest
and repay principal although they are somewhat more susceptible
to the adverse effects of changes in circumstances and economic
conditions than bonds in higher rated categories.
BBB _ Bonds rated BBB are regarded as having an adequate
capacity to pay interest and repay principal. Whereas they
normally exhibit adequate protection parameters, adverse
economic conditions or changing circumstances are more likely
to lead to a weakened capacity to pay interest and repay
principal for bonds in this category than for bonds in higher
rated categories.
Bonds rated 'BB,' 'B,' 'CCC,' 'CC,' and 'C' are regarded
as having predominantly speculative characteristics with
respect to capacity to pay interest and repay principal.
'BB' indicates the least degree of speculation and 'C,'
the highest degree of speculation, While such Bonds will likely
have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to
adverse conditions.
BB _ Bonds rated BB have less near-term vulnerability to
default than other speculative grade debt. However, it faces
major ongoing uncertainties or exposure to adverse business,
financial, or economic conditions that could lead to inadequate
capacity to meet timely interest and principal payments.
B _ Bonds rated B have greater vulnerability to default
but presently has the capacity to meet interest payments and
principal repayments. Adverse business, financial, or economic
conditions would likely impair capacity or willingness to pay
interest and repay principal.
CCC _ Bonds rated CCC have a current identifiable
vulnerability to default, and is dependent on favorable
business, financial, and economic conditions to meet timely
payment of interest and repayment of principal. In the event
of adverse business, financial, or economic conditions, it is
not likely to have the capacity to pay interest and repay
principal.
CC _ The rating CC is typically applied to debt
subordinated to senior debt which is assigned an actual or
implied CCC rating.
C _ The rating C is typically applied to debt subordinated
to senior debt which is assigned an actual or implied CCC debt
rating.
D _ Bonds are rated D when the issue is in payment
default, or the obligor has filed for bankruptcy. The D rating
is used when interest or principal payments are not made on the
date due, even if the applicable grace period has not expired,
unless S&P believes that such payments will be made during such
grace period.
Plus (+) or Minus (-): The ratings from "AA" to "A" may
be modified by the addition of a plus or minus sign to show
relative standing within the major rating categories.
Provisional Ratings: The letter "p" indicates the rating
is provisional. A provisional rating assumes the successful
completion of the project being financed by the bonds being
rated and indicates that payment of debt service requirements
is largely or entirely dependent upon the successful and timely
completion of the project. This rating, however, while
addressing credit quality subsequent to completion of the
project, makes no comment on the likelihood of, or the risk of
default upon failure of, such completion. The investor should
exercise his own judgment with respect to such likelihood and
risk.
Moody's Investors Service, Inc. _ A brief description of
the applicable Moody's Investors Service, Inc. rating symbols
and their meanings follow:
Aaa _ Bonds which are rated Aaa are judged to be of the
best quality. They carry the smallest degree of investment
risk and are generally referred to as "gilt edge." Interest
payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective
elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong
position of such issues. Their safety is so absolute that with
the occasional exception of oversupply in a few specific
instances, characteristically, their market value is affected
solely by money market fluctuations.
Aa _ Bonds which are rated Aa are judged to be of high
quality by all standards. Together with the Aaa group they
comprise what are generally known as high grade bonds. They
are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or
fluctuations of protective elements may be of greater amplitude
or there may be other elements present which make the long term
risks appear somewhat larger than in Aaa securities. Their
market value is virtually immune to all but money market
influences, with the occasional exception of oversupply in a
few specific instances.
A _ Bonds which are rated A possess many favorable
investment attributes and are to be considered as upper medium
grade obligations. Factors giving security to principal and
interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the
future. The market value of A-rated bonds may be influenced to
some degree by economic performance during a sustained period
of depressed business conditions, but, during periods of
normalcy, A-rated bonds frequently move in parallel with Aaa
and Aa obligations, with the occasional exception of oversupply
in a few specific instances.
A1 _ Bonds which are rated Al offer the maximum in
security within their quality group, can be bought for possible
upgrading in quality, and additionally, afford the investor an
opportunity to gauge more precisely the relative attractiveness
of offerings in the marketplace.
