<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 22, 1995
REGISTRATION NO. 33-57693
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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
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
A. EXACT NAME OF TRUST:
KEMPER DEFINED FUNDS SERIES 30
B. NAME OF DEPOSITOR:
KEMPER UNIT INVESTMENT TRUSTS
(a service of Kemper Securities, Inc.)
C. COMPLETE ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES:
KEMPER UNIT INVESTMENT TRUSTS
77 West Wacker Drive, 29th Floor
Chicago, Illinois 60601
D. NAME AND COMPLETE ADDRESS OF AGENT FOR SERVICE: Copy to:
ROBERT K. BURKE MARK J. KNEEDY
77 West Wacker Drive, 29th Floor c/o Chapman and Cutler
Chicago, Illinois 60601 111 West Monroe Street
Chicago, Illinois 60603
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
TITLE AND AMOUNT OF PROPOSED MAXIMUM AMOUNT OF
SECURITIES BEING REGISTERED AGGREGATE OFFERING PRICE REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Kemper An indefinite number of Indefinite $500 (previously paid)
Defined Units of Beneficial Inter-
Funds est pursuant to Rule 24f-2
Series under the Investment Com-
30 pany Act of 1940
</TABLE>
E. APPROXIMATE DATE OF PROPOSED SALE TO PUBLIC:
As soon as practicable after the effective date of the Registration Statement.
[X] Check box if it is proposed that this filing will become effective at
2:00 P.M. on February 22, 1995 pursuant to paragraph (b) of Rule 487.
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- -------------------------------------------------------------------------------
The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a) may determine.
<PAGE>
KEMPER DEFINED FUNDS SERIES 30
----------------
CROSS-REFERENCE SHEET
(FORM N-8B-2 ITEMS REQUIRED BY INSTRUCTIONS AS
TO THE PROSPECTUS IN FORM S-6)
<TABLE>
<CAPTION>
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
----------- ---------------------
I. ORGANIZATION AND GENERAL INFORMATION
<C> <S> <C>
1. (a)Name of trust................... Prospectus front cover
(b)Title of securities issued...... Essential Information
2. Name and address of each depositor. General Information--Administration of
the Trusts
3. Name and address of trustee........
4. Name and address of principal The Tax-Exempt Portfolios--
underwriters...................... Underwriting
5. State of organization of trust..... The Trust Funds
6. Execution and termination of trust The Trust Funds; General Information--
agreement......................... Administration of the Trusts
7. Changes of name.................... The Trust Funds
8. Fiscal year........................ *
9. Litigation.........................
II. GENERAL DESCRIPTION OF THE TRUST AND
SECURITIES OF THE TRUST
10. (a)Registered or bearer securities. General Information--Unitholders
(b)Cumulative or distributive
securities........................ The Trust Funds
(c)Redemption...................... General Information--Redemption
(d)Conversion, transfer, etc....... General Information--Unitholders;
General Information--Market for Units
(e)Periodic payment plan........... *
(f)Voting rights................... General Information--Unitholders
General Information--Investment
(g)Notice of certificateholders.... Supervision; General Information--
Administration of the Trusts; General
Information--Unitholders
(h)Consents required............... General Information--Unitholders;
General Information--Administration of
the Trusts
(i)Other provisions................ The Tax-Exempt Portfolios--Federal Tax
Status; The Corporate Income Series--
Federal Tax Status; The Tax-Exempt
Portfolios--Insurance on the Bonds
Type of securities comprising The Trust Funds; General Information--
11. units............................. Trust Information
12. Certain information regarding peri-
odic payment
certificates...................... *
Essential Information; Public Offering
of Units; General Information--
13. (a) Load, fees, expenses, etc...... Interest, Estimated Long-Term Return
and Estimated Current Return; General
Information--Expenses of the Trusts
</TABLE>
- --------
* Inapplicable, answer negative or not required.
i
<PAGE>
<TABLE>
<CAPTION>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
----------- ---------------------
<C> <S> <C>
(b)Certain information regarding
periodic payment certifi-
cates....................... *
(c)Certain percentages........... Essential Information; Public Offering
of Units; The Tax-Exempt Portfolios--
Insurance on the Bonds
(d)Certain other fees, etc. pay-
able by holders............. General Information--Unitholders
(e)Certain profits receivable by
depositor, principal under-
writers, trustee or affili- General Information--Expenses of the
ated persons................ Trusts; Public Offering of Units
(f)Ratio of annual charges to in-
come........................ *
The Trust Funds;
14. Issuance of trust's securities... General Information--Unitholders
15. Receipt and handling of payments
from purchasers................. *
16. Acquisition and disposition of The Trust Funds; General Information--
underlying securities........... Trust Information; General
Information--Investment Supervision
General Information--Market for Units;
General Information--Redemption;
17. Withdrawal or redemption......... Public Offering of Units
18. (a)Receipt, custody and disposi-
tion of income.............. General Information--Unitholders
(b)Reinvestment of distributions. General Information--Distribution
Reinvestment
(c)Reserves or special funds..... General Information--Expenses of the
Trusts
(d)Schedule of distributions..... *
General Information--Unitholders;
19. Records, accounts and reports.... General Information--Redemption;
General Information--Administration of
the Trusts
20. Certain miscellaneous provisions
of trust agreement
(a)Amendment..................... General Information--Administration of
the
(b)Termination................... Trusts
(c)and (d) Trustee, removal and General Information--Administration of
successor................... the Trusts
(e)and (f) Depositor, removal and General Information--Administration of
successor................... the Trusts
21. Loans to security holders........ *
22. Limitations on liability......... General Information--Administration of
the Trusts
23. Bonding arrangements............. *
24. Other material provisions of
trust agreement................. *
III. ORGANIZATION, PERSONNEL AND
AFFILIATED PERSONS OF DEPOSITOR
25. Organization of depositor........ General Information--Administration of
the Trusts
26. Fees received by depositor....... See Items 13(a) and 13(e)
27. Business of depositor............ General Information--Administration of
the Trusts
28. Certain information as to offi-
cials and affiliated persons of General Information--Administration of
depositor....................... the Trusts
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
----------- ---------------------
<C> <S> <C>
29. Voting securities of depos- General Information--Administration of the
itor...................... Trusts
30. Persons controlling deposi-
tor.......................
31. Payment by depositor for
certain services rendered
to trust..................
32. Payment by depositor for *
certain other services
rendered to trust.........
33. Remuneration of employees
of depositor for certain
services rendered to
trust.....................
34. Remuneration of other per-
sons for certain services
rendered to trust.........
IV. DISTRIBUTION AND REDEMPTION
35. Distribution of trust's se- Public Offering of Units
curities by states........
36. Suspension of sales of *
trust's securities........
37. Revocation of authority to
distribute................
38. (a)Method of distribution.. Public Offering of Units;
(b)Underwriting agreements. General Information--Market for Units;
(c)Selling agreements...... Public Offering of Units; The Tax-Exempt
Portfolios--Underwriting
39. (a)Organization of princi-
pal underwriters..........
(b)N.A.S.D. membership of General Information--Administration
principal underwriters.... of the Trusts
40. Certain fees received by See Items 13(a) and 13(e)
principal underwriters....
41. (a)Business of principal General Information--Administration
underwriters.............. of the Trusts
(b)Branch offices of prin-
cipal underwriters........
(c)Salesmen of principal *
underwriters..............
42. Ownership of trust's secu-
rities by certain persons.
43. Certain brokerage commis-
sions received by princi-
pal underwriters.......... Public Offering of Units
44. (a)Method of valuation..... Public Offering of Units
(b)Schedule as to offering *
price.....................
(c)Variation in offering Public Offering of Units
price to certain persons..
45. Suspension of redemption General Information--Redemption
rights....................
46. (a)Redemption valuation.... General Information--Redemption;
General Information--Market for Units;
Public Offering of Units
(b)Schedule as to redemp- *
tion price................
General Information--Market for Units;
47. Maintenance of position in Public Offering of Units;
underlying securities..... General Information--Redemption
V. INFORMATION CONCERNING THE TRUSTEE
OR CUSTODIAN
48. Organization and regulation General Information--Administration
of trustee................ of the Trusts
49. Fees and expenses of trust-
ee........................
50. Trustee's lien............. General Information--Expenses of the Trusts
</TABLE>
- --------
* Inapplicable, answer negative or not required.
iii
<PAGE>
<TABLE>
<CAPTION>
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
----------- ---------------------
VI. INFORMATION CONCERNING INSURANCE OF
HOLDERS OF SECURITIES
<C> <S> <C>
51. Insurance of holders of trust's Cover Page; General Information--
securities.................. Expenses of the Trusts; The Tax-Exempt
Portfolios--Insurance on the Bonds
VII. POLICY OF REGISTRANT
52. (a) Provisions of trust agreement The Trust Funds; General Information--
with respect to selection or Trust Information; General
elimination of underlying se- Information--Investment Supervision
curities.....................
(b) Transactions involving elimi-
nation of underlying securi-
ties......................... *
(c) Policy regarding substitution
or elimination of underlying General Information--Investment
securities................... Supervision; General Information--
Trust Information
(d) Fundamental policy not other-
wise covered................. *
Essential Information; General
Information--Trust Information; The
53. Tax status of Trust.............. Corporate Income Series--Federal Tax
Status; The Tax-Exempt Portfolios--
VIII. FINANCIAL AND STATISTICALFINFORMATIONederal Tax Status
Trust's securities during last
54. ten years........................
55.
56. Certain information regarding pe-
riodic payment certificates..... *
57.
58.
59. Financial statements (Instruction
1(c) to Form S-6)............... *
</TABLE>
- --------
* Inapplicable, answer negative or not required.
iv
<PAGE>
KEMPER DEFINED FUNDS SERIES 30
(CORPORATE INCOME SERIES AND TAX-EXEMPT PORTFOLIO)
Corporate Income Series 3 (the "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. THE SECURITIES INCLUDED IN THE
CORPORATE INCOME SERIES 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 THE CORPORATE INCOME SERIES 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 "CORPORATE INCOME SERIES--RISK FACTORS." For
foreign investors who are not United States citizens or residents, interest
income from the Corporate Income Series may not be subject to federal
withholding taxes if certain conditions are met. See "Corporate Income
Series--Federal Tax Status."
Insured National Series 14 (a "Tax-Exempt Portfolio" or the "Insured National
Trust") was formed for the purpose of gaining interest income exempt from
Federal income taxes while conserving capital and diversifying risks by
investing in an insured, fixed portfolio consisting of obligations issued by
or on behalf of states of the United States or counties, municipalities,
authorities or political subdivisions thereof.
Insured California Series 14 and Insured Michigan Series 10 (each a "Tax-
Exempt Portfolio" or an "Insured State Trust") were formed for the purpose of
gaining interest income free from Federal and State income taxes and, where
applicable, local income taxes and/or property taxes while conserving capital
and diversifying risks by investing in an insured, fixed portfolio consisting
of obligations issued by or on behalf of the State for which such Trust Fund
is named or counties, municipalities, authorities or political subdivisions
thereof.
Units of the Trusts are not deposits or obligations of, or guaranteed by, any
bank, and Units are not federally insured or otherwise protected by the
Federal Deposit Insurance Corporation and involve investment risk including
loss of principal.
Insurance guaranteeing the scheduled payment of principal and interest on all
of the Bonds in the portfolio of each Insured Trust has been obtained directly
by the issuer or the Sponsor from Municipal Bond Investors Assurance
Corporation or other insurers. See "Insurance on the Bonds" for each Insured
Trust. Insurance obtained by a Bond issuer is effective so long as such Bonds
are outstanding. THE INSURANCE DOES NOT RELATE TO THE UNITS OF THE INSURED
TRUSTS OFFERED HEREBY OR TO THEIR MARKET VALUE. As a result of such insurance,
the Units of the Insured Trusts have received a rating of "Aaa" by Moody's
Investors Service, Inc. See "Insurance on the Bonds" for each Insured Trust.
No representation is made as to any insurer's ability to meet its commitments.
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SPONSOR: KEMPER UNIT INVESTMENT TRUSTS
a service of Kemper Securities, Inc.
- -------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The investor is advised to read and retain this Prospectus for future
reference.
THE DATE OF THIS PROSPECTUS IS FEBRUARY 22, 1995.
<PAGE>
SUMMARY
PUBLIC OFFERING PRICE. The Public Offering Price per Unit of a Trust Fund
during the initial offering period is equal to a pro rata share of the
offering prices of the Securities in such Trust Fund plus or minus a pro rata
share of cash, if any, in the Principal Account held or owned by such Trust
Fund, plus accrued interest plus that sales charge indicated under "Essential
Information." The secondary market Public Offering Price per Unit will be
based upon a pro rata share of the bid prices of the Securities in each Trust
Fund plus or minus a pro rata share of cash, if any, in the Principal Account
held or owned by such Trust Fund, plus accrued interest plus the applicable
sales charge. For sales charges in the secondary market, see "Public Offering
of Units--Public Offering Price." The sales charge is reduced on a graduated
scale for sales involving at least $100,000 or 10,000 Units and will be
applied on whichever basis is more favorable to the investor. The minimum
purchase for each Trust is $1,000.
INTEREST AND PRINCIPAL DISTRIBUTIONS. Distributions of the estimated annual
interest income to be received by each Trust Fund, after deduction of
estimated expenses, will be made monthly. See "Essential Information."
Distributions of funds, if any, in the Principal Account will be made as
provided in "General Information--Unitholders--Distributions to Unitholders."
REINVESTMENT. Each Unitholder of a Trust Fund offered herein may elect to have
distributions of principal or interest or both automatically invested without
charge in shares of certain mutual funds sponsored by Kemper Financial
Services, Inc. See "General Information--Distribution Reinvestment."
ESTIMATED LONG-TERM RETURN AND ESTIMATED CURRENT RETURN. As of the opening of
business on the Initial Date of Deposit, the Estimated Long-Term Return and
the Estimated Current Return, if applicable, for each Trust were as set forth
in "Essential Information." The Estimated Current Return is calculated by
dividing the estimated net annual interest 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 Evaluator
and with the principal prepayment, redemption, maturity, exchange or sale of
Securities while the Public Offering Price will vary with changes in the
offering price of the underlying Securities and with changes in the 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 retirement dates of all of the Securities in the
applicable Trust and (2) takes into account the expenses and sales charge
associated with each Trust Unit. Since the market values and estimated
retirement dates of the Securities 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.
MARKET FOR UNITS. After the initial offering period, while under no obligation
to do so, the Sponsor intends to, and certain of the other Underwriters may,
maintain a market for the Units and to offer to repurchase such Units at
prices subject to change at any time which are based on the aggregate bid side
evaluation of the Securities in a Trust plus accrued interest.
2
<PAGE>
RISK FACTORS. An investment in the Trusts should be made with an understanding
of the risks associated therewith, including, among other factors, the
inability of the issuer or an insurer to pay the principal of or interest on a
bond when due, volatile interest rates, early call provisions, and changes to
the tax status of the Securities. The Corporate Income Series 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." See "The
Corporate Income Series--Risk Factors" and "The Tax-Exempt Portfolios--
Municipal Bond Risk Factors."
3
<PAGE>
KEMPER DEFINED FUNDS SERIES 30
ESSENTIAL INFORMATION
AS OF THE OPENING OF BUSINESS ON THE INITIAL DATE OF DEPOSIT
SPONSOR AND EVALUATOR: KEMPER UNIT INVESTMENT TRUSTS, A SERVICE OF
KEMPER SECURITIES, INC.
TRUSTEE: INVESTORS FIDUCIARY TRUST COMPANY
The income, expense and distribution data set forth below has been calculated
for Unitholders purchasing less than 10,000 Units. Unitholders purchasing more
than 10,000 units will receive a slightly higher return because of the reduced
sales charge for larger purchases.
<TABLE>
<CAPTION>
CORPORATE INSURED INSURED INSURED
INCOME NATIONAL CALIFORNIA MICHIGAN
SERIES 3 SERIES 14 SERIES 14 SERIES 10
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Public Offering Price per
Unit (1)(2)....................... $ 9.964 $ 10.249 $ 10.232 $ 10.295
Principal Amount of Securities per
Unit.............................. $ 10.000 $ 10.000 $ 10.000 $ 10.000
Estimated Current Return based on
Public Offering
Price (3)(4)(5)(6)................ 8.71% 5.75% 5.65% 5.05%
Estimated Long-Term
Return (3)(4)(5)(6)............... 9.10% 5.77% 5.68% 5.13%
Estimated Normal Annual
Distribution per Unit (6)......... $ 0.86724 $ 0.58968 $ 0.57780 $ 0.51948
Principal Amount of Securities..... $2,100,000 $8,050,000 $2,970,000 $3,275,000
Number of Units.................... 210,000 805,000 297,000 327,500
Fractional Undivided Interest per
Unit.............................. 1/210,000 1/805,000 1/297,000 1/327,500
Calculation of Public Offering
Price--Less than 10,000 Units:
Agregate Offering Price of
Securities....................... $1,998,282 $7,846,182 $2,890,015 $3,230,290
Agregate Offering Price of
Securities per Unit.............. $ 9.516 $ 9.747 $ 9.731 $ 9.863
Plus Sales Charge per Unit (7).... $ 0.448 $ 0.502 $ 0.501 $ 0.432
Public Offering Price per
Unit (1)(2)...................... $ 9.964 $ 10.249 $ 10.232 $ 10.295
Redemption Price per Unit.......... $ 9.466 $ 9.634 $ 9.632 $ 9.762
Sponsor's Initial Repurchase Price
per Unit.......................... $ 9.516 $ 9.747 $ 9.731 $ 9.863
Excess of Public Offering Price per
Unit over Redemption Price per
Unit.............................. $ 0.498 $ 0.615 $ 0.600 $ 0.533
Excess of Public Offering Price per
Unit over Sponsor's Initial
Repurchase Price per Unit......... $ 0.448 $ 0.502 $ 0.501 $ 0.432
Calculation of Estimated Net Annual
Interest Income per Unit (6):
Estimated Annual Interest Income.. $ 0.89402 $ 0.61408 $ 0.60399 $ 0.54470
Less: Estimated Annual Expense.... $ 0.02660 $ 0.02445 $ 0.02635 $ 0.02507
Estimated Net Annual Interest
Income........................... $ 0.86742 $ 0.58963 $ 0.57764 $ 0.51963
Estimated Daily Rate of Net
Interest Accrual per Unit......... $ 0.002410 $ 0.001638 $ 0.001605 $ 0.001443
Minimum Principal Value of the
Trust under which Trust Agreement
may be terminated................. $ 420,000 $1,610,000 $ 594,000 $ 655,000
</TABLE>
Evaluations for purposes of sale, purchase or redemption of Units are made as
of the close of business of the Sponsor (currently 3:15 p.m. Central Time)
next following receipt of an order for a sale or purchase of Units or receipt
by Investors Fiduciary Trust Company of Units tendered for redemption.
4
<PAGE>
ESSENTIAL INFORMATION--(CONTINUED)
<TABLE>
<CAPTION>
INSURED
CORPORATE INSURED INSURED MICHIGAN
INCOME NATIONAL CALIFORNIA SERIES
SERIES 3 SERIES 14 SERIES 14 10
--------- --------- ---------- --------
<S> <C> <C> <C> <C>
Trustee's Annual Fee per $1,000 prin-
cipal amount of Securities (8)....... $ 1.860 $ 1.680 $ 1.660 $ 1.590
Reduction of Trustee's fee per Unit
during the first year (6)............ $ 0.000 $0.00017 $ 0.000 $0.00123
Estimated annual interest income per
Unit during the first year (6)....... $0.89402 $0.61391 $0.60399 $0.54347
Interest Payments (9):
First Payment per Unit, representing
30 days............................. $0.07227 $0.04914 $0.04815 $0.04329
Estimated Normal Monthly Distribution
per Unit............................ $0.07227 $0.04914 $0.04815 $0.04329
Estimated Normal Annual Distribution
per Unit............................ $0.86724 $0.58968 $0.57780 $0.51948
Sales Charge (7):
As a percentage of Public Offering
Price per Unit...................... 4.500% 4.900% 4.900% 4.200%
As a percentage of net amount invest-
ed.................................. 4.708% 5.150% 5.149% 4.380%
As a percentage of net amount in-
vested in earning assets............ 4.708% 5.150% 5.149% 4.380%
</TABLE>
<TABLE>
<S> <C>
Date of Trust Agreements........................ February 22, 1995
First Settlement Date........................... March 1, 1995
Mandatory Termination Date...................... December 31, 2034
Evaluator's Annual Evaluation Fee............... Maximum of $0.30 per $1,000
Principal Amount of Securities
Sponsor's Annual Surveillance Fee--Corporate In- Maximum of $0.25 per $1,000
come Series.................................... Principal Amount of Securities
Sponsor's Annual Surveillance Fee--Tax-Exempt Maximum of $0.002 per Unit
Portfolios.....................................
</TABLE>
- ---------------------
(1) Anyone ordering Units for settlement after the First Settlement Date will
pay accrued interest from such date to the date of settlement (normally
five business days after order) less distributions from the Interest
Account subsequent to the First Settlement Date. For purchases settling on
the First Settlement Date, no accrued interest will be added to the Public
Offering Price.
(2) Many unit investment trusts issue a number of units such that each unit
represents approximately $1,000 principal amount of underlying securities.
The Sponsor, on the other hand, in determining the number of Units for
each Trust has elected not to follow this format but rather to provide
that number of Units which will establish as close as possible as of the
Initial Date of Deposit a Principal Amount of Securities per Unit of $10.
(3) The Estimated Current Return and Estimated Long-Term Return are increased
for transactions entitled to a reduced sales charge. See "Public Offering
of Units--Public Offering Price."
(4) The Estimated Current Returns are calculated by dividing the estimated net
annual interest income per Unit by the Public Offering Price. The
estimated net annual interest income per Unit will vary with changes in
fees and expenses of the Trustee, the Sponsor and the Evaluator and with
the principal prepayment, redemption, maturity, exchange or sale of
Securities while the Public Offering Price will vary with changes in the
offering price of the underlying Securities and with changes in the
accrued interest; therefore, there is no assurance that the present
Estimated Current Returns indicated above will be realized in the future.
The Estimated Long-Term Returns are calculated using a formula which (1)
takes into consideration, and determines and factors in the relative
weightings of, the market values, yields (which takes into account the
amortization of premiums and the accretion of discounts) and estimated
retirement dates of all of the Securities in the applicable Trust and (2)
takes into account the expenses and sales charge associated with each
Trust Unit. Since the market values and estimated retirement dates of the
Securities and expenses of each Trust will change, there is no assurance
that the present Estimated Long-Term Returns as indicated above will be
realized in the future. The Estimated Current Returns and Estimated Long-
Term Returns are expected to differ because the calculation of the
Estimated Long-Term Returns reflects the estimated date and amount of
principal returned while the Estimated Current Return calculations include
only net annual interest income and Public Offering Price.
(5) This figure is based on estimated per Unit cash flows. Estimated cash
flows will vary with changes in fees and expenses, with changes in current
interest rates and with the principal prepayment, redemption, maturity,
call, exchange or sale of the underlying Securities. The estimated cash
flows to Unitholders for the Trusts are either set forth under "Estimated
Cash Flows to Unitholders" for each Trust or are available upon request at
no charge from the Sponsor.
(6) During the first year, the Trustee has agreed to reduce its fee (and to
the extent necessary pay expenses of the Trust Funds) in the amounts
stated above. The Trustee has agreed to the foregoing to cover all or a
portion of the interest on any Securities accruing prior to their expected
dates of delivery, since interest will not accrue to the benefit of
Unitholders of a Trust Fund until such Securities are actually delivered
to the Trust Fund. The estimated net annual interest income per Unit will
remain as indicated. See "The Trust Funds" and "General Information--
Interest, Estimated Long-Term Return and Estimated Current Return."
(7) The sales charge as a percentage of the net amount invested in earning
assets will increase as accrued interest increases. Transactions subject
to quantity discounts (see "Public Offering of Units--Public Offering
Price") will have reduced sales charges, thereby reducing all percentages
in the table.
(8) See "General Information--Expenses of the Trusts."
(9) Unitholders will receive interest distributions monthly. The Record Date
is the first day of the month, commencing April 1, 1995, and the
distribution date is the fifteenth day of the month, commencing April 15,
1995.
5
<PAGE>
THE TRUST FUNDS
Kemper Defined Funds Series 30 includes the following separate unit investment
trusts created by the Sponsor under the name Kemper Defined Funds: "Corporate
Income Series 3" (the "Corporate Income Series"), "Insured National Series 14"
(the "Insured National Trust"), "Insured California Series 14" and "Insured
Michigan Series 10" (the "Insured State Trusts") (hereinafter collectively
called the "Trusts" or "Trust Funds"). The Insured National Trust and the
Insured State Trusts are also referred to as the "Tax-Exempt Portfolios" and
"Insured Trusts." Each of the Trust Funds is separate and is designated by a
different series number. Each of the Trust Funds was created under the laws of
the State of Missouri pursuant to a trust indenture dated the Initial Date of
Deposit (the "Trust Agreements") between Kemper Unit Investment Trusts, a
service of Kemper Securities, Inc. (the "Sponsor") and Investors Fiduciary
Trust Company (the "Trustee").*
The 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. The Corporate Income Series may be an appropriate investment
vehicle for investors who desire to participate in a portfolio of intermediate
term taxable fixed income securities issued 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.
The Insured National Trust was formed for the purpose of gaining interest
income free from Federal income taxes while conserving capital and
diversifying risks by investing in an insured, fixed portfolio consisting of
obligations issued by or on behalf of states of the United States or counties,
municipalities, authorities or political subdivisions thereof.
The Insured State Trusts were formed for the purpose of gaining interest
income free from Federal and State income taxes and, where applicable, local
income and/or property taxes while conserving capital and diversifying risks
by investing in an insured, fixed portfolio consisting of obligations issued
by or on behalf of the State for which such Trust Fund is named or counties,
municipalities, authorities or political subdivisions thereof.
There is, of course, no guarantee that the Trust Funds' objectives will be
achieved. Offerees in the states of Illinois, Indiana, Virginia and Washington
may purchase Units of Corporate Income Series 3 and Insured National Series 14
only.
As used herein, the terms "Securities" and "Bonds" mean the obligations
initially deposited in the Trusts described under "Portfolio" for each Trust
(including all contracts to purchase such obligations accompanied by an
irrevocable letter of credit sufficient to perform such contracts initially
deposited in the Trusts) and any additional obligations deposited in the
Trusts following the Initial Date of Deposit. As used herein, the terms
"Municipal Bonds" and "Municipal Obligations" mean the obligations (and
contracts for the purchase thereof) included in the Tax-Exempt Portfolios.
On the Initial Date of Deposit, the Sponsor delivered to the Trustee that
aggregate principal amount of Securities or contracts for the purchase thereof
for deposit in the Trust Funds as set forth under "Essential Information." Of
such principal amount, the amount specified in "Essential Information" was
deposited in each Trust. In exchange for the Securities so deposited, the
Trustee delivered to the Sponsor documentation evidencing the ownership of
that number of Units for each Trust Fund as indicated under "Essential
Information." Each Trust Fund initially consists of delivery statements (i.e.,
contracts) to
- ---------------------
* Reference is made to the Trust Agreements, and any statements contained
herein are qualified in their entirety by the provisions of the Trust
Agreements.
6
<PAGE>
purchase obligations. The Sponsor has a limited right of substitution for such
Securities in the event of a failed contract. See "General Information--Trust
Information."
Additional Units of each Trust may be issued from time to time following the
Initial Date of Deposit by depositing in the Trust additional Securities or
contracts to purchase thereof together with irrevocable letters of credit or
cash. As additional Units are issued by a Trust as a result of the deposit of
additional Securities by the Sponsor, the aggregate value of the Securities in
the Trust will be increased and the fractional undivided interest in the Trust
represented by each Unit will be decreased. The Sponsor may continue to make
additional deposits of Securities into a Trust following the Initial Date of
Deposit, provided that such additional deposits will be in principal amounts
which will maintain the same original percentage relationship among the
principal amounts of the Securities in such Trust established by the initial
deposit of the Securities. Thus, although additional Units will be issued,
each Unit will continue to represent the same principal amount of each
Security, and the percentage relationship among the principal amount of each
Security in the related Trust will remain the same.
Each Unit initially offered represents that undivided interest in the
appropriate Trust indicated under "Essential Information." To the extent that
any Units are redeemed by the Trustee or additional Units are issued as a
result of additional Securities being deposited by the Sponsor, the fractional
undivided interest in a 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 of a Trust Fund 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
Securities will fluctuate inversely with changes in interest rates. The
uncertain economic conditions of recent years, together with the fiscal
measures adopted to attempt to deal with them, have resulted in wide
fluctuations in interest rates and, thus, in the value of fixed rate debt
obligations generally and long-term obligations in particular. The Sponsor
cannot predict the degree to which such fluctuations will continue in the
future.
7
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
UNITHOLDERS
KEMPER DEFINED FUNDS SERIES 30
We have audited the accompanying statements of condition and the related
portfolios of Kemper Defined Funds Series 30 (Corporate Income Series 3,
Insured National Series 14, Insured California Series 14 and Insured Michigan
Series 10) as of February 22, 1995. The statements of condition and portfolios
are the responsibility of the Sponsor. Our responsibility is to express an
opinion on such 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 Securities owned at February 22, 1995 and
a letter of credit deposited to purchase Securities by correspondence with the
Trustee. 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 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 Series
30 (Corporate Income Series 3, Insured National Series 14, Insured California
Series 14 and Insured Michigan Series 10) as of February 22, 1995, in
conformity with generally accepted accounting principles.
GRANT THORNTON LLP
Chicago, Illinois
February 22, 1995
8
<PAGE>
KEMPER DEFINED FUNDS SERIES 30
STATEMENTS OF CONDITION AT THE OPENING OF BUSINESS ON FEBRUARY 22, 1995, THE
INITIAL DATE OF DEPOSIT
<TABLE>
<CAPTION>
CORPORATE INSURED INSURED INSURED
INCOME NATIONAL CALIFORNIA MICHIGAN
SERIES 3 SERIES 14 SERIES 14 SERIES 10
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
INVESTMENT IN SECURITIES
Securities deposited in the Trusts
(1)(4)........................... $ None $ None $ None $ None
Contracts to purchase Securities
(1)(4)........................... 1,998,282 7,846,182 2,890,015 3,230,290
Accrued interest to First Settle-
ment Date on Securities (1)(2)... 51,502 80,216 28,691 57,497
---------- ---------- ---------- ----------
Total............................ $2,049,784 $7,926,398 $2,918,706 $3,287,787
========== ========== ========== ==========
Number of Units................... 210,000 805,000 297,000 327,500
INTEREST OF UNITHOLDERS
Accrued interest payable to Spon-
sor (1)(2)....................... $ 51,502 $ 80,216 $ 28,691 $ 57,497
Interest of Unitholders--
Cost to investors (3)............. 2,092,440 8,250,445 3,038,904 3,371,613
Less: Gross underwriting commis-
sion (3)......................... 94,158 404,263 148,889 141,323
---------- ---------- ---------- ----------
Net interest to Unitholders
(1)(2)(3)........................ 1,998,282 7,846,182 2,890,015 3,230,290
---------- ---------- ---------- ----------
Total............................ $2,049,784 $7,926,398 $2,918,706 $3,287,787
========== ========== ========== ==========
</TABLE>
- --------
NOTES:
(1) The aggregate value of the Securities listed in each "Portfolio" and their
cost to the Trust are the same. The value of the Securities is determined
by Muller Data Corporation on the bases set forth under "Public Offering
of Units--Public Offering Price". The contracts to purchase Securities are
collateralized by an irrevocable letter of credit of $16,183,214 which has
been deposited with the Trustee. Of this amount, $15,964,769 relates to
the offering price of Securities to be purchased and $218,445 relates to
accrued interest on such Securities to the expected dates of delivery.
(2) The Trustee will advance to each Trust the amount of net interest accrued
to the First Settlement Date for distribution to the Sponsor as the
Unitholder of Record.
(3) The aggregate public offering price includes a sales charge for the Trust
as set forth under "Essential Information", assuming all single
transactions involve less than 10,000 Units. For single transactions
involving 10,000 or more Units, the sales charge is reduced (see "Public
Offering of Units--Public Offering Price") resulting in an equal reduction
in both the Cost to investors and the Gross underwriting commission while
the Net interest to Unitholders remains unchanged.
(4) Insurance coverage providing for the timely payment of principal and
interest on the Securities in the Insured Trusts has been obtained
directly by the issuer of such Securities or by the Sponsor from Municipal
Bond Investors Assurance Corporation or other insurers.
9
<PAGE>
PUBLIC OFFERING OF UNITS
PUBLIC OFFERING PRICE. Units of a Trust are offered at the Public Offering
Price thereof. During the initial offering period, the Public Offering Price
per Unit is equal to the aggregate of the offering side evaluations of the
Securities in such Trust (as determined, pursuant to the terms of a contract
with the Evaluator, by Muller Data Corporation, a non-affiliated firm
regularly engaged in the business of evaluating, quoting or appraising
comparable securities), plus or minus a pro rata share of cash, if any, in the
Principal account held or owned by such Trust plus accrued interest plus the
applicable sales charge referred to in the tables below divided by the number
of outstanding Units of such Trust. The Public Offering Price for secondary
market transactions, on the other hand, is based on the aggregate bid side
evaluations of the Securities in a Trust (also, currently, as determined by
Muller Data Corporation), plus or minus cash, if any, in the Principal Account
held or owned by such Trust, plus accrued interest plus a sales charge based
upon the dollar weighted average maturity of such Trust. Investors who
purchase Units through brokers or dealers pursuant to a current management
agreement which by contract or operation of law does not allow such broker or
dealer to earn an additional commission (other than any fee or commission paid
for maintenance of such investor's account under the management agreement) on
such transactions may purchase such Units at the current Public Offering Price
net of the applicable broker or dealer concession. See "Public Offering of
Units--Public Distribution of Units" below.
