===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
----------------------
AMENDMENT NO. 1
TO
REGISTRATION STATEMENT
ON
FORM S-6
----------------------
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
A. EXACT NAME OF TRUST:
RANSON UNIT INVESTMENT TRUSTS, SERIES 54
B. NAME OF DEPOSITOR:
RANSON & ASSOCIATES, INC.
C. COMPLETE ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES:
250 North Rock Road, Suite 150
Wichita, Kansas 67206-2241
D. NAME AND COMPLETE ADDRESS OF AGENT FOR SERVICE:
Copy to:
ALEX R. MEITZNER MARK J. KNEEDY
Ranson & Associates, Inc. Chapman and Cutler
250 North Rock Road, Suite 150 111 West Monroe Street
Wichita, Kansas 67206-2241 Chicago, Illinois 60603
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
TITLE AND AMOUNT
OF SECURITIES PROPOSED MAXIMUM AMOUNT OF
BEING REGISTERED AGGREGATE OFFERING PRICE REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Series 53 An indefinite number of Units of Indefinite Not Applicable
Beneficial Interest pursuant to
Rule 24f-2 under the Investment
Company Act of 1940
</TABLE>
E. APPROXIMATE DATE OF PROPOSED SALE TO PUBLIC:
As soon as practicable after the effective date
of the Registration Statement.
_
|X| Check box if it is proposed that this filing will become effective at
2:00 P.M. on February 4, 1997 pursuant to paragraph (b) of Rule 487.
===============================================================================
The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
<PAGE>
RANSON UNIT INVESTMENT TRUSTS, SERIES 54
------------------------
CROSS-REFERENCE SHEET
(FORM N-8B-2 ITEMS REQUIRED BY INSTRUCTIONS AS
TO THE PROSPECTUS IN FORM S-6)
<TABLE>
<CAPTION>
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
----------- ---------------------
I. ORGANIZATION AND GENERAL INFORMATION
<S> <C>
1. (a)Name of trust................... ) Prospectus front cover
(b)Title of securities issued...... ) Essential Information
2. Name and address of each depositor. ) General Information--Administration of
) the Trusts
3. Name and address of trustee........ ) *
4. Name and address of principal
underwriters...................... ) General Information-the Sponsor
5. State of organization of trust..... ) The Trust Funds
6. Execution and termination of trust ) The Trust Funds; General Information--
agreement......................... ) Administration of the Trusts
7. Changes of name.................... ) The Trust Funds
8. Fiscal year........................ ) *
9. Litigation......................... ) *
II. GENERAL DESCRIPTION OF THE TRUST AND
SECURITIES OF THE TRUST
10. (a)Registered or bearer securities. ) General Information--Unitholders
(b)Cumulative or distributive
securities........................ ) The Trust Funds
(c)Redemption...................... ) General Information--Redemption
(d)Conversion, transfer, etc....... ) General Information--Unitholders;
) General Information--Market for Units
(e)Periodic payment plan........... ) *
(f)Voting rights................... ) General Information--Unitholders
) General Information--Investment Supervision;
</TABLE>
-2-
<PAGE>
<TABLE>
<CAPTION>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
----------- ---------------------
<S> <C>
(g)Notice of certificateholders.... ) General Information--
) Administration of the Trusts; General
) Information--Unitholders
(h)Consents required............... ) General Information--Unitholders;
) General Information--Administration of
) the Trusts
(i)Other provisions................ ) The High Yield Series--Federal Tax
) Status
11. Type of securities comprising ) The Trust Funds; The High Yield Series--
units............................. ) Portfolio
12. Certain information regarding peri-
odic payment certificates......... ) *
13. (a) Load, fees, expenses, etc...... ) General Information--Interest,
) Estimated Long-Term Return
) and Estimated Current Return; General
) Information--Expenses of the Trusts
(b)Certain information regarding
periodic payment certifi-
cates....................... ) *
(c)Certain percentages........... ) Essential Information; Public Offering
) of Units
(d)Certain other fees, etc. pay-
able by holders............. ) General Information--Unitholders
(e)Certain profits receivable by
depositor, principal under-
writers, trustee or affili- ) General Information--Expenses of the
ated persons................ ) Trusts; Public Offering of Units
(f)Ratio of annual charges to in-
come........................ ) *
14. Issuance of trust's securities... ) The Trust Funds;
) General Information--Unitholders
15. Receipt and handling of payments ) *
from purchasers.................
16. Acquisition and disposition of ) The Trust Funds; The High Yield
underlying securities........... ) Series--Portfolio; General
) Information--Investment Supervision
</TABLE>
-3-
<PAGE>
<TABLE>
<CAPTION>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
----------- ---------------------
<S> <C>
17. Withdrawal or redemption......... ) Market for Units;
) General Information--Redemption;
) Public Offering of Units
18. (a)Receipt, custody and disposi-
tion of income.............. ) General Information--Unitholders
(b)Reinvestment of distributions. ) General Information--Distribution
) Reinvestment
(c)Reserves or special funds..... ) General Information--Expenses of the
) Trusts
(d)Schedule of distributions..... ) *
19. Records, accounts and reports.... ) General Information--Redemption;
) Administration of the Trusts
20. Certain miscellaneous provisions
of trust agreement
(a)Amendment..................... ) General Information--Administration of
) the Trusts
(b)Termination................... ) *
(c)and (d) Trustee, removal and ) General Information--Administration of
successor................... ) the Trusts
(e)and (f) Depositor, removal and ) General Information--Administration of
successor................... ) the Trusts
21. Loans to security holders........ ) *
22. Limitations on liability......... ) General Information--Administration of
) the Trusts
23. Bonding arrangements............. ) *
24. Other material provisions of
trust agreement................. ) *
III. ORGANIZATION, PERSONNEL AND
AFFILIATED PERSONS OF DEPOSITOR
25. Organization of depositor........ ) General Information--Administration of
) the Trusts
26. Fees received by depositor....... ) See Items 13(a) and 13(e)
27. Business of depositor............ ) General Information--Administration of
) the Trusts
28. Certain information as to offi-
cials and affiliated persons of ) General Information--Administration of
depositor....................... ) the Trusts
</TABLE>
-4-
<PAGE>
<TABLE>
<CAPTION>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
----------- ---------------------
<S> <C>
29. Voting securities of depos- ) General Information--Administration of the
itor...................... ) Trusts
30. Persons controlling deposi-
tor....................... ) *
31. Payment by depositor for
certain services rendered
to trust.................. ) *
32. Payment by depositor for
certain other services
rendered to trust......... ) *
33. Remuneration of employees
of depositor for certain
services rendered to
trust..................... ) *
34. Remuneration of other per-
sons for certain services
rendered to trust......... ) *
IV. DISTRIBUTION AND REDEMPTION
35. Distribution of trust's se- ) Public Offering of Units
curities by states........
36. Suspension of sales of
trust's securities........ ) *
37. Revocation of authority to
distribute................ ) *
38. (a)Method of distribution.. ) Public Offering of Units;
(b)Underwriting agreements. ) General Information--Market for Units;
(c)Selling agreements...... ) Public Offering of Units
39. (a)Organization of princi- ) General Information--Administration
pal underwriters.......... ) of the Trusts
(b)N.A.S.D. membership of
principal underwriters.... ) *
40. Certain fees received by
principal underwriters.... ) See Items 13(a) and 13(e)
41. (a)Business of principal ) General Information--Administration
underwriters.............. ) of the Trusts
(b)Branch offices of prin-
cipal underwriters........ ) *
(c)Salesmen of principal
underwriters.............. ) *
42. Ownership of trust's secu-
rities by certain persons. ) *
43. Certain brokerage commis-
sions received by princi-
pal underwriters.......... ) Public Offering of Units
44. (a)Method of valuation..... ) Public Offering of Units
(b)Schedule as to offering
price..................... ) *
(c)Variation in offering ) Public Offering of Units
price to certain persons..
45. Suspension of redemption
rights.................... ) General Information--Redemption
</TABLE>
-5-
<PAGE>
<TABLE>
<CAPTION>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
----------- ---------------------
<S> <C>
46. (a)Redemption valuation.... ) General Information--Redemption;
) General Information--Market for Units;
) Public Offering of Units
(b)Schedule as to redemp-
tion price................ ) *
47. Maintenance of position in ) General Information--Market for Units;
underlying securities..... ) Public Offering of Units;
) General Information--Redemption
V. INFORMATION CONCERNING THE TRUSTEE
OR CUSTODIAN
48. Organization and regulation ) General Information--Administration
of trustee................ ) of the Trusts
49. Fees and expenses of trust- ) General Information--Expenses of the Trusts
ee........................
50. Trustee's lien............. ) *
VI. INFORMATION CONCERNING INSURANCE OF
HOLDERS OF SECURITIES
51. Insurance of holders of trust's ) Cover Page; General Information--
securities.................. ) Expenses of the Trusts
VII. POLICY OF REGISTRANT
52. (a) Provisions of trust agreement
with respect to selection or ) The Trust Funds; The High Yield
elimination of underlying se- ) Series--Portfolio; General
curities..................... ) Information--Investment Supervision
(b) Transactions involving elimi-
nation of underlying securi-
ties......................... ) *
(c) Policy regarding substitution
or elimination of underlying ) General Information--Investment
securities................... ) Supervision;
(d) Fundamental policy not other-
wise covered................. ) *
</TABLE>
-6-
<PAGE>
<TABLE>
<CAPTION>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
----------- ---------------------
<S> <C>
53. Tax status of Trust.............. ) Essential Information; The High
) Yield Series--Portfolio; The
) High Yield Series--Federal Tax Status
VIII. FINANCIAL AND STATISTICAL INFORMATION
Trust's securities during last
54. ten years........................ ) *
55. ) *
56. Certain information regarding pe-
riodic payment certificates..... ) *
57. ) *
58. ) *
59. Financial statements (Instruction
1(c) to Form S-6)............... ) *
</TABLE>
- - --------
* Inapplicable, answer negative or not required.
-7-
<PAGE>
RANSON UNIT INVESTMENT TRUSTS, SERIES 54
Defined High Yield Corporate Income Series 6 (the "High Yield Series") was
formed for the purpose of providing a high level of current income through
investment in a fixed portfolio consisting primarily of high yield, high risk
corporate debt obligations issued after July 18, 1984. THE SECURITIES
INCLUDED IN THE HIGH YIELD SERIES ARE RATED BELOW INVESTMENT GRADE (COMMONLY
KNOWN AS "JUNK BONDS") AND ARE SUBJECT TO GREATER MARKET FLUCTUATIONS AND
POTENTIAL RISK OF LOSS OF INCOME AND PRINCIPAL THAN ARE INVESTMENTS IN LOWER-
YIELDING, HIGHER RATED FIXED INCOME SECURITIES. THE SECURITIES INCLUDED IN
THE HIGH YIELD SERIES SHOULD BE VIEWED AS SPECULATIVE AND AN INVESTOR SHOULD
REVIEW HIS ABILITY TO ASSUME THE RISKS ASSOCIATED WITH SPECULATIVE CORPORATE
BONDS. THE PAYMENT OF INCOME IS DEPENDENT UPON THE CONTINUING ABILITY OF THE
ISSUERS AND/OR OBLIGORS TO MEET THEIR RESPECTIVE OBLIGATIONS. SEE "THE HIGH
YIELD SERIES-RISK FACTORS." For foreign investors who are not United States
citizens or residents, interest income from the High Yield Series may not be
subject to federal withholding taxes if certain conditions are met. See "The
High Yield Series-Federal Tax Status."
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.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The investor is advised to read and retain this
Prospectus for future reference.
THE DATE OF THIS PROSPECTUS IS FEBRUARY 4, 1997.
<PAGE>
SUMMARY
PUBLIC OFFERING PRICE. The Public Offering Price per Unit of a Trust Fund
during the initial offering period is equal to a pro rata share of the
offering prices of the Securities in such Trust Fund plus or minus a pro rata
share of cash, if any, in the Principal Account held or owned by such Trust
Fund, plus accrued interest plus that sales charge indicated under "Essential
Information." The secondary market Public Offering Price per Unit will be
based upon a pro rata share of the bid prices of the Securities in each Trust
Fund plus or minus a pro rata share of cash, if any, in the Principal Account
held or owned by such Trust Fund, plus accrued interest plus the applicable
sales charge indicated under "Public Offering of Units-Public Offering
Price." The sales charge is reduced on a graduated scale for sales involving
at least $100,000 or 10,000 Units and will be applied on whichever basis is
more favorable to the investor. The minimum purchase for each Trust is
$1,000.
INTEREST AND PRINCIPAL DISTRIBUTIONS. Distributions of the estimated annual
interest income to be received by each Trust Fund, after deduction of
estimated expenses, will be made monthly. See "Essential Information."
Distributions of funds, if any, in the Principal Account will be made as
provided in "General Information-Unitholders-Distributions to Unitholders."
REINVESTMENT. Each Unitholder of a Trust Fund offered herein may elect to
have distributions of principal or interest or both automatically invested
without charge in shares of certain mutual funds sponsored by Zurich Kemper
Investments, Inc. See "General Information-Distribution Reinvestment."
ESTIMATED LONG-TERM RETURN AND ESTIMATED CURRENT RETURN. As of the opening of
business on the Initial Date of Deposit, the Estimated Long-Term Return and
the Estimated Current Return, if applicable, for each Trust were as set forth
in "Essential Information." The Estimated Current Return is calculated by
dividing the estimated net annual interest income per Unit by the Public
Offering Price. The estimated net annual interest income per Unit will vary
with changes in fees and expenses of the Trustee, the Sponsor and Evaluator
and with the principal prepayment, redemption, maturity and exchange or sale
of Securities while the Public Offering Price will vary with changes in the
offering price of the underlying Securities and with changes in the accrued
interest; therefore, there is no assurance that the present Estimated Current
Return will be realized in the future. Estimated Long-Term Return is
calculated using a formula which (1) takes into consideration, and determines
and factors in the relative weightings of, the market values, yields (which
takes into account the amortization of premiums and the accretion of
discounts) and estimated retirements or average lives of all of the
Securities in the applicable Trust and (2) takes into account the expenses
and sales charge associated with each Trust Unit. Since the market values and
estimated retirements or average lives of the Securities and the expenses of
a Trust will change, there is no assurance that the present Estimated Long-
Term Return will be realized in the future. Estimated Current Return and
Estimated Long-Term Return are expected to differ because the calculation of
Estimated Long-Term Return reflects the estimated date and amount of
principal returned while Estimated Current Return calculations include only
net annual interest income and Public Offering Price.
MARKET FOR UNITS. After the initial offering period, while under no
obligation to do so, the Sponsor intends to, and certain Underwriters may,
maintain a market for the Units and to offer to repurchase such Units at
prices subject to change at any time which are based on the aggregate bid
side evaluation of the Securities in a Trust plus accrued interest.
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, if any, to pay the
principal of or interest on a security when due, volatile interest rates,
volatile market value of the securities, early call provisions, and changes
to the tax status of the Securities. See "The High Yield Series-Risk
Factors."
2
<PAGE>
RANSON UNIT INVESTMENT TRUSTS, SERIES 54
ESSENTIAL INFORMATION
AS OF THE OPENING OF BUSINESS ON THE INITIAL DATE OF DEPOSIT
SPONSOR AND EVALUATOR: RANSON & ASSOCIATES, INC.
TRUSTEE: THE BANK OF NEW YORK
The income, expense and distribution data set forth below has been calculated
for Unitholders purchasing less than 10,000 Units of a Trust. Unitholders
purchasing 10,000 Units or more of a Trust will receive a slightly higher
return because of the reduced sales charge for larger purchases.
<TABLE>
<CAPTION>
High Yield
Series 6
--------------
<S> <C>
Public Offering Price per Unit (1)(2) $ 10.179
Principal Amount of Securities per Unit $ 10.000
Estimated Current Return based on Public Offering Price (3)(4)(5)(6) 8.06%
Estimated Long-Term Return (3)(4)(5)(6) 8.07%
Estimated Normal Annual Distribution per Unit (6) $ .82013
Principal Amount of Securities $ 1,325,000
Number of Units 132,500
Fractional Undivided Interest per Unit 1/132,500
Calculation of Public Offering Price:
Aggregate Offering Price of Securities $ 1,288,067
Aggregate Offering Price of Securities per Unit $ 9.721
Plus Sales Charge per Unit (7) $ .458
Public Offering Price per Unit (1)(2) $ 10.179
Redemption Price per Unit $ 9.608
Sponsor's Initial Repurchase Price per Unit $ 9.721
Excess of Public Offering Price per Unit over Redemption Price per Unit $ .571
Excess of Public Offering Price per Unit over Sponsor's Initial Repurchase
Price per Unit $ .458
Calculation of Estimated Net Annual Interest Income per Unit (6):
Estimated Annual Interest $ .84363
Less: Estimated Annual Expense $ .02350
Estimated Net Annual Interest Income $ .82013
Estimated Daily Rate of Net Interest Accrual per Unit $ .002278139
Minimum Principal Value of the Trust under which Trust Agreement may be terminated (8) $ 530,000
Trustee's Annual Fee per $1,000 principal amount of Securities (9) $ 1.60
Reduction of Trustee's fee per Unit during the first year (6) N/A
Estimated annual interest income per Unit during the first year (6) $ .84363
Interest Payments (10):
First Payment per Unit, representing 24 days $ .05468
Estimated Normal Monthly Distribution per Unit $ .06834
Estimated Normal Annual Distribution per Unit $ .82013
</TABLE>
Evaluations for purposes of sale, purchase or redemption of Units are made as
of the close of business of the Sponsor (currently 3:15 p.m. Central Time)
(the "Evaluation Time") next following receipt of an order for a sale or
purchase of Units or receipt by the Trustee of Units tendered for redemption
3
<PAGE>
ESSENTIAL INFORMATION-(CONTINUED)
<TABLE>
<CAPTION>
High Yield
Series 6
--------------
<S> <C>
Sales Charge (7):
As a percentage of Public Offering Price per Unit 4.50%
As a percentage of net amount invested 4.715%
As a percentage of net amount invested in earning assets 4.715%
</TABLE>
<TABLE>
<S> <C>
Date of Trust Agreement February 4, 1997
First Settlement Date February 7, 1997
Mandatory Termination Date December 31, 2007
Evaluator's Annual Evaluation Fee Maximum of $0.30 per $1,000 Principal Amount of Securities
Sponsor's Annual Surveillance Fee Maximum of $0.25 per $1,000 Principal Amount of Securities
</TABLE>
(1) Anyone ordering Units for settlement after the First Settlement Date
will pay accrued interest from such date to the date of settlement
(normally three business days after order) less distributions from the
Interest Account subsequent to the First Settlement Date. For purchases
settling on the First Settlement Date, no accrued interest will be added
to the Public Offering Price.
(2) Many unit investment trusts issue a number of units such that each
unit represents approximately $1,000 principal amount of underlying
securities. The Sponsor, on the other hand, in determining the number of
Units for each Trust has elected not to follow this format but rather to
provide that number of Units which will establish as close as possible as
of the Initial Date of Deposit a Principal Amount of Securities per Unit
of $10.
(3) The Estimated Current Return and Estimated Long-Term Return are
increased for transactions entitled to a reduced sales charge. See
"Public Offering of Units-Public Offering Price."
(4) The Estimated Current Returns are calculated by dividing the estimated
net annual interest income per Unit by the Public Offering Price. The
estimated net annual interest income per Unit will vary with changes in
fees and expenses of the Trustee, the Sponsor and the Evaluator and with
the principal prepayment, redemption, maturity, exchange or sale of
Securities while the Public Offering Price will vary with changes in the
offering price of the underlying Securities and with changes in the
accrued interest; therefore, there is no assurance that the present
Estimated Current Returns indicated above will be realized in the future.
The Estimated Long-Term Returns are calculated using a formula which (1)
takes into consideration, and determines and factors in the relative
weightings of, the market values, yields (which takes into account the
amortization of premiums and the accretion of discounts) and estimated
retirement dates of all of the Securities in the applicable Trust and (2)
takes into account the expenses and sales charge associated with each
Trust Unit. Since the market values and estimated retirement dates of the
Securities and expenses of each Trust will change, there is no assurance
that the present Estimated Long-Term Returns as indicated above will be
realized in the future. The Estimated Current Returns and Estimated Long-
Term Returns are expected to differ because the calculation of the
Estimated Long-Term Returns reflects the estimated date and amount of
principal returned while the Estimated Current Return calculations
include only net annual interest income and Public Offering Price.
(5) This figure is based on estimated per Unit cash flows. Estimated cash
flows will vary with changes in fees and expenses, with changes in
current interest rates and with the principal prepayment, redemption,
maturity, call, exchange or sale of the underlying Securities. The
estimated cash flows to Unitholders for the Trusts are either set forth
under "Estimated Cash Flows to Unitholders" for each Trust or are
available upon request at no charge from the Sponsor.
(6) During the first year, the Trustee has agreed to reduce its fee (and
to the extent necessary pay expenses of the Trust Funds) in the amounts
stated above. The Trustee has agreed to the foregoing to cover all or a
portion of the interest on any Securities accruing prior to their
expected dates of delivery, since interest will not accrue to the benefit
of Unitholders of a Trust Fund until such Securities are actually
delivered to the Trust Fund. The estimated net annual interest income per
Unit will remain as indicated. See "The Trust Funds" and "General
Information-Interest, Estimated Long-Term Return and Estimated Current
Return."
(7) The sales charge as a percentage of the net amount invested in earning
assets will increase as accrued interest increases. Transactions subject
to quantity discounts (see "Public Offering of Units-Public Offering
Price") will have reduced sales charges, thereby reducing all percentages
in the table.
(8) The minimum principal value of each Trust (other than a Tax-Exempt
Portfolio) under which the Trust Agreement may be terminated is 40% of
the total aggregate principal amount of securities deposited in each such
Trust during the primary offering period. The minimum principal value of
each Tax-Exempt Portfolio under which the Trust Agreement may be
terminated is 20% of the initial aggregate principal amount of securities
deposited in such Trust.
(9) See "General Information-Expenses of the Trusts."
(10) Unitholders will receive interest distributions monthly. The Record
Date is the first day of the month, commencing March 1, 1997, and the
distribution date is the fifteenth day of the month, commencing March 15,
1997.
4
<PAGE>
THE TRUST FUNDS
Ranson Unit Investment Trusts, Series 54 includes the following separate unit
investment trusts created by the Sponsor under the name Ranson Unit
Investment Trusts: "Defined High Yield Corporate Income Series 6"
(collectively, the "Trusts" or "Trust Funds"). Defined High Yield Corporate
Income Series 6 is referred to herein as the "High Yield Series" or the
"Defined Uninsured Corporate Income Trust (DUCOR)". Each of the Trust Funds
is separate and is designated by a different series number. Each of the Trust
Funds was created under the laws of the State of New York pursuant to a trust
indenture dated the Initial Date of Deposit (the "Trust Agreements") between
Ranson & Associates, Inc. (the "Sponsor" and "Evaluator") and The Bank of New
York (the "Trustee").<F1>* Ranson & Associates, Inc. is the Sponsor of the
Trust and is successor sponsor of all unit investment trusts formerly
sponsored by EVEREN Unit Investment Trusts, a service of EVEREN Securities,
Inc., including EVEREN Unit Investment Trusts, Series 52 and previous Series.
The High Yield Series was formed for the purpose of providing a high level of
current income through investment in a fixed portfolio consisting primarily
of high yield, high risk corporate debt obligations issued after July 18,
1984. The High Yield Series may be an appropriate investment vehicle for
investors who desire to participate in a portfolio of taxable fixed income
securities issued by corporate obligors with greater diversification than
investors might be able to acquire individually. Diversification of the Trust
assets will not eliminate the risk of loss always inherent in the ownership
of securities.
There is, of course, no guarantee that the Trust Funds' objectives will be
achieved.
As used herein, the terms "Securities" and "Bonds" mean the obligations
initially deposited in the Trusts described under "Portfolio" for each Trust
(including all contracts to purchase such obligations accompanied by an
irrevocable letter of credit sufficient to perform such contracts initially
deposited in the Trusts) and any additional obligations deposited in the
Trusts following the Initial Date of Deposit.
On the Initial Date of Deposit, the Sponsor delivered to the Trustee that
aggregate principal amount of Securities or contracts for the purchase
thereof for deposit in the Trust Funds as set forth under "Essential
Information." Of such principal amount, the amount specified in "Essential
Information" was deposited in each Trust. In exchange for the Securities so
deposited, the Trustee delivered to the Sponsor documentation evidencing the
ownership of that number of Units for each Trust as indicated under
"Essential Information." Each Trust initially consists of delivery statements
(i.e., contracts) to purchase obligations. The Sponsor has a limited right of
substitution for such Securities in the event of a failed contract. See
"General Information-Trust Information."
Additional Units of each Trust may be issued from time to time following the
Initial Date of Deposit by depositing in the Trust additional Securities (or
contracts for the purchase thereof together with cash or irrevocable letters
of credit) or cash (including a letter of credit) with instructions to
purchase additional Securities. As additional Units are issued by a Trust as
a result of the deposit of additional Securities by the Sponsor, the
aggregate value of the Securities in the Trust will be increased and the
fractional undivided interest in the Trust represented by each Unit will be
decreased. The Sponsor may continue to make additional deposits of Securities
into a Trust following the Initial Date of Deposit, provided that such
- -------------------
<F1>* Reference is made to the Trust Agreements, and any statements
contained herein are qualified in their entirety by the provisions
of the Trust Agreements.
5
<PAGE>
additional deposits will be in principal amounts which will maintain the same
original percentage relationship among the principal amounts of the
Securities in such Trust established by the initial deposit of the
Securities. Thus, although additional Units will be issued, each Unit will
continue to represent the same principal amount of each Security, and the
percentage relationship among the principal amount of each Security in the
related Trust will remain the same. If the Sponsor deposits cash to purchase
additional Securities exiting and new investors may experience a dilution of
their investments and a reduction in their anticipated income because of
fluctuations in the prices of the Securities between the time of the cash
deposit and the purchase of the Securities and because the Trust will pay any
associated brokerage fees. To minimize this effect, the Trust will attempt
to purchase the Securities as close to the evaluation time or as close to the
evaluation prices as possible.
Each Unit initially offered represents that undivided interest in the
appropriate Trust indicated under "Essential Information." To the extent that
any Units are redeemed by the Trustee or additional Units are issued as a
result of additional Securities being deposited by the Sponsor, the
fractional undivided interest in a Trust represented by each unredeemed Unit
will increase or decrease accordingly, although the actual interest in such
Trust represented by such fraction will remain unchanged. Units will remain
outstanding until redeemed upon tender to the Trustee by Unitholders, which
may include the Sponsor, or until the termination of the Trust Agreement.
An investment in Units of a Trust Fund should be made with an understanding
of the risks which an investment in fixed rate debt obligations may entail,
including the risk that the value of the portfolio and hence of the Units
will decline with increases in interest rates. The value of the underlying
Securities will fluctuate inversely with changes in interest rates. The
uncertain economic conditions of recent years, together with the fiscal
measures adopted to attempt to deal with them, have resulted in wide
fluctuations in interest rates and, thus, in the value of fixed rate debt
obligations generally and long-term obligations in particular. The Sponsor
cannot predict the degree to which such fluctuations will continue in the
future.
6
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
UNITHOLDERS
RANSON UNIT INVESTMENT TRUSTS, SERIES 54
We have audited the accompanying statement of condition and the related
portfolio of Ranson Unit Investment Trusts, Series 54 as of February 4, 1997.
The statement of condition and portfolio, are the responsibility of the
Sponsor. Our responsibility is to express an opinion on such financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
Our procedures included confirmation of Securities owned at February 4, 1997
and a letter of credit deposited to purchase Securities by correspondence
with the Trustee. An audit also includes assessing the accounting principles
used and significant estimates made by the Sponsor, as well as evaluating the
overall financial statement presentation. We believe our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Ranson Unit Investment
Trusts, Series 54 as of February 4, 1997, in conformity with generally
accepted accounting principles.
