File No. 333-01445 CIK #910911
Securities and Exchange Commission
Washington, D. C. 20549
Post-Effective
Amendment No. 2
to
Form S-6
For Registration under the Securities Act of 1933
of Securities of Unit Investment Trusts Registered
on Form N-8B-2
EVEREN Unit Investment Trusts Series 43
Name and executive office address of Depositor:
Ranson & Associates, Inc.
250 North Rock Road, Suite 150
Wichita, Kansas 67206
Name and complete address of agent for service:
Robin Pinkerton
Ranson & Associates, Inc.
250 North Rock Road, Suite 150
Wichita, Kansas 67206
( X ) Check box if it is proposed that this filing will
become effective at 2:00 p.m. on April 30, 1998
pursuant to paragraph (b) of Rule 485.
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KEMPER DEFINED FUNDS AND EVEREN UNIT INVESTMENT TRUSTS
CORPORATE INCOME SERIES
DEFINED HIGH YIELD CORPORATE INCOME SERIES
INVESTMENT GRADE CORPORATE INCOME SERIES
Kemper Defined Funds and EVEREN Unit Investment Trusts Corporate
Income Series and Defined High Yield Corporate Income Series ("Corporate
Income Series") were formed for the purpose of providing a high level of
current income through investment in a fixed portfolio consisting
primarily of high yield, high risk corporate debt obligations issued
after July 18, 1984. Certain Series of the Trust may also contain high
yield, high risk dollar denominated foreign corporate debt obligations,
foreign sovereign debt obligations, limited partnership obligations or
zero coupon U.S. Treasury obligations.
Kemper Defined Funds and EVEREN Unit Investment Trusts Investment
Grade Corporate Income Series (the "Investment Grade Series") were formed
for the purpose of providing a high level of current income through
investment in a fixed portfolio consisting primarily of investment grade,
corporate debt obligations issued after July 18, 1984. The payment of
income is dependent upon the continuing ability of the issuers and/or
obligors to meet their respective obligations. See "Trust Portfolio -
Risk Factors."
MOST OF THE SECURITIES INCLUDED IN THE CORPORATE INCOME SERIES ONLY
ARE COMMONLY KNOWN AS "JUNK BONDS" AND ARE SUBJECT TO GREATER MARKET
FLUCTUATIONS AND POTENTIAL RISK OF LOSS OF INCOME AND PRINCIPAL THAN ARE
INVESTMENTS IN LOWER-YIELDING, HIGHER RATED FIXED INCOME SECURITIES. THE
SECURITIES INCLUDED IN EACH SUCH TRUST SHOULD BE VIEWED AS SPECULATIVE
AND AN INVESTOR SHOULD REVIEW HIS ABILITY TO ASSUME THE RISKS ASSOCIATED
WITH SPECULATIVE CORPORATE BONDS. THE PAYMENT OF INCOME IS DEPENDENT
UPON THE CONTINUING ABILITY OF THE ISSUERS AND/OR OBLIGORS TO MEET THEIR
RESPECTIVE OBLIGATIONS. SEE "TRUST PORTFOLIO-RISK FACTORS."
Units of the Trusts are not deposits of, or guaranteed by, any bank,
and Units are not federally insured or otherwise protected by the Federal
Deposit Insurance Corporation and involve investment risk including loss
of principal.
For foreign investors who are not United States citizens or
residents, interest income from a Trust may not be subject to federal
withholding taxes if certain conditions are met. See "Federal Tax
Status."
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SPONSOR: RANSON & ASSOCIATES, INC.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This Prospectus is in two parts. The investor is advised to read and
retain both parts of this Prospectus for future reference.
THE DATE OF THIS PART ONE PROSPECTUS
IS THAT DATE WHICH IS SET FORTH IN PART TWO OF THE PROSPECTUS.
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SUMMARY
Public Offering Price. The Public Offering Price per Unit will be
based upon a pro rata share of the bid prices of the Bonds in a Trust
plus or minus a pro rata share of cash, if any, in the Principal Account
held or owned by such Trust, Purchased Interest, if any, accrued interest
(or Daily Accrued Interest) plus the applicable sales charge. For sales
charges, see "Public Offering of Units-Public Offering Price." The sales
charge is reduced on a graduated scale as set forth under "Public
Offering of Units-Public Offering Price."
Interest and Principal Distributions. Distributions of the
estimated annual interest income to be received by a Trust, after
deduction of estimated expenses, will be made monthly. See
"Unitholders-Distributions to Unitholders" and "Essential Information" in
Part Two of this Prospectus Distributions of funds, if any, in the
Principal Account will be made as provided in "Unitholders-Distributions
to Unitholders."
Reinvestment. Each Unitholder may elect to have distributions of
principal or interest or both automatically invested without charge in
shares of certain Zurich Kemper Investments, Inc. mutual funds. See
"Distribution Reinvestment."
Estimated Long-Term Return and Estimated Current Return. The
Estimated Current Return is calculated by dividing the estimated net
annual interest income per Unit by the Public Offering Price. The
estimated net annual interest income per Unit will vary with changes in
fees and expenses of the Trustee, Sponsor and Evaluator and with the
principal prepayment, redemption, maturity, exchange or sale of Bonds
while the Public Offering Price will vary with changes in the offering
price of the underlying Bonds and with changes in the Purchased Interest,
if any, and accrued interest (or Daily Accrued Interest); therefore,
there is no assurance that the present Estimated Current Returns will be
realized in the future. The Estimated Long-Term Return is calculated
using a formula which (1) takes into consideration, and determines and
factors in the relative weightings of, the market values, yields (which
take into account the amortization of premiums and the accretion of
discounts) and estimated retirement dates of all of the Bonds in a Trust
and (2) takes into account the expenses and sales charge associated with
each Unit. Since the market values and estimated retirement dates of the
Bonds and the expenses of the Trust will change, there is no assurance
that the present Estimated Long-Term Return will be realized in the
future. The Estimated Current Return and Estimated Long-Term Return are
expected to differ because the calculation of Estimated Long-Term Return
reflects the estimated date and amount of principal returned while
Estimated Current Return calculations include only net annual interest
income and Public Offering Price.
Market for Units. While under no obligation to do so, the Sponsor
intends to maintain a market for the Units and to offer to repurchase
such Units at prices subject to change at any time which are based on the
aggregate bid side evaluation of the Bonds in a Trust Fund plus Purchased
Interest, if any, and accrued interest (or Daily Accrued Interest).
Risk Factors. Each Corporate Income Series Trust is comprised
primarily of securities rated below investment grade by Standard &
Poor's, Moody's Investors Service, Inc. or Duff & Phelps Credit Rating
Co., which securities are commonly referred to as "junk bonds." In
addition, certain of the securities in certain of the Trusts may be
obligations of foreign issuers. For special risks associated with the
Trusts, see "Trust Portfolios - Risk Factors."
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THE TRUST FUNDS
Each Series of the Trust is a unit investment trust created by the
Sponsor under the name Kemper Defined Funds Corporate Income Series,
Kemper Defined Funds Investment Grade Corporate Income Series, EVEREN
Unit Investment Trusts Corporate Income Series, EVEREN Unit Investment
Trusts Defined High Yield Corporate Income Series, or EVEREN Unit
Investment Trusts Investment Grade Corporate Income Series (the "Trusts"
or "Trust Funds," and each a "Trust"), all of which are similar, and each
of which was created under the laws of the State of Missouri or New York
pursuant to a trust indenture (the "Trust Agreement").* Ranson &
Associates, Inc. is the Sponsor and Evaluator of the Trusts and is
successor sponsor and evaluator of all unit investment trusts formerly
sponsored by EVEREN Unit Investment Trusts, a service of EVEREN
Securities, Inc. The Bank of New York is the Trustee of the Trusts as
successor to Investors Fiduciary Trust Company.
Each Corporate Income Series was formed for the purpose of providing
a high level of current income through investment in a fixed portfolio
consisting primarily of high yield, high risk corporate debt obligations
issued after July 18, 1984. Certain Series of the Trusts may also
contain high yield, high risk dollar denominated foreign corporate debt
obligations, foreign sovereign debt obligations, limited partnership
obligations or zero coupon U.S. Treasury obligations (collectively, the
"Obligations" or "Bonds"). There is, of course, no guarantee that a
Trust Fund's objective will be achieved.
Each Investment Grade Series was formed for the purpose of providing
a high level of current income through investment in a fixed portfolio
consisting primarily of investment grade, corporate debt obligations
issued after July 18, 1984 There is, of course, no guarantee that the
Trust Funds' objectives will be achieved.
A Trust Fund may be an appropriate investment vehicle for investors
who desire to participate in a portfolio of taxable fixed income
securities issued primarily by corporate obligors with greater
diversification than investors might be able to acquire individually.
Diversification of the Trust assets will not eliminate the risk of loss
always inherent in the ownership of securities. In addition, Bonds of
the type deposited in the Trust Funds often are not available in small
amounts.
Each Unit offered represents that undivided interest in the Trust
involved as indicated under "Essential Information" in Part Two of this
Prospectus. To the extent that any Units are redeemed by the Trustee,
the fractional undivided interest in such Trust represented by each
unredeemed Unit will increase or decrease accordingly, although the
actual interest in such Trust represented by such fraction will remain
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* Reference is made to the Trust Agreement for each Trust, and any
statements contained herein are qualified in their entirety by the
provisions of the appropriate Trust Agreement.
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unchanged. Units will remain outstanding until redeemed upon tender to
the Trustee by Unitholders, which may include the Sponsor, or until the
termination of the Trust Agreement.
An investment in Units should be made with an understanding of the
risks which an investment in fixed rate debt obligations may entail,
including the risk that the value of the portfolio and hence of the Units
will decline with increases in interest rates. The value of the
underlying Bonds will fluctuate inversely with changes in interest rates.
The uncertain economic conditions of recent years, together with the
fiscal measures adopted to attempt to deal with them, have resulted in
wide fluctuations in interest rates and, thus, in the value of fixed rate
debt obligations generally. The Sponsor cannot predict the degree to
which such fluctuations will continue in the future. Each Corporate
Income Series Trust is comprised primarily of securities rated below
investment grade by Standard & Poor's, Moody's Investor Service, Inc., or
Duff & Phelps Credit Rating Co., which securities are commonly referred
to as "junk bonds." For special risks associated with such securities,
see "Trust Portfolio-Risk Factors."
COMPENSATION FOR FOREIGN WITHHOLDING TAX
Certain of the Bonds in certain Series of the Trusts are subject to
non-U.S. ("foreign") withholding taxes. Certain issuers of Bonds which
are subject to foreign withholding taxes have generally agreed, subject
to certain exceptions, to make additional payments ("Additional
Payments") which together with other payments are intended to compensate
the holder of the Bond for the imposition of certain withholding taxes.
However, both the calculation of the Additional Payment and whether the
Additional Payment compensates the holder of the Bond for any related
penalties, interest or other charges imposed in connection with any
applicable foreign withholding taxes are likely to differ from Bond to
Bond. Moreover, the Additional Payment is itself treated as taxable
income to Unitholders for U.S. income tax purposes. The Additional
Payment may not be based upon a "gross-up" formula which would otherwise
compensate an investor for the tax liability triggered by the receipt of
the Additional Payment. For any of these reasons, an investor may not be
adequately compensated for the actual foreign withholding tax liabilities
incurred. If a Trust obtains a certificate from an issuer evidencing
payment of foreign withholding taxes with respect to a Bond, the Trust
will so notify Unitholders. A Unitholder is required to include in his
gross income the entire amount of interest paid on his pro rata portion
of the Bond including the amount of tax withheld therefrom and the amount
of any Additional Payment. However, if the foreign tax withheld
constitutes an income tax for which U.S. foreign tax credits may be
taken, the Unitholder may be able to obtain applicable foreign tax
credits (subject to statutory limitations) or deductions. See "Federal
Tax Status."
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FEDERAL TAX STATUS
For purposes of the following discussion and opinions, it is assumed
that each of the obligations is debt for Federal income tax purposes. In
the opinion of Chapman and Cutler, special counsel for the Sponsor, under
existing law:
1. Each Series of the Trust is not an association taxable as
a corporation for Federal income tax purposes.
2. Each Unitholder of the Trust is considered to be the owner
of a pro rata portion of each of a Trust's assets for Federal income
tax purposes under Subpart E, Subchapter J of Chapter 1 of the
Internal Revenue Code of 1986 (the "Code"); and the income will be
treated as income of the Unitholders. Each Unitholder will be
considered to have received his pro rata share of income derived
from each Trust asset when such income is received by a Trust. Each
Unitholder will also be required to include in taxable income for
Federal income tax purposes, original issue discount with respect to
his interest in any Bonds held by a Trust at the same time and in
the same manner as though the Unitholder were the direct owner of
such interest.