Baa _ Bonds which are rated Baa are considered as lower
medium grade obligations, i.e., they are neither highly
protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable
over any great length of time. Such bonds lack outstanding
investment characteristics and, in fact, have speculative
characteristics as well. The market value of Baa-rated bonds
is more sensitive to changes in economic circumstances and,
aside from occasional speculative factors applying to some
bonds of this class, Baa market valuations move in parallel
with Aaa, Aa and A obligations during periods of economic
normalcy, except in instances of oversupply.
Ba _ Bonds which are rated Ba are judged to have
speculative elements; their future cannot be considered as well
assured. Often the protection of interest and principal
payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B _ Bonds which are rated B generally lack characteristics
of the desirable investment. Assurance of interest and
principal payments or of maintenance of other terms of the
contract over any long period of time may be small.
Caa _ Bonds which are rated Caa are of poor standing.
Such issues may be in default or there may be present elements
of danger with respect to principal or interest.
Ca _ Bonds which are rated Ca represent obligations which
are speculative in a high degree. Such issues are often in
default or have other marked shortcomings.
C _ Bonds which are rated C are the lowest rated class of
bonds and issues so rated can be regarded as having extremely
poor prospects of ever attaining any real investment standing.
Conditional Ratings: Bonds rated "Con(_)" are ones for
which the security depends upon the completion of some act or
the fulfillment of some condition. These are bonds secured by
(a) earnings of projects under construction, (b) earnings of
projects unseasoned in operation experience, (c) rentals which
begin when facilities are completed, or (d) payments to which
some other limiting conditions attaches. Parenthetical rating
denotes probable credit stature upon completion of construction
or elimination of basis of condition.
Note: Moody's applies numerical modifiers, 1, 2, and 3 in
each generic rating classification from Aa through B in certain
areas of its bond rating system. The modifier 1 indicates that
the security ranks in the higher end of its generic rating
category; the modifier 2 indicates a mid-range ranking; and the
modifier 3 indicates that the issue ranks in the lower end of
its generic rating category.
Duff & Phelps Credit Rating Co. _ A brief description of
the applicable Duff & Phelps Credit Rating Co. rating symbols
and their meanings follow:
These ratings represent a summary opinion of the issuer's
long-term fundamental quality. Rating determination is based
on qualitative and quantitative factors which may vary
according to the basic economic and financial characteristics
of each industry and each issuer. Important considerations are
vulnerability to economic cycles as well as risks related to
such factors as competition, government action, regulation,
technological obsolescence, demand shifts, cost structure, and
management depth and expertise. The projected viability of the
obligor at the trough of the cycle is a critical determination.
AAA _ Highest credit quality. The risk factors are
negligible, being only slightly more than for risk-free U.S.
Treasury debt.
AA _ High credit quality. Protection factors are strong.
Risk is modest but may vary slightly from time to time because
of economic conditions.
A _ Protection factors are average but adequate. However,
risk factors are more variable and greater in periods of
economic stress.
BBB _ Below average protection factors but still
considered sufficient for prudent investment. Considerable
variability in risk during economic cycles.
BB _ Below investment grade but deemed likely to meet
obligations when due. Present or prospective financial
protection factors fluctuate according to industry conditions
or company fortunes. Overall quality may move up or down
frequently within this category.
B _ Below investment grade and possessing risk that
obligations will not be met when due. Financial protection
factors will fluctuate widely according to economic cycles,
industry conditions and/or company fortunes. Potential exists
for frequent changes in the rating within this category or into
a higher or lower rating grade.
CCC _ Well below investment grade securities.
Considerable uncertainty exists as to timely payment of
principal, interest or preferred dividends. Protection factors
are narrow and risk can be substantial with unfavorable
economic/industry conditions, and/or with unfavorable company
developments.
DD _ Defaulted debt obligations. Issuer failed to meet
scheduled principal and/or interest payments.
Contents Page
Summary 2
The Trust Funds 4
Compensation for Foreign Withholding Tax 5
Federal Tax Status 5
Trust Portfolios 10
Portfolio Selection 10
Risk Factors 10
General Trust Information 14
Retirement Plans 15
Distribution Reinvestment 17
Interest, Estimated Long-Term Return and Estimated Current Return
18
Public Offering of Units 18
Public Offering Price 18
Purchased and Daily Accrued Interest 20
Public Distribution of Units 21
Profits of Sponsor 21
Market for Units 22
Redemption 22
Unitholders 24
Ownership of Units 24
Distributions to Unitholders 24
Statements to Unitholders 25
Rights of Unitholders 26
Investment Supervision 26
Administration of the Trusts 27
The Trustee 27
The Sponsor 28
The Evaluator 28
Amendment and Termination 29
Limitations on Liability 30
Expenses of the Trusts 30
Legal Opinions 32
Independent Auditors 32
Description of Ratings 32
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 Trusts, the
Trustee, or the Sponsor. The Trusts are registered as unit
investment trusts under the investment Company Act of 1940.