GRANT THORNTON LLP
Chicago, Illinois
February 4, 1997
7
<PAGE>
RANSON UNIT INVESTMENT TRUSTS, SERIES 54
STATEMENT OF CONDITION
AT THE OPENING OF BUSINESS ON FEBRUARY 4, 1997, THE INITIAL DATE OF DEPOSIT
<TABLE>
<CAPTION>
High Yield
Series 6
--------------
<S> <C>
INVESTMENT IN SECURITIES
Securities deposited in the Trust $ -
Contracts to purchase Securities 1,288,067
Accrued interest to First Settlement Date on Securities (2) 26,937
--------------
Total $ 1,315,004
==============
Units of fractional undivided interest outstanding 132,500
LIABILITY AND INTEREST OF UNITHOLDERS
Accrued interest payable to Sponsor $ 26,937
Cost to investors (3) 1,348,718
Less: Gross underwriting commission (3) 60,651
--------------
Net interest to Unitholders (1)(3) 1,288,067
--------------
Total $ 1,315,004
==============
</TABLE>
- -----------------
NOTES:
(1) The aggregate value of the Securities listed in each "Portfolio" and
their cost to the Trust are the same. The value of the Securities is
determined by Cantor Fitzgerald & Co. on the bases set forth under
"Public Offering of Units-Public Offering Price". Cash in the amount of
$1,315,004 has been deposited with the Trustee covering the funds
necessary for the purchase of Securities in the Trust represented by
purchase contracts. Of this amount, $1,288,067 relates to the offering
price of Securities to be purchased and $26,937 relates to accrued
interest on such Securities to the expected dates of delivery.
(2) The Trustee will advance to each Trust the amount of net interest accrued
to the First Settlement Date for distribution to the Sponsor as the
Unitholder of Record.
(3) The aggregate public offering price includes a sales charge for the Trust
as set forth under "Essential Information", assuming all single
transactions involve less than 10,000 Units. For single transactions
involving 10,000 or more Units the sales charge is reduced (see "Public
Offering of Units-Public Offering Price") resulting in an equal reduction
in both the Cost to investors and the Gross underwriting commission while
the Net interest to Unitholders remains unchanged.
8
<PAGE>
PUBLIC OFFERING OF UNITS
PUBLIC OFFERING PRICE. Units of a Trust are offered at the Public Offering
Price thereof. During the initial offering period, the Public Offering Price
per Unit is equal to the aggregate of the offering side evaluations of the
Securities in such Trust (as determined, pursuant to the terms of a contract
with the Evaluator, by Cantor Fitzgerald & Co., a non-affiliated firm
regularly engaged in the business of evaluating, quoting or appraising
comparable securities), plus or minus a pro rata share of cash, if any, in
the Principal account held or owned by such Trust plus accrued interest plus
the applicable sales charge referred to in the tables below divided by the
number of outstanding Units of such Trust. The Public Offering Price for
secondary market transactions, on the other hand, is based on the aggregate
bid side evaluations of the Securities in a Trust (also, currently, as
determined by Cantor Fitzgerald & Co.), plus or minus cash, if any, in the
Principal Account held or owned by such Trust, plus accrued interest plus a
sales charge based upon the dollar weighted average maturity of such Trust.
The sales charge per Unit for the High Yield Series will be reduced during
the initial offering period pursuant to the following graduated scale:
<TABLE>
<CAPTION>
Weighted Average Years to Maturity
-------------------------------------------------------
Under 5 Years 5 to 14.99 Years
------------------------- -------------------------
Percent of Percent of Percent of Percent of
Offering Net Amount Offering Net Amount
Number of Units Price Invested Price Invested
- --------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
1 to 9,999 Units 3.5% 3.627% 4.5% 4.712%
10,000 to 24,999 Units 3.2 3.306 4.2 4.384
25,000 to 49,999 Units 3.0 3.093 4.0 4.167
50,000 to 99,999 Units 2.7 2.775 3.5 3.627
100,000 or more Units 2.3 2.354 3.0 3.093
</TABLE>
As indicated above, in connection with secondary market transactions the
sales charge is based upon the dollar weighted average maturity of a Trust
and is determined in accordance with the tables set forth below. For purposes
of this computation, Securities will be deemed to mature on their expressed
maturity dates unless: (a) the Securities have been called for redemption or
funds or securities have been placed in escrow to redeem them on an earlier
call date, in which case such call date will be deemed to be the date upon
which they mature; or (b) such Securities are subject to a "mandatory
tender," in which case such mandatory tender will be deemed to be the date
upon which they mature. The effect of this method of sales charge computation
will be that different sales charge rates will be applied to a Trust based
upon the dollar weighted average maturity of such Trust's portfolio, in
accordance with the following schedules.
9
<PAGE>
For the High Yield Series, in connection with secondary market transactions
the sales charge per Unit will be reduced as set forth below:
<TABLE>
<CAPTION> Secondary
-----------------------------------------------
Dollar Weighted Average Years to Maturity*
2 to 3.99 4 to 9.99 10 or more
-----------------------------------------------
Dollar Amount of Trade Sales Charge (Percent of Public Offering Price)
---------------------- -----------------------------------------------
<S> <C> <C> <C>
$1,000 to $99,999 3.50% 4.50% 5.50%
$100,000 to $499,999 3.25 4.25 5.00
$500,000 to $999,999 3.00 4.00 4.50
$1,000,000 or more 2.75 3.75 4.00
</TABLE>
- ----------------
* If the dollar weighted average maturity of a Trust Fund is from 1 to 1.99
years, the sales charge is 2% and 1.5% of the Public Offering Price for
purchases of $1,000 to $249,999 and $250,000 or more, respectively.
The reduced sales charges resulting from quantity discounts as shown in the
tables above will apply to all purchases of Units on any one day by the same
purchaser from the same Underwriter or dealer and for this purpose purchases
of Units of a Trust Fund will be aggregated with concurrent purchases of
Units of any other unit investment trust that may be offered by the Sponsor.
In addition, for High Yield Series 6 during the initial offering period only,
the reduced sales charges resulting from quantity discounts as shown in the
table above will apply to all purchases of Units by the same person on such
person's initial purchase date or on any day subsequent to such initial
purchase date, provided that the person purchasing the Units purchased at
least 25,000 Units on such initial purchase date; to determine the applicable
sales charge reduction it is necessary to accumulate all purchases made on
the purchaser's initial purchase date and all purchases made subsequent to
such initial purchase date.
For purposes of the reduced sales charges from quantity discounts, Units
purchased in the name of a spouse or child (under 21) of such purchaser will
be deemed to be additional purchases by such purchaser. The reduced sales
charges will also be applicable to a trust or other fiduciary purchasing for
a single trust estate or single fiduciary account.
Units may be purchased in the primary or secondary market 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.
A purchaser desiring to purchase during a 13 month period $500,000 or more of
any combination of series of Ranson Unit Investment Trusts may qualify for a
reduced sales charge by signing a nonbinding Letter of Intent with any single
broker-dealer. After signing a Letter of Intent, at the date total
purchases, less redemptions, of units of any combination of series of Ranson
Unit Investment Trusts by a purchaser (including units purchased in the name
of the spouse of a purchaser or in the name of a child of such purchaser
under 21 years of age) exceed $500,000, the selling broker-dealer, bank or
other will credit the unitholder with cash as a retroactive reduction of the
10
<PAGE>
sales charge on such units equal to the amount which would have been paid for
the total aggregated sale amount. If a purchaser does not complete the
required purchases under the Letter of Intent within the 13 month period, no
such retroactive sales charge reduction shall be made. To qualify as a
purchase under a Letter of Intent each purchase of units of Ranson Unit
Investment Trusts must equal or exceed $100,000.
Unitholders of the various series of Ranson or EVEREN Unit Investment Trusts
Insured Corporate Series who meet the conditions in the next succeeding
sentence may, during the primary offering period of an Investment Grade
Series or a High Yield Series only, acquire Units of such Series at the
reduced sales charge equivalent to purchases during the initial offering
period of 100,000 or more Units. First, the special sales charge discount
only applies to purchases acquired with funds received from distributions of
unscheduled principal payments in connection with units issued in such series
and, second, the minimum purchase must be at least $1,000.
The Sponsor intends to permit officers, directors and employees of the
Sponsor and Evaluator and, at the discretion of the Sponsor, registered
representatives of selling firms to purchase Units of a Trust without a sales
charge, although a transaction processing fee may be imposed on such trades.
Had Units of a Trust been available for sale at the opening of business on
the Initial Date of Deposit, the Public Offering Price would have been as
shown under "Essential Information." The Public Offering Price per Unit of a
Trust on the date of this Prospectus or on any subsequent date will vary from
the amount stated under "Essential Information" in accordance with
fluctuations in the prices of the underlying Securities and the amount of
accrued interest on the Units. On the Initial Date of Deposit, pursuant to an
exemptive order from the Securities and Exchange Commission, the Public
Offering Price at which Units will be sold will not exceed the price
determined as of the opening of business on the Initial Date of Deposit as
shown under "Essential Information"; however, should the value of the
underlying Securities decline, purchasers will, of course, be given the
benefit of such lower price. The aggregate bid and offering side evaluations
of the Securities shall be determined (a) on the basis of current bid or
offering prices of the Securities, (b) if bid or offering prices are not
available for any particular Security, on the basis of current bid or
offering prices for comparable bonds, (c) by determining the value of
Securities on the bid or offer side of the market by appraisal, or (d) by any
combination of the above.
The foregoing evaluations and computations shall be made as of the evaluation
time stated under "Essential Information," on each business day commencing
with the Initial Date of Deposit of the Securities, effective for all sales
made during the preceding 24-hour period.
The interest on the Securities deposited in a Trust, less the related
estimated fees and expenses, is estimated to accrue in the annual amounts per
Unit set forth under "Essential Information." The amount of net interest
income which accrues per Unit may change as Securities mature or are
redeemed, exchanged or sold, or as the expenses of a Trust change or the
number of outstanding Units of a Trust changes.
Although payment is normally made three business days following the order for
purchase, payments may be made prior thereto. A person will become the owner
of Units on the date of settlement provided payment has been received. Cash,
if any, made available to the Sponsor prior to the date of settlement for the
purchase of Units may be used in the Sponsor's business and may be deemed to
be a benefit to the Sponsor, subject to the limitations of the Securities
Exchange Act of 1934. If a Unitholder desires to have certificates
11
<PAGE>
representing Units purchased, such certificates will be delivered as soon as
possible following his written request therefor. For information with respect
to redemption of Units purchased, but as to which certificates requested have
not been received, see "General Information-Redemption" below.
ACCRUED INTEREST. Accrued interest is the accumulation of unpaid interest on
a security from the last day on which interest thereon was paid. Interest on
Securities generally is paid semi-annually (monthly in the case of Ginnie
Maes, if any) although a Trust accrues such interest daily. Because of this,
a Trust always 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 noninterest-bearing to Unitholders, the Trustee
benefits thereby.
COMPARISON OF PUBLIC OFFERING PRICE AND REDEMPTION PRICE. While the Initial
Public Offering Price of Units will be determined on the basis of the current
offering prices of the Securities in a Trust, the redemption price per Unit
(as well as the secondary market price per Unit) at which Units may be
redeemed (see "General Information-Redemption") will be determined on the
basis of the current bid prices of the Securities. As of the opening of
business on the Initial Date of Deposit, the Public Offering Price per Unit
(based on the offering prices of the Securities in a Trust and including the
sales charge) exceeded the redemption price at which Units could have been
redeemed (based upon the current bid prices of the Securities in a Trust) by
the amount shown under "Essential Information." Under current market
conditions the bid prices for U.S. Treasury Obligations are expected to be
approximately 1/8 to 1/4 of 1% lower than the offer price of such
obligations. In the past, bid prices on securities similar to those in the
Trust Funds have been lower than the offering prices thereof by as much as 5%
or more of principal amount in the case of inactively traded bonds or as
little as 1/2 of 1% in the case of actively traded bonds, but the difference
between such offering and bid prices may be expected to average 3% to 4% of
principal amount. For this reason, among others (including fluctuations in
the market prices of the Securities and the fact that the Public Offering
Price includes a sales charge), the amount realized by a Unitholder upon any
redemption of Units may be less than the price paid for such Units.
PUBLIC DISTRIBUTION OF UNITS. The Sponsor intends to qualify the Units for
sale in a number of states (except for an Insured State Trust or uninsured
State Trust which will be qualified for sale only in the state for which such
12
<PAGE>
Trust is named). Units will be sold through dealers who are members of the
National Association of Securities Dealers, Inc. and through others. Sales
may be made to or through dealers at prices which represent discounts from
the Public Offering Price as set forth below. Certain commercial banks are
making Units of the Trust Funds available to their customers on an agency
basis. A portion of the sales charge paid by their customers is retained by
or remitted to the banks in the amount shown in the tables below. Under the
Glass-Steagall Act, banks are prohibited from underwriting Trust Fund Units;
however, the Glass-Steagall Act does permit certain agency transactions and
the banking regulators have indicated that these particular agency
transactions are permitted under such Act. In addition, state securities laws
on this issue may differ from the interpretations of federal law expressed
herein and banks and financial institutions may be required to register as
dealers pursuant to state law. The Sponsor reserves the right to change the
discounts set forth below from time to time. In addition to such discounts,
the Sponsor may, from time to time, pay or allow an additional discount, in
the form of cash or other compensation, to dealers employing registered
representatives who sell, during a specified time period, a minimum dollar
amount of Units of a Trust and other unit investment trusts created by the
Sponsor. The difference between the discount and the sales charge will be
retained by the Sponsor. For Tax-Exempt Portfolios only, any dealer who sells
at least those amounts of Units set forth under "The Tax-Exempt Portfolios-
Underwriting" on the Initial Date of Deposit will be entitled to a concession
or agency commission equal to the corresponding takedown set forth in that
section for those Units sold on the Initial Date of Deposit.
For the High Yield Series, and the primary market concessions or agency
commissions are as follows:
<TABLE>
<CAPTION>
Primary Market
--------------------------------------------------------------------------
Volume Discounts per Unit*
-----------------------------------------------------
Regular Firm Sales or Firm Sales or Firm Sales or
Concession or Sale Sale Sale
Agency Arrangements Arrangements Arrangements
Commission 25,000 to 49,999 50,000 to 99,999 100,000 or more
--------------- ---------------- ---------------- ---------------
Weighted Average Years to Maturity
Under 5 to Under 5 to Under 5 to Under 5 to
Number of $10 Units 5 14.99 5 14.99 5 14.99 5 14.99
- ---------------------- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 to 9,999 Units 2.30% 3.00% 2.40% 3.20% 2.45% 3.30% 2.50% 3.40%
10,000 to 24,999 Units 2.00 2.90 2.10 3.00 2.15 3.10 2.20 3.20
25,000 to 49,999 Units 1.90 2.80 2.00 2.90 2.05 2.90 2.10 3.00
50,000 to 99,999 Units 1.70 2.40 1.80 2.50 1.85 2.50 1.90 2.50
100,000 or more Units 1.40 2.00 1.50 2.10 1.55 2.10 1.60 2.10
</TABLE>
- ------------
* Volume concessions of up to the amount shown can be earned as a marketing
allowance at the discretion of the Sponsor during the initial one month
period after the Initial Date of Deposit by firms who reach cumulative
firm sales or sales arrangement levels of at least $250,000. After a firm
has met the minimum $250,000 volume level, volume concessions may be
given on all trades originated from or by that firm, including those
placed prior to reaching the $250,000 level, and may continue to be given
during the entire initial offering period. Firm sales of any Investment
Grade Series or High Yield Series issued simultaneously can be combined
for the purposes of achieving the volume discount. Only sales through
Ranson & Associates, Inc. qualify for volume discounts and secondary
purchases do not apply. The Sponsor reserves the right to modify or
change those parameters at any time and make the determination of which
firms qualify for the marketing allowance and the amount paid.
13
<PAGE>
The Sponsor reserves the right to reject, in whole or in part, any order for
the purchase of Units.
PROFITS OF SPONSOR AND UNDERWRITERS. In connection with Trusts other than a
Tax-Exempt Portfolio, the Sponsor will receive gross sales charges equal to
the percentage of the Offering Price of the Units of such Trusts stated under
"Public Offering Price" and will pay a fixed portion of such sales charges to
dealers and agents. As set forth under "The Tax-Exempt Portfolios-
Underwriting," the Underwriters of each Tax-Exempt Portfolio will receive
gross sales charges equal to the percentage of the Public Offering Price of
the Units of such Trust Fund stated under "Public Offering Price" and the
Sponsor will receive a fixed portion of such sales charges. In addition, the
Sponsor may realize a profit or a loss resulting from the difference between
the purchase prices of the Securities to the Sponsor and the cost of such
Securities to a Trust Fund, which is based on the offering side evaluation of
the Securities. See "Portfolio" for each Trust. The Sponsor or Underwriters
may also realize profits or losses with respect to Securities deposited in a
Trust which were acquired from underwriting syndicates of which the Sponsor
or any Underwriter was a member. An underwriter or underwriting syndicate
purchases securities from the issuer on a negotiated or competitive bid
basis, as principal, with the motive of marketing such securities to
investors at a profit. The Sponsor and the Underwriters may realize
additional profits or losses during the initial offering period on unsold
Units as a result of changes in the daily evaluation of the Securities in a
Trust.
14
<PAGE>
THE HIGH YIELD SERIES [SIDEBAR GRAPHIC: High Yield Series]
THE TRUST PORTFOLIO
The High Yield Series was formed for the purpose of providing a high level of
current income through investment in a fixed portfolio consisting primarily of
high yield, high risk corporate debt obligations issued after July 18, 1984.
There is, of course, no guarantee that the Trust Fund's objective will be
achieved.
The Trust Fund may be an appropriate investment vehicle for investors who
desire to participate in a portfolio of taxable fixed income securities issued
by corporate obligors with greater diversification than investors might be
able to acquire individually. Diversification of the Trust assets will not
eliminate the risk of loss always inherent in the ownership of securities.
In addition, Bonds of the type deposited in the Trust Fund often are not
available in small amounts.
The selection of Bonds for the Trust Fund was based largely upon the
experience and judgment of the Sponsor. In making such selections the Sponsor
considered the following factors: (a) the price of the Bonds relative to
other issues of similar quality and maturity; (b) the present rating and
credit quality of the issuers of the Bonds and the potential improvement in
the credit quality of such issuers; (c) the diversification of the Bonds as
to location of issuer; (d) the income to the Unitholders of the Trust; (e)
whether the Bonds were issued after July 18, 1984; and (f) the stated
maturity of the Bonds.
As of the Initial Date of Deposit, all of the Bonds in the Trust are rated
"Ba" or better by Moody's or "BB" or better by Standard & Poor's. See
"Appendix: Description of Ratings" and "Portfolio" below. Subsequent to the
Initial Date of Deposit, a Bond may cease to be so rated. If this should
occur, the Trust would not be required to eliminate the Bond from the Trust,
but such event may be considered in the Sponsor's determination to direct
the Trustee to dispose of such investment. See "General Information-Investment
Supervision." The Trust consists of that number of Bonds divided by type (and
percentage of principal amount of the Trust) as set forth in the following
table.
<TABLE>
<CAPTION>
SERIES INFORMATION
<S> <C>
Number of Bonds 19
Debt Obligations (1):
U.S. Corporate 19(100%)
Average life of the Bonds in the Trust (2) 7.8 Years
Percentage of "when, as and if issued" or
"delayed delivery" Bonds purchased by the Trust None
Syndication (3) None
</TABLE>
- ----------------
(1) The portfolio percentage in parenthesis represents the principal amount
of such Bonds to the total principal amount of Bonds in the Trust. For a
discussion of the risks associated with investments in the bonds of such
issuers, see "Risk Factors" below.
(2) The average life of the Bonds in the Trust is calculated based upon the
stated maturities of the Bonds in the Trust (or, with respect to Bonds
for which funds or securities have been placed in escrow to redeem such
Bonds on a stated call date, based upon such call date). The average
life of the Bonds in the Trust may increase or decrease from time to
time as Bonds mature or are called or sold.
(3) The Sponsor and its affiliates have participated as either the sole
underwriter or manager or a member of underwriting syndicates from which
approximately that percentage listed above of the aggregate principal
amount of the Bonds in the Trust were acquired.
HIGH YIELD SERIES HY-1
<PAGE>
RANSON UNIT INVESTMENT TRUSTS SERIES 54
PORTFOLIO
Defined High Yield Corporate Income Series 6
as of the Initial Date of Deposit: February 4, 1997
<TABLE>
<CAPTION>
Rating(2)
-----------------
Standard Cost of
Aggregate & Redemption Bonds
Principal Name of Issuer(1)(5) Coupon Maturity Moody's Poor's Provisions(3) to Trust(4)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 50,000 Advanced Micro Device 11.000% 8/1/2003 Ba1 BB- [email protected] $ 55,813
50,000 Borden Chemical & Plastics 9.500% 5/1/2005 Ba2 BB+ [email protected] 52,188
75,000 Century Communication (6) 0.000% 3/15/2003 Ba3 BB- Non-callable 44,156
50,000 Comcast Corporation 9.125% 10/15/2006 B1 BB- [email protected] 51,063
50,000 Digital Equipment 7.125% 10/15/2002 Ba1 BB+ Non-callable 48,438
100,000 EKCO Group, Inc. 9.250% 4/1/2006 Ba3 BB- [email protected] 100,375
75,000 Fleming Companies, Inc. 10.625% 12/15/2001 Ba3 B+ [email protected] 78,375
50,000 HMH Properties, Inc. 9.500% 5/15/2005 Ba3 BB- [email protected] 52,625
100,000 K-Mart Corporation 8.125% 12/1/2006 Ba3 B+ Non-callable 96,250
75,000 Kaufman & Broad Home Corp 9.375% 5/1/2003 Ba3 B+ [email protected] 76,688
75,000 Lenfest Communications 8.375% 11/1/2005 Ba3 BB+ Non-callable 72,844
50,000 Maxus Energy Corporation 9.375% 11/1/2003 B1 BB- Non-callable 51,875
50,000 Prime Hospitality Corporation 9.250% 1/15/2006 Ba3 BB [email protected] 51,438
75,000 RJR Nabisco, Inc. 8.750% 8/15/2005 Baa3 BBB- Non-callable 77,063
100,000 Southland Corporation(6) 4.500% 6/15/2004 B2 BB+ [email protected] 78,375
100,000 Stone Container Corporation 10.750% 10/1/2002 B1 BB- [email protected] 105,875
50,000 Tele-Communications, Inc. 7.250% 8/1/2005 Ba1 BBB- Non-callable 47,813
100,000 Trump Atlantic 11.250% 5/1/2006 B1 BB- [email protected] 97,625
50,000 Viacom, Inc. 8.000% 7/7/2006 B1 BB- [email protected] 49,188
- ---------- ----------
$1,325,000---------- $1,288,067
========== ==========
</TABLE>
HIGH YIELD SERIES HY-2
<PAGE>
NOTES TO PORTFOLIO:
* These Bonds are "when, as and if issued" or "delayed delivery" and have
expected settlement dates after the "First Settlement Date."
(1) Contracts to acquire Bonds were entered into by the Sponsor on January
30, 1997. All Bonds are represented by regular way contracts, unless
otherwise indicated, for the performance of which an irrevocable letter
of credit has been deposited with the Trustee.
(2) A brief description of the applicable Standard & Poor's and Moody's
rating symbols and their meanings is set forth under "Appendix:
Description of Ratings." "N.R." indicates that the issue has not been
rated by that rating agency. As of the Initial Date of Deposit the Bonds
were rated as follows by Moody's (as a percentage of the Trust's total
assets): Baa, 6%; Ba, 60%; B, 34%.
(3) There is shown under this heading the year in which each issue of Bonds
is initially or currently redeemable and the redemption price for that
year; unless otherwise indicated, each issue continues to be redeemable
at declining prices thereafter, but not below par value. The prices at
which the Bonds may be redeemed or called prior to maturity may or may
not include a premium and, in certain cases, may be less than the cost of
the Bonds to the Trust. In addition, certain Bonds in the portfolio may
be redeemed in whole or in part other than by operation of the stated
redemption provisions under certain unusual or extraordinary
circumstances specified in the instruments setting forth the terms and
provisions of such Bonds. "S.F." indicates that a sinking fund is
established with respect to that issue of Bonds.
(4) During the initial offering period, evaluations of Bonds are made on the
basis of current offering side evaluations of the Bonds. The aggregate
offering price is greater than the aggregate bid price of the Bonds,
which is the basis on which the Redemption Price will be determined for
purposes of redemption of Units after the initial offering period.
(5) Other information regarding the Bonds in the Trust, at the opening of
business on the Initial Date of Deposit, is as follows:
<TABLE>
<CAPTION>
Annual
Cost of Profit or Interest Bid Side
Bonds to (Loss) to Income Value of
Sponsor Sponsor to Trust Bonds
---------- --------- -------- ----------
<S> <C> <C> <C> <C>
High Yield Series 6 $1,276,224 $11,843 $111,781 $1,273,015
</TABLE>
The Cost of Bonds to Sponsor and Profit or (Loss) to Sponsor reflect
portfolio hedging transaction costs, hedging gains or losses, and certain
other carrying costs.
(6) This Bond was issued at an original issue discount. The tax effect of
Bonds issued at an original issue discount is described in "Federal Tax
Status". This Bond has been purchased at a deep discount from the par
value because there is little or no stated interest income thereon. Bonds
which pay no interest are normally described as "zero coupon" bonds. Over
the life of bonds purchased at a deep discount the value of such bonds
will increase such that upon maturity the holders of such bonds will
receive 100% of the principal amount thereof. Approximately 13.21% of the
aggregate principal amount of the Bonds in the Trust were issued at an
original issue discount.
HIGH YIELD SERIES HY-3
<PAGE>
RISK FACTORS
General. An investment in Units of the Trust should be made with an
understanding of the risks that an investment in "high yield", high risk,
fixed rate, corporate debt obligations or "junk bonds" may entail, including
increased credit risks and the risk that the value of the Units will decline,
and may decline precipitously, with increases in interest rates. In recent
years there have been wide fluctuations in interest rates and thus in the
value of fixed-rate, debt obligations generally, Securities such as those
included in the Trust are, under most circumstances, subject to greater
market fluctuations and risk of loss of income and principal than are
investments in lower-yielding, higher rated securities, and their value may
decline precipitously because of increases in interest rates not only because
the increases in rates generally decrease values but also because increased
rates may indicate a slowdown in the economy and a decrease in the value of
assets generally that may adversely affect the credit of issuers of high
yield, high risk securities resulting in a higher incidence of defaults among
high yield, high risk securities. A slowdown in the economy, or a development
adversely affecting an issuer's creditworthiness, may result in the issuer
being unable to maintain earnings or sell assets at the rate and at the
prices, respectively, that are required to produce sufficient cash flow to
meet its interest and principal requirements. For an issuer that has
outstanding both senior commercial bank debt and subordinated high yield,
high risk securities, an increase in interest rates will increase that
issuer's interest expense insofar as the interest rate on the bank debt is
fluctuating. However, many leveraged issuers enter into interest rate
protection agreements to fix or cap the interest on a large portion of their
bank debt. This reduces exposure to increasing interest rates but reduces the
benefit to the issuer of declining rates. The Sponsor cannot predict future
economic policies or their consequences or, therefore, the course or extent
of any similar market fluctuations in the future. The portfolio consists of
Bonds that, in many cases, do not have the benefit of covenants that would
prevent the issuer from engaging in capital restructurings or borrowing
transactions in connection with corporate acquisitions, leveraged buy outs or
restructurings that could have the effect of reducing the ability of the
issuer to meet its obligations and might result in the ratings of the Bonds
and the value of the underlying portfolio being reduced.
The Bonds in the Trust consist of "high yield, high risk" corporate bonds.