3. Each Unitholder will have a taxable event when a Bond is
disposed of (whether by sale, exchange, liquidation, redemption, or
payment at maturity) or when the Unitholder redeems or sells his
Units. A Unitholder's tax basis in his Units will equal his tax
basis in his pro rata portion of all the assets of the Trust. Such
basis is determined (before the adjustments described below) by
apportioning the tax basis for the Units among each of the Trust
assets according to value as of the valuation date nearest the date
of acquisition of the Units. Unitholders must reduce the tax basis
of their Units for their share of accrued interest received, if any,
on Bonds delivered after the date the Unitholders pay for their
Units to the extent such interest accrued on such Bonds before the
date the Trust acquired ownership of the Bonds (and the amount of
this reduction may exceed the amount of accrued interest paid to the
sellers), and, consequently, such Unitholders may have an increase
in taxable gain or reduction in capital loss upon the disposition of
such Units. Gain or loss upon the sale or redemption of Units is
measured by comparing the proceeds of such sale or redemption with
the adjusted basis of the Units. If the Trustee disposes of Bonds
(whether by sale, exchange, payment on maturity, redemption or
otherwise), gain or loss is recognized to the Unitholder (subject to
various nonrecognition provisions of the Code). The amount of any
such gain or loss is measured by comparing the Unitholders pro rata
share of the total proceeds from such disposition with his basis for
his fractional interest in the asset disposed of. The basis of each
Unit and of each Bond which was issued with original issue discount
(or which has market discount) (including any U.S. Treasury
obligations) must be increased by the amount of accrued original
issue discount (and accrued market discount if the Unitholder elects
to include market discount in income as it accrues) and the basis of
each Unit and of each Bond which was purchased by a Trust at a
premium must be reduced by the annual amortization of bond premium
which the Unitholder has properly elected to amortize under
Section 171 of the Code. The tax basis reduction requirements of
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the Code relating to amortization of bond premium may, under some
circumstances, result in the Unitholder realizing a taxable gain
when his Units are sold or redeemed for an amount equal to or less
than his original cost. The U.S. Treasury obligations held by a
Trust, if any, are treated as bonds that were originally issued at
an original issue discount provided, pursuant to a Treasury
Regulation (the "Regulation") issued on December 28, 1992, that the
amount of original issue discount determined under Section 1286 of
the Code is not less than a "de minimis" amount as determined
thereunder (as discussed below under "Original Issue Discount").
Because U.S. Treasury obligations represent interests in "stripped"
U.S. Treasury bonds, a Unitholder's initial cost for his pro rata
portion of each U.S. Treasury obligation held by a Trust (determined
at the time he acquires his Units, in the manner described above)
shall be treated as its "purchase price" by the Unitholder.
Original issue discount is effectively treated as interest for
Federal income tax purposes, and the amount of original issue
discount in this case is generally the difference between the Bond's
purchase price and its stated redemption price at maturity. A
Unitholder will be required to include in gross income for each
taxable year the sum of his daily portions of original issue
discount attributable to the Bonds held by a Trust as such original
issue discount accrues and will, in general, be subject to Federal
income tax with respect to the total amount of such original issue
discount that accrues for such year even though the income is not
distributed to the Unitholders during such year to the extent it is
not less than a "de minimis" amount as determined under the
Regulation. To the extent the amount of such discount is less than
the respective "de minimis" amount, such discount shall be treated
as zero. In general, original issue discount accrues daily under a
constant interest rate method which takes into account the semi-
annual compounding of accrued interest. In the case of U.S Treasury
obligations, this method will generally result in an increasing
amount of income to the Unitholders each year. Unitholders should
consult their tax advisers regarding the Federal income tax
consequences and accretion of original issue discount.
Limitations on Deductibility of Trust Expenses by Unitholders. Each
Unitholder's pro rata share of each expense paid by a Trust is deductible
by the Unitholder to the same extent as though the expense had been paid
directly by him. It should be noted that as a result of the Tax Reform
Act of 1986 (the "Act"), certain miscellaneous itemized deductions, such
as investment expenses, tax return preparation fees and employee business
expenses will be deductible by an individual only to the extent they
exceed 2% of such individual's adjusted gross income. Unitholders may be
required to treat some or all of the expenses paid by a Trust as
miscellaneous itemized deductions subject to this limitation.
Premium. If a Unitholder's tax basis of his pro rata portion in any
Bonds held by a Trust exceeds the amount payable by the issuer of the
Bond with respect to such pro rata interest upon the maturity of the
Bond, such excess would be considered premium which may be amortized by
the Unitholder at the Unitholder's election as provided in Section 171 of
the Code. Unitholders should consult their tax advisors regarding
whether such election should be made and the manner of amortizing
premium.
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Original Issue Discount. Certain of the Bonds in each Trust may
have been acquired with "original issue discount." In the case of any
Bonds in a Trust acquired with "original issue discount" that exceeds a
"de minimis" amount as specified in the Code or in the case of U.S.
Treasury obligations as specified in the Regulation, such discount is
includable in taxable income of the Unitholders on an accrual basis
computed daily, without regard to when payments of interest on such Bonds
are received. The Code provides a complex set of rules regarding the
accrual of original issue discount. These rules provide that original
issue discount generally accrues on the basis of a constant compound
interest rate over the term of the Bonds. Unitholders should consult
their tax advisers as to the amount of original issue discount which
accrues.
Special original issue discount rules apply if the purchase price of
the Bond by a Trust exceeds its original issue price plus the amount of
original issue discount which would have previously accrued based upon
its issue price (its "adjusted issue price"). Similarly these special
rules would apply to a Unitholder if the tax basis of his pro rata
portion of a Bond issued with original issue discount exceeds his pro
rata portion of its adjusted issue price. Unitholders should also
consult their tax advisers regarding these special rules.
It is possible that a corporate Bond that has been issued at an
original issue discount may be characterized as a "high-yield discount
obligation" within the meaning of Section 163(e)(5) of the Code. To the
extent that such an obligation is issued at a yield in excess of six
percentage points over the applicable Federal rate, a portion of the
original issue discount on such obligation will be characterized as a
distribution on stock (e.g., dividends) for purposes of the dividends
received deduction which is available to certain corporations with
respect to certain dividends received by such corporation.
Market Discount. If a Unitholder's tax basis in his pro rata
portion of Bonds is less than the allocable portion of such Bond's stated
redemption price at maturity (or, if issued with original issue discount,
the allocable portion of its "revised issue price"), such difference will
constitute market discount unless the amount of market discount is "de
minimis" as specified in the Code. Market discount accrues daily
computed on a straight line basis, unless the Unitholder elects to
calculate accrued market discount under a constant yield method. The
market discount rules do not apply to U.S. Treasury obligations because
they are stripped debt instruments subject to special original issue
discount rules as discussed above. Unitholders should consult their tax
advisors as to the amount of market discount which accrues.
Accrued market discount is generally includable in taxable income to
the Unitholders as ordinary income for Federal tax purposes upon the
receipt of serial principal payments on the Bonds, on the sale, maturity
or disposition of such Bonds by a Trust, and on the sale by a Unitholder
of Units, unless a Unitholder elects to include the accrued market
discount in taxable income as such discount accrues. If a Unitholder
does not elect to annually include accrued market discount in taxable
income as it accrues, deductions for any interest expense incurred by the
Unitholder which is incurred to purchase or carry his Units will be
reduced by such accrued market discount. In general, the portion of any
interest expense which was not currently deductible would ultimately be
deductible when the accrued market discount is included in income.
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Unitholders should consult their tax advisers regarding whether an
election should be made to include market discount in income as it
accrues and as to the amount of interest expense which may not be
currently deductible.
Computation of the Unitholder's Tax Basis. The tax basis of a
Unitholder with respect to his interest in a Bond is increased by the
amount of original issue discount (and market discount, if the Unitholder
elects to include market discount, if any, on the Bonds held by a Trust
in income as it accrues) thereon properly included in the Unitholder's
gross income as determined for Federal income tax purposes and reduced by
the amount of any amortized premium which the Unitholder has properly
elected to amortize under Section 171 of the Code. A Unitholder's tax
basis in his Units will equal his tax basis in his pro rata portion of
all of the assets of the Trust.
Recognition of Taxable Gain or Loss upon Disposition of Obligations
by a Trust or Disposition of Units. A Unitholder will recognize taxable
capital gain (or loss) when all or part of his pro rata interest in a
Bond is disposed of in a taxable transaction for an amount greater (or
less) than his tax basis therefor. As previously discussed, gain
realized on the disposition of the interest of a Unitholder in any Bond
deemed to have been acquired with market discount will be treated as
ordinary income to the extent the gain does not exceed the amount of
accrued market discount not previously taken into income. Any capital
gain or loss arising from the disposition of a Bond by a Trust or the
disposition of Units by a Unitholder will be short-term capital gain or
loss unless the Unitholder has held his Units for more than one year in
which case such capital gain or loss will be generally long-term. For
taxpayers other than corporations, net capital gains (which is defined as
net long-term capital gain over net short-term capital loss for a taxable
year) are subject to a maximum marginal stated tax rate of 28 percent.
However, it should be noted that legislative proposals are introduced
from time to time that affect tax rates and could affect relative
differences at which ordinary income and capital gains are taxed. The
tax basis reduction requirements of the Code relating to amortization of
bond premium may under some circumstances, result in the Unitholder
realizing taxable gain when his Units are sold or redeemed for an amount
equal to or less than his original cost.
"The Revenue Reconciliation Act of 1993" (the "Tax Act") raised tax
rates on ordinary income while capital gains remain subject to a 28
percent maximum stated rate. Because some or all capital gains are taxed
at a comparatively lower rate under the Tax Act, the Tax Act includes a
provision that characterizes 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.
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
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was made by the Unitholder to include market discount in income as it
accrues) as previously discussed.
Foreign Investors. A Unitholder who is a foreign investor (i.e., an
investor other than a U.S. citizen or resident or a U.S. corporation,
partnership, estate or trust) will generally not be subject to United
States federal income taxes, including withholding taxes, on interest
income (including any original issue discount) on, or any gain from the
sale or other disposition of, his pro rata interest in any Bond or the
sale of his Units provided that all of the following conditions are met:
(i) the interest income or gain is not effectively connected with the
conduct by the foreign investor of a trade or business within the United
States, (ii) if the interest is United States source income (which is the
case for most securities issued by United States issuers), and the Bond
is issued after July 18, 1984 (which is the case for each Bond held by a
Trust), the foreign investor does not own, directly or indirectly, 10% or
more of the total combined voting power of all classes of voting stock of
the issuer of the Bond and the foreign investor is not a controlled
foreign corporation related (within the meaning of Section 864(d)(4) of
the Code) to the issuer of the Bond, (iii) with respect to any gain, the
foreign investor (if an individual) is not present in the United States
for 183 days or more during his or her taxable year, and (iv) the foreign
investor provides all certification which may be required of his status
(foreign investors may contact the Sponsor to obtain a Form W-8 which
must be filed with the Trustee and refiled every three calendar years
thereafter). Foreign investors should consult their tax advisers with
respect to United States tax consequences of ownership of Units.
It should be noted that payments to a Trust of interest on the Bonds
of foreign companies may be subject to foreign withholding taxes and
Unitholders should consult their tax advisers regarding the potential tax
consequences relating to the payment of any such withholding taxes by
such Trust. Any interest withheld as a result thereof may nevertheless
be treated as income to the Unitholders. Because, under the grantor
trust rules, an investor is deemed to have paid directly his share of
foreign taxes that have been paid or accrued, if any, an investor may be
entitled to a foreign tax credit or deduction for United States tax
purposes with respect to such taxes. In addition, such Bonds may provide
for additional payments to investors intended to compensate them for any
foreign tax liability. (See "Compensation for Foreign Withholding Tax.")
Any such additional payments received by the Trust would constitute
taxable income to Unitholders. Investors should consult their tax
advisers with respect to foreign withholding taxes and foreign tax
credits.
It should be noted that the Tax Act includes a provision which
eliminates the exemption from United States taxation, including
withholding taxes, for certain "contingent interest." The provision
applies to interest received after December 31, 1993. No opinion is
expressed herein regarding the potential applicability of this provision
and whether United States taxation or withholding taxes could be imposed
with respect to income derived from the Units as a result thereof.
Unitholders and prospective investors should consult with their tax
advisers regarding the potential effect of this provision on their
investment in Units.
General. Each Unitholder (other than a foreign investor who has
properly provided the certifications described in the preceding
paragraph) will be requested to provide the Unitholder's taxpayer
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identification number to the Trustee and to certify that the Unitholder
has not been notified that payments to the Unitholder are subject to back-
up withholding. If the proper taxpayer identification number and
appropriate certification are not provided when requested, distributions
by a Trust to such Unitholder, including amounts received upon the
redemption of the Units, will be subject to back-up withholding.
The foregoing discussion relates only to United States Federal
income taxes; Unitholders may be subject to state and local taxation in
other jurisdictions (including a foreign investor's country of
residence). Unitholders should consult their tax advisers regarding
potential state, local, or foreign taxation with respect to the Units.
TAX REPORTING AND REALLOCATION
Because the Trusts receive interest and makes monthly distributions
based upon a Trust's expected total collections of interest and any
anticipated expenses, certain tax reporting consequences may arise. A
Trust is required to report Unitholder information to the Internal
Revenue Service ("IRS"), based upon the actual collection of interest by
such Trust on the securities in such Trust, without regard to such
Trust's expenses or to such Trust's payments to Unitholders during the
year. If distributions to Unitholders exceed interest collected, the
difference will be reported as a return of principal which will reduce a
Unitholder's cost basis in its Units (and its pro rata interest in the
securities in a Trust). A Unitholder must include in taxable income the
amount of income reported by a Trust to the IRS regardless of the amount
distributed to such Unitholder. If a Unitholder's share of taxable
income exceeds income distributions made by a trust to such Unitholder,
such excess is in all likelihood attributable to the payment of
miscellaneous expenses of such Trust which will not be deductible by an
individual Unitholder as an itemized deduction except to the extent that
the total amount of certain itemized deductions, such as investments
expenses (which would include the Unitholder's share of Trust expenses),
tax return preparation fees and employee business expenses, exceeds 2% of
such 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.
TRUST PORTFOLIOS
PORTFOLIO SELECTION
The selection of Bonds for each Series of a Trust was based largely
upon the experience and judgment of the Sponsor. In making such
selections the Sponsor considered the following factors: (a) the price
of the Bonds relative to other issues of similar quality and maturity;
(b) the present rating and credit quality of the issuers of the Bonds and
the potential improvement in the credit quality of such issuers; (c) the
diversification of the Bonds as to location of issuer; (d) the income to
the Unitholders of a Trust; (e) whether the Bonds were issued after
July 18, 1984; and (f) the stated maturity of the Bonds.