Such registration does not imply that the Trusts 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.
KemperDefined Funds.
Corporate
Prospectus Part One
Corporate Income Series
Dated as of the date set forth in Part Two of this Prospectus
Kemper Unit Investment Trusts
<PAGE>
Kemper Defined Funds
Corporate Income Series 2
Part Two
Dated April 28, 1995
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY
IS A CRIMINAL OFFENSE.
NOTE: Part Two of this Prospectus May Not Be Distributed unless
Accompanied by
Part One.
<PAGE>
Kemper Defined Funds
Corporate Income Series 2
Essential Information
As of March 17, 1995
Sponsor and Evaluator: Kemper Unit Investment
Trusts
Trustee: Investors Fiduciary Trust
Company
<TABLE>
<CAPTION>
General Information
<S>
<C>
Principal Amount of Securities
$40,920,000
Number of Units
4,224,000
Fractional Undivided Interest in the Trust per Unit
1/4,224,000
Principal Amount of Securities per Unit
$9.688
Calculation of Public Offering Price:
Aggregate Value of Securities in the Trust
$35,762,100
Aggregate Value of Securities per Unit
$8.466
Principal Cash per Unit (1)
$-
Purchased Interest per Unit through settlement date
of March 24, 1995
$.113
Total Price including Purchased Interest per Unit
$8.579
Sales Charge of 3.9% of Public Offering Price
(4.058% of net amount invested) per Unit
$.348
Public Offering Price per Unit
$8.927
Redemption Price per Unit
$8.450
Calculation of Estimated Net Annual Interest Income per Unit:
Estimated Annual Interest Income
$.8321
Less: Estimated Annual Expense
$.0194
Estimated Net Annual Interest Income
$.8127
Daily Rate at which Estimated Net Annual Interest Income
Accrues per Unit
$.002257
Estimated Current Return Based on Public Offering Price (2)
9.10%
Estimated Long-Term Return (2)
10.15%
</TABLE>
[FN]
1. This amount, if any, represents principal cash or overdraft
which is an
asset or liability of the Trust and is included in the Public
Offering Price.
2. The Estimated Current Return and Estimated Long-Term Return
will vary with
changes in the Public Offering Price and there is no assurance
that such
returns on the date hereof will be applicable on a subsequent
date of
purchase. These estimated returns are increased for transactions
entitled to
a reduced sales charge (see "Public Offering of Units - Public
Offering
Price" - Part One).
<PAGE>
Kemper Defined Funds
Corporate Income Series 2
Essential Information (continued)
As of March 17, 1995
Sponsor and Evaluator: Kemper Unit Investment
Trusts
Trustee: Investors Fiduciary Trust
Company
Record and Distribution Date Record Date is the
first of each
month and distributions
to
Unitholders on such
record dates
will be made on the
15th day of the
month.
Distribution Dates No distribution (other
than capital
gains distributions)
need be made
from the Principal
Account if the
balance therein,
excluding capital
gains, is less than
$1.00 per Unit.
Trustee's Annual Fee (including
estimated expenses) $1.33 per 100 Units
(includes $.1.25
of Trustee's annual fee
per $1,000
principal amount of
underlying
Securities and $.15 of
out-of-pocket
expenses per 100
Units).
Evaluator's Annual Fee $.30 per $1,000
principal amount of
underlying Securities.
Surveillance Fee $.25 per $1,000
principal amount of
underlying Securities.
Date of Trust Agreement and
Initial Deposit April 13, 1994
Mandatory Termination Date December 31, 2006
Weighted Average Stated Maturity
of Bonds 7.74 years
Discretionary Liquidation Amount The Trust may be
terminated if the
value thereof is less
than
$16,896,000 (40% of the
par value of
the Securities
deposited in the
Trust).