For the Corporate Income Series, the sales charge per Unit will be reduced
during the initial offering period pursuant to the following graduated scale:
<TABLE>
<CAPTION>
WEIGHTED AVERAGE YEARS TO MATURITY
-------------------------------------------
UNDER 5 YEARS 5 TO 14.99
--------------------- ---------------------
PERCENT OF PERCENT OF PERCENT OF PERCENT OF
OFFERING NET AMOUNT OFFERING NET AMOUNT
NUMBER OF UNITS PRICE INVESTED PRICE INVESTED
- --------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
1 to 9,999 Units.................... 3.9% 4.058% 4.5% 4.712%
10,000 to 24,999 Units.............. 3.7 3.842 4.2 4.384
25,000 to 49,999 Units.............. 3.5 3.627 4.0 4.167
50,000 to 99,999 Units.............. 3.3 3.413 3.5 3.627
100,000 or more Units............... 2.0 2.001 2.2 2.249
</TABLE>
For the Tax-Exempt Portfolios, the sales charge per Unit will be reduced
during the initial offering period pursuant to the following graduated scale:
<TABLE>
<CAPTION>
WEIGHTED AVERAGE YEARS TO MATURITY
---------------------------------------------------------------------------------------
0 TO 7.49 7.5 TO 9.99 10 TO 14.99 15 OR MORE
--------------------- --------------------- --------------------- ---------------------
PERCENT OF PERCENT OF PERCENT OF PERCENT OF PERCENT OF PERCENT OF PERCENT OF PERCENT OF
OFFERING NET AMOUNT OFFERING NET AMOUNT OFFERING NET AMOUNT OFFERING NET AMOUNT
NUMBER OF UNITS PRICE INVESTED PRICE INVESTED PRICE INVESTED PRICE INVESTED
--------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 to 9,999 Units........ 3.0% 3.093% 3.9% 4.058% 4.2% 4.384% 4.90% 5.152%
10,000 to 24,999 Units.. 2.8 2.881 3.7 3.842 4.0 4.167 4.50 4.712
25,000 to 49,999 Units.. 2.6 2.669 3.5 3.627 3.8 3.950 4.30 4.493
50,000 to 99,999 Units.. 2.5 2.564 3.3 3.413 3.5 3.627 3.50 3.627
100,000 or more Units... 2.0 2.041 2.7 2.775 2.8 2.881 3.00 3.093
</TABLE>
As indicated above, in connection with secondary market transactions the sales
charge is based upon the dollar weighted average maturity of a Trust and is
determined in accordance with the tables set forth below. For purposes of this
computation, Securities will be deemed to mature on their expressed maturity
10
<PAGE>
dates unless: (a) the Securities 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 Securities are subject to a "mandatory tender," in which
case such mandatory tender will be deemed to be the date upon which they
mature. The effect of this method of sales charge computation will be that
different sales charge rates will be applied to a Trust based upon the dollar
weighted average maturity of such Trust's portfolio, in accordance with the
following schedules:
For the Corporate Income Series, in connection with secondary market
transactions the sales charge per Unit will be reduced as set forth below:
<TABLE>
<CAPTION>
SECONDARY
------------------------------
DOLLAR WEIGHTED AVERAGE YEARS
DOLLAR AMOUNT OF TRADE TO MATURITY*
---------------------- 2 TO 3.99 4 TO 9.99 10 OR MORE
--------------------------------------
SALES CHARGE (PERCENT OF
PUBLIC OFFERING PRICE)
------------------------------
<S> <C> <C> <C>
$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
</TABLE>
- ---------------------
* 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.
For the Tax-Exempt Portfolios, in connection with secondary market
transactions the sales charge per Unit will be reduced as set forth below:
<TABLE>
<CAPTION>
SECONDARY
---------------------------------------
YEARS TO MATURITY*
4 TO 7.99 8 TO 14.99 15 OR MORE
--------- ------------------ ----------
SALES CHARGE (% OF PUBLIC OFFERING
AMOUNT OF INVESTMENT PRICE)
-------------------- ---------------------------------------
<S> <C> <C> <C>
$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
</TABLE>
- --------
* If the dollar weighted average maturity of the Trust Fund is from 1 to 3.99
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
tables above will apply to all purchases of Units on any one day by the same
purchaser from the same Underwriter or 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.
11
<PAGE>
Unitholders of the various series of Kemper Insured Corporate Trust and Kemper
Defined Funds Insured Corporate Series who meet the conditions in the next
succeeding sentence may, during the primary offering period of the Corporate
Income Series only, acquire Units of the Corporate Income Series at the
reduced sales charge equivalent to purchases during the initial offering
period of 100,000 or more Units. First, the special sales charge discount only
applies to purchases acquired with funds received from distributions of
unscheduled principal payments in connection with units issued in such series
and, second, the minimum purchase must be at least $1,000.
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.
Had Units of a Trust been available for sale at the opening of business on the
Initial Date of Deposit, the Public Offering Price would have been as shown
under "Essential Information." The Public Offering Price per Unit of a Trust
on the date of this Prospectus or on any subsequent date will vary from the
amount stated under "Essential Information" in accordance with fluctuations in
the prices of the underlying Securities and the amount of accrued interest on
the Units. On the Initial Date of Deposit, pursuant to an exemptive order from
the Securities and Exchange Commission, the Public Offering Price at which
Units will be sold will not exceed the price determined as of the opening of
business on the Initial Date of Deposit as shown under "Essential
Information"; however, should the value of the underlying Securities decline,
purchasers will, of course, be given the benefit of such lower price. The
aggregate bid and offering side evaluations of the Securities shall be
determined (a) on the basis of current bid or offering prices of the
Securities, (b) if bid or offering prices are not available for any particular
Security, on the basis of current bid or offering prices for comparable bonds,
(c) by determining the value of Securities on the bid or offer 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," on each business day commencing
with the Initial Date of Deposit of the Securities, effective for all sales
made during the preceding 24-hour period.
The interest on the Securities deposited in a Trust, less the related
estimated fees and expenses, is estimated to accrue in the annual amounts per
Unit set forth under "Essential Information." The amount of net interest
income which accrues per Unit may change as Securities mature or are redeemed,
exchanged or sold, or as the expenses of a Trust change or the number of
outstanding Units of a Trust changes.
Although payment is normally made five business days following the order for
purchase, payments may be made prior thereto. A person will become the owner
of Units on the First Settlement Date or any date of settlement thereafter
provided payment has been received. Cash, if any, made available to the
Sponsor prior to the date of settlement for the purchase of Units may be used
on 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
"General Information--Redemption" below.
ACCRUED INTEREST. Accrued interest is the accumulation of unpaid interest on a
security from the last day on which interest thereon was paid. Interest on
Securities generally is paid semi-annually (monthly in the case of Ginnie
Maes, if any) although a Trust accrues such interest daily. Because of this, a
Trust always
12
<PAGE>
has an amount of interest earned but not yet collected by the Trustee. For
this reason, with respect to sales settling subsequent to the First Settlement
Date, the Public Offering Price of Units will have added to it the
proportionate share of accrued interest to the date of settlement. Unitholders
will receive on the next distribution date of a Trust the amount, if any, of
accrued interest paid on their Units.
In an effort to reduce the amount of accrued interest which would otherwise
have to be paid in addition to the Public Offering Price in the sale of Units
to the public, the Trustee will advance the amount of accrued interest as of
the First Settlement Date and the same will be distributed to the Sponsor as
the Unitholder of record as of the First Settlement Date. Consequently, the
amount of accrued interest to be added to the Public Offering Price of Units
will include only accrued interest from the First Settlement Date to the date
of settlement, less any distributions from the Interest Account subsequent to
the First Settlement Date.
Because of the varying interest payment dates of the Securities, accrued
interest at any point in time will be greater than the amount of interest
actually received by the Trusts and distributed to Unitholders. Therefore,
there will always remain an item of accrued interest that is added to the
value of the Units. If a Unitholder sells or redeems all or a portion of his
Units, he will be entitled to receive his proportionate share of the accrued
interest from the purchaser of his Units. Since the Trustee has the use of the
funds held in the Interest Account for distributions to Unitholders and since
such Account is non-interest-bearing to Unitholders, the Trustee benefits
thereby.
COMPARISON OF PUBLIC OFFERING PRICE AND REDEMPTION PRICE. While the Initial
Public Offering Price of Units will be determined on the basis of the current
offering prices of the Securities in a Trust, the redemption price per Unit
(as well as the secondary market price per Unit) at which Units may be
redeemed (see "General Information--Redemption") will be determined on the
basis of the current bid prices of the Securities. As of the opening of
business on the Initial Date of Deposit, the Public Offering Price per Unit
(based on the offering prices of the Securities in a Trust and including the
sales charge) exceeded the redemption price at which Units could have been
redeemed (based upon the current bid prices of the Securities in a Trust) by
the amount shown under "Essential Information." In the past, bid prices on
securities similar to those in the Trust Funds have been lower than the
offering prices thereof by as much as 5% or more of principal amount in the
case of inactively traded bonds or as little as 1/2 of 1% in the case of
actively traded bonds, but the difference between such offering and bid prices
may be expected to average 3% to 4% of principal amount. For this reason,
among others (including fluctuations in the market prices of the Securities
and the fact that the Public Offering Price includes a sales charge), the
amount realized by a Unitholder upon any redemption of Units may be less than
the price paid for such Units.
PUBLIC DISTRIBUTION OF UNITS. The Sponsor intends to qualify the Units for
sale in a number of states (except for an Insured State Trust or uninsured
State Trust which will be qualified for sale only in the state for which such
Trust is named). 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 amount shown in the tables 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
13
<PAGE>
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 a Trust and other unit investment trusts created by
the Sponsor. The difference between the discount and the sales charge will be
retained by the Sponsor.
For the Corporate Income Series, the primary market concessions or agency
commissions are as follows:
<TABLE>
<CAPTION>
PRIMARY MARKET
-----------------------------------------------------------------
VOLUME DISCOUNTS PER UNIT*
---------------------------------------------------
FIRM SALES OR FIRM SALES OR FIRM SALES OR
REGULAR SALE SALE SALE
CONCESSION ARRANGEMENTS ARRANGEMENTS ARRANGEMENTS
OR AGENCY 25,000 TO 50,000 TO 100,000 OR
COMMISSION 49,999 99,999 MORE
------------ --------------- --------------- ---------------
WEIGHTED AVERAGE YEARS TO MATURITY
UNDER 5 TO UNDER 5 TO UNDER 5 TO UNDER 5 TO
NUMBER OF $10 UNITS 5 14.99 5 14.99 5 14.99 5 14.99
------------------- ----- ----- ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 to 9,999 Units........ 2.70% 3.00% 2.80% 3.20% 2.90% 3.30% 3.00% 3.40%
10,000 to 24,999 Units.. 2.50 2.90 2.60 3.00 2.70 3.10 2.80 3.20
25,000 to 49,999 Units.. 2.30 2.80 2.40 2.90 2.50 2.90 2.60 3.00
50,000 to 99,999........ 2.20 2.40 2.30 2.50 2.30 2.50 2.30 2.50
100,000 or more Units... 1.10 1.20 1.20 2.10 1.20 2.10 1.20 2.10
</TABLE>
- ---------------------
* Volume concessions of up to the amount shown can be earned as a marketing
allowance at the discretion of the Sponsor during the initial one month
period after the Initial Date of Deposit by firms who reach cumulative firm
sales or sales arrangement levels of at least $250,000. After a firm has
met the minimum $250,000 volume level, volume concessions may be given on
all trades originated from or by that firm, including those placed prior to
reaching the $250,000 level, and may continue to be given during the entire
initial offering period. Firm sales of any Corporate Income Series issued
simultaneously can be combined for the purposes of achieving the volume
discount. Only sales through Kemper qualify for volume discounts and
secondary purchases do not apply. The Sponsor reserves the right to modify
or change those parameters at any time and make the determination of which
firms qualify for the marketing allowance and the amount paid.
For the Tax-Exempt Portfolios, the primary market concessions or agency
commissions are as follows:
<TABLE>
<CAPTION>
PRIMARY
--------------------------------------------
WEIGHTED AVERAGE YEARS TO MATURITY
0 TO 7.49 7.5 TO 9.99 10 TO 14.99 15 OR MORE
---------------------------------------
NUMBER OF UNITS DISCOUNT PER UNIT
--------------- --------------------------------------------
<S> <C> <C> <C> <C>
1 to 9,999 Units................... $0.20 $0.27 $0.28 $0.32
10,000 to 24,999 Units............. $0.19 $0.25 $0.27 $0.32
25,000 to 49,999 Units............. $0.18 $0.23 $0.26 $0.32
50,000 to 99,999 Units............. $0.17 $0.22 $0.25 $0.25
100,000 or more Units.............. $0.11 $0.17 $0.18 $0.20
</TABLE>
14
<PAGE>
The secondary market concessions or agency commissions for Corporate Income
Trusts are as follows:
<TABLE>
<CAPTION>
SECONDARY MARKET
------------------------------
DOLLAR WEIGHT AVERAGE
YEARS TO MATURITY*
2 TO 3.99 4 TO 9.99 10 OR MORE
-----------------------------------
DISCOUNT PER UNIT
(PERCENT OF PUBLIC OFFERING
DOLLAR AMOUNT OF TRADE PRICE)
---------------------- ------------------------------
<S> <C> <C> <C>
$1,000 to $99,999.......................... 2.00% 3.00% 4.00%
$100,000 to $499,999....................... 1.75 2.75 3.50
$500,000 to $999,999....................... 1.50 2.50 3.00
$1,000,000 or more......................... 1.25 2.25 2.50
</TABLE>
- ---------------------
* If the dollar weighted average maturity of a Trust Fund is from 1 to 1.99
years, the concession or agency commission is 1.00% of the Public Offering
Price.
The secondary market concessions or agency commissions for Tax Exempt Trusts
are as follows:
<TABLE>
<CAPTION>
SECONDARY MARKET
-------------------------------
DOLLAR WEIGHT AVERAGE
YEARS TO MATURITY*
4 TO 7.99 8 TO 14.99 15 OR MORE
------------------------------------
DISCOUNT PER UNIT
(PERCENT OF PUBLIC OFFERING
DOLLAR AMOUNT OF TRADE PRICE)
---------------------- -------------------------------
<S> <C> <C> <C>
$1,000 to $99,999......................... 2.00% 3.00% 4.00%
$100,000 to $499,999...................... 1.75 2.75 3.50
$500,000 to $999,999...................... 1.50 2.50 3.00
$1,000,000 or more........................ 1.25 2.25 2.50
</TABLE>
- ---------------------
* If the dollar weighted average maturity of a Trust Fund is from 1 to 3.99
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.
PROFITS OF SPONSOR AND UNDERWRITERS. In connection with the Corporate Income
Series, the Sponsor will receive gross sales charges equal to the percentage
of the Public Offering Price of the Units of such Trust stated under "Public
Offering Price" and will pay a fixed portion of such sales charges to dealers
and agents. As set forth under "The Tax-Exempt Portfolios--Underwriting," the
Underwriters of each Tax-Exempt Portfolio will receive gross sales charges
equal to the percentage of the Public Offering Price of the Units of such
Trust Fund stated under "Public Offering Price" and the Sponsor will receive a
fixed portion of such sales charges. In addition, the Sponsor may realize a
profit or a loss resulting from the difference between the purchase prices of
the Securities to the Sponsor and the cost of such Securities to a Trust Fund,
which is based on the offering side evaluation of the Securities. See
"Portfolio" for each Trust. The Sponsor or Underwriters may also realize
profits or losses with respect to Securities deposited in a Trust which were
acquired from underwriting syndicates of which the Sponsor or any Underwriter
was a member. An underwriter or underwriting syndicate purchases securities
from the issuer on a negotiated or competitive bid basis, as principal, with
the motive of marketing such securities to investors at a profit. The Sponsor
and the Underwriters may realize additional profits or losses during the
initial offering period on unsold Units as a result of changes in the daily
evaluation of the Securities in a Trust.
15
<PAGE>
C
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THE CORPORATE INCOME SERIES
THE TRUST PORTFOLIO
The 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. There is, of course, no guarantee that the Trust Fund's
objective will be achieved.
The 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 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 Fund often
are not available in small amounts.
The selection of Bonds for the Trust Fund 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 the 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, all of the Bonds in the Trust are 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
"Appendix: Description of Ratings" and "Portfolio" below. Subsequent to the
Initial Date of Deposit, a Bond may cease to be so rated. If this should
occur, the 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 "General Information--Investment
Supervision." The Trust consists of that number of Bonds divided by type (and
percentage of principal amount of the Trust) as set forth in the following
table.
SERIES INFORMATION
<TABLE>
<S> <C> <C>
Number of Bonds.............................................. 24
Debt Obligations(1):
U.S. Corporate.............................................. 24
Average life of the Bonds in the Trust(2).................... 7.8 years
Percentage of "when, as and if issued" or "delayed delivery"
Bonds purchased by the Trust................................ None
Syndication(3)............................................... None
</TABLE>
- -------------------
(1) The portfolio percentage in parenthesis represents the principal amount of
such Bonds to the total principal amount of Bonds in the Trust. For a
discussion of the risks associated with investments in the bonds of such
issuers, see "Risk Factors" below.
(2) The average life of the Bonds in the Trust is calculated based upon the
stated maturities of the Bonds in the Trust (or, with respect to Bonds for
which funds or securities have been placed in escrow to redeem such Bonds
on a stated call date, based upon such call date). The average life of the
Bonds in the Trust may increase or decrease from time to time as Bonds
mature or are called or sold.
(3) The Sponsor and its affiliates have participated as either the sole
underwriter or manager or a member of underwriting syndicates from which
approximately that percentage listed above of the aggregate principal
amount of the Bonds in the Trust were acquired.
C-1
CORPORATE INCOME SERIES
<PAGE>
KEMPER DEFINED FUNDS SERIES 30
CORPORATE INCOME SERIES 3 PORTFOLIO
AS OF THE INITIAL DATE OF DEPOSIT: FEBRUARY 22, 1995
<TABLE>
<CAPTION>
RATING(2)
-----------------------
STANDARD COST OF
AGGREGATE & DUFF & REDEMPTION BONDS
PRINCIPAL NAME OF ISSUER(1)(5) MOODY'S POOR'S PHELPS PROVISIONS(3) TO TRUST(4)
- -----------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C> <C>
$ 100,000 ADT Operations Inc., Ba3 BB N.R. Non-callable $ 96,250
8.25% due
8/01/2000
75,000 AMR Corp., 9.50% due Baa3 BB+ BBB- Non-callable 76,875
5/15/2001
100,000 American Standard Inc., Ba3 B+ N.R. [email protected] 108,500
11.375% due
5/15/2004
100,000 Bally Park Place B1 BB BB [email protected] 89,750
Funding, 9.250% due
3/15/2004
100,000 Best Buy Co., Inc., Ba3 B+ BBB- [email protected] 95,750
8.625% due
10/01/2000
50,000 Cablevision Industries B1 BB- N.R. [email protected] 52,625
Corp., 10.75% due
1/30/2002
50,000 Caesars World, Inc., Ba3 BB+ BBB- [email protected] 50,250
8.875% due
8/15/2002
100,000 Chiquita Brands Int'l B1 BB- N.R. Non-callable 94,250
Inc., 9.125% due
3/01/2004
100,000 Clark Oil & Refining Ba2 BB N.R. [email protected] 100,250
Corp., 9.50% due
9/15/2004
100,000 Continental Cablevision Ba2 BB N.R. Non-callable 94,875
Inc., 8.875% due
9/15/2005
100,000 Digital Equipment Corp., Ba1 BB- N.R. Non-callable 87,500
7.125% due
10/15/2002
75,000 Embassy Suites Inc., Ba3 BB+ N.R. [email protected] 73,500
8.75% due
3/15/2000
100,000 Healthsouth Ba3 B N.R. [email protected] 100,000
Rehabilitation Corp.,
9.50% due 4/01/2001
100,000 Kaufman & Broad Home Ba3 BB- BB+ [email protected] 93,375
Corp., 9.375% due
5/01/2003
100,000 La Quinta Inns Inc., B2 BB- N.R. [email protected] 97,000
9.25% due
5/15/2003
75,000 MGM Grand Hotels Ba3 BB- N.R. [email protected] 81,188
Financial Corp.,
11.750% due 5/01/1999
100,000 Owens-Illinois Inc., B2 B+ BB [email protected] 100,750
10.00% due
8/01/2002
100,000 Payless Cashways Inc., Ba3 B+ N.R. [email protected] 91,250
9.125% due
4/15/2003
100,000 Ryland Group Inc., Ba3 BB- N.R. [email protected] 87,250
9.625% due
6/01/2004
(6) 75,000 Southland Corporation, B2 BB+ N.R. [email protected] 48,000
4.50% due
6/15/2004
50,000 Time Warner Inc., 7.95% Ba1 BBB- N.R. Non-callable 48,875
due
2/01/2000
100,000 Turner Broadcasting Ba2 BB+ BBB- Non-callable 87,250
System Inc., 7.40% due
2/01/2004
75,000 USX Corporation 7.20% Baa3 BB+ BBB Non-callable 68,906
due
2/15/2004
75,000 Westinghouse Electric Ba1 BBB- N.R. Non-callable 74,063
Corp., 8.375% due
6/15/2002
----------- ----------
$ 2,100,000 $1,998,282
=========== ==========
</TABLE>
C-2
CORPORATE INCOME SERIES
<PAGE>
NOTES TO PORTFOLIO:
* These Bonds are "when, as and if issued" or "delayed delivery" and have
expected settlement dates after the "First Settlement Date."
(1) Contracts to acquire Bonds were entered into by the Sponsor between
October 21, 1994 and February 21, 1995. All Bonds are represented by
regular way contracts, unless otherwise indicated, for the performance of
which an irrevocable letter of credit has been deposited with the Trustee.
(2) A brief description of the applicable Standard & Poor's Ratings Group,
Moody's Investors Service, Inc. and Duff & Phelps Credit Rating Co. rating
symbols and their meanings is set forth under "Appendix: Description of
Ratings." "N.R." indicates that the issue has not been rated by that
rating agency.
(3) There is shown under this heading the year in which each issue of Bonds is
initially or currently redeemable and the redemption price for that year;
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. "S.F." indicates that a sinking fund is established with
respect to that issue of Bonds.
(4) During the initial offering period, evaluations of Bonds are made on the
basis of current offering side evaluations of the Bonds. The aggregate
offering price is greater than the aggregate bid price of the Bonds, which
is the basis on which the Redemption Price will be determined for purposes
of redemption of Units after the initial offering period.
(5) Other information regarding the Bonds in the Trust, at the opening of
business on the Initial Date of Deposit, is as follows:
<TABLE>
<CAPTION>
ANNUAL
COST OF PROFIT OR INTEREST BID SIDE
BONDS TO (LOSS) TO INCOME VALUE OF
SPONSOR SPONSOR TO TRUST BONDS
---------- --------- -------- ----------
<S> <C> <C> <C> <C>
Corporate Income Series 3........... $1,988,125 $10,157 $187,744 $1,987,781
</TABLE>
The Cost of Bonds to Sponsor and Profit or (Loss) to Sponsor reflect
portfolio hedging transaction costs, hedging gains or losses, and certain
other carrying costs.
(6) This Bond was issued at an original issue discount. The tax effect of
Bonds issued at an original issue discount is described in "Federal Tax
Status". This Bond has been purchased at a deep discount from the par
value because there is little or no stated interest income thereon. Bonds
which pay no interest are normally described as "zero coupon" bonds. Over
the life of bonds purchased at a deep discount the value of such bonds
will increase such that upon maturity the holders of such bonds will
receive 100% of the principal amount thereof. Approximately 4% of the
aggregate principal amount of the Bonds in the Trust were issued at an
original issue discount.
C-3
CORPORATE INCOME SERIES
<PAGE>
RISK FACTORS
General. An investment in Units of the Trust should be made with an
understanding of the risks that an investment in "high yield", high risk,
fixed rate, 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 the 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 on a large portion of their bank debt. This reduces exposure to
increasing interest 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 portfolio consists of Bonds 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 Bonds and the value of the underlying
portfolio being reduced.
The Bonds in the Trust consist of "high yield, high risk" corporate bonds.
"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
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. 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 the Trust will be
adversely affected if trading markets for the Bonds are limited or absent. If
the rate of redemptions is great, the value of the Trust may decline to a
level that requires liquidation (see "General Information--Administration of
the Trusts--Amendment and Termination").
C-4
CORPORATE INCOME SERIES
<PAGE>
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 a Bond is recharacterized as equity by the Internal
Revenue Service for Federal income tax purposes, the issuer's interest
deduction with respect to the Bond 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 the 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 Bond default in the payment of principal or interest, the Trust may incur
additional expenses seeking payment on the defaulted Bond. Because amounts (if
any) recovered by the Trust in payment under the defaulted Bond 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 bonds. The payment of
principal (and premium, if any), interest and sinking fund requirements with
respect to subordinated bonds of an issuer is subordinated in right of payment
to the payment of senior bonds of the issuer. Senior bonds generally include
most, if not all, significant debt bonds 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 bonds 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.
Bonds 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 "Appendix:
Description of Ratings" for a description of speculative ratings issued by
Standard & Poor's, Duff & Phelps and Moody's.
C-5
CORPORATE INCOME SERIES
<PAGE>
FEDERAL TAX STATUS
In the opinion of Chapman and Cutler, special counsel for the Sponsor, under
existing law:
1. 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 the Trust 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 the Trust. Each Unitholder will also be required to include in taxable
income for Federal income tax purposes, original issue discount with
respect to his interest in any Bonds held by the Trust at the same time and
in the same manner as though the Unitholder were the direct owner of such
interest.
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 the Trust (in accordance with the proportion of the fair
market values of such Bonds) in order to determine his tax basis for his
pro rata portion in each Bond. Unitholders must reduce the tax basis of
their Units for their share of accrued interest received, if any, on Bonds
delivered after the date the Unitholders pay for their Units and,
consequently, such Unitholders may have an increase in taxable gain or
reduction in capital loss upon the disposition of such Units. Gain or loss
upon the sale or redemption of Units is measured by comparing the proceeds
of such sale or redemption with the adjusted basis of the Units. If the
Trustee disposes of Bonds, gain or loss is recognized to the Unitholder.
The amount of any such gain or loss is measured by comparing the
Unitholder's pro rata share of the total proceeds from such disposition
with his basis for his fractional interest in the asset disposed of. The
basis of each Unit and of each Bond which was issued with original issue
discount must be increased by the amount of accrued original issue discount
and the basis of each Unit and of each Bond which was purchased by the
Trust at a premium must be reduced by the annual amortization of bond
premium which the Unitholder has properly elected to amortize under Section
171 of the Code. The tax cost reduction requirements of the Code relating
to amortization of bond premium may, under some circumstances, result in
the Unitholder realizing a taxable gain when his Units are sold or redeemed
for an amount equal to or less than his original cost. In general, original
issue discount accrues daily under a constant interest rate method which
takes into account the semi-annual compounding of accrued interest.
Limitations on Deductibility of Trust Expenses by Unitholders. Each
Unitholder's pro rata share of each expense paid by the 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 the 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 the 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.
C-6
CORPORATE INCOME SERIES
<PAGE>
Original Issue Discount. Certain of the Bonds in the Trust may have been
acquired with "original issue discount." In the case of any Bonds in the 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 to the amount of original issue discount which
accrues.
Special original issue discount rules apply if the purchase price of the Bond
by the 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 the 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 the 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
C-7
CORPORATE INCOME SERIES
<PAGE>
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 the
Trust or Disposition of Units. A Unitholder will recognize taxable capital
gain (or loss) when all or part of his pro rata interest in a Bond is disposed
of in a taxable transaction for an amount greater (or less) than his tax basis
therefor. Any gain recognized on a sale or exchange and not constituting a
realization of accrued "market discount," and any loss will, under current
law, generally be capital gain or loss except in the case of a dealer or
financial institution. As previously discussed, gain realized on the
disposition of the interest of a Unitholder in any Bond deemed to have been
acquired with market discount will be treated as ordinary income to the extent
the gain does not exceed the amount of accrued market discount not previously
taken into income. Any capital gain or loss arising from the disposition of a
Bond by the Trust or the disposition of Units by a Unitholder will be short-
term capital gain or loss unless the Unitholder has held his Units for more
than one year in which case such capital gain or loss will be long-term. For
taxpayers other than corporations, net capital gains are subject to a maximum
marginal stated tax rate of 28 percent. However, it should be noted that
legislative proposals are introduced from time to time that affect tax rates
and could affect relative differences at which ordinary income and capital
gains are taxed. The tax cost reduction requirements of the Code relating to
amortization of bond premium may under some circumstances, result in the
Unitholder 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 for taxpayers other than corporations. Because some or all capital
gains are taxed at a comparatively lower rate under the Tax Act, the Tax Act
includes a provision that recharacterizes capital gains as ordinary income in
the case of certain financial transactions that are "conversion transactions"
effective for transactions entered into after April 30, 1993. Unitholders and
prospective investors should consult with their tax advisers regarding the
potential effect of this provision on their investment in Units.
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 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 (a) 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 the Trust), the foreign investor does not own, directly or
indirectly, 10% or more of the total combined voting power of all classes of
voting stock of the issuer of the Bond and the foreign investor is not a
controlled foreign corporation related (within the meaning of Section
864(d)(4) of the Code) to the issuer of the Bond, or (b) 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
C-8
CORPORATE INCOME SERIES
<PAGE>
his or her taxable year and (iv) the foreign investor provides all
certification which may be required of his status (foreign investors may
contact the Sponsor to obtain a Form W-8 which must be filed with the Trustee
and refiled every three calendar years thereafter). Foreign investors should
consult their tax advisers with respect to United States tax consequences of
ownership of Units.
It should be noted that the Tax Act includes a provision which eliminates the
exemption from United States taxation, including withholding taxes, for
certain "contingent interest." The provision applies to interest received
after December 31, 1993. No opinion is expressed herein regarding the
potential applicability of this provision and whether United States taxation
or withholding taxes could be imposed with respect to income derived from the
Units as a result thereof. Unitholders and prospective investors should
consult with their tax advisers regarding the potential effect of this
provision on their investment in Units.
General. Each Unitholder (other than a foreign investor who has properly
provided the certifications described above) will be requested to provide the
Unitholder's taxpayer identification number to the Trustee and to certify that
the Unitholder has not been notified that payments to the Unitholder are
subject to back-up withholding. If the proper taxpayer identification number
and appropriate certification are not provided when requested, distributions
by the Trust to such Unitholder will be subject to back-up withholding.
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.
ESTIMATED CASH FLOWS TO UNITHOLDERS
The table below sets forth the estimated distributions of interest and
principal to Unitholders on a per 100 Units basis. The table assumes no
changes in expenses, no changes in the current interest rates, no exchanges,
redemptions, sales or prepayments of the underlying Bonds prior to maturity or
expected retirement date and the receipt of principal upon maturity or
expected retirement date. To the extent the foregoing assumptions change
actual distributions will vary.
<TABLE>
<CAPTION>
ESTIMATED ESTIMATED ESTIMATED
INTEREST PRINCIPAL TOTAL
DATES DISTRIBUTION DISTRIBUTION DISTRIBUTION
---------------------------- ------------ ------------ ------------
<S> <C> <C> <C>
Apr 15, 1995 $7.23 $ 7.23
May 15, 1995 to Apr 15, 1997 $7.23 $ 7.23
May 15, 1997 $7.23 $36.41 $43.64
Jun 15, 1997 $6.66 $50.33 $56.99
Jul 15, 1997 to Jan 15, 1999 $6.44 $ 6.44
Feb 15, 1999 $6.34 $23.81 $30.15
Mar 15, 1999 to Jul 15, 1999 $6.24 $ 6.24
Aug 15, 1999 $6.24 $47.62 $53.86
Sep 15, 1999 to Jan 15, 2000 $5.85 $ 5.85
Feb 15, 2000 $5.85 $23.81 $29.66
Mar 15, 2000 $5.70 $ 5.70
Apr 15, 2000 $5.57 $35.71 $41.28
May 15, 2000 to Jul 15, 2000 $5.44 $ 5.44
Aug 15, 2000 $5.44 $47.62 $53.06
Sep 15, 2000 $5.04 $23.81 $28.85
</TABLE>
C-9
CORPORATE INCOME SERIES
<PAGE>
<TABLE>
<CAPTION>
ESTIMATED ESTIMATED ESTIMATED
INTEREST PRINCIPAL TOTAL
DATES DISTRIBUTION DISTRIBUTION DISTRIBUTION
---------------------------- ------------ ------------ ------------
<S> <C> <C> <C>
Oct 15, 2000 $4.95 $47.62 $52.57
Nov 15, 2000 to Mar 15, 2001 $4.62 $ 4.62
Apr 15, 2001 $4.62 $47.62 $52.24
May 15, 2001 $4.25 $ 4.25
Jun 15, 2001 $4.11 $35.71 $39.82
Jul 15, 2001 to Jun 15, 2002 $3.98 $ 3.98
Jul 15, 2002 $3.85 $35.71 $39.56
Aug 15, 2002 to Oct 15, 2002 $3.74 $ 3.74
Nov 15, 2002 $3.59 $47.62 $51.21
Dec 15, 2002 to Apr 15, 2003 $3.46 $ 3.46
May 15, 2003 $3.28 $95.24 $98.52
Jun 15, 2003 $2.56 $47.62 $50.18
Jul 15, 2003 to Jan 15, 2004 $2.39 $ 2.39
Feb 15, 2004 $2.39 $47.62 $50.01
Mar 15, 2004 $2.00 $83.33 $85.33
Apr 15, 2004 $1.36 $47.62 $48.98
May 15, 2004 $1.19 $47.62 $ 1.19
Jun 15, 2004 $1.19 $47.62 $48.81
Jul 15, 2004 $0.75 $35.71 $36.46
Aug 15, 2004 to Sep 15, 2004 $0.69 $ 0.69
Oct 15, 2004 $0.50 $47.62 $48.12
Nov 15, 2004 to Sep 15, 2005 $0.32 $ 0.32
Oct 15, 2005 $0.15 $47.62 $47.77
</TABLE>
C-10
CORPORATE INCOME SERIES
<PAGE>
T
A
X
E
X
E
M
P
T
P
O
R
T
F
O
L
I
O
S
THE TAX-EXEMPT PORTFOLIOS
THE TRUST PORTFOLIO
The Tax-Exempt Portfolios may be appropriate investment vehicles for investors
who desire to participate in a portfolio of tax-exempt fixed income securities
with greater diversification than they might be able to acquire individually.
In addition, Municipal Bonds of the type deposited in the Tax-Exempt
Portfolios are often not available in small amounts.
The selection of Municipal Bonds for each Trust was based largely upon the
experience and judgment of the Sponsor. In making such selections the Sponsor
considered the following factors: (a) Standard & Poor's or Moody's ratings of
the Municipal Bonds; (b) the price of the Municipal Bonds relative to other
issues of similar quality and maturity; (c) the diversification of the
Municipal Bonds as to purpose of issue; (d) the income to the Unitholders of
the Trust; (e) in the case of Insured Trust Funds whether such Bonds were
insured or the availability and cost of insurance for the scheduled payment of
principal and interest on the Municipal Bonds; and (f) the dates of maturity
of the Bonds.
All of the Municipal Bonds in each Trust Fund's portfolio are rated in the
category "BBB" or better (including provisional or conditional ratings) by
Standard & Poor's or "Baa" or better by Moody's. See "Appendix: Description of
Ratings" and "Portfolio" for each Tax-Exempt Portfolio.
All Municipal Bonds deposited in the Trust Funds on the Initial Date of
Deposit were represented by purchase contracts assigned to the Trustee
together with cash, cash equivalents or irrevocable letters of credit issued
by a major commercial bank in the amounts necessary to complete the purchase
thereof. Each Trust consists of that number of Municipal Bonds divided by
purpose of issues (and percentage of principal amount of such Trust) as set
forth in the following table.
SERIES INFORMATION
<TABLE>
<CAPTION>
INSURED
INSURED INSURED MICHIGAN
NATIONAL CALIFORNIA SERIES
SERIES 14 SERIES 14 10
--------- ---------- --------
<S> <C> <C> <C>
Number of Obligations.... 10 8 9
Territorial Obligations
(1).....................