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<PAGE>
As of the Initial Date of Deposit for each Series, all of the Bonds
in a Corporate Income Series Trust were rated "Ba" or better by Moody's
Investors Service, Inc. or "BB" or better by Standard & Poor's or Duff &
Phelps Credit Rating Co. As of the Initial Date of Deposit, all of the
Bonds in an Investment Grade Series were rated "Baa" or better by Moody's
or "BBB" or better by Standard & Poor's or Duff & Phelps Credit Rating
Co. See "Description of Ratings" herein and "Schedule of Investments" in
Part Two of this Prospectus. Subsequent to the Initial Date of Deposit,
a Bond may cease to be so rated. If this should occur, a Trust would not
be required to eliminate the Bond from the Trust, but such event may be
considered in the Sponsor's determination to direct the Trustee to
dispose of such investment. See "Investment Supervision."
RISK FACTORS
General. An investment in Units of a Trust should be made with an
understanding of the risks that an investment in "high yield," high risk,
fixed rate, foreign and domestic corporate debt obligations or "junk
bonds" may entail, including increased credit risks and the risk that the
value of the Units will decline, and may decline precipitously, with
increases in interest rates. While the Bonds in an Investment Grade
Series are higher rated and generally thought to be less risky than lower
rated bonds, such Bonds are generally susceptible to the risks described
herein. In recent years there have been wide fluctuations in interest
rates and thus in the value of fixed-rate, debt obligations generally.
Securities such as those included in each Trust are, under most
circumstances, subject to greater market fluctuations and risk of loss of
income and principal than are investments in lower-yielding, higher rated
securities, and their value may decline precipitously because of
increases in interest rates not only because the increases in rates
generally decrease values but also because increased rates may indicate a
slowdown in the economy and a decrease in the value of assets generally
that may adversely affect the credit of issuers of high yield, high risk
securities resulting in a higher incidence of defaults among high yield,
high risk securities. A slowdown in the economy, or a development
adversely affecting an issuer's creditworthiness, may result in the
issuer being unable to maintain earnings or sell assets at the rate and
at the prices, respectively, that are required to produce sufficient cash
flow to meet its interest and principal requirements. For an issuer that
has outstanding both senior commercial bank debt and subordinated high
yield, high risk securities, an increase in interest rates will increase
that issuer's interest expense insofar as the interest rate on the bank
debt is fluctuating. However, many leveraged issuers enter into interest
rate protection agreements to fix or cap the interest rate on a large
portion of their bank debt. This reduces exposure to increasing rates
but reduces the benefit to the issuer of declining rates. The Sponsor
cannot predict future economic policies or their consequences or,
therefore, the course or extent of any similar market fluctuations in the
future. The portfolios consist of Obligations that, in many cases, do
not have the benefit of covenants that would prevent the issuer from
engaging in capital restructurings or borrowing transactions in
connection with corporate acquisitions, leveraged buy outs or
restructurings that could have the effect of reducing the ability of the
issuer to meet its obligations and might result in the ratings of the
Obligations and the value of the underlying portfolio being reduced.
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<PAGE>
The Obligations in certain Trusts consist of "high yield, high risk"
foreign and domestic corporate bonds and foreign sovereign debt
obligations. "High yield" or "junk" bonds, the generic names for
corporate bonds rated below BBB by Standard & Poor's or Duff & Phelps
Credit Rating Co. or below Baa by Moody's Investor Service, Inc., are
frequently issued by corporations in the growth stage of their
development, by established companies whose operations or industries are
depressed or by highly leveraged companies purchased in leveraged buyout
transactions. The market for high yield bonds is very specialized and
investors in it have been predominantly financial institutions. High
yield bonds are generally not listed on a national securities exchange.
Trading of high yield bonds, therefore, takes place primarily in over-the-
counter markets which consist of groups of dealer firms that are
typically major securities firms. Because the high yield bond market is
a dealer market, rather than an auction market, no single obtainable
price for a given bond prevails at any given time. Prices are determined
by negotiation between traders. The existence of a liquid trading market
for the Obligations may depend on whether dealers will make a market in
the Obligations. There can be no assurance that a market will be made
for any of the Obligations, that any market for the Obligations will be
maintained or of the liquidity of the Obligations in any markets made.
Not all dealers maintain markets in all high yield bonds. Therefore,
since there are fewer traders in these bonds than there are in
"investment grade" bonds, the bid-offer spread is usually greater for
high yield bonds than it is for investment grade bonds. The price at
which the Securities may be sold to meet redemptions and the value of a
Trust will be adversely affected if trading markets for the Obligations
are limited or absent. If the rate of redemptions is great, the value of
a Trust may decline to a level that requires liquidation (see
"Administration of the Trusts-Amendment and Termination").
Lower-rated securities tend to offer higher yields than higher-rated
securities with the same maturities because the creditworthiness of the
issuers of lower-rated securities may not be as strong as that of other
issuers. Moreover, if an Obligation is recharacterized as equity by the
Internal Revenue Service for Federal income tax purposes, the issuer's
interest deduction with respect to the Obligation will be disallowed and
this disallowance may adversely affect the issuer's credit rating.
Because investors generally perceive that there are greater risks
associated with the lower-rated securities in a Trust, the yields and
prices of these securities tend to fluctuate more than higher-rated
securities with changes in the perceived quality of the credit of their
issuers. In addition, the market value of high yield, high risk, fixed-
income securities may fluctuate more than the market value of higher-
rated securities since high yield, high risk, fixed-income securities
tend to reflect short-term credit development to a greater extent than
higher-rated securities. Lower-rated securities generally involve
greater risks of loss of income and principal than higher-rated
securities. Issuers of lower-rated securities may possess less
creditworthiness characteristics than issuers of higher-rated securities
and, especially in the case of issuers whose obligations or credit
standing have recently been downgraded, may be subject to claims by
debtholders, owners of property leased to the issuer or others which, if
sustained, would make it more difficult for the issuers to meet their
payment obligations. High yield, high risk bonds are also affected by
variables such as interest rates, inflation rates and real growth in the
economy. Therefore, investors should consider carefully the relative
risks associated with investment in securities which carry lower ratings.
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<PAGE>
The value of the Units reflects the value of the portfolio
securities, including the value (if any) of securities in default.
Should the issuer of any Obligation default in the payment of principal
or interest, a Trust may incur additional expenses seeking payment on the
defaulted Obligation. Because amounts (if any) recovered by a Trust in
payment under the defaulted Obligation may not be reflected in the value
of the Units until actually received by the Trust, and depending upon
when a Unitholder purchases or sells his Units, it is possible that a
Unitholder would bear a portion of the cost of recovery without receiving
any portion of the payment recovered.
High yield, high risk bonds are generally subordinated obligations.
The payment of principal (and premium, if any), interest and sinking fund
requirements with respect to subordinated obligations of an issuer is
subordinated in right of payment to the payment of senior obligations of
the issuer. Senior obligations generally include most, if not all,
significant debt obligations of an issuer, whether existing at the time
of issuance of subordinated debt or created thereafter. Upon any
distribution of the assets of an issuer with subordinated obligations
upon dissolution, total or partial liquidation or reorganization of or
similar proceeding relating to the issuer, the holders of senior
indebtedness will be entitled to receive payment in full before holders
of subordinated indebtedness will be entitled to receive any payment.
Moreover, generally no payment with respect to subordinated indebtedness
may be made while there exists a default with respect to any senior
indebtedness. Thus, in the event of insolvency, holders of senior
indebtedness of an issuer generally will recover more, ratably, than
holders of subordinated indebtedness of that issuer.
Obligations that are rated lower than BBB by Standard & Poor's or
Duff & Phelps or Baa by Moody's, respectively, should be considered
speculative as such ratings indicate a quality of less than investment
grade. Investors should carefully review the objective of the Trust and
consider their ability to assume the risks involved before making an
investment in the Trust. See "Description of Ratings" for a description
of speculative ratings issued by Standard & Poor's, Duff & Phelps and
Moody's.
Zero Coupon U.S. Treasury Obligations. Certain of the Bonds in a
Trust may be "zero coupon" U.S. Treasury bonds. See Part Two of this
Prospectus. Zero coupon bonds are purchased at a deep discount because
the buyer receives only the right to receive a final payment at the
maturity of the bond and does not receive any periodic interest payments.
The effect of owning deep discount bonds which do not make current
interest payments (such as the zero coupon bonds) is that a fixed yield
is earned not only on the original investment but also, in effect, on all
discount earned during the life of such income on such obligation at a
rate as high as the implicit yield on the discount obligation, but at the
same time eliminates the holder's ability to reinvest at higher rates in
the future. For this reason, zero coupon bonds are subject to
substantially greater price fluctuations during periods of changing
market interest rates than are securities of comparable quality which pay
interest.
Foreign Issuers. Certain of the Bonds in a Trust may be securities
of foreign issuers. It is appropriate for investors in such a Trust to
consider certain investment risks that distinguish investments in Bonds
of foreign issuers from those of domestic issuers. Those investment
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<PAGE>
risks include future political and economic developments, the possible
imposition of withholding taxes on interest income payable on the Bonds
held in a portfolio, the possible seizure or nationalization of foreign
deposits, the possible establishment of exchange controls or the adoption
of other foreign governmental restrictions (including expropriation,
burdensome or confiscatory taxation and moratoriums) which might
adversely affect the payment or receipt of payment of amounts due on the
Bonds. Investors should realize that, although a Trust invests in U.S.
dollar denominated investments, the foreign issuers which operate
internationally are subject to currency risks. The value of Bonds can be
adversely affected by political or social instability and unfavorable
diplomatic or other negative developments. In addition, because many
foreign issuers are not subject to the reporting requirements of the
Securities Exchange Act of 1934, there may, be less publicly available
information about the foreign issuer than a U.S. domestic issuer.
Foreign issuers also are not necessarily subject to uniform accounting,
auditing and financial reporting standards, practices and requirements
comparable to those applicable to U.S. domestic issuers.
Liquidity. The Bonds in a Trust may not have been registered under
the Securities Act of 1933 and may not be exempt from the registration
requirements of the Act. Most of the Bonds will not be listed on a
securities exchange. Whether or not the Bonds are listed, the principal
trading market for the Bonds will generally be in the over-the-counter
market. As a result, the existence of a liquid trading market for the
Bonds may depend on whether dealers will make a market in the Bonds.
There can be no assurance that a market will be made for any of the
Bonds, that any market for the Bonds will be maintained, or of the
liquidity of the Bonds in any markets made. The price at which the Bonds
may be sold to meet redemptions and the value of a Trust will be
adversely affected if trading markets for the Bonds are limited or
absent. A Trust may also contain nonexempt Bonds in registered form
which have been purchased on a private placement basis. Sales of these
Bonds may not be practicable outside the United States, but can generally
be made in U.S. institutions in the private placement market which may
not be as liquid as the general U.S. securities market. Since the
private placement market is less liquid, the prices received may be less
than would have been received had the markets been broader.
Exchange Controls. On the basis of the best information available
to the Sponsor at the present time none of the Bonds is subject to
exchange control restrictions under existing law which would materially
interfere with payment to a Trust of amounts due on the Bonds. However,
there can be no assurance that exchange control regulations might not be
adopted in the future which might adversely affect payments to a Trust.
In addition, the adoption of exchange control regulations and other legal
restrictions could have an adverse impact on the marketability of the
Bonds in a Trust and on the ability of a Trust to satisfy its obligation
to redeem Units tendered to the Trustee for redemption.
Jurisdiction over, and U.S. Judgments Concerning, Foreign Obligors.
Non-U.S issuers of the Bonds will generally not have submitted to the
jurisdiction of U.S. courts for purposes of lawsuits relating to those
Bonds. If a Trust contains Bonds of such an issuer, the Trust as a
holder of those obligations may not be able to assert its rights in U.S.
courts under the documents pursuant to which the Bonds are issued. Even
if a Trust obtains a U.S. judgment against a foreign obligor, there can
be no assurance that the judgment will be enforced by a court in the
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<PAGE>
country in which the foreign obligor is located. In addition, a judgment
for money damages by a court in the United States if obtained, will
ordinarily be rendered only in U.S. dollars. It is not clear, however,
whether, in granting a judgment, the rate of conversion of the applicable
foreign currency into U.S. dollars would be determined with reference to
the due date or the date the judgment is rendered. Courts in other
countries may have rules that are similar to, or different from, the
rules of the U.S. courts.
GENERAL TRUST INFORMATION
Because certain of the Bonds in the Trusts may from time to time
under certain circumstances be sold or redeemed or will mature in
accordance with their terms and because the proceeds from such events
will be distributed to Unitholders and will not be reinvested, no
assurance can be given that a Trust will retain for any length of time
its present size and composition. Neither the Sponsor nor the Trustee
shall be liable in any way for any default, failure or defect in any
Bond.
