File No. 333-03141 CIK #910915
Securities and Exchange Commission
Washington, D. C. 20549
Post-Effective
Amendment No. 3
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 47
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 August 31, 1999 pursuant to paragraph (b) of
Rule 485.
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KEMPER INSURED CORPORATE TRUST
KEMPER DEFINED FUNDS INSURED CORPORATE SERIES
EVEREN UNIT INVESTMENT TRUSTS INSURED CORPORATE SERIES
PROSPECTUS PART ONE
Kemper Insured Corporate Trust, Kemper Defined Funds Insured
Corporate Series and EVEREN Unit Investment Trusts Insured Corporate
Series (the "Trusts") were formed for the purpose of providing a high
level of current income through investment in a fixed portfolio
consisting primarily of corporate debt obligations issued after July 18,
1994 by utility companies. Certain Trusts also contain zero coupon U.S.
Treasury obligations.
Insurance guaranteeing the scheduled payment of principal and
interest on all of the Bonds (other than any U.S. Treasury obligations)
in the portfolio listed in Part Two has been obtained directly by the
issuer of such Bonds or by the Sponsor of the Trusts from MBIA Insurance
Corporation. See "Insurance on the Portfolios" and "Portfolio" appearing
in Part Two for each Trust. This insurance is effective so long as the
Bonds are outstanding. As a result of such insurance, the Bonds so
insured in each Trust and the Units of each Trust received on the
original date of deposit a rating of "Aaa" by Moody's Investors Service,
Inc. ("Moody's"). All the Bonds in each Trust have received a rating of
"AAA" by Standard & Poor's, a Division of The McGraw-Hill Companies, Inc.
("Standard & Poor's") as of the original date of deposit. The insurance
does not relate to the Units of the respective Trusts offered hereby or
to their market value. See "Insurance on the Portfolios." No
representation is made as to any insurer's ability to meet its
commitments.
Units of the Trusts are not deposits or obligations of, or
guaranteed by, any bank, and Units are not federally insured or otherwise
protected by the Federal Deposit Insurance Corporation and involve
investment risk including loss of principal. The use of the term
"Insured" in the name of the Trust Funds does not mean that the Units of
the Trusts are insured by any governmental or private organization. The
Units are not insured.
For foreign investors who are not United States citizens or
residents, interest income from each Trust may not be subject to federal
withholding taxes if certain conditions are met. See "Federal Tax
Status."
This Prospectus is in two parts.
Read and retain both parts for future reference.
The date of this Part One is that date which is set forth
in Part Two of the Prospectus.
SPONSOR: RANSON & ASSOCIATES, INC.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COM-MISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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TABLE OF CONTENTS
PAGE
SUMMARY 1
THE TRUST 2
TRUST PORTFOLIOS 2
PORTFOLIO SELECTION 2
RISK FACTORS 3
GENERAL TRUST INFORMATION 6
INSURANCE ON THE PORTFOLIOS 6
RETIREMENT PLANS 8
INDIVIDUAL RETIREMENT ACCOUNT--IRA 8
QUALIFIED RETIREMENT PLANS 9
EXCESS DISTRIBUTIONS TAX 9
DISTRIBUTION REINVESTMENT 9
INTEREST, ESTIMATED LONG-TERM RETURN
AND ESTIMATED CURRENT RETURN 10
FEDERAL TAX STATUS 11
TAX REPORTING AND REALLOCATION 16
PUBLIC OFFERING OF UNITS 16
PUBLIC OFFERING PRICE 16
ACCRUED INTEREST 18
PURCHASED AND DAILY ACCRUED INTEREST 19
PUBLIC DISTRIBUTION OF UNITS 20
PROFITS OF SPONSOR 20
MARKET FOR UNITS 21
REDEMPTION 21
COMPUTATION OF REDEMPTION PRICE 22
UNITHOLDERS 23
OWNERSHIP OF UNITS 23
DISTRIBUTIONS TO UNITHOLDERS 24
STATEMENT TO UNITHOLDERS 25
RIGHTS OF UNITHOLDERS 26
INVESTMENT SUPERVISION 27
ADMINISTRATION OF THE TRUST 27
THE TRUSTEE 27
THE EVALUATOR 28
AMENDMENT AND TERMINATION 29
LIMITATIONS ON LIABILITY 29
EXPENSES OF THE TRUST 30
THE SPONSOR 31
LEGAL OPINIONS 32
INDEPENDENT AUDITORS 32
Essential Information*
Report of Independent Auditors*
Statement of Assets and Liabilities*
Statement of Operations*
Statement of Changes in Net Assets*
Schedule of Investments*
Notes to Schedules of Investments*
Notes to Financial Statements*
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* Information on these items appears in Part Two
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SUMMARY
Public Offering Price. The Public Offering Price per Unit of a
Series of the Trust is equal to a pro rata share of the aggregate bid
prices of the Bonds in such Series plus or minus a pro rata share of
cash, if any, in the Principal Account, held or owned by the Series plus
accrued interest or Purchased Interest and Daily Accrued Interest, as
applicable, plus a sales charge shown under "Public Offering of Units."
The sales charge is reduced on a graduated scale as indicated under
"Public Offering of Units - Public Offering Price."
Interest and Principal Distributions. Distributions of the
estimated annual interest income to be received by a Series of the Trust,
after deduction of estimated expenses, will be made monthly unless the
Unitholder elects to receive such distributions semi-annually (if
available). Distributions will be paid on the Distribution Dates to
Unitholders of record of such Series on the Record Dates set forth for
the applicable option. See "Essential Information" in Part Two.
Unitholders of Kemper Defined Funds Insured Corporate Series or EVEREN
Unit Investment Trusts Insured Corporate Series will receive
distributions monthly.
The distribution of funds, if any, in the Principal Account of each
Series, will be made as provided in "Unitholders-Distributions to
Unitholders."
Reinvestment. Each Unitholder may elect to have distributions of
principal or interest or both automatically invested without charge in
shares of certain Zurich Kemper Investment, Inc. mutual funds. See
"Distribution Reinvestment."
Estimated Current Return and Estimated Long-Term Return. The
Estimated Current Return is calculated by dividing the estimated net
annual interest income per Unit by the Public Offering Price of such
Trust. The estimated net annual interest income per Unit will vary with
changes in fees and expenses of the Trustee, Sponsor and Evaluator and
with the principal prepayment, redemption, maturity, exchange or sale of
Bonds while the Public Offering Price will vary with changes in the bid
price of the underlying Bonds and with changes in accrued interest or
Purchased Interest and Daily Accrued Interest, as applicable; therefore,
there is no assurance that the present Estimated Current Returns will be
realized in the future. Estimated Long-Term Return is calculated using a
formula which (1) takes into consideration, and determines and factors in
the relative weightings of, the market values, yields (which takes into
account the amortization of premiums and the accretion of discounts) and
estimated retirements of all of the Bonds in the Trust and (2) takes into
account the expenses and sales charge associated with each Trust Unit.
Since the market values and estimated retirement dates of the Bonds and
the expenses of the Trust will change, there is no assurance that the
present Estimated Long-Term Return will be realized in the future.
Estimated Current Return and Estimated Long-Term Return are expected to
differ because the calculation of Estimated Long-Term Return reflects the
estimated date and amount of principal returned while Estimated Current
Return calculations include only net annual interest income and Public
Offering Price.
Market for Units. While under no obligation to do so, the Sponsor
intends, subject to change at any time, to maintain a market for the
Units of each Series of the Trust and to continuously offer to repurchase
such Units at prices which are based on the aggregate bid side evaluation
of the Bonds in such Series of the Trust plus accrued interest or
Purchased Interest and Daily Accrued Interest, as applicable.
Risk Factors. An investment in the Trusts should be made with an
understanding of the risks associated therewith, including, among other
factors, the inability of the issuer or an insurer to pay the principal
of or interest on a bond when due, volatile interest rates, early call
provisions and general economic conditions. See "Trust Portfolio-Risk
Factors."
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THE TRUST
Each Series of the Trust is one of a series of unit investment
trusts created by the Sponsor under the name Kemper Insured Corporate
Trust, Kemper Defined Funds Insured Corporate Series or EVEREN Unit
Investment Trusts Insured Corporate Series, all of which are similar, and
each of which was created under the laws of the State of Missouri or New
York pursuant to a Trust Agreement* (the "Trust Agreement"). Ranson &
Associates, Inc. is the Sponsor and Evaluator of the Trusts and is
successor sponsor and evaluator of all unit investment trusts formerly
sponsored by EVEREN Unit Investment Trusts, a service of EVEREN
Securities, Inc. The Bank of New York is the Trustee of the Trusts as
successor to Investors Fiduciary Trust Company.
The objective of each Trust is to provide a high level of current
income through investment in the Bonds. There is, of course, no
guarantee that a Trust's objectives will be achieved.
The Trusts may be appropriate investment vehicles for investors who
desire to participate in a portfolio of taxable fixed income securities
issued primarily by public utilities with greater diversification than
investors might be able to acquire individually. Diversification of a
Trust's assets will not eliminate the risk of loss always inherent in the
ownership of securities. In addition, Bonds of the type deposited in the
Trusts often are not available in small amounts.
An investment in Units should be made with an understanding of the
risks which an investment in fixed rate debt obligations may entail,
including the risk that the value of the portfolio and hence of the Units
will decline with increases in interest rates. The value of the
underlying Bonds will fluctuate inversely with changes in interest rates.
The uncertain economic conditions of recent years, together with the
fiscal measures adopted to attempt to deal with them, have resulted in
wide fluctuations in interest rates and, thus, in the value of fixed rate
debt obligations generally and intermediate and long-term obligations in
particular. The Sponsor cannot predict the degree to which such
fluctuations will continue in the future.
TRUST PORTFOLIOS
Portfolio Selection. The Bonds for each Trust was based largely
upon the experience and judgment of the Sponsor. In making such
selections the Sponsor considered the following factors: (a) the price
of the Bonds relative to other issues of similar quality and maturity;
(b) whether the Bonds were issued by a utility company; (c) the
diversification of the bonds as to location of issuer; (d) the income to
the Unitholders of the Trusts; (e) whether the Bonds were insured or the
availability and cost of insurance for the scheduled payment of principal
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* Reference is made to the Trust Agreement, and any statements contained
herein are qualified in their entirety by the provisions of the Trust
Agreement.
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and interest on the Bonds; (f) in certain Series whether the Bonds were
issued after July 18, 1984 (g) the stated maturity of the bonds.
The Sponsor may not alter the portfolio of a Series of the Trust,
except upon the happening of certain extraordinary circumstances. See
"Investment Supervision." Certain Series of the Trust contain Bonds which
may be subject to optional call or mandatory redemption pursuant to
sinking fund provisions, in each case prior to their stated maturity. A
bond subject to optional call is one which is subject to redemption or
refunding prior to maturity at the option of the issuer, often at a
premium over par. A refunding is a method by which a bond issue is
redeemed, at or before maturity, by the proceeds of a new bond issue. A
bond subject to sinking fund redemption is one which is subject to
partial call from time to time at par from a fund accumulated for the
scheduled retirement of a portion of an issue prior to maturity. Special
or extraordinary redemption provisions may provide for redemption at par
of all or a portion of an issue upon the occurrence of certain
circumstances, which may be prior to the optional call dates shown in the
"Schedules of Investments of the Trust" in Part Two. Redemption pursuant
to optional call provisions is more likely to occur, and redemption
pursuant to special or extraordinary redemption provisions may occur,
when the Bonds have an offering side evaluation which represents a
premium over par, that is, when they are able to be refinanced at a lower
cost. The proceeds from any such call or redemption pursuant to sinking
fund provisions as well as proceeds from the sale of Bonds and from Bonds
which mature in accordance with their terms, unless utilized to pay for
Units tendered for redemption, will be distributed to Unitholders and
will not be used to purchase additional Bonds for the Trust.
Accordingly, any such call, redemption, sale or maturity will reduce the
size and diversity of the Trust and the net annual interest income and
may reduce the Estimated Current Return and the Estimated Long-Term
Return. See "Interest, Estimated Long-Term Return and Estimated Current
Return." The call, redemption, sale or maturity of Bonds also may have
tax consequences to a Unitholder. See "Federal Tax Status." Information
with respect to the call provisions and maturity dates of the Bonds is
contained in "Schedules of Investments."
Risk Factors. Public Utility Issues. Certain of the Bonds in each
Trust are obligations of public utility issuers. In general, public
utilities are regulated monopolies engaged in the business of supplying
light, water, power, heat, transportation or means of communication.
Historically, the utilities industry has provided investors in securities
issued by companies in this industry with high levels of reliability,
stability and relative total return on their investments. However, an
investment in the Trusts should be made with an understanding of the
characteristics of such issuers and the risks which such an investment
may entail. General problems of such issuers would include the
difficulty in financing large construction programs in an inflationary
period, the limitations on operations and increased costs and delays
attributable to environmental considerations, the difficulty of the
capital market in absorbing utility debt, the difficulty in obtaining
fuel at reasonable prices and the effect of energy conservation. All of
such issuers have been experiencing certain of these problems in varying
degrees. In addition, federal, state and municipal governmental
authorities may from time to time review existing, and impose additional,
regulations governing the licensing, construction and operation of
nuclear power plants, which may adversely affect the ability of the
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issuers of certain of the Bonds in the portfolio to make payments of
principal and/or interest on such Bonds.
Utilities are generally subject to extensive regulation by state
utility commissions which, for example, establish the rates which may be
charged and the appropriate rate of return on an approved asset base,
which must be approved by the state commissions. Certain utilities have
had difficulty from time to time in persuading regulators, who are
subject to political pressures, to grant rate increases necessary to
maintain an adequate return on investment and voters in many states have
the ability to impose limits on rate adjustments (for example, by
initiative or referendum). Any unexpected limitations could negatively
affect the profitability of utilities whose budgets are planned far in
advance. Also, changes in certain accounting standards currently under
consideration by the Financial Accounting Standards Board could cause
significant write-downs of assets and reductions in earnings for many
investor-owned utilities. In addition, gas pipeline and distribution
companies have had difficulties in adjusting to short and surplus energy
supplies, enforcing or being required to comply with long-term contracts
and avoiding litigation from their customers, on the one hand, or
suppliers, on the other.
Certain of the issuers of the Bonds in a Trust may own or operate
nuclear generating facilities. Governmental authorities may from time to
time review existing, and impose additional, requirements governing the
licensing, construction and operation of nuclear power plants. Nuclear
generating projects in the electric utility industry have experienced
substantial cost increases, construction delays and licensing
difficulties. These have been caused by various factors, including
inflation, high financing costs, required design changes and rework,
allegedly faulty construction, objections by groups and governmental
officials, limits on the ability to finance, reduced forecasts of energy
requirements and economic conditions. This experience indicates that the
risk of significant cost increases, delays and licensing difficulties
remains present through completion and achievement of commercial
operation of any nuclear project. Also, nuclear generating units in
service have experienced unplanned outages or extensions of scheduled
outages due to equipment problems or new regulatory requirements
sometimes followed by a significant delay in obtaining regulatory
approval to return to service. A major accident at a nuclear plant
anywhere, such as the accident at a plant in Chernobyl, U.S.S.R., could
cause the imposition of limits or prohibitions on the operation,
construction or licensing of nuclear units in the United States.
In view of the uncertainties discussed above, there can be no
assurance that any bond issuer's share of the full cost of nuclear units
under construction ultimately will be recovered in rates or of the extent
to which a bond issuer could earn an adequate return on its investment in
such units. The likelihood of a significantly adverse event occurring in
any of the areas of concern described above varies, as does the potential
severity of any adverse impact. It should be recognized, however, that
one or more of such adverse events could occur and individually or
collectively could have a material adverse impact on the financial
condition or the results of operations or on a bond issuer's ability to
make interest and principal payments on its outstanding debt.
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Other general problems of the gas, water, telephone and electric
utility industry (including state and local joint action power agencies)
include difficulty in obtaining timely and adequate rate increases,
difficulty in financing large construction programs to provide new or
replacement facilities during an inflationary period, rising costs of
rail transportation to transport fossil fuels, the uncertainty of
transmission service costs for both interstate and intrastate
transactions, changes in tax laws which adversely affect a utility's
ability to operate profitably, increased competition in service costs,
reductions in estimates of future demand for electricity and gas in
certain areas of the country, restrictions on operations and increased
cost and delays attributable to environmental considerations, uncertain
availability and increased cost of capital, unavailability of fuel for
electric generation at reasonable prices, including the steady rise in
fuel costs and the costs associated with conversion to alternate fuel
sources such as coal, availability and cost of natural gas for resale,
technical and cost factors and other problems associated with
construction, licensing, regulation and operation of nuclear facilities
for electric generation, including among other considerations the
problems associated with the use of radioactive materials and the
disposal of radioactive wastes, and the effects of energy conservation.
Each of the problems referred to could adversely affect the ability of
the issuers of any utility Bonds in a Trust to make payments due on these
Bonds.
In addition, the ability of state and local joint action power
agencies to make payments on bonds they have issued is dependent in large
part on payments made to them pursuant to power supply or similar
agreements. Courts in Washington and Idaho have held that certain
agreements between Washington Public Power Supply System ("WPPSS") and
the WPPSS participants are unenforceable because the participants did not
have the authority to enter into the agreements. While these decisions
are not specifically applicable to agreements entered into by public
entities in other states, they may cause a reexamination of the legal
structure and economic viability of certain projects financed by joint
action power agencies, which might exacerbate some of the problems
referred to above and possibly lead to legal proceedings questioning the
enforceability of agreements upon which payment of these bonds may
depend.
In addition, business conditions of the telephone industry in
general may affect the performance of the Trust Fund. General problems
of telephone companies include regulation of rates for service by the FCC
and various state or other regulatory agencies. However, over the last
several years regulation has been changing, resulting in increased
competition. The new approach is more market oriented, more flexible and
more complicated. For example, Federal and certain state regulators have
instituted "price cap" regulation which couples protection of rate payers
for basic services with flexible pricing for ancillary services. These
new approaches to regulation could lead to greater risks as well as
greater rewards for operating telephone companies such as those in the
Trust Funds. Inflation has substantially increased the operating
expenses and costs of plants required for growth, service, improvement
and replacement of existing plants. Continuing cost increases, to the
extent not offset by improved productivity and revenues from increased
business, would result in a decreasing rate of return and a continuing
need for rate increases. Although allowances are generally made in rate-
making proceedings for cost increases, delays may be experienced in
obtaining the necessary rate increases and there can be no assurance that
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the regulatory agencies will grant rate increases adequate to cover
operating and other expenses and debt service requirements. To meet
increasing competition, telephone companies will have to commit
substantial capital, technological and marketing resources. Telephone
usage, and therefore revenues, could also be adversely affected by any
sustained economic recession. New technology such as cellular service
and fiber optics, will require additional capital outlays. The uncertain
outcomes of future labor agreements may also have a negative impact on
the telephone companies. Each of these problems could adversely affect
the ability of the telephone company issuers of any Bonds in a portfolio
to make payments of principal and interest on their Bonds.
Zero Coupon U.S. Treasury Obligations;. Certain of the Bonds in
certain of the Trusts are "zero coupon" U.S. Treasury bonds. Zero coupon
bonds are purchased at a deep discount because the buyer receives only
the right to receive a final payment at the maturity of the bond and does
not receive any periodic interest payments. The effect of owning deep
discount bonds which do not make current interest payments (such as the
zero coupon bonds) is that a fixed yield is earned not only on the
original investment but also, in effect, on all discount earned during
the life of such income on such obligation at a rate as high as the
implicit yield on the discount obligation, but at the same time
eliminates the holder's ability to reinvest at higher rates in the
future. For this reason, zero coupon bonds are subject to substantially
greater price fluctuations during periods of changing market interest
rates than are securities of comparable quality which pay interest.
General Trust Information. Because certain of the Bonds in each
Trust may from time to time under certain circumstances be sold or
redeemed or will mature in accordance with their terms and because the
proceeds from such events will be distributed to Unitholders and will not
be reinvested, no assurance can be given that a Trust will retain for any
length of time its present size and composition. Neither the Sponsor nor
the Trustee shall be liable in any way for any default, failure or defect
in any Bond. The Trustee will have no power to vary the investment of a
Trust; i.e., the Trustee will have no managerial power to take advantage
of market variations to improve a Unitholder's investment.
To the best of the Sponsor's knowledge, there is no litigation
pending as of the date of this Part One Prospectus in respect of any Bond
which might reasonably be expected to have a material adverse effect on
the Trust Funds. At any time after the date of this Part One Prospectus,
litigation may be instituted on a variety of grounds with respect to the
Bonds. The Sponsor is unable to predict whether any such litigation may
be instituted, or if instituted, whether such litigation might have a
material adverse effect on the Trust Funds. The Sponsor and the Trustee
shall not be liable in any way for any default, failure or defect in any
Bond.
INSURANCE ON THE PORTFOLIOS
All Bonds in each Series of the Trust, except for the U.S. Treasury
obligations, are insured as to the scheduled payment of interest and
principal, either by the Sponsor or by the Bond issuer under a financial
guaranty insurance policy obtained from MBIA Insurance Corporation ("MBIA
Corporation"). See "Schedules of Investments" in Part Two. The premium
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for each such insurance policy has been paid in advance by such issuer or
the Sponsor and each such policy is non-cancelable and will remain in
force so long as the Bonds are outstanding and MBIA Corporation remains
in business. No premiums for such insurance are paid by the Trusts. If
MBIA Corporation is unable to meet its obligations under its policy or if
the rating assigned to the claims-paying ability of MBIA Corporation
deteriorates, no other insurer has any obligation to insure any issue
adversely affected by either of these events.
The aforementioned insurance guarantees the scheduled payment of
principal and interest on all of the Bonds in each Trust, except for the
U.S. Treasury obligations. It does not guarantee the market value of the
Bonds or the value of the Units of a Series of the Trust. This insurance
is effective so long as the Bond is outstanding, whether or not held by a
Trust. Therefore, any such insurance may be considered to represent an
element of market value in regard to the Bonds, but the exact effect, if
any, of this insurance on such market value cannot be predicted.
MBIA Corporation is the principal operating subsidiary of MBIA,
Inc., a New York Stock Exchange listed company. MBIA, Inc. is not
obligated to pay the debts of or claims against MBIA Corporation. MBIA
Corporation, which commenced municipal bond insurance operations on
January 5, 1987, is a limited liability corporation rather than a several
liability association. MBIA Corporation is domiciled in the State of New
York and licensed to do business in all 50 states, the District of
Columbia, the Commonwealth of the Northern Mariana Islands, the
Commonwealth of Puerto Rico, the Virgin Islands of the United States and
the Territory of Guam.
As of September 30, 1996, MBIA Corporation had admitted assets of
$4.3 billion (unaudited), total liabilities of $2.9 billion (unaudited),
and total policyholder's surplus of $1.4 billion (unaudited), prepared in
accordance with statutory accounting practices prescribed or permitted by
insurance regulatory authorities. As of December 31, 1995, MBIA
Corporation had admitted assets of $3.8 billion (audited), total
liabilities of $2.5 billion (audited) and total capital and surplus of
$1.3 billion (audited) determined in accordance with statutory accounting
practices prescribed or permitted by insurance regulatory authorities.
Copies of MBIA Corporation's financial statements prepared in accordance
with statutory accounting practices are available from MBIA Corporation.
The address of MBIA Corporation is 113 King Street, Armonk, New York
10504.
Effective December 31, 1989, MBIA, Inc. acquired Bond Investors
Group, Inc. On January 5, 1990, the Insurer acquired all of the
outstanding stock of Bond Investors Group, Inc., the parent of BIG, now
known as MBIA Insurance Corp. of Illinois. Through a reinsurance
agreement, BIG had ceded all of its net insured risks, as well as its
unearned premium and contingency reserves, to the Insurer and the Insurer
has reinsured BIG's net outstanding exposure.
Moody's Investors Service rates all bonds issues insured by MBIA
"Aaa" and short-term loans "MIG1," both designated to be of the highest
quality. Standard & Poor's rates all new issues insured by MBIA "AAA."
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Because the Bonds in each Series of the Trust (other than the U.S.
Treasury obligations) are insured as to the scheduled payment of
principal and interest and on the basis of the financial condition and
the method of operation of MBIA Corporation, Moody's Investors Service,
Inc., on the original Date of Deposit of each Series, assigned to each
Trust's Units its "AAA" investment rating. This is the highest rating
assigned to securities by such rating agency. These ratings should not
be construed as an approval of the offering of the Units by Standard &
Poor's or as a guarantee of the market value of a Trust or the Units
thereof.
Bonds in a Trust for which insurance has been obtained by the issuer
thereof or by the Sponsor from MBIA Corporation (all of which were rated
"AAA") may or may not have a higher yield than uninsured bonds rated
"AAA" by Standard & Poor's. In selecting Bonds for the portfolio of the
Trusts, the Sponsor has applied the criteria herein before described.
RETIREMENT PLANS
Units of the Trust Funds may be well suited for purchase by
Individual Retirement Accounts, Keogh Plans, pension funds and other
qualified retirement plans, certain of which are briefly described below.
Generally, capital gains and income received under each of the
foregoing plans are deferred from federal taxation. All distributions
from such plans are generally treated as ordinary income but may, in some
cases, be eligible for special income averaging or tax-deferred rollover
treatment. Investors considering participation in any such plan should
review specific tax laws related thereto and should consult their
attorneys or tax advisers with respect to the establishment and
maintenance of any such plan. Such plans are offered by brokerage firms
and other financial institutions. The Trust Funds will waive the $1,000
minimum investment requirement for IRA accounts. The minimum investment
is $250 for tax-deferred plans such as IRA accounts. Fees and charges
with respect to such plans may vary.
Individual Retirement Account--IRA. Any individual under age 70 1/2
may contribute the lesser of $2,000 or 100% of compensation to an IRA
annually. Such contributions are fully deductible if the individual (and
spouse if filing jointly) are not covered by a retirement plan at work.
The deductible amount an individual may contribute to an IRA will be
reduced $10 for each $50 of adjusted gross income over $25,000 ($40,000
if married, filing jointly or $0 if married, filing separately), if
either an individual or their spouse (if married, filing jointly) is an
active participant in an employer maintained retirement plan. Thus, if
an individual has adjusted gross income over $35,000 ($50,000 if married,
filing jointly or $0 if married, filing separately) and if an individual
or their spouse is an active participant in an employer maintained
retirement plan, no IRA deduction is permitted. Under the Internal
Revenue Code of 1986, as amended (the "Code"), an individual may make
nondeductible contributions to the extent deductible contributions are
not allowed. All distributions from an IRA (other than the return of
certain excess contributions) are treated as ordinary income for federal
income taxation purposes provided that under the Code an individual need
not pay tax on the return of nondeductible contributions. The amount
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includable in income for the taxable year is the portion of the amount
withdrawn for the taxable year as the individual's aggregate deductible
IRA contributions bear to the aggregate balance of all IRAs of the
individual.
A participant's interest in an IRA must be, or commence to be,
distributed to the participant not later than April 1 of the calendar
year following the year during which the participant attains age 70 1/2.
Distributions made before attainment of age 59 1/2, except in the case of
the participant's death or disability, or where the amount distributed is
to be rolled over to another IRA, or where the distributions are taken as
a series of substantially equal periodic payments over the participant's
life or life expectancy (or the joint lives or life expectancies of the
participant and the designated beneficiary) are generally subject to a
surtax in an amount equal to 10% of the distribution. The amount of such
periodic payments may not be modified before the later of five years or
attainment of age 59 1/2. Excess contributions are subject to an annual
6% excise tax.
IRA applications, disclosure statements and trust agreements are
available from the Sponsor upon request.
Qualified Retirement Plans. Units of a Trust may be purchased by
qualified pension or profit sharing plans maintained by corporations,
partnerships or sole proprietors. The maximum annual contribution for a
participant in a money purchase pension plan or to paired profit sharing
and pension plans is the lessor of 25% of compensation or $30,000.
Prototype plan documents for establishing qualified retirement plans are
available from the Sponsor upon request.
Excess Distributions Tax. In addition to the other taxes due by
reason of a plan distribution, a tax of 15% may apply to certain
aggregate distributions from IRAs, Keogh plans, and corporate retirement
plans to the extent such aggregate taxable distributions exceed specified
amounts (generally $150,000, as adjusted) during a tax year. This 15%
tax will not apply to distributions on account of death, qualified
domestic relations orders or amounts eligible for tax-deferred rollover
treatment. In general, for lump sum distributions the excess
distributions over $750,000 (as adjusted) will be subject to the 15% tax.
The Trustee, has agreed to act as custodian for certain retirement
plan accounts. An annual fee, if not paid separately, will be assessed
by the Trustee and paid through the liquidation of shares of the
reinvestment account. An individual wishing the Trustee to act as
custodian must complete a Ranson UIT/IRA application and forward it along
with a check made payable to the Trustee. Certificates for Individual
Retirement Accounts cannot be issued.
DISTRIBUTION REINVESTMENT
Each Unitholder of a Trust may elect to have distributions of
principal (including capital gains, if any) or interest or both
automatically invested without charge in shares of any open-end mutual
fund registered in such Unitholder's state of residence which is
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underwritten or advised by Zurich Kemper Investments, Inc. (the "Kemper
Funds"), other than those Kemper Funds sold with a contingent deferred
sales charge.
If individuals indicate they wish to participate in the Reinvestment
Program but do not designate a reinvestment fund, the Program Agent
referred to below will contact such individuals to determine which
reinvestment fund or funds they wish to elect. Since the portfolio
securities and investment objectives of such Kemper Funds may differ
significantly from that of the Trust Funds, Unitholders should carefully
consider the consequences before selecting such Kemper Funds for
reinvestment. Detailed information with respect to the investment
objectives and the management of the Funds is contained in their
respective prospectuses, which can be obtained from any Trust Underwriter
upon request. An investor should read the prospectus of the reinvestment
fund selected prior to making the election to reinvest. Unitholders who
desire to have such distributions automatically reinvested should inform
their broker at the time of purchase or should file with the Program
Agent a written notice of election.
Unitholders who are receiving distributions in cash may elect to
participate in distribution reinvestment by filing with the Program Agent
an election to have such distributions reinvested without charge. Such
election must be received by the Program Agent at least ten days prior to
the Record Date applicable to any distribution in order to be in effect
for such Record Date. Any such election shall remain in effect until a
subsequent notice is received by the Program Agent. See "Distributions
to Unitholders."
The Program Agent is the Trustee. All inquiries concerning
participation in distribution reinvestment should be directed to the
Program Agent at its unit investment trust division office.
INTEREST, ESTIMATED LONG-TERM RETURN AND ESTIMATED CURRENT RETURN
As of the opening of business on the date indicated therein, the
Estimated Long-Term Returns and the Estimated Current Returns for each
Series of the Trust were as set forth under "Essential Information" for
the applicable Trust in Part Two of this Prospectus. Estimated Current
Returns are calculated by dividing the estimated net annual interest
income per Unit by the Public Offering Price. The estimated net annual
interest income per Unit will vary with changes in fees and expenses of
the Trustee, the Sponsor and the Evaluator and with the principal
prepayment, redemption, maturity, exchange or sale of Bonds while the
Public Offering Price will vary with changes in the offering price of the
underlying Bonds and with changes in accrued interest or Purchased
Interest and Daily Accrued Interest, as applicable; therefore, there is
no assurance that the present Estimated Current Returns will be realized
in the future. Estimated Long-Term Returns are calculated using a
formula which (1) takes into consideration, and determines and factors in
the relative weightings of, the market values, yields (which takes into
account the amortization of premiums and the accretion of discounts) and
estimated retirements of all of the Bonds in a Trust and (2) takes into
account the expenses and sales charge associated with each Trust Unit.
Since the market values and estimated retirements of the Bonds and the
expenses of the Trust will change, there is no assurance that the present
Estimated Long-Term Returns will be realized in the future. Estimated
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Current Returns and Estimated Long-Term Returns are expected to differ
because the calculation of Estimated Long-Term Returns reflects the
estimated date and amount of principal returned while Estimated Current
Returns calculations include only net annual interest income and Public
Offering Price.