General Obligation Bonds
(2)(4).................. 1(6%) 1(14%) 3(42%)
Revenue Bonds (3)(4)..... 9(94%) 7(86%) 6(58%)
Revenue Bond Concentra-
tions (4):
Airport................. 1(12%)
Pollution Control....... 1(13%)
Sales Tax Revenue....... 1(6%)
Electric Systems........ 2(19%)
Utilities............... 1(9%)
Hospital................ 2(13%) 2(25%) 1(15%)
Housing................. 1(22%)
Lease Revenue........... 2(17%) 1(15%)
Education............... 2(19%) 1(12%)
Wastewater.............. 1(17%)
Water & Sewer........... 3(16%)
Transportation..........
Tollroad................
Miscellaneous........... 1(8%)
Average life of the Mu-
nicipal Bonds in the
Trust (5)............... 29 years 25 years 11 years
Percentage of "when, as
and if issued" or "de-
layed delivery" Bonds
purchased by the Trust.. 9% None 10%
Syndication (6).......... None None 32%
</TABLE>
TE-1
TAX-EXEMPT PORTFOLIOS
<PAGE>
- ---------------------
(1) Municipal Bonds issued by Territories of the United States (which term
includes the Commonwealth of Puerto Rico and the District of Columbia)
generally receive the same tax exempt treatment for both state and Federal
tax purposes as Municipal Bonds issued by political entities in the named
State Trust. See "State Risk Factors and State Tax Status" for each Trust.
(2) General obligation bonds are general obligations of governmental entities
and are backed by the taxing powers of such entities.
(3) Revenue bonds are payable from the income of a specific project or
authority and are not supported by an issuer's power to levy taxes.
(4) The portfolio percentage in parenthesis represents the principal amount of
such Bonds to the total principal amount of Bonds in the Trust. For a
discussion of the risk associated with investments in the bonds of such
issuers, see "Municipal Bond Risk Factors" below.
(5) The average life of the Bonds in a Trust is calculated based upon the
stated maturities of the Bonds in such Trust (or, with respect to Bonds
for which funds or securities have been placed in escrow to redeem such
Bonds on a stated call date, based upon such call date). The average life
of the Bonds in a Trust may increase or decrease from time to time as
Bonds mature or are called or sold.
(6) The Sponsor and/or affiliated Underwriters have participated as either the
sole underwriter or manager or a member of underwriting syndicates from
which approximately that percentage listed above of the aggregate
principal amount of the Bonds in such Trust were acquired.
TAXABLE EQUIVALENT ESTIMATED CURRENT RETURN TABLES
As of the date of this Prospectus, the following tables show the approximate
taxable estimated current returns for individuals that are equivalent to tax-
exempt estimated current returns under combined Federal and State taxes (where
applicable) using the published Federal and State tax rates (where applicable)
scheduled to be in effect in 1995. They incorporate increased tax rates for
higher income taxpayers that were included in the Revenue Reconciliation Act
of 1993. These tables illustrate approximately what you would have to earn on
taxable investments to equal the tax-exempt estimated current return in your
income tax bracket. For cases in which more than one State bracket falls
within a Federal bracket the highest State bracket is combined with the
Federal bracket. The combined State and Federal tax rates shown reflect the
fact that State tax payments are currently deductible for Federal tax
purposes, and have been rounded to the nearest 1/10 of 1%. The tables do not
show the approximate taxable estimated current returns for individuals that
are subject to the alternative minimum tax. The taxable equivalent estimated
current returns may be somewhat higher than the equivalent returns indicated
in the following tables for those individuals who have adjusted gross incomes
in excess of $114,700. The tables do not reflect the effect of limitations on
itemized deductions and the deduction for personal exemptions. They were
designed to phase out certain benefits of these deductions for higher income
taxpayers. These limitations, in effect, raise the marginal Federal tax rate
to approximately 44 percent for taxpayers filing a joint return and entitled
to four personal exemptions and to approximately 41 percent for taxpayers
filing a single return entitled to only one personal exemption. These
limitations are subject to certain maximums, which depend on the number of
exemptions claimed and the total amount of the taxpayer's itemized deductions.
For example, the limitation on itemized deductions will not cause a taxpayer
to lose more than 80% of his allowable itemized deductions, with certain
exceptions. See "Federal Tax Status" for a more detailed discussion of recent
Federal tax legislation, including a discussion of provisions affecting
corporations.
TE-2
TAX-EXEMPT PORTFOLIOS
<PAGE>
NATIONAL
<TABLE>
<CAPTION>
TAXABLE INCOME ($1,000'S) TAX-EXEMPT ESTIMATED CURRENT RETURN
- ---------------------------- -------------------------------------------
4 5% 5 6% 6 7% 7
1/2% 1/2% 1/2% 1/2%
SINGLE JOINT EQUIVALENT TAXABLE ESTIMATED
RETURN RETURN TAX BRACKET CURRENT RETURN
------ ------ ----------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0-
23.35 $ 0- 39.00 15.0% 5.29% 5.88% 6.47% 7.06% 7.65% 8.24% 8.82%
23.35-
56.55 39.00- 94.25 28.0 6.25 6.94 7.64 8.33 9.03 9.72 10.42
56.55-
117.95 94.25-143.60 31.0 6.52 7.25 7.97 8.70 9.42 10.14 10.87
117.95-
256.50 143.60-256.50 36.0 7.03 7.81 8.59 9.38 10.16 10.94 11.72
Over
256.50 Over 256.50 39.6 7.45 8.28 9.11 9.93 10.76 11.59 12.42
</TABLE>
CALIFORNIA
<TABLE>
<CAPTION>
TAXABLE INCOME ($1,000'S) TAX-EXEMPT ESTIMATED CURRENT RETURN
- ---------------------------- ---------------------------------------------
4 5% 5 6% 6 7% 7
1/2% 1/2% 1/2% 1/2%
SINGLE JOINT EQUIVALENT TAXABLE ESTIMATED
RETURN RETURN TAX BRACKET* CURRENT RETURN
------ ------ ------------ ---------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0-
23.35 $ 0- 39.00 20.1% 5.63% 6.26% 6.88% 7.51% 8.14% 8.76% 9.39%
23.35-
56.55 39.00- 94.25 34.7 6.89 7.66 8.42 9.19 9.95 10.72 11.49
94.25-143.60 37.4 7.19 7.99 8.79 9.58 10.38 11.18 11.98
56.55-
117.95 37.9 7.25 8.05 8.86 9.66 10.47 11.27 12.08
117.95-
214.93 143.60-256.50 42.4 7.81 8.68 9.55 10.42 11.28 12.15 13.02
214.93-
256.50 43.0 7.89 8.77 9.65 10.53 11.40 12.28 13.16
256.50-429.86 45.6 8.27 9.19 10.11 11.03 11.95 12.87 13.79
Over
256.50 Over 429.86 46.2 8.36 9.29 10.22 11.15 12.08 13.01 13.94
</TABLE>
- --------
*The State tax rates assumed take into account recent adjustments of tax
brackets based on changes in the Consumer Price Index. The table reflects
California income tax laws that increase State income tax rates for high
income taxpayers. However, the table does not reflect the limitation on
itemized deductions and the phase out of the benefit of the personal exemption
credit and the dependent exemption credit that are imposed by the California
income tax laws in a manner similar to Federal tax law.
MICHIGAN
<TABLE>
<CAPTION>
TAXABLE INCOME ($1,000'S) TAX-EXEMPT ESTIMATED CURRENT RETURN
- ---------------------------- ---------------------------------------------
5% 5 6% 6 7% 7 8%
1/2% 1/2% 1/2%
SINGLE JOINT EQUIVALENT TAXABLE ESTIMATED
RETURN RETURN TAX BRACKET* CURRENT RETURN
------ ------ ------------ ---------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0-
23.35 $ 0- 39.00 21.7% 6.39% 7.02% 7.66% 8.30% 8.94% 9.58% 10.22%
23.35-
56.55 39.00- 94.25 33.7 7.54 8.30 9.05 9.80 10.56 11.31 12.07
56.55-
117.95 94.25-143.60 36.5 7.87 8.66 9.45 10.24 11.02 11.81 12.60
117.95-
256.50 143.60-256.50 41.1 8.49 9.34 10.19 11.04 11.88 12.73 13.58
Over
256.50 Over 256.50 44.4 8.99 9.89 10.79 11.69 12.59 13.49 14.39
</TABLE>
- --------
*The combined State and Federal tax brackets reflect Federal and State income
and State intangibles taxes but do not reflect the effect of the exemption
from local income taxes; accordingly, Michigan residents subject to such local
income taxes would need a somewhat higher taxable estimated current return
than those shown to equal the tax-exempt estimated current return of the
Trust.
TE-3
TAX-EXEMPT PORTFOLIOS
<PAGE>
KEMPER DEFINED FUNDS SERIES 30 INSURED NATIONAL
SERIES 14
PORTFOLIO AS OF THE INITIAL DATE OF DEPOSIT: FEBRUARY 22, 1995
<TABLE>
<CAPTION>
NAME OF ISSUER, TITLE,
COUPON RATE AND MATURITY
DATE OF BOND
REPRESENTED BY SPONSOR'S
AGGREGATE CONTRACTS TO PURCHASE REDEMPTION COST OF BONDS
PRINCIPAL BONDS(1)(5) RATING(2) PROVISIONS(3) TO TRUST(4)
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$1,000,000 Alaska Housing Finance
Corporation, Insured
Mortgage Program Bonds,
1993 First Series (FSA
Insured), 5.90% Due 2003 @ 102
12/01/2033 AAA 2024 @ 100 S.F. $ 928,560
500,000 Public Building
Commission of Chicago
(Illinois), Building
Revenue Bonds (Board of
Education of the City of
Chicago), Series A 1993
(MBIA Insured), 5.75% Due 2003 @ 102
12/01/2018 AAA 2012 @ 100 S.F. 466,295
1,000,000 Clark County, Nevada, Las
Vegas--McCarran
International Airport,
Passenger Facility Charge
Revenue Bonds, 1992
Series A (AMBAC Insured), 2002 @ 102
6.00% Due 07/01/2022 AAA 2011 @ 100 S.F. 967,340
1,000,000 Illinois Development
Finance Authority,
Pollution Control Revenue
Refunding Bonds (Central
Illinois Public Service
Company), 1993
Series B-2 (MBIA
Insured), 5.90% Due 2003 @ 102
06/01/2028 AAA 2011 @ 100 S.F. 937,880
750,000 (S)Ohio Capital
Corporation for Housing,
Mortgage Revenue
Refunding Bonds (FHA
Insured Mortgage Loans-
Eastland Woods Section 8
Assisted Project), Series
1995 (MBIA Insured), 2003 @ 102
6.50% Due 01/01/2022 AAA 2005 @ 100 S.F. 760,793
750,000 City of Philadelphia,
Pennsylvania, Gas Works
Revenue Bonds, Fourteenth
Series (Cap Mac Insured), 2003 @ 102
6.375% Due 07/01/2026 AAA 2015 @ 100 S.F. 751,328
800,000 Piedmont Municipal Power
Agency (South Carolina),
Electric Revenue Bonds,
1992 Refunding Series
(MBIA Insured), 6.30% Due 2003 @ 102
01/01/2022 AAA 2015 @ 100 S.F. 808,680
500,000 Rhode Island Depositors
Economic Protection
Corporation, Special
Obligation Refunding
Bonds, 1993 Series A
(MBIA Insured), 5.75%
Due 08/01/2021 AAA Non-Callable 464,795
750,000 Washington Public Power
Supply System, Nuclear
Project No. 1 Refunding
Revenue Bonds, Series
1992 A (MBIA Insured),
6.25% 2002 @ 102
Due 07/01/2017 AAA 2016 @ 100 S.F. 750,000
1,000,000 Wisconsin Health and
Educational Facilities
Authority, Revenue Bonds
(Children's Hospital of
Wisconsin, Inc. Project),
Series 1992 (FGIC
Insured), 6.50% Due 2002 @ 102
08/15/2021 AAA 2011 @ 100 S.F. 1,010,511
---------- ----------
$8,050,000 $7,846,182
========== ==========
</TABLE>
- --------
See "Notes to Portfolios."
TE-4
TAX-EXEMPT PORTFOLIOS
<PAGE>
KEMPER DEFINED FUNDS SERIES 30 INSURED CALIFORNIA
SERIES 14
PORTFOLIO
AS OF THE INITIAL DATE OF DEPOSIT: FEBRUARY 22, 1995
<TABLE>
<CAPTION>
NAME OF ISSUER, TITLE,
COUPON RATE AND MATURITY
DATE OF BOND COST OF
REPRESENTED BY SPONSOR'S BONDS
AGGREGATE CONTRACTS TO PURCHASE REDEMPTION TO
PRINCIPAL BONDS(1)(5) RATING(2) PROVISIONS(3) TRUST(4)
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 500,000 California Public School 2004 @ 102 $ 500,000
District Financing 2016 @ 100 S.F.
Authority, Lease Revenue
Bonds (Rescue Union School
District Projects), Series
1995A (FSA Insured), 6.25%
Due 09/01/2020 AAA
310,000 State Public Works Board of 2002 @ 102 313,320
the State of California, 2010 @ 100 S.F.
Lease Revenue Bonds (The
Regents of the University of
California) (Various
University of California
Projects), Series 1992 A
(AMBAC Insured), 6.40% Due
12/01/2016 AAA
250,000 California State University, 2005 @ 101 250,000
Fresno Association, Inc., 2010 @ 100 S.F.
Auxiliary Organization
Revenue Bonds (Student
Residence Project), Series
1995, (MBIA Insured), 6.25%
Due 02/01/2017 AAA
500,000 California Statewide 2002 @ 102 491,825
Communities Development 2013 @ 100 S.F.
Authority, Sutter Health
Obligated Group (AMBAC
Insured), 6.125% Due
08/15/2022 AAA
240,000 Dry Creek Joint Elementary 2003 @ 102 240,914
School District 2011 @ 100 S.F.
(California), Community
Facilities District No. 1,
Special Tax Bonds, Series
1995 (Capital Guaranty
Insured), 6.25% Due
09/01/2015 AAA
500,000 The City of Los Angeles 2004 @ 102 474,900
(California), Wastewater
System Revenue Bonds, Series
1994-A (MBIA Insured) 5.875%
Due 06/01/2024 AAA
410,000 Saugus Union School 2003 @ 102 384,801
District, (Los Angeles 2012 @ 100 S.F.
County, California), 1993
General Obligation Bonds,
Series A, (MBIA Insured),
5.70% Due 09/01/2018 AAA
260,000 City of Stockton 2003 @ 102 234,255
(California), Insured Health 2014 @ 100 S.F.
Facilities Revenue Bonds
(St. Joseph's Medical Center
of Stockton), Series 1993A
(MBIA Insured), 5.50% Due
06/01/2023 AAA
---------- ----------
$2,970,000 $2,890,015
========== ==========
</TABLE>
- --------
See "Notes to Portfolios."
TE-5
TAX-EXEMPT PORTFOLIOS
<PAGE>
KEMPER DEFINED FUNDS SERIES 30 INSURED MICHIGAN
SERIES 10
PORTFOLIO
AS OF THE INITIAL DATE OF DEPOSIT: FEBRUARY 22, 1995
<TABLE>
<CAPTION>
NAME OF ISSUER, TITLE,
COUPON RATE AND MATURITY
DATE OF BOND COST OF
REPRESENTED BY SPONSOR'S BONDS
AGGREGATE CONTRACTS TO PURCHASE REDEMPTION TO
PRINCIPAL BONDS(1)(5) RATING(2) PROVISIONS(3) TRUST(4)
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 400,000 The Central Michigan
University Board of
Trustees, General Revenue
and Refunding Bonds,
Series 1992 (MBIA
Insured), 6.00% Due
10/01/2005 AAA 2002 @ 102 $ 414,728
560,000 Chippewa Valley Schools,
County of Macomb, State of
Michigan, 1993 Refunding
Bonds, (General
Obligation--Unlimited Tax)
(FGIC Insured), 5.25% Due
05/01/2007 AAA 2003 @ 102 535,674
200,000 City of Detroit, Michigan,
Sewage Disposal System and
Revenue Refunding Bonds,
Series 1993-A (FGIC
Insured), 5.25% Due
07/01/2005 AAA 2003 @ 102 195,310
500,000 State Building Authority,
State of Michigan, 1992
Revenue Bonds, Series I
(MBIA Insured), 5.60% Due
10/01/2005 AAA 2002 @ 102 503,655
500,000 Michigan State Hospital
Finance Authority,
Hospital Revenue Refunding
Bonds (Oakwood Hospital
Obligated Group), Series
1993A (FGIC Insured),
5.30% Due 11/01/2006 AAA 2003 @ 102 483,075
290,000 City of Oak Park, County
of Oakland, State of
Michigan, 1993 Refunding
Bonds (General Obligation
Unlimited Tax) (AMBAC
Insured), 5.10% Due
05/01/2005 AAA 2003 @ 102 279,934
150,000(S) Portage Lake Water and
Sewage Authority, Houghton
County, Michigan, General
Obligation Limited Tax
Refunding Bonds (AMBAC
Insured), 5.60% Due
10/01/2005 AAA Non-Callable 151,184
175,000(S)X Portage Lake Water and
Sewage Authority, Houghton
County, Michigan, General
Obligation Limited Tax
Refunding Bonds (AMBAC
Insured), 5.60% Due
10/01/2006 AAA 2005 @ 102 175,000
500,000 Rochester Community School
District, Counties of
Oakland and Macomb, State
of Michigan, 1993
Refunding Bonds (General
Obligation--Unlimited Tax)
(FGIC Insured), 5.40% Due
05/01/2006 AAA Non-Callable 491,730
-------------- ----------
$3,275,000 $3,230,290
============== ==========
</TABLE>
- --------
See "Notes to Portfolios."
TE-6
TAX-EXEMPT PORTFOLIOS
<PAGE>
NOTES TO PORTFOLIOS:
All insured Bonds in the Trust Funds are insured only by the insurer indicated
in the description. The insurance was obtained directly by the issuer of the
Bonds or by the Sponsor.
(P) This Bond was issued at an original issue discount.The tax effect of Bonds
issued at an original issue discount is described in "Federal Tax Status."
(S) These Municipal Bonds are "when, as and if issued" or "delayed delivery"
and have expected settlement dates after the "First Settlement Date."
Interest on these Bonds begins accruing to the benefit of Unitholders on
the date of delivery.
(C) This Bond is of the same issue as another Bond in the Trust.
(D) This issue of Bonds is secured by, and payable from, escrowed U.S.
Government securities.
(1) Contracts to acquire Municipal Bonds were entered into by the Sponsor
between February 2, 1995 and February 21, 1995. All Bonds are represented
by regular way contracts, unless otherwise indicated, for the performance
of which an irrevocable letter of credit has been deposited with the
Trustee.
(2) The ratings have been provided by Muller Data Corporation as reported to
Muller Data Corporation by the respective rating agencies. All ratings
represent Standard & Poor's Ratings Group ratings unless marked with the
symbol "*" in which case the rating represents a Moody's Investors
Service, Inc. rating. A brief description of the applicable Standard &
Poor's and Moody's rating symbols and their meanings is set forth under
"Appendix: Description of Ratings." A rating marked by "[_]" is contingent
upon Standard & Poor's Ratings Group receiving final documentation from
the insurer.
(3) There is shown under this heading the year in which each issue of
Municipal Bonds is initially redeemable and the redemption price for that
year; 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 or sinking fund provisions under certain unusual or
extraordinary circumstances specified in the instruments setting forth the
terms and provisions of such Bonds. "S.F." indicates that a sinking fund
is established with respect to an issue of Municipal Bonds.
(4) During the initial offering period, evaluations of Municipal Bonds are
made on the basis of current offering side evaluations of the Municipal
Bonds. The aggregate offering price is greater than the aggregate bid
price of the Municipal Bonds, which is the basis on which Redemption
Prices will be determined for purposes of redemption of Units after the
initial offering period.
(5) Other information regarding the Municipal Bonds in the Trust Funds, at the
opening of business on the Initial Date of Deposit, is as follows:
<TABLE>
<CAPTION>
PROFIT
OR ANNUAL
COST OF (LOSS) INTEREST BID SIDE
BONDS TO TO INCOME VALUE OF
TRUST FUND SPONSOR SPONSOR TO TRUST BONDS
---------- ---------- ------- -------- ----------
<S> <C> <C> <C> <C>
Insured National Series 14............ $7,766,983 $79,199 $494,338 $7,755,383
Insured California Series 14.......... $2,856,684 $33,331 $179,385 $2,860,704
Insured Michigan Series 10............ $3,210,090 $20,200 $178,390 $3,197,062
</TABLE>
Neither Cost of Bonds to Sponsor nor Profit or (Loss) to Sponsor reflects
underwriting profits or losses received or incurred by the Sponsor through
its participation in underwriting syndicates but such amounts reflect
portfolio hedging transaction costs, hedging gains or losses, certain other
carrying costs and the cost of insurance obtained by the Sponsor, if any,
prior to the Initial Date of Deposit for individual Bonds.
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MUNICIPAL BOND RISK FACTORS
Certain of the Bonds in the Trust Funds may be general obligations of a
governmental entity that are backed by the taxing power of such entity. All
other Bonds in the Trusts are revenue bonds payable from the income of a
specific project or authority and are not supported by the issuer's power to
levy taxes. General obligation bonds are secured by the issuer's pledge of its
faith, credit and taxing power for the payment of principal and interest.
Revenue bonds, on the other hand, are payable only from the revenues derived
from a particular facility or class of facilities or, in some cases, from the
proceeds of a special excise or other specific revenue source. There are, of
course, variations in the security of the different Bonds in the Trust Funds,
both within a particular classification and between classifications, depending
on numerous factors.
Certain of the Bonds in the Trust Funds may be obligations of issuers whose
revenues are derived from services provided by hospitals and other health care
facilities, including nursing homes. Ratings of bonds issued for health care
facilities are often based on feasibility studies that contain projections of
occupancy levels, revenues and expenses. A facility's gross receipts and net
income available for debt service will be affected by future events and
conditions including, among other things, demand for services and the ability
of the facility to provide the services required, physicians' confidence in
the facility, management's capabilities, economic developments in the service
area, competition, efforts by insurers and governmental agencies to limit
rates, legislation establishing state rate-setting agencies, expenses, the
cost and possible unavailability of malpractice insurance, the funding of
Medicare, Medicaid and other similar third party payor programs, and
government regulation. Federal legislation has been enacted which implements a
system of prospective Medicare reimbursement which may restrict the flow of
revenues to hospitals and other facilities which are reimbursed for services
provided under the Medicare program. Future legislation or changes in the
areas noted above, among other things, would affect all hospitals to varying
degrees and, accordingly, any adverse changes in these areas may affect the
ability of such issuers to make payments of principal and interest on
Municipal Bonds held in the portfolios of the Trust Funds. Such adverse
changes also may affect the ratings of the Municipal Bonds held in the
portfolios of the Trust Funds.
Certain of the Bonds in the Trust Funds may be single family mortgage revenue
bonds, which are issued for the purpose of acquiring from originating
financial institutions notes secured by mortgages on residences located within
the issuer's boundaries and owned by persons of low or moderate income.
Mortgage loans are generally partially or completely prepaid prior to their
final maturities as a result of events such as sale of the mortgaged premises,
default, condemnation or casualty loss. Because these Bonds are subject to
extraordinary mandatory redemption in whole or in part from such prepayments
of mortgage loans, a substantial portion of such Bonds will probably be
redeemed prior to their scheduled maturities or even prior to their ordinary
call dates. The redemption price of such issues may be more or less than the
offering price of such Bonds. Extraordinary mandatory redemption without
premium could also result from the failure of the originating financial
institutions to make mortgage loans in sufficient amounts within a specified
time period or, in some cases, from the sale by the Bond issuer of the
mortgage loans. Failure of the originating financial institutions to make
mortgage loans would be due principally to the interest rates on mortgage
loans funded from other sources becoming competitive with the interest rates
on the mortgage loans funded with the proceeds of the single family mortgage
revenue bonds. Additionally, unusually high rates of default on the underlying
mortgage loans may reduce revenues available for the payment of principal of
or interest on such mortgage revenue bonds. Single family mortgage revenue
bonds issued after December 31, 1980 were issued under Section 103A of the
Internal Revenue Code of 1954, which Section contains certain ongoing
requirements relating to the use
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of the proceeds of such Bonds in order for the interest on such Bonds to
retain its tax-exempt status. In each case, the issuer of the Bonds has
covenanted to comply with applicable ongoing requirements and bond counsel to
such issuer has issued an opinion that the interest on the Bonds is exempt
from Federal income tax under existing laws and regulations. There can be no
assurances that the ongoing requirements will be met. The failure to meet
these requirements could cause the interest on the Bonds to become taxable,
possibly retroactively from the date of issuance.
Certain of the Bonds in the Trust Funds may be obligations of issuers whose
revenues are primarily derived from mortgage loans to housing projects for low
to moderate income families. The ability of such issuers to make debt service
payments will be affected by events and conditions affecting financed
projects, including, among other things, the achievement and maintenance of
sufficient occupancy levels and adequate rental income, increases in taxes,
employment and income conditions prevailing in local labor markets, utility
costs and other operating expenses, the managerial ability of project
managers, changes in laws and governmental regulations, the appropriation of
subsidies and social and economic trends affecting the localities in which the
projects are located. The occupancy of housing projects may be adversely
affected by high rent levels and income limitations imposed under Federal and
state programs. Like single family mortgage revenue bonds, multi-family
mortgage revenue bonds are subject to redemption and call features, including
extraordinary mandatory redemption features, upon prepayment, sale or non-
origination of mortgage loans as well as upon the occurrence of other events.
Certain issuers of single or multi-family housing bonds have considered
various ways to redeem bonds they have issued prior to the stated first
redemption dates for such bonds. In connection with the housing Bonds held by
the Trust Funds, the Sponsor has not had any direct communications with any of
the issuers thereof, but at the Initial Date of Deposit it is not aware that
any of the respective issuers of such Bonds are actively considering the
redemption of such Bonds prior to their respective stated initial call dates.
However, there can be no assurance that an issuer of a Bond in the Trusts will
not attempt to so redeem a Bond in the Trust Funds.
Certain of the Bonds in the Trust Funds may be obligations of issuers whose
revenues are derived from the sale of water and/or sewerage services. Water
and sewerage bonds are generally payable from user fees. Problems faced by
such issuers include the ability to obtain timely and adequate rate increases,
a decline in population resulting in decreased user fees, the difficulty of
financing large construction programs, the limitations on operations and
increased costs and delays attributable to environmental considerations, the
increasing difficulty of obtaining or discovering new supplies of fresh water,
the effect of conservation programs and the impact of "no-growth" zoning
ordinances. Issuers may have experienced these problems in varying degrees.
Certain of the Bonds in the Trust Funds may be obligations of issuers whose
revenues are primarily derived from the sale of electric energy or natural
gas. Utilities are generally subject to extensive regulation by state utility
commissions which, among other things, establish the rates which may be
charged and the appropriate rate of return on an approved asset base. The
problems faced by such issuers include the difficulty in obtaining approval
for timely and adequate rate increases from the governing public utility
commission, the difficulty in financing large construction programs, the
limitations on operations and increased costs and delays attributable to
environmental considerations, increased competition, recent reductions in
estimates of future demand for electricity in certain areas of the country,
the difficulty of the capital market in absorbing utility debt, the difficulty
in obtaining fuel at reasonable prices and the effect of energy conservation.
Issuers may have experienced these problems in varying degrees. In addition,
Federal, state and municipal governmental authorities may from time to time
review existing and impose additional regulations governing the licensing,
construction and operation of nuclear power plants, which may adversely affect
the ability of the issuers of such Bonds to make payments of principal and/or
interest on such Bonds.
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Certain of the Bonds in the Trust Funds may be industrial revenue bonds
("IRBs"), including pollution control revenue bonds, which are tax-exempt
securities issued by states, municipalities, public authorities or similar
entities to finance the cost of acquiring, constructing or improving various
industrial projects. These projects are usually operated by corporate
entities. Issuers are obligated only to pay amounts due on the IRBs to the
extent that funds are available from the unexpended proceeds of the IRBs or
receipts or revenues of the issuer under an arrangement between the issuer and
the corporate operator of a project. The arrangement may be in the form of a
lease, installment sale agreement, conditional sale agreement or loan
agreement, but in each case the payments to the issuer are designed to be
sufficient to meet the payments of amounts due on the IRBs. Regardless of the
structure, payment of IRBs is solely dependent upon the creditworthiness of
the corporate operator of the project or corporate guarantor. Corporate
operators or guarantors may be affected by many factors which may have an
adverse impact on the credit quality of the particular company or industry.
These include cyclicality of revenues and earnings, regulatory and
environmental restrictions, litigation resulting from accidents or
environmentally-caused illnesses, extensive competition and financial
deterioration resulting from leveraged buy-outs or takeovers. The IRBs in the
Trust Funds may be subject to special or extraordinary redemption provisions
which may provide for redemption at par or, with respect to original issue
discount bonds, at issue price plus the amount of original issue discount
accreted to the redemption date plus, if applicable, a premium. The Sponsor
cannot predict the causes or likelihood of the redemption date plus, if
applicable, a premium. The Sponsor cannot predict the causes or likelihood of
the redemption of IRBs or other Bonds in the Trust Funds prior to the stated
maturity of such Bonds.
Certain of the Bonds in the Trust Funds may be obligations which are payable
from and secured by revenues derived from the ownership and operation of
facilities such as airports, bridges, turnpikes, port authorities, convention
centers and arenas. The major portion of an airport's gross operating income
is generally derived from fees received from signatory airlines pursuant to
use agreements which consist of annual payments for leases, occupancy of
certain terminal space and service fees. Airport operating income may
therefore be affected by the ability of the airlines to meet their obligations
under the use agreements. The air transport industry is experiencing
significant variations in earnings and traffic, due to increased competition,
excess capacity, increased costs, deregulation, traffic constraints and other
factors, and several airlines are experiencing severe financial difficulties.
The Sponsor cannot predict what effect these industry conditions may have on
airport revenues which are dependent for payment on the financial condition of
the airlines and their usage of the particular airport facility. Similarly,
payment on Bonds related to other facilities is dependent on revenues from the
projects, such as user fees from ports, tolls on turnpikes and bridges and
rents from buildings. Therefore, payment may be adversely affected by
reduction in revenues due to such factors as increased cost of maintenance,
decreased use of a facility, lower cost of alternative modes of
transportation, scarcity of fuel and reduction or loss of rents.
Certain of the Bonds in the Trust Funds may be obligations of issuers which
are, or which govern the operation of, schools, colleges and universities and
whose revenues are derived mainly from ad valorem taxes, or for higher
eduction systems, from tuition, dormitory revenues, grants and endowments.
General problems relating to school bonds include litigation contesting the
state constitutionality of financing public eduction in part from ad valorem
taxes, thereby creating a disparity in educational funds available to schools
in wealthy areas and schools in poor areas. Litigation or legislation on this
issue may affect the sources of funds available for the payment of school
bonds in the Trusts. General problems relating to college and university
obligations would include the prospect of a declining percentage of the
population consisting of "college" age individuals, possible inability to
raise tuition and fees sufficiently
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to cover increased operating costs, the uncertainty of continued receipt of
Federal grants and state funding and new government legislation or regulations
which may adversely affect the revenues or costs of such issuers. All of such
issuers have been experiencing certain of these problems in varying degrees.
Certain of the Bonds in the Trust Funds may be Urban Redevelopment Bonds
("URBs"). URBs have generally been issued under bond resolutions pursuant to
which the revenues and receipts payable under the arrangements with the
operator of a particular project have been assigned and pledged to purchasers.
In some cases, a mortgage on the underlying project may have been granted as
security for the URBs. Regardless of the structure, payment of the URBs is
solely dependent upon the creditworthiness of the operator of the project.
Certain of the Bonds in the Trust Funds may be lease revenue bonds whose
revenues are derived from lease payments made by a municipality or other
political subdivision which is leasing equipment or property for use in its
operation. The risks associated with owning Bonds of this nature include the
possibility that appropriation of funds for a particular project or equipment
may be discontinued. The Sponsor cannot predict the likelihood of
nonappropriation of funds for these types of lease revenue Bonds.
Certain of the Bonds in the Trust Funds may be sales and/or use tax revenue
bonds whose revenues are derived from the proceeds of a special sales or use
tax. Such taxes are generally subject to continuing Legislature approval.
Payments may be adversely affected by reduction of revenues due to decreased
use of a facility or decreased sales.
Investors should be aware that many of the Bonds in the Trust Funds are
subject to continuing requirements such as the actual use of Bond proceeds or
manner of operation of the project financed from Bond proceeds that may affect
the exemption of interest on such Bonds from Federal income taxation. Although
at the time of issuance of each of the Bonds in the Trusts an opinion of bond
counsel was rendered as to the exemption of interest on such obligations from
Federal income taxation, there can be no assurance that the respective issuers
or other obligors on such obligations will fulfill the various continuing
requirements established upon issuance of the Bonds. A failure to comply with
such requirements may cause a determination that interest on such obligations
is subject to Federal income taxation, perhaps even retroactively from the
date of issuance of such Bonds, thereby reducing the value of the Bonds and
subjecting Unitholders to unanticipated tax liabilities.
Federal bankruptcy statutes relating to the adjustment of debts of political
subdivisions or authorities of states of the United States provide that, in
certain circumstances, such subdivisions or authorities may be authorized to
initiate bankruptcy proceedings without prior notice to or consent of
creditors, which proceedings could result in material and adverse modification
or alteration of the rights of holders of obligations issued by such
subdivisions or authorities.
Certain of the Bonds in the Trust Funds may represent "moral obligations" of a
governmental entity other than the issuer. In the event that the issue of a
Municipal Bond defaults in the repayment thereof, the governmental entity
lawfully may, but is not obligated to, discharge the obligation of the issuer
to repay such Municipal Bond.
STATE RISK FACTORS AND STATE TAX STATUS
None of the special counsel to the various Trust Funds has expressed any
opinion regarding the completeness or materiality of any matters contained in
this Prospectus other than the tax opinions set forth under "Federal Tax
Status." For risks specific to the individual Trusts, see "Risk Factors" for
each Trust.
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INSURED CALIFORNIA SERIES 14
Risk Factors
As described above, the Fund will invest substantially all of its assets in
California Municipal Obligations. The Fund is therefore susceptible to
political, economic or regulatory factors affecting issuers of California
Municipal Obligations. These include the possible adverse effects of certain
California constitutional amendments, legislative measures, voter initiatives
and other matters that are described below. The following information provides
only a brief summary of the complex factors affecting the financial situation
in California (the "State") and is derived from sources that are generally
available to investors and are believed to be accurate. No independent
verification has been made of the accuracy or completeness of any of the
following information. It is based in part on information obtained from
various State and local agencies in California or contained in Official
Statements for various California Municipal Obligations.