<PAGE>
Report of Independent Auditors
Unitholders
Kemper Defined Funds
Corporate Income Series 2
We have audited the accompanying statement of assets and
liabilities,
including the schedule of investments, of Kemper Defined Funds
Corporate
Income Series 2 as of December 31, 1994, and the related
statements of
operations and changes in net assets for the period from April
13, 1994 (Date
of Initial Deposit) to December 31, 1994. These financial
statements are the
responsibility of the Trust's sponsor. Our responsibility is to
express an
opinion on these financial statements based on our 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 financial
statements are free of
material misstatement. An audit includes examining, on a test
basis, evidence
supporting the amounts and disclosures in the financial
statements. Our
procedures included confirmation of investments owned as of
December 31, 1994,
by correspondence with the custodial bank. An audit also
includes assessing
the accounting principles used and significant estimates made by
the sponsor,
as well as evaluating the overall financial statement
presentation. We
believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above
present fairly, in
all material respects, the financial position of Kemper Defined
Funds
Corporate Income Series 2 at December 31, 1994, and the results
of its
operations and the changes in its net assets for the period from
April 13,
1994 to December 31, 1994, in conformity with generally accepted
accounting
principles.
Ernst & Young LLP
Kansas City, Missouri
April 14, 1995
<PAGE>
Kemper Defined Funds
Corporate Income Series 2
Statement of Assets and Liabilities
December 31, 1994
<TABLE>
<CAPTION>
<S> <C>
<C>
Assets
Securities, at value (cost $26,956,203)
$25,204,332
Interest receivable
742,132
- -----------
Total assets
25,946,464
Liabilities and net assets
Amount due to sponsor
350,606
Cash overdraft
75,545
Accrued liabilities
1,825
- -----------
427,976
Net assets, applicable to 3,024,000 Units
outstanding:
Cost of Trust assets, including purchased
interest of $294,969 $27,251,172
Unrealized depreciation (1,751,871)
Distributable funds 19,187
-----------
- -----------
Net assets
$25,518,488
===========
Net asset value per Unit
$8.44
===========
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
Kemper Defined Funds
Corporate Income Series 2
Statement of Operations
<TABLE>
<CAPTION>
Period from
April 13,
1994 to
December 31,
1994
<S>
<C>
- -----------
Investment income - interest
$962,449
Expenses:
Trustee's fees and related expenses
17,012
Evaluator's and portfolio surveillance fees
6,447
- -----------
Total expenses
23,459
- -----------
Net investment income
938,990
Realized and unrealized gain (loss) on investments:
Net realized gain
26,100
Unrealized depreciation during the period
(1,751,871)
- -----------
Net loss on investments
(1,725,771)
- -----------
Net decrease in net assets resulting from operations
$(786,781)
===========
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
Kemper Defined Funds
Corporate Income Series 2
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Period from
April 13,
1994 to
December 31,
1994
<S>
<C>
- -----------
Operations:
Net investment income
$938,990
Net realized gain on investments
26,100
Unrealized depreciation on investments during
the period
(1,751,871)
- -----------
Net decrease in net assets resulting from operations
(786,781)
Distributions to Unitholders:
Net investment income
(280,278)
Principal from investment transactions
(1,422,416)
- -----------
Total distributions to Unitholders
(1,702,694)
Capital transactions:
Issuance of 3,024,000 Units, including purchased
interest of $294,969
28,007,963
- -----------
Total increase in net assets
25,518,488
Net assets:
Beginning of the period
-
- -----------
End of the period (including distributable
funds applicable to Trust Units of $19,187
at December 31, 1994)
$25,518,488
===========
Trust Units outstanding at the end of the period
3,024,000
===========
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
<TABLE>
Kemper
Defined Funds