FEDERAL TAX STATUS
For purposes of the following discussion and opinions, it is assumed
that each of the obligations is debt for Federal income tax purposes. In
the opinion of Chapman and Cutler, special counsel for the Sponsor, under
existing law:
1. Each Trust is not an association taxable as a corporation
for Federal income tax purposes.
2. Each Unitholder of the Trust is considered to be the owner
of a pro rata portion of each of a Trust's assets for Federal income
tax purposes under Subpart E, Subchapter J of Chapter 1 of the
Internal Revenue Code of 1986 (the "Code"); and the income will be
treated as income of the Unitholders. Each Unitholder will be
considered to have received his pro rata share of income derived
from each Trust asset when such income is considered to be received
by a Trust. Each Unitholder will also be required to include in
taxable income for Federal income tax purposes, original issue
discount with respect to his interest in any Bonds held by a Trust
at the same time and in the same manner as though the Unitholder
were the direct owner of such interest.
3. Each Unitholder will have a taxable event when a Bond is
disposed of (whether by sale, exchange, liquidation, redemption, or
payment at maturity) or when the Unitholder redeems or sells his
Units. A Unitholder's tax basis in his Units will equal his tax
basis in his pro rata portion of all the assets of the Trust. Such
basis is determined (before the adjustments described below) by
apportioning the tax basis for the Units among each of the Trust
assets according to value as of the valuation date nearest the date
of acquisition of the Units. Unitholders must reduce the tax basis
of their Units for their share of accrued interest received, if any,
on Bonds delivered after the date the Unitholders pay for their
Units to the extent such interest accrued on such Bonds before the
date the Trust acquired ownership of the Bonds (and the amount of
this reduction may exceed the amount of accrued interest paid to the
sellers) and, consequently, such Unitholders may have an increase in
taxable gain or reduction in capital loss upon the disposition of
such Units. Gain or loss upon the sale or redemption of Units is
measured by comparing the proceeds of such sale or redemption with
the adjusted basis of the Units. If the Trustee disposes of Bonds
(whether by sale, exchange, payment at maturity, redemption or
otherwise), gain or loss is recognized to the Unitholder (subject to
various nonrecognition provisions of the Code). The amount of any
such gain or loss is measured by comparing the Unitholders pro rata
share of the total proceeds from such disposition with his basis for
his fractional interest in the asset disposed of. The basis of each
Unit and of each Bond which was issued with original issue discount
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(or which has market discount) (including any U.S. Treasury
obligations) must be increased by the amount of accrued original
issue discount (and accrued market discount if the Unitholder elects
to include market discount in income as it accrues) and the basis of
each Unit and of each Bond which was purchased by a Trust at a
premium must be reduced by the annual amortization of bond premium
which the Unitholder has properly elected to amortize under
Section 171 of the Code. The tax basis reduction requirements of
the Code relating to amortization of bond premium may, under some
circumstances, result in the Unitholder realizing a taxable gain
when his Units are sold or redeemed for an amount equal to or less
than his original cost. The U.S. Treasury obligations held by a
Trust, if any, are treated as bonds that were originally issued at
an original issue discount provided, pursuant to a Treasury
Regulation (the "Regulation") issued on December 28, 1992, that the
amount of original issue discount determined under Section 1286 of
the Code is not less than a "de minimis" amount as determined
thereunder (as discussed below under "Original Issue Discount").
Because U.S. Treasury obligations represent interests in "stripped"
U.S. Treasury bonds, a Unitholder's initial cost for his pro rata
portion of each U.S. Treasury obligation held by a Trust (determined
at the time he acquires his Units, in the manner described above)
shall be treated as its "purchase price" by the Unitholder.
Original issue discount is effectively treated as interest for
Federal income tax purposes, and the amount of original issue
discount in this case is generally the difference between the Bond's
purchase price and its stated redemption price at maturity. A
Unitholder will be required to include in gross income for each
taxable year the sum of his daily portions of original issue
discount attributable to the Bonds held by a Trust as such original
issue discount accrues and will, in general, be subject to Federal
income tax with respect to the total amount of such original issue
discount that accrues for such year even though the income is not
distributed to the Unitholders during such year to the extent it is
not less than a "de minimis" amount as determined under the
Regulation. To the extent the amount of such discount is less than
the respective "de minimis" amount, such discount shall be treated
as zero. In general, original issue discount accrues daily under a
constant interest rate method which takes into account the semi-
annual compounding of accrued interest. In the case of U.S Treasury
obligations, this method will generally result in an increasing
amount of income to the Unitholders each year. Unitholders should
consult their tax advisers regarding the Federal income tax
consequences and accretion of original issue discount.
Limitations on Deductibility of Trust Expenses by Unitholders. Each
Unitholder's pro rata share of each expense paid by a Trust is deductible
by the Unitholder to the same extent as though the expense had been paid
directly by him. It should be noted that as a result of the Tax Reform
Act of 1986 (the "Act"), certain miscellaneous itemized deductions, such
as investment expenses, tax return preparation fees and employee business
expenses will be deductible by an individual only to the extent they
exceed 2% of such individual's adjusted gross income. Unitholders may be
required to treat some or all of the expenses paid by a Trust as
miscellaneous itemized deductions subject to this limitation.
Premium. If a Unitholder's tax basis of his pro rata portion in any
Bonds held by a Trust exceeds the amount payable by the issuer of the
Bond with respect to such pro rata interest upon the maturity of the
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Bond, such excess would be considered premium which may be amortized by
the Unitholder at the Unitholder's election as provided in Section 171 of
the Code. Unitholders should consult their tax advisors regarding
whether such election should be made and the manner of amortizing
premium.
Original Issue Discount. Certain of the Bonds in each Trust may
have been acquired with "original issue discount." In the case of any
Bonds in a Trust acquired with "original issue discount" that exceeds a
"de minimis" amount as specified in the Code or in the case of U.S.
Treasury obligations as specified in the Regulation, such discount is
includable in taxable income of the Unitholders on an accrual basis
computed daily, without regard to when payments of interest on such Bonds
are received. The Code provides a complex set of rules regarding the
accrual of original issue discount. These rules provide that original
issue discount generally accrues on the basis of a constant compound
interest rate over the term of the Bonds. Unitholders should consult
their tax advisers as to the amount of original issue discount which
accrues.
Special original issue discount rules apply if the purchase price of
the Bond by a Trust exceeds its original issue price plus the amount of
original issue discount which would have previously accrued based upon
its issue price (its "adjusted issue price"). Similarly these special
rules would apply to a Unitholder if the tax basis of his pro rata
portion of a Bond issued with original issue discount exceeds his pro
rata portion of its adjusted issue price. Unitholders should also
consult their tax advisers regarding these special rules.
It is possible that a corporate Bond that has been issued at an
original issue discount may be characterized as a "high-yield discount
obligation" within the meaning of Section 163(e)(5) of the Code. To the
extent that such an obligation is issued at a yield in excess of six
percentage points over the applicable Federal rate, a portion of the
original issue discount on such obligation will be characterized as a
distribution on stock (e.g., dividends) for purposes of the dividends
received deduction which is available to certain corporations with
respect to certain dividends received by such corporation.
Market Discount. If a Unitholder's tax basis in his pro rata
portion of Bonds is less than the allocable portion of such Bond's stated
redemption price at maturity (or, if issued with original issue discount,
the allocable portion of its "revised issue price"), such difference will
constitute market discount unless the amount of market discount is "de
minimis" as specified in the Code. Market discount accrues daily
computed on a straight line basis, unless the Unitholder elects to
calculate accrued market discount under a constant yield method. The
market discount rules do not apply to U.S. Treasury obligations because
they are stripped debt instruments subject to special original issue
discount rules as discussed above. Unitholders should consult their tax
advisors regarding whether such election should be made and as to the
amount of market discount which accrues.
Accrued market discount is generally includable in taxable income to
the Unitholders as ordinary income for Federal tax purposes upon the
receipt of serial principal payments on the Bonds, on the sale, maturity
or disposition of such Bonds by a Trust, and on the sale by a Unitholder
of Units, unless a Unitholder elects to include the accrued market
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discount in taxable income as such discount accrues. If a Unitholder
does not elect to annually include accrued market discount in taxable
income as it accrues, deductions for any interest expense incurred by the
Unitholder which is incurred to purchase or carry his Units will be
reduced by such accrued market discount. In general, the portion of any
interest expense which was not currently deductible would ultimately be
deductible when the accrued market discount is included in income.
Unitholders should consult their tax advisers regarding whether an
election should be made to include market discount in income as it
accrues and as to the amount of interest expense which may not be
currently deductible.
Computation of the Unitholder's Tax Basis. The tax basis of a
Unitholder with respect to his interest in a Bond is increased by the
amount of original issue discount (and market discount, if the Unitholder
elects to include market discount, if any, on the Bonds held by a Trust
in income as it accrues) thereon properly included in the Unitholder's
gross income as determined for Federal income tax purposes and reduced by
the amount of any amortized premium which the Unitholder has properly
elected to amortize under Section 171 of the Code. A Unitholder's tax
basis in his Units will equal his tax basis in his pro rata portion of
all of the assets of the Trust.
Recognition of Taxable Gain or Loss upon Disposition of Obligations
by a Trust or Disposition of Units. A Unitholder will recognize taxable
capital gain (or loss) when all or part of his pro rata interest in a
Bond is disposed of in a taxable transaction for an amount greater (or
less) than his tax basis therefor subject to various non-recognition
provisions of the Code. As previously discussed, gain realized on the
disposition of the interest of a Unitholder in any Bond deemed to have
been acquired with market discount will be treated as ordinary income to
the extent the gain does not exceed the amount of accrued market discount
not previously taken into income. Any capital gain or loss arising from
the disposition of a Bond by a Trust or the disposition of Units by a
Unitholder will generally be short-term capital gain or loss unless the
Unitholder has held his Units for more than one year in which case such
capital gain or loss will be generally long-term. For taxpayers other
than corporations, net capital gains (which is defined as net long-term
capital gain over net short-term capital loss for a taxable year) are
subject to a maximum marginal stated tax rate of 28 percent. However, it
should be noted that legislative proposals are introduced from time to
time that affect tax rates and could affect relative differences at which
ordinary income and capital gains are taxed. The tax basis reduction
requirements of the Code relating to amortization of bond premium may
under some circumstances, result in the Unitholder realizing taxable gain
when his Units are sold or redeemed for an amount equal to or less than
his original cost.
"The Revenue Reconciliation Act of 1993" (the "Tax Act") raised tax
rates on ordinary income while capital gains remain subject to a 28
percent maximum stated rate for taxpayers other than corporations.
Because some or all capital gains are taxed at a comparatively lower rate
under the Tax Act, the Tax Act includes a provision that recharacterizes
capital gains as ordinary income in the case of certain financial
transactions that are "conversion transactions" effective for
transactions entered into after April 30, 1993. Unitholders and
prospective investors should consult with their tax advisers regarding
the potential effect of this provision on their investment in Units.
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If the Unitholder disposes of a Unit, he is deemed thereby to have
disposed of his entire pro rata interest in all Trust assets including
his pro rata portion of all of the Bonds represented by the Unit. This
may result in a portion of the gain, if any, on such sale being taxable
as ordinary income under the market discount rules (assuming no election
was made by the Unitholder to include market discount in income as it
accrues) as previously discussed.
Foreign Investors. A Unitholder who is a foreign investor (i.e., an
investor other than a U.S. citizen or resident or a U.S. corporation,
partnership, estate or trust) will generally not be subject to United
States federal income taxes, including withholding taxes, on interest
income (including any original issue discount) on, or any gain from the
sale or other disposition of, his pro rata interest in any Bond or the
sale of his Units provided that all of the following conditions are met:
(i) the interest income or gain is not effectively connected with the
conduct by the foreign investor of a trade or business within the United
States, (ii) if the interest is United States source income (which is the
case for most securities issued by United States issuers), the Bond is
issued after July 18, 1984 (which is the case for each Bond held by a
Trust), then the foreign investor does not own, directly or indirectly,
10% or more of the total combined voting power of all classes of voting
stock of the issuer of the Bond and the foreign investor is not a
controlled foreign corporation related (within the meaning of
Section 864(d)(4) of the Code) to the issuer of the Bond, (iii) with
respect to any gain, the foreign investor (if an individual) is not
present in the United States for 183 days or more during his or her
taxable year, and (iv) the foreign investor provides all certification
which may be required of his status (foreign investors may contact the
Sponsor to obtain a Form W-8 which must be filed with the Trustee and
refiled every three calendar years thereafter). Foreign investors should
consult their tax advisers with respect to United States tax consequences
of ownership of Units.
It should be noted that the Tax Act includes a provision which
eliminates the exemption from United States taxation, including
withholding taxes, for certain "contingent interest." The provision
applies to interest received after December 31, 1993. No opinion is
expressed herein regarding the potential applicability of this provision
and whether United States taxation or withholding taxes could be imposed
with respect to income derived from the Units as a result thereof.
Unitholders and prospective investors should consult with their tax
advisers regarding the potential effect of this provision on their
investment in Units.
General. Each Unitholder (other than a foreign investor who has
properly provided the certifications described in the preceding
paragraph) will be requested to provide the Unitholder's taxpayer
identification number to the Trustee and to certify that the Unitholder
has not been notified that payments to the Unitholder are subject to back-
up withholding. If the proper taxpayer identification number and
appropriate certification are not provided when requested, distributions
by a Trust to such Unitholder including amounts received upon the
redemption of the Units will be subject to back-up withholding.
The foregoing discussion relates only to United States Federal
income taxes; Unitholders may be subject to state and local taxation in
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other jurisdictions (including a foreign investor's country of
residence). Unitholders should consult their tax advisers regarding
potential state, local, or foreign taxation with respect to the Units.
TAX REPORTING AND REALLOCATION
Because the Trusts receive interest and makes monthly distributions
based upon a Trust's expected total collections of interest and any
anticipated expenses, certain tax reporting consequences may arise. A
Trust is required to report Unitholder information to the Internal
Revenue Service ("IRS"), based upon the actual collection of interest by
such Trust on the securities in such Trust, without regard to such
Trust's expenses or to such Trust's payments to Unitholders during the
year. If distributions to Unitholders exceed interest collected, the
difference will be reported as a return of principal which will reduce a
Unitholder's cost basis in its Units (and its pro rata interest in the
securities in a Trust). A Unitholder must include in taxable income the
amount of income reported by a Trust to the IRS regardless of the amount
distributed to such Unitholder. If a Unitholder's share of taxable
income exceeds income distributions made by a trust to such Unitholder,
such excess is in all likelihood attributable to the payment of
miscellaneous expenses of such Trust which will not be deductible by an
individual Unitholder as an itemized deduction except to the extent that
the total amount of certain itemized deductions, such as investments
expenses (which would include the Unitholder's share of Trust expenses),
tax return preparation fees and employee business expenses, exceeds 2% of
such Unitholders's adjusted gross income. Alternatively, in certain
cases, such excess may represent an increase in the Unitholder's tax
basis in the Units owned. Investors with questions regarding these
issues should consult with their tax advisers.
PUBLIC OFFERING OF UNITS
Public Offering Price. Units of each Series of the Trust are
offered at the Public Offering Price. The Public Offering Price per Unit
of a Series is equal to the aggregate bid side evaluation of the Bonds in
the Series' portfolio (as determined pursuant to the terms of a contract
with the Evaluator, Cantor Fitzgerald & Co., a non-affiliated firm
regularly engaged in the business of evaluating, quoting or appraising
comparable securities), plus or minus (a) cash, if any, in the Principal
Account, held or owed by the Series, (b) Purchased Interest (if any) and
(c) Daily Accrued Interest, divided by the number of outstanding Units of
that Series of the Trust, plus the sales charge applicable. The sales
charge is based upon the dollar weighted average maturity of a Trust and
is determined in accordance with the table set forth below. For purposes
of this computation, Bonds will be deemed to mature on their expressed
maturity dates unless: (a) the Bonds have been called for redemption or
funds or securities have been placed in escrow to redeem them on an
earlier call date, in which case such call date will be deemed to be the
date upon which they mature; or (b) such Bonds are subject to a
"mandatory tender," in which case such mandatory tender will be deemed to
be the date upon which they mature. The effect of this method of sales
charge computation will be that different sales charge rates will be
applied to a Trust based upon the dollar weighted average maturity of
such Trust's portfolio, in accordance with the following schedule:
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<TABLE>
<CAPTION>
PERCENT OF
DOLLAR PUBLIC
WEIGHTED AVERAGE OFFERING AMOUNT
YEARS TO MATURITY PRICE INVESTED
----------------- ------------- --------------
<S> <C> <C>
0 to .99 years 0.00% 0.00%
1 to 3.99 years 2.00 2.041
4 to 7.99 years 3.50 3.627
8 to 14.99 years 4.50 4.712
15 or more years 5.50 5.820
</TABLE>
The sales charge per Unit will be reduced as set forth below:
<TABLE>
<CAPTION>
DOLLAR WEIGHTED AVERAGE
YEARS TO MATURITY*
4 TO 7.99 8 TO 14.99 15 OR MORE
--------- ---------- ----------
AMOUNT OF INVESTMENT SALES CHARGE (% OF PUBLIC OFFERING PRICE)
- -------------------- -----------------------------------------
<S> <C> <C> <C>
$1 to $99,999 3.50% 4.50% 5.50%
$100,000 to $499,999 3.25 4.25 5.00
$500,000 to $999,999 3.00 4.00 4.50
$1,000,000 or more 2.75 3.75 4.00
</TABLE>
- -----------------
*If the dollar weighted average maturity of a Trust is from 1 to
3.99 years, the sales charge is 2% and 1.5% of the Public Offering Price
for purchases of $1 to $249,999 and $250,000 or more, respectively.
The reduced sales charge as shown on the preceding charts will apply
to all purchases of Units on any one day by the same purchaser from the
same firm in the amounts stated herein, and for this purpose, purchases
of Units of a Series of the Trust will be aggregated with concurrent
purchases of Units of any other unit investment trust that may be offered
by the Sponsor. Additionally, Units purchased in the name of a spouse or
child (under 21) of such purchaser will be deemed to be additional
purchases by such purchaser. The reduced sales charge will also be
applicable to a trust or other fiduciary purchasing for a single trust
estate or single fiduciary account.
Units may be purchased at the Public Offering Price less the
concession the Sponsor typically allows to dealers and other selling
agents for purchases (see "Public Distribution of Units") by investors
who purchase Units through registered investment advisers, certified
financial planners or registered broker-dealers who in each case either
charge periodic fees for financial planning, investment advisory or asset
management services, or provide such services in connection with the
establishment of an investment account for which a comprehensive "wrap
fee" charge is imposed.
The Sponsor intends to permit officers, directors and employees of
the sponsor and Evaluator and, at the discretion of the Sponsor,
registered representatives of selling firms to purchase Units of the
Trust without a sales charge, although a transaction processing fee may
be imposed on such trades.
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The Public Offering Price on the date shown on the cover page of
Part Two of the Prospectus or on any subsequent date will vary from the
amounts stated under "Essential Information" in Part Two due to
fluctuations in the prices of the underlying Bonds. The aggregate bid
side evaluation of the Bonds shall be determined (a) on the basis of
current bid prices of the Bonds, (b) if bid prices are not available for
any particular Bond, on the basis of current bid prices for comparable
bonds, (c) by determining the value of the Bonds on the bid side of the
market by appraisal, or (d) by any combination of the above. The value of
insurance obtained by an issuer of Bonds or by the Sponsor is reflected
and included in the market value of such Bonds.
The foregoing evaluations and computations shall be made as of the
Evaluation Time stated under "Essential Information" in Part Two, on each
business day effective for all sales made during the preceding 24-hour
period, and for purposes of resales and repurchases of Units.
The interest on the Bonds in each Series of the Trust, less the
related estimated fees and expenses, is estimated to accrue in the annual
amounts per Unit set forth under "Essential Information" in Part Two.
The amount of net interest income which accrues per Unit may change as
Bonds mature or are redeemed, exchanged or sold, or as the expenses of a
Series of the Trust change or as the number of outstanding Units of such
Series changes.
Payment for Units must be made on or before the third business day
following purchase. If a Unitholder desires to have certificates
representing Units purchased, such certificates will be delivered as soon
as possible following a written request therefor. For information with
respect to redemption of Units purchased, but as to which certificates
requested have not been received, see "Redemption" below.
Accrued Interest. Included in the Public Offering Price of Units
for certain series of Kemper Defined Funds Insured Corporate Series and
all EVEREN Unit Investment Trusts Insured Corporate Series is accrued
interest as described herein. Accrued interest consists of two elements.
The first element arises as a result of accrued interest which is the
accumulation of unpaid interest on a bond from the last day on which
interest thereon was paid. Interest on the Bonds is actually paid either
monthly or semi-annually to a Trust. However, interest on the Bonds is
accounted for daily on an accrual basis. Because of this, a Trust always
has an amount of interest earned but not yet collected by the Trustee
because of coupons that are not yet due. For this reason, the Public
Offering Price of Units of certain Trusts will have added to it the
proportionate share of accrued and undistributed interest to the date of
settlement.
The Trustee advanced the amount of accrued interest on the First
Settlement Date and the same was distributed to the Sponsor. Such
advance was repaid to the Trustee through the first receipts of interest
received on the Bonds. Consequently, the amount of accrued interest
added to the Public Offering Price of Units of certain Trusts included
only accrued interest arising after the First Settlement Date of a Trust,
less any distributions from the Interest Account subsequent to this First
Settlement Date. Since the First Settlement Date was the date of
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settlement for anyone who ordered Units on the Date of Deposit, no
accrued interest was added to the Public Offering Price of Units ordered
on the Date of Deposit.
The second element of accrued interest arises because of the
structure of the Interest Account. The Trustee has no cash for
distribution to Unitholders until it receives interest payments on the
Bonds in a Trust. The Trustee is obligated to provide its own funds, at
times, in order to advance interest distributions. The Trustee will
recover these advancements when such interest is received. Interest
Account balances are established so that it will not be necessary on a
regular basis for the Trustee to advance its own funds in connection with
such interest distributions. The Interest Account balances are also
structured so that there will generally be positive cash balances and
since the funds held by the Trustee will be used by it to earn interest
thereon, it benefits thereby (see "Expenses of the Trust").
Accrued interest is computed as of the initial record date of the
Trusts. On the date of the first distribution of interest to Unitholders
after the First Settlement Date, the interest collected by the Trustee
will be sufficient to repay its advances, to allow for accrued interest
under the monthly, quarterly and semi-annual plans of distribution and to
generate enough cash to commence distributions to Unitholders. If a
Unitholder sells or redeems all or a portion of his Units or if the Bonds
in a Trust are sold or otherwise removed or if a Trust is liquidated, he
will receive at that time his proportionate share of the accrued interest
computed to the settlement date in the case of sale or liquidation and to
the date of tender in the case of redemption of such Trust.
Purchased and Daily Accrued Interest. Included in the Public
Offering Price of Units for certain series of Kemper Defined Funds
Insured Corporate Series is accrued interest as described herein.
Accrued interest consists of two elements. The first element arises as a
result of accrued interest which is the accumulation of unpaid interest
on a bond from the later of the last day on which interest thereon was
paid or the date of original issuance of the bond. Interest on the coupon
Bonds in a Trust Fund is paid semi-annually to the Trust. A portion of
the aggregate amount of such accrued interest on the Bonds in a Trust to
the First Settlement Date of the Trust is referred to herein as
"Purchased Interest." Included in the Public Offering Price of the Trust
Units is the Purchased Interest. In an effort to reduce the amount of
Purchased Interest which would otherwise have to be paid by Unitholders,
the Trustee may advance a portion of the accrued interest to the Sponsor
as the unitholder of record as of the First Settlement Date. The second
element of accrued interest arises because the estimated net interest on
the Units in the Trust Fund is accounted for daily on an accrual basis
(herein referred to as "Daily Accrued Interest"). Because of this, the
Units always have an amount of interest earned but not yet paid or
reserved for payment. For this reason, the Public Offering Price of
Units will include the proportionate share of Daily Accrued Interest to
the date of settlement.
If a unitholder sells or redeems all or a portion of his Units or if
the Bonds are sold or otherwise removed or if a Trust Fund is liquidated,
he will receive at that time his proportionate share of the Purchased
Interest (if any) and Daily Accrued Interest computed to the settlement
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<PAGE>
date in the case of sale or liquidation and to the date of tender in the
case of redemption in a Trust Fund.
Accrued Interest;. Included in the Public Offering Price of Units
for Kemper Insured Corporate Trust series is accrued interest as
described herein. Accrued interest is the accumulation of unpaid
interest on a security from the last day on which interest thereon was
paid. Interest on Securities generally is paid semi-annually although a
Trust accrues such interest daily. Because of this, a Trust always has
an amount of interest earned but not yet collected by the Trustee. For
this reason, with respect to sales settling subsequent to the First
Settlement Date, the Public Offering Price of Units will have added to it
the proportionate share of accrued interest to the date of settlement.
Unitholders will receive on the next distribution date of a Trust the
amount, if any, of accrued interest paid on their Units.
In an effort to reduce the amount of accrued interest which would
otherwise have to be paid in addition to the Public Offering Price in the
sale of Units to the public, the Trustee will advance the amount of
accrued interest as of the First Settlement Date and the same will be
distributed to the Sponsor as the Unitholder of record as of the First
Settlement Date. Consequently, the amount of accrued interest to be
added to the Public Offering Price of Units will include only accrued
interest from the First Settlement Date to the date of settlement, less
any distributions from the Interest Account subsequent to the First
Settlement Date.
Because of the varying interest payment dates of the Securities,
accrued interest at any point in time will be greater than the amount of
interest actually received by the Trusts and distributed to Unitholders.
Therefore, there will always remain an item of accrued interest that is
added to the value of the Units. If a Unitholder sells or redeems all or
a portion of his Units, he will be entitled to receive his proportionate
share of the accrued interest from the purchaser of his Units. Since the
Trustee has the use of the funds held in the Interest Account for
distributions to Unitholders and since such Account is non-interest-
bearing to Unitholders, the Trustee benefits thereby.
Public Distribution of Units. The Sponsor has qualified Units for
sale in a number of states. Units will be sold through dealers who are
members of the National Association of Securities Dealers, Inc. and
through others. Sales may be made to or through dealers at prices which
represent discounts from the Public Offering Price as set forth in the
table below. Certain commercial banks are making Units of the Trusts
available to their customers on an agency basis. A portion of the sales
charge paid by their customers is retained by or remitted to the banks in
the amounts shown in the table below. Under the Glass-Steagall Act,
banks are prohibited from underwriting Trust Units; however, the Glass-
Steagall Act does permit certain agency transactions and the banking
regulators have indicated that these particular agency transactions are
permitted under such Act. In addition, state securities laws on this
issue may differ from the interpretations of Federal law expressed herein
and banks and financial institutions may be required to register as
dealers pursuant to state law.
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<TABLE>
<CAPTION>
DOLLAR WEIGHTED AVERAGE
YEARS TO MATURITY*
4 TO 7.99 8 TO 14.99 15 OR MORE
--------- ---------- ----------
AMOUNT OF INVESTMENT Discount per Unit (% of Public Offering Price)
- -------------------- ----------------------------------------------
<S> <C> <C> <C>
$1,000 to $99,999 2.00% 3.00% 4.00%
$100,000 to $499,999 1.75 2.75 3.50
$500,000 to $999,999 1.50 2.50 3.00
$1,000,000 or more 1.25 2.25 2.50
</TABLE>
- ---------------------
*If the dollar weighted average maturity of a Trust is from 1 to
3.99 years, the concession or agency commission is 1.00% of the Public
Offering Price.
In addition to such discounts, the Sponsor may, from time to time,
pay or allow an additional discount, in the form of cash or other
compensation, to dealers employing registered representatives who sell,
during a specified time period, a minimum dollar amount of Units of the
Trust and other unit investment trusts underwritten by the Sponsor.
The Sponsor reserves the right to change the levels of discounts at
any time. The difference between the discount and the sales charge will
be retained by the Sponsor.
The Sponsor reserves the right to reject, in whole or in part, any
order for the purchase of Units.
Profits of Sponsor. The Sponsor will retain a portion of the sales
charge on each Unit sold, representing the difference between the Public
Offering Price of the Units and the discounts allowed to firms selling
such Units. The Sponsor may realize additional profit or loss as a
result of the possible change in the daily evaluation of the Bonds in a
Trust, since the value of its inventory of Units may increase or
decrease.
MARKET FOR UNITS
While not obligated to do so, the Sponsor intends to, subject to
change at any time, maintain a market for Units of each Series of the
Trust offered hereby and to continuously offer to purchase said Units at
prices, as determined by the Evaluator, based on the aggregate bid prices
of the underlying Bonds of such Series, together with Purchased Interest
(if any) and Daily Accrued Interest to the expected date of settlement.
Accordingly, Unitholders who wish to dispose of their Units should
inquire of their broker or bank as to the current market price of the
Units prior to making a tender for redemption to the Trustee.
REDEMPTION
If more favorable terms do not exist in the over-the-counter market
described above, Unitholders of a Series of the Trust may cause their
Units to be redeemed by the Trustee by making a written request to the
Trustee, The Bank of New York, 101 Barclay Street, New York, New York
10286 and, in the case of Units evidenced by a certificate, by tendering
such certificate to the Trustee, properly endorsed or accompanied by a
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<PAGE>
written instrument or instruments of transfer in form satisfactory to the
Trustee. Unitholders must sign such written request, and such certificate
or transfer instrument, exactly as their names appear on the records of
the Trustee and on any certificate representing the Units to be redeemed.
If the amount of the redemption is $25,000 or less and the proceeds are
payable to the Unitholder(s) of record at the address of record, no
signature guarantee is necessary for redemptions by individual account
owners (including joint owners). Additional documentation may be
requested, and a signature guarantee is always required, from
corporations, executors, administrators, trustees, guardians or
associations. The signatures must be guaranteed by a participant in the
Securities Transfer Agents Medallion Program ("STAMP") or such other
signature program in addition to, or in substitution for, STAMP, as may
be accepted by the Trustee. A certificate should only be sent by
registered or certified mail for the protection of the Unitholder. Since
tender of the certificate is required for redemption when one has been
issued, Units represented by a certificate cannot be redeemed until the
certificate representing such Units has been received by the purchaser.
Redemption shall be made by the Trustee on the third business day
following the day on which a tender for redemption is received, (the
"Redemption Date"), by payment of cash equivalent to the Redemption Price
for that Series of the Trust, determined as set forth below under
"Computation of Redemption Price," as of the Evaluation Time stated under
"Essential Information" in Part Two, next following such tender,
multiplied by the number of Units being redeemed. The price received
upon redemption might be more or less than the amount paid by the
Unitholder depending on the value of the Bonds in the portfolio at the
time of redemption.
Under regulations issued by the Internal Revenue Service, the
Trustee is required to withhold a certain percentage of the principal
amount of a Unit redemption if the Trustee has not been furnished the
redeeming Unitholder's tax identification number in the manner required
by such regulations. Any amount so withheld is transmitted to the
Internal Revenue Service and may be recovered by the Unitholder only when
filing a tax return. Under normal circumstances the Trustee obtains the
Unitholder's tax identification number from the selling broker. However,
any time a Unitholder elects to tender Units for redemption, such
Unitholder should make sure that the Trustee has been provided a
certified tax identification number in order to avoid this possible "back-
up withholding." In the event the Trustee has not been previously
provided such number, one must be provided at the time redemption is
requested.
Any amounts paid on redemption representing interest shall be
withdrawn from the Interest Account of such Series to the extent that
funds are available for such purpose. All other amounts paid on
redemption shall be withdrawn from the Principal Account of such Series.
The Trustee is empowered to sell Bonds from the portfolio of a Series in
order to make funds available for the redemption of Units of such Series.