There can be no assurance that future statewide or regional economic
difficulties, and the resulting impact on State or local governmental finances
generally, will not adversely affect the market value of California Municipal
Obligations held in the portfolio of the Fund or the ability of particular
obligors to make timely payments of debt service on (or relating to) those
obligations.
Economic Overview. California's economy is the largest among the 50 states and
one of the largest in the world. The State's population of over 30 million
represents 12% of the total United States population and grew by 27% in the
1980s. Total personal income in the State, at an estimated $662 billion in
1992, accounts for 13% of all personal income in the nation. Total employment
is almost 14 million, the majority of which is in the service, trade and
manufacturing sectors.
Reports issued by the State Department of Finance and other sources indicate
that the State's economy is suffering its worst recession since the 1930s,
with prospects for recovery slower than for the nation as a whole. The State
has lost over 800,000 jobs since the start of the recession in mid 1990 and
additional job losses are expected before an upturn begins. The largest job
losses have been in Southern California, led by declines in the aerospace and
construction industries. Weaknesses statewide occurred in manufacturing,
construction, services and trade and will be hurt in the next few years by
continued cuts in federal defense spending and base closures. Unemployment is
expected to remain well above the national average in 1994. The State's
economy is only expected to pull out of the recession slowly, following the
national recovery which has begun. Delay in recovery will exacerbate
shortfalls in State revenues.
Certain California Municipal Obligations may be obligations of issuers which
rely in whole or in part, directly or indirectly, on ad valorem property taxes
as a source of revenue. The taxing powers of California local governments and
districts are limited by Article XIIIA of the California Constitution, enacted
by the voters in 1978 and commonly known as "Proposition 13." Briefly, Article
XIIIA limits to 1% of full cash value the rate of ad valorem property taxes on
real property and generally restricts the reassessment of property to 2% per
year, except upon new construction or change of ownership (subject to a number
of exemptions). Taxing entities may, however, raise ad valorem taxes above the
1% limit to pay debt service on voter-approved bonded indebtedness.
Under Article XIIIA, the basic 1% ad valorem tax levy is applied against the
assessed value of property as of the owner's date of acquisition (or as of
March 1, 1975, if acquired earlier), subject to certain adjustments. This
system has resulted in widely varying amounts of tax on similarly situated
properties.
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Several lawsuits have been filed challenging the acquisition-based assessment
system of Proposition 13 and on June 18, 1992 the U.S. Supreme Court announced
a decision upholding Proposition 13.
Article XIIIA prohibits local governments from raising revenues through ad
valorem property taxes above the 1% limit; it also requires voters of any
governmental unit to give two-thirds approval to levy any "special tax." Court
decisions, however, allowed non-voter approved levy of "general taxes" which
were not dedicated to a specific use. In response to these decisions, the
voters of the State in 1986 adopted an initiative statute which imposed
significant new limits on the ability of local entities to raise or levy
general taxes, except by receiving majority local voter approval. Significant
elements of this initiative, "Proposition 62", have been overturned in recent
court cases. An initiative proposed to re-enact the provisions of Proposition
62 as a constitutional amendment was defeated by the voters in November 1990,
but such a proposal may be renewed in the future.
The State and its local governments are subject to an annual "appropriations
limit" imposed by Article XIIIB of the California Constitution, enacted by the
voters in 1979 and significantly amended by Propositions 98 and 111 in 1988
and 1990, respectively. Article XIIIB prohibits the State or any covered local
government from spending "appropriations subject to limitation" in excess of
the appropriations limit imposed. "Appropriations subject to limitation" are
authorizations to spend "proceeds of taxes," which consist of tax revenues and
certain other funds, including proceeds from regulatory licenses, user charges
or other fees to the extent that such proceeds exceed the cost of providing
the product or service, but "proceeds of taxes" excludes most State
subventions to local governments. No limit is imposed on appropriations or
funds which are not "proceeds of taxes," such as reasonable user charges or
fees, and certain other non-tax funds, including bond proceeds.
Among the expenditures not included in the Article XIIIB appropriations limit
are (1) the debt service cost of bonds issued or authorized prior to January
1, 1979, or subsequently authorized by the voters, (2) appropriations arising
from certain emergencies declared by the Governor, (3) appropriations for
certain capital outlay projects, (4) appropriations by the State of post-1989
increases in gasoline taxes and vehicle weight fees, and (5) appropriations
made in certain cases of emergency.
The appropriations limit for each year is adjusted annually to reflect changes
in cost of living and population, and any transfers of service
responsibilities between government units. The definitions for such
adjustments were liberalized in 1990 by Proposition 111 to more closely follow
growth in the State's economy.
"Excess" revenues are measured over a two-year cycle. Local governments must
return any excess to taxpayers by rate reduction. The State must refund 50% of
any excess, with the other 50% paid to schools and community colleges. With
more liberal annual adjustment factors since 1988, and depressed revenues
since 1990 because of the recession, few governments are currently operating
near their spending limits, but this condition may change over time. Local
governments may by voter approval exceed their spending limits for up to four
years.
During fiscal year 1986-87, State receipts from proceeds of taxes exceeded its
appropriations limit by $1.1 billion, which was returned to taxpayers. Since
that year, appropriations subject to limitation have been under the State
limit. State appropriations are expected to be $3.7 billion under the limit
for Fiscal Year 1993-94.
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Because of the complex nature of Articles XIIIA and XIIIB of the California
Constitution, the ambiguities and possible inconsistencies in their terms, and
the impossibility of predicting future appropriations or changes in population
and cost of living, and the probability of continuing legal challenges, it is
not currently possible to determine fully the impact of Article XIIIA or
Article XIIIB on California Municipal Obligations or on the ability of the
State or local governments to pay debt service on such California Municipal
Obligations. It is not presently possible to predict the outcome of any
pending litigation with respect to the ultimate scope, impact or
constitutionality of either Article XIIIA or Article XIIIB, or the impact of
any such determinations upon State agencies or local governments, or upon
their ability to pay debt service on their obligations. Future initiative or
legislative changes in laws or the California Constitution may also affect the
ability of the State or local issuers to repay their obligations.
As of April 1, 1994, the State had approximately $18.1 billion of general
obligation bonds outstanding, and $5.6 billion remained authorized but
unissued. In addition, at June 30, 1993, the State had lease-purchase
obligations, payable from the State's General Fund, of approximately $4.0
billion. Of the State's outstanding general obligation debt, 28% is presently
self-liquidating (for which program revenues are anticipated to be sufficient
to reimburse the General Fund for debt service payments). Four general
obligation bond propositions, totalling $5.9 billion, will be on the June 1994
ballot. In Fiscal Year 1992-93, debt service on general obligation bonds and
lease-purchase debt was approximately 4.1% of General Fund revenues. The State
has paid the principal of and interest on its general obligation bonds, lease-
purchase debt and short-term obligations when due.
The principal sources of General Fund revenues in 1992-93 were the California
personal income tax (44% of total revenues), the sales tax (38%), bank and
corporation taxes (12%), and the gross premium tax on insurance (3%). The
State maintains a Special Fund for Economic Uncertainties (the "Economic
Uncertainties Fund"), derived from General Fund revenues, as a reserve to meet
cash needs of the General Fund, but which is required to be replenished as
soon as sufficient revenues are available. Year-end balances in the Economic
Uncertainties Fund are included for financial reporting purposes in the
General Fund balance. In most recent years, California has budgeted to
maintain the Economic Uncertainties Fund at around 3% of General Fund
expenditures but essentially no reserve has been budgeted in 1992-93 or 1993-
1994 because reserves have been reduced by the recession.
Throughout the 1980s, State spending increased rapidly as the State population
and economy also grew rapidly, including increased spending for many
assistance programs to local governments, which were constrained by
Proposition 13 and other laws. The largest State program is assistance to
local public school districts. In 1988, an initiative (Proposition 98) was
enacted which (subject to suspension by a two-thirds vote of the Legislature
and the Governor) guarantees local school districts and community college
districts a minimum share of State General Fund revenues (currently about
34%).
Since the start of the 1990-91 Fiscal Year, the State has faced adverse
economic, fiscal, and budget conditions. The economic recession seriously
affected State tax revenues. It also caused increased expenditures for health
and welfare programs. The State is also facing a structural imbalance in its
budget with the largest programs supported by the General Fund (education,
health, welfare and corrections) growing at rates significantly higher than
the growth rates for the principal revenue sources of the General Fund. As a
result, the State entered a period of budget imbalance, with expenditures
exceeding revenues for four of the five fiscal years through 1991-92.
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As the State fell into a deep recession in the summer of 1990, the State
budget fell sharply out of balance in the 1990-91 and 1991-92 fiscal years,
despite significant expenditure cuts and tax increases. The State had
accumulated a $2.8 billion budget deficit by June 30, 1992. This deficit also
severely reduced the State's cash resources, so that it had to rely on
external borrowing in the short-term markets to meet its cash needs.
With the failure to enact a budget by July 1, 1992, the State had no legal
authority to pay many of its vendors until the budget was passed;
nevertheless, certain obligations (such as debt service, school
apportionments, welfare payments, and employee salaries) were payable because
of continuing or special appropriations, or court orders. However, the State
Controller did not have enough cash to pay all of these ongoing obligations as
they came due, as well as valid obligations incurred in the prior fiscal year.
Starting on July 1, 1992, the Controller was required to issue "registered
warrants" in lieu of normal warrants backed by cash to pay many State
obligations. Available cash was used to pay constitutionally mandated and
priority obligations. Between July 1 and September 3, 1992, the Controller
issued an aggregate of approximately $3.8 billion of registered warrants, all
of which were called for redemption by September 4, 1992 following enactment
of the 1992-93 Budget Act and issuance by the State of $3.3 billion of Interim
Notes.
The 1992-93 Budget Act, when finally adopted, was projected to eliminate the
State's accumulated deficit, with additional expenditure cuts and a $1.3
billion transfer of State education funding costs to local governments by
shifting local property taxes to school districts. However, as the recession
continued longer and deeper than expected, revenues once again were far below
projections, and only reached a level just equal to the amount of
expenditures. Thus, the State continued to carry its $2.8 billion budget
deficit at June 30, 1993.
The 1993-94 Budget Act was similar to the prior year, in reliance on
expenditure cuts and an additional $2.6 billion transfer of costs to local
government, particularly counties. A major feature of the budget was a two-
year plan to eliminate the accumulated deficit by borrowing into the 1994-95
fiscal year. With the recession still continuing longer than expected, the
1994-95 Governor's Budget now projects that in the 1993-94 Fiscal Year, the
General Fund will have $900 million less revenue and $800 million higher
expenditures than budgeted. As a result, revenues will only exceed
expenditures by about $400 million. If this projection is met, it will be the
first operating surplus in four years; however, some budget analysts outside
the Department of Finance project revenues in the balance of 1993-94 will not
meet the revised, lower projection. In addition, the General Fund may have
some unplanned costs for relief related to the January 17, 1994 Northridge
earthquake.
The State has implemented its short-term borrowings as part of the deficit
elimination plan, and has also borrowed additional sums to cover cash flow
shortfalls in the spring of 1994, for a total of $3.2 billion, coming due in
July and December, 1994. Repayment of these short-term notes will require
additional borrowing, as the State's cash position continues to be adversely
affected.
The Governor's 1994-95 Budget proposal recognizes the need to bridge a gap of
around $5 billion by June 30, 1995. Over $3.1 billion of this amount is being
requested from the federal government as increased aid, particularly for costs
associated with incarcerating, educating and providing health and welfare
services to undocumented immigrants. However, President Clinton has not
included these costs in his proposed Fiscal 1995 Budget. The rest of the
budget gap is proposed to be closed with expenditure cuts and projected $600
million of new revenue assuming the State wins a tax case presently pending in
the U.S. Supreme Court. Thus the State will once again face significant
uncertainties and very difficult choices in the 1994-95 budget, as tax
increases are unlikely and many cuts and budget adjustments have been made in
the past three years.
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The State's severe financial difficulties for the current and upcoming budget
years will result in continued pressure upon various local governments,
particularly school districts and counties which depend on State aid. Despite
efforts in recent years to increase taxes and reduce governmental
expenditures, there can be no assurance that the State will not face budget
gaps in the future.
State general obligation bonds are currently rated "A1" by Moody's and "A" by
Standard & Poor's. These ratings were recently reduced from "Aa" and "A+",
respectively, due to the State's inability to reduce its accumulated budget
deficit, among a number of other fiscal uncertainties. Both of these ratings
were previously reduced from "AAA" levels which the State held until late
1991. There can be no assurance that such ratings will be maintained in the
future. It should be noted that the creditworthiness of obligations issued by
local California issuers may be unrelated to the creditworthiness of
obligations issued by the State of California, and that there is no obligation
on the part of the State to make payment on such local obligations in the
event of default.
The State is involved in certain legal proceedings (described in the State's
recent financial statements) that, if decided against the State, may require
the State to make significant future expenditures or may substantially impair
revenues.
On December 7, 1994, Orange County, California (the "County"), together with
its pooled investment fund (the "Fund") filed for protection under Chapter 9
of the federal Bankruptcy Code, after reports that the Fund had suffered
significant market losses in its investments which caused a liquidity crisis
for the Fund and the County. Approximately 180 other public entities, most but
not all located in the County, were also depositors in the Fund. As of
December 13, 1994, the County indicated that the Fund had lost about 27% of
its initial deposits of approximately $7.4 billion. The County may suffer
further losses as it sells investments to restructure the Fund. Many of the
entities which kept moneys in the Fund, including the County, are facing cash
flow difficulties because of the bankruptcy filing and may be required to
reduce programs or capital projects.
The State of California has no obligations with respect to any bonds or other
securities of the County or any of the other participating entities, although
under existing legal precedents, the State may be obligated to ensure that
school districts have sufficient funds to operate.
State Assistance. Property tax revenues received by local governments declined
more than 50% following passage of Proposition 13. Subsequently, the
California Legislature enacted measures to provide for the redistribution of
the State's General Fund surplus to local agencies, the reallocation of
certain State revenues to local agencies and the assumption of certain
governmental functions by the State to assist municipal issuers to raise
revenues. Total local assistance (including public schools) accounted for
approximately 75% of General Fund expenditures, including the effect of
implementing reductions
in certain aid reductions. To reduce State General Fund support for school
districts, the 1992-93 and 1993-94 Budget Acts caused local governments to
transfer $3.9 billion of property tax revenues to school districts,
representing loss of all of the post-Proposition 13 "bail-out" aid. Local
governments have in return received greater revenues and greater flexibility
to operate health and welfare programs. To the extent the State should be
constrained by its Article XIIIB appropriations limit, or its obligation to
conform to Proposition 98, or other fiscal considerations, the absolute level,
or the rate of growth, of State assistance to local governments may be
reduced. Any such reductions in State aid could compound the serious fiscal
constraints already experienced by many local governments, particularly
counties. The Richmond Unified School District (Contra Costa County) entered
bankruptcy proceedings in May 1991, but the proceedings have been dismissed.
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Assessment Bonds. California Municipal Obligations which are assessment bonds
may be adversely affected by a general decline in real estate values or a
slowdown in real estate sales activity. In many cases, such bonds are secured
by land which is undeveloped at the time of issuance but anticipated to be
developed within a few years after issuance. In the event of such reduction or
slowdown, such development may not occur or may be delayed, thereby increasing
the risk of a default on the bonds. Because the special assessments or taxes
securing these bonds are not the personal liability of the owners of the
property assessed, the lien on the property is the only security for the
bonds. Moreover, in most cases the issuer of these bonds is not required to
make payments on the bonds in the event of delinquency in the payment of
assessments or taxes, except from amounts, if any, in a reserve fund
established for the bonds.
California Long Term Lease Obligations. Certain California long term lease
obligations, though typically payable from the general fund of the
municipality, are subject to "abatement" in the event the facility being
leased is unavailable for beneficial use and occupancy by the municipality
during the term of the lease. Abatement is not a default, and there may be no
remedies available to the holders of the certificates evidencing the lease
obligation in the event abatement occurs. The most common causes of abatement
are failure to complete construction of the facility before the end of the
period during which lease payments have been capitalized and uninsured
casualty losses to the facility (e.g., due to earthquake). In the event
abatement occurs with respect to a lease obligation, lease payments may be
interrupted (if all available insurance proceeds and reserves are exhausted)
and the certificates may not be paid when due.
Several years ago the Richmond Unified School District (the "District")
entered into a lease transaction in which certain existing properties of the
District were sold and leased back in order to obtain funds to cover operating
deficits. Following a fiscal crisis in which the District's finances were
taken over by a State receiver (including a brief period under bankruptcy
court protection), the District failed to make rental payments on this lease,
resulting in a lawsuit by the Trustee for the Certificate of Participation
holders, in which the State was a named defendant (on the grounds that it
controlled the District's finances). One of the defenses raised in answer to
this lawsuit was the invalidity of the original lease transaction. The trial
court upheld the validity of the lease, and the case has been settled. A
judgment in a future case against the position asserted by the Trustee in the
Richmond case may have adverse implications for lease transactions of a
similar nature by other California entities.
The repayment of industrial development securities secured by real property
may be affected by California laws limiting foreclosure rights of creditors.
Securities backed by health care and hospital revenues may be affected by
changes in State regulations governing cost reimbursements to health care
providers under MediCal (the State's Medicaid program), including risks
related to the policy of awarding exclusive contracts to certain hospitals.
Limitations on ad valorem property taxes may particularly affect "tax
allocation" bonds issued by California redevelopment agencies. Such bonds are
secured solely by the increase in assessed valuation of a redevelopment
project area after the start of redevelopment activity. In the event that
assessed values in the redevelopment project decline (for example, because of
a major natural disaster such as an earthquake), the tax increment revenue may
be insufficient to make principal and interest payments on these bonds. Both
Moody's and Standard & Poor's suspended ratings on California tax allocation
bonds after the enactment of Articles XIIIA and XIIIB, and only resumed such
ratings on a selective basis.
Proposition 87, approved by California voters in 1988, requires that all
revenues produced by a tax rate increase go directly to the taxing entity
which increased such tax rate to repay that entity's general obligation
indebtedness. As a result, redevelopment agencies (which, typically, are the
issuers of tax
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allocation securities) no longer receive an increase in tax increment when
taxes on property in the project area are increased to repay voter-approved
bonded indebtedness.
The effect of these various constitutional and statutory changes upon the
ability of California municipal securities issuers to pay interest and
principal on their obligations remains unclear. Furthermore, other measures
affecting the taxing or spending authority of California or its political
subdivisions may be approved or enacted in the future. Legislation has been or
may be introduced which would modify existing taxes or other revenue-raising
measures or which either would further limit or, alternatively, would increase
the abilities of state and local governments to impose new taxes or increase
existing taxes. It is not presently possible to determine the impact of any
such legislation on California Municipal Obligations in which the Fund may
invest, future allocations of state revenues to local governments or the
abilities of state or local governments to pay the interest on, or repay the
principal of, such California Municipal Obligations.
Substantially all of California is within an active geologic region subject to
major seismic activity. Any California Municipal Obligation in the Portfolio
could be affected by an interruption of revenues because of damaged
facilities, or, consequently, income tax deductions for casualty losses or
property tax assessment reductions. Compensatory financial assistance could be
constrained by the inability of (i) an issuer to have obtained earthquake
insurance coverage at reasonable rates; (ii) an insurer to perform on its
contracts of insurance in the event of widespread losses; or (iii) the Federal
or State government to appropriate sufficient funds within their respective
budget limitations.
California Tax Status
In the opinion of Orrick, Herrington & Sutcliffe, special California tax
counsel to Insured California Series 14, under existing law:
Insured California Series 14 is not an association taxable as a corporation
and the income of Insured California Series 14 will be treated as the
income of the Unitholders under the income tax laws of California;
Amounts treated as interest on the underlying Bonds in Insured California
Series 14 which are exempt from tax under California personal income tax
and property tax laws when received by Insured California Series 14 will,
under such laws, retain their status as tax-exempt interest when
distributed to Unitholders. However, interest on the underlying Bonds
attributed to a Unitholder which is a corporation subject to the California
franchise tax laws may be includable in its gross income for purposes of
determining its California franchise tax. Further, certain interest which
is attributable to a Unitholder subject to the California personal income
tax and which is treated as an item of tax preference for purposes of the
federal alternative minimum tax pursuant to Section 57(a)(5) of the
Internal Revenue Code of 1986 may also be treated as an item of tax
preference that must be taken into account in computing such Unitholder's
alternative minimum taxable income for purposes of the California
alternative minimum tax enacted by 1987 California Statutes, chapter 1138.
However, because of the provisions of the California Constitution exempting
the interest on bonds issued by the State of California or by local
governments within the state, from taxes levied on income, the application
of the new California alternative minimum tax to interest otherwise exempt
from the California personal income tax in some cases may be unclear;
Under California income tax law, each Unitholder in Insured California
Series 14 will have a taxable event Insured California Series 14 disposes
of a Bond (whether by sale, exchange, redemption, or
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<PAGE>
payment at maturity) or when the Unitholder redeems or sells units. Because
of the requirement that tax cost basis be reduced to reflect amortization
of bond premium, under some circumstances a Unitholder may realize taxable
gains when Units are sold or redeemed for an amount equal to, or less than,
their original cost. The total cost of each Unit in Insured California
Series 14 to a Unitholder is allocated among each of the Bond issues held
in Insured California Series 14 (in accordance with the proportion of
Insured California Series 14 comprised by each Bond issue) in order to
determine his per Unit tax cost for each Bond issue; and the tax cost
reduction requirements relating to amortization of bond premium will apply
separately to the per Unit cost of each Bond issue. Unitholders' bases in
their Units, and the bases for their fractional interest in each Insured
California Series 14 asset, may have to be adjusted for their pro rata
share of accrued interest received, if any, on Bonds delivered after the
Unitholders' respective settlement dates;
Under the California personal property tax laws, bonds (including the Bonds
in Insured California Series 14) or any interest therein is exempt from
such tax;
Under Section 17280(b)(2) of the California Revenue and Taxation Code,
interest on indebtedness incurred or continued to purchase or carry Units
of Insured California Series 14 is not deductible for the purposes of the
California personal income tax. While there presently is no California
authority interpreting this provision, Section 17280(b)(2) directs the
California Franchise Tax Board to prescribe regulations determining the
proper allocation and apportionment if interest costs for this purpose. The
Franchise Tax Board has not yet proposed or prescribed such regulations. In
interpreting the generally similar Federal provision, the Internal Revenue
Service has taken the position that such indebtedness need not be directly
traceable to the purchase or carrying of Units (although the Service has
not contended that a deduction for interest on indebtedness incurred to
purchase or improve a personal residence or to purchase goods or services
for personal consumption will be disallowed). In the absence of conflicting
regulations or other California authority, the California Franchise Tax
Board generally has interpreted California statutory tax provisions in
accordance with Internal Revenue Service interpretations of similar Federal
provisions.
At the respective times of issuance of the Bonds, opinions relating to the
validity thereof and to the exemption of interest thereon from Federal
income tax and California personal income tax are rendered by bond counsel
to the respective issuing authorities and we have relied solely upon such
opinions, or, as to securities not yet delivered, forms of such opinions
contained in official statements relating to such securities. Except in
certain instances in which Orrick, Herrington & Sutcliffe acted as bond
counsel to issuers of Bonds in Insured California Series 14, and as such
made a review of proceedings relating to the issuance of certain Bonds at
the time of their issuance, Orrick, Herrington & Sutcliffe has not made any
review for the Trust of the proceedings relating to the issuance of the
Bonds in Insured California Series 14 or of the basis for such opinions.
For a discussion of Federal tax matters relating to distributions from the
Trust Fund, see "Federal Tax Status."
INSURED MICHIGAN SERIES 10
Risk Factors
Investors should be aware that the economy of the State of Michigan has, in
the past, proven to be cyclical, due primarily to the fact that the leading
sector of the State's economy is the manufacturing of durable goods. While the
State's efforts to diversity its economy have proven successful, as reflected
by the fact that the share of employment in the State in the durable goods
sector has fallen from 33.1 percent
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<PAGE>
in 1960 to 17.9 percent in 1990, durable goods manufacturing still represents
a sizable portion of the State's economy. As a result, any substantial
national economic downturn is likely to have an adverse effect on the economy
of the State and on the revenues of the State and some of its local
governmental units.
In May 1986, Moody's Investors Service raised the State's general obligation
bond rating to "A1". In October 1989, Standard & Poor's Corporation raised its
rating on the State's general obligation bonds to "AA".
The State's economy could continue to be affected by changes in the auto
industry, notably consolidation and plant closings resulting from competitive
pressures and over-capacity. Such actions could adversely affect State
revenues and the financial impact on the local units of government in the
areas in which plants are closed could be more severe.
General Motors Corporation announced the scheduled closing of several of its
plants in Michigan in 1993 and 1994. Some of these closings have occurred and
some have been deferred. The ultimate impact these closures may have on the
State's revenues and expenditures is not currently known. The impact on the
financial condition of the municipalities in which the plants are located may
be more severe than the impact on the State itself.
In recent years, the State has reported its financial results in accordance
with generally accepted accounting principles. For each of the five fiscal
years ending with the fiscal year ended September 30, 1989, the State reported
positive year-end General Fund balances and positive cash balances in the
combined General Fund/School Aid Fund. For the fiscal years ending September
30, 1990 and 1991, the State reported negative year-end General Fund Balances
of $310.4 million and $169.4 million, respectively, but ended the 1992 fiscal
year with its general fund in balance and ended the 1993 fiscal year with a
small general fund surplus. A positive cash balance in the combined General
Fund/School Aid Fund was recorded at September 30, 1990. In the 1991 thru 1993
fiscal years the State experienced deteriorating cash balances which
necessitated short term borrowing and the deferral of certain scheduled cash
payments. The State borrowed $900 million for cash flow purposes in the 1993
fiscal year, which was repaid on September 30, 1993. The State's Budget
Stabilization Fund received a $283 million transfer from the General Fund in
the 1993 State fiscal year, bringing the fund balance to $303 million at
September 30, 1993.
The Michigan Constitution of 1963 limits the amount of total revenues of the
State raised from taxes and certain other sources to a level for each fiscal
year equal to a percentage of the State's personal income for the prior
calendar year. In the event that the State's total revenues exceed the limit
by 1 percent or more, the Michigan Constitution of 1963 requires that the
excess be refunded to taxpayers.
On March 15, 1994, Michigan voters approved a school finance reform amendment
to the State's Constitution which, among other things, increased the State
sales tax rate from 4% to 6% and placed a cap on property assessment increases
for all property taxes. Concurrent legislation cut the State's income tax rate
from 4.6% to 4.4%, reduced some property taxes and altered local school
funding sources to a combination of property taxes and state revenues, some of
which is provided from other new or increased State taxes. The legislation
also contained other provisions that alter (and in some cases, may reduce) the
revenues of local units of government, and tax increment bonds could be
particularly affected. While the ultimate impact of the constitutional
amendment and related legislation cannot yet be accurately predicted,
investors should be alert to the potential effect of such measures upon the
operations and revenues of Michigan local units of government.
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Although all or most of the Bonds in Insured Michigan Series 10 (the "Michigan
Trust") are revenue obligations or general obligations of local governments or
authorities rather than general obligations of the State of Michigan itself,
there can be no assurance that any financial difficulties the State may
experience will not adversely affect the market value or marketability of the
Bonds or the ability of the respective obligors to pay interest on or
principal of the Bonds, particularly in view of the dependency of local
governments and other authorities upon State aid and reimbursement programs
and, in the case of bonds issued by the State Building Authority, the
dependency of the State Building Authority on the receipt of rental payments
from the State to meet debt service requirements upon such bonds. In the 1991
fiscal year, the State deferred certain scheduled cash payments to
municipalities, school districts, universities and community colleges. While
such deferrals were made up at specified later dates, similar future deferrals
could have an adverse impact on the cash position of some local governmental
units. Additionally, the State reduced revenue sharing payments to
municipalities below that level provided under formulas by $10.9 million in
the 1991 fiscal year and $34.4 million in the 1992 fiscal year, $45.5 million
in the 1993 fiscal year and $64.6 million (budgeted) in the 1994 fiscal year.
Insured Michigan Series 10 may contain general obligation bonds of local units
of government pledging the full faith and credit of the local unit which are
payable from the levy of ad valorem taxes on taxable property within the
jurisdiction of the local unit. Such bonds issued prior to December 22, 1978,
or issued after December 22, 1978 with the approval of the electors of the
local unit, are payable from property taxes levied without limitation as to
rate or amount. With respect to bonds issued after December 22, 1978, and
which were not approved by the electors of the local unit, the tax levy of the
local unit for debt service purposes is subject to constitutional, statutory
and charter tax rate limitations. In addition, several major industrial
corporations have instituted challenges of their ad valorem property tax
assessments in a number of local municipal units in the State. If successful,
such challenges could have an adverse impact on the ad valorem tax bases of
such units which could adversely affect their ability to raise funds for
operation and debt service requirements.
Michigan Tax Status
In the opinion of Miller, Canfield, Paddock and Stone, special counsel to the
Trust for Michigan tax matters, under existing Michigan law:
Insured Michigan Series 10 and the owners of Units will be treated for
purposes of the Michigan income tax laws and the Single Business Tax in
substantially the same manner as they are for purposes of the Federal
income tax laws, as currently enacted. Accordingly, we have relied upon the
opinion of Chapman and Cutler as to the applicability of Federal income tax
under the Internal Revenue Code of 1986 to Insured Michigan Series 10 and
the Unitholders.
Under the income tax laws of the State of Michigan, Insured Michigan Series
10 is not an association taxable as a corporation; the income of Insured
Michigan Series 10 will be treated as the income of the Unitholders and be
deemed to have been received by them when received by Insured Michigan
Series 10. Interest on the underlying Bonds which is exempt from tax under
these laws when received by Insured Michigan Series 10 will retain its
status as tax exempt interest to the Unitholders.
For purposes of the foregoing Michigan tax laws, each Unitholder will be
considered to have received his pro rata share of Bond interest when it is
received by Insured Michigan Series 10, and each Unitholder will have a
taxable event when Insured Michigan Series 10 disposes of a Bond (whether
by sale, exchange, redemption or payment at maturity) or when the
Unitholder redeems or sells his Unit to the extent the transaction
constitutes a taxable event for Federal income tax
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purposes. The tax cost of each unit to a Unitholder will be established and
allocated for purposes of these Michigan tax laws in the same manner as
such cost is established and allocated for Federal income tax purposes.
Under the Michigan Intangibles Tax, Insured Michigan Series 10 is not
taxable and the pro rata ownership of the underlying Bonds, as well as the
interest thereon, will be exempt to the Unitholders to the extent Insured
Michigan Series 10 consists of obligations of the State of Michigan or its
political subdivisions or municipalities, or of obligations of the
Commonwealth of Puerto Rico, Guam or of the United States Virgin Islands.
The Michigan Single Business Tax replaced the tax on corporate and
financial institution income under the Michigan Income Tax, and the
Intangible Tax with respect to those intangibles of persons subject to the
Single Business Tax the income from which would be considered in computing
the Single Business Tax. Persons are subject to the Single Business Tax
only if they are engaged in "business activity", as defined in the Act.
Under the Single Business Tax, both interest received by Insured Michigan
Series 10 on the underlying Bonds and any amount distributed from Insured
Michigan Series 10 to a Unitholder, if not included in determining taxable
income for Federal income tax purposes, is also not included in the
adjusted tax base upon which the Single Business Tax is computed, of either
Insured Michigan Series 10 or the Unitholders. If Insured Michigan Series
10 or the Unitholders have a taxable event for Federal income tax purposes
when Insured Michigan Series 10 disposes of a Bond (whether by sale,
exchange, redemption or payment at maturity) or the Unitholder redeems or
sells his Unit, an amount equal to any gain realized from such taxable
event which was included in the computation of taxable income for Federal
income tax purposes (plus an amount equal to any capital gain of an
individual realized in connection with such event but excluded in computing
that individual's Federal taxable income) will be included in the tax base
against which, after allocation, apportionment and other adjustments, the
Single Business Tax is computed. The tax base will be reduced by an amount
equal to any capital loss realized from such a taxable event, whether or
not the capital loss was deducted in computing Federal taxable income in
the year the loss occurred. Unitholders should consult their tax advisor as
to their status under Michigan law.
Any proceeds paid under an insurance policy issued to the Trustee of the
Trust, or paid under individual policies obtained by issuers of Bonds,
which, when received by the Unitholders, represent maturing interest on
defaulted obligations held by the Trustee, will be excludable from the
Michigan income tax laws and the Single Business Tax if, and to the same
extent as, such interest would have been so excludable if paid by the
issuer of the defaulted obligations. While treatment under the Michigan
Intangibles Tax is not premised upon the characterization of such proceeds
under the Internal Revenue Code, the Michigan Department of Treasury should
adopt the same approach as under the Michigan income tax laws and the
Single Business Tax.
As the Tax Reform Act of 1986 eliminates the capital gain deduction for tax
years beginning after December 31, 1986, the federal adjusted gross income,
the computation base for the Michigan Income Tax, of a Unitholder will be
increased accordingly to the extent such capital gains are realized when
Insured Michigan Series 10 disposes of a Bond or when the Unitholder
redeems or sells a Unit, to the extent such transaction constitutes a
taxable event for Federal income tax purposes.
For a discussion of Federal tax matters relating to distributions from the
Trust Fund, see "Federal Tax Status."
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INSURANCE ON THE BONDS
All Municipal Bonds in the portfolios of the Insured Trust Funds are insured
as to the scheduled payment of interest and principal by the issuer or the
Sponsor from Municipal Bond Investors Assurance Corporation or other insurers.
See "Portfolios" and the Notes thereto. The premium for any insurance policy
or policies obtained by an issuer of Municipal Bonds or the Sponsor has been
paid in advance by such issuer or the Sponsor and any such policy or policies
are non-cancellable and will remain in force so long as the Municipal Bonds so
insured are outstanding and the insurer and/or insurers thereof remain in
business. Where Municipal Bond insurance is obtained by the issuer or the
Sponsor directly from Municipal Bond Investors Assurance Corporation or
another insurer, no premiums for insurance are paid by an Insured Trust Fund.
If the provider of an original issuance insurance policy is unable to meet its
obligations under such policy or if the rating assigned to the claims-paying
ability of any such insurer deteriorates, no other insurer has an obligation
to insure any issue adversely affected by either of the above described
events.
The aforementioned insurance guarantees the scheduled payment of principal and
interest on all of the Municipal Bonds in an Insured Trust Fund. It does not
guarantee the market value of the Municipal Bonds or the value of the Units of
the Insured Trust Fund. Insurance obtained by the issuer of a Municipal Bond
or the Sponsor is effective so long as the Bond is outstanding, whether or not
held by an Insured Trust Fund. Therefore, any such insurance may be considered
to represent an element of market value in regard to the Bonds thus insured,
but the exact effect, if any, of this insurance on such market value cannot be
predicted.