"High yield" or "junk" bonds, the generic names for corporate bonds rated
below BBB by Standard & Poor's or below Baa by Moody's Investor Service,
Inc., are frequently issued by corporations in the growth stage of their
development, by established companies whose operations or industries are
depressed or by highly leveraged companies purchased in leveraged buyout
transactions. The market for high yield bonds is very specialized and
investors in it have been predominantly financial institutions. High yield
bonds are generally not listed on a national securities exchange. Trading of
high yield bonds, therefore, takes place primarily in over-the-counter
markets which consist of groups of dealer firms that are typically major
securities firms. Because the high yield bond market is a dealer market,
rather than an auction market, no single obtainable price for a given bond
prevails at any given time. Prices are determined by negotiation between
traders. The existence of a liquid trading market for the Bonds may depend on
whether dealers will make a market in the Bonds. There can be no assurance
that a market will be made for any of the Bonds, that any market for the
Bonds will be maintained or of the liquidity of the Bonds in any markets
made. Not all dealers maintain markets in all high yield bonds. Therefore,
since there are fewer traders in these bonds than there are in "investment
grade" bonds, the bid-offer spread is usually greater for high yield bonds
than it is for investment grade bonds. The price at which the Securities may
be sold to meet redemptions and the value of the Trust will be adversely
affected if trading markets for the Bonds are limited or absent. If the rate
of redemptions is great, the value of the Trust may decline to a level that
requires liquidation (see "General Information-Administration of the Trusts-
Amendment and Termination").
HIGH YIELD SERIES HY-4
<PAGE>
Lower-rated securities tend to offer higher yields than higher-rated
securities with the same maturities because the creditworthiness of the
issuers of lower-rated securities may not be as strong as that of other
issuers. Moreover, if a Bond is recharacterized as equity by the Internal
Revenue Service for Federal income tax purposes, the issuer's interest
deduction with respect to the Bond will be disallowed and this disallowance
may adversely affect the issuer's credit rating. Because investors generally
perceive that there are greater risks associated with the lower-rated
securities in the Trust, the yields and prices of these securities tend to
fluctuate more than higher rated securities with changes in the perceived
quality of the credit of their issuers. In addition, the market value of high
yield, high risk, fixed-income securities may fluctuate more than the market
value of higher-rated securities since high yield, high risk, fixed-income
securities tend to reflect short-term credit development to a greater extent
than higher-rated securities. Lower-rated securities generally involve
greater risks of loss of income and principal than higher-rated securities.
Issuers of lower-rated securities may possess less creditworthiness
characteristics than issuers of higher-rated securities and, especially in
the case of issuers whose obligations or credit standing have recently been
downgraded, may be subject to claims by debtholders, owners of property
leased to the issuer or others which, if sustained, would make it more
difficult for the issuers to meet their payment obligations. High yield, high
risk bonds are also affected by variables such as interest rates, inflation
rates and real growth in the economy. Therefore, investors should consider
carefully the relative risks associated with investment in securities which
carry lower ratings.
The value of the Units reflects the value of the portfolio securities,
including the value (if any) of securities in default. Should the issuer of
any Bond default in the payment of principal or interest, the Trust may incur
additional expenses seeking payment on the defaulted Bond. Because amounts
(if any) recovered by the Trust in payment under the defaulted Bond may not
be reflected in the value of the Units until actually received by the Trust,
and depending upon when a Unitholder purchases or sells his Units, it is
possible that a Unitholder would bear a portion of the cost of recovery
without receiving any portion of the payment recovered.
High yield, high risk bonds are generally subordinated bonds. The payment of
principal (and premium, if any), interest and sinking fund requirements with
respect to subordinated bonds of an issuer is subordinated in right of
payment to the payment of senior bonds of the issuer. Senior bonds generally
include most, if not all, significant debt bonds of an issuer, whether
existing at the time of issuance of subordinated debt or created thereafter.
Upon any distribution of the assets of an issuer with subordinated bonds upon
dissolution, total or partial liquidation or reorganization of or similar
proceeding relating to the issuer, the holders of senior indebtedness will be
entitled to receive payment in full before holders of subordinated
indebtedness will be entitled to receive any payment. Moreover, generally no
payment with respect to subordinated indebtedness may be made while there
exists a default with respect to any senior indebtedness. Thus, in the event
of insolvency, holders of senior indebtedness of an issuer generally will
recover more, ratably, than holders of subordinated indebtedness of that
issuer.
Bonds that are rated lower than BBB by Standard & Poor's or Baa by Moody's,
respectively, should be considered speculative as such ratings indicate a
quality of less than investment grade. Investors should carefully review the
objective of the Trust and consider their ability to assume the risks
involved before making an investment in the Trust. See "Appendix: Description
of Ratings" for a description of speculative ratings issued by Standard &
Poor's and Moody's.
The Trust Agreement authorizes the Sponsor to increase the size of a Trust
and the number of Units thereof by the deposit of additional Securities, or
cash (including a letter of credit) with instructions to purchase additional
HIGH YIELD SERIES HY-5
<PAGE>
Securities, in such Trust and the issuance of a corresponding number of
additional Units. If the Sponsor deposits cash, existing and new investors
may experience a dilution of their investments and a reduction in their
anticipated income because of fluctuations in the prices of the Securities
between the time of the cash deposit and the purchase of the Securities and
because a Trust will pay the associated brokerage fees. To minimize this
effect, a Trust will attempt to purchase the Securities as close to the
evaluation time or as close to the evaluation prices as possible.
FEDERAL TAX STATUS
For purposes of the following discussion and opinions, it is assumed that the
Bonds are debt for Federal income tax purposes. In the opinion of Chapman and
Cutler, special counsel for the Sponsor, under existing law:
1. The Trust is not an association taxable as a corporation for Federal
income tax purposes.
2. Each Unitholder will be considered the owner of a pro rata portion of
each of the Trust assets for Federal income tax purposes under Subpart E,
Subchapter J of Chapter 1 of the Internal Revenue Code of 1986 (the
"Code"); and the income of the Trust will be treated as income of the
Unitholders. Each Unitholder will be considered to have received his pro
rata share of income derived from each Trust asset when such income is
received by the Trust. Each Unitholder will also be required to include
in taxable income for Federal income tax purposes, original issue
discount with respect to his interest in any Bonds held by the Trust at
the same time and in the same manner as though the Unitholder were the
direct owner of such interest.
3. Each Unitholder will have a taxable event when a Bond is disposed of
(whether by sale, exchange, liquidation, redemption, or payment at
maturity) or when the Unitholder redeems or sells his Units. A
Unitholder's tax basis in his Units will equal his tax basis in his pro
rata portion of all the assets of the Trust. Such basis is determined
(before the adjustments described below) by apportioning the tax basis
for the Units among each of the Trust assets according to value as of the
valuation date nearest the date of acquisition of the Units. Unitholders
must reduce the tax basis of their Units for their share of accrued
interest received, if any, on Bonds delivered after the date the
Unitholders pay for their Units to the extent such interest accrued on
such Bonds before the date the Trust acquired ownership of the Bonds (and
the amount of this reduction may exceed the amount of accrued interest
paid to the sellers) and, consequently, such Unitholders may have an
increase in taxable gain or reduction in capital loss upon the
disposition of such Units. Gain or loss upon the sale or redemption of
Units is measured by comparing the proceeds of such sale or redemption
with the adjusted basis of the Units. If the Trustee disposes of Bonds
(whether by sale, exchange, payment on maturity, redemption or
otherwise), gain or loss is recognized to the Unitholder (subject to
various nonrecognition provisions of the Code). The amount of any such
gain or loss is measured by comparing the Unitholder's pro rata share of
the total proceeds from such disposition with his basis for his
fractional interest in the asset disposed of. The basis of each Unit and
of each Bond which was issued with original issue discount (or which has
market discount) 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 the Trust at a premium must
be reduced by the annual amortization of bond premium which the
Unitholder has properly elected to amortize under Section 171 of the
Code. The tax 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
HIGH YIELD SERIES HY-6
<PAGE>
for an amount equal to or less than his original cost. Original issue
discount is effectively treated as interest for Federal income tax
purposes and the amount of the 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 the daily portions of any
original issue discount attributable to the Bonds held by the Trust as
such original issue discount accrues for such year 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 Code. 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. 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 the 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 (similar limitations also apply
to estates and trusts). Unitholders may be required to treat some or all of
the expenses paid by the 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 the Trust exceeds the amount payable by the issuer of the Bond with
respect to such pro rata interest upon the maturity of the Bond, such excess
would be considered 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 the Trust may have been
acquired with "original issue discount." In the case of any Bonds in the
Trust acquired with "original issue discount" that exceeds a "de minimis"
amount as specified in the Code, such discount is includable in taxable
income of the Unitholders on an accrual basis computed daily, without regard
to when payments of interest on such Bonds are received. The Code provides a
complex set of rules regarding the accrual of original issue discount. These
rules provide that original issue discount generally accrues on the basis of
a constant compound interest rate over the term of the Bonds. Unitholders
should consult their tax advisers as to the amount of original issue discount
which accrues.
Special original issue discount rules apply if the purchase price of the Bond
by the Trust exceeds its original issue price plus the amount of original
issue discount which would have previously accrued based upon its issue price
(its "adjusted issue price"). Similarly these special rules would apply to a
Unitholder if the tax basis of his pro rata portion of a Bond issued with
original issue discount exceeds his pro rata portion of its adjusted issue
price. Unitholders should also consult their tax advisers regarding these
special rules.
It is possible that a corporate Bond that has been issued at an original
issue discount may be characterized as a "high-yield discount obligation"
within the meaning of Section 163(e)(5) of the Code. To the extent that such
an obligation is issued at a yield in excess of six percentage points over
the applicable Federal rate, a portion of the original issue discount on such
obligation will be characterized as a distribution on stock (e.g. dividends)
for purposes of the dividends received deduction which is available to
certain corporations with respect to certain dividends received by such
corporation.
HIGH YIELD SERIES HY-7
<PAGE>
Market Discount. If a Unitholder's tax basis in his pro rata portion of Bonds
is less than the allocable portion of such Bond's stated redemption price at
maturity (or, if issued with original issue discount, the allocable portion
of its "revised issue price"), such difference will constitute market
discount unless the amount of market discount is "de minimis" as specified in
the Code. Market discount accrues daily computed on a straight line basis,
unless the Unitholder elects to calculate accrued market discount under a
constant yield method. Unitholders should consult their tax advisors
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 the Trust, and on the sale by a Unitholder of Units, unless
a Unitholder elects to include the accrued market discount in taxable income
as such discount accrues. If a Unitholder does not elect to annually include
accrued market discount in taxable income as it accrues, deductions for any
interest expense incurred by the Unitholder which is incurred to purchase or
carry his Units will be reduced by such accrued market discount. In general,
the portion of any interest expense which was not currently deductible would
ultimately be deductible when the accrued market discount is included in
income. Unitholders should consult their tax advisers regarding whether an
election should be made to include market discount in income as it accrues
and as to the amount of interest expense which may not be currently
deductible.
Computation of the Unitholder's Tax Basis. The tax basis of a Unitholder with
respect to his interest in a Bond is increased by the amount of original
issue discount (and market discount, if the Unitholder elects to include
market discount, if any, on the Bonds held by the Trust in income as it
accrues) thereon properly included in the Unitholder's gross income as
determined for Federal income tax purposes and reduced by the amount of any
amortized 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 the
Trust or Disposition of Units. A Unitholder will recognize taxable capital
gain (or loss) when all or part of his pro rata interest in a Bond is
disposed of in a taxable transaction for an amount greater (or less) than his
tax basis therefor. As previously discussed, gain realized on the disposition
of the interest of a Unitholder in any Bond deemed to have been acquired with
market discount will be treated as ordinary income to the extent the gain
does not exceed the amount of accrued market discount not previously taken
into income. Any capital gain or loss arising from the disposition of a Bond
by the Trust or the disposition of Units by a Unitholder will be short-term
capital gain or loss unless the Unitholder has held his Units for more than
one year in which case such capital gain or loss will generally be 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.
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
HIGH YIELD SERIES HY-8
<PAGE>
under the market discount rules (assuming no election was made by the
Unitholder to include market discount in income as it accrues) as previously
discussed.
"The Revenue Reconciliation Act of 1993" (the "Tax Act") raised tax rates on
ordinary income while capital gains remain subject to a 28 percent maximum
stated rate for taxpayers other than corporations. Because some or all
capital gains are taxed at a comparatively lower rate under the Tax Act, the
Tax Act includes a provision that characterizes capital gains as ordinary
income in the case of certain financial transactions that are "conversion
transactions" effective for transactions entered into after April 30, 1993.
Unitholders and prospective investors should consult with their tax advisers
regarding the potential effect of this provision on their investment in
Units.
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 the Trust), the foreign investor does not own, directly or
indirectly, 10% or more of the total combined voting power of all classes of
voting stock of the issuer of the Bond and the foreign investor is not a
controlled foreign corporation related (within the meaning of Section
864(d)(4) of the Code) to the issuer of the Bond, (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 above) will be requested to provide the
Unitholder's taxpayer identification number to the Trustee and to certify
that the Unitholder has not been notified that payments to the Unitholder are
subject to back-up withholding. If the proper taxpayer identification number
and appropriate certification are not provided when requested, distributions
by the Trust to such Unitholder (including amounts received upon the
redemption of the Units) will be subject to back-up withholding.
The foregoing discussion relates only to United States Federal income taxes;
Unitholders may be subject to state and local taxation in other jurisdictions
(including a foreign investor's country of residence). Unitholders should
consult their tax advisers regarding potential state, local, or foreign
taxation with respect to the Units.
HIGH YIELD SERIES HY-9
<PAGE>
TAX REPORTING AND REALLOCATION
Because each Trust receives interest and makes monthly distributions based
upon such Trust's expected total collections of interest and any anticipated
expenses, certain tax reporting consequences may arise. Each Trust is
required to report Unitholder information to the Internal Revenue Service
("IRS"), based upon the actual collection of interest by such Trust on the
securities in such Trust, without regard to such Trust's expenses or to such
Trust's payments to Unitholders during the year. If distributions to
Unitholders exceed interest collected, the difference will be reported as a
return of principal which will reduce a Unitholder's cost basis in its Units
(and its pro rata interest in the securities in the Trust). A Unitholder must
include in taxable income the amount of income reported by a Trust to the IRS
regardless of the amount distributed to such Unitholder. If a Unitholder's
share of taxable income exceeds income distributions made by a Trust to such
Unitholder, such excess is in all likelihood attributable to the payment of
miscellaneous expenses of such Trust which will not be deductible by an
individual Unitholder as an itemized deduction except to the extent that the
total amount of certain itemized deductions, such as investment expenses
(which would include the Unitholder's share of Trust expenses), tax return
preparation fees and employee business expenses, exceeds 2% of such
Unitholder's adjusted gross income. Alternatively, in certain cases, such
excess may represent an increase in the Unitholder's tax basis in the Units
owned. Investors with questions regarding these issues should consult with
their tax advisers.
ESTIMATED CASH FLOWS TO UNITHOLDERS
The table below sets forth the estimated distributions of interest and
principal to Unitholders on a per Unit basis. The table assumes no changes in
expenses, no changes in the current interest rates, no exchanges,
redemptions, sales or prepayments of the underlying Bonds prior to maturity
or expected retirement date and the receipt of principal upon maturity or
expected retirement date. To the extent the foregoing assumptions change
actual distributions will vary.
<TABLE>
<CAPTION>
Estimated Estimated Estimated
Interest Principal Total
Dates Distribution Distribution Distribution
--------------------------------- ------------ ------------ ------------
<C> <S> <S> <S>
Monthly
Mar 15, 1997 $0.05468 $0.05468
Apr 15, 1997 to Apr 15, 2000 $0.07030 $0.07030
May 15, 2000 $0.07030 $0.56604 $0.63634
Jun 15, 2000 to Sep 15, 2001 $0.06588 $0.06588
Oct 15, 2001 $0.06588 $0.75472 $0.82060
Nov 15, 2001 $0.05912 $0.05912
Dec 15, 2001 $0.05912 $0.56604 $0.62516
Jan 15, 2002 to Sep 15, 2002 $0.05411 $0.05411
Oct 15, 2002 $0.05411 $0.37736 $0.43147
Nov 15, 2002 to Dec 15, 2002 $0.05187 $0.05187
Jan 15, 2003 $0.05187 $0.37736 $0.42923
Feb 15, 2003 $0.04900 $0.04900
Mar 15, 2003 $0.04900 $0.56604 $0.61504
</TABLE>
HIGH YIELD SERIES HY-10
<PAGE>
<TABLE>
<CAPTION>
ESTIMATED CASH FLOWS TO UNITHOLDERS-(CONTINUED)
Estimated Estimated Estimated
Interest Principal Total
Dates Distribution Distribution Distribution
--------------------------------- ------------ ------------ ------------
<C> <S> <S> <S>
Monthly
Apr 15, 2003 $0.04900 $0.04900
May 15, 2003 $0.04900 $0.37736 $0.42636
Jun 15, 2003 to Jul 15, 2003 $0.04601 $0.04601
Aug 15, 2003 $0.04601 $0.37736 $0.42337
Sep 15, 2003 to Oct 15, 2003 $0.04255 $0.04255
Nov 15, 2003 $0.04255 $0.37736 $0.41991
Dec 15, 2003 $0.03960 $0.03960
Jan 15, 2004 $0.03960 $0.37736 $0.41696
Feb 15, 2004 to Mar 15, 2004 $0.03669 $0.03669
Apr 15, 2004 $0.03669 $0.75472 $0.79141
May 15, 2004 $0.03088 $0.03088
Jun 15, 2004 $0.03088 $0.75472 $0.78560
Jul 15, 2004 to Apr 15, 2005 $0.02805 $0.02805
May 15, 2005 $0.02805 $0.37736 $0.40541
Jun 15, 2005 to Jul 15, 2005 $0.02506 $0.02506
Aug 15, 2005 $0.02506 $0.94340 $0.96846
Sep 15, 2005 to Oct 15, 2005 $0.01865 $0.01865
Nov 15, 2005 $0.01865 $0.56600 $0.58465
Dec 15, 2005 to Apr 15, 2006 $0.01470 $0.01470
May 15, 2006 $0.01470 $0.75472 $0.76942
Jun 15, 2006 to Nov 15, 2006 $0.00511 $0.00511
Dec 15, 2006 $0.00511 $0.75472 $0.75983
</TABLE>
HIGH YIELD SERIES HY-11
<PAGE>
GENERAL INFORMATION [SIDEBAR GRAPHIC: General Information]
RATING OF UNITS
Standard & Poor's has rated the Units of any U.S. Treasury Portfolio Series
or GNMA Portfolio Series "AAA." Because the Securities in an Insured Trust
Fund in a Tax-Exempt Portfolio Series or an Insured Corporate Series are
insured as to the scheduled payment of principal and interest and on the
basis of the financial condition and the method of operation of the insurance
companies referred to in "Insurance on the Bonds" for each such Trust,
Standard & Poor's has also rated the Units of any Insured Trust Fund "AAA."
This is the highest rating assigned by Standard & Poor's. Standard & Poor's
has been compensated by the Sponsor for its services in rating Units of the
Trust Funds.
A Standard & Poor's rating (as described by Standard & Poor's) on the units
of an investment trust (hereinafter referred to collectively as "units" or
"trust") is a current assessment of creditworthiness with respect to the
investments held by such trust. This assessment takes into consideration the
financial capacity of the issuers and of any guarantors, insurers, lessees,
or mortgagors with respect to such investments. The assessment, however, does
not take into account the extent to which trust expenses or portfolio asset
sales for less than the trust's purchase price will reduce payment to the
Unitholder of the interest and principal required to be paid on the portfolio
assets. In addition, the rating is not a recommendation to purchase, sell, or
hold units, inasmuch as the rating does not comment as to market price of the
units or suitability for a particular investor.
Trusts rated "AAA" are composed exclusively of assets that are rated "AAA" by
Standard & Poor's or have, in the opinion of Standard & Poor's, credit
characteristics comparable to assets rated "AAA," or certain short-term
investments. Standard & Poor's defines its "AAA" rating for such assets as
the highest rating assigned by Standard & Poor's to a debt obligation.
Capacity to pay interest and repay principal is very strong.
Securities in an Insured Trust Fund for which insurance has been obtained by
the Issuer or the Sponsor (all of which were rated "AAA" by Standard & Poor's
and/or "Aaa" by Moody's Investors Service, Inc.) may or may not have a higher
yield than uninsured Securities rated "AAA" by Standard & Poor's or "Aaa" by
Moody's Investors Service, Inc. In selecting Securities for the portfolios
of an Insured Trust Fund, the Sponsor has applied the criteria hereinbefore
described.
TRUST INFORMATION
Because certain of the Securities in certain of the Trusts may from time to
time under certain circumstances be sold or redeemed or will mature in
accordance with their terms and because the proceeds from such events will be
distributed to Unitholders and will not be reinvested, no assurance can be
given that a Trust will retain for any length of time its present size and
composition. Neither the Sponsor nor the Trustee shall be liable in any way
for any default, failure or defect in any Security. In the event of a failure
to deliver any Security that has been purchased for a Trust under a contract,
including those securities purchased on a "when, as and if issued" basis
("Failed Securities"), the Sponsor is authorized under the Trust Agreement to
direct the Trustee to acquire other securities ("Replacement Securities") to
make up the original corpus of such Trust.
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Securities in certain of the Trust Funds may have been purchased on a "when,
as and if issued" or delayed delivery basis with delivery expected to take
place after the First Settlement Date. See "Notes to Portfolios" for each
Trust. Accordingly, the delivery of such Securities may be delayed or may not
occur. Interest on these Securities begins accruing to the benefit of
Unitholders on their respective dates of delivery. To the extent any
Municipal Bonds in a Tax-Exempt Portfolio are actually delivered to such
Trust after their respective expected dates of delivery, Unitholders who
purchase Units in such Trust prior to the date such "when, as and if issued"
or "delayed delivery" Municipal Bonds are actually delivered to the Trustee
would, to the extent such income is not offset by a reduction in the
Trustee's fee (or, to the extent necessary, other expenses), be required to
reduce their tax basis in their Units of such Trust since the interest
accruing on such Municipal Bonds during the interval between their purchase
of Units and the actual delivery of such Municipal Bonds would, for tax
purposes, be considered a non-taxable return of principal rather than as tax-
exempt interest. The result of such adjustment, if necessary, would be,
during the first year only, that the Estimated Long-Term Returns may be, and
the Estimated Current Returns would be, slightly lower than those shown
herein, assuming such Trust portfolios and estimated annual expenses do not
vary. See footnote (4) to "Essential Information." Unitholders of all Trusts
will be "at risk" with respect to any "when, as and if issued" or "delayed
delivery" Securities included in their respective Trust (i.e., may derive
either gain or loss from fluctuations in the evaluation of such Securities)
from the date they commit for Units.
The Replacement Securities must be purchased within 20 days after delivery of
the notice that a contract to deliver a Security will not be honored and the
purchase price may not exceed the amount of funds reserved for the purchase
of the Failed Securities. The Replacement Securities (i) must be payable in
United States currency, (ii) must be purchased at a price that results in a
yield to maturity and a current return at least equal to that of the Failed
Securities as of the Initial Date of Deposit, (iii) shall not be "when, as
and if issued" or restricted securities, (iv) must satisfy any rating
criteria for Securities originally included in such Trust, (v) not cause the
Units of such Trust to cease to be rated AAA by Standard & Poor's if the
Units were so rated on the Initial Date of Deposit and (vi) in the case of
Insured Trust Funds must be insured prior to acquisition by a Trust. In
connection with an Insured Corporate Series, an Investment Grade Series or
High Yield Series, Replacement Securities also must be bonds, debentures,
notes or other straight debt obligations (whether secured or unsecured and
whether senior or subordinated) without equity or other conversion features,
with fixed maturity dates substantially the same as those of the Failed
Securities having no warrants or subscription privileges attached and (ii) be
issued after July 18, 1984 if interest thereon is United States source
income. In connection with a Tax-Exempt Portfolio only, Replacement
Securities must also (i) be tax-exempt bonds issued by the appropriate state
or counties, municipalities, authorities or political subdivisions thereof
and (ii) have a fixed maturity date of at least 3 years if the bonds are to
be deposited in a trust other than a long-term trust or at least 10 years if
the bonds are to be deposited in a long-term trust. Whenever a Replacement
Security is acquired for a Trust, the Trustee shall, within five days
thereafter, notify all Unitholders of the Trust of the acquisition of the
Replacement Security and shall, on the next monthly distribution date which
is more than 30 days thereafter, make a pro rata distribution of the amount,
if any, by which the cost to the Trust of the Failed Security exceeded the
cost of the Replacement Security. Once all of the Securities in a Trust are
acquired, the Trustee will have no power to vary the investments of the
Trust, i.e., the Trustee will have no managerial power to take advantage of
market variations to improve a Unitholder's investment.
If the right of limited substitution described in the preceding paragraphs is
not utilized to acquire Replacement Securities in the event of a failed
contract, the Sponsor will refund the sales charge attributable to such
Failed Securities to all Unitholders of the Trust Fund and the Trustee will
distribute the principal and accrued interest attributable to such Failed
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Securities not more than 30 days after the date on which the Trustee would
have been required to purchase a Replacement Security. In addition,
Unitholders should be aware that, at the time of receipt of such principal,
they may not be able to reinvest such proceeds in other securities at a yield
equal to or in excess of the yield which such proceeds would have earned for
Unitholders of such Trust Fund.
Whether or not a Replacement Security is acquired, an amount equal to the
accrued interest (at the coupon rate of the Failed Securities) will be paid
to Unitholders of the Trust Fund to the date the Sponsor removes the Failed
Securities from the Trust Fund if the Sponsor determines not to purchase a
Replacement Security or to the date of substitution if a Replacement Security
is purchased. All such interest paid to Unitholders which accrued after the
date of settlement for a purchase of Units will be paid by the Sponsor. In
the event a Replacement Security could not be acquired by a Trust, the net
annual interest income per Unit for such Trust would be reduced and the
Estimated Current Return and Estimated Long-Term Return might be lowered.
Subsequent to the Initial Date of Deposit, a Security may cease to be rated
or its rating may be reduced below any minimum required as of the Initial
Date of Deposit. Neither event requires the elimination of such investment
from a Trust, but may be considered in the Sponsor's determination to direct
the Trustee to dispose of such investment. See "General Information-
Investment Supervision."
The Sponsor may not alter the portfolio of a Trust except upon the happening
of certain extraordinary circumstances. See "General Information-Investment
Supervision." Certain of the Securities may be subject to optional call or
mandatory redemption pursuant to sinking fund provisions, in each case prior
to their stated maturity. A bond subject to optional call is one which is
subject to redemption or refunding prior to maturity at the option of the
issuer, often at a premium over par. A refunding is a method by which a bond
issue is redeemed, at or before maturity, by the proceeds of a new bond
issue. A bond subject to sinking fund redemption is one which is subject to
partial call from time to time at par with proceeds from a fund accumulated
for the scheduled retirement of a portion of an issue to maturity. Special or
extraordinary redemption provisions may provide for redemption at par of all
or a portion of an issue upon the occurrence of certain circumstances, which
may be prior to the optional call dates shown under "Portfolio" for each
Trust. Redemption pursuant to optional call provisions is more likely to
occur, and redemption pursuant to special or extraordinary redemption
provisions may occur, when the Securities have an offering side evaluation
which represents a premium over par, that is, when they are able to be
refinanced at a lower cost. The proceeds from any such call or redemption
pursuant to sinking fund provisions, as well as proceeds from the sale of
Securities and from Securities which mature in accordance with their terms
from a Trust, unless utilized to pay for Units tendered for redemption, will
be distributed to Unitholders of such Trust and will not be used to purchase
additional Securities for such Trust. Accordingly, any such call, redemption,
sale or maturity will reduce the size and diversity of a Trust and the net
annual interest income of such Trust and may reduce the Estimated Current
Return and the Estimated Long-Term Return. See "General Information-Interest,
Estimated Long-Term Return and Estimated Current Return." The call,
redemption, sale or maturity of Securities also may have tax consequences to
a Unitholder. See "Federal Tax Status" for each Trust. Information with
respect to the call provisions and maturity dates of the Securities is
contained in "Portfolio" for each Trust.