Such sale may be required when Bonds would not otherwise be sold and
might result in lower prices than might otherwise be realized. To the
extent Bonds are sold, the size and diversity of that Series of the Trust
will be reduced.
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<PAGE>
The Trustee is irrevocably authorized in its discretion, if the
Sponsor does not elect to purchase any Units tendered for redemption, in
lieu of redeeming such Units, to sell such Units in the over-the-counter
market for the account of tendering Unitholders at prices which will
return to such Unitholders amounts in cash, net after brokerage
commissions, transfer taxes and other charges, equal to or in excess of
the Redemption Price for such Units. In the event of any such sale, the
Trustee shall pay the net proceeds thereof to the Unitholders on the day
they would otherwise be entitled to receive payment of the Redemption
Price.
The right of redemption may be suspended and payment postponed (1)
for any period during which the New York Stock Exchange is closed, other
than customary weekend and holiday closings, or during which (as
determined by the Securities and Exchange Commission) trading on the New
York Stock Exchange is restricted; (2) for any period during which an
emergency exists as a result of which disposal by the Trustee of Bonds is
not reasonably practicable or it is not reasonably practicable fairly to
determine the value of the underlying Bonds in accordance with the Trust
Agreement; or (3) for such other period as the Securities and Exchange
Commission may by order permit. The Trustee is not liable to any person
in any way for any loss or damage which may result from any such
suspension or postponement.
Computation of Redemption Price. The Redemption Price for Units of
each Series of the Trust is computed by the Evaluator as of the
Evaluation Time stated under "Essential Information" in Part Two next
occurring after the tendering of a Unit for redemption and on any other
business day desired by it, by
A. adding (1) the cash on hand in such Series of the Trust;
(2) the aggregate value of the Bonds held in such Series of the
Trust, as determined by the Evaluator on the basis of bid prices
therefor; and (3) accrued interest or Purchased Interest and Daily
Accrued Interest (as applicable) on the Bonds in that Series of the
Trust as of the date of computation;
B. deducting therefrom (1) amounts representing any
applicable taxes or governmental charges payable out of that Series
of the Trust and for which no deductions have been previously made
for the purpose of additions to the Reserve Account described under
"Expenses of the Trust"; (2) amounts representing estimated accrued
expenses of that Series of the Trust including, but not limited to,
fees and expenses of the Trustee (including legal and auditing
fees), the Evaluator, the Sponsor and bond counsel, if any; (3) cash
held for distribution to Unitholders of record as of the business
day prior to the evaluation being made; and (4) other liabilities
incurred by such Series of the Trust; and
C. finally, dividing the results of such computation by the
number of Units of such Series of the Trust outstanding as of the
date thereof.
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<PAGE>
UNITHOLDERS
Ownership of Units. Ownership of Units of the Trust will not be
evidenced by a certificate unless a Unitholder or the Unitholder's
registered broker/dealer makes a written request to the Trustee.
Units are transferable by making a written request to the Trustee
and, in the case of Units evidenced by a certificate, presenting and
surrendering such certificate to the Trustee properly endorsed or
accompanied by a written instrument or instruments of transfer which
should be sent by registered or certified mail for the protection of the
Unitholder. Unitholders must sign such written request, and such
certificate or transfer instrument (if applicable), exactly as their
names appear on the records of the Trustee and on any certificate
representing the Units to be transferred. Such signatures must be
guaranteed by a participant in the Securities Transfer Agents Medallion
Program ("STAMP") or such other signature program in addition to, or in
substitution for, STAMP, as may be accepted by the Trustee.
Units may be purchased and certificates, if requested, will be
issued in denominations of one Unit or any whole unit multiple thereof
subject to any minimum investment requirement established by the Sponsor
from time to time. Any certificate issued will be numbered serially for
identification, issued in fully registered form and will be transferable
only on the books of the Trustee. The Trustee may require a Unitholder to
pay a reasonable fee to be determined in the sole discretion of the
Trustee, for each certificate re-issued or transferred, and to pay any
governmental charge that may be imposed in connection with each such
transfer or interchange. The Trustee at the present time does not intend
to charge for the normal transfer or interchange of certificates.
Destroyed, stolen, mutilated or lost certificates will be replaced upon
delivery to the Trustee of satisfactory indemnity (generally amounting to
not more than 3% of the market value of the Units), affidavit of loss,
evidence of ownership and payment of expenses incurred.
Distributions to Unitholders. Interest Distributions. Interest
received by a Series of the Trust, including any portion of the proceeds
from a disposition of Bonds which represents accrued interest, is
credited by the Trustee to the Interest Account for such Series. All
other receipts are credited by the Trustee to a separate Principal
Account for such Series. During each year the distributions to the
Unitholders of each Series of the Trust as of each Record Date (see
"Essential Information" in Part Two) will be made on the following
Distribution Date or shortly thereafter and shall consist of an amount
substantially equal to one-twelfth or one-half (depending on the
distribution option selected) of such holders' pro rata share of the net
estimated net annual interest income to the Interest Account for such
Series of the Trust, after deducting estimated expenses.
Persons who purchase Units of the Trust between a Record Date and a
Distribution Date will receive their first distribution on the second
Distribution Date following their purchase of Units. All distributions
of principal and interest will be paid in cash unless a Unitholder has
elected to reinvest principal and/or interest payments in shares of one
of the reinvestment funds. See "Distribution Reinvestment." Interest
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<PAGE>
distributions per Unit for each Series will be in the amounts shown under
"Essential Information" in the applicable Part Two and may change as
underlying Bonds are redeemed, paid or sold, or as expenses of such
Series of the Trust change or the number of outstanding Units of such
Series of the Trust changes.
Since interest on Bonds in each Series of the Trust is payable at
varying intervals, usually in semiannual installments, and distributions
of income are made to Unitholders of a Series of the Trust at what may be
different intervals from receipt of interest, the interest accruing to
such Series of the Trust may not be equal to the amount of money received
and available for distribution from the Interest Account of such Series.
Therefore, on each Distribution Date the amount of interest actually on
deposit in the Interest Account and available for distribution may be
slightly more or less than the interest distribution made. In order to
eliminate fluctuations in interest distributions resulting from such
variances, the Trustee is authorized by the Trust Agreement to advance
such amounts as may be necessary to provide interest distributions of
approximately equal amounts. The Trustee will be reimbursed, without
interest, for any such advances from funds available in the Interest
Account of such Series.
Because the interest to which Unitholders of a Series of the Trust
are entitled will at most times exceed the amount available for
distribution, there will almost always remain an item of accrued interest
that is added to the daily value of the Units of such Series. If
Unitholders of a Series sell or redeem all or a portion of their Units
they will be paid their proportionate share of the accrued interest of
such Series to, but not including, the fifth business day after the date
of a sale or to the date of tender in the case of a redemption.
Unitholders purchasing Units will initially receive distributions in
accordance with the election of the prior owner. Unitholders desiring to
change their distribution option may do so by sending written notice to
the Trustee, together with their certificate (if one was issued).
Certificates should only be sent by registered or certified mail to
minimize the possibility of loss. If written notice and any certificate
are received by the Trustee not later than January 1 or July 1 of a year,
the change will become effective on January 2 for distributions
commencing with February 15 or August 15, respectively, of that year. If
notice is not received by the Trustee, the Unitholder will be deemed to
have elected to continue with the same option for the subsequent twelve
months.
Principal Distributions;. In addition, the Trustee will distribute
on each Distribution Date or shortly thereafter, to each Unitholder of
record on the preceding Record Date, an amount substantially equal to
such holders' pro rata share of the cash balance, if any, in the
Principal Account of such Series computed as of the close of business on
the preceding Record Date. However, no distribution will be required if
the balance in the Principal Account of such Series is less than $1.00
per Unit.
Statement to Unitholders. With each distribution, the Trustee will
furnish or cause to be furnished to each Unitholder a statement of the
amount of interest and the amount of other receipts, if any, which are
being distributed, expressed in each case as a dollar amount per Unit.
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<PAGE>
The accounts of each Series of the Trust are required to be audited,
at the Series' expense, annually by independent auditors designated by
the Sponsor, unless the Trustee determines that such an audit would not
be in the best interest of the Unitholders of such Series of the Trust.
The accountants' report will be furnished by the Trustee to any
Unitholder of such Series of the Trust upon written request.
Within a reasonable period of time after the end of each calendar
year, the Trustee shall furnish to each person who at any time during the
calendar year was a Unitholder of a Series of the Trust a statement
covering the calendar year, setting forth:
A. As to the Interest Account:
1. The amount of interest received on the Bonds in such
Series including amounts received as a portion of the proceeds
of any disposition of the Bonds;
2. The amount paid from the Interest Account of such
Series representing accrued interest of any Units redeemed;
3. The deductions from the Interest Account of such
Series for applicable taxes, if any, fees and expenses
(including auditing fees) of the Trustee, the Evaluator, the
Sponsor and bond counsel, if any;
4. Any amounts credited by the Trustee to a Reserve
Account for such Series described under "Expenses of the
Trust"; and
5. The net amount remaining after such payments and
deductions, expressed both as a total dollar amount and a
dollar amount per Unit outstanding on the last business day of
such calendar year.
B. As to the Principal Account:
1. The dates of the maturity, liquidation or redemption
of any of the Bonds in such Series and the net proceeds
received therefrom excluding any portion credited to the
Interest Account;
2. The amount paid from the Principal Account of such
Series representing the principal of any Units redeemed;
3. The deductions from the Principal Account of such
Series for payment of applicable taxes, if any, fees and
expenses (including auditing expenses) of the Trustee, the
Evaluator, the Sponsor and of bond counsel, if any;
4. Any amounts credited by the Trustee to a Reserve
Account for such Series described under "Expenses of the
Trust"; and
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<PAGE>
5. The net amount remaining after distributions of
principal and deductions, expressed both as a dollar amount and
as a dollar amount per Unit outstanding on the last business
day of such calendar year.
C. The following information:
1. A list of the Bonds in such Series as of the last
business day of such calendar year;
2. The number of Units of such Series outstanding on the
last business day of such calendar year;
3. The Redemption Price of such Series based on the last
Trust Evaluation made during such calendar year;
4. The amount actually distributed during such calendar
year from the Interest and Principal Accounts of such Series
separately stated, expressed both as total dollar amounts and
as dollar amounts per Unit of such Series outstanding on the
Record Date for each such distribution.
Rights of Unitholders. A Unitholder may at any time tender Units to
the Trustee for redemption. No Unitholder of a Series shall have the
right to control the operation and management of such Series or of the
Trust in any manner, except to vote with respect to amendment of the
Trust Agreement or termination of such Series of the Trust. The death or
incapacity of any Unitholder will not operate to terminate the Series or
the Trust nor entitle legal representatives or heirs to claim an
accounting or to bring any action or proceeding in any court for
partition or winding up of such Series or the Trust.
INVESTMENT SUPERVISION
The Sponsor may not alter the portfolio of the Trust by the
purchase, sale or substitution of Bonds, except in the special
circumstances noted below. Thus, with the exception of the redemption or
maturity of Bonds in accordance with their terms, and/or the sale of
Bonds to meet redemption requests, the assets of the Trust will remain
unchanged under normal circumstances.
The Sponsor may direct the Trustee to dispose of Bonds the value of
which has been affected by certain adverse events, including institution
of certain legal proceedings, a decline in their price or the occurrence
of other market factors, including advance refunding, so that in the
opinion of the Sponsor the retention of such Bonds in a Series of the
Trust would be detrimental to the interest of the Unitholders of such
Series. The proceeds from any such sales, exclusive of any portion which
represents accrued interest, will be credited to the Principal Account
for distribution to the Unitholders.
The Sponsor is required to instruct the Trustee to reject any offer
made by an issuer of the Bonds to issue new obligations in exchange or
-27-
<PAGE>
substitution for any of such Bonds pursuant to a refunding or refinancing
plan, except that the Sponsor may instruct the Trustee to accept or
reject such an offer or to take any other action with respect thereto as
the Sponsor may deem proper if (1) the issuer is in default with respect
to such Bonds or (2) in the written opinion of the Sponsor the issuer
will probably default with respect to such Bonds in the reasonably
foreseeable future. Any obligation so received in exchange or
substitution will be held by the Trustee subject to the terms and
conditions of the Trust Agreement to the same extent as Bonds originally
deposited thereunder. Within five days after the deposit of obligations
in exchange or substitution for underlying Bonds, the Trustee is required
to give notice thereof to each Unitholder, identifying the Bonds
eliminated and the Bonds substituted therefor.
The Trustee may sell Bonds designated by the Sponsor from a Series
of the Trust for the purpose of redeeming Units of such Series tendered
for redemption and the payment of expenses.
ADMINISTRATION OF THE TRUST
The Trustee. The Trustee is The Bank of New York, a trust company
organized under the laws of New York. The Bank of New York has its unit
investment trust division offices at 101 Barclay Street, New York, New
York 10286, telephone 1-800-701-8178. The Bank of New York is subject to
supervision and examination by the Superintendent of Banks of the State
of New York and the Board of Governors of the Federal Reserve System, and
its deposits are insured by the Federal Deposit Insurance Corporation to
the extent permitted by law.
The Trustee, whose duties are ministerial in nature, has not
participated in selecting the portfolio of any Series of the Trust. For
information relating to the responsibilities of the Trustee under the
Trust Agreements, reference is made to the material set forth under
"Unitholders."
In accordance with the Trust Agreements, the Trustee shall keep
proper records of all transactions at its office. Such records shall
include the name and address of, and the number of Units held by, every
Unitholder of each Series. The books and records with respect to a
Series of the Trust shall be open to inspection by any Unitholder of such
Series at all reasonable times during the usual business hours. The
Trustee shall make such annual or other reports as may from time to time
be required under any applicable state or Federal statute, rule or
regulation. The Trustee shall keep a certified copy or duplicate
original of the Trust Agreements on file in its office available for
inspection at all reasonable times during usual business hours by any
Unitholder, together with a current list of the Bonds held in each Series
of the Trust. Pursuant to the Trust Agreements, the Trustee may employ
one or more agents for the purpose of custody and safeguarding of Bonds
comprising each Trust Fund.
Under the Trust Agreements, the Trustee or any successor trustee may
resign and be discharged of the trust created by the Trust Agreements by
executing an instrument in writing and filing the same with the Sponsor.
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The Trustee or successor trustee must mail a copy of the notice of
resignation to all Unitholders then of record, not less than sixty days
before the date specified in such notice when such resignation is to take
effect. The Sponsor upon receiving notice of such resignation is
obligated to appoint a successor trustee promptly. If, upon such
resignation, no successor trustee has been appointed and has accepted the
appointment within thirty days after notification, the retiring Trustee
may apply to a court of competent jurisdiction for the appointment of a
successor. The Sponsor may at any time remove the Trustee with or
without cause and appoint a successor trustee as provided in the Trust
Agreements. Notice of such removal and appointment shall be mailed to
each Unitholder by the Sponsor. Upon execution of a written acceptance
of such appointment by a successor trustee, all the rights, powers,
duties and obligations of the original Trustee shall vest in the
successor.
The Trustee shall be a corporation organized under the laws of the
United States or any state thereof, which is authorized under such laws
to exercise trust powers. The Trustee shall have at all times an
aggregate capital, surplus and undivided profits of not less than
$5,000,000.
The Evaluator. Ranson & Associates, Inc., the Sponsor, also serves
as Evaluator. The Evaluator may resign or be removed by the Trustee, in
which event the Trustee is to use its best efforts to appoint a
satisfactory successor. Such resignation or removal shall become
effective upon acceptance of appointment by the successor evaluator. If,
upon resignation of the Evaluator, no successor has accepted appointment
within thirty days after notice of resignation, the Evaluator may apply
to a court of competent jurisdiction for the appointment of a successor.
Notice of such resignation or removal and appointment shall be mailed by
the Trustee to each Unitholder. At the present time, pursuant to a
contract with the Evaluator, Cantor Fitzgerald & Co., a non-affiliated
firm regularly engaged in the business of evaluating, quoting or
appraising comparable securities, provides portfolio evaluations of the
Bonds in the Trusts which are then reviewed by the Evaluator. In the
event the Sponsor is unable to obtain current evaluations from Cantor
Fitzgerald & Co., it may make its own evaluations or it may utilize the
services of any other non-affiliated evaluator or evaluators it deems
appropriate.
Amendment and Termination. The Trust Agreements may be amended by
the Trustee and the Sponsor without the consent of any of the
Unitholders: (1) to cure any ambiguity or to correct or supplement any
provision which may be defective or inconsistent; (2) to change any
provision thereof as may be required by the Securities and Exchange
Commission or any successor governmental agency; or (3) to make such
provisions as shall not adversely affect the interests of the
Unitholders. The Trust Agreements may also be amended in any respect by
the Sponsor and the Trustee, or any of the provisions thereof may be
waived, with the written consent of the holders of Units representing 66-
2/3% of the Units then outstanding, provided that no such amendment or
waiver will reduce the interest in a Series of the Trust of any
Unitholder without the consent of such Unitholder or reduce the
percentage of Units required to consent to any such amendment or waiver
without the consent of all Unitholders. In no event shall the Trust
Agreements be amended to increase the number of Units issuable thereunder
or to permit, except in accordance with the provisions of the Trust
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Agreements, the acquisition of any Bonds in addition to or in
substitution for those in the Trust. The Trustee shall promptly notify
Unitholders of the substance of any such amendment.
The Trust Agreements provide that a Series of the Trust shall
terminate upon the maturity, redemption or other disposition, of the last
of the Bonds held in such Series, but in no event later than the
Mandatory Termination Date set forth under "Essential Information" in
Part Two for each Trust. If the value of a Series of the Trust shall be
less than the applicable minimum Trust value stated under "Essential
Information" in Part Two (40% of the aggregate principal amount of Bonds
deposited in the Trust), the Trustee may, in its discretion, and shall,
when so directed by the Sponsor, terminate such Series of the Trust. A
Series of the Trust may be terminated at any time by the holders of Units
representing 66-2/3% of the Units of such Series then outstanding. In
the event of termination, written notice thereof will be sent by the
Trustee to all Unitholders of such Series. Within a reasonable period
after termination, the Trustee will sell any Bonds remaining in such
Series of the Trust and, after paying all expenses and charges incurred
by such Series of the Trust, will distribute to Unitholders of such
Series (upon surrender for cancellation of certificates for Units, if
issued) their pro rata share of the balances remaining in the Interest
and Principal Accounts of such Series.
Limitations on Liability. The Sponsor: The Sponsor is liable for
the performance of its obligations arising from its responsibilities
under the Trust Agreements, but will be under no liability to the
Unitholders for taking any action or refraining from any action in good
faith pursuant to the Trust Agreements or for errors in judgment, except
in cases of its own gross negligence, bad faith or willful misconduct.
The Sponsor shall not be liable or responsible in any way for
depreciation or loss incurred by reason of the sale of any Bonds.
The Trustee: The Trust Agreements provides that the Trustee shall
be under no liability for any action taken in good faith in reliance upon
prima facie properly executed documents or for the disposition of monies,
Bonds, or certificates except by reason of its own negligence, bad faith
or willful misconduct, nor shall the Trustee be liable or responsible in
any way for depreciation or loss incurred by reason of the sale by the
Trustee of any Bonds. In the event that the Sponsor shall fail to act,
the Trustee may act and shall not be liable for any such action taken by
it in good faith. The Trustee shall not be personally liable for any
taxes or other governmental charges imposed upon or in respect of the
Bonds or upon the interest thereon. In addition, the Trust Agreements
contains other customary provisions limiting the liability of the
Trustee.
The Evaluator: The Trustee and Unitholders may rely on any
evaluation furnished by the Evaluator and shall have no responsibility
for the accuracy thereof. The Trust Agreements provide that the
determinations made by the Evaluator shall be made in good faith upon the
basis of the best information available to it, provided, however, that
the Evaluator shall be under no liability to the Trustee or Unitholders
for errors in judgment, but shall be liable only for its gross
negligence, lack of good faith or willful misconduct.
-30-
<PAGE>
EXPENSES OF THE TRUST
The Sponsor will not charge any Series of the Trust fees for
services performed as Sponsor, except the Sponsor shall receive an annual
surveillance fee for services performed for such Trust Funds in an amount
not to exceed the amount shown under "Essential Information" in Part Two
for performing portfolio surveillance services for each Trust. Such fee
(which is based on the largest number of Units outstanding during each
year) may exceed the actual costs of providing such surveillance services
for a Trust, but at no time will the total amount received for portfolio
surveillance services rendered to such Series in any calendar year exceed
the aggregate cost to the Sponsor for providing such services. The
foregoing fees may be increased without approval of the Unitholders by
amounts not exceeding proportionate increases under the category "All
Services Less Rent of Shelter" in the Consumer Price Index published by
the United States Department of Labor or, if such category is no longer
published, in a comparable category. The Sponsor paid all the expenses
of creating and establishing the Trust, including the cost of the initial
preparation, printing and execution of the Prospectus, Trust Agreements
and the certificates, legal and accounting expenses, advertising and
selling expenses, payment of closing fees, expenses of the Trustee,
initial evaluation fees and other out-of-pocket expenses.
The Trustee receives for its services the fee set forth under
"Essential Information" appearing in Part Two. The Trustee fee which is
calculated monthly is based on the largest aggregate principal amount of
Bonds in each Trust Fund at any time during the period. Funds that are
available for future distributions, redemptions and payment of expenses
are held in accounts which are non-interest bearing to Unitholders and
are available for use by the Trustee pursuant to normal banking
procedures; however, the Trustee is also authorized by the Trust
Agreements to make from time to time certain non-interest bearing
advances to the Trust Funds. The Trustee's fee is payable on or before
each Distribution Date. See "Unitholders-Distributions to Unitholders."
For evaluation of Bonds in a Series of the Trust, the Evaluator
receives a fee payable monthly, calculated on an annual rate as set forth
under "Essential Information" in Part Two, based upon the largest
aggregate principal amount of Bonds in such Series of the Trust at any
time during such monthly period.
The Trustee's fees, the Evaluator's fees and the surveillance fees
are deducted from the Interest Account of each Series to the extent funds
are available and then from the Principal Account of such Series. Such
fees may be increased without approval of Unitholders by amounts not
exceeding a proportionate increase in the Consumer Price Index entitled
"All Services Less Rent of Shelter", published by the United States
Department of Labor, or any equivalent index substituted therefor.
The following additional charges are or may be incurred by a Series
of the Trust: (a) fees for the Trustee's extraordinary services; (b)
expenses of the Trustee (including legal and auditing expenses, but not
including any fees and expenses charged by any agent for custody and
safeguarding of Bonds) and of bond counsel, if any; (c) various
governmental charges; (d) expenses and costs of any action taken by the
Trustee to protect the Trust or such Series, or the rights and interests
-31-
<PAGE>
of the Unitholders; (e) indemnification of the Trustee for any loss,
liability or expense incurred by it in the administration of such Series
of the Trust not resulting from gross negligence, bad faith or willful
misconduct on its part; (f) indemnification of the Sponsor for any loss,
liability or expense incurred in acting as Sponsor of such Series of the
Trust without gross negligence, bad faith or willful misconduct; and (g)
expenditures incurred in contacting Unitholders upon termination of the
Series. The fees and expenses set forth herein are payable out of such
Series of the Trust and, when owed to the Trustee, are secured by a lien
on the assets of the Series of the Trust.
Fees and expenses of a Series of the Trust shall be deducted from
the Interest Account of such Series, or, to the extent funds are not
available in such Account, from the Principal Account of such Series.
The Trustee may withdraw from the Principal Account or the Interest
Account of such Series such amounts, if any, as it deems necessary to
establish a reserve for any taxes or other governmental charges or other
extraordinary expenses payable out of that Series of the Trust. Amounts
so withdrawn shall be credited to a separate account maintained for such
Series known as the Reserve Account and shall not be considered a part of
such Series when determining the value of the Units of such Series until
such time as the Trustee shall return all or any part of such amounts to
the appropriate account.
THE SPONSOR
Ranson & Associates, Inc., the Sponsor of the Trusts, is an
investment banking firm created in 1995 by a number of former owners and
employees of Ranson Capital Corporation. On November 26, 1996, Ranson &
Associates, Inc. purchased all existing unit investment trusts sponsored
by EVEREN Securities, Inc. Accordingly, Ranson & Associates is the
successor sponsor to unit investment trusts formerly sponsored by EVEREN
Unit Investment Trusts, a service of EVEREN Securities, Inc. Ranson &
Associates, is also the sponsor and successor sponsor of Series of The
Kansas Tax-Exempt Trust and Multi-State Series of The Ranson Municipal
Trust. Ranson & Associates, Inc. is the successor to a series of
companies, the first of which was originally organized in Kansas in 1935.
During its history, Ranson & Associates, Inc. and its predecessors have
been active in public and corporate finance and have sold bonds and unit
investment trusts and maintained secondary market activities relating
thereto. At present, Ranson & Associates, Inc., which is a member of the
National Association of Securities Dealers, Inc., is the sponsor to each
of the above-named unit investment trusts and serves as the financial
advisor and as an underwriter for issuers in the Midwest and Southwest,
especially in Kansas, Missouri and Texas. The Company's offices are
located at 250 North Rock Road, Suite 150, Wichita, Kansas 67206-2241.
If at any time the Sponsor shall fail to perform any of its duties
under the Trust Agreements or shall become incapable of acting or shall
be adjudged a bankrupt or insolvent or its affairs are taken over by
public authorities, then the Trustee may (a) appoint a successor sponsor
at rates of compensation deemed by the Trustee to be reasonable and not
exceeding such reasonable amounts as may be prescribed by the Securities
and Exchange Commission, or (b) terminate the Trust Agreements and
-32-
<PAGE>
liquidate the Trust or any Series thereof as provided therein or (c)
continue to act as Trustee without terminating the Trust Agreements.
The foregoing financial information with regard to the Sponsor
relates to the Sponsor only and not to this Trust or any Series. Such
information is included in this Prospectus only for the purposes of
informing investors as to the financial responsibility of the Sponsor and
its ability to carry out its contractual obligations with respect to the
Series of the Trust. More comprehensive financial information can be
obtained upon request from the Sponsor.
LEGAL OPINIONS
The legality of the Units offered hereby and certain matters
relating to federal tax law were passed upon by Chapman and Cutler, 111
West Monroe Street, Chicago, Illinois 60603, as counsel for the Sponsor.
INDEPENDENT AUDITORS
The statement of net assets, including the schedule of investments,
appearing in Part Two of this Prospectus and Registration Statement, with
information pertaining to the specific Series of the Trust to which such
statement relates, has been audited by Ernst & Young LLP, independent
auditors, as set forth in their report appearing in Part Two and is
included in reliance upon such report given upon the authority of such
firm as experts in accounting and auditing.
-33-
<PAGE>
EVEREN Defined Funds
Insured Corporate
Series 9
Part Two
Dated August 31, 1999
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
Insured Corporate Series 9
Essential Information
As of April 30, 1999
Sponsor and Evaluator: Ranson & Associates, Inc.
Trustee: The Bank of New York Co.
<TABLE>
<CAPTION>
General Information
<S> <C>
Principal Amount of Securities $6,065,000
Number of Units 604,030
Fractional Undivided Interest in the Trust per Unit 1/604,030
Principal Amount of Securities per Unit $10.041
Calculation of Public Offering Price:
Aggregate Bid Price of Securities in the Trust $6,201,841
Aggregate Bid Price of Securities per Unit $10.267
Principal Cash per Unit (1) $(.037)
Accrued Interest per Unit through settlement date of
May 5, 1999 $.007
Total Price including Accrued Interest per Unit $10.237
Sales Charge of 3.50% of Public Offering Price
(3.627% of net amount invested) per Unit $.371
Public Offering Price per Unit $10.608
Redemption Price per Unit $10.237
Calculation of Estimated Net Annual Interest Income per Unit:
Estimated Annual Interest Income $.651416
Less: Estimated Annual Expense $.022747
Estimated Net Annual Interest Income $.628669
Daily Rate at which Estimated Annual Interest Income
Accrues per Unit $.001746
Estimated Current Return Based on Public Offering Price (2) 5.93%
Estimated Long-Term Return (2) 5.22%
</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).
3. See Note 1 to the accompanying financial statements of the Trust regarding a
change in ownership of Kemper Unit Investment Trusts and Kemper Securities, Inc.
<PAGE>
EVEREN Defined Funds
U.S. Treasury Portfolio Series 18
Essential Information (continued)
As of April 30, 1999
Sponsor and Evaluator: Ranson & Associates, Inc.
Trustee: The Bank of New York Co.
Record and Distribution Date Record Date is the first of each month and
distributions to Unitholders on such
record dates will be made on the 15th day
of the month.
Distribution Dates No distribution (other than capital gains
distributions) need be made from the
Principal Account if the balance therein,
excluding capital gains, is less than $.01
per Unit.
Trustee's Annual Fee (including
estimated expenses) $1.45 per 100 Units (includes $1.35 of
Trustee's annual fee per $1,000 principal
amount of underlying Securities and $.10
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 May 8, 1996
Mandatory Termination Date December 31, 2027
Weighted Average stated Maturity
of Bonds 6.31
Discretionary Liquidation Amount The Trust may be terminated if the value
thereof is less than $270,000 (40% of
the par value of the Securities deposited
in the Trust).
<PAGE>
Report of Independent Auditors
Unitholders
EVEREN Defined Funds
Insured Corporate Series 9
We have audited the accompanying statement of assets and liabilities of EVEREN
Defined Funds Insured Corporate Series 9, including the schedule of investments,
as of April 30, 1999, and the related statements of operations and changes in
net assets for each of the two years in the period then ended and for the period
from May 8, 1996 (Date of Deposit) to April 30, 1997. 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 April 30, 1999, by
correspondence with the custodial bank. An audit also includes assessing the
accounting principles used and significant estimates made by the sponsor, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of EVEREN Defined Funds Insured
Corporate Series 9 at April 30, 1999, 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
August 17, 1999
<PAGE>
EVEREN Defined Funds
Insured Corporate
Series 9
Statement of Assets and Liabilities
April 30, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
Assets
Municipal Bonds, at value (cost $5,750,986) $6,201,841
Interest receivable 124,581
---------
Total assets 6,326,422
Liabilities and net assets
Cash overdraft 114,716
Accrued liabilities 3,330
---------
118,046
Net assets, applicable to 604,030 Units outstanding:
Cost of Trust assets, exclusive of interest $5,750,986
Unrealized appreciation 450,855
Distributable funds 6,535
--------- ---------
Net assets $6,208,376
=========
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
EVEREN Defined Funds
Insured Corporate
Series 9
Statements of Operations
<TABLE>
<CAPTION>
Period from
May 8,
1996 to
Year ended April 30 April 30,
1999 1998 1997
<S> <C> <C> <C>
--------- --------- ---------
Investment income - interest $433,534 $497,671 $497,752
Expenses:
Trustee's fees and related expenses 13,257 16,903 11,619
Evaluator's and portfolio
surveillance fees 3,672 4,303 3,692
--------- --------- ---------
Total expenses 16,929 21,206 15,311
--------- --------- ---------
Net investment income 416,605 476,465 482,441
Realized and unrealized gain (loss) on
investments:
Realized gain on investments 104,922 69,371 21,340
Unrealized appreciation (depreciation)
during the period (22,185) 365,495 107,545
--------- --------- ---------
Net gain on investments 82,737 434,866 128,885
--------- --------- ---------
Net increase in net assets resulting
from operations $499,342 $911,331 $611,326
========= ========= =========
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
EVEREN Defined Funds
Insured Corporate
Series 9
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Period from
May 8,
1996 to
Year ended April 30 April 30,
1999 1998 1997
<S> <C> <C> <C>
--------- --------- ---------
Operations:
Net investment income $416,605 $476,465 $482,441
Realized gain on investments 104,922 69,371 21,340
Unrealized appreciation (depreciation)
on investments during the period (22,185) 365,495 107,545
--------- --------- ---------
Net increase in net assets resulting
from operations 499,342 911,331 611,326
Distributions to Unitholders:
Net investment income (421,363) (491,150) (433,829)
Capital transactions:
Issuance of 945,000 Units - - 8,963,380
Redemption of 85,986 Units - - (843,685)
Redemption of 148,983 Units - (1,473,814) -
Redemption of 106,621 Units (1,113,162) - -
--------- --------- ---------
Total increase (decrease) in net assets (1,035,183) (1,053,633) 8,297,192
Net assets:
At the beginning of the period 7,243,559 8,297,192 -
--------- --------- ---------
At the end of the period (including
distributable funds applicable to
Trust Units of $6,535, $28,664 and
$44,933 at April 30, 1999, 1998 and
1997, respectively) $6,208,376 $7,243,559 $8,297,192
========= ========= =========
Trust Units outstanding at the end
of the period 604,030 710,651 859,014
========= ========= =========
Net asset value per Unit at the end
of the period $10.278 $10.193 $9.659
========= ========= =========
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
<TABLE>
EVEREN Defined Funds
Insured Corporate Series 9
Schedule of Investments
April 30, 1999
<CAPTION>
Coupon Maturity Redemption Principal
Name of Issuer and Title of Bond (4) Rate Date Provisions(2) Rating(1) Amount Value(3)
<S> <C> <C> <C> <C> <C> <C>
- --------------------- --- --- ----- --- --------- ---
Pacific Gas & Electric Company 6.250% 3/01/2004 Non-Callable AAA $1,200,000 $1,214,280
Texas Utilities Electric Company 6.750 7/01/2005 Non-Callable AAA 1,165,000 1,196,723
Pennsylvania Power and Light Company 6.550 3/01/2006 Non-Callable AAA 1,175,000 1,210,332
Public Service Electric & Gas Company 6.250 1/01/2007 Non-Callable AAA 1,175,000 1,184,741
Consolidated Edison Company of New York 6.625 7/01/2005 Non-Callable AAA 1,200,000 1,239,984
Consolidated Edison Company of New York 6.625 7/01/2005 Non-Callable AAA 150,000 155,781
--------- ---------
$6,065,000 $6,201,841
========= =========
</TABLE>
[FN]
See accompanying notes to Schedule of Investments.