Financial Guaranty Insurance Company. Financial Guaranty is a wholly-owned
subsidiary of FGIC Corporation (the "Corporation"), a Delaware holding
company. The Corporation is a wholly-owned subsidiary of General Electric
Capital Corporation ("GECC"). Neither the Corporation nor GECC is obligated to
pay the debts or the claims against Financial Guaranty. Financial Guaranty is
domiciled in the State of New York and is subject to regulation by the State
of New York Insurance Department. As of September 30, 1994, the total capital
and surplus of Financial Guaranty was approximately $871,000,000. Copies of
Financial Guaranty's financial statements, prepared on the basis of statutory
accounting principles, and the Corporation's financial statements, prepared on
the basis of generally accepted accounting principles, may be obtained by
writing to Financial Guaranty at 115 Broadway, New York, New York 10006,
Attention: Communications Department (telephone number is (212) 312-3000) or
to the New York State Insurance Department at 160 West Broadway, 18th Floor,
New York, New York 10013, Attention: Property Companies Bureau (telephone
number (212) 621-0389).
In addition, Financial Guaranty Insurance Company is currently authorized to
write insurance in all 50 states and the District of Columbia.
The information relating to Financial Guaranty contained above has been
furnished by such corporation. The financial information contained herein with
respect to such corporation is unaudited but appears in reports or other
materials filed with state insurance regulatory authorities and is subject to
audit and review by such authorities. No representation is made herein as to
the accuracy or adequacy of such information or as to the absence of material
adverse changes in such information subsequent to the date thereof but the
Sponsor is not aware that the information herein is inaccurate or incomplete.
AMBAC Indemnity Corporation. AMBAC Indemnity Corporation ("AMBAC") is a
Wisconsin-domiciled stock insurance company, regulated by the Office of the
Commissioner of Insurance of the State of
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Wisconsin, and licensed to do business in 50 states, the District of Columbia
and the Commonwealth of Puerto Rico, with admitted assets (unaudited) of
approximately $1,988,000,000 and statutory capital (unaudited) of
approximately $1,148,000,000 as of March 31, 1994. Statutory capital consists
of AMBAC policyholders' surplus and statutory contingency reserve. AMBAC is a
wholly owned subsidiary of AMBAC Inc., a 100% publicly-held company. Moody's
Investors Service, Inc. and Standard & Poor's Ratings Group have both assigned
a AAA claims-paying ability rating to AMBAC. Copies of AMBAC's financial
statements prepared in accordance with statutory accounting standards are
available from AMBAC. The address of AMBAC's administrative offices and its
telephone number are One State Street Plaza, 17th Floor, New York, New York
10004 and (212) 668-0340. AMBAC has entered into quota share reinsurance
agreements under which a percentage of the insurance underwritten pursuant to
certain municipal bond insurance programs of AMBAC has been and will be
assumed by a number of foreign and domestic unaffiliated reinsurers.
Municipal Bond Investors Assurance Corporation. Municipal Bond Investors
Assurance Corporation ("MBIA Corporation") is the principal operating
subsidiary of MBIA, Inc., a New York Stock Exchange listed company. MBIA, Inc.
is not obligated to pay the debts of or claims against MBIA Corporation. MBIA
Corporation, which commenced municipal bond insurance operations on January 5,
1987, is a limited liability corporation rather than a several liability
association. MBIA Corporation is domiciled in the State of New York and
licensed to do business in all 50 states, the District of Columbia and the
Commonwealth of Puerto Rico.
As of September 30, 1994, MBIA had admitted assets of $3.3 billion
(unaudited), total liabilities of $2.2 billion (unaudited), and total capital
and surplus of $1.1 billion (unaudited) determined in accordance with
statutory accounting practices prescribed or permitted by insurance regulatory
authorities. Standard & Poor's Ratings Group has rated the claims paying
ability of MBIA "AAA". Copies of MBIA Corporation's financial statements
prepared in accordance with statutory accounting practices are available from
MBIA Corporation. The address of MBIA Corporation is 113 King Street, Armonk,
New York 10504.
Effective December 31, 1989, MBIA Inc. acquired Bond Investors Group, Inc. On
January 5, 1990, the Insurer acquired all of the outstanding stock of Bond
Investors Group, Inc., the parent of BIG, now known as MBIA Insurance Corp. of
Illinois. Through a reinsurance agreement, BIG has ceded all of its net
insured risks, as well as its unearned premium and contingency reserves, to
the Insurer and the Insurer has reinsured BIG's net outstanding exposure.
Moody's Investors Service rates all bond issues insured by MBIA "Aaa" and
short-term loans "MIG1," both designated to be of the highest quality.
Standard & Poor's Ratings Group rates all new issues insured by MBIA "AAA."
Financial Security Assurance. Financial Security Assurance ("Financial
Security" or "FSA") is a monoline insurance company incorporated on March 16,
1984 under the laws of the State of New York. The operations of Financial
Security commenced on July 25, 1985, and Financial Security received its New
York State insurance license on September 23, 1985. Financial Security and its
two wholly owned subsidiaries are licensed to engage in financial guaranty
insurance business in 49 states, the District of Columbia and Puerto Rico.
Financial Security and its subsidiaries are engaged exclusively in the
business of writing financial guaranty insurance, principally in respect of
asset-backed and other collateralized securities offered in domestic and
foreign markets. Financial Security and its subsidiaries also write financial
guaranty
TAX-EXEMPT PORTFOLIOS
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<PAGE>
insurance in respect of municipal and other obligations and reinsure financial
guaranty insurance policies written by other leading insurance companies. In
general, financial guaranty insurance consists of the issuance of a guaranty
of scheduled payments of an issuer's securities, thereby enhancing the credit
rating of these securities, in consideration for payment of a premium to the
insurer.
Financial Security is approximately 91.6% owned by U S West, Inc. and 8.4%
owned by The Tokio Marine and Fire Insurance Co., Ltd. ("Tokio Marine").
Neither U S West, Inc. nor Tokio Marine is obligated to pay the debts of or
the claims against Financial Security. Financial Security is domiciled in the
State of New York and is subject to regulation by the State of New York
Insurance Department.
As of March 31, 1993, the total policyholders' surplus and contingency
reserves and the total unearned premium reserve, respectively, of Financial
Security and its consolidated subsidiaries were, in accordance with statutory
accounting principles, approximately $479,110,000 (unaudited) and $220,078,000
(unaudited), and the total shareholders' equity and the unearned premium
reserve, respectively, of Financial Security and its consolidated subsidiaries
were, in accordance with generally accepted accounting principles,
approximately $628,119,000 (unaudited) and $202,493,000 (unaudited).
Copies of Financial Security's financial statements may be obtained by writing
to Financial Security at 350 Park Avenue, New York, New York, 10022, Attention
Communications Department. Financial Security's telephone number is (212) 826-
0100.
Pursuant to an intercompany agreement, liabilities on financial guaranty
insurance written by Financial Security or either of its subsidiaries are
reinsured among such companies at an agreed-upon percentage substantially
proportional to their respective capital, surplus and reserves, subject to
applicable statutory risk limitations. In addition, Financial Security
reinsures a portion of its liabilities under certain of its financial guaranty
insurance policies with unaffiliated reinsurers under various quota share
treaties and on a transaction-by-transaction basis. Such reinsurance is
utilized by Financial Security as a risk management device and to comply with
certain statutory and rating agency requirements; it does not alter or limit
Financial Security's obligations under any financial guaranty insurance
policy.
Financial Security's claims-paying ability is rated "Aaa" by Moody's Investors
Service, Inc., and "AAA" by Standard & Poor's Ratings Group, Nippon Investors
Service Inc., Duff & Phelps Inc. and Australian Ratings Pty. Ltd. Such ratings
reflect only the views of the respective rating agencies, are not
recommendations to buy, sell or hold securities and are subject to revision or
withdrawal at any time by such rating agencies.
Capital Guaranty Insurance Company. Capital Guaranty Insurance Company
("Capital Guaranty" or "CGIC") is a "Aaa/AAA" rated monoline stock insurance
company incorporated in the State of Maryland, and is a wholly owned
subsidiary of Capital Guaranty Corporation, a Maryland insurance holding
company. Capital Guaranty Corporation is a publicly owned company whose shares
are traded on the New York Stock Exchange.
Capital Guaranty Insurance Company is authorized to provide insurance in all
50 states, the District of Columbia and three U.S. territories. Capital
Guaranty focuses on insuring municipal securities and provides policies which
guaranty the timely payment of principal and interest when due for payment on
new issue and secondary market issue municipal bond transactions. Capital
Guaranty's claims-paying ability is rated "Triple-A" by both Moody's and
Standard & Poor's.
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<PAGE>
As of September 30, 1994, Capital Guaranty had more than $14.6 billion in net
exposure outstanding (excluding defeased issues). The total statutory
policyholders' surplus and contingency reserve of Capital Guaranty was
$193,194,000 (unaudited) and the total admitted assets were $293,036,690
(unaudited) as reported to the Insurance Department of the State of Maryland
as of September 30, 1994.
Financial statements for Capital Guaranty Insurance Company, that have been
prepared in accordance with statutory insurance accounting standards, are
available upon request. The address of Capital Guaranty's headquarters is
Steuart Tower, 22nd Floor, One Market Plaza, San Francisco, CA 94105-1413 and
the telephone number is (415) 995-8000.
Chapman and Cutler, counsel for the Sponsor, has given an opinion to the
effect that the payment of insurance proceeds representing maturing interest
on defaulting municipal obligations paid by Financial Guaranty or another
insurer would be excludable from Federal gross income if, and to the same
extent as, such interest would have been so excludable if paid by the issuer
of the defaulted obligations. See "Federal Tax Status."
FEDERAL TAX STATUS
All Municipal Bonds deposited in the Trust Funds will be accompanied by copies
of opinions of bond counsel to the issuers thereof, given at the time of
original delivery of the Municipal Bonds, to the effect that the interest
thereon is excludable from gross income for Federal income tax purposes. In
connection with the offering of Units of the Trust Funds, neither the Sponsor,
the Trustee, the auditors nor their respective counsel have made any review of
the proceedings relating to the issuance of the Municipal Bonds or the basis
for such opinions. Gain realized on the sale or redemption of the Municipal
Bonds by the Trustee or of a Unit by a Unitholder is, however, includable in
gross income for Federal income tax purposes. Such gain does not include any
amounts received in respect of accrued interest or accrued original issue
discount, if any. It should be noted that under legislation described below
that subjects accretion of market discount on tax-exempt bonds to taxation as
ordinary income, gain realized on the sale or redemption of Municipal Bonds by
the Trustee or of Units by a Unitholder that would have been treated as
capital gain under prior law is treated as ordinary income to the extent it is
attributable to accretion of market discount. Market discount can arise based
on the price a Trust Fund pays for Municipal Bonds or the price a Unitholder
pays for his or her Units. In addition, bond counsel to the issuing
authorities rendered opinions as to the exemption of interest on such Bonds,
when held by residents of the state in which the issuers of such bonds are
located, from state income taxes and, where applicable, local income taxes.
In the opinion of Chapman and Cutler, counsel for the Sponsor, under existing
law:
Each Trust Fund is not an association taxable as a corporation for Federal
income tax purposes and interest and accrued original issue discount on
Bonds which is excludable from gross income under the Internal Revenue Code
of 1986 (the "Code") will retain its status when distributed to
Unitholders, except to the extent such interest is subject to the
alternative minimum tax, an additional tax on branches of foreign
corporations and the environmental tax (the "Superfund Tax"), as noted
below.
Exemption of interest and accrued original issue discount on any Municipal
Bonds for Federal income tax purposes does not necessarily result in tax-
exemption under the laws of the several states as such laws vary with
respect to the taxation of such securities and in many states all or part
of such interest and accrued issue discount may be subject to tax.
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<PAGE>
Each Unitholder is considered to be the owner of a pro rata portion of each
asset of the respective Trust Fund in the proportion that the number of
Units of such Trust Fund held by him bears to the total number of Units
outstanding of such Trust Fund under subpart E, subchapter J of chapter 1
of the Code and will have a taxable event when such Trust Fund disposes of
a Bond, or when the Unitholder redeems or sells his Units. Unitholders must
reduce the tax basis of their Units for their share of accrued interest
received by a Trust Fund, if any, on Bonds delivered after the date the
Unitholders pay for their Units to the extent that such interest accrued on
such Bonds during the period from the Unitholder's settlement date to the
date such Bonds are delivered to a Trust Fund and, consequently, such
Unitholders may have an increase in taxable gain or reduction in capital
loss upon the disposition of such Units. Gain or loss upon the sale or
redemption of Units is measured by comparing the proceeds of such sale or
redemption with the adjusted basis of the Units. If the Trustee disposes of
Bonds (whether by sale, payment on maturity, redemption or otherwise), gain
or loss is recognized to the Unitholder. The amount of any such gain or
loss is measured by comparing the Unitholder's pro rata share of the total
proceeds from such disposition with the Unitholder's basis for his or her
fractional interest in the asset disposed of. In the case of a Unitholder
who purchases Units, such basis (before adjustment for earned original
issue discount and amortized bond premium, if any) is determined by
apportioning the cost of the Units among each of the Trust Fund's assets
ratably according to their value as of the date of acquisition of the
Units. The basis of each Unit and of each Municipal Bond which was issued
with original issue discount must be increased by the amount of the accrued
original issue discount and the basis of each Unit and of the Unitholder's
interest in each Municipal Bond which was acquired by such Unitholder at a
premium must be reduced by the annual amortization of Municipal Bond
premium. The tax cost reduction requirements of the Code relating to
amortization of bond premium may, under some circumstances, result in the
Unitholder realizing a taxable gain when his Units are sold or redeemed for
an amount equal to or less than his original cost.
Any insurance proceeds paid under individual policies obtained by issuers
of Bonds which represent maturing interest on defaulted obligations held by
the Trustee will be excludable from Federal gross income if, and to the
same extent as, such interest would have been so excludable if paid in the
normal course by the issuer of the defaulted obligations provided that, at
the time such policies are purchased, the amounts paid for such policies
are reasonable, customary and consistent with the reasonable expectation
that the issuer of the obligations, rather than the insurer, will pay debt
service on the obligations.
Sections 1288 and 1272 of the Code provide a complex set of rules governing
the accrual of original issue discount. These rules provide that original
issue discount accrues either on the basis of a constant compound interest
rate or ratably over the term of the Municipal Bond, depending on the date the
Municipal Bond was issued. In addition, special rules apply if the purchase
price of a Municipal Bond exceeds the original issue price plus the amount of
original issue discount which would have previously accrued based upon its
issue price (its "adjusted issue price"). The application of these rules will
also vary depending on the value of the Municipal Bond on the date a
Unitholder acquires his Units, and the price the Unitholder pays for his
Units. Investors with questions regarding these Code sections should consult
with their tax advisers.
The Revenue Reconciliation Act of 1993 (the "Tax Act") subjects tax-exempt
bonds to the market discount rules of the Code effective for bonds purchased
after April 30, 1993. In general, market discount is the amount (if any) by
which the stated redemption price at maturity exceeds an investor's purchase
price (except to the extent that such difference, if any, is attributable to
original issue discount not yet
TAX-EXEMPT PORTFOLIOS
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<PAGE>
accrued) subject to a statutory de minimis rule. Market discount can arise
based on the price a Trust Fund pays for Municipal Bonds or the price a
Unitholder pays for his or her Units. Under the Tax Act, accretion of market
discount is taxable as ordinary income; under prior law the accretion had been
treated as capital gain. Market discount that accretes while a Trust Fund
holds a Municipal Bond would be recognized as ordinary income by the
Unitholders when principal payments are received on the Municipal Bond, upon
sale or at redemption (including early redemption), or upon the sale or
redemption of his or her Units, unless a Unitholder elects to include market
discount in taxable income as it accrues. The market discount rules are
complex and Unitholders should consult their tax advisers regarding these
rules and their application.
In the case of certain corporations, the alternative minimum tax and the
Superfund Tax depend upon the corporation's alternative minimum taxable
income, which is the corporation's taxable income with certain adjustments.
One of the adjustment items used in computing the alternative minimum taxable
income and the Superfund Tax of a corporation (other than an S Corporation,
Regulated Investment Company, Real Estate Investment Trust, or REMIC) is an
amount equal to 75% of the excess of such corporation's "adjusted current
earnings" over an amount equal to its alternative minimum taxable income
(before such adjustment item and the alternative tax net operating loss
deduction). "Adjusted current earnings" includes all tax-exempt interest,
including interest on all of the Bonds in a Trust Fund and tax-exempt original
issue discount. Unitholders are urged to consult their tax advisers with
respect to the particular tax consequences to them including the corporate
alternative minimum tax, the Superfund Tax and the branch profits tax imposed
by Section 884 of the Code.
Counsel for the Sponsor has also advised that under Section 265 of the Code,
interest on indebtedness incurred or continued to purchase or carry Units of a
Trust Fund is not deductible for Federal income tax purposes. The Internal
Revenue Service has taken the position that such indebtedness need not be
directly traceable to the purchase or carrying of Units (however, these rules
generally do not apply to interest paid on indebtedness incurred to purchase
or improve a personal residence or to purchase goods or services for personal
consumption). Also, under Section 265 of the Code, certain financial
institutions that acquire Units would generally not be able to deduct any of
the interest expense attributable to ownership of such Units. Investors with
questions regarding these issues should consult with their tax advisers.
In the case of certain Municipal Bonds in the Trust Funds, the opinions of
bond counsel indicate that interest on such Municipal Bonds received by a
"substantial user" of the facilities being financed with the proceeds of these
Municipal Bonds or persons related thereto, for periods while such Municipal
Bonds are held by such a user or related person, will not be excludable from
Federal gross income, although interest on such Municipal Bonds received by
others would be excludable from Federal gross income. "Substantial user" and
"related person" are defined under U.S. Treasury Regulations. Any person who
believes that he or she may be a "substantial user" or a "related person" as
so defined should contact his or her tax adviser.
In the case of corporations, the alternative tax rate applicable to long-term
capital gains is 35% effective for long-term capital gains realized in taxable
years beginning on or after January 1, 1993. For taxpayers other than
corporations, net capital gains are subject to a maximum marginal stated tax
rate of 28%. 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. Under the
Code, taxpayers must disclose to the Internal Revenue Service the amount of
tax-exempt interest earned during the year.
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<PAGE>
Under existing law, the Trust Funds are not associations taxable as
corporations and the income of the Trust Funds will be treated as the income
of the Unitholders under the income tax laws of the State of Missouri.
All statements of law in the Prospectus concerning exclusion from gross income
for Federal, state or other tax purposes are the opinions of counsel and are
to be so construed.
At the respective times of issuance of the Bonds, opinions relating to the
validity thereof and to the exclusion of interest thereon from Federal gross
income are rendered by bond counsel to the respective issuing authorities.
Neither the Sponsor nor Chapman and Cutler has made any special review for the
Trust Funds of the proceedings relating to the issuance of the Bonds or of the
basis for such opinions.
Section 86 of the Code, in general, provides that fifty percent of Social
Security benefits are includible in gross income to the extent that the sum of
"modified adjusted gross income" plus fifty percent of the Social Security
benefits received exceeds a "base amount". The base amount is $25,000 for
unmarried taxpayers, $32,000 for married taxpayers filing a joint return and
zero for married taxpayers who do not live apart at all times during the
taxable year and who file separate returns. Modified adjusted gross income is
adjusted gross income determined without regard to certain otherwise allowable
deductions and exclusions from gross income and by including tax-exempt
interest. To the extent that Social Security benefits are includible in gross
income, they will be treated as any other item of gross income.
In addition, under the Tax Act, for taxable years beginning after December 31,
1993, up to 85 percent of Social Security benefits are includible in gross
income to the extent that the sum of "modified adjusted gross income" plus
fifty percent of Social Security benefits received exceeds an "adjusted base
amount." The adjusted base amount is $34,000 for unmarried taxpayers, $44,000
for married taxpayers filing a joint return and zero for married taxpayers who
do not live apart at all times during the taxable year and who file separate
returns.
Although tax-exempt interest is included in modified adjusted gross income
solely for the purpose of determining what portion, if any, of Social Security
benefits will be included in gross income, no tax-exempt interest, including
that received from the Trust Fund, will be subject to tax. A taxpayer whose
adjusted gross income already exceeds the base amount or the adjusted base
amount must include 50% or 85%, respectively, of his or her Social Security
benefits in gross income whether or not he or she receives any tax-exempt
interest. A taxpayer whose modified adjusted gross income (after inclusion of
tax-exempt interest) does not exceed the base amount need not include any
Social Security benefits in gross income.
For a discussion of the state tax status of income earned on Units of a state
trust, see the discussion of tax status for the applicable trust. Except as
noted therein, the exemption of interest on state and local obligations for
Federal income tax purposes discussed above does not necessarily result in
exemption under the income or other tax laws of any state or city. The laws of
the several states vary with respect to the taxation of such obligations.
TAX-EXEMPT PORTFOLIOS
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<PAGE>
UNDERWRITING
The Underwriters named below have severally purchased Units of the Trusts in
the following respective amounts:
<TABLE>
<CAPTION>
INSURED
INSURED INSURED MICHIGAN
NATIONAL CALIFORNIA SERIES
SERIES 14 SERIES 14 10
--------- ---------- --------
<S> <C> <C> <C>
*Kemper Unit Investment Trusts 695,000 237,000 157,200
*Kemper Securities, Inc. 50,000 50,000 50,000
Fidelity Brokerage Services 10,000
Gruntal & Company, Inc. 10,000 10,000
Rauscher Pierce Refsnes, Inc. 10,000
Roney & Company 10,000 120,300
Southwest Securities, Inc. 10,000
Stifel Nicolaus & Company, Inc. 10,000
------- ------- -------
TOTAL UNITS: 805,000 297,500 327,500
======= ======= =======
</TABLE>
Underwriter Addresses:
*Kemper Unit Investment Trusts, a service of Kemper Securities, Inc., 77 West
Wacker Drive, 29th Floor, Chicago, IL 60601-1994
*Kemper Securities, Inc., 77 West Wacker Drive, 28th Floor, Chicago, IL 60601-
1994
Fidelity Capital Markets, a division of National Financial Services
Corporation, 161 Devonshire Street, D4, Boston, MA 02110
Gruntal & Company, Inc., 14 Wall Street, 14th Floor, New York, NY 10005
Rauscher Pierce Refsnes, Inc., 2500 RPR Tower, Dallas, TX 75201
Roney & Company, One Griswold Street, 6th Floor, UITs, Detroit, MI 48226
Southwest Securities Inc., 1201 Elm Street, Suite 4300, Dallas, TX 75270
Stifel Nicolaus & Co., Inc., 500 North Broadway, St. Louis, MO 63102
- ------------------
*Kemper Corporation owns or has a controlling interest in Kemper Unit
Investment Trusts (the Trusts' Sponsor and Evaluator) and Kemper Securities,
Inc. Kemper Unit Investment Trusts is a service of Kemper Securities, Inc. For
additional information about the Underwriters, see "Underwriting."
The Underwriters acquired the Units of the Trust Funds at a price per Unit
equal to the Public Offering Prices set forth under "Essential Information"
less the Underwriters' takedown. The amount of the Underwriters' takedown for
Trusts with a weighted average maturity less than 7.5 years for each Unit is
$.22 for those firms committing for 10,000 to 24,999 Units, $.22 plus 50% of
any net portfolio profit for those firms committing for 25,000 to 99,999 Units
and $.23 plus 50% of any net portfolio profit for those firms committing for
100,000 or more Units. The amount of the Underwriters' takedown for Trusts
with a weighted average maturity between 7.5 and 9.99 years for each Unit is
$.28 for those firms committing for 10,000 to 24,999 Units, $.28 plus 50% of
any net portfolio profits for those firms committing for 25,000 to 49,999
Units, $.29 plus 50% of any net portfolio profit for those firms committing
for 50,000 to 99,999 Units and $.30 plus 50% of any net portfolio profit for
those firms committing for 100,000 or more Units. The amount of the
Underwriters' takedown for Trusts with a weighted average maturity 10 to 14.99
years for each Unit is $.30 for those firms committing for 10,000 to 24,999
Units, $.30 plus 50% of any net portfolio profits for those firms committing
for 25,000 to 49,999 Units, $.31 plus 50% of any net portfolio profit for
those firms committing for 50,000 to 99,999 Units and $.32 plus 50% of any net
portfolio profit for those firms committing for 100,000 or more Units. The
amount of the Underwriters' takedown for Trusts with a weighted average
maturity greater than 14.99 years for each Unit is $.36 for 10,000 to 24,999
Units, $.36 plus 50% of any net portfolio profit for those firms committing
for 25,000 to 49,999 Units, $.37 plus 50% of any net portfolio profit for
those firms committing for 50,000 to 99,999 Units and $.38 plus 50% of any net
portfolio profit for those firms committing for 100,000 or more Units.
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In connection with any quantity discounts (see "Public Offering of Units--
Public Offering Price"), the Sponsor and the applicable Underwriter will each
receive reduced concessions as a result of the reduced sales charges to the
investor. 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 who underwrite additional Units of a Trust or who
sell, during a specified time period, a minimum dollar amount of Units of a
Trust and other unit investment trusts underwritten by the Sponsor. The
Underwriting Agreement provides that the Sponsor will select and purchase the
Municipal Bonds for deposit in the Trust Funds on its own behalf and on behalf
of the other Underwriters.
The Underwriting Agreement provides that a public offering of the Units of the
Trust Funds will be made by the Underwriters at the Public Offering Price
described in the Prospectus. Units may also be sold to or through dealers, who
are members of the National Association of Securities Dealers, Inc., and
others at prices representing discounts from the Public Offering Price.
However, resales of Units of the Trust Funds to the public will be made at the
Public Offering Price thereof.
Underwriters and broker-dealers of the Trusts, banks and/or others are
eligible to participate in a program in which such firms receive from the
Sponsor a nominal award for each of their representatives who have sold a
minimum number of Units of unit investment trusts created by the Sponsor
during a specified time period. In addition, at various times the Sponsor may
implement other programs under which the sales forces of Underwriters,
brokers, dealers, banks and/or others may be eligible to win other nominal
awards for certain sales efforts, or under which the Sponsor will reallow to
any such Underwriters, brokers, dealers, banks and/or others that sponsor
sales contests or recognition programs conforming to criteria established by
the Sponsor, or participate in sales programs sponsored by the Sponsor, an
amount not exceeding the total applicable sales charges on the sales generated
by such persons at the public offering price during such programs. Also, the
Sponsor in its discretion may from time to time pursuant to objective criteria
established by the Sponsor pay fees to qualifying underwriters, brokers,
dealers, banks or others for certain services or activities which are
primarily intended to result in sales of Units of the Trusts. Such payments
are made by the Sponsor out of its own assets, and not out of the assets of
the Trusts. These programs will not change the price Unitholders pay for their
Units or the amount that the Trusts will receive from the Units sold.
Approximately every eighteen months the Sponsor holds a business seminar which
is open to Underwriters that sell units of trusts it sponsors. The Sponsor
pays substantially all costs associated with the seminar, excluding
Underwriter travel costs. Each Underwriter is invited to send a certain number
of representatives based on the gross number of units such firm underwrites
during a designated time period.
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<PAGE>
ESTIMATED CASHFLOWS TO UNITHOLDERS
The tables below set forth the estimated monthly distributions of interest and
principal to Unitholders on a per 100 Units basis. The tables assume no
changes in expenses, no changes in the current interest rates, no exchanges,
redemptions, sales or prepayments of the underlying Securities prior to
maturity or expected retirement date and the receipt of principal upon
maturity or expected retirement date. To the extent the foregoing assumptions
change actual distributions will vary.
INSURED NATIONAL TRUST
Monthly
<TABLE>
<CAPTION>
ESTIMATED ESTIMATED ESTIMATED
INTEREST PRINCIPAL TOTAL
DATES DISTRIBUTION DISTRIBUTION DISTRIBUTION
---------------------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Apr 15, 1995 $4.91 $4.91
May 15, 1995 to Aug 15, 2004 4.91 4.91
Sep 15, 2004 4.58 $124.22 128.80
Oct 15, 2004 to Dec 15, 2004 4.26 4.26
Jan 15, 2005 4.26 192.55 196.81
Feb 15, 2005 to Jun 15, 2005 3.27 3.27
Jul 15, 2005 3.27 93.17 96.44
Aug 15, 2005 to Jun 15, 2017 2.79 2.79
Jul 15, 2017 2.79 93.17 95.96
Aug 15, 2017 to Nov 15, 2018 2.32 2.32
Dec 15, 2018 2.32 62.11 64.43
Jan 15, 2019 to Jul 15, 2021 2.03 2.03
Aug 15, 2021 2.03 62.11 64.14
Sep 15, 2021 to Jun 15, 2022 1.74 1.74
Jul 15, 2022 1.74 124.22 125.96
Aug 15, 2022 to May 15, 2028 1.14 1.14
Jun 15, 2028 1.14 124.22 125.36
Jul 15, 2028 to Nov 15, 2033 0.55 0.55
Dec 15, 2033 0.55 124.22 124.77
</TABLE>
INSURED CALIFORNIA TRUST
Monthly
<TABLE>
<CAPTION>
ESTIMATED ESTIMATED ESTIMATED
INTEREST PRINCIPAL TOTAL
DATES DISTRIBUTION DISTRIBUTION DISTRIBUTION
---------------------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Apr 15, 1995 $4.81 $4.81
May 15, 1995 to Nov 15, 2004 4.81 4.81
Dec 15, 2004 4.81 $104.38 109.19
Jan 15, 2005 to Aug 15, 2005 4.27 4.27
Sep 15, 2005 4.27 80.81 85.08
Oct 15, 2005 to Jan 15, 2017 3.87 3.87
Feb 15, 2017 3.87 84.18 88.05
Mar 15, 2017 to Aug 15, 2018 3.44 3.44
Sep 15, 2018 3.44 138.05 141.49
Oct 15, 2018 to Aug 15, 2020 2.81 2.81
Sep 15, 2020 2.81 168.35 171.16
Oct 15, 2020 to Aug 15, 2022 1.96 1.96
Sep 15, 2022 1.53 168.35 169.88
Oct 15, 2022 to May 15, 2023 1.13 1.13
Jun 15, 2023 1.13 87.54 88.67
Jul 15, 2023 to May 15, 2024 0.74 0.74
Jun 15, 2024 0.74 168.35 169.09
</TABLE>
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<PAGE>
INSURED MICHIGAN TRUST
Monthly
<TABLE>
<CAPTION>
ESTIMATED ESTIMATED ESTIMATED
INTEREST PRINCIPAL TOTAL
DATES DISTRIBUTION DISTRIBUTION DISTRIBUTION
---------------------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Apr 15, 1995 $4.33 $4.33
May 15, 1995 to Sep 15, 2004 4.33 4.33
Oct 15, 2004 4.33 $274.81 279.14
Nov 15, 2004 to Apr 15, 2005 3.05 3.05
May 15, 2005 3.05 88.55 91.60
Jun 15, 2005 2.69 2.69
Jul 15, 2005 2.69 61.07 63.76
Aug 15, 2005 to Sep 15, 2005 2.43 2.43
Oct 15, 2005 2.43 45.80 48.23
Nov 15, 2005 to Apr 15, 2006 2.22 2.22
May 15, 2006 2.22 152.67 154.89
Jun 15, 2006 to Sep 15, 2006 1.56 1.56
Oct 15, 2006 1.56 53.44 55.00
Nov 15, 2006 1.32 152.67 153.99
Dec 15, 2006 to Apr 15, 2007 0.67 0.67
May 15, 2007 0.67 170.99 171.66
</TABLE>
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GENERAL INFORMATION
RATING OF UNITS
Because the Securities in the Insured Trust Funds in a Tax-Exempt Portfolio or
Insured Corporate Series are insured as to the scheduled payment of principal
and interest and on the basis of the financial condition and the method of
operation of the insurance companies referred to in "Insurance on the Bonds"
for each such Trust, Moody's Investors Service, Inc. has assigned to each of
the Insured Trust Fund's Units its "Aaa" investment rating. These are the
highest ratings assigned to securities by such rating agency. These ratings
should not be construed as an approval of the offering of the Units by Moody's
Investors Service, Inc. or as a guarantee of the market value of an Insured
Trust Fund or the Units thereof. There is no guarantee that the "Aaa"
investment rating will be maintained.
Securities in an Insured Trust Fund for which insurance has been obtained by
the Issuer or the Sponsor (all of which were rated "AAA" by Standard & Poor's
Ratings Group and/or "Aaa" by Moody's Investors Service, Inc.) may or may not
have a higher yield than uninsured Securities rated "AAA" by Standard & Poor's
Ratings Group or "Aaa" by Moody's Investors Service, Inc. In selecting
Securities for the portfolios of an Insured Trust Fund, the Sponsor has
applied the criteria hereinbefore described.
TRUST INFORMATION
Because certain of the Securities in certain of 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 Security. In the event of a failure
to deliver any Security that has been purchased for a Trust under a contract,
including those securities purchased on a "when, as and if issued" basis
("Failed Securities"), the Sponsor is authorized under the Trust Agreement to
direct the Trustee to acquire other securities ("Replacement Securities") to
make up the original corpus of such Trust.
Securities in certain of the Trust Funds may have been purchased on a "when,
as and if issued" or delayed delivery basis with delivery expected to take
place after the First Settlement Date. See "Notes to Portfolios" for each
Trust. Accordingly, the delivery of such Securities may be delayed or may not
occur. Interest on these Securities begins accruing to the benefit of
Unitholders on their respective dates of delivery. To the extent any Municipal
Bonds in a Tax-Exempt Portfolio are actually delivered to such Trust after
their respective expected dates of delivery, Unitholders who purchase Units in
such Trust prior to the date such "when, as and if issued" or "delayed
delivery" Municipal Bonds are actually delivered to the Trustee would, to the
extent such income is not offset by a reduction in the Trustee's fee (or, to
the extent necessary, other expenses), be required to reduce their tax basis
in their Units of such Trust since the interest accruing on such Municipal
Bonds during the interval between their purchase of Units and the actual
delivery of such Municipal Bonds would, for tax purposes, be considered a non-
taxable return of principal rather than as tax-exempt interest. The result of
such adjustment, if necessary, would be, during the first year only, that the
Estimated Long-Term Returns may be, and the Estimated Current Returns would
be, slightly lower than those shown herein, assuming such Trust portfolios and
estimated annual expenses do not vary. See footnote (4) to "Essential
Information." Unitholders of all Trusts will be "at risk" with respect to any
"when, as and if issued" or "delayed delivery" Securities included in their
respective Trust (i.e., may derive either gain or loss from fluctuations in
the evaluation of such Securities) from the date they commit for Units.