Each Unit of a Trust represents an undivided fractional interest in the
Securities deposited therein, in the ratio shown under "Essential
Information." Units may be purchased and certificates, if requested, will be
issued in denominations of one Unit or any multiple or fraction thereof,
subject to each Trust's minimum investment requirement of one Unit. Fractions
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of Units will be computed to three decimal points. To the extent that Units
of a Trust are redeemed, the principal amount of Securities in such Trust
will be reduced and the undivided fractional interest represented by each
outstanding Unit of such Trust will increase. See "General Information-
Redemption."
Certain of the Securities in certain of the Trusts may have been acquired at
a market discount from par value at maturity. The coupon interest rates on
the discount securities at the time they were purchased and deposited in the
Trusts were lower than the current market interest rates for newly issued
bonds of comparable rating and type. If such interest rates for newly issued
comparable securities increase, the market discount of previously issued
securities will become greater, and if such interest rates for newly issued
comparable securities decline, the market discount of previously issued
securities will be reduced, other things being equal. Investors should also
note that the value of securities purchased at a market discount will
increase in value faster than securities purchased at a market premium if
interest rates decrease. Conversely, if interest rates increase, the value of
securities purchased at a market discount will decrease faster than
securities purchased at a market premium. In addition, if interest rates
rise, the prepayment risk of higher yielding, premium securities and the
prepayment benefit for lower yielding, discount securities will be reduced. A
discount security held to maturity will have a larger portion of its total
return in the form of taxable income and capital gain and loss in the form of
tax-exempt interest income than a comparable security newly issued at current
market rates. See "Federal Tax Status." Market discount attributable to
interest changes does not indicate a lack of market confidence in the issue.
Neither the Sponsor nor the Trustee shall be liable in any way for any
default, failure or defect in any of the Securities.
Certain of the Securities in certain of the Trust Funds may be "zero coupon"
bonds, i.e., an original issue discount bond that does not provide for the
payment of current interest. Zero coupon bonds are purchased at a deep
discount because the buyer receives only the right to receive a final payment
at the maturity of the bond and does not receive any periodic interest
payments. The effect of owning deep discount bonds which do not make current
interest payments (such as the zero coupon bonds) is that a fixed yield is
earned not only on the original investment but also, in effect, on all
discount earned during the life of such obligation. This implicit
reinvestment of earnings at the same rate eliminates the risk of being unable
to reinvest the income on such obligation at a rate as high as the implicit
yield on the discount obligation, but at the same time eliminates the
holder's ability to reinvest at higher rates in the future. For this reason,
zero coupon bonds are subject to substantially greater price fluctuations
during periods of changing market interest rates than are securities of
comparable quality which pay interest currently. For the Federal tax
consequences of original issue discount securities such as the zero coupon
bonds, see "Federal Tax Status" for each Trust.
To the best of the Sponsor's knowledge, there is no litigation pending as of
the Initial Date of Deposit in respect of any Security which might reasonably
be expected to have a material adverse effect on the Trust Funds. At any time
after the Initial Date of Deposit, litigation may be instituted on a variety
of grounds with respect to the Securities. The Sponsor is unable to predict
whether any such litigation may be instituted, or if instituted, whether such
litigation might have a material adverse effect on the Trust Funds. The
Sponsor and the Trustee shall not be liable in any way for any default,
failure or defect in any Security.
GENERAL INFORMATION GI-4
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RETIREMENT PLANS
Units of the Trusts (other than a Tax-Exempt Portfolio) may be well suited
for purchase by Individual Retirement Accounts, Keogh Plans, pension funds
and other qualified retirement plans. Generally, capital gains and income
received under each of the foregoing plans are deferred from federal
taxation. All distributions from such plans are generally treated as ordinary
income but may, in some cases, be eligible for special income averaging or
tax-deferred rollover treatment. Investors considering participation in any
such plan should review specific tax laws related thereto and should consult
their attorneys or tax advisers with respect to the establishment and
maintenance of any such plan. Such plans are offered by brokerage firms and
other financial institutions. The Trusts will waive the $1,000 minimum
investment requirement for IRA accounts. The minimum investment is $250 for
tax-deferred plans such as IRA accounts. Fees and charges with respect to
such plans may vary.
The Trustee has agreed to act as custodian for certain retirement plan
accounts. An annual fee of $12.00 per account, if not paid separately, will
be assessed by the Trustee and paid through the liquidation of shares of the
reinvestment account. An individual wishing the Trustee to act as custodian
must complete an Ranson UIT/IRA application and forward it along with a check
made payable to The Bank of New York. Certificates for Individual Retirement
Accounts cannot be issued.
DISTRIBUTION REINVESTMENT
Each Unitholder of a Trust may elect to have distributions of principal
(including capital gains, if any) or interest or both automatically invested
without charge in shares of any mutual fund which is registered in such
Unitholder's state of residence and is 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 generally will differ significantly from that of the
Trusts, Unitholders should carefully consider the consequences before
selecting such Kemper Funds for reinvestment. Detailed information with
respect to the investment objectives and the management of the Funds is
contained in their respective prospectuses, which can be obtained from the
Sponsor upon request. An investor should read the prospectus of the
reinvestment fund selected prior to making the election to reinvest.
Unitholders who desire to have such distributions automatically reinvested
should inform their broker at the time of purchase or should file with the
Program Agent a written notice of election.
Unitholders who are receiving distributions in cash may elect to participate
in distribution reinvestment by filing with the Program Agent an election to
have such distributions reinvested without charge. Such election must be
received by the Program Agent at least ten days prior to the Record Date
applicable to any distribution in order to be in effect for such Record Date.
Any such election shall remain in effect until a subsequent notice is
received by the Program Agent. See "General Information-Unitholders-
Distributions to Unitholders."
The Program Agent is The Bank of New York. All inquiries concerning
participation in distribution reinvestment should be directed to the Program
Agent at its corporate trust office.
GENERAL INFORMATION GI-5
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INTEREST, ESTIMATED LONG-TERM RETURN AND ESTIMATED CURRENT RETURN
As of the opening of business on the Initial Date of Deposit, the Estimated
Long-Term Return and the Estimated Current Return, if applicable, for each
Trust were as set forth in the "Essential Information" for each Trust.
Estimated Current Return is calculated by dividing the estimated net annual
interest income per Unit by the Public Offering Price. The estimated net
annual interest income per Unit will vary with changes in fees and expenses
of the Trustee, the Sponsor and the Evaluator and with the principal
prepayment, redemption, maturity, exchange or sale of the Securities while
the Public Offering Price will vary with changes in the offering price of the
underlying Securities and accrued interest; therefore, there is no assurance
that the present Estimated Current Return will be realized in the future.
Estimated Long-Term Return is calculated using a formula which (1) takes into
consideration, and determines and factors in the relative weightings of, the
market values, yields (which takes into account the amortization of premiums
and the accretion of discounts) and estimated retirements or average life of
all of the Securities in a Trust and (2) takes into account the expenses and
sales charge associated with each Trust Unit. Since the market values and
estimated retirements of the Securities and the expenses of a Trust will
change, there is no assurance that the present Estimated Long-Term Return
will be realized in the future. Estimated Current Return and Estimated Long-
Term Return are expected to differ because the calculation of Estimated Long-
Term Return reflects the estimated date and amount of principal returned
while Estimated Current Return calculations include only net annual interest
income and Public Offering Price.
In order to acquire certain of the Securities contracted for by a Trust, it
may be necessary for the Sponsor or Trustee to pay on the dates for delivery
of such Securities amounts covering accrued interest on such Securities which
exceed the amount which will be made available in the letter of credit
furnished by the Sponsor on the Initial Date of Deposit. The Trustee has
agreed to pay any amounts necessary to cover any such excess and will be
reimbursed therefor, without interest, when funds become available from
interest payments on the Securities deposited in that Trust.
Payments received in respect of mortgages underlying Ginnie Maes in each
series of a GNMA Portfolio will consist of a portion representing interest
and a portion representing principal. Although the aggregate monthly payment
made by the obligor on each mortgage remains constant (aside from optional
prepayments of principal), in the early years most of each such payment will
represent interest, while in later years, the proportion representing
interest will decline and the proportion representing principal will
increase. However, by reason of optional prepayments, principal payments in
the earlier years on mortgages underlying Ginnie Maes may be substantially in
excess of those required by the amortization schedules of such mortgages.
Therefore, principal payments in later years may be substantially less since
the aggregate unpaid principal balances of such underlying mortgages may have
been greatly reduced. To the extent that the underlying mortgages bearing
higher interest rates in a GNMA Portfolio are prepaid faster than the other
underlying mortgages, the net annual interest rate per Unit and the Estimated
Current Return on the Units of a GNMA Portfolio can be expected to decline.
Monthly payments to the Unitholders of a GNMA Portfolio will reflect all of
these factors.
MARKET FOR UNITS
After the initial offering period, while not obligated to do so, the Sponsor
intends to, and certain of the Underwriters may, subject to change at any
time, maintain a market for Units of the Trust Funds offered hereby and to
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continuously offer to purchase said Units at prices, determined by the
Evaluator, based on the aggregate bid prices of the underlying Securities in
such Trusts, together with accrued interest to the expected dates of
settlement. To the extent that a market is maintained during the initial
offering period, the prices at which Units will be repurchased will be based
upon the aggregate offering side evaluation of the Securities in the Trusts.
The aggregate bid prices of the underlying Securities in each Trust are
expected to be less than the related aggregate offering prices (which is the
evaluation method used during the initial public offering period).
Accordingly, Unitholders who wish to dispose of their Units should inquire of
their bank or broker as to current market prices in order to determine
whether there is in existence any price in excess of the Redemption Price
and, if so, the amount thereof.
The offering price of any Units resold by the Sponsor or Underwriters will be
in accord with that described in the currently effective Prospectus
describing such Units. Any profit or loss resulting from the resale of such
Units will belong to the Sponsor and/or the Underwriters. The Sponsor and/or
the Underwriters may suspend or discontinue purchases of Units of any Trust
if the supply of Units exceeds demand, or for other business reasons.
REDEMPTION
A Unitholder who does not dispose of Units in the secondary market described
above may cause Units to be redeemed by the Trustee by making a written
request to the Trustee, 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 redemptions by individual account owners (including joint
owners). Additional documentation may be requested, and a signature guarantee
is always required, from corporations, executors, administrators, trustees,
guardians or associations. The signatures must be guaranteed by a participant
in the Securities Transfer Agents Medallion Program ("STAMP") or such other
guarantee program in addition to, or in substitution for, STAMP, as may be
accepted by the Trustee. A certificate should only be sent by registered or
certified mail for the protection of the Unitholder. Since tender of the
certificate is required for redemption when one has been issued, Units
represented by a certificate cannot be redeemed until the certificate
representing such Units has been received by the purchasers.
Redemption shall be made by the Trustee on the 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 such Trust,
determined as set forth below under "Computation of Redemption Price," as of
the evaluation time stated under "Essential Information," next following such
tender, multiplied by the number of Units being redeemed. Any Units redeemed
shall be canceled and any undivided fractional interest in the Trust
extinguished. The price received upon redemption might be more or less than
the amount paid by the Unitholder depending on the value of the Securities in
the Trust at the time of redemption.
Under regulations issued by the Internal Revenue Service, the Trustee is
required to withhold a certain percentage of the principal amount of a Unit
redemption if the Trustee has not been furnished the redeeming Unitholder's
tax identification number in the manner required by such regulations. Any
amount so withheld is transmitted to the Internal Revenue Service and may be
recovered by the Unitholder only when filing a tax return. Under normal
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circumstances the Trustee obtains the Unitholder's tax identification number
from the selling broker. However, any time a Unitholder elects to tender
Units for redemption, such Unitholder should make sure that the Trustee has
been provided a certified tax identification number in order to avoid this
possible "back-up withholding." In the event the Trustee has not been
previously provided such number, one must be provided at the time redemption
is requested.
Any amounts paid on redemption representing interest shall be withdrawn from
the Interest Account for such Trust to the extent that funds are available
for such purpose. All other amounts paid on redemption shall be withdrawn
from the Principal Account for such Trust. The Trustee is empowered to sell
Securities for a Trust in order to make funds available for the redemption of
Units of such Trust. Such sale may be required when Securities would not
otherwise be sold and might result in lower prices than might otherwise be
realized. To the extent Securities are sold, the size and diversity of a
Trust will be reduced.
In the case of a U.S. Treasury Portfolio or a GNMA Portfolio, Securities will
be sold by the Trustee so as to maintain, as closely as practicable, the
original percentage relationship between the principal amounts of the
Securities in such Trusts. The Securities to be sold for purposes of
redeeming Units will be selected from a list supplied by the Sponsor. The
Securities will be chosen for this list by the Sponsor on the basis of such
market and credit factors as it may determine are in the best interests of
such Trusts. Provision is made under the related Trust Agreements for the
Sponsor to specify minimum face amounts in which blocks of Securities are to
be sold in order to obtain the best price available. While such minimum
amounts may vary from time to time in accordance with market conditions, it
is anticipated that the minimum face amounts which would be specified would
range from $25,000 to $100,000. Sales may be required at a time when the
Securities would not otherwise be sold and might result in lower prices than
might otherwise be realized. Moreover, due to the minimum principal amount in
which U.S. Treasury Obligations and Ginnie Maes may be required to be sold,
the proceeds of such sales may exceed the amount necessary for payment of
Units redeemed. To the extent not used to meet other redemption requests in
such Trusts, such excess proceeds will be distributed pro rata to all
remaining Unitholders of record of such Trusts, unless reinvested in
substitute Securities. See "General Information-Investment Supervision."
The Trustee is irrevocably authorized in its discretion, if an Underwriter
does not elect to purchase any Unit tendered for redemption, in lieu of
redeeming such Units, to sell such Units in the over-the-counter market for
the account of tendering Unitholders at prices which will return to the
Unitholders amounts in cash, net after brokerage commissions, transfer taxes
and other charges, equal to or in excess of the Redemption Price for such
Units. In the event of any such sale, the Trustee shall pay the net proceeds
thereof to the Unitholders on the day they would otherwise be entitled to
receive payment of the Redemption Price.
The right of redemption may be suspended and payment postponed (1) for any
period during which the New York Stock Exchange is closed, other than
customary weekend and holiday closings, or during which (as determined by the
Securities and Exchange Commission) trading on the New York Stock Exchange is
restricted; (2) for any period during which an emergency exists as a result
of which disposal by the Trustee of Securities is not reasonably practicable
or it is not reasonably practicable to fairly determine the value of the
underlying Securities in accordance with the Trust Agreements; or (3) for
such other period as the Securities and Exchange Commission may by order
permit. The Trustee is not liable to any person in any way for any loss or
damage which may result from any such suspension or postponement.
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Computation of Redemption Price. The Redemption Price for Units of each Trust
is computed by the Evaluator as of the evaluation time stated under
"Essential Information" next occurring after the tendering of a Unit for
redemption and on any other business day desired by it, by:
A. adding: (1) the cash on hand in the Trust other than cash deposited in
the Trust to purchase Securities not applied to the purchase of such
Securities; (2) the aggregate value of each issue of the Securities
(including "when issued" contracts, if any) held in the Trust as
determined by the Evaluator on the basis of bid prices therefor; and (3)
interest accrued and unpaid on the Securities in the Trust as of the date
of computation;
B. deducting therefrom (1) amounts representing any applicable taxes or
governmental charges payable out of the Trust and for which no deductions
have been previously made for the purpose of additions to the Reserve
Account described under "General Information-Expenses of the Trusts"; (2)
an amount representing estimated accrued expenses of the Trust, including
but not limited to fees and expenses of the Trustee (including legal and
auditing fees and any insurance costs), the Evaluator, the Sponsor and
bond counsel, if any; (3) cash held for distribution to Unitholders of
record as of the business day prior to the evaluation being made; and (4)
other liabilities incurred by the Trust; and
C. finally dividing the results of such computation by the number of Units
of the Trust outstanding as of the date thereof.
UNITHOLDERS
Ownership of Units. Ownership of Units of any Trust will not be evidenced by
certificates unless a Unitholder, the Unitholder's registered broker/dealer
or the clearing agent for such broker/dealer makes a written request to the
Trustee. Certificates, if issued, will be so noted on the confirmation
statement sent to the Underwriter and broker. Non-receipt of such
certificate(s) must be reported to the Trustee within one year; otherwise, a
2% surety bond fee will be required for replacement.
Units are transferable by making a written request to the Trustee and, in the
case of Units evidenced by a certificate, by presenting and surrendering such
certificate to the Trustee properly endorsed or accompanied by a written
instrument or instruments of transfer which should be sent registered or
certified mail for the protection of the Unitholder. Unitholders must sign
such written request, and such certificate or transfer instrument, exactly as
their names appear on the records of the Trustee and on any certificate
representing the Units to be transferred. Such signatures must be guaranteed
by a participant in the Securities Transfer Agents Medallion Program
("STAMP") or such other signature guarantee program in addition to, or in
substitution for, STAMP, as may be accepted by the Trustee.
Units may be purchased and certificates, if requested will be issued in
denominations of one Unit subject to each Trust's minimum investment
requirement of 100 Units or any whole Unit multiple thereof subject to any
minimum requirement established by the Sponsor from time to time. Any
certificate issued will be numbered serially for identification, issued in
fully registered form and will be transferable only on the books of the
Trustee. The Trustee may require a Unitholder to pay a reasonable fee, to be
determined in the sole discretion of the Trustee, for each certificate re-
issued or transferred and to pay any governmental charge that may be imposed
in connection with each such transfer or interchange. The Trustee at the
present time does not intend to charge for the normal transfer or interchange
of certificates. Destroyed, stolen, mutilated or lost certificates will be
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replaced upon delivery to the Trustee of satisfactory indemnity (generally
amounting to 3% of the market value of the Units), affidavit of loss,
evidence of ownership and payment of expenses incurred.
Distributions to Unitholders. Interest received by each Trust, including any
portion of the proceeds from a disposition of Securities which represents
accrued interest, is credited by the Trustee to the Interest Account for such
Trust. All other receipts are credited by the Trustee to a separate Principal
Account for the Trust. The Trustee normally has no cash for distribution to
Unitholders until it receives interest payments on the Securities in the
Trust. Since interest usually is paid semiannually (monthly in the case of a
GNMA Portfolio), during the initial months of the Trusts, the Interest
Account of each Trust, consisting of accrued but uncollected interest and
collected interest (cash), will be predominantly the uncollected accrued
interest that is not available for distribution. On the dates set forth under
"Essential Information" for each Trust, the Trustee will commence
distributions, in part from funds advanced by the Trustee.
Thereafter, assuming the Trust retains its original size and composition,
after deduction of the fees and expenses of the Trustee, the Sponsor and
Evaluator and reimbursements (without interest) to the Trustee for any
amounts advanced to a Trust, the Trustee will normally distribute on each
Interest Distribution Date (the fifteenth of the month) or shortly thereafter
to Unitholders of record of such Trust on the preceding Record Date (which is
the first day of each month). Unitholders of the Trusts will receive an
amount substantially equal to one-twelfth of such holders' pro rata share of
the estimated net annual interest income to the Interest Account of such
Trust. However, interest earned at any point in time will be greater than the
amount actually received by the Trustee and distributed to the Unitholders.
Therefore, there will always remain an item of accrued interest that is added
to the daily value of the Units. If Unitholders of a Trust sell or redeem all
or a portion of their Units, they will be paid their proportionate share of
the accrued interest of such Trust to, but not including, the third business
day after the date of a sale or to the date of tender in the case of a
redemption.
In order to equalize distributions and keep the undistributed interest income
of the Trusts at a low level, all Unitholders of record in such Trust on the
first Record Date will receive an interest distribution on the first Interest
Distribution Date. Because the period of time between the first Interest
Distribution Date and the regular distribution dates may not be a full
period, the first regular distributions may be partial distributions.
Unitholders of a U.S. Treasury Portfolio which contains Stripped Treasury
Securities should note that Stripped Treasury Securities are sold at a deep
discount because the buyer of those securities obtains only the right to
receive a future fixed payment on the security and not any rights to periodic
interest payments thereon. Purchasers of these Securities acquire, in effect,
discount obligations that are economically identical to the "zero-coupon
bonds" that have been issued by corporations. Zero coupon bonds are debt
obligations which do not make any periodic payments of interest prior to
maturity and accordingly are issued at a deep discount. Under generally
accepted accounting principles, a holder of a security purchased at a
discount normally must report as an item of income for financial accounting
purposes the portion of the discount attributable to the applicable reporting
period. The calculation of this attributable income would be made on the
"interest" method which generally will result in a lesser amount of
includible income in earlier periods and a correspondingly larger amount in
later periods. For Federal income tax purposes, the inclusion will be on a
basis that reflects the effective compounding of accrued but unpaid interest
effectively represented by the discount. Although this treatment is similar
to the "interest" method described above, the "interest" method may differ to
the extent that generally accepted accounting principles permit or require
the inclusion of interest on the basis of a compounding period other than the
semi-annual period. See "Federal Tax Status" for the U.S. Treasury
Portfolios, if any.
GENERAL INFORMATION GI-10
<PAGE>
Persons who purchase Units between a Record Date and a Distribution Date will
receive their first distribution on the second Distribution Date following
their purchase of Units. Since interest on Bonds in the Trusts is payable at
varying intervals, usually in semi-annual installments, and distributions of
income are made to Unitholders at different intervals from receipt of
interest, the interest accruing to a Trust may not be equal to the amount of
money received and available for distribution from the Interest Account.
Therefore, on each Distribution Date the amount of interest actually
deposited in the Interest Account of a Trust and available for distribution
may be slightly more or less than the interest distribution made. In order to
eliminate fluctuations in interest distributions resulting from such
variances, the Trustee is authorized by the Trust Agreements to advance such
amounts as may be necessary to provide interest distributions of
approximately equal amounts. The Trustee will be reimbursed, without
interest, for any such advances from funds available in the Interest Account
for such Trust.
The Trustee will distribute on each Distribution Date or shortly thereafter,
to each Unitholder of record of a Trust on the preceding Record Date, an
amount substantially equal to such holder's pro rata share of the cash
balance, if any, in the Principal Account of such Trust computed as of the
close of business on the preceding Record Date. However, no distribution will
be required if the balance in the Principal Account is less than $.01 per
Unit. Notwithstanding the foregoing, the Trustee will make a distribution to
Unitholders of all principal relating to maturing U.S. Treasury Obligations
in any U.S. Treasury Portfolio or GNMA Portfolio within twelve business days
of the date of such maturity.
In connection with GNMA Portfolios only, the terms of the Ginnie Maes provide
for payment to the holders thereof (including a GNMA Portfolio) on the
fifteenth day of each month of amounts collected by or due to the issuers
thereof with respect to the underlying mortgages during the preceding month.
The Trustee will collect the interest due a GNMA Portfolio on the Securities
therein as it becomes payable and credit such interest to a separate Interest
Account for such GNMA Portfolio created by the Indenture. Distributions will
be made to each Unitholder of record of a GNMA Portfolio on the appropriate
Distribution Date (see "Essential Information") and will consist of an amount
substantially equal to such Unitholder's pro rata share of the cash balances,
if any, in the Interest Account, the Principal Account and any Capital Gains
Account of such GNMA Portfolio, computed as of the close of business on the
preceding Record Date.
Statements to Unitholders. With each distribution, the Trustee will furnish
or cause to be furnished to each Unitholder a statement of the amount of
interest and the amount of other receipts, if any, which are being
distributed, expressed in each case as a dollar amount per Unit.
The accounts of each Trust are required to be audited annually, at the
Trust's expense, by independent auditors designated by the Sponsor, unless
the Sponsor determines that such an audit would not be in the best interest
of the Unitholders of such Trust. The accountants' report will be furnished
by the Trustee to any Unitholder of such Trust upon written request. Within a
reasonable period of time after the end of each calendar year, the Trustee
shall furnish to each person who at any time during the calendar year was a
Unitholder of a Trust a statement, covering the calendar year, setting forth
for the applicable Trust:
A. As to the Interest Account:
1. The amount of interest received on the Securities (and for Tax-Exempt
Portfolios, the percentage of such amount by states and territories in
which the issuers of such Securities are located);
GENERAL INFORMATION GI-11
<PAGE>
2. The amount paid from the Interest Account representing accrued
interest of any Units redeemed;
3. The deductions from the Interest Account for applicable taxes, if any,
fees and expenses (including auditing fees) of the Trustee, the Sponsor,
the Evaluator, and, if any, of bond counsel;
4. Any amounts credited by the Trustee to the Reserve Account described
under "General Information- Expenses of the Trusts";
5. The net amount remaining after such payments and deductions, expressed
both as a total dollar amount and a dollar amount per Unit outstanding on
the last business day of such calendar year; and
B. As to the Principal Account:
1. The dates of the maturity, liquidation or redemption of any of the
Securities and the net proceeds received therefrom excluding any portion
credited to the Interest Account;
2. The amount paid from the Principal Account representing the principal
of any Units redeemed;
3. The deductions from the Principal Account for payment of applicable
taxes, if any, fees and expenses (including auditing fees) of the
Trustee, the Sponsor, the Evaluator, and, if any, of bond counsel;
4. The amount of when-issued interest treated as a return of capital, if
any;
5. Any amounts credited by the Trustee to the Reserve Account described
under "General Information- Expenses of the Trusts";
6. The net amount remaining after distributions of principal and
deductions, expressed both as a dollar amount and as a dollar amount per
Unit outstanding on the last business day of the calendar year; and
C. The following information:
1. A list of the Securities as of the last business day of such calendar
year;
2. The number of Units outstanding on the last business day of such
calendar year;
3. The Redemption Price based on the last evaluation made during such
calendar year;
4. The amount actually distributed during such calendar year from the
Interest and Principal Accounts (and Capital Gains Account, if
applicable) separately stated, expressed both as total dollar amounts and
as dollar amounts per Unit outstanding on the Record Dates for each such
distribution.
Rights of Unitholders. A Unitholder may at any time tender Units to the
Trustee for redemption. The death or incapacity of any Unitholder will not
operate to terminate a Trust nor entitle legal representatives or heirs to
claim an accounting or to bring any action or proceeding in any court for
partition or winding up of a Trust.
GENERAL INFORMATION GI-12
<PAGE>
No Unitholder shall have the right to control the operation and management of
any Trust in any manner, except to vote with respect to the amendment of the
Trust Agreements or termination of any Trust.
INVESTMENT SUPERVISION
The Sponsor may not alter the portfolios of the Trusts by the purchase, sale
or substitution of Securities, except in the special circumstances noted
below and as indicated earlier under "General Information- Trust Information"
regarding the substitution of Replacement Securities for any Failed
Securities. Thus, with the exception of the redemption or maturity of
Securities in accordance with their terms, the assets of the Trusts will
remain unchanged under normal circumstances.
The Sponsor may direct the Trustee to dispose of Securities the value of
which has been affected by certain adverse events including institution of
certain legal proceedings or decline in price or the occurrence of other
market factors, including advance refunding, so that in the opinion of the
Sponsor the retention of such Securities in a Trust would be detrimental to
the interest of the Unitholders. The proceeds from any such sales, exclusive
of any portion which represents accrued interest, will be credited to the
Principal Account of such Trust for distribution to the Unitholders.
The Sponsor is required to instruct the Trustee to reject any offer made by
an issuer of Securities to issue new obligations in exchange or substitution
for any of such Securities pursuant to a refunding financing plan, except
that the Sponsor may instruct the Trustee to accept or reject such an offer
or to take any other action with respect thereto as the Sponsor may deem
proper if (1) the issuer is in default with respect to such Securities or (2)
in the written opinion of the Sponsor the issuer will probably default with
respect to such Securities in the reasonably 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 Securities originally deposited thereunder. Within five days
after deposit of obligations in exchange or substitution for underlying
Securities, the Trustee is required to give notice thereof to each
Unitholder, identifying the Securities eliminated and the Securities
substituted therefor.
The Trustee may sell Securities, designated by the Sponsor, from a Trust for
the purpose of redeeming Units of such Trust tendered for redemption and the
payment of expenses.