Corporate
Income Series 2
Schedule of
Investments
December
31, 1994
<CAPTION>
Coupon
Maturity Redemption Principal
Name of Issuer Rate
Date Provisions(2) Rating(1) Amount(4) Value(3)
<S> <C> <C>
<C> <C> <C> <C>
-------
- ---------- -------------- --------- ----------- -----------
AMR Corporation 9.50%
5/15/2001 Non-Callable BB+ $630,000 $640,238
Best Buy Company Inc. 8.625
10/01/2000 1998 @ 102.5 B+ 1,260,000 1,140,300
Century Communications Corporation (6) 0.00
3/15/2003 Non-Callable BB- 1,260,000 516,600
Continental Cablevision Inc. 8.625
8/15/2003 Non-Callable BB 1,260,000 1,143,450
Eagle Food Centers Inc. 8.625
4/15/2000 1998 @ 103.5 B+ 1,260,000 746,550
Foodmaker Inc. 9.25
3/01/1999 1997 @ 102.64 B+ 1,260,000 1,071,000
Healthsouth Rehabilitation Corporation 9.50
4/01/2001 1998 @ 104.75 B 1,260,000 1,219,050
Kaufman & Broad Home Corporation 9.375
5/01/2003 2000 @ 100 BB- 1,260,000 1,105,650
Kroger Company 9.25
1/15/2005 1998 @ 104.63 BB 1,575,000 1,551,375
Owens-Illinois, Inc. 9.75
8/15/2004 1997 @ 104.88 B+ 1,575,000 1,515,938
Ryland Group Inc. 9.625
6/01/2004 2000 @ 100 BB- 1,260,000 1,083,600
Safeway Inc. 9.65
1/15/2004 Non-Callable BB- 1,260,000 1,269,450
Service Merchandise Company 9.00
12/15/2004 1997 @ 104.5 BB- 1,260,000 963,900
Southern Pacific Rail Corporation 9.375
8/15/2005 1998 @ 104.17 BB- 1,260,000 1,173,375
Southland Corporation 4.50
6/15/2004 1995 @ 100 BB+ 630,000 381,150
Time Warner Inc. 7.95
2/01/2000 Non-Callable BBB- 630,000 598,500
Turner Broadcasting System Inc. 7.40
2/01/2004 Non-Callable BB+ 945,000 791,437
Unisys Corporation 10.625
10/01/1999 1997 @ 101.77 BB- 630,000 639,450
UAL Corporation 9.00
12/15/2003 Non-Callable BB 945,000 891,844
Viacom International Inc. 10.25
9/15/2001 Non-Callable B+ 1,260,000 1,291,500
Vons Companies Inc. 9.625
4/01/2002 1997 @ 103.61 BB- 945,000 930,825
Wheeling-Pittsburgh Corporation 9.375
11/15/2003 2000 @ 102.5 BB 1,575,000 1,362,375
United Mexican States (5) 8.50
9/15/2002 Non-Callable BB 945,000 789,075
Banco Nacional De Comerico Exterior, S.N.C. (5) 7.25
2/02/2004 Non-Callable BB 945,000 689,850
Cemex S.A. 8.875
6/10/1998 Non-Callable Ba2* 630,000 560,700
Republic of Argentina 8.375
12/01/2003 Non-Callable BB- 945,000 670,950
YPF Sociedad Anonima 8.00
2/15/2004 Non-Callable BB- 630,000 466,200
----------- -----------
$29,295,000 $25,204,332
=========== ===========
</TABLE>
[FN]
See accompanying notes to Schedule of Investments.
<PAGE>
Kemper Defined Funds
Corporate Income Series 2
Notes to Schedule of Investments
1. All ratings are by Standard & Poor's Corporation, unless
marked with the
symbol "*", in which case the rating is by Moody's Investors
Service, Inc.
The symbol "NR" indicates Bonds for which no rating is available.
2. There is shown under this heading the year in which each
issue of Bonds is
initially redeemable and the redemption price for that year or,
if currently
redeemable, the redemption price currently in effect; unless
otherwise
indicated, each issue continues to be redeemable at declining
prices
thereafter, but not below par value. The prices at which the
Bonds may be
redeemed or called prior to maturity may or may not include a
premium and, in
certain cases, may be less than the cost of the Bonds to the
Trust. In
addition, certain Bonds in the Portfolio may be redeemed in whole
or in part
other than by operation of the stated redemption provisions under
certain
unusual or extraordinary circumstances specified in the
instruments setting
forth the terms and provisions of such Bonds.
3. See Note 1 to the accompanying financial statements for a
description of
the method of determining cost and value.
4. At December 31, 1994, the Portfolio of the Trust consists of
22 U.S.
corporate debt obligations, 2 foreign corporate debt obligations
and 3 foreign
sovereign debt obligations. Approximately 44% of the aggregate
principal
amount of Bonds in the Trust are subject to call by the issuers
within five
years after December 31, 1994.
5. These Bonds have been issued by a foreign government or are
obligations of
a foreign government.