The Sponsor may not alter the portfolio of a Trust Fund except upon
the happening of certain extraordinary circumstances. See "Investment
Supervision." Certain of the Bonds may be subject to optional call or
mandatory redemption pursuant to sinking fund provisions, in each case
prior to their stated maturity. A bond subject to optional call is one
which is subject to redemption or refunding prior to maturity at the
option of the issuer, often at a premium over par. A refunding is a
method by which a bond issue is redeemed, at or before maturity, by the
proceeds of a new bond issue. A bond subject to sinking fund redemption
is one which is subject to partial call from time to time at par from a
fund accumulated for the scheduled retirement of a portion of an issue
prior to maturity. Special or extraordinary redemption provisions may
provide for redemption at par of all or a portion of an issue upon the
occurrence of certain circumstances, which may be prior to the optional
call dates shown in "Schedule of Investments" in Part Two of this
Prospectus. Redemption pursuant to optional call provisions is more
likely to occur, and redemption pursuant to special or extraordinary
redemption provisions may occur, when the Bonds have an offering side
evaluation which represents a premium over par, that is, when they are
able to be refinanced at a lower cost. The proceeds from any such call
or redemption pursuant to sinking fund provisions as well as proceeds
from the sale of Bonds and from Bonds which mature in accordance with
their terms, unless utilized to pay for Units tendered for redemption,
will be distributed to Unitholders and will not be used to purchase
additional Bonds for the affected Trust. Accordingly, any such call,
redemption, sale or maturity will reduce the size and diversity of a
Trust and the net annual interest income and may reduce the Estimated
Current Return and the Estimated Long-Term Return. See "Interest,
Estimated Long-Term Return and Estimated Current Return." The call,
redemption, sale or maturity of Bonds also may have tax consequences to a
Unitholder. See "Federal Tax Status." Information with respect to the
call provisions and maturity dates of the Bonds is contained in "Schedule
of Investments" in Part Two of this Prospectus.
To the best of the Sponsor's knowledge, there was no litigation
pending as of the Initial Date of Deposit for each Trust in respect of
any Bond which might reasonably be expected to have a material adverse
effect on the related Trust. At any time after the Initial Date of
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<PAGE>
Deposit, litigation may be instituted on a variety of grounds with
respect to the Bonds. The Sponsor is unable to predict whether any such
litigation may be instituted, or if instituted, whether such litigation
might have a material adverse effect on the related Trust. The Sponsor
and the Trustee shall not be liable in any way, for any default, failure
or defect in any Bond.
RETIREMENT PLANS
Units of the Trust Funds may be well suited for purchase by
Individual Retirement Accounts, Keogh Plans, pension funds and other
qualified retirement plans, certain of which are briefly described below.
Generally, capital gains and income received under each of the
foregoing plans are deferred from federal taxation. All distributions
from such plans are generally treated as ordinary income but may, in some
cases, be eligible for special income averaging or tax-deferred rollover
treatment. Investors considering participation in any such plan should
review specific tax laws related thereto and should consult their
attorneys or tax advisers with respect to the establishment and
maintenance of any such plan. Such plans are offered by brokerage firms
and other financial institutions. The Trust Funds will waive the $1,000
minimum investment requirement for IRA accounts. The minimum investment
is $250 for tax-deferred plans such as IRA accounts. Fees and charges
with respect to such plans may vary.
Individual Retirement Account-IRA. Any individual under age 70-1/2
may contribute the lesser of $2,000 or 100% of compensation to an IRA
annually. Such contributions are fully deductible if the individual (and
spouse if filing jointly) are not covered by a retirement plan at work.
The deductible amount an individual may contribute to an IRA will be
reduced $10 for each $50 of adjusted gross income over $25,000 ($40,000
if married, filing jointly or $0 if married, filing separately), if
either an individual or their spouse (if married, filing jointly) is an
active participant in an employer maintained retirement plan. Thus, if
an individual has adjusted gross income over $35,000 ($50,000 if married,
filing jointly or $0 if married, filing separately) and if an individual
or their spouse is an active participant in an employer maintained
retirement plan, no IRA deduction is permitted. Under the Internal
Revenue Code of 1986, as amended (the "Code"), an individual may make
nondeductible contributions to the extent deductible contributions are
not allowed. All distributions from an IRA (other than the return of
certain excess contributions) are treated as ordinary income for federal
income taxation purposes provided that under the Code an individual need
not pay tax on the return of nondeductible contributions. The amount
includable in income for the taxable year is the portion of the amount
withdrawn for the taxable year as the individual's aggregate deductible
IRA contributions bear to the aggregate balance of all IRAs of the
individual.
A participant's interest in an IRA must be, or commence to be,
distributed to the participant not later than April 1 of the calendar
year following the year during which the participant attains age 70-1/2.
Distributions made before attainment of age 59-1/2, except in the case of
the participant's death or disability, or where the amount distributed is
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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 has agreed to act as custodian for certain retirement
plan accounts. An annual fee, if not paid separately, will be assessed
by the Trustee and paid through the liquidation of shares of the
reinvestment account. An individual wishing the Trustee to act as
custodian must complete a Ranson UIT/IRA application and forward it along
with a check made payable to the Trustee. Certificates for Individual
Retirement Accounts cannot be issued.
DISTRIBUTION REINVESTMENT
Each Unitholder of a Trust may elect to have distributions of
principal (including capital gains, if any) or interest or both
automatically invested without charge in shares of any open-end mutual
fund underwritten or advised by Zurich Kemper Investments, Inc. which is
registered in the Unitholder's state of residence (the "Kemper Funds"),
other than those Kemper Funds sold with a contingent deferred sales
charge.
If individuals indicate they wish to participate in the Reinvestment
Program but do not designate a reinvestment fund, the Program Agent
referred to below will contact such individuals to determine which
reinvestment fund or funds they wish to elect. Since the portfolio
securities and investment objectives of such Kemper Funds generally will
differ significantly from those of the Trust Funds, Unitholders should
carefully consider the consequences before selecting such Kemper Funds
for reinvestment. Detailed information with respect to the investment
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objectives and the management of the Funds is contained in their
respective prospectuses, which can be obtained from the Sponsor upon
request. An investor should read the prospectus of the reinvestment fund
selected prior to making the election to reinvest. Unitholders who
desire to have such distributions automatically reinvested should inform
their broker at the time of purchase or should file with the Program
Agent a written notice of election.
Unitholders who are receiving distributions in cash may elect to
participate in distribution reinvestment by filing with the Program Agent
an election to have such distributions reinvested without charge. Such
election must be received by the Program Agent at least ten days prior to
the Record Date applicable to any distribution in order to be in effect
for such Record Date. Any such election shall remain in effect until a
subsequent notice is received by the Program Agent. See
"Unitholders-Distributions to Unitholders."
The Program Agent is the Trustee. All inquiries concerning
participation in distribution reinvestment should be directed to the
Program Agent at its unit investment trust office.
INTEREST, ESTIMATED LONG-TERM RETURN
AND ESTIMATED CURRENT RETURN
As of the opening of business on the date indicated therein, the
Estimated Long-Term Return and the Estimated Current Return for each
Trust Fund were as set forth in the "Essential Information" in Part Two
of this Prospectus. Estimated Current Return is calculated by dividing
the estimated net annual interest income per Unit by the Public Offering
Price. The estimated net annual interest income per Unit will vary with
changes in fees and expenses of the Trustee, the Sponsor and the
Evaluator and with the principal prepayment, redemption, maturity,
exchange or sale of the Bonds while the Public Offering Price will vary
with changes in the offering price of the underlying Bonds and with
changes in the Purchased Interest and Daily Accrued Interest; therefore,
there is no assurance that the present Estimated Current Return will be
realized in the future. Estimated Long-Term Return is calculated using a
formula which (1) takes into consideration, and determines and factors in
the relative weightings of, the market values, yields (which takes into
account the amortization of premiums and the accretion of discounts) and
estimated retirements of all the Bonds in a Trust and (2) takes into
account the expenses and sales charge associated with each Trust Unit.
Since the market values and estimated retirements of the Bonds and the
expenses of a Trust will change, there is no assurance that the present
Estimated Long-Term Return will be realized in the future. Estimated
Current Return and Estimated Long-Term Return are expected to differ
because the calculation of Estimated Long-Term Return reflects the
estimated date and amount of principal returned while Estimated Current
Return calculations include only net annual interest income and Public
Offering Price.
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PUBLIC OFFERING OF UNITS
Public Offering Price. Units of each Trust Fund are offered at the
Public Offering Price thereof. The Public Offering Price is based on the
aggregate bid side evaluations of the Bonds in each Trust Fund (as
determined pursuant to the terms of a contract with the Evaluator, by
Cantor Fitzgerald & Co., a non-affiliated firm regularly engaged in the
business of evaluating, quoting or appraising comparable securities),
plus or minus cash, if any, in the Principal Account held or owned by
such Trust Fund, Purchased Interest, if any, and accrued interest (or
Daily Accrued Interest) plus a sales charge based upon the dollar
weighted average maturity of such Trust Fund.
The sales charge is based upon the dollar weighted average maturity
of a Trust Fund and is determined in accordance with the table set forth
below. For purposes of this computation, Bonds will be deemed to mature
on their expressed maturity dates unless: (a) the Bonds have been called
for redemption or funds or securities have been placed in escrow to
redeem them on an earlier call date, in which case such call date will be
deemed to be the date upon which they mature; or (b) such Bonds are
subject to a "mandatory tender," in which case such mandatory, tender
will be deemed to be the date upon which they mature. The effect of this
method of sales charge computation will be that different sales charge
rates will be applied to a Trust Fund based upon the dollar weighted
average maturity of such Trust Fund's portfolio, in accordance with the
following schedule:
<TABLE>
<CAPTION>
DOLLAR PERCENT OF PERCENT OF
WEIGHTED AVERAGE PUBLIC OFFERING NET AMOUNT
YEARS TO MATURITY PRICE INVESTED
----------------- --------------- --------------
<S> <C> <C>
0 to .99 years 0.00% 0.000%
1 to 1.99 years 2.00 2.041%
2 to 3.99 years 3.50 3.627
4 to 9.99 years 4.50 4.712
10 or more years 5.50 5.820
</TABLE>
The sales charge per Unit will be reduced as set forth below:
<TABLE>
<CAPTION>
DOLLAR WEIGHTED AVERAGE
YEARS TO MATURITY*
2 TO 3.99 4 TO 9.99 10 OR MORE
--------- ---------- ----------
DOLLAR AMOUNT OF TRADE SALES CHARGE (% 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.
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<PAGE>
The reduced sales charges resulting from quantity discounts as shown
on the table above will apply to all purchases of Units on any one day by
the same purchaser from the same dealer and for this purpose purchases of
Units of a Trust Fund will be aggregated with concurrent purchases of
Units of any other unit investment trust that may be offered by the
Sponsor. Additionally, Units purchased in the name of a spouse or child
(under 21) of such purchaser will be deemed to be additional purchases by
such purchaser. The reduced sales charges will also be applicable to a
trust or other fiduciary purchasing for a single trust estate or single
fiduciary account.
Units may be purchased at the Public Offering Price less the
concession the Sponsor typically allows to dealers and other selling
agents for purchases (see "Public Distribution of Units") by investors
who purchase Units through registered investment advisers, certified
financial planners or registered broker-dealers who in each case either
charge periodic fees for financial planning, investment advisory or asset
management services, or provide such services in connection with the
establishment of an investment account for which a comprehensive "wrap
fee" charge is imposed.
The Sponsor intends to permit officers, directors and employees of
the Sponsor and Evaluator and at the discussion the Sponsor registered
representatives of selling firms to purchase Units of a Trust without a
sales charge, although a transaction processing fee may be imposed on
such trades.
The Public Offering Price per Unit of a Trust Fund on the date of
this Prospectus or on any subsequent date will vary from the amount
stated under "Essential Information" in Part Two of this Prospectus in
accordance with fluctuations in the prices of the underlying Bonds and
the amount of accrued interest on the Units. The aggregate bid side
evaluations of the Bonds shall be determined (a) on the basis of current
bid prices of the Bonds, (b) if bid price is not available for any
particular Bond, on the basis of current bid prices for comparable bonds,
(c) by determining the value of Bonds on the bid side of the market by
appraisal, or (d) by any combination of the above.
The foregoing evaluations and computations shall be made as of the
evaluation time stated under "Essential Information" in Part Two of this
Prospectus, on each business day effective for all sales made during the
preceding 24-hour period.
The interest on the Bonds deposited in a Trust Fund, less the
related estimated fees and expenses, is estimated to accrue in the annual
amounts per Unit set forth under "Essential Information" in Part Two of
this Prospectus. The amount of net interest income which accrues per
Unit may change as Bonds mature or are redeemed, exchanged or sold, or as
the expenses of a Trust Fund change or the number of outstanding Units of
a Trust Fund changes.
Although payment is normally made three business days following the
order for purchase, payment may be made prior thereto. A person will
become the owner of Units on the date of settlement provided payment has
been received. Cash, if any, made available to the Sponsor prior to the
date of settlement for the purchase of Units may be used in the Sponsor's
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business and may be deemed to be a benefit to the Sponsor, subject to the
limitations of the Securities Exchange Act of 1934. If a Unitholder
desires to have certificates representing Units purchased, such
certificates will be delivered as soon as possible following his written
request therefor. For information with respect to redemption of Units
purchased, but as to which certificates requested have not been received,
see "Redemption" below.
Accrued Interest. The Public Offering Price for Corporate Income
Series 3 and subsequent series and all Investment Grade Corporate Income
Series includes 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
although a Trust accrues such interest daily. Because of this, a Trust
always has an amount of interest earned but not yet collected by the
Trustee. For this reason, with respect to sales settling subsequent to
the First Settlement Date, the Public Offering Price of Units will have
added to it the proportionate share of accrued interest to the date of
settlement. Unitholders will receive on the next distribution date of a
Trust the amount, if any, of accrued interest paid on their Units.
In an effort to reduce the amount of accrued interest which would
otherwise have to be paid in addition to the Public Offering Price in the
sale of Units to the public, the Trustee will advance the amount of
accrued interest as of the First Settlement Date and the same will be
distributed to the Sponsor as the Unitholder of record as of the First
Settlement Date. Consequently, the amount of accrued interest to be
added to the Public Offering Price of Units will include only accrued
interest from the First Settlement Date to the date of settlement, less
any distributions from the Interest Account subsequent to the First
Settlement Date.