<PAGE>
EVEREN Defined Funds
Insured Corporate Series 9
Notes to Schedule of Investments
1. All ratings are by Standard & Poor's Corporation, unless marked with the
symbol "*", in which case the rating is by Moody's Investors Service, Inc. The
symbol "NR" indicates Bonds for which no rating is available.
2. There is shown under this heading the year in which each issue of Bonds is
initially redeemable and the redemption price for that year or, if currently
redeemable, the redemption price currently in effect; unless otherwise
indicated, each issue continues to be redeemable at declining prices thereafter,
but not below par value. The prices at which the Bonds may be redeemed or
called prior to maturity may or may not include a premium and, in certain cases,
may be less than the cost of the Bonds in the Trust. In addition, certain Bonds
in the 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. All Corporate Bonds are insured either by the issuer of the Bonds or by the
sponsor under a policy obtained from Municipal Bond Investors Assurance
Corporation. The insurance policy has been paid in advance by such issuer or
the sponsor and each such policy is non-cancelable and will remain in force so
long as the Bonds are outstanding. Therefore, the Corporate Bonds are rated AAA
by Standard & Poor's Corporation and Aaa by Moody's Investors Service, Inc.
See accompanying notes to financial statements.
<PAGE>
EVEREN Defined Funds
Insured Corporate Series 9
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 are stated at bid prices as determined by Ranson &
Associates, Inc. The aggregate bid prices of the Securities are determined by
the Evaluator based on (a) current bid prices of the Securities, (b) current bid
prices for comparable securities, (c) appraisal, (d) insurance or (e) any
combination of the above. (See Note 4 - Insurance.).
Cost of Securities
Cost of the Trust's Securities is based on the offering prices of the Securities
on the dates of deposit of such Securities acquired during the primary sales
period. The premium or discount, if any, is not being amortized. Realized gain
(loss) from Security transactions is reported on an identified cost basis.
Investment Income
Interest income consists of interest accrued as earned on the Trust's
Securities.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires the Trust's sponsor to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from such estimates.
2. Unrealized Appreciation and Depreciation
Following is an analysis of net unrealized appreciation at April 30, 1999
<TABLE>
<CAPTION>
<S> <C>
Gross unrealized appreciation $450,855
Gross unrealized depreciation -
----------
Net unrealized appreciation $450,855
=========
</TABLE>
3. Federal Income Taxes
The Trust is not an association taxable as a corporation for federal income tax
purposes. Each Unitholder is considered to be the owner of a pro rata portion
of the Trust under Subpart E, Subchapter J of Chapter 1 of the Internal Revenue
Code of 1986, as amended. Accordingly, no provision has been made for federal
income taxes.
<PAGE>
EVEREN Defined Funds
Insured Corporate Series 9
Notes to Financial Statements (continued)
4. Other Information
Cost to Investors
The cost to original investors of Units of the Trust was based on the aggregate
offering price of the Securities on the date of an investor's purchase, plus or
minus a pro rata share of cash or overdraft in the Principal Account, and daily
accrued interest, plus a sales charge of 3.90% of the Public Offering Price
(equivalent to 4.058% of the net amount invested). The Public Offering Price
for secondary market transactions is based on the aggregate bid price 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).
Insurance
Insurance guaranteeing the payment of all principal and interest on the Bonds in
the portfolio has been obtained from an independent company by the issuer of the
Bonds involved or by the Trust's sponsor. Insurance obtained by the Trust's
sponsor or a Bond issuer is effective as long as such Bonds are outstanding. As
a result of such insurance, the Units of the Trust have received a rating of
"AAA" by Standard & Poor's Corporation. No representation is made as to any
insurer's ability to meet its commitments.
Distributions
Distributions of net investment income to Unitholders are declared and paid
monthly. Income distributions per Unit on a record date basis are $.63, $.63
and $.56 for the periods ended April 30, 1999, 1998 and 1997, 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 July 17,1999, in this Post-Effective
Amendment to the Registration Statement (Form S-6) and related Prospectus of
EVEREN Defined Funds Insured Corporate Series 9 dated August 31, 1999.
Ernst & Young LLP
Kansas City, Missouri
August 31, 1999
<PAGE>
EVEREN Defined Funds
Insured Corporate
Series 10
Part Two
Dated August 31, 1999
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
Insured Corporate Series 10
Essential Information
As of April 30, 1999
Sponsor and Evaluator: Ranson & Associates, Inc.
Trustee: The Bank of New York Co.
<TABLE>
<CAPTION>
General Information
<S> <C>
Principal Amount of Securities $18,580,000
Number of Units 1,855,782
Fractional Undivided Interest in the Trust per Unit 1/1,855,782
Principal Amount of Securities per Unit $10.012
Calculation of Public Offering Price:
Aggregate Bid Price of Securities in the Trust $18,875,785
Aggregate Bid Price of Securities per Unit $10.171
Principal Cash per Unit (1) $(.014)
Accrued Interest per Unit through settlement date of
May 5, 1999 $.008
Total Price including Accrued Interest per Unit $10.165
Sales Charge of 5.50% of Public Offering Price
(5.820% of net amount invested) per Unit $.592
Public Offering Price per Unit $10.757
Redemption Price per Unit $10.165
Calculation of Estimated Net Annual Interest
Income per Unit:
Estimated Annual Interest Income $.743090
Less: Estimated Annual Expense $.022388
Estimated Net Annual Interest Income $.720702
Daily Rate at which Estimated Annual Interest
Income Accrues per Unit $.002002
Estimated Current Return Based on Public Offering
Price (exclusive of accrued interest) (2) 6.70%
Estimated Long-Term Return (2) 6.63%
</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).
3. See Note 1 to the accompanying financial statements of the Trust regarding a
change in ownership of Kemper Unit Investment Trusts and Kemper Securities, Inc.
<PAGE>
EVEREN Defined Funds
U.S. Treasury Portfolio Series 18
Essential Information (continued)
As of April 30, 1999
Sponsor and Evaluator: Ranson & Associates, Inc.
Trustee: The Bank of New York Co.
Record and Distribution Date Record Date is the first of each month and
distributions to Unitholders on such
record dates will be made on the 15th day
of the month.
Distribution Dates No distribution (other than capital gains
distributions) need be made from the
Principal Account if the balance therein,
excluding capital gains, is less than $.01
per Unit.
Trustee's Annual Fee (including
estimated expenses) $1.35 per 100 Units (includes $1.25 of
Trustee's annual fee per $1,000 principal
amount of underlying Securities and $.10
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 May 8, 1996
Mandatory Termination Date December 31, 2027
Weighted Average stated Maturity
of Bonds 24.99 years
Discretionary Liquidation Amount The Trust may be terminated if the value
thereof is less than $9,360,000 (40% of
the par value of the Securities deposited
in the Trust).
<PAGE>
Report of Independent Auditors
Unitholders
EVEREN Defined Funds
Insured Corporate Series 10
We have audited the accompanying statement of assets and liabilities of EVEREN
Defined Funds Insured Corporate Series 10, including the schedule of
investments, as of April 30, 1999, and the related statements of operations and
changes in net assets for each of the two years in the period then ended and for
the period from May 8, 1996 (Date of Deposit) to April 30, 1997. 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 April 30, 1999, by
correspondence with the custodial bank. An audit also includes assessing the
accounting principles used and significant estimates made by the sponsor, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of EVEREN Defined Funds Insured
Corporate Series 10 at April 30, 1999, 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
August 17, 1999
<PAGE>
EVEREN Defined Funds
Insured Corporate Series 10
Statement of Assets and Liabilities
April 30, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
Assets
Municipal Bonds, at value (cost $17,561,763) $18,875,785
Interest receivable 347,629
---------
Total assets 19,223,414
Liabilities and net assets
Cash overdraft 254,646
Accrued liabilities 3,409
---------
258,055
Net assets, applicable to 1,855,782 Units outstanding:
Cost of Trust assets, exclusive of interest $17,561,763
Unrealized appreciation 1,314,022
Distributable funds 89,574
--------- ---------
Net assets $18,965,359
=========
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
EVEREN Defined Funds
Insured Corporate Series 10
Statements of Operations
<TABLE>
<CAPTION>
Period from
May 8,
1996 to
Year ended April 30 April 30,
1999 1998 1997
<S> <C> <C> <C>
--------- --------- ---------
Investment income - interest $1,499,998 $1,630,233 $1,237,472
Expenses:
Trustee's fees and related expenses 34,076 39,996 21,692
Evaluator's and portfolio
surveillance fees 10,954 13,445 8,026
--------- --------- ---------
Total expenses 45,030 53,441 29,718
--------- --------- ---------
Net investment income 1,454,968 1,576,792 1,207,754
Realized and unrealized gain (loss) on
investments:
Realized gain on investments 303,993 224,354 -
Unrealized appreciation (depreciation)
during the period (334,775) 994,099 654,698
--------- --------- ---------
Net gain (loss) on investments (30,782) 1,218,453 654,698
--------- --------- ---------
Net increase in net assets resulting
from operations $1,424,186 $2,795,245 $1,862,452
========= ========= =========
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
EVEREN Defined Funds
Insured Corporate Series 10
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Period from
May 8,
1996 to
Year ended April 30 April 30,
1999 1998 1997
<S> <C> <C> <C>
--------- --------- ---------
Operations:
Net investment income 1,454,968 $1,576,792 $1,207,754
Realized gain on investments 303,993 224,354 -
Unrealized appreciation (depreciation)
on investments during the period (334,775) 994,099 654,698
--------- --------- ---------
Net increase in net assets resulting
from operations 1,424,186 2,795,245 1,862,452
Distributions to Unitholders:
Net investment income (1,440,361) (1,626,240) (1,057,416)
Capital transactions:
Issuance of 2,340,000 Units - - 22,043,753
Issuance of 65,000 Units - 617,864 -
Redemption of 313,577 Units - (3,189,549) -
Redemption of 235,641 Units (2,464,575) - -
--------- --------- ---------
Total increase (decrease) in net assets (2,480,750) (1,402,680) 22,848,789
Net assets:
At the beginning of the period 21,446,109 22,848,789 -
--------- --------- ---------
At the end of the period (including
distributable funds applicable to
Trust Units of $89,574, $(99,008)
and $150,339 at April 30, 1999,
1998 and 1997, respectively) $18,965,359 $21,446,109 $22,848,789
========= ========= =========
Trust Units outstanding at the end of
the period 1,855,782 2,091,423 2,340,000
========= ========= =========
Net asset value per Unit at the end of
the period $10.220 $10.254 $9.764
========= ========= =========
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
<TABLE>
EVEREN Defined Funds
Insured Corporate Series 10
Schedule of Investments
April 30, 1999
<CAPTION>
Coupon Maturity Redemption Principal
Name of Issuer and Title of Bond (4) Rate Date Provisions(2) Rating(1) Amount Value(3)
<S> <C> <C> <C> <C> <C> <C>
- --------------------- --- --- ----- --- --------- ---
Texas Utilities Electric Company 7.875% 3/01/2023 2003 @ 103.84 AAA $4,250,000 $4,432,240
Consolidated Edison Company 7.500 6/15/2023 2003 @ 103.27 AAA 4,300,000 4,425,345
New York Telephone Company 7.250 2/15/2024 2004 @ 103.06 AAA 3,615,000 3,659,717
Public Service Electric & Gas Company 7.000 9/01/2024 2003 @ 102.74 AAA 2,140,000 2,079,952
Southern California Edison Company 7.250 3/01/2026 2003 @ 102.43 AAA 2,175,000 2,164,125
Pacific Gas & Electric Utility Company 7.250 8/01/2026 2003 @ 103.63 AAA 2,100,000 2,114,406
--------- ---------
$18,580,000 $18,875,785
========= =========
</TABLE>
[FN]
See accompanying notes to Schedule of Investments.
<PAGE>
EVEREN Defined Funds
Insured Corporate Series 10
Notes to Schedule of Investments
1. All ratings are by Standard & Poor's Corporation, unless marked with the
symbol "*", in which case the rating is by Moody's Investors Service, Inc. The
symbol "NR" indicates Bonds for which no rating is available.
2. There is shown under this heading the year in which each issue of Bonds is
initially redeemable and the redemption price for that year or, if currently
redeemable, the redemption price currently in effect; unless otherwise
indicated, each issue continues to be redeemable at declining prices thereafter,
but not below par value. The prices at which the Bonds may be redeemed or
called prior to maturity may or may not include a premium and, in certain cases,
may be less than the cost of the Bonds in the Trust. In addition, certain
Bonds in the 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. All Corporate Bonds are insured either by the issuer of the Bonds or by the
sponsor under a policy obtained from Municipal Bond Investors Assurance
Corporation. The insurance policy has been paid in advance by such issuer or
the sponsor and each such policy is non-cancelable and will remain in force so
long as the Bonds are outstanding. Therefore, the Corporate Bonds are rated AAA
by Standard & Poor's Corporation and Aaa by Moody's Investors Service, Inc.
See accompanying notes to financial statements.
<PAGE>
EVEREN Defined Funds
Insured Corporate Series 10
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
The Corporate Securities are stated at bid prices as determined by Ranson &
Associates, Inc. The aggregate bid prices of the Securities are determined by
the Evaluator based on (a) current bid prices of the Securities, (b) current bid
prices for comparable securities, (c) appraisal, (d) insurance or (e) any
combination of the above. (See Note 4 - Insurance.).
Cost of Securities
Cost of the Trust's Securities is based on the offering prices of the Securities
on the dates of deposit of such Securities acquired during the primary sales
period. The premium or discount, if any, is not being amortized. Realized gain
(loss) from Security transactions is reported on an identified cost basis.
Investment Income
Interest income consists of interest accrued as earned on the Trust's
Securities.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires the Trust's sponsor to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from such estimates.
2. Unrealized Appreciation and Depreciation
Following is an analysis of net unrealized appreciation at April 30, 1999:
<TABLE>
<CAPTION>
<S> <C>
Gross unrealized appreciation $1,314,022
Gross unrealized depreciation -
----------
Net unrealized appreciation $1,314,022
=========
</TABLE>
3. Federal Income Taxes
The Trust is not an association taxable as a corporation for federal income tax
purposes. Each Unitholder is considered to be the owner of a pro rata portion
of the Trust under Subpart E, Subchapter J of Chapter 1 of the Internal Revenue
Code of 1986, as amended. Accordingly, no provision has been made for federal
income taxes.
<PAGE>
EVEREN Defined Funds
Insured Corporate Series 10
Notes to Financial Statements (continued)
4. Other Information
Cost to Investors
The cost to original investors of Units of the Trust was based on the aggregate
offering price of the Bonds on the date of an investor's purchase, plus or minus
a pro rata share of cash or overdraft in the Principal Account, and daily
accrued interest, plus a sales charge of 4.90% of the Public Offering Price
(equivalent to 5.152% of the net amount invested). The Public Offering Price
for secondary market transactions is based on the aggregate bid price of the
Bonds plus or minus a pro rata share of cash or overdraft in the Principal
Account, and daily accrued interest on the date of an investor's purchase, plus
a sales charge of 5.50% of the Public Offering Price (equivalent to 5.820% of
the net amount invested).
Insurance
Insurance guaranteeing the payment of all principal and interest on the Bonds in
the portfolio has been obtained from independent companies by the issuers of the
Bonds involved or by the Trust's sponsor. Insurance obtained by the Trust's
sponsor or a Bond issuer is effective as long as such Bonds are outstanding. As
a result of such insurance, the Units of the Trust have received a rating of
"AAA" by Standard & Poor's Corporation. No representation is made as to any
insurer's ability to meet its commitments.
Distributions
Distributions of net investment income to Unitholders are declared and paid
monthly. Income distributions per Unit on a record date basis are $.72, $.72
and $.64 for the periods ended April 30, 1999, 1998 and 1997, 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 August 17, 1999, in this Post-Effective
Amendment to the Registration Statement (Form S-6) and related Prospectus of
EVEREN Defined Funds Insured Corporate Series 10 dated August 31, 1999.
Ernst & Young LLP
Kansas City, Missouri
August 31, 1999
<PAGE>
KEMPER GOVERNMENT SECURITIES TRUST
KEMPER DEFINED FUNDS GNMA PORTFOLIO
KEMPER DEFINED FUNDS U.S. TREASURY PORTFOLIO
EVEREN UNIT INVESTMENT TRUSTS GNMA PORTFOLIO
EVEREN UNIT INVESTMENT TRUSTS U.S TREASURY PORTFOLIO
PART ONE
Each Series of the Kemper Government Securities Trust, GNMA Portfolio,
Kemper Defined Funds GNMA Portfolio and EVEREN Unit Investment Trusts GNMA
Portfolio (collectively, the "GNMA Trust") was formed for the purpose of
obtaining safety of capital and current monthly distributions of interest and
principal through investment in a portfolio consisting of mortgage-backed
Securities of the modified pass-through type. All payments of principal and
interest on the mortgage-backed Securities are fully guaranteed by the
Government National Mortgage Association ("GNMA"). The full faith and credit of
the United States is pledged to the payment of the Securities in the GNMA Trust
but the Units of such Series are not backed by such full faith and credit.
Each Series of the Kemper Government Securities Trust, U.S. Treasury
Portfolio, Kemper Defined Funds U.S. Treasury Portfolio and EVEREN Unit
Investment Trusts U.S. Treasury Portfolio (collectively, the "U.S. Treasury
Portfolio Series") was formed for the purpose of providing safety of capital and
investment flexibility through an investment in a portfolio of interest-bearing
(or in certain Series zero coupon) U.S. Treasury obligations that are backed by
the full faith and credit of the United States Government. Interest income
distributed by the U.S. Treasury Portfolio Series is generally exempt from state
personal income taxes in all states.
Certain Series are available to non-resident aliens and the income from
such Series, provided certain conditions are met, will be exempt from
withholding for U.S. Federal income tax for such foreign investors. A foreign
investor must provide a completed W-8 form to his financial representative or
the trustee to avoid withholding on his account.
Units of the Trusts are not deposits or obligations of, or guaranteed by,
any bank, and are not Federally insured or otherwise protected by the Federal
Deposit Insurance Corporation and involve investment risk including loss of
principal.
SPONSOR: RANSON & ASSOCIATES, INC.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED OF THE
UNITS OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY CONTRARY
REPRESENTATION IS A CRIMINAL OFFENSE.
The investor is advised to read and retain both parts of this Prospectus for
future reference.
The date of this Part One is that date set forth in Part Two of the Prospectus
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C>
SUMMARY - GNMA PORTFOLIO 1
GNMA PORTFOLIO 3
The GNMA Trust 3
Risk Factors 3
Portfolios 4
Origination 5
Nature of Ginnie Maes and GNMA Guaranty 6
Life of the Securities and of the Series of the GNMA Trust 7
SUMMARY - U.S. TREASURY PORTFOLIO 8
THE U.S. TREASURY PORTFOLIO SERIES 11
Risk Factors 12
General 12
PORTFOLIO SELECTION 13
THE UNITS 13
ESTIMATED LONG-TERM AND CURRENT RETURNS 14
PUBLIC OFFERING OF UNITS 15
Public Offering Price 15
Public Distribution 19
Profits of Sponsor 20
TAX STATUS OF THE TRUSTS 20
Regulated Investment Companies 20
U.S. Treasury Portfolio Series 23
Kemper Government Securities Trust, GNMA Portfolio (Foreign Investors
Trust) and Kemper Defined Funds, GNMA Portfolio, Series 1 28
RETIREMENT PLANS 34
DISTRIBUTION REINVESTMENT 36
-i-
<PAGE>
REDEMPTION 37
Right of Redemption 37
Computation of Redemption Value 39
Postponement of Redemption 39
RIGHTS OF UNITHOLDERS 40
Unitholders 40
Ownership of Units 40
Certain Limitations 40
EXPENSES AND CHARGES 41
Initial Expenses 41
Fees 41
Other Charges 41
DISTRIBUTIONS FROM THE INTEREST, PRINCIPAL AND CAPITAL GAINS ACCOUNTS. 42
GNMA Trust 42
U.S. Treasury Portfolio Series 42
General 43
ADMINISTRATION OF THE TRUST 44
Records and Accounts 44
Portfolio Supervision 44
Reports to Unitholders 45
Amendments 47
Termination 47
RESIGNATION, REMOVAL AND LIABILITY 48
Regarding the Trustee 48
Regarding the Sponsor 48
Regarding the Evaluator 49
MISCELLANEOUS 49
Sponsor 49
Trustee 49
Legal Opinions 50
INDEPENDENT AUDITORS 50
</TABLE>
-ii-
<PAGE>
Essential Information*
Report of Independent Auditors*
Statement of Assets and Liabilities*
Statement of Operations*
Statement of Changes in Net Assets*
Schedule of Investments*
Notes to Schedule of Investments*
Notes to Financial Statements*
*INFORMATION ON THESE ITEMS APPEARS IN PART TWO
-iii-
<PAGE>
KEMPER GOVERNMENT SECURITIES TRUST
KEMPER DEFINED FUNDS, GNMA PORTFOLIO
KEMPER DEFINED FUNDS, U.S. TREASURY PORTFOLIO
EVEREN UNIT INVESTMENT TRUSTS GNMA PORTFOLIO
SUMMARY - GNMA PORTFOLIO
General. Each Series of the Kemper Government Securities Trust, GNMA
Portfolio, Kemper Defined Funds, GNMA Portfolio and EVEREN Unit Investment
Trusts GNMA Portfolio (each a "GNMA Trust" or "Trust"), is one of a series of
unit investment trusts whose objective is to obtain safety of capital and to
provide current monthly distributions of interest and principal through
investment in a fixed portfolio initially consisting of contracts to purchase
taxable mortgage-backed securities of the modified pass-through type ("Ginnie
Maes" or "Securities"), including so-called "Ginnie Mae II's" (see "GNMA
Portfolios-Origination"), which involve larger pools of mortgages and which have
a central paying agent, fully guaranteed as to principal and interest by the
Government National Mortgage Association ("GNMA"). Certain Series of the GNMA
Trust contain Ginnie Maes which consist of pools of long term (i.e., 30 year)
mortgages on 1- to 4-family dwellings. Other Series contain Ginnie Maes
consisting of pools of mortgages on 1- to 4-family dwellings which have stated
maturity of 15 years (so called "Ginnie Mae Midgets"). See "GNMA Portfolios"
and the "Schedule of Investments" in Part Two. Under certain circumstances, the
Sponsor may direct the Trustee to reinvest certain surplus monies in the
principal account of a Series in additional Ginnie Maes. See "Administration of
the Trust - Portfolio Supervision."
The guaranteed payment of principal and interest afforded by Ginnie Maes
may make an investment in a Series of the GNMA Trust particularly well suited
for purchase by Individual Retirement Accounts, Keogh Plans, pension funds and
other tax-deferred retirement plans. In addition, the ability to buy whole or
fractional Units (minimum purchase $1,000, $250 for IRA accounts) enables such
investors to tailor the dollar amount of their purchases of Units to take
maximum possible advantage of the annual deductions available for contributions
to such plans. Investors should consult with their tax advisers before
investing. See "Retirement Plans."
Monthly Distributions. Monthly distributions of principal, prepayments of
principal, if any, and interest received by a Series of the GNMA Trust will be
paid in cash unless the Unitholder elects to have them automatically reinvested
in any open-end mutual fund underwritten or advised by Zurich Kemper
Investments, Inc. (the "Kemper Funds"), other than those Kemper Funds sold with
a contingent deferred sales charge. Since the portfolio securities and
investment objectives of such Kemper Funds may differ significantly from that of
the GNMA Trusts, Unitholders should carefully consider the consequences before
selecting such Kemper Funds for reinvestment. Any such reinvestment is made at
net asset value, that is, without a sales charge. Investors have the ability to
designate that only principal payments (including prepayments) or only interest
payments or both are to be reinvested. Investors who intend to participate in
the Reinvestment Program should so indicate at the time of their purchase. See
"Distribution Reinvestment." It should be noted by purchasers of Midget Foreign
Investors Trusts that distributions from the reinvestment fund chosen generally
<PAGE>
will be subject to U.S. Federal income tax withholding. Distributions will be
made on or about the last day of each month to Unitholders of record on the 1st
day of such month.
Securities. One or more different issues of Ginnie Maes were deposited in
the GNMA Trust on the Initial Date of Deposit. The current percentage
relationship among the Ginnie Maes in a GNMA Series is shown under "Essential
Information" and "Schedule of Investments" in Part Two.
Risk Factors. An investment in Units of a Series of the GNMA Trust should
be made with an understanding of the risks which an investment in fixed rate
long term debt obligations may entail, including the risk that the value of the
Portfolio and hence of the Units will decline with increases in interest rates.
Because of the shorter average life of the Securities in certain Series of the
GNMA Trust and the lower coupon interest rates on such Securities, the value of
such Series should tend to fluctuate less than longer term obligations. Some or
all of the Securities in a Series of the GNMA Trust may have been purchased at a
market discount.
Estimated Current and Long-Term Returns. The Estimated Current Return
shown under "Essential Information" in Part Two, shows the return based on the
Public Offering Price which includes a sales charge and is computed by dividing
the estimated net annual interest income by the Public Offering Price. The net
annual interest rate will vary with changes in the fees and expenses of the
Trustee, Sponsor and Evaluator and with the exchange, redemption, sale,
scheduled payments, prepayments or maturity of underlying Securities. The
Public Offering Price will also vary with fluctuations in the evaluation of the
underlying Securities and accrued interest, and, in the case of certain Trusts,
with changes in Purchased Interest and Daily Accrued Interest. Therefore, it
can be expected that the Estimated Current Return will fluctuate in the future.
The Estimated Long-Term Return is calculated using a formula which (1) takes
into consideration, and determines and factors in the relative weightings of,
the market values, yields (which takes into account the amortization of premiums
and the accretion of discounts) and estimated average life of all of the
Securities in the Trusts and (2) takes into account the expenses and sales
charge associated with each Unit of each Trust. Since the market values and
estimated average life of the Securities and the expenses of the Trusts will
change, it can be expected that the Estimated Long-Term Returns will fluctuate
in the future. The Estimated Current Return and Estimated Long-Term Return are
expected to differ because the calculation of the Estimated Long-Term Return
reflects the estimated date and amount of principal returned while the Estimated
Current Return calculation includes only the net annual interest rate and Public
Offering Price. See "Estimated Long-Term and Current Returns." The net annual
income is, of course, taxable to a Unitholder. The net annual income is not
taxable for Federal income tax purposes to qualified foreign investors who have
purchased Midget Foreign Investors Trusts. See "Tax Status of the Trusts" and
"Retirement Plans."
Market for Units. The Sponsor, though not obligated to do so, intends to
maintain a market for the Units of the Series of the GNMA Trust based on the
aggregate bid side evaluation of the underlying Securities plus, in the case of
certain Trusts, Purchased Interest and Daily Accrued Interest. If such market
is not maintained, a Unitholder will, nevertheless, be able to dispose of his
Units through redemption at prices based on the aggregate bid side evaluation of
-2-
<PAGE>
the underlying Securities in each Series. See "Redemption." Market conditions
may cause such prices to be greater or less than the amount paid for Units.
GNMA PORTFOLIO
The GNMA Trust. Each Series of the GNMA Trust is a "unit investment trust"
created under Missouri or New York law pursuant to a Trust Indenture and
Agreement (hereinafter collectively referred to as the "Indenture").* Ranson &
Associates, Inc. is the Sponsor and Evaluator of the Trusts and is successor
sponsor and evaluator of all unit investment trusts formerly sponsored by EVEREN
Unit Investment Trusts, a service of EVEREN Securities, Inc. The Bank of New
York is the Trustee of the Trusts as successor to Investors Fiduciary Trust
Company.
The purpose and objective of the GNMA Trust is to provide investors with an
appropriate vehicle to obtain safety of capital and monthly distributions of
interest and principal through investment in a fixed portfolio of securities
(the "GNMA Portfolio") consisting of taxable mortgage-backed securities of the
modified pass-through type ("Ginnie Maes") guaranteed by the Government National
Mortgage Association ("GNMA") and backed by the full faith and credit of the
United States. In addition, the Midget Foreign Investors Trusts and GNMA
Foreign Investors Portfolio Series, which are available only to non-resident
alien investors, have an additional purpose of providing income which is exempt
from withholding for U.S. Federal income taxes for such foreign investors. A
foreign investor must provide a completed W-8 Form to his financial
representative or the Trustee to avoid withholding on his account. See "Tax
Status of the Trusts."
As used herein, the term "Securities" means the Ginnie Maes described in
Part Two under "Schedule of Investments."
On the date shown, each Unit represented the fractional undivided interest
in the Securities and estimated net income of the Series of the GNMA Trust set
forth in Part Two under "Essential Information." Because regular payments of
principal are to be received and certain of the Securities from time to time may
be redeemed or will mature in accordance with their terms or may be sold under
certain circumstances described herein, the Series of the GNMA Trust is not
expected to retain its present size and composition. Units will remain
outstanding until redeemed upon tender to the Trustee by any Unitholder (which
may include the Sponsor) or until the termination of a Series of the GNMA Trust
pursuant to the Indenture.
Risk Factors. An investment in Units of a Series of the GNMA Trust should
be made with an understanding of the risks which an investment in fixed rate
long term debt obligations may entail, including the risk that the value of the
GNMA Portfolio and hence of the Units will decline with increases in interest
rates. Because of the shorter average life of the Ginnie Mae Midgets in certain
Series of the GNMA Trust, and the lower coupon interest rate on such Securities,
- --------------------
* To the extent reference is made to the Indenture, any statements herein are
qualified in their entirety by the provisions of said Indenture.
-3-
<PAGE>
the value of the Units of such Series should tend to fluctuate less than that of
Series composed of longer term obligations. The value of the underlying
Securities will fluctuate inversely with changes in interest rates. In
addition, the potential for appreciation of the underlying Securities, which
might otherwise be expected to occur as a result of a decline in interest rates
may be limited or negated by increased principal prepayments on the underlying
mortgages. The high inflation of prior years, together with the fiscal measures
adopted to attempt to deal with it, have resulted in wide fluctuations in
interest rates and, thus, in the value of fixed rate long term debt obligations
generally. The Sponsor cannot predict whether such fluctuations will continue
in the future.