6. This Bond has been purchased at a discount from the par value
because
there is no stated interest income thereon. Such Bond is
normally described
as a "zero coupon" Bond. Over the life of the Bond the value
increases, so
that upon maturity, the holders of the Bond will receive 100% of
the principal
amount thereof.
[FN]
See accompanying notes to financial statements.
<PAGE>
Kemper Defined Funds
Corporate Income Series 2
Notes to Financial Statements
1. Significant Accounting Policies
Valuation of Securities
As of the date of the financial statements and during the Trust's
primary
offering period, Securities are stated at offering prices as
determined by
Kemper Unit Investment Trusts (A Service of Kemper Securities,
Inc.), the
"Evaluator" and sponsor of the Trust. At the end of the primary
offering
period and thereafter, the Securities will be stated at bid
prices as
determined by Kemper Unit Investment Trusts. The aggregate
prices of the
Securities are determined based on (a) current prices of the
Securities, (b)
current prices for comparable securities, (c) appraisal, or (d)
any
combination of the above.
Cost of Securities
Cost of the Trust's Securities is based on the offering prices of
the
Securities on the dates of deposit of such Securities acquired
during the
primary sales period, plus amortization of original issue
discount for the
zero coupon obligation. The premium or discount for the fixed
rate
obligations is not being amortized. Realized gain (loss) from
Security
transactions is reported on an identified cost basis.
Investment Income
Interest income consists of amortization of original issue
discount on the
zero coupon obligation and interest accrued as earned on the
fixed rate
obligations.
2. Unrealized Appreciation and Depreciation
Following is an analysis of net unrealized depreciation at
December 31, 1994:
<TABLE>
<CAPTION>
<S>
<C>
Gross unrealized depreciation
$(1,751,871)
Gross unrealized appreciation
-
- ------------
Net unrealized depreciation
$(1,751,871)
============
</TABLE>
3. Transactions with Affiliates
From the inception of the Trust through January 31, 1995, the
Trustee,
Investors Fiduciary Trust Company (IFTC), was 50% owned by Kemper
Financial
Services, Inc., an affiliate of Kemper Unit Investment Trusts.
On that date,
State Street Boston Corporation acquired IFTC. Payments to the
Trustee
included $1.25 of Trustee's annual fee per $1,000 principal
amount of
underlying Securities in the Trust through December 31, 1994,
calculated
monthly, based on the largest aggregate principal amount of
Securities in the
Trust at any time during the month and reimbursement of
out-of-pocket expenses
of $.15 per 100 Units through December 31, 1994, calculated
monthly, based on
the largest number of Trust Units outstanding at any time during
the month.
<PAGE>
Kemper Defined Funds
Corporate Income Series 2
Notes to Financial Statements (continued)
3. Transactions with Affiliates (continued)
The annual Evaluator's fee and portfolio surveillance fee,
calculated monthly,
are $.30 and $.25, respectively, per $1,000 principal amount of
Securities in
the Trust based on the largest aggregate principal amount of
Securities in the
Trust at any time during the month.
Certain amounts of purchased interest on Securities acquired
during the
primary sales period are paid by the sponsor. The sponsor will
be reimbursed
for such payment subsequent to the primary sales period.
4. Federal Income Taxes
The Trust is not an association taxable as a corporation for
federal income
tax purposes. Each Unitholder is considered to be the owner of a
pro rata
portion of the Trust under Subpart E, Subchapter J of Chapter 1
of the
Internal Revenue Code of 1986, as amended. Accordingly, no
provision has been
made for federal income taxes.
5. Other Information
Cost to Investors
The cost to initial investors of Units of the Trust was based on
the aggregate
offering price of the Securities on the date of an investor's
purchase, plus
or minus a pro rata share of cash or overdraft in the Principal
Account,
purchased interest and daily accrued interest, plus a sales
charge of 3.9% of
the Public Offering Price (equivalent to 4.058% of the net amount
invested).
The Public Offering Price for secondary market transactions is
based on the
aggregate bid prices of the Securities plus or minus a pro rata
share of cash
or overdraft in the Principal Account, purchased interest and
daily accrued
interest on the date of an investor's purchase, plus a sales
charge of 3.5% of
the Public Offering Price (equivalent to 3.627% of the net amount
invested).