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GENERAL INFORMATION
<PAGE>
The Replacement Securities must be purchased within 20 days after delivery of
the notice that a contract to deliver a Security will not be honored and the
purchase price may not exceed the amount of funds reserved for the purchase of
the Failed Securities. The Replacement Securities (i) must be payable in
United States currency, (ii) must be purchased at a price that results in a
yield to maturity and a current return at least equal to that of the Failed
Securities as of the Initial Date of Deposit, (iii) shall not be "when, as and
if issued" or restricted securities, (iv) must satisfy any rating criteria for
Securities originally included in such Trust, (v) not cause the Units of such
Trust to cease to be rated Aaa by Moody's Investors Service, Inc. if the Units
were so rated on the Initial Date of Deposit and (vi) in the case of Insured
Trust Funds must be insured prior to acquisition by a Trust. In connection
with an Insured Corporate Series only, Replacement Securities also must (i) be
intermediate or long-term, as applicable, corporate bonds, debentures, notes
or other straight debt obligations (whether secured or unsecured and whether
senior or subordinated) without equity or other conversion features, with
fixed maturity dates substantially the same as those of the Failed Securities
having no warrants or subscription privileges attached, (ii) be issued after
July 18, 1984 if interest thereon is United States source income and (iii)
have a fixed maturity of at least 10 years. In connection with a Corporate
Income Series only, Replacement Securities also must (i) be corporate bonds,
debentures, notes or other straight debt obligations (whether secured or
unsecured and whether senior or subordinated) without equity or other
conversion features, with fixed maturity dates substantially the same as those
of the Failed Securities having no warrants or subscription privileges
attached, (ii) be issued after July 18, 1984 and (iii) have a fixed maturity
of at least 6 years. In connection with a Tax-Exempt Portfolio only,
Replacement Securities must also (i) be tax-exempt bonds issued by the
appropriate state or counties, municipalities, authorities or political
subdivisions thereof and (ii) have a fixed maturity date of at least 3 years
if the bonds are to be deposited in a trust other than a long-term trust or at
least 10 years if the bonds are to be deposited in a long-term trust. Whenever
a Replacement Security is acquired for a Trust, the Trustee shall, within five
days thereafter, notify all Unitholders of the Trust of the acquisition of the
Replacement Security and shall, on the next monthly distribution date which is
more than 30 days thereafter, make a pro rata distribution of the amount, if
any, by which the cost to the Trust of the Failed Security exceeded the cost
of the Replacement Security. Once all of the Securities in a Trust are
acquired, the Trustee will have no power to vary the investments of the Trust,
i.e., the Trustee will have no managerial power to take advantage of market
variations to improve a Unitholder's investment.
If the right of limited substitution described in the preceding paragraphs is
not utilized to acquire Replacement Securities in the event of a failed
contract, the Sponsor will refund the sales charge attributable to such Failed
Securities to all Unitholders of the Trust Fund and the Trustee will
distribute the principal and accrued interest attributable to such Failed
Securities not more than 30 days after the date on which the Trustee would
have been required to purchase a Replacement Security. In addition,
Unitholders should be aware that, at the time of receipt of such principal,
they may not be able to reinvest such proceeds in other securities at a yield
equal to or in excess of the yield which such proceeds would have earned for
Unitholders of such Trust Fund.
Whether or not a Replacement Security is acquired, an amount equal to the
accrued interest (at the coupon rate of the Failed Securities) will be paid to
Unitholders of the Trust Fund to the date the Sponsor removes the Failed
Securities from the Trust Fund if the Sponsor determines not to purchase a
Replacement Security or to the date of substitution if a Replacement Security
is purchased. All such interest paid to Unitholders which accrued after the
date of settlement for a purchase of Units will be paid by the Sponsor. In the
event a Replacement Security could not be acquired by a Trust, the net annual
interest income per Unit for such Trust would be reduced and the Estimated
Current Return and Estimated Long-Term Return might be lowered.
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GENERAL INFORMATION
<PAGE>
Subsequent to the Initial Date of Deposit, a Security may cease to be rated or
its rating may be reduced below any minimum required as of the Initial Date of
Deposit. Neither event requires the elimination of such investment from a
Trust, but may be considered in the Sponsor's determination to direct the
Trustee to dispose of such investment. See "General Information--Investment
Supervision."
The Sponsor may not alter the portfolio of a Trust except upon the happening
of certain extraordinary circumstances. See "General Information--Investment
Supervision." Certain of the Securities 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 with proceeds from a fund accumulated for the
scheduled retirement of a portion of an issue 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 under "Portfolio" for each
Trust. Redemption pursuant to optional call provisions is more likely to
occur, and redemption pursuant to special or extraordinary redemption
provisions may occur, when the Securities 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
Securities and from Securities which mature in accordance with their terms
from a Trust, unless utilized to pay for Units tendered for redemption, will
be distributed to Unitholders of such Trust and will not be used to purchase
additional Securities for such Trust. Accordingly, any such call, redemption,
sale or maturity will reduce the size and diversity of a Trust and the net
annual interest income of such Trust and may reduce the Estimated Current
Return and the Estimated Long-Term Return. See "General Information--Interest,
Estimated Long-Term Return and Estimated Current Return." The call,
redemption, sale or maturity of Securities also may have tax consequences to a
Unitholder. See "Federal Tax Status" for each Trust. Information with respect
to the call provisions and maturity dates of the Securities is contained in
"Portfolio" for each Trust.
Each Unit of a Trust represents an undivided fractional interest in the
Securities deposited therein, in the ratio shown under "Essential
Information." Units may be purchased and certificates, if requested, will be
issued in denominations of one Unit or any multiple or fraction thereof,
subject to each Trust's minimum investment requirement of one Unit. Fractions
of Units will be computed to three decimal points. To the extent that Units of
a Trust are redeemed, the principal amount of Securities in such Trust will be
reduced and the undivided fractional interest represented by each outstanding
Unit of such Trust will increase. See "General Information--Redemption."
Certain of the Securities in certain of the Trusts may have been acquired at a
market discount from par value at maturity. The coupon interest rates on the
discount securities at the time they were purchased and deposited in the
Trusts were lower than the current market interest rates for newly issued
bonds of comparable rating and type. If such interest rates for newly issued
comparable securities increase, the market discount of previously issued
securities will become greater, and if such interest rates for newly issued
comparable securities decline, the market discount of previously issued
securities will be reduced, other things being equal. Investors should also
note that the value of securities purchased at a market discount will increase
in value faster than securities purchased at a market premium if interest
rates decrease. Conversely, if interest rates increase, the value of
securities purchased at a market discount will decrease faster than securities
purchased at a market premium. In addition, if interest rates rise, the
prepayment risk of higher yielding, premium securities and the prepayment
benefit for lower yielding,
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GENERAL INFORMATION
<PAGE>
discount securities will be reduced. A discount security held to maturity will
have a larger portion of its total return in the form of taxable income and
capital gain and loss in the form of tax-exempt interest income than a
comparable security newly issued at current market rates. See "Federal Tax
Status." Market discount attributable to interest changes does not indicate a
lack of market confidence in the issue. Neither the Sponsor nor the Trustee
shall be liable in any way for any default, failure or defect in any of the
Securities.
Certain of the Securities in certain of the Trust Funds may be "zero coupon"
bonds, i.e., an original issue discount bond that does not provide for the
payment of current interest. Zero coupon bonds are purchased at a deep
discount because the buyer receives only the right to receive a final payment
at the maturity of the bond and does not receive any periodic interest
payments. The effect of owning deep discount bonds which do not make current
interest payments (such as the zero coupon bonds) is that a fixed yield is
earned not only on the original investment but also, in effect, on all
discount earned during the life of such obligation. This implicit reinvestment
of earnings at the same rate eliminates the risk of being unable to reinvest
the income on such obligation at a rate as high as the implicit yield on the
discount obligation, but at the same time eliminates the holder's ability to
reinvest at higher rates in the future. For this reason, zero coupon bonds are
subject to substantially greater price fluctuations during periods of changing
market interest rates than are securities of comparable quality which pay
interest currently. For the Federal tax consequences of original issue
discount securities such as the zero coupon bonds, see "Federal Tax Status"
for each Trust.
To the best of the Sponsor's knowledge, there is no litigation pending as of
the Initial Date of Deposit in respect of any Security which might reasonably
be expected to have a material adverse effect on the Trust Funds. At any time
after the Initial Date of Deposit, litigation may be instituted on a variety
of grounds with respect to the Securities. The Sponsor is unable to predict
whether any such litigation may be instituted, or if instituted, whether such
litigation might have a material adverse effect on the Trust Funds. The
Sponsor and the Trustee shall not be liable in any way for any default,
failure or defect in any Security.
RETIREMENT PLANS
Units of the Trusts (other than a Tax-Exempt Portfolio) 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 Trusts 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
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GENERAL INFORMATION
<PAGE>
$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.
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 mutual fund which is registered in
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GENERAL INFORMATION
<PAGE>
such Unitholder's state of residence and is underwritten or advised by an
affiliate of the Sponsor, Kemper Financial Services, Inc. (the "Kemper
Funds"), other than those Kemper Funds sold with a contingent deferred sales
charge.
If individuals indicate they wish to participate in the Reinvestment Program
but do not designate a reinvestment fund, the Program Agent referred to below
will contact such individuals to determine which reinvestment fund or funds
they wish to elect. Since the portfolio securities and investment objectives
of such Kemper Funds generally will differ significantly from that of the
Trusts, 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 "General Information--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.
INTEREST, ESTIMATED LONG-TERM RETURN AND ESTIMATED CURRENT RETURN
As of the opening of business on the Initial Date of Deposit, the Estimated
Long-Term Return and the Estimated Current Return, if applicable, for each
Trust were as set forth in the "Essential Information" for each Trust.
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 Securities while the Public
Offering Price will vary with changes in the offering price of the underlying
Securities and 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 or average life of
all of the Securities 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 Securities 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.
In order to acquire certain of the Securities contracted for by a Trust, it
may be necessary for the Sponsor or Trustee to pay on the dates for delivery
of such Securities amounts covering accrued interest on such
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GENERAL INFORMATION
<PAGE>
Securities which exceed the amount which will be made available in the letter
of credit furnished by the Sponsor on the Initial Date of Deposit. The Trustee
has agreed to pay any amounts necessary to cover any such excess and will be
reimbursed therefor, without interest, when funds become available from
interest payments on the Securities deposited in that Trust.
Payments received in respect of mortgages underlying Ginnie Maes in each
series of a GNMA Portfolio will consist of a portion representing interest and
a portion representing principal. Although the aggregate monthly payment made
by the obligor on each mortgage remains constant (aside from optional
prepayments of principal), in the early years most of each such payment will
represent interest, while in later years, the proportion representing interest
will decline and the proportion representing principal will increase. However,
by reason of optional prepayments, principal payments in the earlier years on
mortgages underlying Ginnie Maes may be substantially in excess of those
required by the amortization schedules of such mortgages. Therefore, principal
payments in later years may be substantially less since the aggregate unpaid
principal balances of such underlying mortgages may have been greatly reduced.
To the extent that the underlying mortgages bearing higher interest rates in a
GNMA Portfolio are prepaid faster than the other underlying mortgages, the net
annual interest rate per Unit and the Estimated Current Return on the Units of
a GNMA Portfolio can be expected to decline. Monthly payments to the
Unitholders of a GNMA Portfolio will reflect all of these factors.
MARKET FOR UNITS
After the initial offering period, while not obligated to do so, the Sponsor
intends to, and certain of the Underwriters may, subject to change at any
time, maintain a market for Units of the Trust Funds 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 Securities in
such Trusts, together with accrued interest to the expected dates of
settlement. To the extent that a market is maintained during the initial
offering period, the prices at which Units will be repurchased will be based
upon the aggregate offering side evaluation of the Securities in the Trusts.
The aggregate bid prices of the underlying Securities in each Trust are
expected to be less than the related aggregate offering prices (which is the
evaluation method used during the initial public offering period).
Accordingly, Unitholders who wish to dispose of their Units should inquire of
their bank or broker as to current market prices in order to determine whether
there is in existence any price in excess of the Redemption Price and, if so,
the amount thereof.
The offering price of any Units resold by the Sponsor or Underwriters 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 and/or the Underwriters. The Sponsor and/or the
Underwriters may suspend or discontinue purchases of Units of any Trust if the
supply of Units exceeds demand, or for other business reasons.
REDEMPTION
A Unitholder who does not dispose of Units in the secondary market described
above may cause Units to be redeemed by the Trustee by making a written
request to the Trustee, Investors Fiduciary Trust Company, P.O. Box 419430,
Kansas City, Missouri, 64173-0216 and, in the case of Units evidenced by a
certificate, by tendering such certificate to the Trustee, properly endorsed
or accompanied by a written instrument or instruments of transfer in a 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
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GENERAL INFORMATION
<PAGE>
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
guarantee program in addition to, or in substitution for, STAMP, as may be
accepted by the Trustee. A certificate should only be sent by registered or
certified mail for the protection of the Unitholder. Since tender of the
certificate is required for redemption when 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 such Trust, determined as set forth below under "Computation of Redemption
Price," as of the evaluation time stated under "Essential Information," next
following such tender, multiplied by the number of Units being redeemed. Any
Units redeemed shall be cancelled and any undivided fractional interest in the
Trust extinguished. The price received upon redemption might be more or less
than the amount paid by the Unitholder depending on the value of the
Securities in the Trust at the time of redemption.
Under regulations issued by the Internal Revenue Service, the Trustee is
required to withhold a certain percentage of the principal amount of a Unit
redemption if the Trustee has not been furnished the redeeming Unitholder's
tax identification number in the manner required by such regulations. Any
amount so withheld is transmitted to the Internal Revenue Service and may be
recovered by the Unitholder only when filing a tax return. Under normal
circumstances the Trustee obtains the Unitholder's tax identification number
from the selling broker. However, any time a Unitholder elects to tender Units
for redemption, such Unitholder should make sure that the Trustee has been
provided a certified tax identification number in order to avoid this possible
"back-up withholding." In the event the Trustee has not been previously
provided such number, one must be provided at the time redemption is
requested.
Any amounts paid on redemption representing interest shall be withdrawn from
the Interest Account for such Trust to the extent that funds are available for
such purpose. All other amounts paid on redemption shall be withdrawn from the
Principal Account for such Trust. The Trustee is empowered to sell Securities
for a Trust in order to make funds available for the redemption of Units of
such Trust. Such sale may be required when Securities would not otherwise be
sold and might result in lower prices than might otherwise be realized. To the
extent Securities are sold, the size and diversity of a Trust will be reduced.
In the case of a U.S. Treasury Portfolio or a GNMA Portfolio, Securities will
be sold by the Trustee so as to maintain, as closely as practicable, the
original percentage relationship between the principal amounts of the
Securities in such Trusts. The Securities to be sold for purposes of redeeming
Units will be selected from a list supplied by the Sponsor. The Securities
will be chosen for this list by the Sponsor on the basis of such market and
credit factors as it may determine are in the best interests of such Trusts.
Provision is made under the related Trust Agreements for the Sponsor to
specify minimum face amounts in which blocks of Securities are to be sold in
order to obtain the best price available. While such minimum amounts may vary
from time to time in accordance with market conditions, it is anticipated that
the
GI-8
GENERAL INFORMATION
<PAGE>
minimum face amounts which would be specified would range from $25,000 to
$100,000. Sales may be required at a time when the Securities would not
otherwise be sold and might result in lower prices than might otherwise be
realized. Moreover, due to the minimum principal amount in which U.S. Treasury
Obligations and Ginnie Maes may be required to be sold, the proceeds of such
sales may exceed the amount necessary for payment of Units redeemed. To the
extent not used to meet other redemption requests in such Trusts, such excess
proceeds will be distributed pro rata to all remaining Unitholders of record
of such Trusts, unless reinvested in substitute Securities. See "General
Information--Investment Supervision."
The Trustee is irrevocably authorized in its discretion, if an Underwriter
does not elect to purchase any Unit tendered for redemption, in lieu of
redeeming such Units, to sell such Units in the over-the-counter market for
the account of tendering Unitholders at prices which will return to the
Unitholders amounts in cash, net after brokerage commissions, transfer taxes
and other charges, equal to or in excess of the Redemption Price for such
Units. In the event of any such sale, the Trustee shall pay the net proceeds
thereof to the Unitholders on the day they would otherwise be entitled to
receive payment of the Redemption Price.
The right of redemption may be suspended and payment postponed (1) for any
period during which the New York Stock Exchange is closed, other than
customary weekend and holiday closings, or during which (as determined by the
Securities and Exchange Commission) trading on the New York Stock Exchange is
restricted; (2) for any period during which an emergency exists as a result of
which disposal by the Trustee of Securities is not reasonably practicable or
it is not reasonably practicable to fairly determine the value of the
underlying Securities in accordance with the Trust Agreements; or (3) for such
other period as the Securities and Exchange Commission may by order permit.
The Trustee is not liable to any person in any way for any loss or damage
which may result from any such suspension or postponement.
Computation of Redemption Price. The Redemption Price for Units of each Trust
is computed by the Evaluator as of the evaluation time stated under "Essential
Information" 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 the Trust other than cash deposited in the
Trust to purchase Securities not applied to the purchase of such Securities;
(2) the aggregate value of each issue of the Securities (including "when
issued" contracts, if any) held in the Trust as determined by the Evaluator on
the basis of bid prices therefor; and (3) interest accrued and unpaid on the
Securities in the Trust as of the date of computation;
B. deducting therefrom (1) amounts representing any applicable taxes or
governmental charges payable out of the Trust and for which no deductions have
been previously made for the purpose of additions to the Reserve Account
described under "General Information--Expenses of the Trusts"; (2) an amount
representing estimated accrued expenses of the Trust, including but not
limited to fees and expenses of the Trustee (including legal and auditing fees
and any insurance costs), the Evaluator, the Sponsor and bond counsel, if any;
(3) cash held for distribution to Unitholders of record as of the business day
prior to the evaluation being made; and (4) other liabilities incurred by the
Trust; and
C. finally dividing the results of such computation by the number of Units of
the Trust outstanding as of the date thereof.
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<PAGE>
UNITHOLDERS
Ownership of Units. Ownership of Units of any Trust will not be evidenced by
certificates unless a Unitholder, the Unitholder's registered broker/dealer or
the clearing agent for such broker/dealer makes a written request to the
Trustee. Certificates, if issued, will be so noted on the confirmation
statement sent to the Underwriter and broker. Non-receipt of such
certificate(s) must be reported to the Trustee within one year; otherwise, a
2% surety bond fee will be required for replacement.
Units are transferable by making a written request to the Trustee and, in the
case of Units evidenced by a certificate, by presenting and surrendering such
certificate to the Trustee properly endorsed or accompanied by a written
instrument or instruments of transfer which should be sent registered or
certified mail for the protection of the Unitholder. Unitholders must sign
such written request, and such certificate or transfer instrument, exactly as
their names appear on the records of the Trustee and on any certificate
representing the Units to be transferred. Such signatures must be guaranteed
by a participant in the Securities Transfer Agents Medallion Program ("STAMP")
or such other signature guarantee program in addition to, or in substitution
for, STAMP, as may be accepted by the Trustee.
Units may be purchased and certificates, if requested will be issued in
denominations of one Unit subject to each Trust's minimum investment
requirement of 100 Units or any whole Unit multiple thereof subject to any
minimum requirement established by the Sponsor from time to time. Any
certificate issued will be numbered serially for identification, issued in
fully registered form and will be transferable only on the books of the
Trustee. The Trustee may require a Unitholder to pay a reasonable fee, to be
determined in the sole discretion of the Trustee, for each certificate re-
issued or transferred and to pay any governmental charge that may be imposed
in connection with each such transfer or interchange. The Trustee at the
present time does not intend to charge for the normal transfer or interchange
of certificates. Destroyed, stolen, mutilated or lost certificates will be
replaced upon delivery to the Trustee of satisfactory indemnity (generally
amounting to 3% of the market value of the Units), affidavit of loss, evidence
of ownership and payment of expenses incurred.
Distributions to Unitholders. Interest received by each Trust, including any
portion of the proceeds from a disposition of Securities 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 the Trust. The Trustee normally has no cash for distribution to
Unitholders until it receives interest payments on the Securities in the
Trust. Since interest usually is paid semi-annually (monthly in the case of a
GNMA Portfolio), during the initial months of the Trusts, the Interest Account
of each Trust, consisting of accrued but uncollected interest and collected
interest (cash), will be predominantly the uncollected accrued interest that
is not available for distribution. On the dates set forth under "Essential
Information" for each Trust, the Trustee will commence distributions, in part
from funds advanced by the Trustee.
Thereafter, assuming the Trust retains its original size and composition,
after deduction of the fees and expenses of the Trustee, the Sponsor and
Evaluator and reimbursements (without interest) to the Trustee for any amounts
advanced to a Trust, 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 on the preceding Record Date (which is the
first day of each month). Unitholders of the Trusts will receive an amount
substantially equal to one-twelfth of such holders' pro rata share of the
estimated net annual interest income to the Interest Account of such Trust.
However, interest earned at any point in time will be greater than the amount
actually received by the Trustee and distributed to the Unitholders.
Therefore,
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<PAGE>
there will always remain an item of accrued interest that is added to the
daily value of the Units. If Unitholders of a Trust sell or redeem all or a
portion of their Units, they will be paid their proportionate share of the
accrued interest of such Trust to, but not including, the fifth business day
after the date of a sale or to the date of tender in the case of a redemption.
In order to equalize distributions and keep the undistributed interest income
of the Trusts at a low level, all Unitholders of record in such Trust on the
first Record Date will receive an interest distribution on the first Interest
Distribution Date. Because the period of time between the first Interest
Distribution Date and the regular distribution dates may not be a full period,
the first regular distributions may be partial distributions.
Because each Trust receives interest and makes monthly distributions based
upon such Trust's expected total collections of interest and any anticipated
expenses, certain tax reporting consequences may arise. Each Trust is required
to report Unitholder information to the Internal Revenue Service ("IRS"),
based upon the actual collection of interest by such Trust on the securities
in such Trust, without regard to such Trust's expenses or to such Trust's
payments to Unitholders during the year. If distributions to Unitholders
exceed interest collected, the difference will be reported as a return of
principal which will reduce a Unitholder's cost basis in its Units (and its
pro rata interest in the securities in the Trust). A Unitholder must include
in taxable income the amount of income reported by a Trust to the IRS
regardless of the amount distributed to such Unitholder. If a Unitholder's
share of taxable income exceeds income distributions made by a Trust to such
Unitholder, such excess is in all likelihood attributable to the payment of
miscellaneous expenses of such Trust which will not be deductible by an
individual Unitholder as an itemized deduction except to the extent that the
total amount of certain itemized deductions, such as investment expenses
(which would include the Unitholder's share of Trust expenses), tax return
preparation fees and employee business expenses, exceeds 2% of such
Unitholder's adjusted gross income. Alternatively, in certain cases, such
excess may represent an increase in the Unitholder's tax basis in the Units
owned. Investors with questions regarding these issues should consult with
their tax advisers.
Unitholders of a U.S. Treasury Portfolio which contains Stripped Treasury
Securities should note that Stripped Treasury Securities are sold at a deep
discount because the buyer of those securities obtains only the right to
receive a future fixed payment on the security and not any rights to periodic
interest payments thereon. Purchasers of these Securities acquire, in effect,
discount obligations that are economically identical to the "zero-coupon
bonds" that have been issued by corporations. Zero coupon bonds are debt
obligations which do not make any periodic payments of interest prior to
maturity and accordingly are issued at a deep discount. Under generally
accepted accounting principles, a holder of a security purchased at a discount
normally must report as an item of income for financial accounting purposes
the portion of the discount attributable to the applicable reporting period.
The calculation of this attributable income would be made on the "interest"
method which generally will result in a lesser amount of includible income in
earlier periods and a correspondingly larger amount in later periods. For
Federal income tax purposes, the inclusion will be on a basis that reflects
the effective compounding of accrued but unpaid interest effectively
represented by the discount. Although this treatment is similar to the
"interest" method described above, the "interest" method may differ to the
extent that generally accepted accounting principles permit or require the
inclusion of interest on the basis of a compounding period other than the
semi-annual period. See "Federal Tax Status" for the U.S. Treasury Portfolios,
if any.
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 Bonds in
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GENERAL INFORMATION
<PAGE>
the Trusts 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 may not
be equal to the amount of money received and available for distribution from
the Interest Account. Therefore, on each Distribution Date the amount of
interest actually deposited in the Interest Account of a Trust 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 Agreements to
advance such amounts as may be necessary to provide interest distributions of
approximately equal amounts. The Trustee will be reimbursed, without interest,
for any such advances from funds available in the Interest Account for such
Trust.
The Trustee will distribute on each Distribution Date or shortly thereafter,
to each Unitholder of record of a Trust on the preceding Record Date, an
amount substantially equal to such holder's pro rata share of the cash
balance, if any, in the Principal Account of such Trust 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 $.01 per
Unit. Notwithstanding the foregoing, the Trustee will make a distribution to
Unitholders of all principal relating to maturing U.S. Treasury Obligations in
any U.S. Treasury Portfolio or GNMA Portfolio within twelve business days of
the date of such maturity.
In connection with GNMA Portfolios only, the terms of the Ginnie Maes provide
for payment to the holders thereof (including a GNMA Portfolio) on the
fifteenth day of each month of amounts collected by or due to the issuers
thereof with respect to the underlying mortgages during the preceding month.
The Trustee will collect the interest due a GNMA Portfolio on the Securities
therein as it becomes payable and credit such interest to a separate Interest
Account for such GNMA Portfolio created by the Indenture. Distributions will
be made to each Unitholder of record of a GNMA Portfolio on the appropriate
Distribution Date (see "Essential Information") and will consist of an amount
substantially equal to such Unitholder's pro rata share of the cash balances,
if any, in the Interest Account, the Principal Account and any Capital Gains
Account of such GNMA Portfolio, computed as of the close of business on the
preceding Record Date.
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 of each Trust are required to be audited annually, at the Trust's
expense, by independent auditors designated by the Sponsor, unless the Sponsor
determines that such an audit would not be in the best interest of the
Unitholders of such Trust. The accountants' report will be furnished by the
Trustee to any Unitholder of such Trust upon written request. Within a
reasonable period of time after the end of each calendar year, the Trustee
shall furnish to each person who at any time during the calendar year was a
Unitholder of a Trust a statement, covering the calendar year, setting forth
for the applicable Trust:
A. As to the Interest Account:
1. The amount of interest received on the Securities (and for Tax-Exempt
Portfolios, the percentage of such amount by states and territories in which
the issuers of such Securities are located);
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, the
Evaluator, and, if any, of bond counsel;
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GENERAL INFORMATION
<PAGE>
4. Any amounts credited by the Trustee to the Reserve Account described under
"General Information--Expenses of the Trusts";
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
Securities 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, the Evaluator, and, if any, of bond counsel;
4. The amount of when-issued interest treated as a return of capital, if any;
5. Any amounts credited by the Trustee to the Reserve Account described under
"General Information--Expenses of the Trusts";
6. 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 Securities 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;
4. The amount actually distributed during such calendar year from the Interest
and Principal Accounts (and Capital Gains Account, if applicable) separately
stated, expressed both as total dollar amounts and as dollar amounts per Unit
outstanding on the Record Dates for each such distribution.
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
any Trust in any manner, except to vote with respect to the amendment of the
Trust Agreements or termination of any Trust.
INVESTMENT SUPERVISION
The Sponsor may not alter the portfolios of the Trusts by the purchase, sale
or substitution of Securities, except in the special circumstances noted below
and as indicated earlier under "General Information--Trust Information"
regarding the substitution of Replacement Securities for any Failed
Securities. Thus, with the exception of the redemption or maturity of
Securities in accordance with their terms, the assets of the Trusts will
remain unchanged under normal circumstances.
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GENERAL INFORMATION
<PAGE>
The Sponsor may direct the Trustee to dispose of Securities 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 Securities in a Trust 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 such Trust for distribution to the Unitholders.
The Sponsor is required to instruct the Trustee to reject any offer made by an
issuer of Securities to issue new obligations in exchange or substitution for
any of such Securities pursuant to a refunding financing 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 Securities or (2) in the written
opinion of the Sponsor the issuer will probably default with respect to such
Securities in the reasonably forseeable 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 Securities originally
deposited thereunder. Within five days after deposit of obligations in
exchange or substitution for underlying Securities, the Trustee is required to
give notice thereof to each Unitholder, identifying the Securities eliminated
and the Securities substituted therefor.
The Trustee may sell Securities, designated by the Sponsor, from a Trust for
the purpose of redeeming Units of such Trust tendered for redemption and the
payment of expenses.
ADMINISTRATION OF THE TRUSTS
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 Agreements, reference is made
to the material set forth under "General Information--Unitholders."
In accordance with the Trust Agreements, the Trustee shall keep records of all
transactions at its office. Such records shall include the name and address
of, and the number of Units held by, every Unitholder of each Trust. Such
books and records shall be open to inspection by any Unitholder of such Trust
at all reasonable times during usual business hours. The Trustee shall make
such annual or other reports as may from time to time be required under any
applicable state or Federal statute, rule or regulation. The Trustee shall
keep a certified copy or duplicate original of the Trust Agreements on file in
its office available for inspection at all reasonable times during usual
business hours by any Unitholder, together with a current list of the
Securities held in each Trust. Pursuant to the Trust Agreements, the Trustee
may employ one or more agents for the purpose of custody and safeguarding of
Securities comprising the Trusts.
Under the Trust Agreements, the Trustee or any successor trustee may resign
and be discharged of its duties created by the Trust Agreements by executing
an instrument in writing and filing the same with the Sponsor.
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GENERAL INFORMATION
<PAGE>
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. The Sponsor may at any time remove the Trustee,
with or without cause, and appoint a successor trustee as provided in the
Trust Agreements. Notice of such removal and appointment shall be mailed to
each Unitholder by the Sponsor. Upon execution of a written acceptance of such
appointment by such successor trustee, all the rights, powers, duties and
obligations of the original Trustee shall vest in the successor. The Trustee
shall be a corporation organized under the laws of the United States, or any
state thereof, which is authorized under such laws to exercise trust powers.
The Trustee shall have at all times an aggregate capital, surplus and
undivided profits of not less than $5,000,000.
The Evaluator. Kemper Unit Investment Trusts, a service of Kemper Securities,
Inc., the Sponsor, also serves as Evaluator. The Evaluator may resign or be
removed by the Trustee in which event the Trustee is to use its best efforts
to appoint a satisfactory successor. Such resignation or removal shall become
effective upon acceptance of appointment by the successor evaluator. If upon
resignation of the Evaluator no successor has accepted appointment within 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,
for both the initial offering period and secondary market transactions,
portfolio evaluations of the Securities in the Trusts which are then reviewed
by the Evaluator. In the event the Sponsor is unable to obtain current
evaluations from Muller Data Corporation, it may make its own evaluations or
it may utilize the services of any other non-affiliated evaluator or
evaluators it deems appropriate.
Amendment and Termination. The Trust Agreements may be amended by the Trustee
and the Sponsor without the consent of any of the Unitholders: (1) to cure any
ambiguity or to correct or supplement any provision which may be defective or
inconsistent; (2) to change any provision thereof as may be required by the
Securities and Exchange Commission or any successor governmental agency; or
(3) to make such provisions as shall not adversely affect the interests of the
Unitholders. The Trust Agreements with respect to the Trusts 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 2/3% of the Units then outstanding of such Trust, 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 such Trust. In no event shall any Trust Agreement be
amended to increase the number of Units of a Trust issuable thereunder or to
permit, except in accordance with the provisions of such Trust Agreement, the
acquisition of any Securities in addition to or in substitution for those
initially deposited in a Trust. The Trustee shall promptly notify Unitholders
of the substance of any such amendment.
The Trust Agreements provide that the Trusts shall terminate upon the
maturity, redemption or other disposition of the last of the Securities held
in a Trust. If the value of a Trust shall be less than the applicable minimum
value stated under "Essential Information," the Trustee may, in its
discretion, and shall, when so directed by the Sponsor, terminate the Trust. A
Trust may be terminated at any time by
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GENERAL INFORMATION
<PAGE>
the holders of Units representing 66 2/3% of the Units thereof then
outstanding. In the event of termination of a Trust, written notice thereof
will be sent by the Trustee to all Unitholders of such Trust. Within a
reasonable period after termination, the Trustee will sell any Securities
remaining in such Trust and, after paying all expenses and charges incurred by
the Trust, 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 (and Capital Gains
Account, if applicable) of such Trust.
Limitations on Liability. The Sponsor: The Sponsor is liable for the
performance of its obligations arising from its responsibilities under the
Trust Agreements, but will be under no liability to the Unitholders for taking
any action or refraining from any action in good faith pursuant to the Trust
Agreements or for errors in judgment, except in cases of its own gross
negligence, bad faith or willful misconduct. The Sponsor shall not be liable
or responsible in any way for depreciation or loss incurred by reason of the
sale of any Securities.
The Trustee: The Trust Agreements provide 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, Securities or
certificates except by reason of its own gross negligence, bad faith or
willful misconduct, nor shall the Trustee be liable or responsible in any way
for depreciation or loss incurred by reason of the sale by the Trustee of any
Securities. 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 Securities or upon the interest
thereon. In addition, the Trust Agreements contain other customary provisions
limiting the liability of the Trustee.
The Evaluator: The Trustee and Unitholders may rely on any evaluation
furnished by the Evaluator and shall have no responsibility for the accuracy
thereof. The Trust Agreements provide that the determinations made by the
Evaluator shall be made in good faith upon the basis of the best information
available to it, provided, however, that the Evaluator shall be under no
liability to the Trustee or Unitholders for errors in judgment, but shall be
liable only for its gross negligence, lack of good faith or willful
misconduct.
EXPENSES OF THE TRUSTS
The Sponsor will charge the Trusts a surveillance fee for services performed
for the Trusts in an amount not to exceed that amount set forth in "Essential
Information" but in no event will such compensation, when combined with all
compensation received from other unit investment trusts for which the Sponsor
both acts as sponsor and provides portfolio surveillance, exceed the aggregate
cost to the Sponsor for providing such services. Such fee shall be based on
the total number of Units of the related Trust outstanding as of the January
Record Date for any annual period. The Sponsor will receive a portion of the
sales commissions paid in connection with the purchase of Units and will share
in profits, if any, related to the deposit of Securities in the Trusts. The
Sponsor and other Underwriters have borne all the expenses of creating and
establishing the Trusts including the cost of the initial preparation,
printing and execution of the Prospectus, Trust Agreements 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.
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GENERAL INFORMATION
<PAGE>
The Trustee receives for its services fees set forth under "Essential
Information." The Trustee fee which is calculated monthly is based on the
largest aggregate principal amount of Securities in a Trust 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 trust
procedures; however, the Trustee is also authorized by the Trust Agreements to
make from time to time certain non-interest bearing advances to the Trusts.
During the first year the Trustee has agreed to lower its fees and absorb
expenses by the amount set forth under "Essential Information." The Trustee's
fee will not be increased in future years in order to make up this reduction
in the Trustee's fee. The Trustee's fee is payable on or before each
Distribution Date.
For evaluation of Securities in each Trust, the Evaluator shall receive a fee,
payable monthly, calculated on the basis of that annual rate set forth under
"Essential Information," based upon the largest aggregate principal amount of
Securities in such Trust at any time during such monthly period.