The Securities in the Series of the GNMA Trust were chosen in part on the
basis of their respective stated maturity dates. The ranges of maturity dates
of the Securities contained in a Series of the Trust are shown in Part Two on
the "Schedule of Investments." See "Life of the Securities and of the Series of
the GNMA Trust."
A Series of the GNMA Trust may be an appropriate medium for investors who
desire to participate in a portfolio of taxable fixed income securities offering
the safety of capital provided by securities backed by the full faith and credit
of the United States but who do not wish to invest the minimum $25,000 which is
required for a direct investment in GNMA guaranteed securities.
Portfolios. The GNMA Portfolios of the Series of the GNMA Trust consist of
Ginnie Maes, including so-called Ginnie Mae II's and, in the case of certain
designated Series, Ginnie Mae Midgets, fully guaranteed as to payment of
principal and interest by the Government National Mortgage Association. In
order for Ginnie Maes to be eligible for inclusion in Midget Foreign Investors
Trusts or GNMA Foreign Investors Portfolio Series, evidence must be received by
the Sponsor that the underlying mortgages were originated after July 18, 1984.
Although the Sponsor believes that all the underlying mortgages were originated
after July 18, 1984, to the extent that this is not the case, a Foreign Investor
will be subject to withholding for U.S. Federal income taxes on income derived
from mortgages that were originated on or prior to July 18, 1984. See "Tax
Status of the Trusts." Each group of Ginnie Maes described herein as having a
specified range of maturities includes individual mortgage-backed securities
which have varying ranges of maturities. Each such group of Ginnie Maes is
described as one category of securities because current market conditions accord
no difference in price among the individual Ginnie Mae securities within such
group on the basis of the difference in the maturity dates of each Ginnie Mae.
As long as this market condition prevails, a purchase of Ginnie Maes with the
same coupon rate and a maturity date within the range mentioned above will be
considered an acquisition of the same Security. In the future, however, the
difference in maturity ranges could affect the market value of the individual
Ginnie Maes. At such time, any additional purchases by a GNMA Portfolio Series
of the Trust will take into account the maturities of the individual Securities.
A Series of the GNMA Trust may contain Securities which were acquired at a
market discount. Such Securities trade at less than par value because the
interest rates thereon are lower than interest rates on comparable debt
securities being issued at currently prevailing interest rates. If interest
rates for newly issued and otherwise comparable securities increase, the market
discount of previously issued securities will increase and if interest rates for
-4-
<PAGE>
newly issued comparable securities decline, the market discount of previously
issued securities will decrease, other things being equal. Market discount
attributable to interest rate changes does not indicate a lack of market
confidence in the issue.
Holders of Units will be "at risk" with respect to such Securities (i.e.,
may derive either gain or loss from fluctuations in the evaluation of the
Securities) from the date they commit for Units. See "Estimated Long - Term and
Current Returns."
The mortgages underlying a Ginnie Mae may be prepaid at any time without
penalty. A lower or higher return on Units may occur depending on whether the
price at which the respective Ginnie Maes were acquired by a Series of the Trust
is lower or higher than par (which represents the price at which such Ginnie
Maes will be redeemed upon prepayment). Redemption of premium Ginnie Maes at
par pursuant to prepayments of mortgages will operate to lower the current
return on Units outstanding at that time since premium Ginnie Maes normally
carry higher interest coupons than par or discount Ginnie Maes. If mortgage
rates decline in the future, such prepayments may occur with increasing
frequency because, among other reasons, mortgagors may be able to refinance
their outstanding mortgages at lower interest rates. See "Life of the
Securities and of the Series of the GNMA Trust."
Set forth below is a brief description of the current method of origination
of Ginnie Maes; the nature of such securities, including the guaranty of GNMA;
the basis of selection and acquisition of the Ginnie Maes included in the GNMA
Portfolios; and the expected life of the Ginnie Maes in the Series of the GNMA
Trust. The "Schedule of Investments" in Part Two contains information
concerning the coupon rate and range of stated maturities of the Ginnie Maes in
such Series of the GNMA Trust.
Origination. The Ginnie Maes included in the GNMA Portfolios are backed by
the indebtedness secured by underlying mortgage pools of long term mortgages on
1- to 4-family dwellings. In the case of The Midget Foreign Investors Trusts or
GNMA Foreign Investors Portfolio Series, which may be acquired only by qualified
foreign investors, the Sponsor has acquired only pools containing mortgages
which it believes were originated after July 18, 1984. The pool of mortgages
which is to underlie a particular new issue of Ginnie Maes is assembled by the
proposed issuer of such Ginnie Maes. The issuer is typically a mortgage banking
firm, and in every instance must be a mortgagee approved by and in good standing
with the Federal Housing Administration ("FHA"). In addition, GNMA imposes its
own criteria on the eligibility of issuers, including a net worth requirement.
The mortgages which are to comprise a new Ginnie Mae pool may have been
originated by the issuer itself in its capacity as a mortgage lender or may be
acquired by the issuer from a third party. Such third party may be another
mortgage banker, a banking institution, the Veterans Administration ("VA")
(which in certain instances acts as a direct lender and thus originates its own
mortgages) or one of several other governmental agencies. All mortgages in any
given pool will be insured under the National Housing Act, as amended ("FHA-
insured") or Title V of the Housing Act of 1949 ("FMHA-insured") or guaranteed
under the Servicemen's Readjustment Act of 1944, as amended, or Chapter 37 of
Title 38, U.S.C. ("VA-guaranteed"). Such mortgages will have a date for the
first scheduled monthly payment of principal that is not more than one year
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prior to the date on which GNMA issues its guaranty commitment as described
below, will have comparable interest rates and maturity dates, and will meet
additional criteria of GNMA. All mortgages in the pools backing the Ginnie Maes
contained in the Portfolios are mortgages on 1- to 4-family dwellings (having a
stated maturity of up to 30 years, except in the case of certain Series
containing Ginnie Mae Midgets, whose stated maturity is 15 years). In general,
the mortgages in these pools provide for monthly payments over the life of the
mortgage (aside from prepayments) designed to repay the principal of the
mortgage over such period, together with interest at the fixed rate of the
unpaid balance.
To obtain GNMA approval of a new pool of mortgages, the issuer will file
with GNMA an application containing information concerning itself, describing
generally the pooled mortgages, and requesting that GNMA approve the issue and
issue its commitment (subject to GNMA's satisfaction with the mortgage documents
and other relevant documentation) to guarantee the timely payment of principal
of and interest on the Ginnie Maes to be issued by the issuer. If the
application is in order, GNMA will issue its commitment and will assign a GNMA
pool number to the pool. Upon completion of the required documentation
(including detailed information as to the underlying mortgages, a custodial
agreement with a Federal or state regulated financial institution satisfactory
to GNMA pursuant to which the underlying mortgages will be held in safekeeping,
and a detailed guaranty agreement between GNMA and the issuer) the issuance of
the Ginnie Maes is permitted. When the Ginnie Maes are issued, GNMA will
endorse its guaranty thereon. The aggregate principal amount of Ginnie Maes
issued will be equal to the then unpaid aggregate principal balances of the
pooled mortgages. The interest rate borne by the Ginnie Maes is currently fixed
at 1/2 of 1% below the interest rate of the pooled 1- to 4-family mortgages, the
differential being applied to the payment of servicing and custodial charges as
well as GNMA's guaranty fee.
Ginnie Mae II's consist of jumbo pools of mortgages consisting of pools of
mortgages from more than one issuer. The major advantage of Ginnie Mae II's
lies in the fact that a central paying agent sends one check to the holder on
the required payment date. This greatly simplifies the current procedure of
collecting distributions from each issuer of a Ginnie Mae, since such
distributions are often received late.
Nature of Ginnie Maes and GNMA Guaranty. All of the Ginnie Maes in the
GNMA Portfolio, including the Ginnie Mae II's, are of the "modified pass-
through" type, i.e., they provide for timely monthly payments to the registered
holders thereof (including the Series of the GNMA Trust) of a pro rata share of
the scheduled principal payments on the underlying mortgages, whether or not
collected by the issuers. Such monthly payments will also include, on a pro
rata basis, any prepayments of principal of such mortgages received and interest
(net of the servicing and other charges described above) on the aggregate unpaid
principal balance of such Ginnie Maes, whether or not the interest on the
underlying mortgage has been collected by the issuers.
The Ginnie Maes in the GNMA Portfolios are guaranteed as to timely payment
of principal and interest by GNMA. Funds received by the issuers on account of
the mortgages backing the Ginnie Maes in the GNMA Portfolios are intended to be
sufficient to make the required payments of principal of and interest on such
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Ginnie Maes but, if such funds are insufficient for that purpose, the guaranty
agreements between the issuers and GNMA require the issuers to make advances
sufficient for such payments. If the issuers fail to make such payments, GNMA
will do so.
GNMA is authorized by Section 306(g) of Title III of the National Housing
Act to guarantee the timely payment of principal of and interest on securities
which are based on or backed by a trust or pool composed of mortgages insured by
FHA, the Farmers' Home Administration ("FMHA") or guaranteed by the VA.
Section 306(g) provides further that the full faith and credit of the United
States is pledged to the payment of all amounts which may be required to be paid
under any guaranty under such subsection. An opinion of an Assistant Attorney
General of the United States, dated December 9, 1969, states that such
guaranties "constitute general obligations of the United States backed by its
full faith and credit."* GNMA is empowered to borrow from the United States
Treasury to the extent necessary to make any payments of principal and interest
required under such guaranties.
Ginnie Maes are backed by the aggregate indebtedness secured by the
underlying FHA-insured, FMHA-insured or VA-guaranteed mortgages and, except to
the extent of funds received by the issuers on account of such mortgages, Ginnie
Maes do not constitute a liability of nor evidence any recourse against such
issuers, but recourse thereon is solely against GNMA. Holders of Ginnie Maes
(such as the GNMA Trust) have no security interest in or lien on the underlying
mortgages.
The GNMA guaranties referred to herein relate only to payment of principal
of and interest on the Ginnie Maes in the GNMA Portfolios and not to the Units
offered hereby.
Life of the Securities and of the Series of the GNMA Trust. Monthly
payments of principal will be made, and additional prepayments of principal may
be made, to the Series of the GNMA Trust in respect of the mortgages underlying
the Ginnie Maes in the GNMA Portfolios. All of the mortgages in the pools
relating to the Ginnie Maes in the GNMA Portfolios are subject to prepayment
without any significant premium or penalty at the option of the mortgagors.
While the mortgages on 1- to 4-family dwellings underlying the Ginnie Maes have
a stated maturity of up to 30 years (15 years for Ginnie Mae Midgets), it has
been the experience of the mortgage industry that the average life of comparable
mortgages, owing to prepayments, refinancings and payments from foreclosures is
considerably less.
In the mid 1970s, published tables for Ginnie Maes utilized a 12-year
average life assumption for Ginnie Mae pools of 26-30 year mortgages on 1- to
4-family dwellings. This assumption was derived from the FHA experience
relating to prepayments on such mortgages during the period from the mid 1950s
to the mid 1970s. This 12-year average life assumption was calculated in
respect of a period during which mortgage lending rates were fairly stable.
That assumption is probably no longer an accurate measure of the life of Ginnie
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* Any statement in this Prospectus that a particular Security is backed by
the full faith and credit of the United States is based upon the opinion of
an Assistant Attorney General of the United States and should be so
construed.
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Maes or their underlying single family mortgage pools. However, current yield
tables, published in 1981, still utilize the 12-year average life assumption and
Ginnie Maes continue to be traded based on this assumption. Recently, mortgages
issued at high interest rates have experienced accelerated prepayment rates
which would indicate a shorter average life than 12 years.
A number of factors, including homeowner's mobility, change in family size
and mortgage market interest rates will affect the average life of the Ginnie
Maes in the GNMA Portfolios. For example, Ginnie Maes issued during a period of
high interest rates will be backed by a pool of mortgage loans bearing similarly
high rates. In general, during a period of declining interest rates, new
mortgage loans with interest rates lower than those charged during periods of
high rates will become available. To the extent a homeowner has an outstanding
mortgage with a high rate, he may refinance his mortgage at a lower interest
rate or he may rapidly repay his old mortgage. Should this happen, a Ginnie Mae
issued with a high interest rate may experience a rapid prepayment of principal
as the underlying mortgage loans prepay in whole or in part. Accordingly, there
can be no assurance that the prepayment levels which will be actually realized
will conform to the experience of the FHA, other mortgage lenders or other
Ginnie Mae investors.
It is not possible to meaningfully predict prepayment levels regarding the
Ginnie Maes in the GNMA Portfolios. Therefore, the termination of a Series of
the GNMA Trust might be accelerated as a result of prepayments made as described
herein.
In addition to prepayments as described above, sales of Securities in the
GNMA Portfolios under certain permitted circumstances may result in an
accelerated termination of a Series of the GNMA Trust. Also, it is possible
that, in the absence of a secondary market for the Units or otherwise,
redemptions of Units may occur in sufficient numbers to reduce the GNMA
Portfolios to a size resulting in such termination. Early termination of a
Series of the GNMA Trust may have important consequences to the Unitholder,
e.g., to the extent that Units were purchased with a view to an investment of
longer duration, the overall investment program of the investor may require
readjustment; or the overall return on investment may be less or greater than
anticipated, depending, in part, on whether the purchase price paid for Units
represented the payment of an overall premium or a discount, respectively, above
or below the stated principal amounts of the underlying mortgages. In addition,
a capital gain or loss may result for tax purposes from termination of the GNMA
Portfolios.
SUMMARY - U.S. TREASURY PORTFOLIO
Each Kemper Government Securities Trust, U.S. Treasury Portfolio, Kemper
Defined Funds, U.S. Treasury Portfolio and EVEREN Unit Investment Trusts U.S.
Treasury Portfolio (collectively, the "U.S. Treasury Portfolio Series") is a
unit investment trust whose objective is to obtain safety of capital and
investment flexibility as well as current monthly distributions of interest
through investment in a fixed, laddered portfolio consisting of interest-bearing
U.S. Treasury obligations or, in certain U.S. Treasury Portfolio Series,
consisting of some or almost all zero coupon U.S. Treasury obligations (the
"U.S. Treasury Obligations"). The U.S. Treasury Portfolio Series is formed for
the purpose of providing protection against changes in interest rates and also
passing through to Unitholders in all states the exemption from state personal
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income taxes afforded to direct owners of U.S. obligations. Each U.S. Treasury
Portfolio Series has an additional purpose of providing income which is exempt
from withholding for U.S. Federal income taxes for non-resident alien investors.
A foreign investor must provide a completed W-8 Form to his financial
representative or the Trustee to avoid withholding on his account. The
Securities are direct obligations of the United States and are backed by its
full faith and credit. The value of the Units, the estimated current return and
estimated long-term return to new purchasers will fluctuate with the value of
the portfolio which will generally decrease or increase inversely with changes
in interest rates.
The guaranteed payment of principal and interest afforded by U.S. Treasury
Obligations, and, with respect to those Series which own zero coupon U.S.
Treasury Obligations ("Stripped Treasury Securities"), the additional fact that
no interest distributions will be made prior to maturity of the Stripped
Treasury Securities may make investment in U.S. Treasury Portfolio Series
particularly well suited for purchase by Individual Retirement Accounts, Keogh
Plans, pension funds and other tax-deferred retirement plans. In addition, the
ability to buy Units (minimum purchase $1,000 per Series, $250 for IRA accounts)
at a Public Offering Price of approximately $1.00 per Unit ($10.00 per Unit for
Kemper Defined Funds and EVEREN Unit Investment Trusts) enables such investors
to tailor the dollar amount of their purchases of Units to take maximum possible
advantage of the annual deductions available for contributions to such plans.
Investors should consult with their tax advisers before investing. See
"Retirement Plans."
Monthly Distributions. Monthly distributions of interest received by each
U.S. Treasury Portfolio Series will be paid in cash unless the Unitholder elects
to have them automatically reinvested in any mutual fund underwritten or advised
by Zurich Kemper Investments, Inc. (the "Kemper Funds"), other than those Kemper
Funds sold with a contingent deferred sales charge. Since the portfolio
securities and investment objectives of such Kemper Funds may differ
significantly from that of the U.S. Treasury Portfolio, Unitholders should
carefully consider the consequences before selecting such Kemper Funds for
reinvestment. Any such reinvestment is made at net asset value (that is,
without a sales charge). Investors have the ability to designate that only
principal payments or only interest payments or both are to be reinvested (see
"Reinvestment Program"). Distributions of principal will be made in accordance
with the instructions of the investor in any month the amount in the Principal
Account equals or exceeds $1.00 per 1,000 Units ($1.00 per 100 Units for certain
Trusts). Distributions will be made as specified in Part Two for each Trust.
Stripped Treasury Securities. Stripped Treasury Securities are sold at a
deep discount because the buyer of those securities obtains only the right to
receive a future fixed payment on the security and not any rights to periodic
interest payments thereon. Purchasers of these Securities acquire, in effect,
discount obligations that are economically identical to the "zero-coupon bonds"
that have been issued by corporations. Zero coupon bonds are debt obligations
which do not make any periodic payments of interest prior to maturity and
accordingly are issued at a deep discount.
Stripped Treasury Securities held by any Series of the U.S. Treasury
Portfolio Series Trust shall consist solely of either of the following types of
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the registered securities: (a) U.S. Treasury debt obligations originally issued
as bearer coupon bonds which have been stripped of their unmatured interest
coupons and (b) coupons which have been stripped from U.S. Treasury bearer
bonds, either of which may be held through the Federal Reserve Bank's book entry
system called "Separate Trading of Registered Interest and Principal of
Securities" ("STRIPS"). The Stripped Treasury Securities are payable in full at
maturity at their stated maturity amount and are not subject to redemption prior
to maturity. In addition, the Stripped Treasury Securities do not make any
periodic payments of interest.
The Stripped Treasury Securities are sold at a substantial discount from
their face amounts payable at maturity. The holder of Stripped Treasury
Securities will be required to include annually in gross income an allocable
portion of the deemed original issue discount, prior to receipt of cash
attributable to that income. Accordingly, any Series owning Stripped Treasury
Securities may not be a suitable investment unless these taxes can be paid from
other funds or unless such Series is purchased by Individual Retirement
Accounts, Keogh plans or other tax-deferred retirement plans. Stripped Treasury
Securities are marketable in substantially the same manner as other discount
Treasury Securities.
Risk Factors. An investment in Units of the U.S. Treasury Portfolio should
be made with an understanding of the risks which an investment in fixed-rate
U.S. Treasury obligations may entail, including the risk that the value of the
portfolio and hence of the Units will decline with increases in interest rates.
Some or all of the Securities in the Trust Fund have been purchased at a market
discount. The current returns (coupon interest rate) of such Securities are
lower than the current returns of similar, comparably rated, Securities issued
at currently prevailing interest rates.
Additionally, an investment in a Series holding Stripped Treasury
Securities should be made with an understanding of the risks which an investment
in debt obligations, most of which were purchased at a deep discount, may
entail, including the risk that the value of the underlying debt obligations and
hence of the Units will decline with increases in interest rates. The market
value of Stripped Treasury Securities, and therefore the value of the Units, may
be subject to greater fluctuations in response to changing interest rates than
debt obligations of comparable maturities which pay interest currently. This
risk is greater when the period to maturity is longer. No distributions of
income are anticipated until maturity of the Stripped Treasury Securities. The
price per Unit will vary in accordance with fluctuations in the values of the
Stripped Treasury Securities, and the distributions could change if Stripped
Treasury Securities are paid or sold, or if the expenses of the Trust change.
The Stripped Treasury Securities will mature at one year intervals in
consecutive years and do not make any periodic payment of income prior to
maturity. Accordingly, it is not anticipated that there will be any periodic
distributions of income.
Because interest on "zero coupon" debt obligations is not distributed on a
current basis but in effect compounded, the value of securities of this type,
including the value of accreted and reinvested interest (and of a trust
comprised of these obligations), is subject to greater fluctuations than of
obligations which distribute income regularly. Accordingly, while the full
faith and the credit of the U.S. government provides a high level of protection
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against credit risks on the Securities, sale of Units before maturity of the
Securities at a time when interest rates have increased would involve greater
risk than in a trust which is invested in debt obligations or comparable
maturity which pay interest currently. This risk is greater when the period to
maturity is longer.
Estimated Current and Long-Term Returns. The Estimated Current Return is
calculated by dividing the estimated net annual interest rate per Unit by the
Public Offering Price. The net estimated annual interest rate per Unit will
vary with changes in the fees and expenses of the Trustee, Sponsor and Evaluator
and with the exchange, redemption, sales, scheduled payments, prepayments or
maturity of underlying Securities in the portfolio. The Public Offering Price
of a Trust will also vary with fluctuations in the evaluation of the underlying
Securities and accrued interest, and in the case of certain Trusts with changes
in the Purchased Interest and Daily Accrued Interest; therefore, there is no
assurance that the present Estimated Current Return will be realized in the
future. The Estimated Long-Term Return is calculated using a formula which
(1) takes into account the amortization of premiums and the accretion of
discounts, the estimated retirements of all the Securities in such Series and
(2) takes into account the expenses and sales charge associated with each Unit
of the Trust. Since the market values and the estimated average lives or
estimated retirements, as the case may be, of the Securities and the expenses of
a Trust will change, it can be expected that the Estimated Long-Term Returns
will fluctuate in the future. Estimated Current Return and Estimated Long-Term
Return are expected to differ because the calculation of the Estimated Long-Term
Return reflects the estimated date and amount of principal returned while the
Estimated Current Return calculation includes only the net annual interest rate
and Public Offering Price.
Market for Units. The Sponsor, though not obligated to do so, after the
initial offering period, intends to maintain a market for the Units based on the
aggregate bid side evaluation of the underlying Securities plus Purchased
Interest, if any, and accrued interest (or Daily Accrued Interest). If such
market is not maintained, a Unitholder will, nevertheless, be able to dispose of
his Units through redemption at prices based on the aggregate bid side
evaluation of the underlying Securities. See "Redemption." Market conditions
may cause such prices to be greater or less than the amount paid for Units.
THE U.S. TREASURY PORTFOLIO SERIES
Each Kemper Government Securities Trust, U.S. Treasury Portfolio, Kemper
Defined Funds, U.S. Treasury Portfolio and EVEREN Unit Investment Trusts U.S.
Treasury Portfolio (collectively, the "U.S. Treasury Portfolio Series") is a
"unit investment trust" created under Missouri or New York law pursuant to a
Trust Indenture and Agreement (hereinafter collectively referred to as the
"Indenture").* 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.
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* To the extent reference is made to the Indenture, any statements herein are
qualified in their entirety by the provisions of said indenture.
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The objective of the U.S. Treasury Portfolio is to obtain safety of capital
and investment flexibility through investment in a fixed, laddered portfolio
consisting of interest-bearing (or in some cases zero coupon) U.S. Treasury
obligations. The U.S. Treasury Portfolio Series is formed for the purpose of
providing protection against changes in interest rates and also passing through
to Unitholders in all states the exemption from state personal income taxes
afforded to direct owners of U.S. obligations. The Securities are direct
obligations of the United States and are backed by its full faith and credit.
The value of the Units, the estimated current return and estimated long-term
return to new purchasers will fluctuate with the value of the Securities
included in the portfolio which will generally decrease or increase inversely
with changes in interest rates. See "Tax Status of the Trusts."
Risk Factors. An investment in Units of the U.S. Treasury Portfolio Series
should be made with an understanding of the risks which an investment in fixed
rate debt obligations may entail, including the risks that the value of the
Portfolio and hence of the Units will decline with increases in interest rates.
The value of the underlying Securities will fluctuate inversely with changes in
interest rates. The high inflation of prior years, together with the fiscal
measures adopted to attempt to deal with it, have resulted in wide fluctuations
in interest rates and, thus, in the value of fixed rate long term debt
obligations generally. The Sponsor cannot predict whether such fluctuations
will continue in the future.
In selecting Securities for deposit in the U.S. Treasury Portfolio Series,
the following factors, among others, were considered by the Sponsor: (i) the
prices of the Securities relative to other comparable Securities; (ii) the
maturities of these Securities; and (iii) whether the Securities were issued
after July 18, 1984.
The U.S. Treasury Portfolio Series may be an appropriate medium for
investors who desire to participate in a portfolio of taxable fixed income
securities offering the safety of capital provided by an investment backed by
the full faith and credit of the United States. In addition, many investors may
benefit from the exemption from state and local personal income taxes that will
pass through the U.S. Treasury Portfolio Series to Unitholders in virtually all
states.
Since Unitholders of a Series holding Stripped Treasury Securities will be
required for Federal income tax purposes to include amounts in ordinary gross
income in advance of the receipt of the cash attributable to such income, such
Series may be appropriate only for an account which can pay taxes with other
funds in advance of the receipt of the cash attributable to such income or for
Individual Retirement Accounts, Keogh plans or other tax-deferred retirement
plans.
General. Each Unit in a Series represents the fractional undivided
interest in the U.S. Treasury Portfolio Series as set forth under "Essential
Information" in Part Two. Because certain of the Securities from time to time
may be redeemed or will mature in accordance with their terms or may be sold
under certain circumstances described herein, the U.S. Treasury Portfolio Series
of the Trust is not expected to retain its present size and composition. Units
will remain outstanding until redeemed upon tender to the Trustee by any
Unitholder (which may include the Sponsor) or until the termination of the Trust
pursuant to the Indenture.
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PORTFOLIO SELECTION
In selecting Ginnie Maes and U.S. Treasury Obligations (collectively
referred to herein as the "Portfolio Obligations") for deposit in a Series of
the appropriate Trusts, the following factors, among others, were considered by
the Sponsor: (i) the types of such obligations available; (ii) the prices and
yields of such obligations relative to other comparable obligations including
the extent to which such obligations are trading at a premium or at a discount
from par; and (iii) the maturities of such obligations.
Each Series of the Trusts consists of the unamortized principal amount of
the Portfolio Obligations listed in Part Two under "Schedule of Investments" as
may continue to be held from time to time in such Series together with accrued
and undistributed interest thereon and undistributed cash representing payments
and prepayments of principal and proceeds realized from the disposition of
Portfolio Obligations. Neither the Sponsor nor the Trustee shall be liable in
any way for any default, failure or defect in any of the Securities.
Each series of the Trust may contain "zero coupon" U.S. Treasury
Obligations. See "Schedule of Investments" in Part Two of this Prospectus.
Zero coupon obligations are purchased at a deep discount because the buyer
receives only the right to receive a final payment at the maturity of the
obligations and does not receive any periodic interest payments. The effect of
owning deep discount obligations which do not make current interest payments
(such as the zero coupon obligations) is that a fixed yield is earned not only
on the original investment but also, in effect, on all discount earned during
the life of such income on such obligation at a rate as high as the implicit
yield on the discount obligation, but at the same time eliminates the holder's
ability to reinvest at higher rates in the future. For this reason, zero coupon
obligations are subject to substantially greater price fluctuations during
periods of changing market interest rates than are securities of comparable
quality which pay interest.
Because regular payments of principal are to be received and certain of the
Portfolio Obligations from time to time may be redeemed or will mature in
accordance with their terms or may be sold under certain circumstances described
herein, the Series of the Trusts are not expected to retain their present size
and composition.
THE UNITS
Each Unit represents the fractional undivided interest in a Series of the
Trusts set forth in Part Two under "Essential Information." If any Units are
redeemed by the Trustee, the principal amount of Portfolio Obligations in such
Series of the Trusts will be reduced by amounts allocable to redeemed Units, and
the fractional undivided interest represented by each Unit in the balance will
be increased. Units will remain outstanding until redeemed upon tender to the
Trustee by any Unitholder (which may include the Sponsor) or until the
termination of the Series of the Trusts. See "Redemption" and "Administration
of the Trust - Termination."
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ESTIMATED LONG-TERM AND CURRENT RETURNS
The Estimated Current Return and Estimated Long-Term Return for each trust
are the amounts set forth in Part Two under "Essential Information" as of the
date shown on that page. Estimated Current Return is calculated by dividing the
estimated net annual interest rate per Unit by the Public Offering Price. The
estimated net annual interest rate per Unit will vary with changes in fees and
expenses of the Trustee, the Sponsor and the Evaluator and with the principal
prepayment, redemption, maturity, exchange or sale of Portfolio Obligations
while the Public Offering Price will vary with changes in the offering price of
the underlying Portfolio Obligations and accrued interest, and in the case of
certain Trusts, with changes in Purchased Interest and Daily Accrued Interest;
therefore, there is no assurance that the present Estimated Current Return will
be realized in the future. The Estimated Long-Term Return is calculated using a
formula which (1) takes into consideration, and determines and factors in the
relative weightings of, the market values, yields (which takes into account the
amortization of premiums and the accretion of discounts) and, in the case of
GNMA Portfolio Series, the estimated average life of all the Portfolio
Obligations in such Series or, in the case of U.S. Treasury Portfolio Series,
the estimated retirements of all of the Portfolio Obligations in such Series and
(2) takes into account the expenses and sales charge associated with each Trust
Unit. Since the market values and the estimated average lives or estimated
retirements, as the case may be, of the Portfolio Obligations and the expenses
of the Trust will change, there is no assurance that the present Estimated Long-
Term Return will be realized in the future. The Estimated Current Return and
Estimated Long-Term Return are expected to differ because the calculation of the
Estimated Long-Term Return reflects the estimated dates and amounts of principal
returned while the Estimated Current Return calculations include only net annual
interest rates and Public Offering Price. See "Summary - GNMA Portfolio -
Estimated Current and Long-Term Returns" and "Summary - U.S. Treasury Portfolio
- - Estimated Current and Long-Term Returns."
Payments received in respect of the mortgages underlying the Ginnie Maes in
the GNMA Trust Portfolios will consist of a portion representing interest and a
portion representing principal. Although the aggregate monthly payment made by
the obligor on each mortgage remains constant (aside from optional prepayments
of principal), in the early years most of each such payment will represent
interest, while in later years, the proportion representing interest will
decline and the proportion representing principal will increase. However, by
reason of optional prepayments, principal payments in the earlier years on the
mortgages underlying the Ginnie Maes may be substantially in excess of those
required by the amortization schedules of such mortgages. Therefore, principal
payments in later years may be substantially less since the aggregate unpaid
principal balances of such underlying mortgages may have been greatly reduced.
To the extent that the underlying mortgages bearing higher interest rates in the
GNMA Trust Portfolios are pre-paid faster than the other underlying mortgages,
the net annual interest rate per Unit and the Estimated Current Return on the
Units can be expected to decline. Monthly payments to the Unitholders will
reflect all of the foregoing factors.
In addition to the Public Offering Price, the price of a Unit will include
accrued interest on the Portfolio Obligations from the last Record Date of that
Series of the Trusts to the date of settlement for any purchase. Therefore,
accrued interest will generally be added to the value of the Units. If a
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Unitholder sells all or a portion of his Units, he will receive his
proportionate share of the accrued interest on such Series from the purchaser of
his Units. Similarly, if a Unitholder redeems all or a portion of his Units,
the Redemption Price per Unit will include accrued interest on the Portfolio
Obligations.
PUBLIC OFFERING OF UNITS
Public Offering Price. The Public Offering Price of Units is computed by
adding to the aggregate bid price of the Portfolio Obligations in that Series of
the Trusts as determined by the Evaluator (see below) plus any money in the
Principal Account of such Series other than money required to redeem tendered
Units, plus Purchased Interest, if any, and accrued interest (or Daily Accrued
Interest), then dividing such sum by the number of Units of such Series
outstanding and then adding that sales charge referred to below.
Although under no obligation to do so, the Sponsor intends to permit volume
purchasers of Units to purchase Units at a reduced sales charge. The Sponsor
may at any time change the amount by which the sales charge is reduced or may
discontinue the discount altogether.