<PAGE>
<TABLE>
Kemper Defined Funds
Corporate Income Series 2
Notes to Financial Statements (continued)
5. Other Information (continued)
Selected data per Unit of the Trust outstanding during the period
- -
<CAPTION>
Period from
April 13,
1994 to
December 31,
1994
<S>
<C>
------
Investment income - interest
$.51
Expenses
.01
------
Net investment income
.50
Distributions to Unitholders:
Net investment income
(.51)
Principal from investment transactions
(.32)
------
Total distributions to Unitholders
(.83)
Net loss on investments
(.79)
------
Change in net asset value
(1.12)
Net asset value:
Beginning of the period
9.56*
------
End of the period, including distributable funds
$8.44
======
</TABLE>
[FN]
* Value at Date of Initial Deposit (April 13, 1994).
<PAGE>
Consent of Independent Auditors
We consent to the reference to our firm under the caption
"Independent
Auditors" and to the use of our report dated April 14, 1995, in
this Post-
Effective Amendment to the Registration Statement (Form S-6) and
related
Prospectus of Kemper Defined Funds Corporate Income Series 2
dated April 28,
1995.
Ernst & Young LLP
Kansas City, Missouri
April 28, 1995
<PAGE>
Contents of Post-Effective AmendmentTo Registration Statement
This Post-Effective amendment to the Registration Statement
comprises the following papers and documents:
The facing sheet
The prospectus
The signatures
The Consent of Independent Accountants
<PAGE>
Signatures
Pursuant to the requirements of the Securities Act of 1933,
The Registrant, Kemper Defined Funds Series 17, certifies that it
meets all of the requirements for effectiveness of this
registration statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this Amendment to the
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Chicago,
and State of Illinois, on the 27th day of April, 1995.
Kemper Defined Funds Series 17
Registrant
By: Kemper Unit Investment Trusts
(a service of Kemper
Securities, Inc.)
Depositor
By: Michael J. Thoms
Vice President
Pursuant to the requirements of the Securities Act of 1933,
this Amendment to the Registration Statement has been signed
below on April 27, 1995 by the following persons, who constitute
a majority of the Board of Directors of Kemper Securities, Inc.
Signature Title
James R. Boris Chairman and Chief Executive Officer
James R. Boris
Stephen G. McConahey President and Chief Operating Officer
Stephen G. McConahey
Frank V. Geremia Senior Executive Vice President
Frank V. Geremia
David M. Greene Senior Executive Vice President
David M. Greene
Arthur J. McGivern Senior Executive Vice President and
Director
Arthur J. McGivern
Ramon Pecuch Senior Executive Vice President and
Director
Ramon Pecuch
Thomas R. Reedy Senior Executive Vice President and
Director
Thomas R. Reedy
Janet L. Reali Executive Vice President and Director
Janet L. Reali
Daniel D. Williams Executive Vice President and Treasurer
Daniel D. Williams
David B. Mathis Director
David B. Mathis
Stephen B. Timbers Director
Stephen B. Timbers
Donald F. Eller Director
Donald F. Eller
Michael J. Thoms
Michael J. Thoms signs this document pursuant to a Power of
Attorney filed with the Securities and Exchange Commission with
Amendment No. 1 to the Registration Statement on Form S-6 for
Kemper Defined Funds Series 28 (Registration No. 33-56779).
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted
from
Post-effective Amendment Number 1 to Form S-6 and is qualified in
its entirety by reference to such Post-effective Amendment to
Form S-6.
</LEGEND>
<SERIES>
<NUMBER> 2
<NAME> KEMPER DEFINED FUNDS CORPORATE INCOME SERIES
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> APR-13-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 26,956,203
<INVESTMENTS-AT-VALUE> 25,204,332
<RECEIVABLES> 742,132
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 25,946,464
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 427,976
<TOTAL-LIABILITIES> 427,976
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 27,251,172
<SHARES-COMMON-STOCK> 3,024,000
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 19,187
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (1,751,871)
<NET-ASSETS> 25,518,488
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 962,449
<OTHER-INCOME> 0
<EXPENSES-NET> 23,459
<NET-INVESTMENT-INCOME> 938,990
<REALIZED-GAINS-CURRENT> 26,100
<APPREC-INCREASE-CURRENT> (1,751,871)
<NET-CHANGE-FROM-OPS> (786,781)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (280,278)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> (1,422,416)
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 25,518,488
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