ADMINISTRATION OF THE TRUSTS
The Trustee. The Trustee is The Bank of New York, a trust company organized
under the laws of New York. The Bank of New York has its offices at 101
Barclay Street, New York, New York 10286, telephone 1-800-701-8178. The Bank
of New York is subject to supervision and examination by the Superintendent
of Banks of the State of New York and the Board of Governors of the Federal
Reserve System, and its deposits are insured by the Federal Deposit Insurance
Corporation to the extent permitted by law.
The Trustee, whose duties are ministerial in nature, has not participated in
selecting the portfolio of any Trust. For information relating to the
responsibilities of the Trustee under the Trust Agreements, reference is made
to the material set forth under "General Information-Unitholders."
GENERAL INFORMATION GI-13
<PAGE>
In accordance with the Trust Agreements, the Trustee shall keep records of
all transactions at its office. Such records shall include the name and
address of, and the number of Units held by, every Unitholder of each Trust.
Such books and records shall be open to inspection by any Unitholder of such
Trust at all reasonable times during usual business hours. The Trustee shall
make such annual or other reports as may from time to time be required under
any applicable state or Federal statute, rule or regulation. The Trustee
shall keep a certified copy or duplicate original of the Trust Agreements on
file in its office available for inspection at all reasonable times during
usual business hours by any Unitholder, together with a current list of the
Securities held in each Trust. Pursuant to the Trust Agreements, the Trustee
may employ one or more agents for the purpose of custody and safeguarding of
Securities comprising the Trusts.
Under the Trust Agreements, the Trustee or any successor trustee may resign
and be discharged of its duties created by the Trust Agreements by executing
an instrument in writing and filing the same with the Sponsor.
The Trustee or successor trustee must mail a copy of the notice of
resignation to all Unitholders then of record, not less than 60 days before
the date specified in such notice when such resignation is to take effect.
The Sponsor upon receiving notice of such resignation is obligated to appoint
a successor trustee promptly. If, upon such resignation, no successor trustee
has been appointed and has accepted the appointment within 30 days after
notification, the retiring Trustee may apply to a court of competent
jurisdiction for the appointment of a successor. The Sponsor may at any time
remove the Trustee, with or without cause, and appoint a successor trustee as
provided in the Trust Agreements. Notice of such removal and appointment
shall be mailed to each Unitholder by the Sponsor. Upon execution of a
written acceptance of such appointment by such successor trustee, all the
rights, powers, duties and obligations of the original Trustee shall vest in
the successor. The Trustee shall be a corporation organized under the laws of
the United States, or any state thereof, which is authorized under such laws
to exercise trust powers. The Trustee shall have at all times an aggregate
capital, surplus and undivided profits of not less than $5,000,000.
The Evaluator. 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 30 days after notice
of resignation, the Evaluator may apply to a court of competent jurisdiction
for the appointment of a successor. Notice of such resignation or removal and
appointment shall be mailed by the Trustee to each Unitholder. At the present
time, pursuant to a contract with the Evaluator, Cantor Fitzgerald & Co., a
non-affiliated firm regularly engaged in the business of evaluating, quoting
or appraising comparable securities, provides, for both the initial offering
period and secondary market transactions, portfolio evaluations of the
Securities in the Trusts which are then reviewed by the Evaluator. In the
event the Sponsor is unable to obtain current evaluations from 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 with respect to
the Trusts may also be amended in any respect by the Sponsor and the Trustee,
or any of the provisions thereof may be waived, with the consent of the
holders of Units representing 66 2/3% of the Units then outstanding of such
GENERAL INFORMATION GI-14
<PAGE>
Trust, provided that no such amendment or waiver will reduce the interest of
any Unitholder thereof without the consent of such Unitholder or reduce the
percentage of Units required to consent to any such amendment or waiver
without the consent of all Unitholders of such Trust. In no event shall any
Trust Agreement be amended to increase the number of Units of a Trust
issuable thereunder or to permit, except in accordance with the provisions of
such Trust Agreement, the acquisition of any Securities in addition to or in
substitution for those initially deposited in a Trust. The Trustee shall
promptly notify Unitholders of the substance of any such amendment.
The Trust Agreements provide that the Trusts shall terminate upon the
maturity, redemption or other disposition of the last of the Securities held
in a Trust. If the value of a Trust shall be less than the applicable minimum
value stated under "Essential Information," the Trustee may, in its
discretion, and shall, when so directed by the Sponsor, terminate the Trust.
A Trust may be terminated at any time by the holders of Units representing 66
2/3% of the Units thereof then outstanding. In the event of termination of a
Trust, written notice thereof will be sent by the Trustee to all Unitholders
of such Trust. Within a reasonable period after termination, the Trustee will
sell any Securities remaining in such Trust and, after paying all expenses
and charges incurred by the Trust, will distribute to Unitholders thereof
(upon surrender for cancellation of certificates for Units, if issued) their
pro rata share of the balances remaining in the Interest and Principal
Accounts (and Capital Gains Account, if applicable) of such Trust.
Limitations on Liability. The Sponsor: The Sponsor is liable for the
performance of its obligations arising from its responsibilities under the
Trust Agreements, but will be under no liability to the Unitholders for
taking any action or refraining from any action in good faith pursuant to the
Trust Agreements or for errors in judgment, except in cases of its own gross
negligence, bad faith or willful misconduct. The Sponsor shall not be liable
or responsible in any way for depreciation or loss incurred by reason of the
sale of any Securities.
The Trustee: The Trust Agreements provide that the Trustee shall be under no
liability for any action taken in good faith in reliance upon prima facie
properly executed documents or for the disposition of monies, Securities or
certificates except by reason of its own negligence, bad faith or willful
misconduct, nor shall the Trustee be liable or responsible in any way for
depreciation or loss incurred by reason of the sale by the Trustee of any
Securities. In the event that the Sponsor shall fail to act, the Trustee may
act and shall not be liable for any such action taken by it in good faith.
The Trustee shall not be personally liable for any taxes or other
governmental charges imposed upon or in respect of the Securities or upon the
interest thereon. In addition, the Trust Agreements contain other customary
provisions limiting the liability of the Trustee.
The Evaluator: The Trustee and Unitholders may rely on any evaluation
furnished by the Evaluator and shall have no responsibility for the accuracy
thereof. The Trust Agreements provide that the determinations made by the
Evaluator shall be made in good faith upon the basis of the best information
available to it, provided, however, that the Evaluator shall be under no
liability to the Trustee or Unitholders for errors in judgment, but shall be
liable only for its gross negligence, lack of good faith or willful
misconduct.
EXPENSES OF THE TRUSTS
The Sponsor will charge the Trusts a surveillance fee for services performed
for the Trusts in an amount not to exceed that amount set forth in "Essential
Information" but in no event will such compensation, when combined with all
compensation received from other unit investment trusts for which the Sponsor
both acts as sponsor and provides portfolio surveillance, exceed the
aggregate cost to the Sponsor for providing such services. Such fee shall be
based on the total number of Units of the related Trust outstanding as of the
GENERAL INFORMATION GI-15
<PAGE>
January Record Date for any annual period. The Sponsor will receive a portion
of the sales commissions paid in connection with the purchase of Units and
will share in profits, if any, related to the deposit of Securities in the
Trusts. The Sponsor and other Underwriters have borne all the expenses of
creating and establishing the Trusts including the cost of the initial
preparation, printing and execution of the Prospectus, Trust Agreements and
certificates, legal and accounting expenses, advertising and selling
expenses, payment of closing fees, the expenses of the Trustee, evaluation
fees relating to the deposit and other out-of-pocket expenses.
The Trustee receives for its services fees set forth under "Essential
Information." The Trustee fee which is calculated monthly is based on the
largest aggregate principal amount of Securities in a Trust at any time
during the period. In no event shall the Trustee be paid less than $2,000 per
Trust in any one year. Funds that are available for future distributions,
redemptions and payment of expenses are held in accounts which are non-
interest bearing to Unitholders and are available for use by the Trustee
pursuant to normal trust procedures; however, the Trustee is also authorized
by the Trust Agreements to make from time to time certain non-interest
bearing advances to the Trusts. During the first year the Trustee has agreed
to lower its fees and absorb expenses by the amount set forth under
"Essential Information." The Trustee's fee will not be increased in future
years in order to make up this reduction in the Trustee's fee. The Trustee's
fee is payable on or before each Distribution Date.
For evaluation of Securities in each Trust, the Evaluator shall receive a
fee, payable monthly, calculated on the basis of that annual rate set forth
under "Essential Information," based upon the largest aggregate principal
amount of Securities in such Trust at any time during such monthly period.
The Trustee's and Evaluator's fees are deducted first from the Interest
Account of a Trust to the extent funds are available and then from the
Principal Account. Such fees may be increased without approval of Unitholders
by amounts not exceeding a proportionate increase in the Consumer Price Index
entitled "All Services Less Rent of Shelter," published by the United States
Department of Labor, or any equivalent index substituted therefor. In
addition, the Trustee's fee may be periodically adjusted in response to
fluctuations in short-term interest rates (reflecting the cost to the Trustee
of advancing funds to a Trust to meet scheduled distributions).
The following additional charges are or may be incurred by the Trusts: (a)
fees for the Trustee's extraordinary services; (b) expenses of the Trustee
(including legal and auditing expenses and insurance costs for Insured Trust
Funds, but not including any fees and expenses charged by any agent for
custody and safeguarding of Securities) and of bond counsel, if any; (c)
various governmental charges; (d) expenses and costs of any action taken by
the Trustee to protect a Trust or the rights and interests of the
Unitholders; (e) indemnification of the Trustee for any loss, liability or
expense incurred by it in the administration of a Trust not resulting from
gross negligence, bad faith or willful misconduct on its part; (f)
indemnification of the Sponsor for any loss, liability or expense incurred in
acting in that capacity without gross negligence, bad faith or willful
misconduct; and (g) expenditures incurred in contacting Unitholders upon
termination of the Trusts. The fees and expenses set forth herein are payable
out of the appropriate Trust and, when owing to the Trustee, are secured by a
lien on such Trust. Fees or charges relating to a Trust shall be allocated to
each Trust in the same ratio as the principal amount of such Trust bears to
the total principal amount of all Trusts. Fees or charges relating solely to
a particular Trust shall be charged only to such Trust.
Fees and expenses of the Trusts shall be deducted from the Interest Account
thereof, or, to the extent funds are not available in such Account, from the
Principal Accounts. The Trustee may withdraw from the Principal Account or
the interest Account of any Trust such amounts, if any, as it deems necessary
GENERAL INFORMATION GI-16
<PAGE>
to establish a reserve for any taxes or other governmental charges or other
extraordinary expenses payable out of the Trust. Amounts so withdrawn shall
be credited to a separate account maintained for a Trust known as the Reserve
Account and shall not be considered a part of the Trust when determining the
value of the Units until such time as the Trustee shall return all or any
part of such amounts to the appropriate account.
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 Inc. is the successor sponsor to unit
investments 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 issuers in the Midwest and
Southwest, especially in Kansas, Missouri and Texas. The Sponsor'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 shall have its affairs taken over by public
authorities, then the Trustee may (a) appoint a successor sponsor at rates of
compensation deemed by the Trustee to be reasonable and not exceeding such
reasonable amounts as may be prescribed by the Securities and Exchange
Commission, or (b) terminate the Trust Agreements and liquidate the Trusts as
provided therein, or (c) continue to act as Trustee without terminating the
Trust Agreements.
The foregoing financial information with regard to the Sponsor relates to the
Sponsor only and not to these Trusts. Such information is included in this
Prospectus only for the purpose of informing investors as to the financial
responsibility of the Sponsor and its ability to carry out its contractual
obligations with respect to the Trusts. More comprehensive financial
information can be obtained upon request from the Sponsor.
LEGAL OPINIONS
The legality of the Units offered hereby and certain matters relating to
Federal tax law have been passed upon by Chapman and Cutler, 111 West Monroe
Street, Chicago, Illinois 60603, as counsel for the Sponsor.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The statements of condition and the related portfolios at the Initial Date of
Deposit included in this Prospectus have been audited by Grant Thornton LLP,
independent certified public accountants, as set forth in their report in the
Prospectus, and are included herein in reliance upon the authority of said
firm as experts in accounting and auditing.
GENERAL INFORMATION GI-17
<PAGE>
APPENDIX
DESCRIPTION OF RATINGS*
Standard & Poor's-A brief description of the applicable Standard & Poor's
rating symbols and their meanings follow:
A Standard & Poor's corporate or municipal bond rating is a current
assessment of the creditworthiness of an obligor with respect to a specific
debt obligation. This assessment may take into consideration obligors such as
guarantors, insurers, or lessees.
The bond rating is not a recommendation to purchase, sell or hold a security,
inasmuch as it does not comment as to market price or suitability for a
particular investor.
The ratings are based on current information furnished by the issuer and
obtained by Standard & Poor's from other sources it considers reliable.
Standard & Poor's does not perform an audit in connection with any rating and
may, on occasion, rely on unaudited financial information. The ratings may be
changed, suspended, or withdrawn as a result of changes in, or unavailability
of, such information, or for other circumstances.
The ratings are based, in varying degrees, on the following considerations:
I. Likelihood of default-capacity and willingness of the obligor as to the
timely payment of interest and repayment of principal in accordance with
the terms of the obligation;
II. Nature of and provisions of the obligation;
III. Protection afforded by, and relative position of, the obligation in
the event of bankruptcy, reorganization or other arrangement, under the
laws of bankruptcy and other laws affecting creditors' rights.
AAA-Bonds rated AAA have the highest rating assigned by Standard & Poor's to
a debt obligation. Capacity to pay interest and repay principal is extremely
strong.
AA-Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in small degree.
A-Bonds rated A have a strong capacity to pay interest and repay principal
although they are somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than bonds in higher rated
categories.
BBB-Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay interest and repay
principal for bonds in this category than for bonds in higher rated
categories.
- -----------------------
*As described by the rating company itself.
A-1
<PAGE>
Bonds rated 'BB,' 'B,' 'CCC,' 'CC,' and 'C' are regarded as having
predominantly speculative characteristics with respect to capacity to pay
interest and repay principal.
'BB' indicates the least degree of speculation and 'C,' the highest degree of
speculation. While such Bonds will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
BB-Bonds rated BB have less near-term vulnerability to default than other
speculative grade debt. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions that could
lead to inadequate capacity to meet timely interest and principal payments.
B-Bonds rated B have greater vulnerability to default but presently has the
capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions would likely impair capacity or
willingness to pay interest and repay principal.
CCC-Bonds rated CCC have a current identifiable vulnerability to default, and
is dependent on favorable business, financial, and economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial, or economic conditions, it is not likely to have
the capacity to pay interest and repay principal.
CC-The rating CC is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC rating.
C-The rating C is typically applied to debt subordinated to senior debt which
is assigned an actual or implied CCC debt rating.
D-Bonds are rated D when the issue is in payment default, or the obligor has
filed for bankruptcy. The D rating is used when interest or principal
payments are not made on the date due, even if the applicable grace period
has not expired, unless S&P believes that such payments will be made during
such grace period.
Plus ( +) or Minus ( - ): The ratings from "AA" to "A" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
Provisional Ratings: The letter "p" indicates the rating is provisional. A
provisional rating assumes the successful completion of the project being
financed by the bonds being rated and indicates that payment of debt service
requirements is largely or entirely dependent upon the successful and timely
completion of the project. This rating, however, while addressing credit
quality subsequent to completion of the project, makes no comment on the
likelihood of, or the risk of default upon failure of, such completion. The
investor should exercise his own judgment with respect to such likelihood and
risk.
Moody's Investors Service, Inc.-A brief description of the applicable Moody's
Investors Service, Inc. rating symbols and their meanings follow:
Aaa-Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an
A-2
<PAGE>
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such issues.
Their safety is so absolute that with the occasional exception of oversupply
in a few specific instances, characteristically, their market value is
affected solely by money market fluctuations.
Aa-Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuations of
protective elements may be of greater amplitude or there may be other
elements present which make the long term risks appear somewhat larger than
in Aaa securities. Their market value is virtually immune to all but money
market influences, with the occasional exception of oversupply in a few
specific instances.
A-Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may
be present which suggest a susceptibility to impairment sometime in the
future. The market value of A-rated bonds may be influenced to some degree by
economic performance during a sustained period of depressed business
conditions, but, during periods of normalcy, A-rated bonds frequently move in
parallel with Aaa and Aa obligations, with the occasional exception of
oversupply in a few specific instances.
A1-Bonds which are rated A1 offer the maximum in security within their
quality group, can be bought for possible upgrading in quality, and
additionally, afford the investor an opportunity to gauge more precisely the
relative attractiveness of offerings in the marketplace.
Baa-Bonds which are rated Baa are considered as lower medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and, in fact, have speculative characteristics as
well. The market value of Baa-rated bonds is more sensitive to changes in
economic circumstances and, aside from occasional speculative factors
applying to some bonds of this class, Baa market valuations move in parallel
with Aaa, Aa and A obligations during periods of economic normalcy, except in
instances of oversupply.
Ba-Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B-Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa-Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal
or interest.
Ca-Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked
shortcomings.
C-bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.
A-3
<PAGE>
Conditional Ratings: Bonds rated "Con(-)" are ones for which the security
depends upon the completion of some act or the fulfillment of some condition.
These are bonds secured by (a) earnings of projects under construction, (b)
earnings of projects unseasoned in operation experience, (c) rentals which
begin when facilities are completed, or (d) payments to which some other
limiting conditions attaches. Parenthetical rating denotes probable credit
stature upon completion of construction or elimination of basis of condition.
Note: Moody's applies numerical modifiers, 1, 2, and 3 in each generic rating
classification from Aa through B in certain areas of its bond rating system.
The modifier 1 indicates that the security ranks in the higher end of its
generic rating category; the modifier 2 indicates a mid-range ranking; and
the modifier 3 indicates that the issue ranks in the lower end of its generic
rating category.
A-4
<PAGE>
CONTENTS PAGE
SUMMARY 2
ESSENTIAL INFORMATION 3
THE TRUST FUNDS 5
REPORT OF INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS 7
STATEMENTS OF CONDITION 8
PUBLIC OFFERING OF UNITS 9
Public Offering Price 9
Accrued Interest 12
Comparison of Public Offering Price and
Redemption Price 12
Public Distribution of Units 12
Profits of Sponsor and Underwriters 14
THE HIGH YIELD SERIES HY-1
The Trust Portfolio HY-1
Series Information HY-1
Portfolio HY-2
Notes to Portfolio HY-3
Risk Factors HY-4
Federal Tax Status HY-6
Tax Reporting and Reallocation HY-10
Estimated Cash Flows to Unitholders HY-10
GENERAL INFORMATION GI-1
Rating of Units GI-1
Trust Information GI-1
Retirement Plans GI-5
Distribution Reinvestment GI-5
Interest, Estimated Long-Term Return and
Estimated Current Return GI-6
Market for Units GI-6
Redemption GI-7
Unitholders GI-9
Investment Supervision GI-13
Administration of the Trusts GI-13
Expenses of the Trusts GI-15
The Sponsor GI-17
Legal Opinions GI-17
Independent Certified Public Accountants GI-17
APPENDIX
Description of Ratings A-1
-----------------------------------------
This Prospectus does not contain all of the information set forth in the
registration statement and exhibits relating thereto, filed with the
Securities and Exchange Commission Washington, D.C. under the Securities Act
of 1933 and the Investment Company Act of 1940, and to which reference is
made.
-----------------------------------------
No person is authorized to give any information or to make any
representations not contained in this Prospectus and any information or
representation not contained herein must not be relied upon as having been
authorized by the Trusts, the Trustee, or the Sponsor. The Trusts are
registered as unit investment trusts under the Investment Company Act of
1940. Such registration does not imply that the Trusts or the Units have been
guaranteed, sponsored, recommended or approved by the United States or any
state or any agency or officer thereof.
-----------------------------------------
This Prospectus does not constitute an offer to sell, or a solicitation of an
offer to buy, securities in any state to any person to whom it is not lawful
to make such offer in such state.
- ------------------
DEFINED HIGH
YIELD
CORPORATE
INCOME
SEREIES 6
- ------------------
------------------
RANSON
UNIT
INVESTMENT
TRUSTS
------------------
PROSPECTUS FEBRUARY 4, 1997
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents.
The facing sheet
The Cross-Reference sheets
The Prospectus
The Signatures
The following exhibits.
1.1. Trust Agreement.
1.1.1. Standard Terms and Conditions of Trust.
2.1. Form of Certificate of Ownership (pages three and four of the
Standard Terms and Conditions of Trust included as Exhibit 1.1.1).
3.1. Opinion of counsel to the Sponsor as to legality of the securities
being registered including a consent to the use of its name under
"Legal Opinions" in the Prospectus.
3.2. Opinion of counsel to the Sponsor as to the tax status of the
securities being registered.
4.1. Consent of Independent Certified Public Accountants.
4.2. Consent of Independent Evaluator.
EX-27. Financial Data Schedule
S-1
<PAGE>
SIGNATURES
The Registrant, Ranson Unit Investment Trusts, Series 54, hereby identifies
Ranson Unit Investment Trusts, Series 53 and Kemper Defined Funds, Series 9
for purposes of the representations required by Rule 487 and represents the
following: (1) that the portfolio securities deposited in the series as to the
securities of which this Registration Statement is being filed do not differ
materially in type or quality from those deposited in such previous series;
(2) that, except to the extent necessary to identify the specific portfolio
securities deposited in, and to provide essential financial information for,
the series with respect to the securities of which this Registration Statement
is being filed, this Registration Statement does not contain disclosures that
differ in any material respect from those contained in the registration
statements for such previous series as to which the effective date was
determined by the Commission or the staff; and (3) that it has complied with
Rule 460 under the Securities Act of 1933.
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Ranson Unit Investment Trusts, Series 54 has duly caused this 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 4th day
of February, 1997.
RANSON UNIT INVESTMENT TRUSTS, SERIES 54,
Registrant
By: RANSON & ASSOCIATES, INC.,
Depositor
By: ALEX R. MEITZNER
---------------------------------------
Alex R. Meitzner
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below on February 4, 1997 by the following
persons, who constitute a majority of the Board of Directors of Ranson &
Associates, Inc.
SIGNATURE TITLE
- --------------------- --------------------
DOUGLAS K. ROGERS Executive Vice )
- --------------------- President and Director )
Douglas K. Rogers
ALEX R. MEITZNER Chairman of the Board )
- --------------------- of Directors )
Alex R. Meitzner
ROBIN K. PINKERTON President, Secretary, )
- --------------------- Treasurer and Director ) ALEX R. MEITZNER
Robin K. Pinkerton -----------------------
Alex R. Meitzner
- ------------------------------------------------------------------------------
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.
S-2
EXHIBIT 1.1
RANSON UNIT INVESTMENT TRUSTS
SERIES 54
TRUST AGREEMENT
Dated: February 4, 1997
This Trust Agreement between Ranson & Associates, Inc., as Depositor and
Evaluator, and The Bank of New York, as Trustee, sets forth certain provisions
in full and incorporates other provisions by reference to the document
entitled "Standard Terms and Conditions of Trust for Corporate Bond Trusts
Sponsored by Ranson & Associates, Inc, Effective: February 4, 1997" (herein
called the "Standard Terms and Conditions of Trust") and such provisions as
are set forth in full and such provisions as are incorporated by reference
constitute a single instrument. All references herein to Articles and
Sections are to Articles and Sections of the Standard Terms and Conditions
of Trust.
WITNESSETH THAT:
In consideration of the premises and of the mutual agreements herein
contained, the Depositor, Evaluator and Trustee agree as follows:
PART I
STANDARD TERMS AND CONDITIONS OF TRUST
Subject to the provisions of Part II hereof, all the provisions contained
in the Standard Terms and Conditions of Trust are herein incorporated by
reference in their entirety and shall be deemed to be a part of this
instrument as fully and to the same extent as though said provisions had
been set forth in full in this instrument.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
The following special terms and conditions are hereby agreed to:
(a) The Bonds, as defined in Section 1.01(4) and listed in
Schedule A hereto, have been deposited in trust under this Trust
Agreement.
(b) The fractional undivided interest in and ownership of each
Trust represented by each Unit is the amount set forth under "Essential
Information_Fractional Undivided Interest per Unit" in the Prospectus.
(c) The number of Units in each Trust is that amount set forth
under "Essential Information_Number of Units" in the Prospectus.
<PAGE>
-2-
(d) The amount of the second distribution of funds from the
Interest Account shall be that amount set forth under "Essential
Information_Interest Payments_First Payment per Unit" for each Trust
in the Prospectus.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement
to be duly executed.
RANSON & ASSOCIATES, INC.,
Depositor and Evaluator
By /s/ ROBIN K. PINKERTON
___________________________
President
THE BANK OF NEW YORK,
Trustee
By /s/ Ted Rudich
___________________________
Vice President
<PAGE>
SCHEDULE A
BONDS INITIALLY DEPOSITED
RANSON UNIT INVESTMENT TRUSTS, SERIES 54
(Note: Incorporated herein and made a part hereof are the "Portfolios"
as set forth in the Prospectus for each Trust.)
EXHIBIT 1.1.1
STANDARD TERMS AND CONDITIONS OF TRUST
FOR
CORPORATE BOND TRUSTS
Sponsored by
RANSON & ASSOCIATES, INC.
Effective: FEBRUARY 4, 1997
AMONG
RANSON & ASSOCIATES, INC.
Depositor and Evaluator
and
THE BANK OF NEW YORK
Trustee
-----------------------------------
Applicable to Insured Corporate Series 11 and Subsequent Series,
Investment Grade Corporate Income Series 3 and Subsequent Series,
and Defined High Yield Corporate Income Series 6 and Subsequent Series
(Included in Ranson Unit Investment Trusts, Series 54
and certain Subsequent Series)
-----------------------------------
<PAGE>
STANDARD TERMS AND CONDITIONS OF TRUST
TABLE OF CONTENTS
Page
Preambles 1
ARTICLE I DEFINITIONS 1
Section 1.01. Definitions 1
ARTICLE II DEPOSIT OF BONDS; ACCEPTANCE OF TRUST; FORM AND
ISSUANCE OF UNITS; PORTFOLIO INSURANCE 7
Section 2.01. Deposit of Bonds 7
Section 2.02. Acceptance of Trust 7
Section 2.03. Issuance of Units 7
Section 2.04. Form of Certificates 8
Section 2.05. Portfolio Insurance 8
ARTICLE III ADMINISTRATION OF FUND 10
Section 3.01. Initial Costs 10
Section 3.02. Interest Account 10
Section 3.03. Principal Account 10
Section 3.04. Reserve Account 11
Section 3.05. Deductions and Distributions 11
Section 3.06. Distribution Statements 14
Section 3.07. Extraordinary Sale of Bonds 15
Section 3.08. Refunding Bonds 16
Section 3.09. Counsel 16
Section 3.10. Notice and Sale by Trustee 17
Section 3.11. Trustee Not Required to Amortize 17
Section 3.12. Liability, Indemnification and Succession
of Depositor 17
Section 3.13. Notice to Depositor 18
Section 3.14. Limited Replacement of Special Bonds 18
Section 3.15. Compensation of Depositor for Supervisory Services 19
Section 3.16. Deferred Sales Charge 20
ARTICLE IV EVALUATION OF BONDS; EVALUATOR 21
Section 4.01. Evaluation of Bonds 21
Section 4.02. Information for Unitholders 21
Section 4.03. Compensation of Evaluator 21
Section 4.04. Liability of Evaluator 22
Section 4.05. Resignation and Removal of Evaluator; Successor 22
-i-
<PAGE>
ARTICLE V EVALUATION, REDEMPTION, PURCHASE, ISSUANCE,
TRANSFER, INTERCHANGE OR REPLACEMENT OF UNITS 23
Section 5.01. Evaluation 23
Section 5.02. Redemptions by Trustee; Purchases by Depositor 24
Section 5.03. Issuance, Transfer or Interchange of Units 25
Section 5.04. Certificates Mutilated, Destroyed, Stolen or Lost 26
ARTICLE VI TRUSTEE 27
Section 6.01. General Definition of Trustee's Liabilities,
Rights and Duties 27
Section 6.02. Books, Records and Reports 29
Section 6.03. Indenture and List of Bonds on File 30
Section 6.04. Compensation 30
Section 6.05. Removal and Resignation of Trustee; Successor 31
Section 6.06. Qualifications of Trustee 32
ARTICLE VII RIGHTS OF UNITHOLDERS 32
Section 7.01. Beneficiaries of Trust 32
Section 7.02. Rights, Terms and Conditions 32
ARTICLE VIII ADDITIONAL COVENANTS; MISCELLANEOUS PROVISIONS 33
Section 8.01. Amendments 33
Section 8.02. Termination 34
Section 8.03. Construction 35
Section 8.04. Registration of Units 35
Section 8.05. Written Notice 35
Section 8.06. Severability 36
Section 8.07. Dissolution of Depositor Not to Terminate 36
___________________________________
This Table of Contents does not constitute part of the Indenture
-ii-
<PAGE>
STANDARD TERMS AND CONDITIONS OF TRUST
EFFECTIVE: FEBRUARY 4, 1997
These Standard Terms and Conditions of Trust are executed between
RANSON & ASSOCIATES, INC., as Depositor and Evaluator and THE BANK
OF NEW YORK, as Trustee.