Because of the varying interest payment dates of the Securities,
accrued interest at any point in time will be greater than the amount of
interest actually received by the Trusts and distributed to Unitholders.
Therefore, there will always remain an item of accrued interest that is
added to the value of the Units. If a Unitholder sells or redeems all or
a portion of his Units, he will be entitled to receive his proportionate
share of the accrued interest from the purchaser of his Units. Since the
Trustee has the use of the funds held in the Interest Account for
distributions to Unitholders and since such Account is non-interest-
bearing to Unitholders, the Trustee benefits thereby.
Purchased and Daily Accrued Interest. The Public Offering Price for
Kemper Defined Funds Corporate Income Series l and 2 includes Purchased
and Daily Accrued Interest. Accrued interest consists of two elements.
The first element arises as a result of accrued interest which is the
accumulation of unpaid interest on a bond from the later of the last day
on which interest thereon was paid or the date of original issuance of
the bond. Interest on the coupon Bonds in a Trust Fund is paid semi-
annually to such Trust. A portion of the aggregate amount of such
accrued interest on the Bonds in a Trust to the First Settlement Date of
such Trust is referred to herein as "Purchased Interest." Included in
the Public Offering Price of Trust Units is the Purchased Interest. In
an effort to reduce the amount of Purchased Interest which would
otherwise have to be paid by Unitholders, the Trustee may have advanced a
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portion of the accrued interest to the Sponsor as the Unitholder of
record as of the First Settlement Date. The second element of accrued
interest arises because the estimated net interest on the Units in a
Trust Fund is accounted for daily on an accrual basis (herein referred to
as "Daily Accrued Interest"). Because of this, the Units always have an
amount of interest earned but not yet paid or reserved for payment. For
this reason, the Public Offering Price of Units will include the
proportionate share of Daily Accrued Interest to the date of settlement.
If a Unitholder sells or redeems all or a portion of his Units or if
the Bonds are sold or otherwise removed or if a Trust Fund is liquidated,
he will receive at that time his proportionate share of the Purchased
Interest, if any, and accrued interest (or Daily Accrued Interest)
computed to the settlement date in the case of sale or liquidation and to
the date of tender in the case of redemption in a Trust Fund.
Public Distribution of Units. The Sponsor has qualified the Units
for sale in a number of states. Units will be sold through dealers who
are members of the National Association of Securities Dealers, Inc. and
through others. Sales may be made to or through dealers at prices which
represent discounts from the Public Offering Price as set forth below.
Certain commercial banks are making Units of the Trust Funds available to
their customers on an agency basis. A portion of the sales charge paid
by their customers is retained by or remitted to the banks in the amounts
shown in the table below. Under the Glass-Steagall Act, banks are
prohibited from underwriting Trust Fund Units; however, the Glass-
Steagall Act does permit certain agency transactions and the banking
regulators have indicated that these particular agency transactions are
permitted under such Act. In addition, state securities laws on this
issue may differ from the interpretations of federal law expressed herein
and banks and financial institutions may be required to register as
dealers pursuant to state law. The Sponsor reserves the right to change
the discounts set forth below from time to time. In addition to such
discounts, the Sponsor may, from time to time, pay or allow an additional
discount, in the form of cash or other compensation, to dealers employing
registered representatives who sell, during a specified time period, a
minimum dollar amount of Units of the Trusts and other unit investment
trusts created by the Sponsor. The difference between the discount and
the sales charge will be retained by the Sponsor.
<TABLE>
<CAPTION>
DOLLAR WEIGHTED AVERAGE
YEARS TO MATURITY*
2 TO 3.99 4 TO 9.99 10 OR MORE
--------- ---------- ----------
DOLLAR AMOUNT OF TRADE DISCOUNT PER UNIT (% OF PUBLIC OFFERING PRICE)
- ---------------------- ----------------------------------------------
<S> <C> <C> <C>
$1,000 to $99,999 2.00% 3.00% 4.00%
$100,000 to $499,999 1.75 2.75 3.50
$500,000 to $999,999 1.50 2.50 3.00
$1,000,000 or more 1.25 2.25 2.50
</TABLE>
- ---------------------
*If the dollar weighted average maturity of a Trust Fund is from 1 to
1.99 years, the concession or agency commission is 1.00% of the Public
Offering Price.
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The Sponsor reserves the right to reject, in whole or in part, any
order for the purchase of Units.
Profits of Sponsor. The Sponsor will receive gross sales charges
equal to the percentage of the Public Offering Price of the Units of a
Trust stated under "Public Offering Price" and will pay a fixed portion
of such sales charges to dealers and agents. The Sponsor may also
realize additional profit or loss as a result of the possible change in
the daily evaluation of the Bonds in a Trust, since the value of its
inventory may increase or decrease.
MARKET FOR UNITS
While not obligated to do so, the Sponsor intends to, subject to
change at any time, maintain a market for Units of the Trusts offered
hereby and to continuously offer to purchase said Units at prices,
determined by the Evaluator, based on the aggregate bid prices of the
underlying Bonds, together with Purchased Interest, if any, and accrued
interest (or Daily Accrued Interest) to the expected dates of settlement.
Unitholders who wish to dispose of their Units should inquire of their
broker as to current market prices in order to determine whether there is
in existence any price in excess of the Redemption Price and, if so, the
amount thereof. The offering price of any Units resold by the Sponsor
will be in accord with that described in the currently effective
prospectus describing such Units. Any profit or loss resulting from the
resale of such Units will belong to the Sponsor. The Sponsor may suspend
or discontinue purchases of Units if the supply of Units exceeds demand,
or for other business reasons.
REDEMPTION
A Unitholder who does not dispose of Units as described above may
cause Units to be redeemed by the Trustee by making a written request to
the Trustee and, in the case of Units evidenced by a certificate, by
tendering such certificate to the Trustee, properly endorsed or
accompanied by a written instrument or instruments of transfer in form
satisfactory to the Trustee. Unitholders must sign the request, and such
certificate or transfer instrument, exactly as their names appear on the
records of the Trustee and on any certificate representing the Units to
be redeemed. If the amount of the redemption is $25,000 or less and the
proceeds are payable to the Unitholder(s) of record at the address of
record, no signature guarantee is necessary for redemptions by individual
account owners (including joint owners). Additional documentation may be
requested, and a signature guarantee is always required, from
corporations, executors, administrators, trustees, guardians or
associations. The signatures must be guaranteed by a participant in the
Securities Transfer Agents Medallion Program ("STAMP") or such other
signature guaranty program in addition to, or in substitution for, STAMP,
as may be accepted by the Trustee. A certificate should only be sent by
registered or certified mail for the protection of the Unitholder. Since
tender of the certificate is required for redemption when one has been
issued, Units represented by a certificate cannot be redeemed until the
certificate representing such Units has been received by the purchasers.
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Redemption shall be made by the Trustee on the third business day
following the day on which a tender for redemption is received (the
"Redemption Date") by payment of cash equivalent to the Redemption Price
for the Trust Fund, determined as set forth below under "Computation of
Redemption Price," as of the evaluation time stated under "Essential
Information" in Part Two of this Prospectus, next following such tender,
multiplied by the number of Units being redeemed. Any Units redeemed
shall be cancelled and any undivided fractional interest in a Trust Fund
extinguished. The price received upon redemption might be more or less
than the amount paid by the Unitholder depending on the value of the
Bonds in a Trust Fund at the time of redemption.
Under regulations issued by the Internal Revenue Service, the
Trustee is required to withhold a certain percentage of the principal
amount of a Unit redemption if the Trustee has not been furnished the
redeeming Unitholder's tax identification number in the manner required
by such regulations. Any amount so withheld is transmitted to the
internal Revenue Service and may be recovered by the Unitholder only when
filing a tax return. Under normal circumstances the Trustee obtains the
Unitholder's tax identification number from the selling broker. However,
any time a Unitholder elects to tender Units for redemption, such
Unitholder should make sure that the Trustee has been provided a
certified tax identification number in order to avoid this possible
"backup withholding." In the event the Trustee has not been previously
provided such number, one must be provided at the time redemption is
requested.
Any amounts paid on redemption representing interest shall be
withdrawn from the Interest Account to the extent that funds are
available for such purpose. All other amounts paid on redemption shall
be withdrawn from the Principal Account. The Trustee is empowered to
sell Bonds in order to make funds available for the redemption of Units.
Such sale may be required when Bonds would not otherwise be sold and
might result in lower prices than might otherwise be realized. To the
extent Bonds are sold, the size and diversity of a Trust Fund will be
reduced.
The right of redemption may be suspended and payment postponed
(1) for any period during which the New York Stock Exchange is closed,
other than customary weekend and holiday closings, or during which (as
determined by the Securities and Exchange Commission) trading on the New
York Stock Exchange is restricted; (2) for any period during which an
emergency exists as a result of which disposal by the Trustee of Bonds is
not reasonably practicable or it is not reasonably practicable to fairly
determine the value of the underlying Bonds in accordance with the Trust
Agreement; or (3) for such other period as the Securities and Exchange
Commission may by order permit. The Trustee is not liable to any person
in any way for any loss or damage which may result from any such
suspension or postponement.
Computation of Redemption Price. The Redemption Price for Units is
computed by the Evaluator as of the evaluation time stated under
"Essential Information" in Part Two of this Prospectus next occurring
after the tendering of a Unit for redemption and on any other business
day desired by it, by:
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A. adding: (1) the cash on hand in a Trust other than cash
deposited in such Trust to purchase Bonds not applied to the
purchase of such Bonds; (2) the aggregate value of each issue of the
Bonds held in such Trust as determined by the Evaluator on the basis
of bid prices therefor; and (3) Purchased and Daily Accrued
Interest;
B. deducting therefrom (1) amounts representing any
applicable taxes or governmental charges payable out of such Trust
Fund and for which no deductions have been previously made for the
purpose of additions to the Reserve Account described under
"Expenses of the Trusts"; (2) an amount representing estimated
accrued expenses of such Trust Fund, including but not limited to
fees and expenses of the Trustee (including legal and auditing
fees), the Sponsor and the Evaluator; (3) cash held for distribution
to Unitholders of record as of the business day prior to the
evaluation being made; and (4) other liabilities incurred by such
Trust Fund; and
C. finally dividing the results of such computation by the
number of Units of such Trust Fund outstanding as of the date
thereof.
UNITHOLDERS
Ownership of Units. Ownership of Units of a Trust will not be
evidenced by certificates unless a Unitholder or the Unitholder's
registered broker/dealer makes a written request to the Trustee.
Units are transferable by making a written request to the Trustee
and, in the case of Units evidenced by a certificate, by presenting and
surrendering such certificate to the Trustee properly endorsed or
accompanied by a written instrument or instruments of transfer which
should be sent by registered or certified mail for the protection of the
Unitholder. Unitholders must sign such written request, and such
certificate or transfer instrument (if applicable), exactly as their
names appear on the records of the Trustee and on any certificate
representing the Units to be transferred. Such signatures must be
guaranteed by a participant in the Securities Transfer Agents Medallion
Program ("STAMP") or such other signature guaranty program in addition
to, or in substitution for, STAMP, as may be accepted by the Trustee. In
certain instances the Trustee may require additional documents such as,
but not limited to, trust instruments, certificates of death,
appointments as executor or administrator or certificates of corporate
authority.
Units may be purchased and certificates, if requested, will be
issued in denominations of one Unit or any whole Unit multiple thereof
subject to any minimum investment requirement established by the Sponsor
from time to time. 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
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<PAGE>
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 a Trust,
including any portion of the proceeds from a disposition of Bonds which
represents accrued interest, is credited by the Trustee to the Interest
Account for such Trust. All other receipts are credited by the Trustee
to a separate Principal Account for such Trust. Assuming a Trust Fund
retains its original size and composition, after deduction of the fees
and expenses of the Trustee, Sponsor and Evaluator and reimbursements
(without interest) to the Trustee for any amounts advanced to such Trust
Fund, the Trustee will normally distribute on each Interest Distribution
Date (the fifteenth of the month) or shortly thereafter to Unitholders of
record of such Trust Fund on the preceding Record Date (the first day of
each month), an amount substantially equal to one-twelfth of such
Unitholders' pro rata share of the estimated net annual interest income
to the Interest Account.
Persons who purchase Units between a Record Date and a Distribution
Date will receive their first distribution on the second Distribution
Date following their purchase of Units. Since interest on the Bonds is
payable at varying intervals, usually in semi-annual installments, and
distributions of income are made to Unitholders at different intervals
from receipt of interest, the interest accruing to a Trust Fund may not
be equal to the amount of money received and available for distribution
from the Interest Account. Therefore, on each Distribution Date the
amount of interest actually deposited in the Interest Account and
available for distribution may be slightly more or less than the interest
distribution made. In order to eliminate fluctuations in interest
distributions resulting from such variances, the Trustee is authorized by
the Trust Agreement to advance such amounts as may be necessary to
provide interest distributions of approximately equal amounts. The
Trustee will be reimbursed, without interest, for any such advances from
funds available in the Interest Account.
The Trustee will distribute on each Distribution Date or shortly
thereafter, to each Unitholder of record of each Trust Fund on the
preceding Record Date, an amount substantially equal to such Unitholder's
pro rata share of the cash balance, if any, in the Principal Account
computed as of the close of business on the preceding Record Date.
However, no distribution will be required if the balance in the Principal
Account is less than $1.00 per 100 Units.
Statements to Unitholders. With each distribution, the Trustee will
furnish or cause to be furnished to each Unitholder a statement of the
amount of interest and the amount of other receipts, if any, which are
being distributed, expressed in each case as a dollar amount per Unit.