The Trustee's and Evaluator's fees are deducted first from the Interest
Account of a Trust to the extent funds are available and then from the
Principal Account. 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. In
addition, the Trustee's fee may be periodically adjusted in response to
fluctuations in short-term interest rates (reflecting the cost to the Trustee
of advancing funds to a Trust to meet scheduled distributions).
The following additional charges are or may be incurred by the Trusts: (a)
fees for the Trustee's extraordinary services; (b) expenses of the Trustee
(including legal and auditing expenses and insurance costs for Insured Trust
Funds, but not including any fees and expenses charged by any agent for
custody and safeguarding of Securities) and of bond counsel, if any; (c)
various governmental charges; (d) expenses and costs of any action taken by
the Trustee to protect a 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 a 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 the
Trusts. The fees and expenses set forth herein are payable out of the
appropriate Trust and, when owing to the Trustee, are secured by a lien on
such Trust. Fees or charges relating to a Trust shall be allocated to each
Trust in the same ratio as the principal amount of such Trust bears to the
total principal amount of all Trusts. Fees or charges relating solely to a
particular Trust shall be charged only to such Trust.
Fees and expenses of the Trusts shall be deducted from the Interest Account
thereof, or, to the extent funds are not available in such Account, from the
Principal Accounts. The Trustee may withdraw from the Principal Account or the
interest Account of any Trust 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 the Trust. Amounts so withdrawn shall be
credited to a separate account maintained for a Trust known as the Reserve
Account and shall not be considered a part of the Trust 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.
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GENERAL INFORMATION
<PAGE>
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 Agreements 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 Agreements and liquidate the Trusts as
provided therein, or (c) continue to act as Trustee without terminating the
Trust Agreements.
The foregoing financial information with regard to the Sponsor relates to the
Sponsor only and not to these Trusts. 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 Trusts. More comprehensive financial
information can be obtained upon request from the Sponsor.
LEGAL OPINIONS
The legality of the Units offered hereby and certain matters relating to
Federal tax law have been passed upon by Chapman and Cutler, 111 West Monroe
Street, Chicago, Illinois 60603, as counsel for the Sponsor.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The statements of condition and the related portfolios at the Initial Date of
Deposit included in this Prospectus have been audited by Grant Thornton LLP,
independent certified public accountants, as set forth in their report in the
Prospectus, and are included herein in reliance upon the authority of said
firm as experts in accounting and auditing.
GI-18
GENERAL INFORMATION
<PAGE>
APPENDIX
DESCRIPTION OF RATINGS*
Standard & Poor's Ratings Group -- A brief description of the applicable
Standard & Poor's Rating Group 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.
- --------
*As described by the rating company itself.
A-1
<PAGE>
"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.
A-2
<PAGE>
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 A1 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
A-3
<PAGE>
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.
A-4
<PAGE>
<TABLE>
<CAPTION>
PAGE
CONTENTS -----
<S> <C>
SUMMARY................................................................... 2
ESSENTIAL INFORMATION..................................................... 4
THE TRUST FUNDS........................................................... 6
REPORT OF INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS............................................................. 8
STATEMENTS OF CONDITION................................................... 9
PUBLIC OFFERING OF UNITS.................................................. 10
Public Offering Price.................................................... 10
Accrued Interest......................................................... 12
Comparison of Public Offering Price and Redemption Price................. 13
Public Distribution of Units............................................. 13
Profits of Sponsor and Underwriters...................................... 15
THE CORPORATE INCOME SERIES............................................... C-1
The Trust Portfolio...................................................... C-1
Series Information....................................................... C-1
Portfolio................................................................ C-2
Notes to Portfolio....................................................... C-3
Risk Factors............................................................. C-4
Federal Tax Status....................................................... C-6
Estimated Cash Flows to Unitholders...................................... C-9
THE TAX-EXEMPT PORTFOLIOS................................................. TE-1
The Trust Portfolio...................................................... TE-1
Series Information....................................................... TE-1
Taxable Equivalent Estimated Current Return Tables....................... TE-2
Portfolios............................................................... TE-4
Notes to Portfolios...................................................... TE-7
Municipal Bond Risk Factors.............................................. TE-8
State Risk Factors and State Tax Status.................................. TE-11
Insurance on the Bonds................................................... TE-23
Federal Tax Status....................................................... TE-26
Underwriting............................................................. TE-30
Estimated Cash Flows to Unitholders...................................... TE-32
GENERAL INFORMATION....................................................... GI-1
Rating of Units.......................................................... GI-1
Trust Information........................................................ GI-1
Retirement Plans......................................................... GI-4
Distribution Reinvestment................................................ GI-5
Interest, Estimated Long-Term Return and Estimated Current Return........ GI-6
Market For Units......................................................... GI-7
Redemption............................................................... GI-7
Unitholders.............................................................. GI-10
Investment Supervision................................................... GI-13
Administration of the Trusts............................................. GI-14
Expenses of the Trusts................................................... GI-16
The Sponsor.............................................................. GI-18
Legal Opinions........................................................... GI-18
Independent Certified Public Accountants................................. GI-18
APPENDIX: DESCRIPTION OF RATINGS.......................................... A-1
</TABLE>
-----------------------------------
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.
<PAGE>
This Registration Statement on Form S-6 comprises the following papers and
documents.
<TABLE>
<C> <S>
The facing sheet of Form S-6.
The cross-reference sheet.
The prospectus.
The signatures.
The following exhibits.
1.1(a). Form of Trust Indenture and Agreement for the Insured National
Series 14.
1.1(b). Form of Trust Indenture and Agreement for the Insured California
Series 14 and Insured Michigan Series 10.
1.1(c). Form of Trust Indenture and Agreement for the Corporate Income
Series 3.
1.1.1(a). Standard Terms and Conditions of Trust for the Insured National
Series 14. Reference is made to Exhibit 1.1.1 to the Registration
Statement on Form S-6 with respect to Kemper Defined Funds Series 13
(Registration No. 33-52165) as filed on February 17, 1994.
1.1.1(b). Standard Terms and Conditions of Trust for the Insured California
Series 14 and Insured Michigan Series 10. Reference is made to
Exhibit 1.1.1 to the Registration Statement on Form S-6 with respect
to Kemper Defined Funds Series 13 (Reg. No. 33-52165) as filed on
February 17, 1994.
1.1.1(c). Standard Terms and Conditions of Trust for the Corporate Income
Series 3. Reference is made to Exhibit 1.1.1 to the Registration
Statement on Form S-6 with respect to Kemper Defined Fund Series 9
(Reg. No. 33-56012) as filed on November 3, 1993.
2.1. Form of Certificate of Ownership (pages two to four, inclusive, of
the Standard Terms and Conditions of Trust included as Exhibits
1.1.1(a), 1.1.1(b) and 1.1.1(c)).
3.1. Opinion of counsel to the Sponsor as to legality of the securities
being registered including a consent to the use of its name under
the headings "Federal Tax Status" and "Legal Opinions" in the
Prospectus and opinion of counsel as to the Federal income tax
status of the securities being registered and certain Missouri tax
matters.
3.2. Opinion and consent of special counsel to Insured California Series
14 for California tax matters.
3.3. Opinion and consent of special counsel to Insured Michigan Series 10
for Michigan tax matters.
4.1. Consent of Moody's Investors Service.
4.2. Consent of Muller Data Corporation.
4.3. Consent of Grant Thornton LLP.
Ex-27. Financial Data Schedules.
</TABLE>
S-1
<PAGE>
SIGNATURES
THE REGISTRANT, KEMPER DEFINED FUNDS SERIES 30 HEREBY IDENTIFIES SERIES A-62
AND MULTI-STATE SERIES 19 OF THE KEMPER TAX-EXEMPT INSURED INCOME TRUST,
KEMPER DEFINED FUNDS INSURED NATIONAL SERIES 1 AND KEMPER DEFINED FUND, SERIES
9 FOR PURPOSES OF THE REPRESENTATIONS REQUIRED BY RULE 487 AND REPRESENTS THE
FOLLOWING:
(1) THAT THE PORTFOLIO SECURITIES DEPOSITED IN THE SERIES AS TO THE
SECURITIES OF WHICH THIS REGISTRATION STATEMENT IS BEING FILED DO NOT
DIFFER MATERIALLY IN TYPE OR QUALITY FROM THOSE DEPOSITED IN SUCH PREVIOUS
SERIES;
(2) THAT, EXCEPT TO THE EXTENT NECESSARY TO IDENTIFY THE SPECIFIC
PORTFOLIO SECURITIES DEPOSITED IN, AND TO PROVIDE ESSENTIAL FINANCIAL
INFORMATION FOR, THE SERIES WITH RESPECT TO THE SECURITIES OF WHICH THIS
REGISTRATION STATEMENT IS BEING FILED, THIS REGISTRATION STATEMENT DOES NOT
CONTAIN DISCLOSURES THAT DIFFER IN ANY MATERIAL RESPECT FROM THOSE
CONTAINED IN THE REGISTRATION STATEMENTS FOR SUCH PREVIOUS SERIES AS TO
WHICH THE EFFECTIVE DATE WAS DETERMINED BY THE COMMISSION OR THE STAFF; AND
(3) THAT IT HAS COMPLIED WITH RULE 460 UNDER THE SECURITIES ACT OF 1933.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT,
KEMPER DEFINED FUNDS SERIES 30 HAS DULY CAUSED THIS AMENDMENT TO THE
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO DULY AUTHORIZED, IN THE CITY OF CHICAGO, AND STATE OF ILLINOIS, ON
THE 22ND DAY OF FEBRUARY, 1995.
KEMPER DEFINED FUNDS SERIES 30
Registrant
By: KEMPER UNIT INVESTMENT TRUSTS
(a service of Kemper Securities,
Inc.)
Depositor
/s/ Michael J. Thoms
By: _________________________________
Michael J. Thoms
S-2
<PAGE>
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BELOW ON FEBRUARY 22, 1995 BY
THE FOLLOWING PERSONS, WHO CONSTITUTE A MAJORITY OF THE BOARD OF DIRECTORS OF
KEMPER SECURITIES, INC.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
James R. Boris
- -------------------------------------------
James R. Boris Chairman and Chief Executive Officer
Stephen G. McConahey
- -------------------------------------------
Stephen G. McConahey President and Chief Operating Officer
Frank V. Geremia
- -------------------------------------------
Frank V. Geremia Senior Executive Vice President
David M. Greene
- -------------------------------------------
David M. Greene Senior Executive Vice President
Arthur J. McGivern
- -------------------------------------------
Arthur J. McGivern Senior Executive Vice President and General
Counsel
Ramon Pecuch
- -------------------------------------------
Ramon Pecuch Senior Executive Vice President and
Director
Thomas R. Reedy
- -------------------------------------------
Thomas R. Reedy Senior Executive Vice President and
Director
Janet L. Reali
- -------------------------------------------
Janet L. Reali Executive Vice President, Corporate Counsel
and Secretary
Daniel D. Williams
- -------------------------------------------
Daniel D. Williams Executive Vice President and Treasurer
David B. Mathis
- -------------------------------------------
David B. Mathis Director
Stephen B. Timbers
- -------------------------------------------
Stephen B. Timbers Director
Donald F. Eller
- -------------------------------------------
Donald F. Eller Director
Charles M. Kierscht
- -------------------------------------------
Charles M. Kierscht Director
</TABLE>
/s/ Michael J. Thoms
_____________________________________
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).
S-3
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND> This schedule contains summary financial information extracted from
Amendment Number 1 to Form S-6 and is qualified in its entirety by reference to
such Amendment Number 1 to Form S-6.
</LEGEND>
<SERIES>
<NAME> CORPORATE INCOME
<NUMBER> 3
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> FEB-22-1995
<PERIOD-END> FEB-22-1995
<INVESTMENTS-AT-COST> 1,998,282
<INVESTMENTS-AT-VALUE> 1,998,282
<RECEIVABLES> 51,502
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,049,784
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 51,502
<TOTAL-LIABILITIES> 51,502
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,998,282
<SHARES-COMMON-STOCK> 210,000
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1,998,282
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<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>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND> This schedule contains summary financial information extracted from
Amendment Number 1 to Form S-6 and is qualified in its entirety by reference to
such Amendment Number 1 to Form S-6.
</LEGEND>
<SERIES>
<NAME> INSURED NATIONAL
<NUMBER> 14
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> FEB-22-1995
<PERIOD-END> FEB-22-1995
<INVESTMENTS-AT-COST> 7,846,182
<INVESTMENTS-AT-VALUE> 7,846,182
<RECEIVABLES> 80,216
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 7,926,398
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 80,216
<TOTAL-LIABILITIES> 80,216
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 7,846,182
<SHARES-COMMON-STOCK> 805,000
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 7,846,182
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<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>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND> This schedule contains summary financial information extracted from
Amendment Number 1 to Form S-6 and is qualified in its entirety by reference to
such Amendment Number 1 to Form S-6.
</LEGEND>
<SERIES>
<NAME> INSURED CALIFORNIA
<NUMBER> 14
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> FEB-22-1995
<PERIOD-END> FEB-22-1995
<INVESTMENTS-AT-COST> 2,890,015
<INVESTMENTS-AT-VALUE> 2,890,015
<RECEIVABLES> 28,691
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,918,706
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 28,691
<TOTAL-LIABILITIES> 28,691
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,890,015
<SHARES-COMMON-STOCK> 297,000
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 2,890,015
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<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>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND> This schedule contains summary financial information extracted from
Amendment Number 1 to Form S-6 and is qualified in its entirety by reference to
such Amendment Number 1 to Form S-6.
</LEGEND>
<SERIES>
<NAME> INSURED MICHIGAN
<NUMBER> 10
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> FEB-22-1995
<PERIOD-END> FEB-22-1995
<INVESTMENTS-AT-COST> 3,230,290
<INVESTMENTS-AT-VALUE> 3,230,290
<RECEIVABLES> 57,497
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,287,787
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 57,497
<TOTAL-LIABILITIES> 57,497
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,230,290
<SHARES-COMMON-STOCK> 327,500
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 3,230,290
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<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>
<PAGE>
Exhibit 1.1(A)
KEMPER DEFINED FUNDS SERIES 30
(Insured National Series)
TRUST AGREEMENT
This Trust Agreement dated as of February 22, 1995 between Kemper Unit
Investment Trusts, a service of Kemper Securities, Inc., as Depositor, and
Investors Fiduciary Trust Company, as Trustee, sets forth certain provisions in
full and incorporates other provisions by reference to the document entitled
"Kemper Defined Funds Series 13 and Subsequent Series, Standard Terms and
Conditions of Trust, Effective February 17, 1994" (herein called the "Standard
Terms and Conditions of Trust"), and such provisions as are set forth in full
and such provisions as are incorporated by reference constitute a single
instrument.
WITNESSETH THAT:
In consideration of the premises and of the mutual agreements herein
contained, the Depositor and the Trustee agree as follows:
Part I
STANDARD TERMS AND CONDITIONS OF TRUST
Subject to the provisions of Part II hereof, all the provisions contained
in the Standard Terms and Conditions of Trust are herein incorporated by
reference in their entirety and shall be deemed to be a part of this instrument
as fully and to the same extent as though said provisions had been set forth in
this instrument.
Part II
SPECIAL TERMS AND CONDITIONS OF TRUST
The following special terms and conditions are hereby agreed to:
(a) The interest-bearing tax-exempt obligations listed in the
Schedules hereto have been deposited in trust under this Trust Agreement as
indicated in the Trust named on the attached Schedules.
(b) For the purposes of the definition of the terms "Depositor" and
"Evaluator" in Article I, it is hereby specified that such term shall mean
Kemper Unit Investment Trusts, a service of Kemper Securities, Inc. or its
successors or any successor Depositor appointed.
(c) For the purposes of the definition of the term "Unit" in Article
I, it is hereby specified that the fractional undivided interest in and
ownership of the
<PAGE>
Trust is the amount set forth in the section captioned "Essential
Information" in the final Prospectus of the Trust (the "Prospectus")
contained in Amendment No. 1 to the Trust's Registration Statement
(Registration No. 33-57693) as filed with the Securities and Exchange
Commission on February 22, 1995.
(d) For purposes of the definition of the term "Fund" in Article I, it
is hereby specified that such term shall mean the term "Trust" as defined
on page 6 of the Prospectus.
(e) For purposes of the definition of the term "Trust Fund" in Article
I, it is hereby specified that such term shall include the definition of
the term "Trust Fund" as set forth on page 6 of the Prospectus and
specifically shall include Insured National Series 14.
(f) The term "Record Date" shall mean the "Record Dates" set forth
under "Unitholders - Distributions to Unitholders" of the Prospectus.
(g) The terms "Interest Distribution Date" and "Principal Distribution
Date" shall mean the "Interest Distribution Dates" and "Principal
Distribution Dates" set forth under "Unitholders - Distributions to
Unitholders" in the Prospectus.
(h) The number of Units of the Trust referred to in Section 2.01 is as
set forth in the section captioned "Essential Information" in the
Prospectus.
(i) As contemplated by Section 3.04, an initial distribution for the
Trust will be made on the Distribution Date and in the amount set forth in
the section captioned "Unitholders - Distributions to Unitholders" in the
Prospectus to all holders of record on the Record Date set forth
thereunder. Thereafter, the amounts distributed shall be calculated in the
manner set forth in Section 3.04.
(j) For the purposes of Section 4.03, the Evaluator shall receive for
evaluation of the Bonds in the Trust a fee, payable monthly, calculated on
the basis of an annual rate of $.30 per $1,000 principal amount of Bonds,
based upon the largest aggregate principal amount of Bonds in the Trust at
any time during such monthly period.
(k) For the purposes of Section 3.13, the Depositor shall receive for
portfolio surveillance services a fee calculated on the basis of an annual
rate of $.20 per $1,000 principal amount of Bonds, based upon the largest
aggregate principal amount of Bonds in the Trust at any time during such
monthly period.
(l) For the purposes of Section 8.01(g), the liquidation amount is
hereby specified as the amount set forth under "Essential Information -
Minimum
-2-
<PAGE>
Value of Trust under which Trust Agreement may be Terminated" in the
Prospectus.
(m) For the purposes of Section 8.05, with the exception of the first
year, the compensation for the Trustee is hereby specified as the amount
set forth under "Essential Information". During the first year, the Trustee
has agreed to lower its fee and to the extent necessary assume and pay out
of its own funds expenses of the Trust by the amount set forth under
"Essential Information" in the Prospectus.
(n) Any monies held to purchase "when-issued" bonds will be held in
non-interest bearing accounts.
(o) The term First Settlement Date" shall mean the "First Settlement
Date" set forth under the section captioned "Essential Information" in the
Prospectus.
(p) The fourth sentence of Section 8.06(a) is hereby eliminated and
the last sentence of such Section shall be restated as follows:
The Depositor may at any time remove the Trustee, with or without
cause, and appoint a successor Trustee by written instrument or
instruments delivered to the Trustee so removed and the successor
Trustee, provided that a notice of such removal and appointment of a
successor Trustee shall be mailed by the successor Trustee promptly
after acceptance of such appointment to each Unitholder then or
record.
-3-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement
to be duly executed.
KEMPER UNIT INVESTMENT TRUSTS
a service of Kemper Securities, Inc.
Depositor
By Robert K. Burke
---------------------
Senior Vice President
INVESTORS FIDUCIARY TRUST
COMPANY
By Ron Puett
---------------------
Operations Officer
<PAGE>
SCHEDULE A
Bonds Initially Deposited
Kemper Defined Funds Series 30
(Insured National Series)
(Note: Incorporated herein and made a part hereof is the "Portfolio" as set
forth in the Prospectus.)
<PAGE>
EXHIBIT 1.1(B)
KEMPER DEFINED FUNDS SERIES 30
(Insured State Series)
TRUST AGREEMENT
This Trust Agreement dated as of February 22, 1995 between Kemper Unit
Investment Trusts, a service of Kemper Securities, Inc., as Depositor, and
Investors Fiduciary Trust Company, as Trustee, sets forth certain provisions in
full and incorporates other provisions by reference to the document entitled
"Kemper Defined Funds Series 13 and Subsequent Series (Tax-Exempt Portfolios),
Standard Terms and Conditions of Trust, Effective February 17, 1994" (herein
called the "Standard Terms and Conditions of Trust"), and such provisions as are
set forth in full and such provisions as are incorporated by reference
constitute a single instrument.
WITNESSETH THAT:
In consideration of the premises and of the mutual agreements herein
contained, the Depositor and the Trustee agree as follows:
Part I
STANDARD TERMS AND CONDITIONS OF TRUST
Subject to the provisions of Part II hereof, all the provisions contained
in the Standard Terms and Conditions of Trust are herein incorporated by
reference in their entirety and shall be deemed to be a part of this instrument
as fully and to the same extent as though said provisions had been set forth in
this instrument.
Part II
SPECIAL TERMS AND CONDITIONS OF TRUST
The following special terms and conditions are hereby agreed to:
(a) The interest-bearing tax-exempt obligations listed in the
Schedules hereto have been deposited in trust under this Trust Agreement as
indicated in the Trust named on the attached Schedules.
(b) For the purposes of the definition of the terms "Depositor" and
"Evaluator" in Article I, it is hereby specified that such term shall mean
Kemper Unit Investment Trusts, a service of Kemper Securities, Inc. or its
successors or any successor Depositor appointed.
<PAGE>
(c) For the purposes of the definition of the term "Unit" in Article
I, it is hereby specified that the fractional undivided interest in and
ownership of the Trust is the amount set forth in the section captioned
"Essential Information" in the final Prospectus of the Trust (the
"Prospectus") contained in Amendment No. 1 to the Trust's Registration
Statement (Registration No. 33-57693) as filed with the Securities and
Exchange Commission on February 22, 1995.
(d) For purposes of the definition of the term "Fund" in Article I, it
is hereby specified that such term shall mean the term "Trust" as defined
on page 6 of the Prospectus.
(e) For purposes of the definition of the term "Trust Fund" in Article
I, it is hereby specified that such term shall include the definition of
the term "Trust Fund" as set forth on page 6 of the Prospectus and
specifically includes Insured California Series 14 and Insured Michigan 10
(the "Insured State Trusts").
(f) The term "Record Date" shall mean the "Record Dates" set forth
under "Unitholders - Distributions to Unitholders" of the Prospectus.
(g) The terms "Interest Distribution Date" and "Principal Distribution
Date" shall mean the "Interest Distribution Dates" and "Principal
Distribution Dates" set forth under "Unitholders - Distributions to
Unitholders" in the Prospectus.
(h) The number of Units of the Trust referred to in Section 2.01 is as
set forth in the section captioned "Essential Information" in the
Prospectus.
(i) As contemplated by the last paragraph of Section 3.04, an initial
distribution for the Trust will be made on the Distribution Date and in the
amount set forth in the section captioned "Unitholders - Distributions to
Unitholders" in the Prospectus to all holders of record on the Record Date
set forth thereunder. Thereafter, the amounts distributed shall be
calculated in the manner set forth in Section 3.04.
(j) For the purposes of Section 4.03, the Evaluator shall receive for
evaluation of the Bonds in the Trust a fee, payable monthly, calculated on
the basis of an annual rate of $.30 per $1,000 principal amount of Bonds,
based upon the largest aggregate principal amount of Bonds in the Trust at
any time during such monthly period.
(k) For the purposes of Section 3.13, the Depositor shall receive for
portfolio surveillance services a fee, payable monthly, calculated on the
basis of an annual rate of $.20 per $1,000 principal amount of Bonds, based
upon the
-2-
<PAGE>
largest aggregate principal amount of Bonds in the Trust at any time during
such monthly period.
(l) For the purposes of Section 8.01(g), the liquidation amount is
hereby specified as the amount set forth under "Essential Information -
Minimum Value of Trust under which Trust Agreement may be Terminated" in
the Prospectus.
(m) For the purposes of Section 8.05, with the exception of the first
year, the compensation for the Trustee is hereby specified as the amount
set forth under "Essential Information". During the first year, the Trustee
has agreed to lower its fee and to the extent necessary assume and pay out
of its own funds expenses of the Trust by the amount set forth under
"Essential Information" in the Prospectus.
(n) Any monies held to purchase "when-issued" bonds will be held in
non-interest bearing accounts.
(o) The term "First Settlement Date" shall mean the "First Settlement
Date" set forth under the section captioned "Essential Information" in the
Prospectus.
(p) The fourth sentence of Section 8.06(a) is hereby eliminated and
the last sentence of such Section shall be restated as follows:
The Depositor may at any time remove the Trustee, with or without
cause, and appoint a successor Trustee by written instrument or
instruments delivered to the Trustee so removed and the successor
Trustee, provided that a notice of such removal and appointment of a
successor Trustee shall be mailed by the successor Trustee promptly
after acceptance of such appointment to each Unitholder then or
record.
-3-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement
to be duly executed.
KEMPER UNIT INVESTMENT TRUSTS
a service of Kemper Securities, Inc.
Depositor
By Robert K. Burke
---------------------
Senior Vice President
INVESTORS FIDUCIARY TRUST
COMPANY
By Ron Puett
---------------------
Operations Officer
<PAGE>
SCHEDULE A
Bonds Initially Deposited
Kemper Defined Funds Series 30
(Insured State Series)
(Note: Incorporated herein and made a part hereof is the "Portfolio" as set
forth in the Prospectus.)
<PAGE>
Exhibit 1.1(C)
KEMPER DEFINED FUNDS SERIES 30
TRUST AGREEMENT
This Trust Agreement dated as of February 22, 1995 between Kemper Unit
Investment Trusts, a service of Kemper Securities, Inc., as Depositor, and
Investors Fiduciary Trust Company, as Trustee, sets forth certain provisions in
full and incorporates other provisions by reference to the document entitled
"Kemper Defined Funds Corporate Income Series 1 and Subsequent Series Standard
Terms and Conditions of Trust, Effective November 3, 1993" (herein called the
"Standard Terms and Conditions of Trust"), and such provisions as are set forth
in full and such provisions as are incorporated by reference constitute a single
instrument.
WITNESSETH THAT:
In consideration of the premises and of the mutual agreements herein
contained, the Depositor and the Trustee agree as follows:
Part I
STANDARD TERMS AND CONDITIONS OF TRUST
Subject to the provisions of Part II hereof, all the provisions contained
in the Standard Terms and Conditions of Trust are herein incorporated by
reference in their entirety and shall be deemed to be a part of this instrument
as fully and to the same extent as though said provisions had been set forth in
this instrument.
Part II
SPECIAL TERMS AND CONDITIONS OF TRUST
The following special terms and conditions are hereby agreed to:
(a) The interest-bearing obligations listed in the Schedule hereto have
been deposited in trust under this Trust Agreement as indicated in the Trust
named on the attached Schedule.
(b) For the purposes of the definition of the term "Depositor" in
Article I, it is hereby specified that such term shall mean Kemper Unit
Investment Trusts, a service of Kemper Securities, Inc. or its successors or
any successor Depositor appointed.
(c) For the purposes of the definition of the term "Unit" in Article I,
it is hereby specified that the fractional undivided interest in and
ownership of the
<PAGE>
Trust is the amount set forth in the section captioned "Essential
Information" in the final Prospectus of the Trust (the "Prospectus")
contained in Amendment No. 1 to the Trust's Registration Statement
(Registration No. 33-57693) as filed with the Securities and Exchange
Commission on February 22, 1995. The fractional undivided interest may
increase by the number of any additional Units issued pursuant to Section
2.03, or decrease by the number of Units redeemed pursuant to Section 5.02.
(d) For purposes of the definition of the term "Fund" and "Trust Fund"
in Article I, it is hereby specified that such term shall mean the term
"Trust" as defined on page 6 of the Prospectus.
(e) The term "Record Date" shall mean the "Record Dates" set forth
under "Unitholders - Distributions to Unitholders" of the Prospectus.
(f) The terms "Interest Distribution Date" and "Principal Distribution
Date" shall mean the "Interest Distribution Dates" and "Principal
Distribution Dates" set forth under "Unitholders - Distributions to
Unitholders" in the Prospectus.
(g) The term "Initial Date of Deposit" shall mean February 22, 1995.
(h) The number of Units of the Trust referred to in Section 2.03 is as
set forth in the section captioned "Essential Information" in the Prospectus.
(i) For the purposes of Section 3.13, the Depositor shall receive for
portfolio surveillance services a fee calculated on the basis of that maximum
annual rate set forth in "Essential Information", based upon the largest
aggregate principal amount of Bonds in the Trust at any time during such
monthly period.
(j) For the purposes of Section 4.03, the Evaluator shall receive for
evaluation of the Bonds in the Trust a fee, payable monthly, calculated on
the basis of that annual rate set forth in "Essential Information", based
upon the largest aggregate principal amount of Bonds in the Trust at any time
during such monthly period.
(k) For the purposes of Section 8.01(g), the liquidation amount is
hereby specified as the amount set forth under "Essential Information -
Minimum principal value of the trust under which Trust Agreement may be
terminated" in the Prospectus.
(l) For the purposes of Section 8.05, the compensation for the Trustee
for each Trust is the amount set forth in "Essential Information".
-2-
<PAGE>
(m) Any monies held to purchase "when-issued" bonds will be held in
non-interest bearing accounts.
(n) The fourth sentence of Section 8.06(a) is hereby eliminated and the
last sentence of such Section shall be restated as follows:
The Depositor may at any time remove the Trustee, with or without
cause, and appoint a successor Trustee by written instrument or
instruments delivered to the Trustee so removed and the successor
Trustee, provided that a notice of such removal and appointment of a
successor Trustee shall be mailed by the successor Trustee promptly
after acceptance of such appointment to each Unitholder then or
record.
-3-
<PAGE>
Exhibit 1.1(c)
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to be
duly executed.
KEMPER SECURITIES, INC.
through its Kemper Unit Investment Trusts
service
Depositor
By Robert K. Burke
-------------------------------
Senior Vice President
INVESTORS FIDUCIARY TRUST
COMPANY
By Ron Puett
-------------------------------
Operations Officer
<PAGE>
SCHEDULE A
Bonds Initially Deposited
Kemper Defined Funds Series 30
(Note: Incorporated herein and made a part hereof is the "Portfolio" as set
forth in the Prospectus.)
<PAGE>
Exhibit 3.1
Chapman and Cutler
111 West Monroe Street
Chicago, Illinois 60603
February 22, 1995
Kemper Unit Investment Trusts
77 West Wacker Drive
Chicago, Illinois 60601
Re: Kemper Defined Funds Series 30
------------------------------
Gentlemen:
We have served as counsel for Kemper Unit Investment Trusts, as Sponsor
and Depositor of Kemper Defined Funds Series 30 (the "Fund"), in connection with
the preparation, execution and delivery of Trust Agreements dated the date of
this opinion between Kemper Unit Investment Trusts, as Depositor, and Investors
Fiduciary Trust Company, as Trustee, pursuant to which the Depositor has
delivered to and deposited the Bonds listed in the Schedules to each Trust
Agreement with the Trustee and pursuant to which the Trustee has issued to or on
the order of the Depositor a certificate or certificates representing all the
Units of fractional undivided interest in, and ownership of, the Fund, created
under said Trust Agreements.
In connection therewith we have examined such pertinent records and
documents and matters of law as we have deemed necessary in order to enable us
to express the opinions hereinafter set forth.
Based upon the foregoing, we are of the opinion that:
1. The execution and delivery of the Trust Agreements and the
execution and issuance of certificates evidencing the Units of the Fund
have been duly authorized; and
2. The certificates evidencing the Units of the Fund, when duly
executed and delivered by the Depositor and the Trustee in accordance
with the aforementioned Trust Agreements, will constitute valid and
binding obligations of the Fund and the Depositor in accordance with the
terms thereof.
<PAGE>
-2-
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement (File No. 33-57693) relating to the Units referred to
above and to the use of our name and to the reference to our firm in said
Registration Statement and in the related Prospectus.
Respectfully submitted,
CHAPMAN AND CUTLER
<PAGE>
Chapman and Cutler
111 West Monroe Street
Chicago, Illinois 60603
February 22, 1995
Kemper Unit Investment Trusts
77 West Wacker Drive
Chicago, Illinois 60601
Investors Fiduciary Trust Company
127 West 10th Street
Kansas City, Missouri 64105
Re: Kemper Defined Funds Series 30
(Insured National Series 14, Insured California Series 14
and Insured Michigan Series 10)
Gentlemen:
We have acted as counsel for Kemper Unit Investment Trusts, Depositor of
Kemper Defined Funds Series 30 (Insured National Series 14, Insured California
Series 14 and Insured Michigan Series 10) (the "Fund"), in connection with the
issuance of Units of fractional undivided interest in the several Trusts of said
Fund under Trust Agreements dated February 22, 1995 (the "Indenture") between
Kemper Unit Investment Trusts, as Depositor and Evaluator and Investors
Fiduciary Trust Company, as Trustee.
In this connection, we have examined the Registration Statement, the form of
Prospectus proposed to be filed with the Securities and Exchange Commission, the
Indenture and such other instruments and documents as we have deemed pertinent.
Based upon the foregoing and upon an investigation of such matters of law as
we consider to be applicable, we are of the opinion that, under existing Federal
income tax law:
(i) Each Trust is not an association taxable as a corporation but will
be governed by the provisions of subchapter J (relating to trusts) of chapter
1, Internal Revenue Code of 1986 (the "Code").
(ii) Each Unitholder will be considered as owning a pro rata share of
each asset of the respective Trust in the proportion that the number of Units
of such Trust held by him bears to the total number of Units outstanding of
such Trust. Under subpart E, subchapter J of chapter 1 of the Code, income of
each Trust will be treated as income of each Unitholder of the respective
Trust in the
<PAGE>
-2-
proportion described, and an item of Trust income will have the same
character in the hands of a Unitholder as it would have in the hands of the
Trustee. Accordingly, to the extent that the income of a Trust consists of
interest excludable from gross income under Section 103 of the Code, such
income will be excludable from Federal gross income of the Unitholders,
except in the case of a Unitholder who is a substantial user (or a person
related to such user) of a facility financed through issuance of any
industrial development bonds or certain private activity bonds held by the
respective Trust. In the case of such Unitholder (and no other) interest
received with respect to his Units attributable to such industrial
development bonds or such private activity bonds is includable in his gross
income. In the case of certain corporations, interest on the Bonds is
included in computing the alternative minimum tax pursuant to Section 56(c)
of the Code, the environmental tax (the "Superfund Tax") imposed by Section
59A of the Code, and the branch profits tax imposed by Section 884 of the
Code with respect to U.S. branches of foreign corporations.
(iii) Gain or loss will be recognized to a Unitholder upon redemption or
sale of his Units. Such gain or loss is measured by comparing the proceeds of
such redemption or sale with the adjusted basis of the Units represented by
his Certificate. Before adjustment, such basis would normally be cost if the
Unitholder had acquired his Units by purchase, plus his aliquot share of
advances by the Trustee to the Trust to pay interest on Bonds delivered after
the Unitholder's settlement date to the extent that such interest accrued on
the Bonds during the period from the Unitholder's settlement date to the date
such Bonds are delivered to the respective Trust, but only to the extent that
such advances are to be repaid to the Trustee out of interest received by
such Trust with respect to such Bonds. In addition, such basis will be
increased by the Unitholder's aliquot share of the accrued original issue
discount with respect to each Bond held by the Fund with respect to which
there was an original issue discount at the time the Bond was issued and
reduced by the annual amortization of bond premium, if any, on Bonds held by
the Trust.