WITNESSETH THAT:
In consideration of the premises and of the mutual agreements herein
contained, the Depositor, the Trustee and the Evaluator agree as follows:
INTRODUCTION
These Standard Terms and Conditions of Trust effective shall be
applicable to certain Series of Ranson Unit Investment Trusts primarily
containing corporate bonds and established after the date of effectiveness
hereof, as provided in this paragraph. For all Series established after the
date of effectiveness hereof to which these Standard Terms and Conditions of
Trust are to be applicable, the Depositor, the Trustee and the Evaluator
shall execute a Trust Agreement incorporating by reference these Standard
Terms and Conditions of Trust and designating any exclusion from or exception
to such incorporation by reference for the purposes of that Series or
variation of the terms hereof for the purposes of that Series and specifying
for that Series (if not otherwise specified in the Prospectus for such
Series) (i) the Bonds deposited in trust and the number of Units delivered by
the Trustee in exchange for the Bonds pursuant to Section 2.03, (ii) the
fractional undivided interest represented by each Unit, (iii) the amount of
the Trustee advancement with respect to any "when issued" Bonds deposited in
a Trust, if any, and (iv) the amount of the second distribution from the
Interest Account.
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Whenever used in this Indenture the
following words and phrases, unless the context clearly indicates otherwise,
shall have the following meanings:
(1) "Depositor" shall mean Ranson & Associates, Inc. and
its successors in interest, or any successor depositor appointed as
hereinafter provided.
(2) "Evaluator" shall mean Ranson & Associates, Inc. and
its successors in interest, or any successor evaluator appointed as
hereinafter provided.
<PAGE>
(3) "Trustee" shall mean The Bank of New York or any
successor trustee appointed as hereinafter provided, or any entity
which acquires all or a substantial part of the unit investment trust
division of The Bank of New York.
(4) "Bonds" shall mean such interest bearing debt
obligations, including delivery statements relating to "when-issued"
and/or "regular way" contracts, if any, for the purchase of certain
securities and cash, certified or bank check or checks or letter of
credit or letters of credit sufficient in amount or availability
required for such purchase, deposited in irrevocable trust and listed
in all Schedules of the Trust Agreement, any additional obligations
deposited pursuant to Section 2.01 and any obligations received in
exchange, substitution or replacement for such obligations pursuant to
Section 3.14 hereof, as may from time to time continue to be held as a
part of a Trust.
(5) "Business Day" shall mean any day other than a Sunday
or, in the City of New York, a legal holiday or a day on which banking
institutions are authorized by law to close.
(6) "Certificate" shall mean any one of the certificates
executed by the Trustee and the Depositor in substantially the
following form with the blanks appropriately filled in:
-2-
<PAGE>
Face of Certificate
NUMBER RANSON UNIT INVESTMENT TRUSTS UNITS
CERTIFICATE OF BENEFICIAL OWNERSHIP
This certifies that _______________________________________ is the
registered owner of ____ units(s) of fractional undivided interest in Ranson
Unit Investment Trusts of the above-named Series (herein referred to as the
"Trust") created under the laws of the State of New York pursuant to the
Agreement and the related Trust Agreement, a copy of which is available at
the office of the Trustee. This Certificate is issued under and is subject
to the terms, provisions and conditions of the aforesaid Agreement and the
related Trust Agreement to which the holder of this Certificate by virtue of
the acceptance hereof assents and is bound. This Certificate is transferable
and interchangeable by the registered owner in person or by his duly
authorized attorney at the office of the Trustee upon surrender of this
Certificate properly endorsed or accompanied by a written instrument of
transfer and any other documents that the Trustee may require for transfer,
in form satisfactory to the Trustee, and payment of the fees and expenses
provided in the Agreement.
WITNESS the facsimile signature of the Depositor and the manual
signature of an authorized signatory of the Trustee.
Dated
RANSON & ASSOCIATES, INC., THE BANK OF NEW YORK,
Depositor Trustee,
By By
---------------------------- -----------------------------
Authorized Signature Authorized Signature
-3-
<PAGE>
Reverse of Certificate
FORM OF ASSIGNMENT
For Value Received, the undersigned hereby sells, assigns and
transfers _________ Units represented by this Certificate unto
-------------------------------------
-------------------------------------
Please Insert Social Security
or Other Identifying Number
of Assignee
------------------------------
------------------------------
and does hereby irrevocably constitute and appoint attorney, to transfer
said Units on the books of the Trustee, with full power of substitution
in the premises.
Dated:
------------------------ -------------------------------------
NOTICE: The signature to this assignment must
correspond with the name as written upon the face of
the Certificate in every particular, without
alteration or enlargement or any change whatever, and
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.
Signature Guaranteed
By
-----------------------------------
-4-
<PAGE>
(7) "Contract Bonds" shall mean Bonds which are to be
acquired by a Trust pursuant to contracts, including (i) Bonds listed
in Schedule A to the Trust Agreement and (ii) Bonds which the
Depositor has contracted to purchase for the Trust pursuant to
Section 3.14 hereof.
(8) "Distribution Dates" shall mean the dates on which
distributions are made to Unitholders as set forth in the Prospectus.
(9) "Evaluation Time" shall mean the close of business of
the Depositor or such other evaluation time set forth in the
Prospectus.
(10) "Fund" shall mean all Trusts outstanding under this
Indenture.
(11) "High Yield Series" shall mean any Trust so designated
in the related Prospectus.
(12) "Indenture" shall mean these Standard Terms and
Conditions of Trust as originally executed or, if amended as
hereinafter provided, as so amended, together with the Trust Agreement
creating a particular series of the Fund.
(13) "Initial Date of Deposit" shall mean, with respect to
any Trust, the date of the Trust Agreement creating such Trust.
(14) "Insurance" shall mean one or more contracts or
policies of insurance obtained by the Trust guaranteeing the payment
when due of the principal of and interest on the Bonds held pursuant
and subject to this Indenture, together with the proceeds, if any,
thereof payable to or received by the Trustee for the benefit of the
Trust and the Unitholders thereof except that Insurance shall not
include those Bonds held pursuant and subject to this Indenture which
are insured by individual policies of insurance which have been
obtained by the issuers of such Bonds (the "Pre-Insured Bonds"). All
references herein relating to Insurance shall apply exclusively to
Insured Corporate Series.
(15) "Insured Corporate Series" shall mean any Trust so
designated in the related Prospectus.
(16) "Insurer" shall mean MBIA Insurance Corporation, AMBAC
Indemnity Corporation and/or Capital Markets Assurance Corporation
("CAPMAC"), their respective successors and assigns, having its
principal office in New York, New York, or any other insurer named in
the Prospectus for a Trust, which has issued the contract or policy of
insurance obtained by the Trust protecting the Trust and the
Unitholders thereof against nonpayment when due of the principal of
and interest on the Bonds (except for Pre-Insured Bonds or U.S.
-5-
<PAGE>
Treasury Obligations) held by the Trustee as part of the Trust. All
references to an Insurer shall apply exclusively to Insured Corporate
Series.
(17) "Investment Grade Corporate Income Series" shall mean
any Trust so designated in the related Prospectus.
(18) "Prospectus" shall mean (a) the prospectus relating to
a Trust filed with the Securities and Exchange Commission pursuant to
Rule 497 under the Securities Act of 1933, as amended, and dated the
date of the Trust Agreement or (b) if any post-effective amendment to
such prospectus described in (a) shall have been subsequently made
effective under the Securities Act of 1933, as amended, such post-
effective amendment thereto.
(19) "Record Dates" shall mean the record dates relating to
the computation of distributions to Unitholders as set forth in the
Prospectus.
(20) "Supplemental Trust Agreement" shall mean an amendment
or supplement to the Trust Agreement executed pursuant to Section
2.01(b) for the purpose of depositing additional Bonds in a Trust and
issuing additional Units.
(21) "Trust" shall mean any one of the separate trusts
created by the Trust Agreement, which shall consist of the Bonds held
pursuant and subject to the Indenture together with all undistributed
interest received or accrued thereon, any undistributed cash realized
from the sale, redemption, liquidation, or maturity thereof or the
proceeds of insurance received in respect thereof. Such amounts as
may be on deposit in the Reserve Account hereinafter established shall
be excluded from the Trust.
(22) "Trust Agreement" shall mean the Trust Agreement for
the particular series of the Fund into which these Standard Terms and
Conditions is incorporated.
(23) "Unitholder" shall mean the registered holder of any
Certificate as recorded on the books of the Trustee, his legal
representatives and heirs and the successors of any corporation,
partnership or other legal entity which is a registered holder of any
Certificate and as such shall be deemed a beneficiary of the trust
created by this Indenture to the extent of his pro rata share thereof.
(24) "Units" in respect of any Trust shall mean the
fractional undivided interest in and ownership of the Trust equal
initially to the fraction of the respective Trust specified in the
Prospectus, the denominator of which shall be increased by the number
of any additional Units issued pursuant to Section 2.03 and decreased
by the number of any such Units redeemed as provided in Section 5.02.
-6-
<PAGE>
(25) Words importing singular number shall include the
plural number in each case and vice versa, and words importing persons
shall include corporations and associations, as well as natural
persons.
(26) The words "herein," "hereby," "herewith," "hereof,"
"hereinafter," "hereunder," "hereinabove," "hereafter," "heretofore"
and similar words or phrases of reference and association shall refer
to this Indenture in its entirety.
ARTICLE II
DEPOSIT OF BONDS; ACCEPTANCE OF TRUST; FORM AND
ISSUANCE OF UNITS; PORTFOLIO INSURANCE
Section 2.01. Deposit of Bonds. (a) The Depositor, on the Initial
Date of Deposit, has deposited with the Trustee in trust the Bonds listed in
the Schedules attached to the Trust Agreement in bearer form or duly endorsed
in blank or accompanied by all necessary instruments of assignment and
transfer in proper form to be held, managed and applied by the Trustee as
herein provided. The Depositor shall deliver the Bonds listed on said
Schedules to the Trustee which were not actually delivered concurrently with
the execution and delivery of the Trust Agreement within 90 days after said
execution and delivery, or if the contract to buy such Bond between the
Depositor and seller is terminated by the seller thereof for any reason
beyond the control of the Depositor, the Depositor shall forthwith take the
remedial action specified in Section 3.14.
(b) From time to time following the Initial Date of Deposit for a
Trust, the Depositor is hereby authorized, in its discretion, to assign,
convey to and deposit with the Trustee additional Bonds for such Trust, duly
endorsed in blank or accompanied by all necessary instruments of assignment
and transfer in proper form, to be held, managed and applied by the Trustee
as herein provided. The Depositor in each case shall ensure that each
deposit of additional Bonds pursuant to this Section shall have the same
ratio of Bonds (based on principal amount) as existed on the Initial Date of
Deposit for each Trust. Any brokerage fees related to the purchase of Bonds
deposited in the Trust after the Initial Date of Deposit shall be an expense
of such Trust.
Section 2.02. Acceptance of Trust. The Trustee hereby accepts the
trusts herein created for the use and benefit of the Unitholders, subject to
the terms and conditions of this Indenture.
Section 2.03. Issuance of Units. (a) The Trustee hereby
acknowledges receipt of the deposit of the Bonds listed in the Schedules to
the Trust Agreement and referred to in Section 2.01 hereof and,
-7-
<PAGE>
simultaneously with the receipt of said deposit, has recorded on its books
the ownership, by the Depositor or such other person or persons as may be
indicated by the Depositor, of the aggregate number of Units specified in the
Trust Agreement and has delivered, or on the order of the Depositor will
deliver, in exchange for such Bonds, documentation evidencing the ownership
of the number of Units specified and, if such Units are represented by a
Certificate, such Certificate substantially in the form above recited,
representing the ownership of those Units. The Trustee hereby agrees that on
the date of any Supplemental Trust Agreement, it shall acknowledge that the
additional Bonds identified therein have been deposited with it by recording
on its books the ownership, by the Depositor or such other person or persons
as may be indicated by the Depositor, of the aggregate number of Units to be
issued in respect of such additional Bonds so deposited, and shall, if so
requested, execute documentation substantially in the form above recited
representing the ownership of an aggregate number of those Units.
(b) Under the terms and conditions of the Trust Agreement and this
Indenture and at such times as are permitted by the Trustee, Units may also
be held in certificated form. Unitholders may elect to have their Units held
in certificated form by making a written request to the Trustee requesting
such Certificates; provided, that the Trustee is entitled to specify the
minimum denomination of any Certificate issued. The Trustee shall, at the
request of the holder of any Units held in uncertificated form, issue a new
Certificate to evidence such Units and at such time make an appropriate
notation in the registration books of the Trustee. The rights set forth in
this Indenture of any holder of Units held in certificated form shall be the
same as those of any other Unitholder. Certificates may be transferred as
provided herein.
Section 2.04. Form of Certificates. Each Certificate referred to in
Section 2.03 is, and each Certificate hereafter issued shall be, in
substantially the form hereinabove recited, numbered serially for
identification, in fully registered form, transferable only on the books of
the Trustee as herein provided, executed manually by an authorized officer of
the Trustee and in facsimile by the President or one of the Vice Presidents
of the Depositor and dated the date of execution and delivery by the Trustee.
Section 2.05. Portfolio Insurance. This Section 2.05 shall apply
only to Insured Corporate Series Trusts and not to Investment Grade Corporate
Income Series Trusts or High Yield Series Trusts. Concurrently with the
delivery to the Trustee of the Bonds listed in Schedule A to this Indenture
the Insurer has delivered to and deposited with the Trustee, a Bond Fund
Portfolio Insurance Policy (the "Insurance") to protect the related Trust and
the Unitholders thereof against nonpayment of principal and interest, when
due, on any Bond or Bonds (except for Pre-Insured Bonds) held by the Trustee
in the portfolio of the Trust. The Trustee shall take all action deemed
necessary or advisable in connection with the Insurance to continue the
Insurance in full force and effect and shall pay all premiums due thereon,
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including the initial premium, all in such manner as in its sole discretion
shall appear to result in the most protection and least expense to such
trust.
The Insurance may not be cancelled by the Insurer. The Trustee shall
make the deduction and payment of premiums prescribed in Section 3.05(c)(5)
of this Indenture in order to continue in force the coverage thus provided.
The Insurer's right to the payment of premiums from funds held by the Trustee
in accordance with the terms of the policy is absolute (except when payment
is withheld in good faith by the Trustee in the event of dispute over the
amount thereof), but no failure on the part of the Trustee to make such
payment of premium or installment thereof to the Insurer shall result in a
cancellation of the Insurance or otherwise affect the right of any Unitholder
under the policy to have any amounts of principal and interest paid by the
Insurer to the Trustee to be held as part of the Trust when the same are not
paid when due by the issuer of a Bond or Bonds held by the Trustee as part of
the Trust.
With each payment of a premium or installment thereof, the Trustee
shall notify the Insurer of all Bonds (except Pre-Insured Bonds) which during
the expiring premium period were redeemed from or sold by the Trust.
At all times during the existence of the Trust the Insurance policy
shall provide for payment by the Insurer to the Trustee of any amounts of
principal and interest due, but not paid, by the issuer of a Bond insured by
the Insurance. The Trustee shall promptly notify the Insurer of any
nonpayment of principal or interest and the Insurer shall, pursuant to the
terms of the Insurance policy, make payment to the Trustee of all amounts of
principal and interest at that time due, but not paid.
Payments of principal and interest assumed by the Insurer shall be
made as required by the related Bond or Bonds. In the event of a sale of any
such Bond or Bonds by the Trustee under Section 3.07, 5.02 or 6.04, or a
termination of this Indenture and the trust created hereby under
Section 8.02, prior to the final maturity of such Bond or Bonds, upon notice
from the Trustee, the Insurer shall, pursuant to the terms of the Insurance
policy, promptly make payment to the Trustee of the accrued interest on such
Bond or Bonds to the date such Bond or Bonds are removed from the portfolio
of the Trust and the Insurer shall be relieved of further obligation to the
Trustee thereon.
Upon the making of any payment referred to in the preceding
paragraphs, the Insurer shall succeed to the rights of the Trustee under the
Bond or Bonds involved to the extent of the payments made at that time, or
any time subsequent thereto, and shall continue to make all payments required
by the terms of such Bond or Bonds to the extent that funds are not provided
therefor by the issuer thereof and such Bond or Bonds are held by the Trust.
To the extent the Trustee receives partial payments of principal (or partial
payments in lieu of principal) from an issuer of Bonds in the Trust, such
payments will reduce the outstanding principal amount of such Bonds subject
to the Insurance provided by the Insurer and any interest payments to be paid
by the Insurer will be based on such reduced principal. Upon the payment of
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any amounts by the Insurer, occasioned by the nonpayment thereof by the
issuer, the Trustee shall execute and deliver to the Insurer any receipt,
instrument or document required to evidence the right of the Insurer in the
Bond or Bonds involved to payment of principal and/or interest thereon to the
extent of the payments made by the Insurer to the Trustee.
With respect to Pre-Insured Bonds in a Trust, the Trustee shall
promptly notify the respective insurance company of any nonpayment of
principal or interest on such Pre-Insured Bonds and if the respective
insurance company should fail to make payment to the Trustee within 30 days
after receipt of such notice, the Trustee shall take all action against the
respective insurance company and/or the issuer deemed necessary to collect
all amounts of principal and interest at that time due, but not collected.
The Trustee shall also take such action required by Section 5.02
hereof with respect to Permanent Insurance, if such Permanent Insurance is
available, as defined in such Section 5.02.
ARTICLE III
ADMINISTRATION OF FUND
Section 3.01. Initial Costs. To the extent not borne by the
Depositor the expenses incurred in establishing a Trust shall be borne by the
Trust, including the cost of the initial preparation and typesetting of the
registration statement, prospectuses (including preliminary prospectuses),
the Indenture, and other documents relating to a Trust, printing of
Certificates, Securities and Exchange Commission and state blue sky
registration fees, the costs of the initial valuation of the portfolio and
audit of a Trust, the initial fees and expenses of the Trustee, and legal and
other out-of-pocket expenses related thereto, but not including the expenses
incurred in the printing of prospectuses (including preliminary
prospectuses), expenses incurred in the preparation and printing of brochures
and other advertising materials and any other selling expenses. To the
extent the funds in the Interest and Capital Accounts of the Trust shall be
insufficient to pay the expenses borne by the Trust specified in this
Section 3.01, the Trustee shall advance out of its own funds and cause to be
deposited and credited to the Interest or Capital Accounts such amount as may
be required to permit payment of such expenses. The Trustee shall be
reimbursed for such advance in the manner provided in the related Prospectus;
provided, however, that nothing herein shall be deemed to prevent, and the
Trustee shall be entitled to, full reimbursement for any advances made
pursuant to this Section no later than the termination of the Trust.
Section 3.02. Interest Account. The Trustee shall collect the
interest on the Bonds as it becomes payable (including all interest accrued
but unpaid prior to the date of deposit of the Bonds in trust and including
that part of the proceeds of the sale, liquidation, redemption or maturity of
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any Bonds or insurance thereon which represents accrued interest thereon) and
credit such interest to a separate account to be known as the "Interest
Account."
Section 3.03. Principal Account. (a) The Bonds and all moneys
(except moneys held by the Trustee pursuant to subsection (b) hereof) other
than amounts credited to the Interest Account, received by the Trustee in
respect of the Bonds, including insurance thereon, shall be credited to a
separate account to be known as the "Principal Account."
(b) Moneys and/or irrevocable letters of credit required to
purchase Contract Bonds or deposited to secure such purchases are hereby
declared to be held specially by the Trustee for such purchases and shall not
be deemed to be part of the Principal Account until (i) the Depositor fails
to timely purchase a Contract Bond and has not given the Failed Contract
Notice (as defined in Section 3.14) at which time the moneys and/or letters
of credit attributable to the Contract Bond not purchased by the Depositor
shall be credited to the Principal Account; or (ii) the Depositor has given
the Trustee the Failed Contract Notice at which time the moneys and/or
letters of credit attributable to failed contracts referred to in such Notice
shall be credited to the Principal Account; provided, however, that if the
Depositor also notifies the Trustee in the Failed Contract Notice that it has
purchased or entered into a contract to purchase a New Bond (as defined in
Section 3.14), the Trustee shall not credit such moneys and/or letters of
credit to the Principal Account unless the New Bond shall also have failed or
is not delivered by the Depositor within two business days after the
settlement date of such New Bond, in which event the Trustee shall forthwith
credit such moneys and/or letters of credit to the Principal Account. The
Trustee shall in any case forthwith credit to the Principal Account, and/or
cause the Depositor to deposit in the Principal Account, the difference, if
any, between the purchase price of the failed Contract Bond and the purchase
price of the New Bond, together with any sales charge and accrued interest
applicable to such difference and distribute such moneys to Unitholders
pursuant to Section 3.05.
The Trustee shall give prompt written notice to the Depositor and the
Evaluator of all amounts credited to or withdrawn from a Principal Account
and the balance in such Account after giving effect to such credit or
withdrawal.
Section 3.04. Reserve Account. From time to time the Trustee shall
withdraw from the cash on deposit in an Interest Account or Principal Account
such amounts as it, in its sole discretion, shall deem requisite to establish
a reserve for any applicable taxes or other governmental charges that may be
payable out of the Trust. Such amounts so withdrawn shall be credited to a
separate account which shall be known as the "Reserve Account." The Trustee
shall not be required to distribute to the Unitholders any of the amounts in
the Reserve Account; provided, however, that if it shall, in its sole
discretion, determine that such amounts are no longer necessary for payment
of any applicable taxes or other governmental charges, then it shall promptly
deposit such amounts in the account from which withdrawn or if the Trust
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shall have terminated or shall be in the process of termination, the Trustee
shall distribute same in accordance with Section 8.02 (d) and (e) to each
Unitholder such holder's interest in the Reserve Account.
Section 3.05. Deductions and Distributions. (a) The Trustee, as of
the "First Settlement Date," as defined in the Prospectus for the related
Trust, shall advance from its own funds and shall pay to the Unitholders then
of record the amount of interest accrued on the Bonds deposited in the Trust.
The Trustee shall also advance from its own funds and pay the appropriate
persons the amount specified in the Prospectus for the related Trust, which
amount represents interest which accrues on any "when issued" Bonds deposited
in the Trust from the date stated in the preceding sentence to the respective
dates of delivery to the Trust of any of such Bonds. The Trustee shall be
entitled to reimbursement, without interest, for such advancement from
interest received by the Trust before any further distributions shall be made
from the Interest Account to Unitholders of the Trust. Subsequent
distributions shall be made as hereinafter provided.
(b) The second distribution of funds from the Interest Account
shall be made on the first Distribution Date after the first Record Date to
all Unitholders of record as of the first Record Date.
(c) As of the first day of each month of each year commencing with
the first Record Date, the Trustee shall:
(1) deduct from the Interest Account or, to the extent
funds are not available in such Account, from the Principal Account
and pay to itself individually the amounts that it is at the time
entitled to receive pursuant to Section 6.04;
(2) deduct from the Interest Account, or, to the extent
funds are not available in such Account, from the Principal Account
and pay to the Evaluator the amount that it is at the time entitled to
receive pursuant to Section 4.03;
(3) deduct from the Interest Account, or to the extent
funds are not available in such Account, from the Principal Account
and pay to the Depositor the amount that it is entitled to receive
pursuant to Section 3.15;
(4) deduct from the Interest Account, or, to the extent
funds are not available in such Account, from the Principal Account
and pay to bond counsel, as hereinafter provided for, an amount equal
to unpaid fees and expenses, if any, of such bond counsel pursuant to
Section 3.09 as certified to by the Depositor;
(5) deduct (as provided in Section 3.16) ffrom the Interest
Account, or, to the extent funds are not available in such Account,
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from the Principal Account and pay to the Depositor the amount, if
any, that it is at the time entitled to receive pursuant to
Section 3.16; and
(6) deduct rom the Interest Account, or, to the extent
funds are not available in such Account, from the Principal Account
and pay to the Insurer the amount of any premium to which it is at the
time entitled to receive, pursuant to Section 2.05.
(d) On or shortly after the Distribution Date of each month
occurring subsequent to the first Record Date, the Trustee shall distribute
by mail to or upon the order of each Unitholder of record as of the close of
business on the preceding Record Date at the post office address appearing on
the registration books of the Trustee such Unitholder's pro rata share of the
balance of the Interest Account calculated as of each Record Date on the
basis of one-twelfth of the estimated annual interest income to the Trust for
the ensuing twelve months, after deduction of the estimated costs and
expenses to be incurred during the twelve month period for which the interest
income has been estimated.
In the event the amount on deposit in the Interest Account is not
sufficient for the payment of the amount of interest to be distributed to
Unitholders on the bases of the aforesaid computations, the Trustee shall
advance its own funds and cause to be deposited in and credited to the
Interest Account such amounts as may be required to permit payment of the
monthly interest distribution to be made as aforesaid and shall be entitled
to be reimbursed, without interest, out of interest received by the related
Trust subsequent to the date of such advance and subject to the condition
that any such reimbursement shall be made only under conditions which will
not reduce the funds in or available for the Interest Account to an amount
less than required for the next ensuing distribution of interest.
Distributions of amounts represented by the cash balance in the
Principal Account shall be computed as of the Record Date of each month
occurring subsequent to the date of the first Record Date. On the
Distribution Date of each month as of which such computation is made, or
within a reasonable period of time thereafter, the Trustee shall distribute
by mail to each Unitholder of record at the close of business on the date of
computation (the Record Date) at his post office address such Unitholder's
pro rata share of the cash balance of the Principal Account as thus computed.
The Trustee shall not be required to make a distribution from the Principal
Account unless the cash balance on deposit therein available for distribution
shall be sufficient to distribute at least $0.01 per Unit.
If the Depositor (i) fails to replace any failed Special Bond (as
defined in Section 3.14) or (ii) is unable or fails to enter into any
contract for the purchase of any New Bond in accordance with Section 3.14,
the Trustee shall distribute to all Unitholders the principal, accrued
interest and sales charge attributable to such Special Bonds at the next
monthly Distribution Date which is more than thirty days after the expiration
of the Purchase Period (as defined in Section 3.14) or at such earlier time
or in such manner as the Trustee in its sole discretion deems to be in the
best interest of the Unitholders.
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If any contract for a New Bond in replacement of a Special Bond shall
fail, the Trustee shall distribute the principal, accrued interest and sales
charge attributable to the Special Bond to the Unitholders at the next
monthly Distribution Date which is more than thirty days after the date on
which the contract in respect of such New Bond failed or at such earlier time
or in such earlier manner as the Trustee in its sole discretion determines to
be in the best interest of the Unitholders.