The accounts are required to be audited annually, at the related
Trust Fund's expense, by independent auditors designated by the Sponsor,
unless the Trustee determines that such an audit would not be in the best
interest of the Unitholders. The accountants' report will be furnished
by the Trustee to any Unitholder upon written request. Within a
reasonable period of time after the end of each calendar year, the
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Trustee shall furnish to each person who at any time during the calendar
year was a Unitholder a statement for such Unitholder's Trust, covering
the calendar year, setting forth:
A. As to the Interest Account: (1) The amount of interest
received on the Bonds, including amounts received as a portion of
the proceeds of any disposition of the Bonds; (2) the amount paid
from the Interest Account representing accrued interest of any Units
redeemed; (3) the deductions from the Interest Account for
applicable taxes, if any, fees and expenses (including auditing
fees) of the Trustee, the Sponsor and the Evaluator; (4) any amounts
credited by the Trustee to the Reserve Account described under
"Expenses of the Trusts"; and (5) the net amount remaining after
such payments and deductions, expressed both as a total dollar
amount and a dollar amount per Unit outstanding on the last business
day of such calendar year; and
B. As to the Principal Account: (1) The dates of the
maturity, liquidation or redemption of any of the Bonds and the net
proceeds received therefrom excluding any portion credited to the
Interest Account; (2) the amount paid from the Principal Account
representing the principal of any Units redeemed; (3) the deductions
from the Principal Account for payment of applicable taxes, if any,
fees and expenses (including auditing fees) of the Trustee, the
Sponsor and the Evaluator; (4) any amounts credited by the Trustee
to the Reserve Account described under "Expenses of the Trusts"; and
(5) the net amount remaining after distributions of principal and
deductions, expressed both as a dollar amount and as a dollar amount
per Unit outstanding on the last business day of the calendar year;
and
C. The following information: (1) A list of the Bonds as of
the last business day of such calendar year; (2) the number of Units
outstanding on the last business day of such calendar year; (3) the
Redemption Price based on the last evaluation made during such
calendar year; and (4) the amount actually distributed during such
calendar year from the Interest and Principal Accounts separately
stated, expressed both as total dollar amounts and as dollar amounts
per Unit outstanding on the Record Dates for each such distribution.
Rights of Unitholders. A Unitholder may at any time tender Units to
the Trustee for redemption. The death or incapacity of any Unitholder
will not operate to terminate a Trust nor entitle legal representatives
or heirs to claim an accounting or to bring any action or proceeding in
any court for partition or winding up of a Trust.
No Unitholder shall have the right to control the operation and
management of a Trust in any manner, except to vote with respect to the
amendment of the Trust Agreement or termination of the related Trust.
INVESTMENT SUPERVISION
The Sponsor may not alter the portfolio of a Trust by the purchase,
sale or substitution of Bonds, except in the special circumstances noted
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below. Thus, with the exception of the redemption or maturity of Bonds
in accordance with their terms, the assets of a Trust Fund will remain
unchanged under normal circumstances.
The Sponsor may direct the Trustee to dispose of Bonds the value of
which has been affected by certain adverse events including institution
of certain legal proceedings or decline in price or the occurrence of
other market factors, including advance refunding, so that in the opinion
of the Sponsor the retention of such Bonds in a Trust Fund would be
detrimental to the interest of the Unitholders. The proceeds from any
such sales, exclusive of any portion which represents accrued interest,
will be credited to the Principal Account of a Trust Fund for
distribution to the Unitholders.
The Sponsor is required to instruct the Trustee to reject any offer
made by an issuer of Bonds to issue new obligations in exchange or
substitution for any of such Bonds pursuant to a refunding or refinancing
plan, except that the Sponsor may instruct the Trustee to accept or
reject such an offer or to take any other action with respect thereto as
the Sponsor may deem proper if (1) the issuer is in default with respect
to such Bonds or (2) in the written opinion of the Sponsor the issuer
will probably default with respect to such Bonds in the reasonably
foreseeable future. Any obligation so received in exchange or
substitution will be held by the Trustee subject to the terms and
conditions of the Trust Agreement to the same extent as Bonds originally
deposited thereunder. Within five days after the deposit of obligations
in exchange or substitution for underlying Bonds, the Trustee is required
to give notice thereof to each Unitholder, identifying the Bonds
eliminated and the Bonds substituted therefor.
The Trustee may sell Bonds, designated by the Sponsor, from a Trust
Fund for the purpose of redeeming Units of such Trust Fund tendered for
redemption and the payment of expenses.
ADMINISTRATION OF THE TRUSTS
The Trustee. The Trustee is The Bank of New York, a trust company
organized under the laws of New York. The Bank of New York has its unit
investment trust division offices at 101 Barclay Street, New York, New
York 10286, telephone 1-800-701-8178. The Bank of New York is subject to
supervision and examination by the Superintendent of Banks of the State
of New York and the Board of Governors of the Federal Reserve System, and
its deposits are insured by the Federal Deposit Insurance Corporation to
the extent permitted by law.
The Trustee, whose duties are ministerial in nature, has not
participated in selecting the portfolio of any Trust. For information
relating to the responsibilities of the Trustee under the Trust
Agreement, reference is made to the material set forth under
"Unitholders."
In accordance with the Trust Agreement, the Trustee shall keep
records of all transactions at its office. Such records shall include
the name and address of, and the number of Units held by, every
Unitholder of a Trust. Such books and records shall be open to
inspection by any Unitholder of the related Trust Fund at all reasonable
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times during usual business hours. The Trustee shall make such annual or
other reports as may from Time to lime be required under any applicable
state or federal statute, rule or regulation. The Trustee shall keep a
certified copy or duplicate original of the Trust Agreement on file in
its office available for inspection at all reasonable times during usual
business hours by any Unitholder, together with a current list of the
Bonds held in each Trust Fund. Pursuant to the Trust Agreement, the
Trustee may employ one or more agents for the purpose of custody and
safeguarding of the Bonds comprising a Trust Fund.
Under the Trust Agreement, the Trustee or any successor trustee may
resign and be discharged of the trust created by the Trust Agreement by
executing an instrument in writing and filing the same with the Sponsor.
The Trustee or successor trustee must mail a copy of the notice of
resignation to all Unitholders then of record, not less than 60 days
before the date specified in such notice when such resignation is to take
effect. The Sponsor upon receiving notice of such resignation is
obligated to appoint a successor trustee promptly. If, upon such
resignation, no successor trustee has been appointed and has accepted the
appointment within 30 days after notification, the retiring Trustee may
apply to a court of competent jurisdiction for the appointment of a
successor. The Sponsor may remove the Trustee at any time with or
without cause and appoint a successor trustee as provided in the Trust
Agreement. Notice of such removal and appointment shall be mailed to
each Unitholder by the Sponsor. Upon execution of a written acceptance
of such appointment by such successor trustee, all the rights, powers,
duties and obligations of the original Trustee shall vest in the
successor. The Trustee must be a corporation organized under the laws of
the United States, or any state thereof, be authorized under such laws to
exercise trust powers and have at all times an aggregate capital, surplus
and undivided profits of not less than $5,000,000.
The Sponsor. Ranson & Associates, Inc., the Sponsor of the Trusts,
is an investment banking firm created in 1995 by a number of former
owners and employees of Ranson Capital Corporation. On November 26,
1996, Ranson & Associates, Inc. purchased all existing unit investment
trusts sponsored by EVEREN Securities, Inc. Accordingly, Ranson &
Associates is the successor sponsor to unit investment trusts formerly
sponsored by EVEREN Unit Investment Trusts, a service of EVEREN
Securities, Inc. Ranson & Associates, is also the sponsor and successor
sponsor of Series of The Kansas Tax-Exempt Trust and Multi-State Series
of The Ranson Municipal Trust. Ranson & Associates, Inc. is the
successor to a series of companies, the first of which was originally
organized in Kansas in 1935. During its history, Ranson & Associates,
Inc. and its predecessors have been active in public and corporate
finance and have sold bonds and unit investment trusts and maintained
secondary market activities relating thereto. At present, Ranson &
Associates, Inc., which is a member of the National Association of
Securities Dealers, Inc., is the sponsor to each of the above-named unit
investment trusts and serves as the financial advisor and as an
underwriter for issuers in the Midwest and Southwest, especially in
Kansas, Missouri and Texas. The Company's offices are located at 250
North Rock Road, Suite 150, Wichita, Kansas 67206-2241.
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If at any time the Sponsor shall fail to perform any of its duties
under the Trust Agreement or shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or shall have its affairs taken over by
public authorities, then the Trustee may (a) appoint a successor sponsor
at rates of compensation deemed by the Trustee to be reasonable and not
exceeding such reasonable amounts as may be prescribed by the Securities
and Exchange Commission, or (b) terminate the Trust Agreement and
liquidate a Trust Fund as provided therein or (c) continue to act as
Trustee without terminating the Trust Agreement.
The foregoing financial information with regard to the Sponsor
relates only to the Sponsor and not to any Trust Fund. Such information
is included in this Prospectus only for the purpose of informing
investors as to the financial responsibility of the Sponsor and its
ability to carry out its contractual obligations with respect to the
Trust Funds. More comprehensive financial information can be obtained
upon request from the Sponsor.
The Evaluator. The Sponsor also serves as Evaluator. The Evaluator
may resign or be removed by the Trustee in which event the Trustee is to
use its best efforts to appoint a satisfactory successor. Such
resignation or removal shall become effective upon acceptance of
appointment by the successor evaluator. If upon resignation of the
Evaluator no successor has accepted appointment within 30 days after
notice of resignation, the Evaluator may apply to a court of competent
jurisdiction for the appointment of a successor. Notice of such
resignation or removal and appointment shall be mailed by the Trustee to
each Unitholder. At the present time, pursuant to a contract with the
Evaluator, Cantor Fitzgerald & Co., a non-affiliated firm regularly
engaged in the business of evaluating, quoting or appraising comparable
securities, provides portfolio evaluations of the Bonds in each Trust
Fund which are then reviewed by the Evaluator. In the event the Sponsor
is unable to obtain current evaluations from Cantor Fitzgerald & Co., it
may make its own evaluations or it may utilize the services of any other
non-affiliated evaluator or evaluators it deems appropriate.
Amendment and Termination. The Trust Agreement may be amended by
the Trustee and the Sponsor without the consent of any of the
Unitholders: (1) to cure any ambiguity or to correct or supplement any
provision which may be defective or inconsistent; (2) to change any
provision thereof as may be required by the Securities and Exchange
Commission or any successor governmental agency; or (3) to make such
provisions as shall not adversely affect the interests of the Unitholders
(as determined in good faith by the Sponsor and the Trustee). The Trust
Agreement may also be amended in any respect by the Sponsor and the
Trustee, or any of the provisions thereof may be waived, with the consent
of the holders of Units representing 66-1/3% of the Units then
outstanding of a Trust Fund, provided that no such amendment or waiver
will reduce the interest of any Unitholder thereof without the consent of
such Unitholder or reduce the percentage of Units required to consent to
any such amendment or waiver without the consent of all Unitholders of
the related Trust. Except in accordance with the provisions of the Trust
Agreement, in no event shall the Trust Agreement be amended to increase
the number of Units of the Trust issuable thereunder or to permit the
acquisition of any Bonds in addition to or in substitution for those
initially deposited in a Trust Fund (other than as provided in the Trust
Agreement). The Trustee shall promptly notify Unitholders of the
substance of any such amendment.
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<PAGE>
The Trust Agreement provides that a Trust Fund shall terminate upon
the maturity, redemption or other disposition of the last of the Bonds
held in such Trust Fund, but in no event later than the Mandatory
Termination Date set forth under "Essential Information" in Part Two of
this Prospectus. If the value of a Trust Fund shall be less than the
applicable minimum value stated under "Essential Information" in Part Two
of this Prospectus (40% of the aggregate principal amount of Bonds
deposited in such Trust), the Trustee may, in its discretion, and shall,
when so directed by the Sponsor, terminate such Trust Fund. A Trust Fund
may be terminated at any time by the holders of Units representing 66-
2/3% of the Units thereof then outstanding. In the event of termination
of a Trust Fund, written notice thereof will be sent by the Trustee to
all Unitholders of such Trust Fund. Within a reasonable period after
termination, the Trustee will sell any Bonds remaining in such Trust Fund
and, after paying all expenses and charges incurred by such Trust Fund,
will distribute to Unitholders thereof (upon surrender for cancellation
of certificates for Units, if issued) their pro rata share of the
balances remaining in the Interest and Principal Accounts of such Trust
Fund.
Limitations on Liability. The Sponsor: The Sponsor is liable for
the performance of its obligations arising from its responsibilities
under the Trust Agreement, but will be under no liability to the
Unitholders for taking any action or refraining from any action in good
faith pursuant to the Trust Agreement or for errors in judgment, except
in cases of its own gross negligence, bad faith or willful misfeasance in
the performance of its duties or by reason of its reckless disregard of
its obligations and duties under the Trust Agreement. The Sponsor shall
not be liable or responsible in any way for depreciation or loss incurred
by reason of the sale of any Bonds.
The Trustee: The Trust Agreement provides that the Trustee shall be
under no liability for any action taken in good faith in reliance upon
prima facie properly executed documents or for the disposition of monies,
Bonds or certificates except by reason of its own negligence, bad faith
or willful misfeasance in the performance of its duties or by reason of
its reckless disregard of its obligations and duties under the Trust
Agreement. The Trustee shall not be liable or responsible in any way for
depreciation or loss incurred by reason of the sate by the Trustee of any
Bonds. In the event that the Sponsor shall fail to act, the Trustee may
act and shall not be liable for any such action taken by it in good
faith. The Trustee shall not be personally liable for any taxes or other
governmental charges imposed upon or in respect of the Bonds or upon the
interest thereon.