The sales charge per Unit for the GNMA Portfolio Series will be reduced
pursuant to the following graduated scale:
<TABLE>
GNMA MIDGET SERIES GNMA SERIES
---------------------- ----------------------
PERCENT OF PERCENT OF
PERCENT OF NET PERCENT OF NET
TICKET OFFERING AMOUNT OFFERING AMOUNT
SIZE PRICE INVESTED PRICE INVESTED
- ------ ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Less than $100,000 3.50% 3.627% 3.95% 4.112%
$100,000 to $249,999 3.25 3.359 3.70 3.842
$250,000 to $499,999 2.85 2.934 3.35 3.466
$500,000 to $999,999* 2.60 2.669 3.10 3.199
<FN>
- --------------------
* For any transaction in excess of this amount, contact the Sponsor for the
applicable sales charge.
</TABLE>
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<PAGE>
The sales charge per Unit for U.S. Treasury Portfolio Series will be
reduced pursuant to the following graduated scale:
<TABLE>
DOLLAR WEIGHTED AVERAGE YEARS TO MATURITY
0-1.99 2-2.99 3-4.99 5-6.99 7-9.99
YEARS YEARS YEARS YEARS YEARS
-------- ------ ------- ------- -------
TICKET SIZE SALES CHARGE (PERCENT OF PUBLIC OFFERING PRICE)
- ------------------ -----------------------------------------------
<S> <C> <C> <C> <C> <C>
Less than $500,000 1.25% 1.50% 1.75% 2.25% 3.00%
$500,000 to $999,999 1.00 1.25 1.50 1.75 2.50
$1,000,000 to $1,499,999* 1.00 1.00 1.25 1.50 2.00
<FN>
- --------------------
* For any transaction in excess of $1,499,999, please contact the Sponsor for
the applicable sales charge.
</TABLE>
The reduced sales charges as shown on the tables above will apply to all
purchases of Units on any one day by the same person from the same firm, and for
this purpose, purchases of Units of one or more Series of the Trusts will be
aggregated with concurrent purchases of Units of any other unit investment trust
that may be offered by the Sponsor.
Additionally, Units purchased in the name of a spouse or child (under 21)
of such purchaser will be deemed to be additional purchases by such purchaser.
The reduced sales charge is also applicable to a trustee or other fiduciary
purchasing Units for a single trust estate or single fiduciary account.
The Sponsor will also allow purchasers who commit to purchase $1 million or
more of a Series units during a 12 month period to do so at the applicable sales
charge for such series pursuant to a letter of intent, subject to certain
restrictions.
The Sponsor intends to permit officers, directors and employees of the
Sponsor and Evaluator to purchase Units of any Series of the Trusts without a
sales charge, although a transaction processing fee may be imposed on such
trades. The Sponsor reserves the right to reject, in whole or in part, any
order for the purchase of Units and the right to charge the amount of the sales
charge from time to time.
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.
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<PAGE>
In addition to the Public Offering Price, the price of a Unit of a Series
of the Kemper Government Securities Trust will include accrued interest on the
Portfolio Obligations from the last Record Date of that Series of such Trust to
the date of settlement for any purchase. Therefore, accrued interest will
generally be added to the value of the Units of such Trust. If a Unitholder of
the Kemper Government Securities Trust sells all or a portion of his Units, he
will receive his proportionate share of the accrued interest for that Series of
the Trusts from the purchaser of his Units. Similarly, if a Unitholder of the
Kemper Government Securities Trust redeems all or a portion of his Units, the
Redemption Price per Unit will include accrued interest on the Portfolio
Obligations in such Series.
In the case of certain Series of Kemper Defined Funds, the Public Offering
Price includes accrued interest which consists of two elements. The first
element arises as a result of accrued interest which is the accumulation of
unpaid interest on a security from the later of the last day on which interest
thereon was paid or the date of original issuance of the security. Interest on
the Portfolio Obligations in a Trust is paid monthly or semi-annually to the
Trust. The aggregate amount of such accrued interest on the Portfolio
Obligations in a Trust in certain Series of Kemper Defined Funds to the First
Settlement Date of such Trust is referred to herein as "Purchased Interest."
Included in the Public Offering Price of the Trust Units is Purchased Interest.
The second element of accrued interest arises because the estimated net interest
on the Units in a Trust is accounted for daily on an accrual basis (herein
referred to as "Daily Accrued Interest" for purposes of certain Kemper Defined
Funds Trusts). 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 in certain Series of Kemper Defined Funds will include
the proportionate share of Daily Accrued Interest to the date of settlement. If
a Unitholder in certain Series of Kemper Defined Funds sells or redeems all or a
portion of his Units or if the Portfolio Obligations are sold or otherwise
removed or if the Trust is liquidated, he will receive at that time his
proportionate share of the Purchased Interest and Daily Accrued Interest
computed to the settlement date in the case of sale or liquidation and to the
date of tender in the case of redemption in the Trust.
In the case of certain other Series of Kemper Defined Funds and all Series
of EVEREN Unit Investment Trusts, the Public Offering Price includes accrued
interest as described in this paragraph. Accrued interest is the accumulation
of unpaid interest on a security from the last day on which interest thereon was
paid. Interest on Securities generally is paid semi-annually (monthly in the
case of Ginnie Maes, if any) although a Trust accrues such interest daily.
Because of this, a Trust always 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.
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<PAGE>
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.
The Public Offering Price on any date will vary from the amount stated
under "Essential Information" in Part Two due to fluctuations in the valuation
of the underlying Portfolio Obligations in such Series of the Trusts and accrued
interest, and, in the case of certain Trusts, the additions or deletions of
Purchased Interest and Daily Accrued Interest.
The aggregate bid prices of the Portfolio Obligations in a Series of the
Trusts, are determined for each Series of the Trusts by the Evaluator, in the
following manner: (a) on the basis of current bid prices for the Portfolio
Obligations, (b) if bid prices are not available for the Portfolio Obligations,
on the basis of current bid prices for comparable securities, (c) by determining
the value of the Portfolio Obligations on the bid side of the market by
appraisal, or (d) by any combination of the above. The Evaluator may obtain
current price information as to the Portfolio Obligations from investment
dealers or brokers, including the Sponsor. Such evaluations and computations
will be made as of the close of business on each business day and will be
effective for all sales of Units made during the preceding 24-hour period.
Evaluations, for purposes of redemptions by the Trustee, will be made each
business day as of the Evaluation Time stated under "Essential Information" in
Part Two, effective for all redemptions made subsequent to the last preceding
determination.
In connection with the Ginnie Maes deposited in the GNMA Trusts, there is a
period of time beginning on the first day of each month, during which the total
amount of payments (including prepayments, if any) of principal for the
preceding month on the various mortgages underlying each of the Ginnie Maes in
the Portfolio of a Series will not yet have been reported by the issuer to GNMA
and made generally available to the public. During this period, the precise
principal amount of the underlying mortgages remaining outstanding for each
Ginnie Mae in the Portfolios, and therefore the precise principal amount of such
Security, will not be known, although the principal amount outstanding for the
preceding month will be known. Therefore, the exact amount of principal to be
acquired by the Trustee as a holder of such Securities which may be distributed
to Unitholders of such Series with the next monthly distribution will not be
known. The Sponsor does not expect that the amounts of such prepayments and the
differences in such principal amounts from month to month will be material in
relation to a Series of the GNMA Trusts due to the number of mortgages
underlying each Ginnie Mae and the number of such Ginnie Maes in each Series of
the GNMA Trusts. However, there can be no assurance that they will not be
material. For purposes of the determination by the Evaluator of the bid prices
of the Ginnie Maes in the GNMA Portfolios and for purposes of calculations of
accrued interest on the Units, during the period in each month prior to the time
when the precise amounts of principal of the Ginnie Maes for the month become
publicly available, the Evaluator will base its evaluations and calculations,
which are the basis for calculations of the Public Offering Price, the Sponsor's
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<PAGE>
Repurchase Price and the Redemption Price per Unit, upon the principal amount of
such Series outstanding for the preceding month. The Sponsor expects that the
differences in such principal amounts from month to month will not be material
to each GNMA Portfolio Series of the Trusts. Nevertheless, the Sponsor will
adopt procedures as to pricing and evaluation for the Units of each Series of
the GNMA Trusts, with such modifications, if any, deemed necessary by the
Sponsor for the protection of Unitholders, designed to minimize the impact of
such differences upon the calculation of the Public Offering Price per Unit, the
Sponsor's Repurchase Price per Unit and the Redemption Price per Unit of such
Series.
Public Distribution. The Sponsor has qualified Units for sale in various
states. Units will be sold through dealers who are members of the National
Association of Securities Dealers, Inc. and through others. Such firms receive
a discount from the Public Offering Price as indicated in the tables under
"Profit of Sponsor" below. Certain commercial banks are making Units of the
Trust available to their customers on an agency basis. A portion of the sales
charge paid by their customers is retained by or remitted to the banks in an
amount as indicated in the tables under "Profit of Sponsor" below. Under the
Glass-Steagall Act, banks are prohibited from underwriting Trust Units; however,
the Glass-Steagall Act does permit certain agency transactions and the banking
permitted 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 reject, in whole or in part, any
order for the purchase of Units. The Sponsor reserves the right to change the
discounts from time to time. The difference between the discounts and the sales
charge will be retained by the Sponsor.
The Sponsor also reserves the right to change the discounts set forth above
from time to time. In addition to such discounts, the Sponsor may, from time to
time, pay or allow an additional discount, in the form of cash or other
compensation, to dealers employing registered representatives who sell, during a
specified time period, a minimum dollar amount of Units of the Series of the
Trusts and other unit investment trusts underwritten by the Sponsor.
While not obligated to do so, the Sponsor intends, subject to change at any
time, to maintain a market for Units of the Series of the Trusts offered hereby
and to continuously offer to purchase said Units at prices based on the
aggregate bid prices of the underlying Portfolio Obligations in such Series,
together with accrued interest to the expected date of settlement.
The Sponsor may suspend or discontinue purchases of Units at prices based
on the bid prices of Securities in any Series of the Trusts if the supply of
Units exceeds demand, or for other business reasons.
-19-
<PAGE>
Profits of Sponsor. Sales of Units may be made to or through dealers or
through others at prices which represent discounts from the Public Offering
Price as set forth below. Discounted rates for the GNMA Portfolio Series are as
follows:
<TABLE>
GNMA
MIDGET GNMA
TICKET SIZE* SERIES SERIES
- ------------ ------ ------
<S> <C> <C>
Less than $100,000 2.10% 2.60%
$100,000 to $249,999 2.10 2.60
$250,000 to $499,999 1.80 2.30
$500,000 to $999,999** 1.55 2.05
<FN>
- --------------------
* The breakpoint is applied on a Unit basis utilizing a breakpoint equivalent
in the above table of $1.00 per Unit for $1 Units and $1000 per 100 Units
for $10 Units.
** For transactions in excess of this amount, contact the Sponsor for the
applicable rates.
</TABLE>
On the sale of Units, the Sponsor will retain the difference between the
discount and the sales charge. The Sponsor may also realize profits or sustain
losses while maintaining a market in the Units, in the amount of any difference
between the prices at which it buys Units and the prices at which Units are
resold after allowing for the discount.
Cash, if any, received by a dealer from Unitholders prior to the settlement
date for a purchase of Units of any Series may be used in such dealer's business
subject to the limitations of Rule 15c3-3 under the Securities Exchange Act of
1934 and may be of benefit to the dealer.
TAX STATUS OF THE TRUSTS
Regulated Investment Companies. In the opinion of Chapman and Cutler,
counsel for the Sponsor, under existing law: Each Series of the GNMA Trusts
(except for Kemper Government Securities Trust GNMA Portfolio (Foreign Investors
Trusts) and Kemper Defined Funds, GNMA Portfolio, Series 1) is an association
taxable as a corporation under the Internal Revenue Code of 1986, as amended
(the "Code") and intends to qualify on a continuing basis for and elect special
Federal income tax treatment as a "regulated investment company" under the Code.
If a Trust so qualifies and timely distributes to Unitholders 90% or more of its
taxable income (without regard to its net capital gain, i.e., the excess of its
net long-term capital gain over its net short-term capital loss), it will not be
subject to Federal income tax on the portion of its taxable income (including
any net capital gain) that it distributes to Unitholders. In addition, to the
extent a Trust timely distributes to Unitholders at least 98% of its taxable
income (including any net capital gain), it will not be subject to the 4% excise
tax on certain undistributed income of "regulated investment companies." Each
Series of the GNMA Portfolio intends to timely distribute its taxable income
(including any net capital gains) to avoid the imposition of Federal income tax
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<PAGE>
or the excise tax. Distributions of the entire net investment income of each
Series of such Trusts is required by the Indenture.
Each Trust intends to file its federal income tax return on a calendar
basis. In any taxable year of the Trusts, the distributions of its income,
other than distributions which are designated as capital gain dividends, will,
to the extent of the earnings and profits of such Series, constitute dividends
for Federal income tax purposes which are taxable as ordinary income to
Unitholders. To the extent that the distributions to a Unitholder in any year
exceed the Trust's current and accumulated earnings and profits, they will be
treated as a return of capital and will reduce the Unitholder's basis in his
Units, and to the extent that they exceed his basis, will be treated as a gain
from the sale of his Units as discussed below. Distributions from each Series
of the GNMA Trusts will not be eligible for the 70% dividends received deduction
for corporations. Although distributions generally will be treated as
distributed when paid, distributions declared in October, November or December,
payable to Unitholders of record on a specified date in one of those months and
paid during January of the following year will be treated as having been
distributed by each Series of such Trusts (and received by the Unitholders) on
December 31 of the year such distributions are declared.
Under the Code, certain miscellaneous itemized deductions, such as
investment expenses, tax return preparation fees and employee business expenses,
will be deductible by individuals only to the extent they exceed 2% of adjusted
gross income. Miscellaneous itemized deductions subject to this limitation
under present law do not include expenses incurred by the GNMA Trusts, as long
as the Units of such Trusts are held by or for 500 or more persons at all times
during the taxable year or another exception is met. In the event the Units of
any Series of a GNMA Trust are held by fewer than 500 persons, additional
taxable income will be realized by the individual Unitholders in excess of the
distributions received from such Series.
Distributions of a Trust's net capital gain which a Trust properly
designates as capital gain dividends will be taxable to Unitholders thereof as
long-term capital gains, regardless of the length of time the Units have been
held by a Unitholder. However, if a Unitholder receives a long-term capital
gain dividend (or is allocated a portion of the Trust's undistributed long-term
capital gain) and sells his Units at a loss prior to holding them for 6 months,
such loss will be recharacterized as long-term capital loss to the extent of
such long-term capital gain received as a dividend or allocated to a Unitholder.
Distributions in partial liquidation, reflecting the proceeds of prepayments,
redemptions, maturities (including monthly mortgage payments of principal) or
sales of Portfolio Obligations from a Series of such Trusts (exclusive of net
capital gain) will not be taxable to Unitholders of such Series to the extent
that they represent a return of capital for tax purposes. The portion of
distributions which represents a return of capital will, however, reduce a
Unitholder's basis in his Units, and to the extent they exceed the basis of his
Units will be taxable as a capital gain. A Unitholder may recognize a taxable
gain or loss when his Units are sold or redeemed. Such gain or loss will
generally constitute either a long-term or short-term capital gain or loss
depending upon the length of time the Unitholder has held his Units. Any loss
on Units held six months or less will be treated as long-term capital loss to
the extent of any long-term capital gains dividends received (or deemed to have
been received) by the Unitholder with respect to such Units. The Internal
Revenue Service Restructuring and Reform Act of 1998 (the "1998 Tax Act")
provides that for taxpayers other than corporations, net capital gain (which is
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defined as net long-term capital gain over net short-term capital loss for the
taxable year) realized from property (with certain exclusions) is generally
subject to a maximum marginal stated tax rate of 20% (10% in the case of certain
taxpayers in the lowest tax bracket). Capital gain or loss is long-term if the
holding period for the asset is more than one year, and is short-term if the
holding period for the asset is one year or less. The date on which a Unit is
acquired (i.e., the "trade date") is excluded for purposes for determining the
holding period of the Unit. The legislation is generally effective
retroactively for amounts properly taken into account on or after January 1,
1998. Capital gains realized from assets held for one year or less are taxed at
the same rates as ordinary income.
Note, however, that the 1998 Tax Act (and the Taxpayer Relief Act of 1997
(the "1997 Act")) provide that the application of the rules described above in
the case of pass-through entities such as the Trusts will be prescribed in
future Treasury Regulations. The Internal Revenue Service has released
preliminary guidance which provides that, in general, pass-through entities such
as the Trusts may designate their capital gains dividends as either a 20% rate
gain distribution, an unrecaptured section 1250 gain distribution, or a 28% rate
gain distribution, depending on the nature of the gain received by the pass-
through entity. Unitholders should consult their own tax advisors as to the tax
rate applicable to capital gain dividends.
The 1997 Act includes other provisions that treat certain other
transactions designed to reduce or eliminate risk of loss and opportunities for
gain (e.g., short sales, offsetting notional principal contracts, futures or
forward contracts or similar transactions) as constructive sales for purposes of
recognition of gain (but not loss) and for purposes of determining the holding
period. Unit holders should consult their own tax advisers with regard to any
such constructive sales rules. In addition, it should be noted that capital
gains may be recharacterized 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 a Ginnie Mae has been purchased by a GNMA Trust at a market discount
(i.e., for a purchase price less than its stated redemption price at maturity
(or if issued with original issue discount, its "revised issue price")) unless
the amount of market discount is "de minimis" as specified in the Code, each
payment of principal on the GNMA will generally constitute ordinary income to
such Series of the Trust to the extent of any accrued market discount unless the
Trust elects to include the accrued market discount in taxable income as it
accrues. In the case of a Ginnie Mae, the amount of market discount that is
deemed to accrue each month shall generally be the amount of discount that bears
the same ratio to the total amount of remaining market discount that the amount
of interest paid during the accrual period (each month) bears to the total
amount of interest remaining to be paid on the Ginnie Mae as of the beginning of
the accrual period.
Distributions reinvested into additional Units of a Trust will be taxed to
a Unitholder in the manner described above (i.e., as ordinary income, long-term
capital gain or as a return of capital).
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<PAGE>
Each Unitholder of each Series of the GNMA Trusts shall receive an annual
statement describing the tax status of the distributions paid by such Series of
such Trust.
Each Unitholder will be requested to provide the Unitholder's taxpayer
identification number to the Trustee and to certify that the Unitholder has not
been notified that payments to the Unitholder are subject to back-up
withholding. If the proper taxpayer identification number and appropriate
certification are not provided when requested, distributions by the Trust to
such Unitholder (including amounts received upon the redemption of Units) will
be subject to back-up withholding.
The foregoing discussion relates only to the Federal income tax status of
the Trusts and to the tax treatment of distributions by the Trusts to United
States Unitholders.
A Unitholder who is a foreign investor (i.e., an investor other than a
United States citizen or resident or a United States corporation, partnership,
estate or trust) should be aware that, generally, subject to applicable tax
treaties, distributions from a Trust which constitute dividends for Federal
income tax purposes (other than dividends which the Trust designates as capital
gain dividends) will be subject to United States income taxes, including
withholding taxes. However, distributions received by a foreign investor from a
Trust that are designated by the Trust as capital gain dividends should not be
subject to United States Federal income taxes, including withholding taxes, if
all of the following conditions are met (i) the capital gain dividend is not
effectively connected with the conduct by the foreign investor of a trade or
business within the United States, (ii) 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 (iii) 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. Units in
the Trust and Trust distributions may also be subject to state and local
taxation and Unitholders should consult their tax advisers in this regard.
U.S. Treasury Portfolio Series. The following is a general discussion of
certain of the Federal income tax consequences of the purchase, ownership and
disposition of the Units. The summary is limited to investors who hold the
Units as "capital assets" (generally, property held for investment) within the
meaning of Section 1221 of the Internal Revenue Code of 1986 (the "Code").
Unitholders should consult their tax advisors in determining the Federal, state,
local and any other tax consequences of the purchase, ownership and disposition
of Units in the U.S. Treasury Portfolio Series. In the opinion of Chapman and
Cutler, counsel for the Sponsor under existing law:
(1) Each Series of the U.S. Treasury Portfolio is not an association
taxable as a corporation for Federal income tax purposes; each Unitholder
will be treated as the owner of a pro rata portion of the U.S. Treasury
Portfolio Series of the Trust under the Code and income of such Series will
be treated as the income of the Unitholders under the Code. Each
Unitholder will be considered to have received his or her pro rata share of
income derived from each Series asset when such income is considered to be
received by each U.S. Treasury Portfolio Series.
-23-
<PAGE>
(2) Each Unitholder will have a taxable event when the U.S. Treasury
Portfolio Series disposes of a U.S. Treasury Obligation, or when the
Unitholder redeems or sells his Units. Unitholders must reduce the tax
basis of their Units for their share of accrued interest received by the
U.S. Treasury Portfolio Series, if any, on U.S. Treasury Obligations
delivered after the Unitholder pay for their Units to the extent that such
interest accrued on such U.S. Treasury Obligations before the date each
U.S. Treasury Portfolio Series acquired ownership of the U.S. Treasury
Obligations (and the amount of this reduction may exceed the amount of
accrued interest paid to the seller) and, consequently, such Unitholders
may have an increase in taxable gain or reduction in capital loss upon the
disposition of such Units. Gain or loss upon the sale or redemption of
Units is measured by comparing the proceeds of such sale or redemption with
the adjusted basis of the Units. If the Trustee disposes of U.S. Treasury
Obligations (whether by sale, payment on maturity, redemption or
otherwise), gain or loss is recognized to the Unitholder (subject to
various non-recognition provisions of the Code). The amount of any such
gain or loss is measured by comparing the Unitholder's pro rata share of
the total proceeds from such disposition with the Unitholder's basis for
his or her fractional interest in the asset disposed of. In the case of a
Unitholder who purchases Units, such basis (before adjustment for earned
original issue discount, amortized bond premium and accrued market discount
(if the Unitholder has elected to include such market discount in income as
it accrues), if any) is determined by apportioning the cost of the Units
among each of the U.S. Treasury Portfolio Series assets ratably according
to value as of the valuation date nearest the date of acquisition of the
Units. The tax basis reduction requirements of said Code relating to
amortization of bond premium may, under some circumstances, result in the
Unitholder realizing a taxable gain when his Units are sold or redeemed for
an amount equal to or less than his original cost.
(3) The basis of each Unit and of each U.S. Treasury Obligation which
was issued with original issue discount must be increased by the amount of
accrued original issue discount and the basis of each Unit and of each U.S.
Treasury Obligation which was purchased by such Trusts 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. A Trust may
contain certain "zero coupon" Securities (the "Stripped Treasury
Securities") that are treated as bonds that were originally issued at an
original issue discount as of the date a Unitholder purchases a Unit.
Because the Stripped Treasury Securities represent interests in "stripped"
U.S. Treasury bonds, a Unitholder's tax basis for his pro rata portion of
each Stripped Treasury Security held by the Trust (determined at the time
he acquires his Units, in the manner described above) shall be treated as
its "purchase price" by the Unitholder. Original issue discount is
effectively treated as interest for Federal income tax purposes, and the
amount of original issue discount in this case is generally the difference
between the bond's purchase price and its stated redemption price at
maturity. A Unitholder will be required to include in gross income for
each taxable year the sum of his daily portions of original issue discount
attributable to the Stripped Treasury Securities held by the U.S. Treasury
Portfolio Series 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
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it is not less than a "de minimis" amount as determined under the Treasury
Regulation relating to stripped bonds. To the extent that 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
the Stripped Treasury Securities, this method will generally result in an
increasing amount of income to the Unitholders each year. Unitholders
should consult their tax advisers regarding the Federal income tax
consequences and accretion of original issue discount.
(4) The Unitholder's aliquot share of the total proceeds received on
the disposition of, or principal paid with respect to, a U.S. Treasury
Obligation held by the U.S. Treasury Portfolio Series will constitute
ordinary income (which will be treated as interest income for most
purposes) to the extent it does not exceed the accrued market discount on
such U.S. Treasury Obligation that has not previously been included in
taxable income by such Unitholder. A Unitholder may generally elect to
include market discount in income as such discount accrues. In general,
market discount is the excess, if any, of the Unitholder's pro rata portion
of the outstanding principal balance of a U.S. Treasury Obligation over the
Unitholder's initial tax basis for such pro rata portion, determined at the
time such Unitholder acquires his Units. However, market discount with
respect to any U.S. Treasury Obligation will generally be considered zero
if it amounts to less than 0.25% of the obligation's stated redemption
price at maturity times the number of years to maturity. The market
discount rules do not apply to Stripped Treasury Securities because they
are stripped debt instruments subject to special original issue discount
rules as discussed above. If a Unitholder sells his Units, gain, if any,
will constitute ordinary income to the extent of the aggregate of the
accrued market discount on the Unitholder's pro rata portion of each U.S.
Treasury Obligation that is held by the U.S. Treasury Portfolio Series that
has not previously been included in taxable income by such Unitholder. In
general, market discount accrues on a ratable basis unless the Unitholder
elects to accrue such discount on a constant interest rate basis. However,
a Unitholder should consult his own tax adviser regarding the accrual of
market discount. The deduction by a Unitholder for any interest expense
incurred to purchase or carry Units will be reduced by the amount of any
accrued market discount that has not yet been included in taxable income by
such Unitholder. In general, the portion of any interest expense which is
not currently deductible would be ultimately deductible when the accrued
market discount is included in income. 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.
(5) The Code provides that "miscellaneous itemized deductions" are
allowable only to the extent that they exceed two percent of an individual
taxpayer's adjusted gross income. Miscellaneous itemized deductions
subject to this limitation under present law include a Unitholder's pro
rata share of expenses paid by the applicable Series of the U.S. Treasury
Portfolio Series, including fees of the Trustee, and the Evaluator, but
does not include amortizable bond premium on U.S. Treasury Obligations held
by the U.S. Treasury Portfolio Series.
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The market discount rules to not apply to stripped Treasury securities
because they are stripped debt instruments subject to special original issue
discount rules. Unit holders should consult their tax advisors as to the amount
of original issue discount which accrues.
If a Unit holder does not elect to annually include accrued market discount
in taxable income as it accrues, deduction for any interest expense incurred by
the Unit holder 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. Unit holders should consult
their tax advisors 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.
The tax basis of a Unitholder with respect to his interest in a U.S.
Treasury Obligation is increased by the amount of original issue discount (and
market discount, if the Unitholder elects to include market discount, if any, on
the U.S. Treasury Obligations held by the Trust in income as it accrues) thereon
properly included in the Unitholder's gross income as determined for Federal
income tax purposes and reduced by the amount of any amortized acquisition
premium which the Unitholder has properly elected to amortize under Section 171
of the Code. A Unitholder's tax basis in his Units will equal his tax basis in
is pro rata portion of all of the asset of the Trust.
A Unitholder will recognize taxable capital gain (or loss) when all or part
of his pro rata interest in a U.S. Treasury Obligation is disposed of in a
taxable transaction for an amount greater (or less) than his tax basis therefor.
Any gain recognized on a sale or exchange and not constituting a realization of
accrued "market discount," and any loss will, under current law, generally be
capital gain or loss except in the case of a dealer or financial institution.
As previously discussed, gain realized on the disposition of the interest of a
Unitholder in any U.S. Treasury Obligation 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 U.S.
Treasury Obligation by the Trust or the disposition of Units by a Unitholder
will be short-term capital gain or loss unless the Unitholder has held his Units
for more than one year in which case such capital gain or loss will be long-
term. 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 Internal Revenue Service Restructuring and Reform
Act of 1998 (the "1998 Tax Act") provides that for taxpayers other than
corporations, net capital gain (which is defined as net long-term capital gain
over net short-term capital loss for the taxable year) realized from property
(with certain exclusions) is subject to a maximum marginal stated tax rate of
20% (10% in the case of certain taxpayers in the lowest tax bracket). Capital
gain or loss is long-term if the holding period for the asset is more than one
year, and is short-term if the holding period for the asset is one year or less.
The date on which a Unit is acquired (i.e., the "trade date") is excluded for
purposes for determining the holding period of the Unit. The legislation is
generally effective retroactively for amounts properly taken into account on or
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after January 1, 1998. Capital gains realized from assets held for one year or
less are taxed at the same rates as ordinary income.
If a Unitholder disposes of a Unit, he is deemed thereby to have disposed
of his entire pro rata interest in all Trust assets including his pro rata
portion of the U.S. Treasury Obligations represented by the Unit. This may
result in a portion of the gain, if any, on such sale being taxable as ordinary
income under the market discount rules (assuming no election was made by the
Unitholder to include market discount in income as it accrues) as previously
discussed.
In addition, capital gains may be recharacterized 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.
Certain transactions designed to reduce or eliminate risk of loss and
opportunities for gain (e.g., short sales, offsetting notional principal
contracts, futures or forward contracts, or similar transactions) are treated as
constructive sales for purposes of recognition of gain (but not loss) and for
purposes of determining the holding period. Unitholders should consult their
own tax advisors with regard to any such constructive sales rules.
A Unitholder of a U.S. Treasury Portfolio Series who is not a citizen or
resident of the United States or a United States domestic corporation (a
"Foreign Investor") will not be subject to U.S. Federal income taxes, including
withholding taxes on amounts distributed from the U.S. Treasury Portfolio Series
(including any original issue discount) on, or any gain from the sale or other
disposition of, his Units or the sale or disposition of any U.S. Treasury
Obligations by the Trustee, provided that (i) the interest income or gain is not
effectively connected with the conduct by the Foreign Investor of a trade or
business within the United States, (ii) with respect to any gain, the Foreign
Investor (if an individual) is not present in the United States for 183 days or
more during the taxable year, and (iii) the Foreign Investor provides the
required certification of his status and of the matters contained in clauses (i)
and (ii) above, and further provided that the exemption from withholding for
U.S. Federal income taxes for interest on any U.S. Treasury Obligation shall
only apply to the extent the U.S. Treasury Obligation was issued after July 18,
1984.
Unless an applicable treaty exemption applies and proper certification is
made, amounts otherwise distributable by the U.S. Treasury Portfolio Series to a
Foreign Investor will generally be subject to withholding taxes under
Section 1441 of the Code unless the Unitholder timely provides his financial
representative or the Trustee with a statement that (i) is signed by the
Unitholder under penalties of perjury, (ii) certifies that such Unitholder is
not a United States person, or in the case of an individual, that he is neither
a citizen nor a resident of the United States, and (iii) provides the name and
address of the Unitholder. The statement may be made, at the option of the
person otherwise required to withhold, on Form W-8 or on a substitute form that
is substantially similar to Form W-8. If the information provided on the
statement changes, the beneficial owner must so inform the person otherwise
required to withhold within 30 days of such change.
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<PAGE>
The foregoing discussions relate only to Federal income taxes on
distributions by a Trust. Foreign Unitholders should consult their own tax
advisers with respect to the foreign and United States tax consequences on
ownership of Units.
It should be remembered that even if distributions are reinvested they are
still treated as distributions for income tax purposes.
In addition, Unitholders of Series holding Stripped Treasury Securities may
be required for Federal income tax purposes to include amounts in ordinary gross
income in advance of the receipt of the cash attributable to such income.
Each Unitholder (other than a foreign investor who has properly provided
the certifications described above) will be requested to provide the
Unitholder's taxpayer identification number to the Trustee and to certify that
the Unitholder has not been notified that payments to the Unitholder are subject
to back-up withholding. If the proper taxpayer identification number and
appropriate certification are not provided when requested, distributions by a
Trust to such Unitholder will be subject to back-up withholding.
The Sponsor believes that Unitholders who are individuals will not be
subject to any state personal income taxes on the interest received by a U.S.
Treasury Portfolio Series and distributed to them. However, Unitholders
(including individuals) may be subject to state and local taxes on any capital
gains (or market discount treated as ordinary income) derived from a U.S.