If, at the end of the Purchase Period, less than all moneys
attributable to a failed Special Bond have been applied or allocated by the
Trustee pursuant to a contract to purchase New Bonds, the Trustee shall
distribute the remaining moneys to Unitholders at the next monthly
distribution date which is more than thirty days after the end of the
Purchase Period or at such earlier time thereafter as the Trustee in its sole
discretion deems to be in the best interest of the Unitholders.
The amounts to be so distributed to each Unitholder shall be that pro
rata share of the cash balance of the Interest and Principal Accounts,
computed as set forth above, as shall be represented by the Units, whether or
not evidenced by the outstanding Certificate or Certificates, registered in
the name of such Unitholder.
In the computation of each such share, fractions of less than one cent
shall be omitted. After any such distribution provided for above, any cash
balance remaining in an Interest Account or Principal Account shall be held
in the same manner as other amounts subsequently deposited in each of such
accounts, respectively.
For the purpose of distributions as herein provided, the Unitholders
of record on the registration books of the Trustee at the close of business
on each Record Date shall be conclusively entitled to such distribution, and
no liability shall attach to the Trustee by reason of payment to any such
registered Unitholder of record. Nothing herein shall be construed to
prevent the payment of amounts from the Interest Account and the Principal
Account to individual Unitholders by means of one check, draft or other
proper instrument, provided that the appropriate statement of such
distribution shall be furnished therewith as provided in Section 3.06 hereof.
Section 3.06. Distribution Statements. With each distribution from
the Interest or Principal Accounts the Trustee shall set forth, either in the
instrument by means of which payment of such distribution is made or in an
accompanying statement, the amount being distributed from each such account
and, if from the Interest Account, the amount of accrued interest
(uncollected and not available for distribution) on the record date for such
distribution, each expressed as a dollar amount per Unit. Within a
reasonable period of time after the last business day of each calendar year,
the Trustee shall furnish to each person who at any time during such calendar
year was a Unitholder a statement setting forth, with respect to such
calendar year:
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(A) as to the Interest Account:
(1) the amount of interest received on the Bonds,
(2) the amounts paid for purchases of New Bonds
pursuant to Section 3.14 and for redemptions pursuant to
Section 5.02,
(3) the deductions for applicable taxes and fees and
expenses of the Trustee and all other Trust expenses, and
(4) the balance remaining after such distributions
and deductions, expressed both as a total dollar amount and as
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 sale, maturity, liquidation or
redemption of any of the Bonds and the net proceeds received
therefrom, excluding any portion thereof credited to the
Interest Account,
(2) the amount paid for purchases of New Bonds
pursuant to Section 3.14 and for redemptions pursuant to
Section 5.02,
(3) the deductions for payment of applicable taxes
and fees and expenses, including the cost of Permanent
Insurance, of the Trustee and all other Trust expenses, and
(4) the balance remaining after such distributions
and deductions, expressed both as a total dollar amount and as
a dollar amount per Unit outstanding on the last business day
of such calendar year; and
(C) the following information:
(1) a list of the Bonds as of the last business day
of such calendar year,
(2) the number of Units outstanding on the last
business day of such calendar year,
(3) the Unit Value based on the last Trust
Evaluation made during such calendar year, and
(4) the amounts actually distributed during such
calendar year from the Interest and Principal Accounts,
separately stated, expressed both as total dollar amounts and
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as dollar amounts per Unit outstanding on the record dates for
each plan of distribution.
Section 3.07. Extraordinary Sale of Bonds. If necessary, in order
to maintain the investment character of the Trust, the Depositor may direct
the Trustee to sell or liquidate Bonds at such price and time and in such
manner as shall be determined by the Depositor, provided that the Depositor
has determined that any one or more of the following conditions exist:
(a) that there has been a default on such Bonds in the
payment of principal or interest, or both, when due and payable;
(b) that any action or proceeding has been instituted in
law or equity seeking to restrain or enjoin the payment of principal
or interest on any such Bonds, attacking the constitutionality of any
enabling legislation or alleging and seeking to have judicially
determined the illegality of the issuing body or the constitution of
its governing body or officers, the illegality, irregularity or
omission of any necessary acts or proceedings preliminary to the
issuance of such Bonds, or seeking to restrain or enjoin the
performance by the officers or employees of any such issuing body of
any improper or illegal act in connection with the administration of
funds necessary for debt service on such Bonds or otherwise; or that
there exists any other legal question or impediment affecting such
Bonds or the payment of debt service on the same;
(c) that there has occurred any breach of covenant or
warranty in any resolution, ordinance, trust indenture or other
document, which would adversely affect either immediately or
contingently the payment of debt service on such Bonds, or their
general credit standing, or otherwise impair the sound investment
character of such Bonds;
(d) that there has been a default in the payment of
principal of or interest on any other outstanding obligations of an
issuer or guarantor of such Bonds;
(e) that the price of any such Bonds had declined to such
an extent, or such other market or credit factor exists, so that in
the opinion of the Depositor the retention of such Bonds would be
detrimental to the Trust and to the interest of the Unitholders;
(f) that such Bonds are the subject of an advanced
refunding. For the purposes of this Section 3.07(g), "an advanced
refunding" shall mean when refunding bonds are issued and the proceeds
thereof are deposited in irrevocable trust to retire the Bonds on or
before their redemption date; or
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(g) that as of any Record Date any of the Bonds are
scheduled to be redeemed and paid prior to the next succeeding monthly
Distribution Date; provided, however, that as the result of such
redemption the Trustee will receive funds in an amount sufficient to
enable the Trustee to include in the next distribution from the
Principal Account at least $0.01 per Unit.
Upon receipt of such direction from the Depositor, upon which the
Trustee shall rely, the Trustee shall proceed to sell or liquidate the
specified Bonds in accordance with such direction; provided, however, that
the Trustee shall not sell or liquidate any Bonds upon receipt of a direction
from the Depositor that it has determined that the conditions in
subdivision (g) above exist, unless the Trustee shall receive on account of
such sale or liquidation the full principal amount of such Bonds, plus the
premium, if any, and the interest accrued and to accrue thereon to the date
of the redemption of such Bonds.
The Trustee shall not be liable or responsible in any way for
depreciation or loss incurred by reason of any sale made pursuant to any such
direction or by reason of the failure of the Depositor to give any such
direction, and in the absence of such direction the Trustee shall have no
duty to sell or liquidate any Bonds under this Section 3.07 except to the
extent otherwise required by Section 3.10 of this Indenture.
Section 3.08. Refunding Bonds. In the event that an offer shall be
made by an obligor of any of the Bonds to issue new obligations in exchange
and substitution for any issue of Bonds pursuant to a plan for the refunding
or refinancing of such Bonds, the Depositor shall instruct the Trustee in
writing to reject such offer and either to hold or sell such Bonds, except
that if (1) the issuer is in default with respect to such Bonds or (2) in the
opinion of the Depositor, given in writing to the Trustee, the issuer will
probably default with respect to such Bonds in the reasonably foreseeable
future, the Depositor shall instruct the Trustee in writing to accept or
reject such offer or take any other action with respect thereto as the
Depositor may deem proper. Any obligation so received in exchange shall be
deposited hereunder and shall be subject to the terms and conditions of this
Indenture to the same extent as the Bonds originally deposited hereunder.
Within five days after such deposit, notice of such exchange and deposit
shall be given by the Trustee to each Unitholder, including an identification
of the Bonds eliminated and the bonds substituted therefor.
Section 3.09. Counsel. The Depositor may employ from time to time
as it may deem necessary a firm of bond attorneys for any legal services that
may be required in connection with the disposition of underlying bonds
pursuant to Section 3.07 or the substitution of any securities for underlying
bonds as the result of any refunding permitted under Section 3.08. The fees
and expenses of such counsel shall be paid by the Trustee from the Interest
and Principal Accounts as provided for in Section 3.05(c)(4) hereof.
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Section 3.10. Notice and Sale by Trustee. If at any time the
principal of or interest on any of the Bonds shall be in default and not paid
or provision for payment thereof shall not have been duly made within thirty
days, either pursuant to the Insurance or otherwise, the Trustee shall notify
the Depositor thereof. If within thirty days after such notification the
Depositor has not given any instruction to sell or to hold or has not taken
any other action in connection with such Bonds, the Trustee may in its
discretion sell such Bonds forthwith, and the Trustee shall not be liable or
responsible in any way for depreciation or loss incurred by reason of such
sale.
Section 3.11. Trustee Not Required to Amortize. Nothing in this
Indenture, or otherwise, shall be construed to require the Trustee to make
any adjustments between the Interest and Principal Accounts by reason of any
premium or discount in respect of any of the Bonds.
Section 3.12. Liability, Indemnification and Succession of
Depositor. (a) The Depositor shall be under no liability to the Unitholders
for any action taken or for refraining from the taking of any action in good
faith pursuant to this Indenture or for errors in judgment, but shall be
liable only for its own wilful misfeasance, bad faith or gross negligence in
the performance of its duties or by reason of its reckless disregard of its
obligations and duties hereunder. The Depositor may rely in good faith on
any paper, order, notice, list, affidavit, receipt, opinion, endorsement,
assignment, draft or any other document of any kind prima facie properly
executed and submitted to it by the Trustee, bond counsel or any other
persons pursuant to this Indenture and in furtherance of its duties.
(b) Each Trust shall pay and hold the Depositor harmless from and
against any loss, liability or expense incurred in acting as Depositor of
such Trust other than by reason of wilful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties hereunder. The Depositor shall not
be under any obligation to appear in, prosecute or defend any legal action
which in its opinion may involve it in any expense or liability, provided,
however, that the Depositor may in its discretion undertake any such action
which it may deem necessary or desirable in respect of this Agreement and the
rights and duties of the parties hereto and the interests of the Unitholders
hereunder and, in such event, the legal expenses and costs of any such action
and any liability resulting therefrom shall be expenses, costs and
liabilities of the Trust concerned and shall be paid directly by the Trustee
out of the Interest and Principal Accounts of such Trust.
(c) The covenants, provisions and agreements herein contained shall
in every case be binding upon any successor to the business of any Depositor.
In the event of an assignment by any Depositor to a successor corporation or
partnership as permitted by the next following sentence, such Depositor and,
if such Depositor is a partnership, its partners shall be relieved of all
further liability under this Indenture. Any Depositor may transfer all or
substantially all of its assets to a corporation or partnership which carries
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on the business of such Depositor, if at the time of such transfer such
successor duly assumes all the obligations of such Depositor under this
Indenture.
Section 3.13. Notice to Depositor. In the event that the Trustee
shall have been notified at any time of any action to be taken or proposed to
be taken by holders of the Bonds (including but not limited to the making of
any demand, direction, request, giving of any notice, consent or waiver or
the voting with respect to any amendment or supplement to any indenture,
resolution, agreement or other instrument under or pursuant to which the
Bonds have been issued), the Trustee shall promptly notify the Depositor and
shall thereupon take such action or refrain from taking any action as the
Depositor shall in writing direct; provided, however, that if the Depositor
shall not within five business days of the giving of such notice to the
Depositor direct the Trustee to take or refrain from taking any action, the
Trustee shall take such action as it, in its sole discretion, shall deem
advisable. Neither the Depositor nor the Trustee shall be liable to any
person for any action or failure to take action with respect to this
Section 3.13.
Section 3.14. Limited Replacement of Special Bonds. If any contract
in respect of Contract Bonds other than a contract to purchase a New Bond (as
defined below), including those purchased on a when, as and if issued basis,
shall have failed due to any occurrence, act or event beyond the control of
the Depositor or the Trustee (such failed Contract Bonds being herein called
the "Special Bonds"), the Depositor shall notify the Trustee and the Insurer
(such notice being herein called the "Failed Contract Notice") of its
inability to deliver the failed Special Bond to the Trustee after it is
notified in writing that the Special Bond will not be delivered by the seller
thereof to the Depositor. Prior to, or simultaneously with, giving the
Trustee the Failed Contract Notice, or within a maximum of twenty days after
giving such Notice (such twenty day period being herein called the "Purchase
Period"), the Depositor shall, if possible, purchase or enter into the
contract, if any, to purchase an obligation to be held as a Bond hereunder
(herein called the "New Bond") as part of the Trust in replacement of the
failed Special Bond, subject to the satisfaction of all of the following
conditions in the case of each purchase or contract to purchase:
(a) The New Bonds (i) shall be bonds, debentures, notes or
other straight debt obligations (whether secured or unsecured and
whether senior or subordinated) without equity or other conversion
features, with fixed maturity dates substantially the same as those of
the Failed Bonds, having no warrants or subscription privileges
attached; (ii) shall be payable in United States currency; (iii) shall
not be when, as and if issued obligations or restricted securities;
(iv) shall be issued after July 18, 1984 if interest thereon is United
States source income; (v) in the case of an Insured Corporate Series
Trust, shall be issued or guaranteed by an issuer subject to or exempt
from the reporting requirements under Section 13 or 15(d) of the
Securities Exchange Act of 1934 (or similar provisions of law) or in
effect guaranteed, directly or indirectly, by means by of a lease
agreement, agreement to buy securities, services or products, or other
similar commitment of the credit of such an issuer to the payment of
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the substitute Securities; (vi) in the case of an Insured Corporate
Series Trust, shall not cause the Units of the Trust to cease to be
rated AAA by Standard & Poor's; (vii) in the case of an Insured
Corporate Series Trust, must be insured by the Insurer or be eligible
for (and when acquired be insured under) the insurance obtained by the
Trust; and (viii) in the case of an Insured Corporate Series Trust,
must be eligible for (and when acquired be covered by) the Permanent
Insurance if such Permanent Insurance is available to the Trust.
(b) The purchase price of the New Bonds (exclusive of
accrued interest) shall not exceed the principal attributable to the
Special Bonds.
(c) The Depositor shall furnish a notice to the Trustee and
any Insurer (which may be part of the Failed Contract Notice) in
respect of the New Bond purchased or to be purchased that shall
(i) identify the New Bonds, (ii) state that the contract to purchase,
if any, entered into by the Depositor is satisfactory in form and
substance, and (iii) state that the foregoing conditions of clauses
(a) and (b) have been satisfied with respect to the New Bonds.
Upon satisfaction of the foregoing conditions with respect to any New
Bond, the Depositor shall pay the purchase price for the New Bond from its
own resources or, if the Trustee has credited any moneys and/or letters of
credit attributable to the failed Special Bond to the Principal Account, the
Trustee shall pay the purchase price of the New Bond upon directions from the
Depositor from the moneys and/or letters of credit so credited to the
Principal Account. If the Depositor has paid the purchase price, and, in
addition, the Trustee has credited moneys of the Depositor to the Principal
Account, the Trustee shall forthwith return to the Depositor the portion of
such moneys that is not properly distributable to Unitholders pursuant to
Section 3.05.
Whenever a New Bond is acquired by the Depositor pursuant to the
provisions of this Section 3.14, the Trustee shall, within five days
thereafter, mail to all Unitholders notices of such acquisition, including an
identification of the failed Special Bonds and the New Bonds acquired. The
purchase price of the New Bonds shall be paid out of the principal
attributable to the failed Special Bonds. The Trustee shall not be liable or
responsible in any way for depreciation or loss incurred by reason of any
purchase made pursuant to any such directions and in the absence of such
directions the Trustee shall have no duty to purchase any New Bonds under
this Indenture. The Depositor shall not be liable for any failure to
instruct the Trustee to purchase any New Bonds or for errors of judgment in
respect of this Section 3.14; provided, however, that this provision shall
not protect the Depositor against any liability to which it would otherwise
be subject by reason of willful misfeasance, bad faith or gross negligence in
the performance of its duties or by reason of its reckless disregard of its
obligations and duties hereunder.
Section 3.15. Compensation of Depositor for Supervisory Services.
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As compensation for providing supervisory portfolio services under this
Indenture, the Depositor shall receive against a statement or statements
therefor submitted to the Trustee monthly or annually that aggregate annual
fee set forth in the Prospectus for the related Trust, but in no event shall
such compensation when combined with all compensation received from other
series of the Fund for providing such supervisory services in any calendar
year exceed the aggregate cost to the Depositor for providing such services.
Such compensation may, from time to time, be adjusted provided that the total
adjustment upward does not, at the time of such adjustment, exceed the
percentage of the total increase, after the date hereof, in consumer prices
for services as measured by the United States Department of Labor Consumer
Price Index entitled "All Services Less Rent of Shelter" or similar index, if
such index should no longer be published. The consent or concurrence of any
Unitholder hereunder shall not be required for any such adjustment or
increase. Such compensation shall be charged by the Trustee, upon receipt of
invoice therefor from the Depositor, against the Interest and Principal
Accounts on or before the Distribution Date on which such period terminates.
If the cash balance in the Interest and Principal Accounts shall be
insufficient to provide for amounts payable pursuant to this Section 3.15,
the Trustee shall have the power to sell (i) Bonds from the current list of
Bonds designated to be sold pursuant to Section 5.02 hereof, or (ii) if no
such Bonds have been so designated, such Bonds as the Trustee may see fit to
sell in its own discretion, and to apply the proceeds of any such sale in
payment of the amounts payable pursuant to this Section 3.15. Any moneys
payable to the Depositor pursuant to this Section 3.15 shall be secured by a
prior lien on the Trust except that no such lien shall be prior to any lien
in favor of the Trustee under the provisions of Section 6.04.
Section 3.16. Deferred Sales Charge. If the Trust Agreement related
to a Trust specifies a Deferred Sales Charge, the Trustee shall, on the dates
specified and as provided in such Prospectus, withdraw from the Interest
Account or Principal Account (as specified in the such Prospectus), an amount
per Unit specified in such Prospectus and credit such amount to a special
non-Trust account designated by the Depositor out of which the deferred sales
charge will be distributed to the Depositor (the "Deferred Sales Charge
Account"). If the balance in the applicable Account is insufficient to make
such withdrawal, the Trustee shall, as directed by the Depositor, advance
funds in an amount required to fund the proposed withdrawal and be entitled
to reimbursement of such advance upon the deposit of additional moneys in the
applicable Account, and/or sell Securities and credit the proceeds thereof to
the Deferred Sales Charge Account. Such direction shall, if the Trustee is
directed to sell a Security, identify the Security to be sold and include
instructions as to the execution of such sale. If a Unitholder redeems Units
prior to full payment of the deferred sales charge, the Trustee shall, if so
provided in the related Prospectus, on the Redemption Date, withhold from the
Redemption Price payable to such Unitholder an amount equal to the unpaid
portion of the deferred sales charge and distribute such amount to the
Deferred Sales Charge Account. If pursuant to Section 5.02 hereof, the
Depositor shall purchase a Unit tendered for redemption prior to the payment
in full of the deferred sales charge due on the tendered Unit, the Depositor
shall pay to the Unitholder the amount specified under Section 5.02 less the
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unpaid portion of the deferred sales charge. All advances made by the
Trustee pursuant to this Section shall be secured by a lien on the Trust
prior to the interest of the Unitholders.
ARTICLE IV
EVALUATION OF BONDS; EVALUATOR
Section 4.01. Evaluation of Bonds. The Evaluator shall determine
separately and promptly furnish to the Trustee and the Depositor upon request
the value of each issue of Bonds (treating separate maturities of Bonds as
separate issues) as of the Evaluation Time on days of trading on the New York
Stock Exchange on the bid side of the market on the days on which an
evaluation of the Trust is required by Section 5.01 and, in addition, as of
the Evaluation Time on days of trading on the New York Stock Exchange on the
bid side of the market if a secondary market for the Units is maintained,
such additional evaluation being made on any day desired by the Trustee or
deemed necessary by the Depositor. Such evaluations shall be made (i) on the
basis of current bid and offering prices for the Bonds, (ii) if bid and
offering prices are not available for the Bonds, on the basis of current bid
and offering prices for comparable bonds, (iii) by causing the value of the
Bonds to be determined by others engaged in the practice of evaluation,
quoting or appraising comparable bonds, or (iv) by any combination of the
above. Any evaluation of Bonds which includes amounts attributable to
Permanent Insurance, as defined in Section 5.02 hereof, shall, to the extent
necessary, include a deduction for amounts which would be payable as premiums
and related expenses to obtain Permanent Insurance if the Trustee had
exercised the right to obtain Permanent Insurance. For each evaluation, the
Evaluator shall also determine and furnish to the Trustee and the Depositor
the aggregate of (a) the value of all Bonds on the basis of such evaluation
and (b) on the basis of the information furnished to the Evaluator by the
Trustee pursuant to Section 3.03, the amount of cash then held in the
Principal Account which was received by the Trustee after the Record Date
preceding such determination less any amounts held in the Principal Account
for distribution to Unitholders on a subsequent Distribution Date when a
Record Date occurs four business days or less after such determination. For
the purposes of the foregoing, the Evaluator may obtain current bid prices
for the Bonds from investment dealers or brokers (including the Depositor)
that customarily deal in bonds comparable to those held by the Trust.
Section 4.02. Information for Unitholders. For the purpose of
permitting Unitholders to satisfy any reporting requirements of applicable
federal or state tax law, the Evaluator shall make available to the Trustee
and the Trustee shall transmit to any Unitholder upon request any
determinations made by it pursuant to Section 4.01.
Section 4.03. Compensation of Evaluator. As compensation for its
services hereunder, the Evaluator shall receive against a statement therefor
submitted to the Trustee, that annual fee set forth in the Prospectus for the
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related Trust, computed on the basis described in such Prospectus. Such
compensation may, from time to time, be adjusted provided that the total
adjustment upward does not, at the time of such adjustment, exceed the
percentage of the total increase, after the date hereof, in consumer prices
for services as measured by the United States Department of Labor Consumer
Price Index entitled "All Services Less Rent" or similar index, if such index
shall no longer be published. The consent or concurrence of any Unitholder
hereunder shall not be required for any such adjustment or increase. Such
compensation shall be charged by the Trustee against the Interest and
Principal Accounts on or before the Distribution Date on which such period
terminates. If the cash balances in the Interest and Principal Accounts
shall be insufficient to provide for amounts payable pursuant to this
Section 4.03, the Trustee shall have the power to sell (i) Bonds designated
to be sold pursuant to Section 5.02 hereof, or (ii) if no such Bonds have
been so designated, such Bonds as the Trustee may see fit to sell in its own
discretion, and to apply the proceeds of any such sale in payment of the
amounts payable pursuant to this Section 4.03. Any moneys payable to the
Evaluator pursuant to this Section 4.03 shall be secured by a prior lien on
the Trust except that no such lien shall be prior to any lien in favor of the
Trustee under the provisions of Section 6.04.
Section 4.04. Liability of Evaluator. The Trustee, the Depositor
(if other than the Evaluator) and the Unitholders may rely on any evaluation
furnished by the Evaluator and shall have no responsibility for the accuracy
thereof. The determinations made by the Evaluator hereunder shall be made in
good faith upon the basis of the best information available to it. The
Evaluator shall be under no liability to the Trustee, the Depositor (if other
than the Evaluator) or the Unitholders for errors in judgment; provided,
however, that this provision shall not protect the Evaluator against any
liability to which it would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of its duties
or by reason of its reckless disregard of its obligations and duties
hereunder.
Section 4.05. Resignation and Removal of Evaluator; Successor.
(a) The Evaluator may resign and be discharged hereunder, by executing an
instrument in writing resigning as Evaluator and filing the same with the
Depositor (if other than the Evaluator) and the Trustee, not less than 60
days before the date specified in such instrument when, subject to
Section 4.05(e), such resignation is to take effect. Upon receiving such
notice of resignation, the Depositor (if other than the Evaluator) and the
Trustee shall use their (its, in case the Depositor is the Evaluator) best
efforts to appoint a successor evaluator having qualifications and at a rate
of compensation satisfactory to the Depositor and the Trustee. Such
appointment shall be made by written instrument executed by the Depositor (if
other than the Evaluator) and Trustee, in duplicate, one copy of which shall
be delivered to the resigning Evaluator and one copy to the successor
evaluator. The Depositor (if other than the Evaluator) or the Trustee may
remove the Evaluator at any time upon 30 days' written notice and appoint a
successor evaluator having qualifications and at a rate of compensation
satisfactory to the Depositor and the Trustee. Such appointment shall be
made by written instrument executed by the Depositor (if other than the
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Evaluator) and the Trustee, in duplicate, one copy of which shall be
delivered to the Evaluator so removed and one copy to the successor
evaluator. Notice of such resignation or removal and appointment of a
successor evaluator shall be mailed by the Trustee to each Unitholder then of
record.
(b) Any successor evaluator appointed hereunder shall execute,
acknowledge and deliver to the Depositor and the Trustee an instrument
accepting such appointment hereunder, and such successor evaluator without
any further act, deed or conveyance shall become vested with all the rights,
powers, duties and obligations of its predecessor hereunder with like effect
as if originally named Evaluator herein and shall be bound by all the terms
and conditions of this Indenture.
(c) In case at any time the Evaluator shall resign and no successor
evaluator shall have been appointed and have accepted appointment within 30
days after notice of resignation has been received by the Depositor (if other
than the Evaluator) and the Trustee, the Evaluator may forthwith apply to a
court of competent jurisdiction for the appointment of a successor evaluator.
Such court may thereupon after such notice, if any, as it may deem proper and
prescribe, appoint a successor evaluator.
(d) Any corporation into which the Evaluator hereunder may be
merged or with which it may be consolidated, or any corporation resulting
from any merger or consolidation to which the Evaluator hereunder shall be a
party, shall be the successor evaluator under this Indenture without the
execution or filing of any paper, instrument or further act to be done on the
part of the parties hereto, anything herein, or in any agreement relating to
such merger or consolidation, by which the Evaluator may seek to retain
certain powers, rights and privileges theretofore obtaining for any period of
time following such merger or consolidation, to the contrary notwithstanding.
(e) Any resignation or removal of the Evaluator and appointment of
a successor evaluator pursuant to this Section shall become effective upon
acceptance of appointment by the successor evaluator as provided in
subsection (b) hereof.
ARTICLE V
EVALUATION, REDEMPTION, PURCHASE, ISSUANCE,
TRANSFER, INTERCHANGE OR REPLACEMENT OF UNITS
Section 5.01. Evaluation. The Trustee shall make an evaluation of
each Trust as of the Evaluation Time on days of trading on the New York Stock
Exchange (i) on the day on which any Unit is tendered for redemption and
(ii) on any other day desired by the Trustee or requested by the Depositor.
Such evaluations shall take into account and itemize separately (1) the cash
on hand in the Trust (other than cash declared held in trust to cover
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contracts to purchase bonds) or moneys in the process of being collected from
matured interest coupons or bonds matured or called for redemption prior to
maturity, (2) the value of each issue of the Bonds in the Trust as last
determined by the Evaluator pursuant to Section 4.01 and (3) interest accrued
thereon not subject to collection and distribution. For each such evaluation
there shall be deducted from the sum of the above (1) amounts representing
any applicable taxes or governmental charges payable out of the Trust and for
which no deductions shall have previously been made for the purpose of
addition to the Reserve Account, (2) amounts representing accrued expenses of
the Trust including but not limited to unpaid fees and expenses of the
Trustee, the Evaluator, the Depositor and bond counsel, in each case as
reported by the Trustee to the Depositor on or prior to the date of
evaluation, and (3) cash held for distribution to Unitholders of record as of
a date prior to the evaluation then being made. The value of the pro rata
share of each Unit determined on the basis of any such evaluation shall be
referred to herein as the "Unit Value." The Trustee shall make an evaluation
of the Bonds deposited in the Fund as of the time said Bonds are deposited
under this Indenture. Such evaluation shall be made on the same basis as set
forth in Section 4.01, except that it shall be based upon the offering prices
of the Bonds. The Trustee, in lieu of making the evaluation required hereby,
may use an evaluation prepared by the Evaluator and/or by any other
recognized evaluator and in so doing shall not be liable or responsible,
under any circumstances whatever, for the accuracy or correctness thereof, or
for any error or omission therein. The Trustee's determination of the
offering price of the Bonds on the date of deposit determined as herein
provided shall be included in Schedule A attached to the Trust Agreement.
Section 5.02. Redemptions by Trustee; Purchases by Depositor.