The Evaluator: The Trustee and Unitholders may rely on any
evaluation furnished by the Evaluator and shall have no responsibility
for the accuracy thereof. The Trust Agreement provides that the
determinations made by the Evaluator shall be made in good faith upon the
basis of the best information available to it, provided, however, that
the Evaluator shall be under no liability to the Trustee or Unitholders
for errors in judgment, but shall be liable only for its gross
negligence, bad faith or willful misfeasance in the performance of its
duties or by reason of its reckless disregard of its obligations and
duties under the Trust Agreement.
-31-
<PAGE>
EXPENSES OF THE TRUSTS
The Sponsor will not charge the Trusts any fees for services
performed as Sponsor, except that the Sponsor shall receive an annual
surveillance fee, which is not to exceed the amount set forth under
"Essential Information" in Part Two of this Prospectus for providing
portfolio surveillance services for the Trusts. Such fee (which is based
on the largest number of Units outstanding during each year) may exceed
the actual costs of providing such surveillance services for a Trust, but
at no time will the total amount received for portfolio surveillance
services rendered to a Trust and to any other unit investment trusts
sponsored by the Sponsor for which it provides portfolio surveillance
services in any calendar year exceed the aggregate cost to the Sponsor of
supplying such services in such year. The foregoing fees may be
increased without approval of the Unitholders by amounts not exceeding
proportionate increases under the category "All Services Less Rent of
Shelter" in the Consumer Price Index published by the United States
Department of Labor or, if such category is no longer published, in a
comparable category. The Sponsor will receive a portion of the sales
commissions paid in connection with the purchase of Units and will retain
the profits, if any, related to the deposit of Bonds in a Trust Fund.
The Sponsor has borne all the expenses of creating and establishing the
Trusts including the cost of the initial preparation, printing and
execution of the Prospectus, Trust Agreement and certificates, legal and
accounting expenses, advertising and selling expenses, payment of closing
fees, the expenses of the Trustee, evaluation fees relating to the
deposit and other out-of-pocket expenses.
The Trustee receives for its services the fee set forth under
"Essential Information" in Part Two of this Prospectus. The Trustee's
fee which is calculated monthly is based on the largest aggregate
principal amount of Bonds in each Trust Fund at any time during the
period. Funds that are available for future distributions, redemptions
and payment of expenses are held in accounts which are non-interest
bearing to Unitholders and are available for use by the Trustee pursuant
to normal banking procedures; however, the Trustee is also authorized by
the Trust Agreement to make from time to time certain non-interest
bearing advances to a Trust Fund. The Trustee's fee is payable on or
before each Distribution Date. See "Unitholders-Distributions to
Unitholders."
For evaluation of the Bonds, the Evaluator shall receive a fee,
payable monthly, calculated on the basis of that annual rate set forth
under "Essential Information" in Part Two of this Prospectus based upon
the largest aggregate principal amount of Bonds in the related Trust Fund
at any time during such monthly period.
The Trustee's fees, the Evaluator's fees and the surveillance fees
are deducted from the Interest Account of the appropriate Trust Fund to
the extent funds are available and then from the Principal Account of
such Trust. Such fees may be increased without approval of Unitholders
by amounts not exceeding a proportionate increase in the Consumer Price
index entitled "All Services Less Rent of Shelter," published by the
United States Department of Labor, or any equivalent index substituted
therefor.
-32-
<PAGE>
The following additional charges are or may be incurred by a Trust
Fund: (a) fees for the Trustee's extraordinary services; (b) expenses of
the Trustee (including legal and auditing expenses, but not including any
fees and expenses charged by any agent for custody and safeguarding of
Bonds); (c) various governmental charges; (d) expenses and costs of any
action taken by the Trustee to protect such Trust or the rights and
interests of the Unitholders; (e) indemnification of the Trustee for any
loss, liability or expense incurred by it in the administration of such
Trust not resulting from gross negligence, bad faith or willful
misconduct on its part; (f) indemnification of the Sponsor for any loss,
liability or expense incurred in acting in that capacity without gross
negligence, bad faith or willful misconduct; and (g) expenditures
incurred in contacting Unitholders upon termination of such Trust Fund.
The fees and expenses set forth herein are payable out of a Trust and,
when owing to the Trustee, are secured by a lien on such Trust.
Fees and expenses of a Trust Fund shall be deducted from the
Interest Account thereof, or, to the extent funds are not available in
such Account, from the Principal Account. The Trustee may withdraw from
the Principal Account or the Interest Account such amounts, if any, as it
deems necessary to establish a reserve for any taxes or other
governmental charges or other extraordinary expenses payable out of a
Trust. Amounts so withdrawn shall be credited to a separate account
maintained for each Trust Fund known as the Reserve Account and shall not
be considered a part of the Trust Fund when determining the value of the
Units until such time as the Trustee shall return all or any part of such
amounts to the appropriate account.
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 AUDITORS
The statement of net assets, including the schedule of investments,
appearing in Part Two of this Prospectus, with information pertaining to
the specific Trust to which such statement relates, has been audited by
Ernst & Young LLP, independent auditors, as set forth in their report
appearing in Part Two of this Prospectus, and is included herein in
reliance upon the authority of said firm as experts in accounting and
auditing.
DESCRIPTION OF RATINGS*
Standard & Poor's. - A brief description of the applicable Standard
& Poor's, a Division of The McGraw-Hill Companies, Inc., ("Standard &
Poor's") rating symbols and their meanings follow:
- --------------------
* As described by the rating company itself.
-33-
<PAGE>
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.
-34-
<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
-35-
<PAGE>
a large or by an exceptionally stable margin and principal is secure.
While the various protective elements are likely to change, such changes
as can be visualized are most unlikely to impair the fundamentally strong
position of such issues. Their safety is so absolute that with the
occasional exception of oversupply in a few specific instances,
characteristically, their market value is affected solely by money market
fluctuations.
Aa - Bonds which are rated Aa are judged to be of high quality by
all standards. Together with the Aaa group they comprise what are
generally known as high grade bonds. They are rated lower than the best
bonds because margins of protection may not be as large as in Aaa
securities or fluctuations of protective elements may be of greater
amplitude or there may be other elements present which make the long term
risks appear somewhat larger than in Aaa securities. Their market value
is virtually immune to all but money market influences, with the
occasional exception of oversupply in a few specific instances.
A - Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade obligations.
Factors giving security to principal and interest are considered
adequate, but elements may be present which suggest a susceptibility to
impairment sometime in the future. The market value of A-rated bonds may
be influenced to some degree by economic performance during a sustained
period of depressed business conditions, but, during periods of normalcy,
A-rated bonds frequently move in parallel with Aaa and Aa obligations,
with the occasional exception of oversupply in a few specific instances.
A1 - Bonds which are rated Al offer the maximum in security within
their quality group, can be bought for possible upgrading in quality, and
additionally, afford the investor an opportunity to gauge more precisely
the relative attractiveness of offerings in the marketplace.
Baa - Bonds which are rated Baa are considered as lower medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present
but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds
lack outstanding investment characteristics and, in fact, have
speculative characteristics as well. The market value of Baa-rated bonds
is more sensitive to changes in economic circumstances and, aside from
occasional speculative factors applying to some bonds of this class, Baa
market valuations move in parallel with Aaa, Aa and A obligations during
periods of economic normalcy, except in instances of oversupply.
Ba - Bonds which are rated Ba are judged to have speculative
elements; their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the
future. Uncertainty of position characterizes bonds in this class.
-36-
<PAGE>
B - Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time
may be small.
Caa - Bonds which are rated Caa are of poor standing. Such issues
may be in default or there may be present elements of danger with respect
to principal or interest.
Ca - Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have
other marked shortcomings.
C - Bonds which are rated C are the lowest rated class of bonds and
issues so rated can be regarded as having extremely poor prospects of
ever attaining any real investment standing.
Conditional Ratings: Bonds rated "Con(-)" are ones for which the
security depends upon the completion of some act or the fulfillment of
some condition. These are bonds secured by (a) earnings of projects
under construction, (b) earnings of projects unseasoned in operation
experience, (c) rentals which begin when facilities are completed, or
(d) payments to which some other limiting conditions attaches.
Parenthetical rating denotes probable credit stature upon completion of
construction or elimination of basis of condition.
Note: Moody's applies numerical modifiers, 1, 2, and 3 in each
generic rating classification from Aa through B in certain areas of its
bond rating system. The modifier 1 indicates that the security ranks in
the higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the issue ranks in
the lower end of its generic rating category.
Duff & Phelps Credit Rating Co. - A brief description of the
applicable Duff & Phelps Credit Rating Co. rating symbols and their
meanings follow:
These ratings represent a summary opinion of the issuer's long-term
fundamental quality. Rating determination is based on qualitative and
quantitative factors which may vary according to the basic economic and
financial characteristics of each industry and each issuer. Important
considerations are vulnerability to economic cycles as well as risks
related to such factors as competition, government action, regulation,
technological obsolescence, demand shifts, cost structure, and management
depth and expertise. The projected viability of the obligor at the
trough of the cycle is a critical determination.
AAA - Highest credit quality. The risk factors are negligible,
being only slightly more than for risk-free U.S. Treasury debt.
AA - High credit quality. Protection factors are strong. Risk is
modest but may vary slightly from time to time because of economic
conditions.
A - Protection factors are average but adequate. However, risk
factors are more variable and greater in periods of economic stress.
-37-
<PAGE>
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.
-38-
<PAGE>
CONTENTS PAGE
- -------- ----
SUMMARY 2
THE TRUST FUNDS 3
COMPENSATION FOR FOREIGN
WITHHOLDING TAX 4
FEDERAL TAX STATUS 5
TAX REPORTING AND REALLOCATION 10
TRUST PORTFOLIOS 10
PORTFOLIO SELECTION 10
RISK FACTORS 11
GENERAL TRUST INFORMATION 15
RETIREMENT PLANS 16
DISTRIBUTION REINVESTMENT 17
INTEREST, ESTIMATED LONG-TERM
RETURN AND ESTIMATED CURRENT
RETURN 18
PUBLIC OFFERING OF UNITS 19
PUBLIC OFFERING PRICE 19
ACCRUED INTEREST 21
PURCHASED AND DAILY ACCRUED
INTEREST 21
PUBLIC DISTRIBUTION OF UNITS 22
PROFITS OF SPONSOR 23
MARKET FOR UNITS 23
REDEMPTION 23
UNITHOLDERS 25
OWNERSHIP OF UNITS 25
DISTRIBUTIONS TO UNITHOLDERS 26
STATEMENTS TO UNITHOLDERS 26
RIGHTS OF UNITHOLDERS 27
INVESTMENT SUPERVISION 27
ADMINISTRATION OF THE TRUSTS 28
THE TRUSTEE 28
THE SPONSOR 29
THE EVALUATOR 30
AMENDMENT AND TERMINATION 30
LIMITATIONS ON LIABILITY 31
EXPENSES OF THE TRUSTS 32
LEGAL OPINIONS 33
INDEPENDENT AUDITORS 33
DESCRIPTION OF RATINGS 33
--------------------
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.
-------------
CORPORATE
INCOME
-------------
---------------
PROSPECTUS
PART ONE
---------------
CORPORATE INCOME SERIES
DEFINED HIGH YIELD CORPORATE
INCOME SERIES
INVESTMENT GRADE CORPORATE
INCOME SERIES
Dated as of the date set forth in
Part Two of this Prospectus
RANSON & ASSOCIATES, INC.
<PAGE>
EVEREN Defined Funds
Corporate Income Series 5
Part Two
Dated April 30, 1998
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
NOTE: Part Two of this Prospectus May Not Be Distributed Unless Accompanied by
Part One.
<PAGE>
EVEREN Defined Funds
Corporate Income Series 5
Essential Information
As of December 31, 1997
Sponsor and Evaluator: Ranson & Associates, Inc.
Trustee: The Bank of New York Co.
<TABLE>
<CAPTION>
General Information
<S> <C>
Principal Amount of Securities $13,005,000
Number of Units 1,298,792
Fractional Undivided Interest in the Trust per Unit 1/1,298,792
Principal Amount of Securities per Unit $10.013
Calculation of Public Offering Price:
Aggregate Value of Securities in the Trust $13,110,451
Aggregate Value of Securities per Unit $10.094
Principal Cash per Unit (1) $(.014)
Accrued Interest per Unit through settlement date of January 6, 1998 $.011
Total Price including Accrued Interest per Unit $10.091
Sales Charge of 3.50% of Public Offering Price (3.627%
of the net amount invested) per Unit $.366
Public Offering Price per Unit $10.457
Redemption Price per Unit $10.091
Calculation of Estimated Net Annual Interest Income per Unit:
Estimated Annual Interest Income $.7720
Less: Estimated Annual Expense $.0175
Estimated Net Annual Interest Income $.7545
Daily Rate at which Estimated Annual Interest Income Accrues per Unit $.002096
Estimated Current Return Based on Public Offering Price (2) 7.22%
Estimated Long-Term Return (2) 5.13%
</TABLE>
[FN]
1. This amount, if any, represents principal cash or overdraft which is an
asset or liability of the Trust and is included in the Public Offering Price.
2. The Estimated Current Return and Estimated Long-Term Return will vary with
changes in the Public Offering Price and there is no assurance that such returns
on the date hereof will be applicable on a subsequent date of purchase. These
estimated returns are increased for transactions entitled to a reduced sales
charge (see "Public Offering of Units - Public Offering Price" - Part One).
<PAGE>
EVEREN Defined Funds
Corporate Income Series 5
Essential Information (continued)
As of December 31, 1997
Sponsor and Evaluator: Ranson & Associates, Inc.
Trustee: The Bank of New York Co.