(iv) If the Trustee disposes of a Trust asset (whether by sale, payment
on maturity, redemption or otherwise) gain or loss is recognized to the
Unitholder and the amount thereof is measured by comparing the Unitholder's
aliquot share of the total proceeds from the transaction with his basis for
his fractional interest in the asset disposed of. Such basis is ascertained
by apportioning the tax basis for his Units among each of the Trust assets
(as of the date on which his Units were acquired) ratably according to their
values as of the valuation date nearest the date on which he purchased such
Units. A Unitholder's basis in his Units and of his fractional interest in
each Trust asset must be reduced by the amount of his aliquot share of
interest received by the Trust, if any, on Bonds delivered after the
Unitholder's settlement date to the extent that such
<PAGE>
-3-
interest accrued on the Bonds during the period from the Unitholder's
settlement date to the date such Bonds are delivered to the Trust; must be
reduced by the annual amortization of bond premium, if any, on Bonds held by
each Trust and must be increased by the Unitholder's share of the accrued
original issue discount with respect to each Bond which, at the time the Bond
was issued, had original issue discount.
(v) In the case of any Bond held by a Trust where the "stated redemption
price at maturity" exceeds the "issue price", such excess shall be original
issue discount. With respect to each Unitholder, upon the purchase of his
Units subsequent to the original issuance of Bonds held by a Trust, Section
1272(a)(7) of the Code provides for a reduction in the accrued "daily
portion" of such original issue discount upon the purchase of a Bond
subsequent to the Bond's original issue, under certain circumstances. In the
case of any Bond held by a Trust the interest on which is excludable from
gross income under Section 103 of the Code, any original issue discount which
accrues with respect thereto will be treated as interest which is excludable
from gross income under Section 103 of the Code.
(vi) Certain bonds in the portfolios of certain of the Trusts have been
insured by the issuers thereof against default in the prompt payment of
principal and interest (the "Insured Bonds"). Insurance has been obtained for
such bonds, or, in the case of a commitment, the bonds will be ultimately
insured under the terms of such an insurance policy, which are designated as
issuer insured bonds on the portfolio pages of the respective Trusts in the
prospectus for the Fund, by the issuer of such bonds. Insurance obtained by
the issuer is effective so long as such bonds remain outstanding. For each of
these bonds, we have been advised that the aggregate principal amount of such
bonds listed on the portfolio page for the respective Trust was acquired by
the applicable Trust and is part of the series of such bonds listed on the
portfolio page for the respective Trust in the aggregate principal amount
listed on the portfolio page for the respective Trust. Based upon the
assumption that the Bonds acquired by the applicable Trust are part of the
series covered by an insurance policy or, in the case of a commitment, will
be ultimately insured under the terms of such an insurance policy, it is our
opinion that any amounts received by the applicable Trust representing
maturing interest on such bonds will be excludable from federal gross income
if, and to the same extent as, such interest would have been so excludable if
paid in normal course by the Issuer provided that, at the time such policies
are purchased, the amounts paid for such policies are reasonable, customary
and consistent with the reasonable expectation that the issuer of the bonds,
rather than the insurer, will pay debt service on the bonds. Paragraph (ii)
of this opinion is accordingly applicable to such payment representing
maturing interest.
<PAGE>
-4-
Sections 1288 and 1272 of the Code provide a complex set of rules governing
the accrual of original issue discount. These rules provide that original issue
discount accrues either on the basis of a constant compound interest rate or
ratably over the term of the Bond, depending on the date the Bond was issued.
In addition, special rules apply if the purchase price of a Bond exceeds the
original issue price plus the amount of original issue discount which would have
previously accrued based upon its issue price (its "adjusted issue price") to
prior owners. The application of these rules will also vary depending on the
value of the Bond on the date a Unitholder acquires his Units, and the price the
Unitholder pays for his Units.
Because the Trusts do not include any "private activity bonds" within the
meaning of Section 141 of the Code issued on or after August 8, 1986, none of
the Trust Fund's interest income shall be treated as an item of tax preference
when computing the alternative minimum tax. In the case of corporations, for
taxable years beginning after December 31, 1986, the alternative minimum tax and
the Superfund Tax depend upon the corporation's alternative minimum taxable
income ("AMTI") which is the corporation's taxable income with certain
adjustments.
Pursuant to Section 56(c) of the Code, one of the adjustment items used in
computing AMTI and the Superfund Tax of a corporation (other than an S
Corporation, Regulated Investment Company, Real Estate Investment Trust or
REMIC) for taxable years beginning after 1989, is an amount equal to 75% of the
excess of such corporation's "adjusted current earnings" over an amount equal to
its AMTI (before such adjustment item and the alternative tax net operating loss
deduction). "Adjusted current earnings" includes all tax-exempt interest,
including interest on all Bonds in each Trust, and tax-exempt original issue
discount.
Effective for tax returns filed after December 31, 1987, all taxpayers are
required to disclose to the Internal Revenue Service the amount of tax-exempt
interest earned during the year.
Section 265 of the Code provides for a reduction in each taxable year of
100 percent of the otherwise deductible interest on indebtedness incurred or
continued by financial institutions, to which either Section 585 or Section 593
of the Code applies, to purchase or carry obligations acquired after August 7,
1986, the interest on which is exempt from Federal income taxes for such taxable
year. Under rules prescribed by Section 265, the amount of interest otherwise
deductible by such financial institutions in any taxable year which is deemed to
be attributable to tax-exempt obligations acquired after August 7, 1986, will be
the amount that bears the same ratio to the interest deduction otherwise
allowable (determined without regard to Section 265) to the taxpayer for the
taxable year as the taxpayer's average adjusted basis (within the meaning of
Section 1016) of tax-exempt obligations acquired after August 7, 1986, bears to
such average adjusted basis for all assets of the taxpayer, unless such
financial institution can otherwise establish, under regulations to
<PAGE>
-5-
be prescribed by the Secretary of the Treasury, the amount of interest on
indebtedness incurred or continued to purchase or carry such obligations.
We also call attention to the fact that, under Section 265 of the Code,
interest on indebtedness incurred or continued to purchase or carry Units by
taxpayers other than certain financial institutions, as referred to above, is
not deductible for Federal income tax purposes. Under rules used by the
Internal Revenue Service for determining when borrowed funds are considered used
for the purpose of purchasing or carrying particular assets, the purchase of
Units may be considered to have been made with borrowed funds even though the
borrowed funds are not directly traceable to the purchase of Units. However,
these rules generally do not apply to interest paid on indebtedness incurred for
expenditures of a personal nature such as a mortgage incurred to purchase or
improve a personal residence.
"The Revenue Reconciliation Act of 1993" (the "Tax Act") subjects tax-exempt
bonds to the market discount rules of the Code effective for bonds purchased
after April 30, 1993. In general, market discount is the amount (if any) by
which the stated redemption price at maturity exceeds an investor's purchase
price (except to the extent that such difference, if any, is attributable to
original issue discount not yet accrued). Market discount can arise based on
the price a Trust pays for Bonds or the price a Unitholder pays for his or her
Units. Under the Tax Act, accretion of market discount is taxable as ordinary
income; under prior law, the accretion had been treated as capital gain. Market
discount that accretes while a Trust holds a Bond would be recognized as
ordinary income by the Unitholders when principal payments are received on the
Bonds, upon sale or at redemption (including early redemption), or upon the sale
or redemption of his or her Units, unless a Unitholder elects to include market
discount in taxable income as it accrues.
We have also examined the laws of the State of Missouri to determine their
applicability to the Fund. It is our opinion that under Missouri law, as
presently enacted and construed:
(i) Each Trust is not an association taxable as a corporation for
Missouri income tax purposes.
(ii) The Unitholders of each Trust will be treated as the owners of a
pro rata portion of each Trust and the income of each Trust will therefore be
treated as income of the Unitholders under Missouri law.
(iii) Each Trust will not be subject to the Kansas City, Missouri
Earnings and Profits Tax and each Unitholder's share of income of each Trust
will not generally be subject to the Kansas City, Missouri Earnings and
Profits Tax or the City of St. Louis Earnings Tax (except in the case of
certain Unitholders, including corporations, otherwise subject to the St.
Louis City Earnings Tax).
<PAGE>
-6-
The scope of this opinion is expressly limited to the matters set forth
herein, and, except as expressly set forth above, we express no opinion with
respect to any other taxes, including state or local taxes or collateral tax
consequences with respect to the purchase, ownership and disposition of Units.
Very truly yours,
CHAPMAN AND CUTLER
<PAGE>
CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
February 22, 1995
Kemper Unit Investment Trusts,
a service of Kemper Securities, Inc.
77 West Wacker Drive, 29th Floor
Chicago, Illinois 60601
Investors Fiduciary Trust Company
127 West 10th Street
Kansas City, Missouri 64l05
Re: Kemper Defined Funds Series 30
(Corporate Income Series 3)
Gentlemen:
We have acted as counsel for Kemper Unit Investment Trusts, a service of
Kemper Securities, Inc., as Sponsor and Depositor of Kemper Defined Funds Series
30 (Corporate Income Series 3) (the "Trust"), in connection with the issuance of
Units of fractional undivided interest in the Trust, under a Trust Agreement
dated February 22, 1995 (the "Indenture") between Kemper Unit Investment Trusts,
a service of Kemper Securities, Inc., as Depositor and Evaluator, and Investors
Fiduciary Trust Company, as Trustee.
In this connection, we have examined the Registration Statement, the
Prospectus, the Indenture, and such other instruments and documents as we have
deemed pertinent.
The assets of the Trust will consist of a portfolio of high yield, high risk
corporate debt obligations (the "Corporate Bonds" or the "Obligations") as set
forth in the Prospectus. All Obligations have been issued after July 18, 1984.
Based upon the foregoing and upon an investigation of such matters of law as
we consider to be applicable, we are of the opinion that, under existing Federal
income tax law:
(i) The Trust is not an association taxable as a corporation but will be
governed by the provisions of subchapter J (relating to Trusts) of chapter 1,
Internal Revenue Code of 1986 (the "Code").
(ii) Each Unitholder will be considered as owning a pro rata share of
each asset of the Trust in the proportion that the number of Units held by
him bears
<PAGE>
-2-
to the total number of Units outstanding. Under subpart E, subchapter J of
chapter 1 of the Code, income of the Trust will be treated as income of each
Unitholder in the proportion described, and an item of Trust income will have
the same character in the hands of a Unitholder as it would have in the hands
of the Trustee. 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 the Trust. Each Unitholder will also be required to include in
taxable income for Federal income tax purposes, original issue discount with
respect to his interest in any Obligation held by the Trust which was issued
with original issue discount at the same time and in the same manner as
though the Unitholder were the direct owner of such interest. Original issue
discount will be treated as zero with respect to Corporate Bonds if it is "de
minimis" within the meaning of Section 1273 of the Code. If a Corporate Bond
is a "high-yield discount obligation" within the meaning of Section 163(e)(5)
of the Code, certain special rules may apply. A Unitholder may elect to
include in taxable income for Federal income tax purposes, market discount as
it accrues with respect to his interest in any Corporate Bond held by the
Trust which he is considered as having acquired with market discount at the
same time and in the same manner as though the Unitholder were the direct
owner of such interest.
(iii) The price a Unitholder pays for his Units, including sales
charges, is allocated among his pro rata portion of each Obligation held by
the Trust (in proportion to the fair market values thereof on the date the
Unitholder purchases his Units), in order to determine his initial cost for
his pro rata portion of each Obligation held by the Trust. In general,
original issue discount accrues daily under a constant interest rate method
which takes into account the semi-annual compounding of accrued interest.
(iv) Gain or loss will be recognized to a Unitholder upon redemption or
sale of his Units. Such gain or loss is measured by comparing the proceeds of
such redemption or sale with the adjusted basis of the Units represented by
his Certificate. Before adjustment, such basis would normally be cost if the
Unitholder had acquired his units by purchase. In addition, such basis will
be increased by the Unitholder's aliquot share of the accrued original issue
discount with respect to each Obligation held by the Trust with respect to
which there was original issue discount at the time such Obligation was
issued and by accrued market discount which the Unitholder has elected to
annually include in income with respect to each Corporate Bond and reduced by
the Unitholder's aliquot share of the amortized acquisition premium, if any,
which the Unitholder has properly elected to amortize under Section 171 of
the Code on each Obligation held by the Trust. The tax cost reduction
requirements of the Code relating to amortization of bond premium may, under
certain
<PAGE>
-3-
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.
(v) If the Trustee disposes of a Trust asset (whether by sale, exchange,
redemption, payment on maturity or otherwise) gain or loss will be recognized
to the Unitholder and the amount thereof will be measured by comparing the
Unitholder's aliquot share of the total proceeds from the transaction with
his basis for his fractional interest in the asset disposed of. Such basis is
ascertained by apportioning the tax basis for his Units (as of the date on
which his Units were acquired) among each of the Trust assets ratably
according to their values as of the valuation date nearest the date on which
he purchased such Units. A Unitholder's basis in his Units and of his
fractional interest in each Trust asset must be reduced by the Unitholder's
share of the amortized acquisition premium, if any, on Obligations held by
the Trust which the Unitholder has properly elected to amortize under Section
171 of the Code and must be increased by the Unitholder's share of the
accrued original issue discount with respect to each Obligation which, at the
time the Obligation was issued, had original issue discount and in the case
of a Corporate Bond, by accrued market discount which the Unitholder has
elected to annually include in income.
The Tax Reform Act of 1986 (the "Act"), among other things, provides that
certain itemized deductions, such as investment expenses, tax return preparation
fees and employee business expenses will be deductible by individuals 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 the Trust as miscellaneous itemized deductions subject to this limitation.
The Code provides a complex set of rules governing the accrual of original
issue discount. These rules provide that original issue discount generally
accrues on the basis of a constant compound interest rate. Special rules apply
if the purchase price of an Obligation 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 an
Obligation issued with original issue discount exceeds his pro rata portion of
its adjusted issue price. The application of these rules will also vary
depending on the value of the Obligation on the date a Unitholder acquires his
Units, and the price a Unitholder pays for his Units. 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 corporations.
<PAGE>
-4-
If a Unitholder's tax basis in his interest in any Corporate Bond held by
the Trust is less than his allocable portion of such Corporate Bond's stated
redemption price at maturity (or, if issued with original issue discount, his
allocable portion of its revised issue price on the date he buys his Units),
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.
Accrued market discount is generally includible in taxable income of the
Unitholders as ordinary income for Federal tax purposes upon the receipt of
serial principal payments on Corporate Bonds held by the Trust, on the sale,
maturity or disposition of such Corporate Bonds by the Trust and on the sale of
a Unitholder's 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 of any interest expense incurred by the Unitholder to
purchase or carry his Units will be reduced by such accrued market discount. In
general, the portion of any interest which is not currently deductible is
deductible when the accrued market discount is included in income upon the sale
or redemption of the Corporate Bonds or the sale of Units.
A Unitholder will recognize taxable gain (or loss) when all or part of the
pro rata interest in an Obligation is either sold by the Trust or redeemed or
when a Unitholder disposes of his Units in a taxable transaction, in each case
for an amount greater (or less) than his tax basis therefor.
Any gain recognized on a sale or exchange and not constituting a
realization of accrued "market discount" and any loss will, under current law,
generally be capital gain or loss except in the case of a dealer or financial
institution. As previously discussed, gain realized on the disposition of the
interest of a Unitholder in any Corporate Bond deemed to have been acquired by
the Unitholder 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.
If a 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 Corporate 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.
A Unit who is a foreign investor (i.e., an investor other than a U.S.
citizen or resident of U.S. corporation, partnership, estate or trust) will 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 or redemption of any Obligation
<PAGE>
-5-
held by the Trust 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
(a) the interest is United States source income (which is the case
for most securities issued by United States issuers), the debt
instrument is issued after July 18, 1984, 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 debt
instrument and the Unitholder is not a controlled foreign corporation
related (within the meaning of Section 864(d)(4) of the Code) to the
issuer of the debt instrument; or
(b) 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.
It should be noted that the "Revenue Reconciliation Act of 1993," includes
a provision which eliminates the exemption from United States taxation,
including withholding taxes, for certain "contingent interest." This 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.
We have also examined the laws of the State of Missouri to determine their
applicability to the Trust. It is our opinion that under Missouri law, as
presently enacted and construed:
(i) The Trust is not an association taxable as a corporation for
Missouri income tax purposes.
(ii) The Unitholders of the Trust will be treated as the owners of a pro
rata portion of the Trust and the income of the Trust will therefore be
treated as income of the Unitholders under Missouri law.
<PAGE>
-6-
(iii) The Trust will not be subject to the Kansas City, Missouri
Earnings and Profits Tax and each Unitholder's share of income of the Trust
will not generally be subject to the Kansas City, Missouri Earnings and
Profits Tax or the City of St. Louis Earnings Tax (except in the case of
certain Unitholders, including corporations, otherwise subject to the St.
Louis City Earnings Tax).
The scope of this opinion is expressly limited to the matters set forth
herein, and, except as expressly set forth above, we express no opinion with
respect to any other taxes, including state or local taxes or collateral tax
consequences with respect to the purchase, ownership and disposition of Units.
Very truly yours
CHAPMAN AND CUTLER
MJK/ch
<PAGE>
Exhibit 3.2
ORRICK, HERRINGTON & SUTCLIFFE
Old Federal Reserve Bank Building
400 Sansome Street
San Francisco, California 94111
February 22, 1995
Investors Fiduciary Trust Company
127 West 10th Street
Kansas City, Missouri 64105
Re: Kemper Defined Funds Series 30
Insured California Series 14
Dear Sirs:
We have acted as special California counsel for Kemper Unit Investment
Trust, a Service of Kemper Securities, Inc., as Depositor of Kemper Defined
Funds Series 30--Insured California Series 14 (the "Fund"), in connection with
the issuance under the Trust Indenture and Agreement dated February 22, 1995,
between Kemper Unit Investment Trust, a Service of Kemper Securities, Inc., as
Depositor, and Investors Fiduciary Trust Company, as Trustee, of 297,000 Units
of fractional undivided interest in the Fund (the "Units") in exchange for
certain bonds, as well as "regular-way" and "when-issued" contracts for the
purchase of bonds (such bonds and contracts are hereinafter referred to
collectively as the "Securities").
In connection therewith, we have examined such corporate records,
certificates and other documents and such questions of law as we have deemed
necessary or appropriate for the purpose of this opinion, and, on the basis of
such examination, and upon existing provisions of the Revenue and Taxation Code
of the State of California, we are of the opinion that:
1. The Fund is not an association taxable as a corporation and the
income of the Fund will be treated as the income of the certificateholders
under the income tax laws of California.
2. Amounts treated as interest on the underlying securities which
are exempt from tax under California personal income tax and property tax
laws when received by the Fund will, under such laws, retain their status
as tax-exempt interest when distributed to certificateholders. However,
interest on the underlying securities attributed to a certificateholder
which is a corporation subject to the California franchise tax laws may be
includable in its gross income for purposes of determining its California
franchise tax.
<PAGE>
Investors Fiduciary Trust Company
February 22, 1995
Page 2
3. Under California income tax law, each certificateholder in the
Fund will have a taxable event when the Fund disposes of a security
(whether by sale, exchange, redemption, or payment at maturity) or when the
certificateholder redeems or sells Units. Because of the requirement that
tax cost basis be reduced to reflect amortization of bond premium, under
some circumstances a certificateholder may realize taxable gain when Units
are sold or redeemed for an amount equal to, or less than, their original
cost. The total tax cost of each Unit to a certificateholder is allocated
among each of the bond issues held in the Fund (in accordance with the
proportion of the Fund comprised by each bond issue) in order to determine
his per unit tax cost for each bond issue; and the tax cost reduction
requirements relating to amortization of bond premium will apply separately
to the per unit cost of each bond issue. Certificateholders' bases in
their Units, and the bases for their fractional interest in each Fund
asset, may have to be adjusted for their pro rata share of accrued interest
received, if any, on securities delivered after the certificateholders'
respective settlement dates.
4. Under the California personal property tax laws, bonds (including
the Securities) or any interest therein is exempt from such tax.
5. Any proceeds paid under the insurance policy, if any, issued to
the Trustee of the Fund with respect to the Securities which represent
maturing interest on defaulted obligations held by the Trustee will be
exempt from California personal income tax if, and to the same extent as,
such interest would have been so exempt if paid by the issuer of the
defaulted obligations.
6. Under Section 17280(b)(2) of the California Revenue and Taxation
Code, interest on indebtedness incurred or continued to purchase or carry
Units of the Fund is not deductible for the purposes of the California
personal income tax. While there presently is no California authority
interpreting this provision, Section 17280(b)(2) directs the California
Franchise Tax Board to prescribe regulations determining the proper
allocation and apportionment of interest costs for this purpose. The
Franchise Tax Board has not yet proposed or prescribed such regulations.
In interpreting the generally similar Federal provision, the Internal
Revenue Service has taken the position that such indebtedness need not be
directly traceable to the purchase or carrying of Units (although the
Service has not contended that a deduction for interest on indebtedness
incurred to purchase or improve a personal residence or to purchase goods
or services for personal consumption will be disallowed). In the absence
of conflicting regulations or other California authority, the California
Franchise Tax Board generally has interpreted California statutory tax
provisions in accord with Internal Revenue Service interpretations of
similar Federal provisions.
Opinions relating to the validity of securities and the exemption of
interest thereon from State of California income tax are rendered by bond
counsel to the issuing authority at the time securities are issued and we have
relied solely upon such opinions, or as to
<PAGE>
Investors Fiduciary Trust Company
February 22, 1995
Page 3
securities not yet delivered, forms of such opinions contained in official
statements relating to such securities. Except in certain instances in which we
acted as bond counsel to issuers of securities, and as such made a review of
proceedings relating to the issuance of certain securities at the time of their
issuance, we have not made any review of proceedings relating to the issuance of
securities or the bases of bond counsels' opinion.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement (SEC No. 33-57693) relating to the Units referred to
above and to the use of our name and to the reference to our firm in said
Registration Statement and in the related Prospectus.
Very truly yours,
Orrick, Herrington & Sutcliffe
<PAGE>
Exhibit 3.3
Miller, Canfield, Paddock and Stone, P.L.C.
1400 North Woodward Avenue
Bloomfield Hills, Michigan 48303-2014
February 22, 1995
Kemper Unit Investment Trusts, a service
of Kemper Securities Group, Inc.
77 West Wacker Drive
Chicago, Illinois 60601
Investors Fiduciary Trust Company
127 West 10th Street
Kansas City, Missouri 64105
Re: Kemper Defined Funds State File 30
Insured Michigan Series 10
Gentlemen:
We have acted as special Michigan counsel to you as Depositor and
Trustee of Kemper Defined Funds State File 30 -- Insured Michigan Series 10 (the
"Insured Michigan Trust") referred to above (the "Fund") . You have asked that
we, acting in such capacity, render an opinion to you with respect to certain
matters relating to the issuance of the units of fractional undivided interest
in the Fund (the "Units") pursuant to a Registration Statement on Form S-6 filed
with the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Registration Statement").
You have requested our opinion as to the applicability to the Insured
Michigan Trust (the "Michigan Trust") and the holders of Units (the
"Unitholders") , each of which Units represents the ownership of a specified
fractional undivided interest in the assets of the Michigan Trust, of the
Michigan Income Tax Act (M.C.L.A. (S)(S)206.1 et seq.; M.S.A. (S)(S)7.557(101)
et seq.) (the "Michigan Income Tax"), the City Income Tax Act (M.C.L.A.
(S)(S)141.501 et seq.; M.S.A. (S)(S)5.3194(1) et seq.) , which incorporates the
"Uniform City Income Tax ordinance," the First Class School District excise tax
upon income (M.C.L.A. (S)380.451; M.S.A. (S)(S)15.4451) (collectively, the
"income tax laws"), the Michigan Single Business Tax Act (M.C.L.A. (S)(S)208.1
et seq.; M.S.A. (S)(S)7.558(1) et seq.) (the "Single Business Tax") and the
Michigan Tax on ownership of Intangible Personal Property (M.C.L.A.
(S)(S)205.131 et seq.; M.S.A. (S)(S)7.556(1) et seq.) (the "Intangibles Tax").
You have also requested our opinion regarding the tax status of proceeds payable
from an insurance policy to be obtained by either the Fund or by the issuer of
the Bonds involved, guaranteeing prompt payment of principal and interest on all
Bonds in the portfolio of the Fund.
The Michigan Trust, its formation, its proposed method of operation,
the rights of owners of Certificates representing Units, the nature of such
ownership and the portfolio of
<PAGE>
Miller, Canfield, Paddock and Stone
February 22, 1995
Page 2
investments of the Michigan Trust are described and set forth in the Prospectus
dated February 22, 1995, filed with the Securities and Exchange Commission in
Registration No. 33-57693. In giving our opinion set forth hereunder, we have
relied upon the facts contained in such Registration Statement, including the
fact that, at the respective dates of issuance of the underlying Debt
Obligations, opinions of bond counsel to the respective Michigan authorities
issuing such Debt Obligations were given with respect to the validity of the
Debt obligations and the exemption of the same, and of the interest thereon,
from Michigan taxation.
Based on the above, it is our opinion that:
The Michigan Trust and the owners of Units will, in our opinion, be
treated for purposes of the Michigan income tax laws and the Single Business Tax
in substantially the same manner as they are for purposes of the Federal income
tax laws, as currently enacted. Accordingly, we have relied upon the opinion of
Messrs. Chapman and Cutler as to the applicability of Federal income tax under
the Internal Revenue Code of 1986, as currently amended, to the Michigan Trust
and the Unitholders.
Under the income tax laws of the State of Michigan, the Michigan Trust
is not an association taxable as a corporation; the income of the Michigan Trust
will be treated as the income of the Unitholders of the Michigan Trust and be
deemed to have been received by them when received by the Michigan Trust.
Interest on the Debt Obligations in the Michigan Trust which is exempt from tax
under the Michigan income tax laws when received by the Michigan Trust will
retain its status as tax exempt interest to the Unitholders of the Michigan
Trust.
For purposes of the Michigan income tax laws, each Unitholder of the
Michigan Trust will be considered to have received his pro rata share of
interest on each Debt Obligation in the Michigan Trust when it is received by
the Michigan Trust, and each Unitholder will have a taxable event when the
Michigan Trust disposes of a Debt Obligation (whether by sale, exchange,
redemption or payment at maturity) or when the Unitholder redeems or sells his
Unit, to the extent the transaction constitutes a taxable event for Federal
income tax purposes. The tax cost of each Unit to a Unitholder will be
established and allocated for purposes of the Michigan income tax laws in the
same manner as such cost is established and allocated for Federal income tax
purposes.
Under the Michigan Intangibles Tax, the Michigan Trust is not taxable
and the pro rata ownership of the underlying Debt Obligations, as well as the
interest thereon, will be exempt to the Unitholders to the extent the Michigan
Trust consists of obligations of the State of Michigan or its political
subdivisions or municipalities, or of obligations of the Commonwealth of Puerto
Rico, Guam or of the United States Virgin Islands.
The Michigan Single Business Tax replaced the tax on corporate and
financial institution income under the Michigan Income Tax, and the intangible
tax with respect to those intangibles of persons subject to the Single Business
Tax the income from which would
<PAGE>
Miller, Canfield, Paddock and Stone
February 22, 1995
Page 3
be considered in computing the Single Business Tax. Persons are subject to the
Single Business Tax only if they are engaged in "business activity," as defined
in the Act. Under the Single Business Tax, both interest received by the
Michigan Trust on the underlying Debt Obligations and any amount distributed
from the Michigan Trust to a Unitholder, if not included in determining taxable
income for Federal income tax purposes, is also not included in the adjusted tax
base upon which the Single Business Tax is computed, of either the Michigan
Trust or the Unitholders. If the Michigan Trust or the Unitholders have a
taxable event for Federal income tax purposes when the Michigan Trust disposes
of a Debt Obligation (whether by sale, exchange, redemption or payment at
maturity) or the Unitholder redeems or sells his Unit, an amount equal to any
gain realized from such taxable event which was included in the computation of
taxable income for Federal income tax purposes (plus an amount equal to any
capital gain of an individual realized in connection with such event but
excluded in computing that individual's Federal taxable income) will be included
in the tax base against which, after allocation, apportionment and other
adjustments, the Single Business Tax is computed. The tax base will be reduced
by an amount equal to any capital loss realized from such a taxable event,
whether or not the capital loss was deducted in computing Federal taxable income
in the year the loss occurred. Unitholders should consult their tax advisor as
to their status under Michigan law.
Any proceeds paid under an insurance policy issued to the Trustee of
the Fund, or paid under individual policies obtained by issuers of Bonds, which,
when received by the Unitholders, represent maturing interest on defaulted
obligations held by the Trustee, will be excludable from the Michigan income tax
laws and the Single Business Tax if, and to the same extent as, such interest
would have been so excludable if paid by the issuer of the defaulted
obligations. While treatment under the Michigan Intangibles Tax is not premised
upon the characterization of such proceeds under the Internal Revenue Code, the
Michigan Department of Treasury should adopt the same approach as under the
Michigan income tax laws and the Single Business tax.
Chapman and Cutler of 111 West Monroe Street, Chicago, Illinois 60603,
are entitled to rely on this opinion as though it were addressed to them.
We also advise you that, as the Tax Reform Act of 1986 eliminates the
capital gain deduction for tax years beginning after December 31, 1986, the
federal adjusted gross income, the computation base for the Michigan Income Tax,
of a Unitholder will be increased accordingly to the extent such capital gains
are realized when the Michigan Trust disposes of a Debt obligation or when the
Unitholder redeems or sells a Unit, to the extent such transaction constitutes a
taxable event for Federal income tax purposes.
<PAGE>
Miller, Canfield, Paddock and Stone
February 22, 1995
Page 4
We hereby consent to the reference to Miller, Canfield, Paddock and
Stone under the heading "Michigan Tax Status" in the Prospectus relating to the
Michigan Trust which is part of the Registration Statement in Registration No.
33-57693 filed with the Securities and Exchange Commission under the Securities
Act of 1933, as amended, and to the filing of this opinion as an exhibit to said
registration statement.
Yours very truly,
Miller, Canfield, Paddock and Stone, P.L.C.
<PAGE>
EXHIBIT 4.1
Consent of Moody's Investors Service
Laura Levenstein 99 Church Street
Vice President New York, NY 10007
Structured Ratings 212-553-0319
Public Finance Department
February 22, 1995
Mr. Mike Thoms
Kemper Securities Group, Inc.
Unit Investment Trust
77 West Wacker Drive-29th Floor
Chicago, IL 60601
Re: Kemper Defined Funds, Insured National Series 14, Insured California Series
14 and Insured Michigan Series 10.
Dear Mr. Thoms:
Please be advised that once Moody's Investors Service has independently verified
the existence of insurance policies on all Bonds expected to be included in the
Trusts, we will assign Aaa ratings to the Units in the series of Trusts
described above. The ratings on the Units will reflect the portfolios of the
Trusts, which will be composed solely of securities covered by bond insurance
policies. The insurance companies issuing the policies are all rated Aaa by
Moody's.
Insurance guarantying the payments of principal and interest, when due, on the
Bonds in the portfolio of the Trust has been obtained from an insurance company
either by the Trust, by the Issuer of the Bonds involved, by a prior owner of
the Bonds or by the Sponsor prior to the deposit of such Bonds in the Trust. It
is important to note that the insurance relates only to the Bonds in the Trust
and does not directly insure the Units or assure payment of the market value
thereof. While as a result of such insurance the Units of the Trust will receive
a rating of "Aaa" by Moody's Investors Service, Moody's has indicated that
this rating is not a recommendation to buy, hold or sell Units. This rating
reflects Moody's determination that the Bonds in the portfolio of the Trust are
judged to be of the best quality. This rating does not reflect a determination
by Moody's that the Unitholder will receive all principal and interest payable
on such Bonds through their nominal maturity. This is due to the possibility
that the Trust may, for a variety of reasons, dispose of such Bonds, including
sales to meet redemptions, to pay expenses of the Trustee, to wind up the Trust
when the value of the Bonds in the Trust falls below a certain minimum amount
and for other reasons specified in the Indenture. Accordingly, while the "Aaa"
rating reflects that such Bonds in the portfolio carry the smallest degree of
credit risk and they are generally considered to be "gilt edged", this rating
does not assure a Unitholder that it will receive all principal and interest
payable on such Bonds through their nominal maturity.
<PAGE>
Page 2
This letter evidences our consent to the use of the name of Moody's Investors
Service in connection with the rating assigned to the Units in the registration
statement or prospectus relating to the Units or the Trusts. However, this
letter should not be construed as a consent by us, within the meaning of
Section 7 of the Securities Act of 1933, to the use of the name of Moody's
Investors Service in connection with the ratings assigned to the securities
contained in the Trust. You are hereby authorized to file a copy of this letter
with the Securities and Exchange Commission.
Please send us copies of the prospectus as soon as it is available, as well as
any mini-prospectus or other sales materials.
Please do not hesitate to call should you have any additional questions or
requests.
Sincerely,
Laura Levenstein
<PAGE>
Exhibit 4.2
Consent of Muller Data Corporation,
90 Fifth Avenue,
New York, New York 10011
Kemper Capital Markets, Inc.
Unit Investment Trusts
77 West Wacker Drive-29th Floor
Chicago, Illinois 60601-1994
RE: Kemper Defined Funds Corporate Income Series 3
Kemper Defined Funds Insured National Series 14
Kemper Defined Funds Insured California Series 14
Kemper Defined Funds Insured Michigan Series 10
Gentlemen:
We have examined Registration Statement File No. 33-57693 for the above
captioned trust. We hereby acknowledge that Muller Data Corporation is currently
acting as the evaluator for the trust. We hereby consent to the use in the
Registration Statement of the reference to Muller Data Corporation as evaluator.
In addition, we hereby confirm that the ratings indicated in the Registration
Statement for the respective bonds comprising the trust portfolio are the
ratings indicated in our Muniview data base as of the date of the Evaluation
Report.
You are hereby authorized to file a copy of this letter with the Securities and
Exchange Commission.
Sincerely,
/s/ Neil Edelstein
- ----------------------
Neil Edelstein,
Executive Vice President
NE/tg
<PAGE>
EXHIBIT 4.3
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS' CONSENT
-------------------------------------------------
We have issued our report dated February 22, 1995 on the statements of
condition and related bond portfolios of Kemper Defined Funds Series 30
(Corporate Income Series 3, Insured National Series 14, Insured California
Series 14 and Insured Michigan Series 10) as of February 22, 1995 contained in
the Registration Statement on Form S-6 and in the Prospectus. We consent to the
use of our report in the Registration Statement and in the Prospectus and to the
use of our name as it appears under the caption "Other Matters-Independent
Certified Public Accountants".
GRANT THORNTON LLP
Chicago, Illinois
February 22, 1995