Treasury Portfolio Series and to other state and local taxes (including
corporate income or franchise taxes, personal property or intangibles taxes, and
estate or inheritance taxes) on their Units or the income derived therefrom. In
addition, individual Unitholders (and any other Unitholders which are not
subject to state and local taxes on the interest income derived from U.S.
Treasury Portfolio Series) will probably not be entitled to a deduction for
state and local tax purposes for their share of the fees and expenses paid by a
U.S. Treasury Portfolio Series, for any amortized bond premium or for any
interest on indebtedness incurred to purchase or carry their Units. Therefore,
even though the Sponsor believes that interest income from a U.S. Treasury
Portfolio Series is exempt from state personal income taxes in all states,
Unitholders should consult their own tax advisers with respect to state and
local taxation of the purchase, ownership and disposition of Units.
Kemper Government Securities Trust, GNMA Portfolio (Foreign Investors
Trust) and Kemper Defined Funds, GNMA Portfolio, Series 1. For purposes of the
following discussion and opinion, it is assumed that interest on the Securities
is included in gross income for Federal income tax purposes and that the
Securities are debt for Federal income tax purposes. In the opinion of Chapman
and Cutler, counsel for the Sponsor:
(1) Each GNMA Portfolio Series is not an association taxable as a
corporation for Federal income tax purposes; each Unitholder will be
treated as the owner of a pro rata portion of the assets of the GNMA
Portfolio Series of the respective Trust under the Code and income of such
Series will be treated as the income of the Unitholders under the Code.
Each Unitholder will be considered to have received his or her pro rata
share of income derived from each GNMA Portfolio Series asset when such
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<PAGE>
income is considered to be received by a GNMA Portfolio Series. Each
Unitholder will also be required to include in taxable income tax purposes,
and original issue discount with respect to an interest in any Securities
held by a GNMA Portfolio Series at the same time and in the same manner as
though the Unitholder were the direct owner of such interest.
(2) Each Unitholder will have a taxable event when a GNMA Portfolio
Series disposes of a Security (whether by sale, liquidation, redemption,
payment at maturity or otherwise), or when the Unitholder redeems or sells
his Units. The Unitholders tax basis in a Unit will equal the tax basis in
the Unitholders pro rata portion of all of the assets of a GNMA Portfolio
Series. Such basis is determined (before the adjustments described below)
by apportioning the tax basis for the Units among each of the assets of the
GNMA Portfolio Series according to the value as of the valuation date
nearest the date of the acquisition of the Units. Unitholders must reduce
the tax basis of their Units for their share of accrued interest received
by a GNMA Portfolio Series, if any, on Securities delivered after the
Unitholders pay for their Units to the extent that such interest accrued on
such Securities during the period from the Unitholder's settlement date to
the date such Securities are delivered to such GNMA Portfolio Series and,
consequently, such Unitholder may have an increase in capital gain or
reduction of 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 Securities (whether by sale, payment on maturity,
redemption or otherwise), gain or loss is recognized to the Unitholder
(subject to the various non-recognition provisions of the Code). The
amount of any such gain or loss is measured by comparing the Unitholder's
pro rata share of the total proceeds for such disposition with the
Unitholder's basis for his or her fractional interest in the asset disposed
of. The Unitholder's tax basis (before adjustment for earned original
issue discount, amortized bond premium and accrued market discount (if the
Unitholder has elected to include such market discount in income as it
accrues), if any) is determined by apportioning the cost of the Units among
each of a GNMA Portfolio Series assets ratably according to value as of the
valuation date nearest the date of acquisition of the Units. The tax cost
reduction requirements of the Code relating to amortization of bond premium
may, under some circumstances, result in the Unitholder realizing a taxable
gain when his Units are sold or redeemed for an amount equal to or less
than his original cost.
(3) Each GNMA Portfolio Series contains Stripped Treasury Securities.
The basis of each Unit and of each U.S. Treasury Obligation which was
issued with original issue discount must be increased by the amount of
accrued original issue discount and the basis of each Unit and of each U.S.
Treasury Obligation which was purchased by such Trusts 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 Stripped
Treasury Securities held by the Trusts are treated as bonds that were
originally issued at an original issue discount as of the date a Unitholder
purchases a Unit. Because the Stripped Treasury Securities represent
interests in "stripped" U.S. Treasury bonds, a Unitholder's initial cost
for his pro rata portion of each Stripped Treasury Security held by a Trust
(determined at the time he acquires his Units, in the manner described
above) will be treated as its "purchase price" by the Unitholder. Original
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issue discount is effectively treated as interest for Federal income tax
purposes, and the amount of original issue discount is generally the
difference between the bond's purchase price and its stated redemption
price at maturity. A Unitholder will be required to include in gross
income for each taxable year the sum of his daily portions of original
issue discount attributable to the Stripped Treasury Securities as such
original 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 relating to stripped
bonds. To the extent that 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 the Stripped Treasury Securities this method will
generally result in an increasing amount of income to the Unitholders each
year. Unitholders should consult their tax advisers regarding the Federal
income tax consequences and accretion of original issue discount.
(4) The Unitholder's aliquot share of the total proceeds received on
the disposition of, or principal paid with respect to, a Security held by a
Trust will constitute ordinary income (which will be treated as interest
income for most purposes) to the extent it does not exceed the accrued
market discount on such Security that has not previously been included in
taxable income by such Unitholder. A Unitholder may generally elect to
include market discount in income as such discount accrues. In general,
market discount is the excess, if any, of the Unitholder's pro rata portion
of the outstanding principal balance of a Security over the Unitholder's
initial tax basis for such pro rata portion, determined at the time such
Unitholder acquires his Units. However, market discount with respect to
any Security will generally be considered zero if it amounts to less than
0.25% of the obligation's stated redemption price at maturity times the
number of years to maturity. The market discount rules do not apply to
Stripped Treasury Securities because they are stripped debt instruments
subject to special original issue discount rules as discussed above. If a
Unitholder sells his Units, gain, if any, will constitute ordinary income
to the extent of the aggregate of the accrued market discount on the
Unitholder's pro rata portion of each Security issued that is held by a
Trust that has not previously been included in taxable income by such
Unitholder. In general, market discount accrues on a ratable basis unless
the Unitholder elects to accrue such discount on a constant interest rate
basis. However, a Unitholder should consult his own tax adviser regarding
the accrual of market discount. The deduction by a Unitholder for any
interest expense incurred to purchase or carry Units will be reduced by the
amount of any accrued market discount that has not yet been included in
taxable income by such Unitholder. In general, the portion of any interest
expense which is not currently deductible would be ultimately deductible
when the accrued market discount is included in income. 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.
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<PAGE>
(5) The Code provides that "miscellaneous itemized deductions" are
allowable only to the extent that they exceed two percent of an individual
taxpayer's adjusted gross income. Miscellaneous itemized deductions
subject to this limitation under present law include a Unitholder's pro
rata share of expenses paid by the Trust, including fees of the Trustee and
the Evaluator but does not include amortizable bond premium on Securities
held by the Trusts.
The market discount rules do not apply to stripped Treasury Securities
because they are stripped debt instruments subject to special original issue
discount rules. Unitholders should consult their tax advisers as to the amount
of original issue discount which accrues.
If a Unitholder does not elect to annually include accrued market discount
in taxable income as it accrues, deduction for any interest expense incurred by
the Unitholder which is incurred to purchase or carry his Units will be reduced
by such accrued market discount. In general, the portion of any interest
expense which was not currently deductible would ultimately be deductible when
the accrued market discount is included in income. Unitholders should consult
their tax advisers regarding whether an election should be made to include
market discount in income as it accrues and as to the amount of interest expense
which may not be currently deductible.
The tax basis of a Unitholder with respect to his interest in a U.S.
Treasury Obligation is increased by the amount of original issue discount (and
market discount, if the Unitholder elects to include market discount, if any, on
the U.S. Treasury Obligations held by a Trust in income as it accrues) thereon
properly included in the Unitholder's gross income as determined for Federal
income tax purposes and reduced by the amount of any amortized acquisition
premium which the Unitholder has properly elected to amortize under Section 171
of the Code. A Unitholder's tax basis in his Units will equal his tax basis in
his pro rata portion of all of the assets of the Trust.
A Unitholder will recognize capital gain (or loss) when all or part of his
pro rata interest in a U.S. Treasury Obligation is disposed of in a taxable
transaction for an amount greater (or less) than his tax basis thereof. Any
gain recognized on a sale or exchange and not constituting a realization of
accrued "market discount," and any loss will, under current law, generally be
capital gain or loss except in the case of a dealer or financial institution.
As previously discussed, gain realized on the disposition of the interest of a
Unitholder in any U.S. Treasury Obligation 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 U.S. Treasury
Obligation by the Trust or the disposition of Units by a Unitholder will be
short-term capital gain or loss unless the Unitholder has held his Units for
more than one year in which case such capital gain or loss will be long-term.
The Internal Revenue Service Restructuring and Reform Act of 1998 (the "1998 Tax
Act") provides that for taxpayers other than corporations, net capital gain
(which is defined as net long-term capital gain over net short-term capital loss
for the taxable year) realized from property (with certain exclusions) is
subject to a maximum marginal stated tax rate of 20% (10% in the case of certain
taxpayers in the lowest tax bracket). Capital gain or loss is long-term if the
holding period for the asset is more than one year, and is short-term if the
holding period for the asset is one year or less. The date on which a Unit is
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acquired (i.e., the "trade date") is excluded for purposes for determining the
holding period of the Unit. The legislation is generally effective
retroactively for amounts properly taken into account on or after January 1,
1998. Capital gains realized from assets held for one year or less are taxed at
the same rates as ordinary income.
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.
If a Unitholder disposes of a Unit, he is deemed thereby to have disposed
of his entire pro rata interest in all Trust assets including his pro rata
portion of the U.S. Treasury Obligations represented by the Unit. This may
result in a portion of the gain, if any, on such sale being taxable as ordinary
income under the market discount rules (assuming no election was made by the
Unitholder to include market discount in income as it accrues) as previously
discussed.
In addition, capital gains may be recharacterized 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.
Certain transactions designed to reduce or eliminate risk of loss and
opportunities for gain (e.g., short sales, offsetting notional principal
contracts, futures or forward contracts, or similar transactions) are treated as
constructive sales for purposes of recognition of gain (but not loss) and for
purposes of determining the holding period. Unitholders should consult their
own tax advisors with regard to any such constructive sales rules.
"The Revenue Reconciliation Act of 1993" (the "Tax Act") raised tax rates
on ordinary income while capital gains remain subject to a 28% maximum stated
rate for taxpayers other than corporations. Because some or all capital gains
are taxed at a comparatively lower rate under the Tax Act, the Tax Act included
a provision that recharacterizes capital gains as ordinary income in the case of
certain financial transactions that are "conversion transactions" effective for
transactions entered into after April 30, 1993. Unitholders and prospective
investors should consult with their tax advisers regarding the potential effect
of this provision on their investment in Units.
A Unitholder of a GNMA Portfolio Series who is not a citizen or resident of
the United States or a United States domestic corporation (a "Foreign Investor")
will generally not be subject to U.S. Federal income taxes, including
withholding taxes on amounts distributed from the Trusts (including any original
issue discount) on, or any gain from the sale or other disposition of, his Units
or the sale or disposition of any Securities by the Trustee, provided that
(i) the interest income or gain is not effectively connected with the conduct by
the Foreign Investor of a trade or business within the United States, (ii) with
respect to any gain, the Foreign Investor (if an individual) is not present in
the United States for 183 days or more during the taxable year, and (iii) the
Foreign Investor provides the required certification of his status and of the
matters contained in clauses (i) and (ii) above, and further provided that the
exemption from withholding for U.S. Federal income taxes for interest on any
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Stripped Treasury Security shall only apply to the extent the Stripped Treasury
Security was issued after July 18, 1984 and for interest on any Ginnie Mae to
the extent the mortgages underlying such Ginnie Mae were originated after
July 18, 1984.
Unless an applicable treaty exemption applies and proper certification is
made, amounts otherwise distributable by the Trusts to a Foreign Investor will
generally be subject to withholding taxes under Section 1441 of the Code unless
the Unitholder timely provides his financial representative or the Trustee with
a statement that (i) is signed by the Unitholder under penalties of perjury,
(ii) certifies that such Unitholder is not a United States person, or in the
case of an individual, that he is neither a citizen nor a resident of the United
States, and (iii) provides the name and address of the Unitholder. The
statement may be made, at the option of the person otherwise required to
withhold, on Form W-8 or on a substitute form that is substantially similar to
Form W-8. If the information provided on the statement changes, the beneficial
owner must so inform the person otherwise required to withhold within 30 days of
such change. Foreign Unitholders should consult their own tax advisers with
respect to the foreign and United States tax consequences or ownership of Units.
The foregoing discussions relate only to Federal income taxes on
distributions by the Trusts; such distributions may also be subject to state and
local taxation. Unitholders should consult their own tax advisers regarding
questions of state and local taxation applicable to the Units.
The Sponsor believes that Unitholders who are individuals will not be
subject to any state personal income taxes on the interest received by a Trust
and distributed to them. However, Unitholders (including individuals) may be
subject to state and local taxes on any capital gains (or market discount
treated as ordinary income) derived from a Trust and to other state and local
taxes (including corporate income or franchise taxes, personal property or
intangibles taxes, and estate or inheritance taxes) on their Units or the income
derived therefrom. In addition, individual Unitholders (and any other
Unitholders which are not subject to state and local taxes on the interest
income derived from a Trust) will probably not be entitled to a deduction for
state and local tax purposes for their share of the fees and expenses paid by a
Trust, for any amortized bond premium or for any interest on indebtedness
incurred to purchase or carry their Units. Therefore, even though the Sponsor
believes that interest income from a Trust is exempt from state personal income
taxes in all states Unitholders should consult their own tax advisers with
respect to state and local taxation.
It should be remembered that even if distributions are reinvested, they are
still treated as distributions for income tax purposes.
It should also be remembered that Unitholders may be required for Federal
income tax purposes to include amounts in ordinary gross income in advance of
the receipt of the cash attributable to such income.
Each Unitholder (other than a foreign investor who has properly provided
the certifications described above) will be requested to provide the
Unitholder's taxpayer identification number to the Trustee and to certify that
the Unitholder has not been notified that payments to the Unitholder are subject
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to back-up withholding. If the proper taxpayer identification number and
appropriate certification are not provided when requested, distributions by a
Trust to such Unitholder will be subject to back-up withholding.
Foreign Investors Trust - Each Kemper Government Securities Trust, GNMA
Portfolio Series of Midget Foreign Investors Trust, which is available only to
non-resident alien investors, is not an association taxable as a corporation for
Federal income tax purposes and income received by such Series will be treated
as the income of the Unitholders.
A Unitholder of a Series of a Midget Foreign Investors Trust who is not a
citizen or resident of the United States or a United States domestic corporation
(a "Foreign Investor") will not be subject to U.S. Federal income taxes,
including withholding taxes on amounts distributed from a Trust (including any
original issue discount) on, or any gain from the sale or other disposition of,
his Units or the sale or disposition of any Ginnie Mae by the trustee, provided
that (i) the interest income or gain is not effectively connected with the
conduct by the Foreign Investor of a trade or business within the United States,
(ii) with respect to any gain, the Foreign Investor (if an individual) is not
present in the United States for 183 days or more during the taxable year, and
(iii) the Foreign Investor provides the required certification of his status and
of the matters contained in clauses (i) and (ii) above, and further provided
that the exemption from withholding for U.S. Federal income taxes for interest
on any Ginnie Mae shall only apply to the extent the mortgages underlying the
Ginnie Mae were originated after July 18, 1984.
Interest income received by the Trust is subject to withholding taxes under
Section 1441 of the Code prior to distribution of such interest income to each
Unitholder unless the Unitholder provides his financial representative or the
Trustee with a statement that (i) is signed by the Unitholder under penalties of
perjury, (ii) certifies that such Unitholder is not a United States person, or
in the case of an individual, that he is neither a citizen nor a resident of the
United States, and (iii) provides the name and address of the Unitholder. The
statement may be made, at the option of the person otherwise required to
withhold, on Form W-8 or on a substitute form that is substantially similar to
Form W-8. If the information provided on the statement changes, the beneficial
owner must so inform the person otherwise required to withhold within 30 days of
such change.
Finally, it should be remembered that even if distributions are reinvested,
they are still treated as distributions for income tax purposes.
RETIREMENT PLANS
As indicated under "Tax Status of the Trusts" above, Unitholders of a U.S.
Treasury Portfolio Series will be required for Federal income tax purposes to
include amounts in ordinary gross income in advance of the receipt of the cash
attributable to such income. Therefore, purchase of Units may be appropriate
only for an account which can pay taxes with other funds in advance of the
receipt of the cash attributable to such income or for Individual Retirement
Accounts, Keogh plans, pension funds and other qualified retirement plans,
certain of which are briefly described below.
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The various Series of the Trusts which are not Foreign Investors Trusts,
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 in each of the foregoing plans
are deferred from Federal taxation. All distributions from such plans are
generally treated as ordinary income but may, in some cases, be eligible for
special income averaging or tax-deferred rollover treatment. Investors
considering participation in any such plan should review specific tax laws
related thereto and should consult their attorneys or tax advisers with respect
to the establishment and maintenance of any such plan. Such plans are offered
by brokerage firms and other financial institutions. Each Series of the Trusts
will waive the $1,000 minimum investment requirement for IRA accounts. The
minimum investment is $250 for tax-deferred plans such as IRA accounts. Fees
and charges with respect to such plans may vary.
Individual Retirement Account - IRA. Any individual under age 70-1/2 may
contribute the lesser of $2,000 or 100% of compensation to an IRA annually.
Such contributions are fully deductible if the individual (and spouse if filing
jointly) are not covered by a retirement plan at work. The deductible amount an
individual may contribute to an IRA will be reduced $10 for each $50 of adjusted
gross income over $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 Code, an individual
may make nondeductible contributions to the extent deductible contributions are
not allowed. All distributions from an IRA (other than the return of certain
excess contributions) are treated as ordinary income for Federal income taxation
purposes provided that under the Code an individual need not pay tax on the
return of nondeductible contributions, the amount includable in income for the
taxable year is the portion of the amount withdrawn for the taxable year as the
individual's aggregate nondeductible IRA contributions bear to the aggregate
balance of all IRAs of the individual.
A participant's interest in an IRA must be, or commence to be, distributed
to the participant not later than April 1 of the calendar year following the
year during which the participant attains at 70-1/2. Distributions made before
attainment of age 59-1/2, except in the case of the participant's death or
disability, or where the amount distributed is to be rolled over to another IRA,
or where the distributions are taken as a series of substantially equal periodic
payments over the participant's life or life expectancy (or the joint lives or
life expectancies of the participant and the designated beneficiary) are
generally subject to a surtax in an amount equal to 10% of the distribution.
The amount of such periodic payments may not be modified before the later of
five years or attainment of age 59-1/2. Excess contributions are subject to an
annual 6% excise tax.
IRA applications, disclosure statement and trust agreements are available
from the Sponsor upon request.
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Qualified Retirement Plans. Units of a Series of the Trust which are not
Foreign Investors Trusts 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 distribution 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 per account, if not paid separately, will be assessed
by the Trustee and paid through the liquidation of shares of the retirement
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 can not be issued.
DISTRIBUTION REINVESTMENT
Each Unitholder of the Trust may elect, at the time of purchase, to have
distributions of principal (including capital gains, if any) or interest or both
automatically invested without charge in shares of any mutual fund registered in
such Unitholder's state of residence which is underwritten or advised by Zurich
Kemper Investments, Inc. (the "Kemper Funds"), other than those Kemper Funds
sold with a contingent deferred sales charge. Since the portfolio securities
and investment objectives of such Kemper Funds may differ significantly from
that of the Trusts, Unitholders should carefully consider the consequences
before selecting such Kemper Funds for reinvestment.
Detailed information with respect to the investment objectives and
management of these Kemper Funds is contained in their respective prospectuses,
which can be obtained from the Sponsor or an investor's financial representative
upon request. An investor should read the appropriate prospectus prior to
making the election to reinvest. Unitholders who desire to have their
distributions automatically reinvested should inform their financial
representative at the time of purchase or should file with the Program Agent
referred to below a written notice of such election.
Unitholders who initially elect to receive distributions in cash may elect
to participate in the reinvestment program by filing with the Program Agent an
election to have such distributions reinvested without charge. The election
must be received by the Program Agent at least ten days prior to the Record Date
applicable to any distribution in order to be in effect for such distribution.
The election to participate in the reinvestment program shall remain in effect
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until a subsequent notice is received in writing by the Program Agent. See
"Administration of the Trust-Distributions from the Interest, Principal and
Capital Gains Accounts."
The Program Agent is the Trustee. All inquiries concerning participation
in the Reinvestment Plan should be directed to the Program Agent at its unit
investment trust office.
Unitholders participating in IRA's, Keogh Plans and other tax deferred
retirement plans, may find it highly advantageous to participate in the
Reinvestment Program in order to keep the monies in the account fully invested
at all times. Should reinvestment be selected, an account with an identical
registration to that established at the time the Trust Units are purchased will
be set up in the reinvestment Fund selected by the investor. Investors should
consult with their plan custodian as to the appropriate disposition of
distributions. If participants in IRA's, Keogh Plans and other tax deferred
retirement plans do not elect a reinvestment option, cash distributions will be
sent to the custodian of the retirement plan and will not be sent to the
investor, since payments to the investor would constitute a distribution from
the plan which would result in tax penalties for premature withdrawals from such
programs. See "Retirement Plans."
REDEMPTION
Right of Redemption. It may be possible, in some cases, for Units to be
sold in the over-the-counter market for a higher price than the Redemption Value
for such Units. Therefore, a Unitholder who wishes to dispose of his Units is
advised to inquire through his financial representative as to current market
prices for Units in order to determine if there is an over-the-counter price in
excess of Redemption Value per Unit or the Sponsor's Repurchase Price for such
Series of the Trust.
A Unitholder who does not dispose of Units in the secondary market
described above may cause Units to be redeemed by the Trustee by making a
written request to the Trustee, The Bank of New York, 101 Barclay Street, New
York, New York 10286 and, in the case of Units evidenced by a certificate, by
tendering such certificate to the Trustee, properly endorsed or accompanied by a
written instrument or instruments of transfer in a form satisfactory to the
Trustee. Unitholders must sign the request, and such certificate or transfer
instrument, exactly as their names appear on the records of the Trustee and on
any certificate representing the Units to be redeemed. If the amount of the
redemption is $25,000 or less and the proceeds are payable to the Unitholder(s)
of record at the address of record, no signature guarantee is necessary for
redemption by individual account owners (including joint owners) or fiduciary
accounts where the fiduciary is named in the account registration. Additional
documentation may be requested, and a signature guarantee is always required,
from corporations, executors, administrators, trustees, guardians or
associations. If required, the signatures must be guaranteed by a participant
in the Securities Transfer Agents Medallion Program ("STAMP") or such other
signature guarantee program in addition to or in substitution for STAMP as may
be accepted by the Trustee. A certificate should only be sent by registered or
certified mail for the protection of the Unitholder. Since tender of the
certificate is required for redemption when one has been issued, Units
represented by a certificate cannot be redeemed until the certificate
representing such Units has been received by the purchaser.
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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 Value of such Series, determined as
set forth below under "Computation of Redemption Value," next following such
tender, multiplied by the number of Units of such Series being redeemed. Any
Units redeemed shall be cancelled and any undivided fractional interest in such
Series of the Trusts extinguished. The price received upon redemption might be
more or less than the amount paid by the Unitholder depending on the value of
the Portfolio Obligations in the Portfolio of the Series at the time of
redemption.
During the period in which the Sponsor maintains a market for Units, the
Sponsor has the right to repurchase any Unit presented for tender to the Trustee
for redemption no later than the close of business on the second business day
following such presentation.
The Trustee is irrevocably authorized in its discretion, if the Sponsor
does not elect to repurchase any Unit tendered for redemption or if the Sponsor
itself tenders Units for redemption, in lieu of redeeming Units presented for
tender at the Redemption Value, to sell such Units in the over-the-counter
market for the account of a tendering Unitholder at prices which will return to
the Unitholder monies, net after brokerage commissions, transfer taxes and other
charges, equal to or in excess of the Redemption Value for such Units. In the
event of any such sale, the Trustee will pay the net proceeds thereof to the
Unitholder on the day he would otherwise be entitled to receive payment of the
Redemption Value.
Any amounts to be paid on redemption representing interest shall be
withdrawn from the Interest Account of such Series to the extent funds are
available. All other amounts paid on redemption shall be withdrawn from the
Principal Account of such Series. The Trustee is authorized by the Indenture to
sell Portfolio Obligations from a Series in order to provide funds for
redemption. To the extent Portfolio Obligations are sold, the size of that
Series of the Trusts will be reduced. Portfolio Obligations will be sold by the
Trustee so as to maintain, as closely as practicable, the original percentage
relationship between the principal amounts of the Portfolio Obligations in such
Series. The Portfolio Obligations to be sold for purposes of redeeming Units
will be selected from a list supplied by the Sponsor. The Portfolio Obligations
will be chosen for this list by the Sponsor on the basis of such market and
credit factors as it may determine are in the best interests of such Series of
the Trust. Provision is made under the Indenture for the Sponsor to specify
minimum face amounts in which blocks of Portfolio Obligations are to be sold in
order to obtain the best price available. While such minimum amounts may vary
from time to time in accordance with market conditions, it is anticipated that
the minimum face amounts which would be specified would range from $25,000 to
$100,000. Sales may be required at a time when the Portfolio Obligations would
not otherwise be sold and might result in lower prices than might otherwise be
realized. Moreover, due to the minimum principal amount in which Portfolio
Obligations may be required to be sold, the proceeds of such sales may exceed
the amount necessary for payment of Units redeemed. To the extent not used to
meet other redemption requests in such Series, such excess proceeds will be
distributed pro rata to all remaining Unitholders of record of such Series,
unless reinvested in substitute Portfolio Obligations. See "Administration of
the Trust - Portfolio Supervision."
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Computation of Redemption Value. The value of a Unit of a Series of the
Trust is determined as of the Evaluation Time stated under "Essential
Information" in Part Two (a) semiannually, on June 30 and December 31 of each
year (or the last business day prior thereto), (b) on any business day as of the
Evaluation Time next following the tender of any Unit and (c) on any other
business day desired by the Sponsor or the Trustee,
(1) by adding:
a. The aggregate bid side evaluation of the Portfolio
Obligations in a Series of the Trust, as determined by the Evaluator;
b. Cash on hand in such Series of the Trusts, other than money
deposited to purchase contract obligations or money credited to the
Reserve Account; and
c. Accrued but unpaid interest on the Portfolio Obligations in
such Series to the redemption date.
(2) and then deducting from the resulting figure: amounts
representing any applicable taxes or governmental charges payable by such
Series of the Trusts for the purpose of making an addition to the reserve
account (as defined in the Indenture), amounts representing estimated
accrued expenses (including audit fees) of the Series, amounts representing
unpaid fees and expenses of the Trustee, the Sponsor (if applicable),
counsel and the Evaluator and monies held for distribution to Unitholders
of record of such Series as of the business day prior to the evaluation
being made on the days or dates set forth above;
(3) and then dividing the result of the above computation by the
total number of Units of such Series outstanding on the date of evaluation.
The resulting figure equals the Redemption Value for each Unit of such
Series. The Evaluator will determine the aggregate current bid price
evaluation of the Portfolio Obligations in each Series of the Trusts as set
forth under "Public Offering of Units - Public Offering Price."
Postponement of Redemption. The right of redemption of any Series may be
suspended and payment of the Redemption Value per Unit postponed for more than
seven calendar days following a tender of Units for redemption for any period
(as determined by the Securities and Exchange Commission) during which the New
York Stock Exchange is closed, other than for customary weekend and holiday
closings, or during which trading on that Exchange is restricted or an emergency
exists as a result of which disposal or evaluation of the Portfolio Obligations
is not reasonably practicable, or for such other periods as the Securities and
Exchange Commission may by order permit. The Trustee is not liable to any
person in any way for any loss or damage which may result from any such
suspension or postponement.
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RIGHTS OF UNITHOLDERS
Unitholders. A Unitholder is deemed to be a beneficiary of the Series of
the Trusts which he purchased and is vested with all right, title and interest
in the appropriate Series of the Trusts, each of which was created by the
Indenture. A Unitholder may at any time tender his Units to the Trustee for
redemption.
Ownership of Units. Ownership of Units of a Series of the Trusts will not
be evidenced by Certificates unless a Unitholder or the Unitholder's registered
broker/dealer makes a written request to the Trustee. Units are transferable by
making a written request to the Trustee and, in the case of Units evidenced by a
certificate, by presenting and surrendering such certificate to the Trustee
properly endorsed or accompanied by a written instrument or instruments of
transfer which should be sent registered or certified mail for the protection of
the Unitholder. Unitholders must sign such written request, and such
certificate or transfer instrument, exactly as their names appear on the records
of the Trustee and on any certificate representing the Units to be transferred.
Such signatures must be guaranteed by a participant in the Securities Transfer
Agents Medallion Program ("STAMP") or such other signature guarantee program in
addition to or in substitution for STAMP as may be accepted by the Trustee.
Certificates will be issued in denominations of 1,000 Units (100 Units for
Kemper Defined Funds and EVEREN Unit Investment Trusts) or any whole number of
Units in excess thereof. The Trustee may require a Unitholder to pay a
reasonable fee, to be determined in the sole discretion of the Trustee, for each
certificate reissued or transferred and to pay any governmental charge that may
be imposed in connection with each such transfer or exchange. The Trustee at
the present time does not intend to charge for the normal transfer or exchange
of certificates. Destroyed, stolen, mutilated or lost certificates will be
replaced upon delivery to the Trustee of satisfactory indemnity (generally
amounting to 3% of the market value of the Units), affidavit of loss, if
appropriate, evidence of ownership and payment of expenses incurred. Any
mutilated certificate must be presented to the Trustee before a substitute
certificate will be issued.
Certain Limitations. The death or incapacity of any Unitholder (or the
dissolution of the Sponsor) will not operate to terminate the Trusts or any
Series thereof nor entitle the legal representatives or heirs of such Unitholder
to claim an accounting or to take any other action or proceeding in any court
for a partition or winding up of the Trusts or any Series thereof.
No Unitholder shall have the right to vote except with respect to removal
of the Trustee or amendment and termination of the Trust or of the Series of
which they are a Unitholder. See "Administration of the Trust - Amendment" and
"Administration of the Trust - Termination." Unitholders shall have no right to
control the operation or administration of the Trust or any Series thereof in
any manner, except upon the vote of Unitholders representing 66-2/3% of the
Units of a Series outstanding for purposes of amendment, termination or
discharge of the Trustee, all as provided in the Indenture; however, no
Unitholder shall ever be under any liability to any third party for any action
taken by the Trustee, Evaluator or Sponsor.
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EXPENSES AND CHARGES
Initial Expenses. All expenses and charges incurred prior to or in
establishment of the Series of the Trusts, including the cost of the initial
preparation, printing and execution of the Indenture and the certificate, the
initial fees of the Trustee and the Evaluator, initial legal and auditing
expenses, the cost of the preparation and printing of the Prospectus and all
other advertising and selling expenses were paid by the Sponsor.
Fees. The Sponsor will receive no fee from the Trusts or any Series
thereof for its services as such. However, the Sponsor does receive a portfolio
surveillance fee, which is earned for portfolio supervisory services, at the
rate set forth under "Essential Information" in Part Two for the appropriate
Series, computed monthly on the basis of the largest principal amount of
Portfolio Obligations in such Series of the Trusts at any time during the
preceding month. The portfolio surveillance fee, which may not exceed the
amount set forth under "Essential Information" in Part Two, may exceed the
actual costs of providing portfolio supervisory services for these Series of the
Trusts, but at no time will the total amount the Sponsor receives for
supervisory services rendered to all unit investment trusts sponsored by the
Sponsor in any calendar year exceed the aggregate cost of providing such
services in that year.