<TABLE>
<CAPTION>
<S> <C>
Record and Distribution Date Record Date is the first of each month
and distributions to Unitholders on such
record dates will be made on the
15th day of the month.
Distribution Dates No distribution (other than capital gains
distributions) need be made from the
Principal Account if the balance therein,
excluding capital gains, is less than
$1.00 per 1 Unit.
Trustee's Annual Fee (including
estimated expenses) $1.19 per 100 Units (includes $1.09 of
Trustee's annual fee per $1,000 principal
amount of underlying Securities and
$.30 of out-of-pocket expenses per 100
Units).
Evaluator's Annual Fee $.30 per $1,000 principal amount of
underlying Securities.
Surveillance Fee $.25 per $1,000 principal amount of
underlying Securities.
Date of Trust Agreement and
Initial Deposit March 13, 1996
Mandatory Termination Date December 31, 2001
Weighted Average Stated
Maturity of Bonds 2.65 years
Discretionary Liquidation Amount The Trust may be terminated if the value
thereof is less than $130,000 (40% of the
par value of the Securities deposited in
the Trust).
</TABLE>
[FN]
<PAGE>
Report of Independent Auditors
Unitholders
EVEREN Defined Funds
Corporate Income Series 5
We have audited the accompanying statement of assets and liabilities of EVEREN
Defined Funds Corporate Income Series 5, including the schedule of investments,
as of December 31, 1997, and the related statements of operations and changes in
net assets for the year ended and for the period from March 13, 1996 (Date of
Deposit) to December 31, 1996. These financial statements are the
responsibility of the Trust's sponsor. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures
included confirmation of investments owned as of December 31, 1997, by
correspondence with the custodial bank. An audit also includes assessing the
accounting principles used and significant estimates made by the sponsor, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of EVEREN Defined Funds Corporate
Income Series 5 at December 31, 1997, and the results of its operations and
changes in its net assets for the periods indicated above in conformity with
generally accepted accounting principles.
Ernst & Young LLP
Kansas City, Missouri
April 16, 1998
<PAGE>
EVEREN Defined Funds
Corporate Income Series 5
Statement of Assets and Liabilities
December 31, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
Assets
Securities, at value (cost $12,742,911) $13,110,451
Interest receivable 267,848
---------
Total assets 13,378,299
Liabilities and net assets
Cash overdraft 188,985
Accrued liabilities 3,214
---------
192,199
Net assets, applicable to 1,298,792 Units outstanding:
Cost of Trust assets, exclusive of interest $12,742,911
Unrealized appreciation 367,540
Distributable funds 75,649
--------- ---------
Net assets $13,186,100
=========
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
EVEREN Defined Funds
Corporate Income Series 5
Statements of Operations
<TABLE>
<CAPTION>
Period from
March 13,
Year ended 1996 to
December 31, December 31,
1997 1996
<S> <C> <C>
--------- ---------
Investment income - interest $1,182,436 $686,390
Expenses:
Trustee's fees and related expenses 22,076 9,644
Evaluator's and portfolio surveillance fees 7,436 4,091
--------- ---------
Total expenses 29,512 13,735
--------- ---------
Net investment income 1,152,924 672,655
Realized and unrealized gain on investments:
Realized gain 4,725 -
Unrealized appreciation during the period 145,238 222,302
--------- ---------
Net gain on investments 149,963 222,302
--------- ---------
Net increase in net assets resulting from operations $1,302,887 $894,957
========= =========
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
EVEREN Defined Funds
Corporate Income Series 5
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Period from
March 13,
Year ended 1996 to
December 31, December 31,
1997 1996
<S> <C> <C>
--------- ---------
Operations:
Net investment income $1,152,924 $672,655
Realized gain on investments 4,725 -
Unrealized appreciation on investments during the period 145,238 222,302
--------- ---------
Net increase in net assets resulting from operations 1,302,887 894,957
Distributions to Unitholders:
Net investment income (1,023,463) (570,117)
Capital transactions:
Issuance of 1,365,000 Units - 13,243,302
Redemption of 331 Units - (3,297)
Redemption of 65,877 Units (658,169) -
--------- ---------
Total increase (decrease) in net assets (378,745) 13,564,845
Net assets:
At the beginning of the period 13,564,845 -
--------- ---------
At the end of the period (including distributable funds, applicable
to Trust Units of $75,649 and $99,241 at December 31, 1997 and
1996, respectively) $13,186,100 $13,564,845
========= =========
Trust Units outstanding at the end of the period 1,298,792 1,364,669
========= =========
Net asset value per Unit at the end of the period $10.15 $9.94
========= =========
</TABLE>
See accompanying notes to financial statements.
[FN]
<PAGE>
<TABLE>
EVEREN Defined Funds
Corporate Income Series 5
Schedule of Investments
December 31, 1997
<CAPTION>
Coupon Maturity Redemption Principal
Name of Issuer and Title of Bond Rate Date Provisions(2) Rating(1) Amount Value(3)
<S> <C> <C> <C> <C> <C> <C>
- --------------------- --- --- ----- --- --------- ---
Cemex S.A. 8.875% 6/10/1998 Non-Callable BB $1,580,000 $1,593,477
Bancomer S.A. 8.000 7/07/1998 Non-Callable Ba2* 1,580,000 1,589,480
G-1 Holdings (4) 0.000 10/10/1998 Non-Callable Ba3* 1,235,000 1,118,305
Domtar, Inc. 11.750 3/15/1999 Non-Callable Ba1* 1,050,000 1,132,992
Valasis Inserts 9.375 3/15/1999 Non-Callable BB- 1,605,000 1,652,075
Six Flags Entertainment (4) 0.000 12/15/1999 Non-Callable BBB- 840,000 744,181
Century Communication, Inc. 9.500 8/15/2000 Non-Callable BB- 1,680,000 1,753,399
Best Buy Co., Inc. 8.625 10/01/2000 Non-Callable B- 1,730,000 1,743,044
Reliance Group Holdings 9.000 11/15/2000 Non-Callable BB+ 1,705,000 1,783,498
--------- ---------
$13,005,000 $13,110,451
========= =========
</TABLE>
[FN]
See accompanying notes to Schedule of Investments.
<PAGE>
EVEREN Defined Funds
Corporate Income Series 5
Notes to Schedule of Investments
1. All ratings are by Standard & Poor's Corporation, unless marked with the
symbol "*", in which case the rating is by Moody's Investors Service, Inc. The
symbol "NR" indicates Bonds for which no rating is available.
Standard & Poor's Corporation states, "Bonds rated BB, B, CCC and CC are
regarded, as predominantly speculative with respect to capacity to pay interest
and repay principal in accordance with the terms of the obligation. Within this
range of ratings, BB indicates the lowest degree of speculation and CC 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".
Moody's Investors Service, Inc. states "Bonds rated Ba, B, Ca and C are
regarded, on balance, as predominantly speculative with respect to capacity to
pay interesr and repay principal in accordance with the terms of the obligation.
Within this range of ratings, Ba indicates the lowest 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."
2. There is shown under this heading the year in which each issue of Bonds is
initially redeemable and the redemption price for that year or, if currently
redeemable, the redemption price currently in effect; unless otherwise
indicated, each issue continues to be redeemable at declining prices thereafter,
but not below par value. The prices at which the Bonds may be redeemed or
called prior to maturity may or may not include a premium and, in certain cases,
may be less than the cost of the Bonds in the Trust. In addition, certain Bonds
in the 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.
3. See Note 1 to the accompanying financial statements for a description of the
method of determining cost and value.
4. These Bonds have been purchased at a discount from the par value because
there is no stated interest income thereon. Such Bonds are normally described
as "zero coupon" Bonds. Over the lives of the Bonds the values increase, so
that upon maturity, the holders of the Bonds will receive 100% of the principal
amount thereof.
See accompanying notes to financial statements.
<PAGE>
EVEREN Defined Funds
Corporate Income Series 5
Notes to Financial Statements
1. Significant Accounting Policies
Trust Sponsor and Evaluator
From the Trust's date of deposit through November 26, 1996, the Trust's sponsor
and evaluator was EVEREN Unit Investment Trusts (EVEREN), or its predecessor
entity, Kemper Unit Investment Trusts. On that date, Zurich Kemper Investments,
Inc. acquired EVEREN and assigned substantially all of its unit investment trust
business to Ranson & Associates, Inc., which serves as the Trust's sponsor and
evaluator.
Valuation of Securities
Corporate Securities and the zero coupon obligations are stated at bid prices as
determined by Ranson & Associates, Inc. The aggregate bid prices of the
Securities are determined by the Evaluator based on (a) current bid prices of
the Securities, (b) current bid prices for comparable securities, (c) appraisal,
or (d) any combination of the above.
Cost of Securities
Cost of the Trust's Securities is based on the offering prices of the Securities
on the dates of deposit of such Securities acquired during the primary sales
period, plus amortization of original issue discount for the zero coupon
obligations. The premium or discount for the fixed rate obligations is not
being amortized. Realized gain (loss) from Security transactions is reported on
an identified cost basis.
Investment Income
Interest income consists of amortization of original issue discount on the zero
coupon obligations and interest accrued as earned on the fixed rate obligations.
2. Unrealized Appreciation and Depreciation
Following is an analysis of net unrealized appreciation at December 31, 1997:
<TABLE>
<CAPTION>
<S> <C>
Gross unrealized appreciation $375,839
Gross unrealized depreciation (8,299)
----------
Net unrealized appreciation $367,540
=========
</TABLE>
3. Federal Income Taxes
The Trust is not an association taxable as a corporation for federal income tax
purposes. Each Unitholder is considered to be the owner of a pro rata portion
of the Trust under Subpart E, Subchapter J of Chapter 1 of the Internal Revenue
Code of 1986, as amended. Accordingly, no provision has been made for federal
income taxes.
4. Other Information
Cost to Investors
The cost to original investors of Units of the Trust was based on the aggregate
offering price of the Securities on the date of an investor's purchase, plus or
minus a pro rata share of cash or overdraft in the Principal Account and daily
accrued interest, plus a sales charge of 3.50% of the Public Offering Price
(equivalent to 3.625% of the net amount invested). The Public Offering Price
for secondary market transactions is based on the aggregate bid prices of the
Securities plus or minus a pro rata share of cash or overdraft in the Principal
Account, and daily accrued interest on the date of an investor's purchase, plus
a sales charge of 3.50% of the Public Offering Price (equivalent to 3.627% of
the net amount invested).
<PAGE>
EVEREN Defined Funds
Corporate Income Series 5
Notes to Financial Statements (continued)
Distributions
Distributions of net investment income to Unitholders are declared and paid
monthly. Income distributions per Unit on a record date basis, are $.76 and
$.53 for the years ended December 31, 1997 and 1996, respectively.
<PAGE>
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Independent Auditors"
and to the use of our report dated April 16, 1998, in this Post-Effective
Amendment to the Registration Statement (Form S-6) and related Prospectus of
EVEREN Defined Funds Corporate Income Series 5 dated April 30,1998.
Ernst & Young LLP
Kansas City, Missouri
April 30, 1998
<PAGE>
Contents of Post-Effective Amendment
To Registration Statement
This Post-Effective amendment to the Registration Statement
comprises the following papers and documents:
The facing sheet
The prospectus
The signatures
The Consent of Independent Accountants
<PAGE>
Signatures
Pursuant to the requirements of the Securities Act of 1933,
The Registrant, EVEREN Unit Investment Trusts Series 43,
certifies that it meets all of the requirements for effectiveness
of this registration statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this Amendment to the
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Wichita,
and State of Kansas, on the 30th day of April, 1998.
EVEREN Unit Investment Trusts
Series 43
Registrant
By: Ranson & Associates, Inc.
Depositor
By: Robin Pinkerton
President
Pursuant to the requirements of the Securities Act of 1933,
this Amendment to the Registration Statement has been signed
below on April 30, 1998 by the following persons, who constitute
a majority of the Board of Directors of Ranson & Associates, Inc.
Signature Title
Douglas K. Rogers Executive Vice and President and Director
Douglas K. Rogers
Alex R. Meitzner Chairman of the Board and Director
Alex R. Meitzner
Robin K. Pinkerton President, Secretary, Treasurer and
Robin K. Pinkerton Director
Robin Pinkerton
An executed copy of each of the related powers of attorney
was filed with the Securities and Exchange Commission in
connection with the Registration Statement on Form S-6 of The
Kansas Tax-Exempt Trust, Series 51 (File No. 33-46376) and
Series 52 (File No. 33-47687) and the same are hereby
incorporated herein by this reference.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM EVEREN DEFINED FUNDS CORPORATE INCOME SERIES 5
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<SERIES>
<NUMBER> 05
<NAME> EVEREN DEFINED FUNDS CORPORATE INCOME SERIES 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-END> Dec-31-1997
<INVESTMENTS-AT-COST> 12,742,911
<INVESTMENTS-AT-VALUE> 13,110,451
<RECEIVABLES> 267,848
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 13,378,299
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 192,199
<TOTAL-LIABILITIES> 192,199
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 12,818,560
<SHARES-COMMON-STOCK> 1,298,792
<SHARES-COMMON-PRIOR> 1,364,669
<ACCUMULATED-NII-CURRENT> 75,649
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 367,540
<NET-ASSETS> 13,186,100
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,182,436
<OTHER-INCOME> 0
<EXPENSES-NET> 29,512
<NET-INVESTMENT-INCOME> 1,152,924
<REALIZED-GAINS-CURRENT> 4,725
<APPREC-INCREASE-CURRENT> 145,238
<NET-CHANGE-FROM-OPS> 1,302,887
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,023,463)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 65,877
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (378,745)
<ACCUMULATED-NII-PRIOR> 99,241
<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>