The Trustee will receive for its services under the Indenture the fee set
forth in Part Two under "Essential Information," computed monthly on the basis
of the largest principal amount of Portfolio Obligations in such Series at any
time during the preceding month. In no event will the Trustee be paid less than
$2,000 per Series in any one year.
For evaluation of Portfolio Obligations in a Series of the Trusts, the
Evaluator shall receive the fee set forth in Part Two under "Essential
Information," computed monthly on the basis of the largest aggregate principal
amount of Portfolio Obligations in such Series at any time during the preceding
month.
The Trustee's fees, Sponsor's portfolio surveillance fees and the
Evaluator's fees are payable monthly on or before each Distribution Date from
the Interest Account of each Series to the extent funds are available and
thereafter from the Principal Account of such Series. Any of such fees may be
increased without approval of the Unitholders in proportion to increases under
the category "All Services Less Rent of Shelter" in the Consumer Price Index
published by the United States Department of Labor or if such category is no
longer published, in a comparable category. The Trustee also receives benefits
to the extent that it holds funds on deposits in various non-interest bearing
accounts created under the Indenture.
Other Charges. The following additional charges are or may be incurred by
a Series of the Trusts as more fully described in the Indenture: (a) fees of
the Trustee for extraordinary services, (b) expenses of the Trustee (including
legal and auditing expenses, but not including any fees and expenses charged by
any agent for custody and safeguarding the Portfolio Obligations) and of counsel
designated by the Sponsor, (c) various governmental charges, (d) expenses and
costs of any action taken by the Trustee to protect the Series of the Trusts and
the rights and interests of the Unitholders thereof, (e) indemnification of the
Trustee for any loss, liability or expense incurred by it in the administration
of the Series of the Trusts without gross negligence, bad faith, willful
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malfeasance or willful misconduct on its part or reckless disregard of its
obligations and duties, (f) indemnification of the Sponsor for any losses,
liabilities and expenses incurred in acting as Sponsor under the Indenture
without gross negligence, bad faith, willful malfeasance or willful misconduct
or reckless disregard of its obligations and duties, and (g) expenditures
incurred in contacting Unitholders upon termination of such Series of the
Trusts.
The fees and expenses set forth herein are payable out of a Series of the
Trusts and when so paid by or owing to the Trustee are secured by a lien on such
Series. If the balances in the Interest and Principal Accounts are insufficient
to provide for amounts payable by any Series of the Trusts, the Trustee has the
power to sell Portfolio Obligations from such Series to pay such amounts. To
the extent Portfolio Obligations are sold, the size of that Series of the Trusts
will be reduced and the proportions of the types of Portfolio Obligations will
change. Such sales might be required at a time when Portfolio Obligations would
not otherwise be sold and might result in lower prices than might otherwise be
realized. Moreover, due to the minimum principal amount in which Portfolio
Obligations may be required to be sold, the proceeds of such sales may exceed
the amount necessary for the payment of such fees and expenses.
DISTRIBUTIONS FROM THE INTEREST, PRINCIPAL AND CAPITAL GAINS ACCOUNTS.
GNMA Trust. The terms of the Ginnie Maes provide for payment to the
holders thereof (including the Series of the GNMA Trust) on the fifteenth day of
each month (the 25th day in the case of Ginnie Mae II's) of amounts collected by
or due to the issuers thereof with respect to the underlying mortgages during
the preceding month. The Trustee will collect the interest due each Series on
the Securities therein as it becomes payable and credit such interest to a
separate Interest Account created by the Indenture for such Series.
Distributions will be made to each Unitholder of record of each Series of
the GNMA Trust on the appropriate Distribution Date and will consist of an
amount substantially equal to such Unitholder's pro rata share of the cash
balances in the Interest Account, the Principal Account and the Capital Gains
Account, if any, of such Series computed as of the close of business on the
preceding Record Date.
U.S. Treasury Portfolio Series. The terms of the U.S. Treasury Obligations
(other than Stripped Treasury Securities) provide for semi-annual payments of
interest on or about the 15th day of the designated months. Interest received
by a U.S. Treasury Portfolio Series, including any portion of the proceeds from
a disposition of the U.S. Treasury Obligations which represents accrued
interest, is credited by the Trustee to the Interest Account for such Trust
Fund. All other receipts are credited by the Trustee to a separate Principal
Account for such Trust Fund.
Since interest on the U.S. Treasury Obligations (other than Stripped
Treasury Securities) in U.S. Treasury Portfolio Series is payable in semi-annual
installments, and distributions of income are made to Unitholders at different
intervals from receipt of interest, the interest accruing to Unitholders in the
U.S. Treasury Portfolio Series may not be equal to the amount of money received
and available for distribution from the Interest Account. Therefore, on each
Distribution Date the amount of interest actually deposited in the Interest
Account of a U.S. Treasury Portfolio Series and available for distribution may
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be slightly more or less than the interest distribution made. In order to
eliminate fluctuations in interest distributions resulting from such variances,
the Trustee is authorized by the Indenture to advance such amounts as may be
necessary to provide interest distributions of approximately equal amounts. The
Trustee will be reimbursed, without interest, for any such advances from funds
available in the Interest Account for such U.S. Treasury Portfolio Series.
Stripped Treasury Securities are sold at a deep discount because the buyer
of those securities obtains only the right to receive a future fixed payment on
the security and not any rights to periodic interest payments thereon.
Purchasers of these Securities acquire, in effect, discount obligations that are
economically identical to the "zero-coupon bonds" that have been issued by
corporations. Zero coupon bonds are debt obligations which do not make any
periodic payments of interest prior to maturity and accordingly are issued at a
deep discount.
Under generally accepted accounting principles, a holder of a security
purchased at a discount normally must report as an item of income for financial
accounting purposes the portion of the discount attributable to the applicable
reporting period. The calculation of this attributable income would be made on
the "interest" method which generally will result in a lesser amount of
includable income in earlier periods and a correspondingly larger amount in
later periods. For Federal income tax purposes, the inclusion will be on a
basis that reflects the effective compounding of accrued but unpaid interest
effectively represented by the discount. Although this treatment is similar to
the "interest" method described above, the "interest" method may differ to the
extent that generally accepted accounting principles permit or require the
inclusion of interest on the basis of a compounding period other than the semi-
annual period. See "Tax Status of the Trusts."
The Trustee will distribute on each Distribution Date or shortly
thereafter, to each Unitholder of record of U.S. Treasury Portfolio Series on
the preceding Record Date, an amount substantially equal to such holder's pro
rata share of the cash balance, if any, in the Principal Account of U.S.
Treasury Portfolio Series computed as of the close of business on the preceding
Record Date. However, no distribution will be required if the balance in the
Principal Account is less than $1.00 per 1,000 Units (or in the case of certain
Trusts, less than $1.00 per 100 Units). Notwithstanding the foregoing, the
Trustee will make a distribution to Unitholders of all principal relating to
maturing Treasury Obligations within seven business days of the date of each
such maturity.
General. Distributions for an IRA, Keogh or other tax-deferred retirement
plan will not be sent to the individual Unitholder. These distributions will go
directly to the custodian of the plan to avoid the penalties associated with
premature withdrawals from such accounts. See "Retirement Plans."
All funds collected or received will be held by the Trustee in trust,
without interest to Unitholders, as part of the appropriate Series of the Trusts
or the Reserve Account for such Series referred to below until required to be
disbursed in accordance with the provisions of the Indenture. Such funds will
be segregated on the trust ledger of the Trustee so long as such practice
preserves a valid preference of Unitholders of such Series under the bankruptcy
laws of the United States, or if such preference is not preserved, the Trustee
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shall handle such funds in such other manner as shall constitute the segregation
and holding thereof in trust within the meaning of the Investment Company Act of
1940, as the same may from time to time be amended. To the extent permitted by
the Indenture and applicable banking regulations, such funds are available for
use by the Trustee pursuant to normal banking procedures.
The first distribution for persons who purchase Units between a Record Date
and a Distribution Date will be made on the second Distribution Date following
their purchase of Units.
The Trustee is authorized by the Indenture to withdraw from the Principal
and/or Interest Accounts of each Series such amounts as it deems necessary to
establish a reserve for any taxes or other governmental charges that may be
payable out of such Series of the Trust, which amounts will be deposited in a
separate Reserve Account. If the Trustee determines that the amount in the
Reserve Account is greater than the amount necessary for payment of any taxes or
other governmental charges, it will promptly deposit the excess back in the
Account from which it was withdrawn.
ADMINISTRATION OF THE TRUST
Records and Accounts. In accordance with the Indenture, the Trustee shall
keep records of all transactions at its office. Such records shall include the
name and address of, and the number of Units held by, each Unitholder of each
Series of the Trusts. Such books and records shall be open to inspection by any
Unitholder of such Series at all reasonable times during the usual business
hours. The Trustee shall make such annual or other reports as may from time to
time be required under any applicable state or Federal statute, rule or
regulation. The Trustee shall keep a certified copy or duplicate original of
the Indenture on file in its office available for inspection at all reasonable
times during usual business hours by any Unitholder of such Series, together
with a current list of the Portfolio Obligations held in each Series of the
Trusts. Pursuant to the Indenture, the Trustee may employ one or more agents
for the purpose of custody and safeguarding of the Portfolio Obligations
comprising the Portfolios.
Portfolio Supervision. The Indenture permits the Sponsor to direct the
Trustee to dispose of any Portfolio Obligation in a Series of the Trusts upon
the happening of any of the following events:
(1) Default in the payment of principal or interest on any of the
Portfolio Obligations when due and payable,
(2) Institution of legal proceedings seeking to restrain or enjoin
the payment of any of the Portfolio Obligations or attacking their
validity,
(3) A breach of covenant or warranty which could adversely affect the
payment of debt service on the Portfolio Obligations,
-44-
<PAGE>
(4) Default in the payment of principal or interest on any other
outstanding obligation guaranteed or backed by the full faith and credit of
the United States of America,
(5) A decline in market price to such an extent or such other market
credit or other factors exist, as in the opinion of the Sponsor would make
retention of any of the Portfolio Obligations detrimental to the Trusts or
any Series thereof and to the interests of the Unitholders,
(6) An offer is made to refund or refinance any of the Portfolio
Obligations, or
(7) Termination of the Trusts or any Series thereof.
The Trustee shall also sell any Portfolio Obligation in a Series of the
Trusts if there is a default in the payment of principal and interest on such
Portfolio Obligation and no provision for payment is made therefor and the
Sponsor fails to instruct the Trustee to sell or hold such Portfolio Obligation
within thirty days after notice to the Sponsor from the Trustee of such default.
The Trustee shall not be liable for any depreciation or loss by reason of any
sale of Portfolio Obligations or by reason of the failure of the Sponsor to give
directions to the Trustee.
Amounts received by a Series of the Trusts upon the sale of any Portfolio
Obligation under the conditions set forth above will be deposited in the
Principal Account, Interest Account or Capital Gains Account for such Series, as
appropriate, when received and pursuant to the Sponsor's instructions will be
either distributed by the Trustee on the next Distribution Date to Unitholders
of record of such Series on the Record Date prior to such Distribution Date.
Reports to Unitholders. With each distribution, the Trustee will furnish
or cause to be furnished to the Unitholders of each Series a statement of the
amount of interest and other receipts, if any, distributed, expressed in each
case as a dollar amount per Unit of such Series.
The accounts of each Series of the Trusts are required to be audited
annually, at such Series' expense, by independent certified public accountants
designated by the Sponsor, unless the Trustee determines that such an audit
would not be in the best interest of the Unitholders of that Series of the
Trust. The accountants' report will be furnished by the Trustee to any
Unitholder of such Series upon written request.
Within a reasonable period of time after the end of each calendar year, the
Trustee will furnish to each person who at any time during such calendar year
was a Unitholder of record of a Series of the Trusts a statement setting forth
for the applicable Series:
(1) As to the Interest Account for such Series:
(a) the amount of interest received on the Portfolio
Obligations, including amounts received as a portion of the proceeds
of any disposition of Portfolio Obligations;
-45-
<PAGE>
(b) the amount paid from the Interest Account representing
accrued interest for any Units redeemed and amounts paid or reserved
for purchases of substitute Portfolio Obligations;
(c) the deductions from the Interest Account for applicable
taxes or other governmental charges, if any, and fees and expenses of
the Trustee (including auditing fees), the Sponsor, the Evaluator and
counsel;
(d) the deductions from the Interest Account for payment into
the Reserve Account; and
(e) the net amount remaining after such payments and deductions
expressed both as a total dollar amount and as a dollar amount per
Unit or appropriate multiple thereof outstanding on the last business
day of such calendar year.
(2) As to the Principal Account for such Series:
(a) the dates of the sale, maturity, liquidation or redemption
of any of the Portfolio Obligations and the net proceeds received
therefrom, excluding any portion credited to the Interest Account;
(b) the amount paid from the Principal Account representing the
principal of any Units redeemed and amounts paid or reserved for
purchases of substitute Portfolio Obligations;
(c) the deductions from the Principal Account, if any, for
payment of applicable taxes or other governmental charges, fees and
expenses of the Trustee (including auditing fees), the Sponsor, the
Evaluator and counsel;
(d) the deductions from the Principal Account for payment into
the Reserve Account; and
(e) the net amounts remaining after such payments and deductions
expressed both as a total dollar amount and as a dollar amount per
Unit or appropriate multiple thereof outstanding on the last business
day of such calendar year.
(3) The following information with respect to such Series:
(a) a list of the Portfolio Obligations, as appropriate, as of
the last business day of such calendar year grouped by coupon and
maturity range;
(b) the number of Units outstanding on the last business day of
such calendar year;
-46-
<PAGE>
(c) the Unit Value (as defined in the Indenture) based on the
last Trust evaluation made during such calendar year; and
(d) the amounts actually distributed during such calendar year
from the Interest and Principal Accounts, separately stated, expressed
both as total dollar amounts and as dollar amounts per Unit or
appropriate multiple thereof outstanding on the Record Dates for such
distributions.
Amendments. The Indenture and the Agreement with respect to each Series
may be amended by the Trustee and the Sponsor without the consent of Unitholders
(a) to cure any ambiguity or to correct or supplement any provision thereof
which may be defective or inconsistent, (b) to change any provision thereof as
may be required by the Securities and Exchange Commission or any successor
governmental agency, (c) for those Trusts that have qualified as "regulated
investment companies," to add or change any provision thereof which may be
necessary or advisable for the continuing qualification as a regulated
investment company under the Internal Revenue Code of 1986 and (d) to make such
other provisions as shall not adversely affect the interest of the Unitholders
(as determined in good faith by the Sponsor and the Trustee); provided, however,
that the Indenture may also be amended with respect to any Series by the Sponsor
and the Trustee (or the performance of any of the provisions of the Indenture
may be waived) with the consent of holders of Units representing 66-2/3% of the
Units then outstanding of such Series for the purposes of adding any provisions
to or changing in any manner or eliminating any of the provisions of the
Indenture of such Series or of modifying in any manner the rights of Unitholders
thereof. However, the Indenture may not be amended, without the consent of the
holders of all Units of a Series then outstanding, so as (1) to permit, except
in accordance with the terms and conditions of the Indenture, the acquisition of
any Portfolio Obligations other than those specified in the Indenture, or (2) to
reduce the aforesaid percentage of Units of a Series the holders of which are
required to consent to certain of such amendments and may not be amended so as
to reduce the interest in such Series represented by Units without the consent
of the holder of such Units. The Trustee shall promptly notify Unitholders of
the substance of any such amendment.
Termination. The Indenture provides that a Series of the Trusts will
terminate after the maturity, redemption, sale or other disposition of the last
of the Portfolio Obligations held in such Series. If the value of a Series of
the Trusts, as shown by an evaluation, is less than forty percent (40%) of the
par value of the Portfolio Obligations deposited in such Series of the Trust,
the Trustee shall, if directed by the Sponsor in writing, terminate such Series.
A Series of the Trust may also be terminated at any time by the written consent
of holders of 66-2/3% of the Units of such Series outstanding.
Upon termination, the Trustee will sell the Portfolio Obligations then held
in the appropriate Series of the Trust and credit the moneys derived from such
sale to the Principal Capital Gains and Interest Accounts thereof. The Trustee
will then, after deduction of any fees and expenses of such Series and payment
into the Reserve Account of any amount required for taxes or other governmental
charges that may be payable by such Series, distribute to each Unitholder of
such Series, only upon surrender for cancellation of his certificate, if issued,
after due notice of such termination, such Unitholder's pro rata share in the
-47-
<PAGE>
Interest, Capital Gains and Principal Accounts for such Series. The sale of
Portfolio Obligations in a Series of the Trusts upon termination may result in a
lower amount than might otherwise be realized if such sale were not required at
such time. For this reason, among others, the amount realized by a Unitholder
upon termination may be less than the principal amount of Portfolio Obligations
represented by the Units held by such Unitholder.
RESIGNATION, REMOVAL AND LIABILITY
Regarding the Trustee. The Trustee shall be under no liability for any
action taken in good faith in reliance on prima facie properly executed
documents or for the disposition of moneys or Portfolio Obligations from any
Series of the Trust, nor shall the Trustee be liable or responsible in any way
for depreciation or loss incurred by reason of the disposition of any Portfolio
Obligations by the Trustee. However, the Trustee shall be liable for willful
malfeasance, willful misconduct, bad faith or gross negligence in the
performance of its duties or by reason of its reckless disregard of its
obligations and duties under the Indenture. In the event of a failure of the
Sponsor to act, the Trustee may act under the Indenture and shall not be liable
for any action taken by it in good faith. The Trustee shall not be personally
liable for any taxes or other governmental charges imposed upon a Series of the
Trust or in respect of the Portfolio Obligations or the interest thereon. The
Indenture also contains other customary provisions limiting the liability of the
Trustee and providing for the indemnification of the Trustee for any loss or
claim accruing to it without gross negligence, bad faith, willful misconduct,
willful malfeasance or reckless disregard of its duties and obligations under
the Indenture on its part.
The Trustee or any successor may resign by executing an instrument in
writing, filing the same with the Sponsor and mailing a copy of such notice or
resignation to all Unitholders then of record. Upon receiving such notice the
Sponsor will use its best efforts to appoint a successor Trustee promptly. The
Sponsor may at any time remove the Trustee with or without cause and appoint a
successor as provided in the Indenture. If within 30 days of the resignation of
a Trustee no successor has been appointed or, if appointed, has not accepted the
appointment, the retiring Trustee may apply to a court of competent jurisdiction
for the appointment of a successor. The resignation or removal of a Trustee
becomes effective only when the successor Trustee accepts its appointment as
such or when a court of competent jurisdiction appoints a successor Trustee.
Regarding the Sponsor. The Sponsor shall be under no liability to the
Series of the Trust or to Unitholders for taking any action or for refraining
from any action in good faith or for errors in judgment, nor shall the Sponsor
be liable or responsible in any way for depreciation or loss incurred by reason
of the disposition of any Portfolio Obligation. The Sponsor will, however, be
liable for its own willful malfeasance, willful misconduct, bad faith, gross
negligence or reckless disregard of its duties and obligations under the
Indenture.
If at any time the Sponsor shall resign under the Indenture or shall fail
or be incapable of performing its duties thereunder or shall become bankrupt or
its affairs are taken over by public authorities, the Indenture directs the
Trustee to either (1) appoint a successor sponsor or sponsors at rates of
compensation deemed reasonable by the Trustee and not exceeding amounts
-48-
<PAGE>
prescribed by the Securities and Exchange Commission or (2) continue to act as
sponsor itself without terminating the Indenture.
Regarding the Evaluator. The Trustee, Sponsor and Unitholders may rely on
any evaluation furnished by the Evaluator and shall have no responsibility for
the accuracy thereof. Determinations by the Evaluator under the Indenture shall
be made in good faith upon the basis of the best information available to it,
provided, however, that the Evaluator shall be under no liability to the
Trustee, Sponsor or Unitholders for errors in judgment. The Evaluator shall,
however, be liable for its own willful malfeasance, bad faith, gross negligence
or reckless disregard of its obligations and duties under the Indenture.
The Evaluator may resign or may be removed by the Sponsor and the Trustee,
and the Sponsor and the Trustee are to use their best efforts to appoint a
satisfactory successor. Such resignation or removal shall become effective upon
the acceptance of appointment by the successor Evaluator. If upon resignation
of the Evaluator no successor accepts appointment within thirty days after
notice of resignation, the Evaluator may apply to a court of competent
jurisdiction for the appointment of a successor.
MISCELLANEOUS
Sponsor. 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, Inc. is the successor
sponsor to unit investment trusts formerly sponsored by EVEREN Unit Investment
Trusts, a service of EVEREN Securities, Inc. Ranson & Associates, Inc. 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 Kansas municipalities. The Sponsor's offices are located
at 250 North Rock Road, Suite 150, Wichita, Kansas 67206-2241.
The foregoing information with regard to the Sponsor relates to the Sponsor
only and not to any Series of the Trust. Such information is included in this
Prospectus only for the purpose of informing investors as to the financial
responsibility of the Sponsor and its ability to carry out its contractual
obligations shown herein. More comprehensive financial information can be
obtained from the Sponsor upon request.
Trustee. The Trustee 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
-49-
<PAGE>
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 Obligations. For information relating to the
responsibilities of the Trustee under the Indenture, reference is made to the
material set forth under "Administration of the Trust."
Legal Opinions. The legality of the Units offered hereby and certain
matters relating to Federal tax law were originally passed upon by Chapman and
Cutler, 111 West Monroe Street, Chicago, Illinois 60603, as counsel for the
Sponsor.
INDEPENDENT AUDITORS
The financial statements appearing in Part Two of this Prospectus and
Registration Statement, with information pertaining to the specific Series of
the Trusts to which such statements relate, have been audited by Ernst & Young
LLP, independent auditors, as set forth in their report appearing in Part Two
and are included in reliance upon such report given upon the authority of such
firm as experts in auditing and accounting.
-50-
<PAGE>
EVEREN Defined Funds
U.S. Treasury Portfolio
Series 18
Part Two
Dated August 31, 1999
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
U.S. Treasury Portfolio Series 18
Essential Information
As of April 30, 1999
Sponsor and Evaluator: Ranson & Associates, Inc.
Trustee: The Bank of New York Co.
<TABLE>
<CAPTION>
General Information
<S> <C>
Principal Amount of Securities $10,873,000
Number of Units 1,087,181
Fractional Undivided Interest in the Trust per Unit 1/1,087,181
Principal Amount of Securities per Unit $10.001
Calculation of Public Offering Price:
Aggregate Bid Price of Securities in the Trust $11,109,607
Aggregate Bid Price of Securities per Unit $10.219
Principal Cash per Unit (1) $(.005)
Accrued Interest per Unit through settlement date of
May 5, 1999 $.007
Total Price including Accrued Interest per Unit $10.221
Sales Charge of 1.75% of Public Offering Price
(1.781% of net amount invested) per Unit $.182
Public Offering Price per Unit $10.403
Redemption Price per Unit $10.221
Calculation of Estimated Net Annual Interest Income per Unit:
Estimated Annual Interest Income 0.614955
Less: Estimated Annual Expense 0.011491
Estimated Net Annual Interest Income 0.603464
Daily Rate at which Estimated Annual Interest Income Accrues
per Unit 0.001676
Estimated Current Return Based on Public Offering Price (2) 5.80%
Estimated Long-Term Return (2) 4.12%
</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).
3. See Note 1 to the accompanying financial statements of the Trust regarding a
change in ownership of Kemper Unit Investment Trusts and Kemper Securities, Inc.
<PAGE>
EVEREN Defined Funds
U.S. Treasury Portfolio Series 18
Essential Information (continued)
As of April 30, 1999
Sponsor and Evaluator: Ranson & Associates, Inc.
Trustee: The Bank of New York Co.
Record and Distribution Date Record Date is the first of each month and
distributions to Unitholders on such
record dates will be made on the 15th day
of the month.
Distribution Dates No distribution (other than capital gains
distributions) need be made from the
Principal Account if the balance therein,
excluding capital gains, is less than $.01
per Unit.
Trustee's Annual Fee (including
estimated expenses) $.90 per 100 Units (includes $.80 of
Trustee's annual fee per $1,000 principal
amount of underlying Securities and $.10
of out-of-pocket expenses per 100 Units).
Evaluator's Annual Fee $.10 per $1,000 principal amount of
underlying Securities.
Surveillance Fee $.10 per $1,000 principal amount of
underlying Securities.
Date of Trust Agreement and
Initial Deposit May 8, 1996
Mandatory Termination Date December 31, 2027
Discretionary Liquidation Amount The Trust may be terminated if the value
thereof is less than $5,120,000 (40% of
the par value of the Securities deposited
in the Trust).
<PAGE>
Report of Independent Auditors
Unitholders
EVEREN Defined Funds
U.S. Treasury Portfolio Series 18
We have audited the accompanying statement of assets and liabilities of EVEREN
Defined Funds U.S. Treasury Portfolio Series 18, including the schedule of
investments, as of April 30, 1999, and the related statements of operations and
changes in net assets for each of the two years in the period then ended and for
the period from May 8, 1996 (Date of Deposit) to April 30, 1997. 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 April 30, 1999, by
correspondence with the custodial bank. An audit also includes assessing the
accounting principles used and significant estimates made by the sponsor, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of EVEREN Defined Funds U.S.
Treasury Portfolio Series 18 at April 30, 1999, 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
August 17, 1999
<PAGE>
EVEREN Defined Funds
U.S. Treasury Portfolio Series 18
Statement of Assets and Liabilities
April 30, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
Assets
Government Securities, at value (cost $10,794,372) $11,109,607
Interest receivable 262,919
---------
Total assets 11,372,526
Liabilities and net assets
Cash overdraft 211,131
Accrued liabilities 2,048
---------
213,179
Net assets, applicable to 1,087,181 Units outstanding:
Cost of Trust assets, exclusive of interest $10,794,372
Unrealized appreciation 315,235
Distributable funds 49,740
--------- ---------
Net assets $11,159,347
=========
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
EVEREN Defined Funds
U.S. Treasury Portfolio Series 18
Statements of Operations
<TABLE>
<CAPTION>
Period from
May 8,
1996 to
Year ended April 30 April 30,
1999 1998 1997
<S> <C> <C> <C>
--------- --------- ---------
Investment income - interest $721,966 $792,978 $559,932
Expenses:
Trustee's fees and related expenses 12,330 14,048 7,159
Evaluator's and portfolio
surveillance fees 4,125 4,883 2,521
--------- --------- ---------
Total expenses 16,455 18,931 9,680
--------- --------- ---------
Net investment income 705,511 774,047 550,252
Realized and unrealized gain on
investments:
Realized gain on investments 52,792 16,506 -
Unrealized appreciation during the
period 38,139 276,899 197
--------- --------- ---------
Net gain on investments 90,931 293,405 197
--------- --------- ---------
Net increase in net assets resulting
from operations $796,442 $1,067,452 $550,449
========= ========= =========
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
EVEREN Defined Funds
U.S. Treasury Portfolio Series 18
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Period from
May 8,
1996 to
Year ended April 30 April 30,
1999 1998 1997
<S> <C> <C> <C>
--------- --------- ---------
Operations:
Net investment income $705,511 $774,047 $550,252
Realized gain on investments 52,792 16,506 -
Unrealized appreciation on investments
during the period 38,139 276,899 197
--------- --------- ---------
Net increase in net assets resulting
from operations 796,442 1,067,452 550,449
Distributions to Unitholders:
Net investment income (716,243) (778,253) (435,685)
Capital transactions:
Issuance of 1,280,000 Units - - 12,655,130
Issuance of 50,000 Units - 494,415 -
Redemption of 93,677 Units - (1,071,018) -
Redemption of 149,142 Units (1,403,342) - -
--------- --------- ---------
Total increase (decrease) in net assets (1,323,143) (287,404) 12,769,894
Net assets:
At the beginning of the period 12,482,490 12,769,894 -
--------- --------- ---------
At the end of the period (including
distributable funds applicable to
Trust Units of $49,740, $(112,272)
and $69,996 at April 30, 1999, 1998
and 1997, respectively) $11,159,347 $12,482,490 $12,769,894
========= ========= =========
Trust Units outstanding at the end of
the period 1,087,181 1,236,323 1,280,000
========= ========= =========
Net asset value per Unit at the end of
the period $10.264 $10.096 $9.976
========= ========= =========
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
<TABLE>
EVEREN Defined Funds
U.S. Treasury Portfolio Series 18
Schedule of Investments
April 30, 1999
U.S. Treasury Notes and Stripped Securities
<CAPTION>
Principal Maturity
Amount Coupon Date Value
<S> <C> <C> <C> <C>
--------- --------- ------ ---------
$327,400 0.000% (1) 5/15/1999 $326,856
1,850,600 6.750% 5/31/1999 1,853,783
79,800 0.000% (1) 5/15/2000 75,959
2,070,200 6.250% 5/31/2000 2,099,307
1,740,800 8.000% 5/15/2001 1,838,459
440,200 0.000% (1) 5/15/2001 397,668
1,850,000 7.500% 5/15/2002 1,971,656
334,000 0.000% (1) 5/15/2002 286,175
2,180,000 6.250% 2/15/2003 2,259,744
--------- ---------
$10,873,000 $11,109,607
========= =========
</TABLE>
Note to Schedule of Investment
1. These Treasury Notes and Stripped Securities have been purchased at a
discount from the par value because there is no stated interest income thereon.
Such Securities are normally described as "zero coupon" Securities. Over the
lives of these Securities the value increases, so that upon maturity the
holders of the Securities will receive 100% of the principal amount thereof.
[FN]
See accompanying notes to financial statements.
<PAGE>
EVEREN Defined Funds
U.S. Treasury Portfolio Series 18
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
Government Securities 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 Government 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 the original issue discount on the
zero coupon obligations and interest accrued as earned on the fixed rate
obligations.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires the Trust's sponsor to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from such estimates.
2. Unrealized Appreciation and Depreciation
Following is an analysis of net unrealized appreciation at April 30, 1999:
<TABLE>
<CAPTION>
<S> <C>
Gross unrealized appreciation $342,857
Gross unrealized depreciation (27,622)
----------
Net unrealized appreciation $315,235
=========
</TABLE>
3. Federal Income Taxes
The Trust is not an association taxable as a corporation for federal income tax
purposes. Each Unitholder is considered to be the owner of a pro rata portion
of the Trust under Subpart E, Subchapter J of Chapter 1 of the Internal Revenue
Code of 1986, as amended. Accordingly, no provision has been made for federal
income taxes.
<PAGE>
EVEREN Defined Funds
U.S. Treasury Portfolio Series 18
Notes to Financial Statements (continued)
4. Other Information
Cost to Investors
The cost to original investors of Units of the Trust was based on the aggregate
offering price of the Securities on the date of an investor's purchase, plus or
minus a pro rata share of cash or overdraft in the Principal Account, daily
accrued interest, plus a sales charge of 1.950% of the Public Offering Price
(equivalent to 1.989% of the net amount invested). The Public Offering Price
for secondary market transactions is based on the aggregate bid price of the
Securities plus or minus a pro rata share of cash or overdraft in the Principal
Account, daily accrued interest on the date of an investor's purchase, plus a
sales charge of 1.75% of the Public Offering Price (equivalent to 1.781% of the
net amount invested).
Distributions
Distributions of net investment income to Unitholders are declared and paid
monthly. Income distributions per Unit on a record date basis are $.61, $.60
and $.54 for the periods ended April 30, 1999, 1998 and 1997, 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 August 17, 1999, in this Post-Effective
Amendment to the Registration Statement (Form S-6) and related Prospectus of
EVEREN Defined Funds U.S. Treasury Portfolio Series 18 dated August 31, 1999.
Ernst & Young LLP
Kansas City, Missouri
August 31, 1999
<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 47, 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
31st day of August, 1999.
EVEREN Unit Investment Trusts, Series 47
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 August 31, 1999 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.