Any Unit tendered for redemption by a Unitholder or his duly authorized
attorney to the Trustee at its unit investment trust division office shall be
redeemed by the Trustee no later than the seventh calendar day following the
day on which tender for redemption is made, provided that if such day of
redemption is not a Business Day, then such Unit shall be redeemed on the
first Business Day prior thereto (being herein called the "Redemption Date").
Subject to payment by such Unitholder of any tax or other governmental
charges which may be imposed thereon, such redemption is to be made by
payment on the Redemption Date of cash equivalent to the Unit Value,
determined by the Trustee as of the Evaluation Time on the date of tender;
provided that accrued interest is paid to the Redemption Date, multiplied by
the number of Units tendered (herein called the "Redemption Price"). Units
received for redemption by the Trustee on any day after the Evaluation Time
on days of trading on the New York Stock Exchange will be held by the Trustee
until the next day on which the New York Stock Exchange is open for trading
and will be deemed to have been tendered on such day for redemption at the
Redemption Price computed on that day. Units held in certificated form will
be deemed to be "tendered" to the Trustee when the Trustee is in physical
receipt of the Certificate or Certificates representing such Units in the
form and with such documentation as is required to accomplish transfers of
Units pursuant to Section 5.03 hereof.
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The Trustee may in its discretion, and shall when so directed by the
Depositor, suspend the right of redemption or postpone the date of payment of
the Redemption Price for more than seven calendar days following the day on
which tender for redemption is made (1) for any period during which the New
York Stock Exchange is closed other than customary weekend and holiday
closings or during which 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 Trust of the Bonds is not reasonably practicable or
it is not reasonably practicable fairly to determine in accordance herewith
the value of the Bonds; or (3) for such other period as the Securities and
Exchange Commission may by order permit, and shall not be liable to any
person or in any way for any loss or damage which may result from any such
suspension or postponement.
Not later than the close of business on the day of tender of a Unit or
Units for redemption by a Unitholder other than the Depositor, the Trustee
shall notify the Depositor of such tender. The Depositor shall have the
right to purchase such Unit or Units by notifying the Trustee of its election
to make such purchase as soon as practicable thereafter but in no event
subsequent to the close of business on the second business day after the day
on which such Unit or Units were tendered for redemption. Such purchase
shall be made by payment for such Unit or Units by the Depositor to the
Unitholder not later than the close of business on the Redemption Date of an
amount not less than the Redemption Price which would otherwise be payable by
the Trustee to such Unitholder.
Any Unit or Units so purchased by the Depositor may at the option of
the Depositor be tendered to the Trustee for redemption at the corporate
trust office of the Trustee in the manner provided in the first paragraph of
this Section 5.02.
If the Depositor does not elect to purchase any Unit or Units tendered
to the Trustee for redemption, or if a Unit or Units are being tendered by
the Depositor for redemption, that portion of the Redemption Price which
represents interest shall be withdrawn from the Interest Account to the
extent available. The balance paid on any redemption, including accrued
interest, if any, shall be withdrawn from the Principal Account to the extent
that funds are available for such purpose. If such available balance shall
be insufficient, the Trustee shall sell such of the Bonds, currently
designated for such purposes by the Evaluator, as the Trustee in its sole
discretion shall deem necessary. In the event that funds are withdrawn from
the Principal Account for payment of accrued interest, the Principal Account
shall be reimbursed for such funds so withdrawn when sufficient funds are
next available in the Interest Account.
The Evaluator shall maintain with the Trustee a current list of Bonds
held in the Trust designated to be sold for the purpose of redemption of
Certificates tendered for redemption and not purchased by the Depositor, and
for payment of expenses hereunder, provided that if the Evaluator shall for
any reason fail to maintain such a list, the Trustee, in its sole discretion,
may designate a current list of Bonds for such purposes. The net proceeds of
any sales of Bonds from such list representing principal shall be credited to
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the Principal Account of the Trust and the proceeds of such sales
representing accrued interest shall be credited to the Interest Account of
the Trust. The Evaluator shall also designate on such list of Bonds
designated to be sold the Bonds upon the sale of which the Trustee shall
obtain permanent insurance (the "Permanent Insurance") from the Insurer (if
such Permanent Insurance is available to the Trust), provided that if the
Evaluator shall for any reason fail to make such designation, the Trustee, in
its sole discretion, shall make such designation if it deems such designation
to be in the best interests of Unitholders. The Trustee is hereby authorized
to pay and shall pay out of the proceeds of the sale of the Bonds which are
covered by Permanent Insurance any premium for such Permanent Insurance and
expenses related thereto and the net proceeds after such deduction shall be
credited to the Principal Account and the net proceeds representing accrued
interest shall be credited to the Interest Account.
Neither the Depositor nor the Trustee shall not be liable or
responsible in any way for depreciation or loss incurred by reason of any
sale of Bonds made pursuant to this Section 5.02. Certificates evidencing
Units redeemed pursuant to this Section 5.02 shall be cancelled by the
Trustee and the Unit or Units evidenced by such Certificates shall be
terminated by such redemptions.
Section 5.03. Issuance, Transfer or Interchange of Units. (a)
Certificates representing Units held by a Unitholder will not be issued
except upon written request by a Unitholder, or his or her registered
broker/dealer, to the Trustee at its principal trust office. Certificates
that have been issued may be returned to the Trustee at any time and
cancelled, without affecting the Unitholder's interest in the Trust, when
accompanied by proper written instructions from the Unitholder.
(b) A Unitholder may transfer any of his Units by making a written
request to the Trustee at its principal trust office and, in the case of
Units evidenced by a Certificate, by presenting and surrendering such
Certificate at such office properly endorsed or accompanied by a written
instrument or instruments of transfer in form satisfactory to the Trustee.
Unitholders must sign such written request, and such Certificate of transfer
instrument, exactly as their name appears on the records of the Trustee and
on any Certificate representing the Units to be transferred. Such signature
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. Such transfer shall thereupon be made on the records of the Trustee
and, if appropriate, a new registered Certificate or Certificates for the
same number of Units of the same Trust shall be issued in exchange and
substitution therefor. Certificates issued pursuant to this Agreement are
interchangeable for one or more other Certificates of the same Trust in an
equal aggregate number of Units and all Certificates issued shall be issued
in denominations of one Unit or any whole multiple thereof as may be
requested by the Unitholder. The Trustee may deem and treat the person in
whose name any Unit or Certificate shall be registered upon the books of the
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Trustee as the owner of such Unit or Certificate for all purposes hereunder
and the Trustee shall not be affected by any notice to the contrary. The
transfer books maintained by the Trustee for each Trust for the purpose of
this Section 5.03 shall be closed for an individual Trust as such Trust is
terminated pursuant to Article VIII hereof.
A sum sufficient to pay any tax or other charge that may be imposed in
connection with any such transfer or interchange shall be paid by the
Unitholder to the Trustee. The Trustee may require a Unitholder to pay a
reasonable fee which the Trustee in its sole discretion shall determine for
each new Certificate issued on any such transfer or interchange.
All Certificates cancelled pursuant to this Indenture shall be
disposed of by the Trustee without liability on its part.
Section 5.04. Certificates Mutilated, Destroyed, Stolen or Lost. In
case any Certificate shall become mutilated or be destroyed, stolen or lost,
the Trustee shall execute and deliver a new Certificate in exchange and
substitution therefor upon the holder's furnishing the Trustee with proper
identification and satisfactory indemnity, complying with such other
reasonable regulations and conditions as the Trustee may prescribe and paying
such expenses as the Trustee may incur. Any mutilated Certificate shall be
duly surrendered and cancelled before any new Certificate shall be issued in
exchange and substitution therefor. Upon the issuance of any new Certificate
a sum sufficient to pay any tax or other governmental charge and the fees and
expenses of the Trustee may be imposed. Any such new Certificate issued
pursuant to this Section shall constitute complete and indefeasible evidence
of ownership in the Trust, as if originally issued, whether or not the lost,
stolen or destroyed Certificate shall be found at any time. In the event the
Trust has terminated or is in the process of termination, the Trustee may,
instead of issuing a new Certificate in exchange and substitution for any
Certificate which shall have become mutilated or shall have been destroyed,
stolen or lost, make the distributions in respect of such mutilated,
destroyed, stolen or lost Certificate (without surrender thereof except in
the case of a mutilated Certificate) as provided in Section 8.02 hereof if
the Trustee is furnished with such security or indemnity as it may require to
save it harmless, and in the case of destruction, loss or theft of a
Certificate, evidence to the satisfaction of the Trustee of the destruction,
loss or theft of such Certificate and of the ownership thereof.
ARTICLE VI
TRUSTEE
Section 6.01. General Definition of Trustee's Liabilities, Rights
and Duties. The Trustee shall in its discretion undertake such action as it
may deem necessary at any and all times to protect the Trust and the rights
and interests of the Unitholders pursuant to the terms of this Indenture,
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provided, however, that the expenses and costs of such actions, undertakings
or proceedings shall be reimbursable to the Trustee from the Interest and
Principal Accounts, and the payment of such costs and expenses shall be
secured by a prior lien on the Trust.
In addition to and notwithstanding the other duties, rights,
privileges and liabilities of the Trustee as otherwise set forth the
liabilities of the Trustee are further defined as follows:
(a) all moneys deposited with or received by the Trustee
hereunder shall be held by it without interest in trust as part of the
Trust or the Reserve Account until required to be disbursed in
accordance with the provisions of this Indenture and such moneys will
be segregated by separate recordation on the trust ledger of the
Trustee so long as such practice preserves a valid preference under
applicable law, or if such preference is not so preserved the Trustee
shall handle such moneys in such other manner as shall constitute the
segregation and holding thereof in trust within the meaning of the
Investment Company Act of 1940;
(b) the Trustee shall be under no liability for any action
taken in good faith on any appraisal, paper, order, list, demand,
request, consent, affidavit, notice, opinion, direction, evaluation,
endorsement, assignment, resolution, draft or other document whether
or not of the same kind prima facie properly executed, or for the
disposition of moneys, Bonds or certificates pursuant to this
Indenture, or in respect of any evaluation which it is required to
make or is required or permitted to have made by others under this
Indenture or otherwise, except by reason of its own negligence, lack
of good faith or wilful misconduct, provided that the Trustee shall
not in any event be liable or responsible for any evaluation made by
the Evaluator. The Trustee may construe any of the provisions of this
Indenture, insofar as the same may appear to be ambiguous or
inconsistent with any other provisions hereof, and any construction of
any such provisions hereof by the Trustee in good faith shall be
binding upon the parties hereto;
(c) the Trustee shall not be responsible for or in respect
of the recitals herein, the validity or sufficiency of this Indenture
or for the due execution hereof by the Depositor, or for the form,
character, genuineness, sufficiency, value or validity of any Bonds
(except that the Trustee shall be responsible for the exercise of due
care in determining the genuineness of Bonds delivered to it pursuant
to contracts for the purchase of such Bonds) or for or in respect of
the validity or sufficiency of the Certificates (except for the due
execution thereof by the Trustee) or of the due execution thereof by
the Depositor, or for the payment by the Insurer of amounts due under,
or the performance by the Insurer of its obligations in accordance
with, the Insurance, or the Permanent Insurance and the Trustee shall
in no event assume or incur any liability, duty, or obligation to any
Unitholder or the Depositor other than as expressly provided for
herein. The Trustee shall not be responsible for or in respect of the
validity of any signature by or on behalf of the Depositor;
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(d) the Trustee shall not be under any obligation to appear
in, prosecute or defend any action, which in its opinion may involve
it in expense or liability, unless as often as required by the
Trustee, it shall be furnished with reasonable security and indemnity
against such expense or liability, and any pecuniary cost of the
Trustee from such actions shall be deductible from and a charge
against the Interest and Principal Accounts;
(e) the Trustee may employ agents, attorneys, accountants
and auditors and shall not be answerable for the default or misconduct
of any such agents, attorneys, accountants or auditors if such agents,
attorneys, accountants or auditors shall have been selected with
reasonable care. The Trustee shall be fully protected in respect of
any action under this Indenture taken, or suffered, in good faith by
the Trustee, in accordance with the opinion of its counsel. The fees
and expenses charged by such agents, attorneys, accountants or
auditors shall constitute an expense of the Trustee reimbursable from
the Interest and Principal Accounts as set forth in Section 6.04
hereof;
(f) if at any time the Depositor shall fail to undertake or
perform any of the duties which by the terms of this Indenture are
required by it to be undertaken or performed, or such Depositor shall
become incapable of acting or shall be adjudged a bankrupt or
insolvent, or a receiver of such Depositor or of its property shall be
appointed, or any public officer shall take charge or control of such
Depositor or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, then in any such case,
the Trustee may: (1) appoint a successor depositor who shall act
hereunder in all respects in place of such Depositor which successor
shall be satisfactory to the Trustee, and which may be compensated at
rates deemed by the Trustee to be reasonable under the circumstances,
by deduction from the Interest Account or, to the extent funds are not
available in such Account, from the Principal Account but no such
deduction shall be made exceeding such reasonable amount as the
Securities and Exchange Commission may prescribe in accordance with
Section 26(a)(2)(C) of the Investment Company Act of 1940, or (2)
terminate this Indenture and the trust created hereby and liquidate
the Trust in the manner provided in Section 8.02;
(g) if (i) the value of the Trust as shown by any
evaluation by the Trustee pursuant to Section 5.01 hereof shall be
less than 20% of the aggregate principal amount of Bonds initially
deposited in the Trust or (ii) by reason of the aggregate redemption
of Units by the Depositor and/or one or more underwriters not
theretofore sold constituting more than 60% of the number of Units
initially authorized and the net worth of the Trust is reduced to less
than 40% of the aggregate principal amount of Bonds initially
deposited in the Trust, the Trustee may in its discretion, and shall
when so directed by the Depositor, terminate this Indenture and the
trust created hereby and liquidate the Trust, all in the manner
provided in Section 8.02;
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(h) in no event shall the Trustee be liable for any taxes
or other governmental charges imposed upon or in respect of the Bonds
or upon the interest thereon or upon it as Trustee hereunder or upon
or in respect of the Trust which it may be required to pay under any
present or future law of the United States of America or of any other
taxing authority having jurisdiction in the premises. For all such
taxes and charges and for any expenses, including counsel fees, which
the Trustee may sustain or incur with respect to such taxes or
charges, the Trustee shall be reimbursed and indemnified out of the
Interest and Principal Accounts of the Trust, and the payment of such
amounts so paid by the Trustee shall be secured by a prior lien on the
Trust;
(i) except as provided in Sections 3.01 and 3.05, no
payment to a Depositor or to any principal underwriter (as defined in
the Investment Company Act of 1940) for the Trust or to any affiliated
person (as so defined) or agent of a Depositor or such underwriter
shall be allowed the Trustee as an expense except for payment of such
reasonable amounts as the Securities and Exchange Commission may
prescribe as compensation for performing bookkeeping and other
administrative services of a character normally performed by the
Trustee; and
(j) the Trustee except by reason of its own negligence or
wilful misconduct shall not be liable for any action taken or suffered
to be taken by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this
Indenture.
Section 6.02. Books, Records and Reports. The Trustee shall keep
proper books of record and account of all the transactions of each Trust
under this Indenture at its corporate trust office including a record of the
name and address of, and the Certificates issued by each Trust and held by,
every Unitholder, and such books and records of each Trust shall be open to
inspection by any Unitholder of such Trust at all reasonable times during the
usual business hours. The Trustee shall cause, at Trust expense, audited
statements as to the assets and income of each Trust to be prepared on an
annual basis by independent public accountants selected by the Depositor,
provided, however, if the cost to a Trust for preparation of such statements
shall exceed an amount equivalent to $.50 per Unit on an annual basis, then
the Trustee shall not be required to have such statements prepared. Any such
report shall be provided to a Unitholder upon request.
To the extent permitted under the Investment Company Act of 1940 as
evidenced by an opinion of independent counsel to the Depositor, the Trustee
shall pay, or reimburse to the Depositor or others, the costs of the
preparation of documents and information with respect to a Trust required by
law or regulation in connection with the maintenance of a secondary market in
units of such Trust. Such costs may include but are not limited to
accounting and legal fees, blue sky registration and filing fees, printing
expenses and other reasonable expenses related to documents required under
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Federal and state securities law. Such costs shall be a Trust expense and
the Trustee shall not be obligated to advance any of its own funds to make
such payments.
The Trustee shall make such annual or other reports as may from time
to time be required under any applicable state or federal statute or rule or
regulation thereunder.
Section 6.03. Indenture and List of Bonds on File. The Trustee
shall keep a certified copy or duplicate original of this Indenture on file
at its unit investment trust division office available for inspection at all
reasonable times during the usual business hours by any Unitholder, together
with a current list of the Bonds.
Section 6.04. Compensation. For services performed under this
Indenture the Trustee shall be paid that amount per annum set forth in the
Prospectus for the related Trust computed on the basis set forth in such
Prospectus. The Trustee may from time to time adjust its compensation as set
forth above provided that total adjustment upward does not, at the time of
such adjustment, exceed the percentage of the total increase, after the date
hereof, in consumer prices for services as measured by the United States
Department of Labor Consumer Price Index entitled "All Services Less Rent of
Shelter" or similar index, if such index should no longer be published. The
consent or concurrence of any Unitholder hereunder shall not be required for
any such adjustment or increase. Such compensation shall be charged by the
Trustee against the Interest and Principal Accounts on or before the
Distribution Date on which such period terminates; provided, however, that
such compensation shall be deemed to provide only for the usual, normal and
proper functions undertaken as Trustee pursuant to this Indenture. The
Trustee shall charge the Interest and Principal Accounts for any and all
expenses and disbursements incurred hereunder, including insurance premiums,
legal and auditing expenses, and for any extraordinary services performed by
the Trustee hereunder.
The Trustee shall be indemnified and held harmless against any loss or
liability accruing to it without negligence, bad faith or wilful misconduct
on its part, arising out of or in connection with the acceptance or
administration of the trust, including the costs and expenses (including
counsel fees) of defending itself against any claim of liability in the
premises. If the cash balances in the Interest and Principal Accounts shall
be insufficient to provide for amounts payable pursuant to this Section 6.04,
the Trustee shall have the power to sell (i) Bonds designated to be sold
pursuant to Section 5.02 hereof, or (ii) if no such Bonds have been so
designated, such Bonds as the Trustee may see fit to sell in its own
discretion, and to apply the proceeds of any such sale in payment of the
amounts payable pursuant to this Section 6.04.
The Trustee shall not be liable or responsible in any way for
depreciation or loss incurred by reason of any sale of Bonds made pursuant to
this Section 6.04. Any moneys payable to the Trustee pursuant to this
Section shall be secured by a prior lien on the Trust.
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Section 6.05. Removal and Resignation of Trustee; Successor.
The following provisions shall provide for the removal and resignation of
the Trustee and the appointment of any successor trustee:
(a) the Trustee or any trustee or trustees hereafter
appointed may resign and be discharged of the Trust created by this
Indenture, by executing an instrument in writing resigning as Trustee
of the Trust and filing same with the Depositor and mailing a copy of
a notice of resignation to all Unitholders then of record, not less
than sixty days before the date specified in such instrument when,
subject to Section 6.05(e), such resignation is to take effect. Upon
receiving such notice of resignation, the Depositor shall promptly
appoint a successor trustee as hereinafter provided, by written
instrument, in duplicate, one copy of which shall be delivered to the
resigning Trustee and one copy to the successor trustee. The
Depositor may at any time remove the Trustee, with or without cause,
and appoint a successor trustee by written instrument, in duplicate,
one copy of which shall be delivered to the Trustee so removed and one
copy to the successor trustee. Notice of such resignation or removal
of a trustee and appointment of a successor trustee shall be mailed by
the successor trustee, promptly after its acceptance of such
appointment, to each Unitholder then of record;
(b) any successor trustee appointed hereunder shall
execute, acknowledge and deliver to the Depositor and to the retiring
Trustee an instrument accepting such appointment hereunder, and such
successor trustee without any further act, deed or conveyance shall
become vested with all the rights, powers, duties and obligations of
its predecessor hereunder with like effect as if originally named
Trustee herein and shall be bound by all the terms and conditions of
this Indenture. Upon the request of such successor trustee, the
Depositor and the retiring Trustee shall, upon payment of any amounts
due the retiring Trustee, or provision therefor to the satisfaction of
such retiring Trustee, execute and deliver an instrument acknowledged
by it transferring to such successor trustee all the rights and powers
of the retiring Trustee; and the retiring Trustee shall transfer,
deliver and pay over to the successor trustee all Bonds and moneys at
the time held by it hereunder, together with all necessary instruments
of transfer and assignment or other documents properly executed
necessary to effect such transfer and such of the records or copies
thereof maintained by the retiring Trustee in the administration
hereof as may be requested by the successor trustee, and shall
thereupon be discharged from all duties and responsibilities under
this Indenture;
(c) in case at any time the Trustee shall resign and no
successor trustee shall have been appointed and have accepted
appointment within thirty days after notice of resignation has been
received by the Depositor, the retiring Trustee may forthwith apply to
a court of competent jurisdiction for the appointment of a successor
trustee. Such court may thereupon, after such notice, if any, as it
may deem proper and prescribe, appoint a successor trustee;
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(d) any entity into which any trustee hereunder may be
merged or with which it may be consolidated, or any entity resulting
from any merger or consolidation to which any trustee hereunder shall
be a party, shall be the successor trustee under this Indenture
without the execution or filing of any paper, instrument or further
act to be done on the part of the parties hereto, anything herein, or
in any agreement relating to such merger or consolidation, by which
any such trustee may seek to retain certain powers, rights and
privileges theretofore obtaining for any period of time following such
merger or consolidation, to the contrary notwithstanding; and
(e) any resignation or removal of the Trustee and
appointment of a successor trustee pursuant to this Section shall
become effective upon acceptance of appointment by the successor
trustee as provided in subsection (b) hereof.
Section 6.06. Qualifications of Trustee. The Trustee shall be a
corporation organized and doing business under the laws of the United States
or any state thereof, which is authorized under such laws to exercise
corporate trust powers and having at all times an aggregate capital, surplus,
and undivided profits of not less than $5,000,000.
ARTICLE VII
RIGHTS OF UNITHOLDERS
Section 7.01. Beneficiaries of Trust. By the purchase and
acceptance or other lawful delivery and acceptance of any Unit, whether
certificated or not, the Unitholder shall be deemed to be a beneficiary of
the Trust created by this Indenture and vested with all right, title and
interest in the Trust to the extent of such Unit or Units, subject to the
terms and conditions of this Indenture.
Section 7.02. Rights, Terms and Conditions. In addition to the
other rights and powers set forth in the other provisions and conditions of
this Indenture the Unitholders shall have the following rights and powers and
shall be subject to the following terms and conditions:
(a) a Unitholder may at any time tender his Units to the
Trustee for redemption in accordance with Section 5.02;
(b) the death or incapacity of any Unitholder shall not
operate to terminate this Indenture or the Trust, nor entitle his
legal representatives or heirs to claim an accounting or to take any
action or proceeding in any court of competent jurisdiction for a
partition or winding up of the Trust, nor otherwise affect the rights,
obligations and liabilities of the parties hereto or any of them.
Each Unitholder expressly waives any right he may have under any rule
of law, or the provisions of any statute, or otherwise, to require the
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Trustee at any time to account, in any manner other than as expressly
provided in this Indenture, in respect of the Bonds or moneys from
time to time received, held and applied by the Trustee hereunder; and
(c) except as expressly provided herein, no Unitholder
shall have any right to vote or in any manner otherwise control the
operation and management of the Trust, or the obligations of the
parties hereto, nor shall anything herein set forth, or contained in
the terms of any Certificates issued, be construed so as to constitute
the Unitholders from time to time as partners or members of an
association; nor shall any Unitholder ever be under any liability to
any third persons by reason of any action taken by the parties to this
Indenture, or any other cause whatsoever.
ARTICLE VIII
ADDITIONAL COVENANTS; MISCELLANEOUS PROVISIONS
Section 8.01. Amendments. (a) This Indenture may be amended from
time to time by the parties hereto or their respective successors, without
the consent of any of the Unitholders, (i) to cure any ambiguity or to
correct or supplement any provision contained hereon which may be defective
or inconsistent with any other provision contained herein; or (ii) to make
such other provision in regard to matters or questions arising hereunder as
shall not adversely affect the interests of the Unitholders; provided,
however, that the parties hereto may not amend this Indenture so as to
(1) increase the number of Units issuable hereunder above the maximum number
set forth in Section 2.03 of this Indenture except as provided in
Section 5.04 hereof or such lesser amount as may be outstanding at any time
during the term of this Indenture or (2) permit, subject to Sections 3.08 and
3.14 hereof, the deposit or acquisition hereunder of interest-bearing
obligations or other securities either in addition to or in substitution for
any of the Bonds.
(b) Except for the amendments, changes or modifications as provided
in Section 8.01(a) hereof, neither the parties hereto nor their respective
successors shall consent to any other amendment, change or modification of
this Indenture without the giving of notice and the obtaining of the approval
or consent of Unitholders representing at least 66-2/3% of the Units then
outstanding of the affected Trust. Nothing contained in this Section 8.01(b)
shall permit, or be construed as permitting, a reduction of the aggregate
percentage of Units the holders of which are required to consent to any
amendment, change or modification of this Indenture without the consent of
the Unitholders of all of the Units then outstanding of the affected Trust
and in no event may any amendment be made which would (1) alter the rights to
the Unitholders as against each other, (2) provide the Trustee with the power
to engage in business or investment activities other than as specifically
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provided in this Indenture or (3) adversely affect the characterization of
the Trust as a grantor trust for federal income tax purposes.
(c) Promptly after the execution of any such amendment the Trustee
shall furnish written notification to all then outstanding Unitholders of the
substance of such amendment.
Section 8.02. Termination. This Indenture and the Trust created
hereby shall terminate upon the maturity, redemption, sale or other
disposition as the case may be of the last Bond held hereunder unless sooner
terminated as hereinbefore specified and may be terminated at any time by the
written consent of Unitholders representing 66-2/3% of the then outstanding
Units thereof; provided, that in no event shall this trust continue beyond
the end of the calendar year preceding the fiftieth anniversary of the
execution of this Indenture (the "Mandatory Termination Date"); and provided
further that in connection with any such liquidation it shall not be
necessary for the Trustee to dispose of any Bond or Bonds if retention of
such Bond or Bonds, until due, shall be deemed to be in the best interests of
Unitholders, including, but not limited to, situations in which a Bond or
Bonds insured by the Insurance are in default, situations in which a Bond or
Bonds insured by the Insurance reflect a deteriorated market price resulting
from a fear of default and situations in which a Bond or Bonds mature after
the Mandatory Termination Date.
Written notice of any termination, specifying the time or times at
which the Unitholders may surrender any Certificates held for cancellation,
shall be given by the Trustee to each Unitholder at his address appearing on
the registration books of the Trustee. Within a reasonable period of time
after such termination the Trustee shall fully liquidate the Bonds then held,
if any, and shall:
(a) deduct from the Interest Account or, to the extent that
funds are not available in such Account, from the Principal Account
and pay to itself individually an amount equal to the sum of (1) its
accrued compensation for its ordinary recurring services, (2) any
compensation due it for its extraordinary services and (3) any costs,
expenses or indemnities as provided herein;
(b) deduct from the Interest Account or, to the extent that
funds are not available in such Account, from the Principal Account
and pay accrued and unpaid fees of the Evaluator, Depositor and bond
counsel, if any;
(c) deduct from the Interest Account or the Principal
Account any amounts which may be required to be deposited in the
Reserve Account to provide for payment of any applicable taxes or
other governmental charges and any other amounts which may be required
to meet expenses incurred under this Indenture;
(d) distribute to each Unitholder of such Trust such
Unitholder's pro rata share of the balance of the Interest Account;
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(e) distribute to each Unitholder of such Trust such
Unitholder's pro rata share of the balance of the Principal Account;
and
(f) together with such distribution to each Unitholder as
provided for in (d) and (e), furnish to each such Unitholder a final
distribution statement as of the date of the computation of the amount
distributable to Unitholders, setting forth the data and information
in substantially the form and manner provided for in Section 3.06
hereof.
The amounts to be so distributed to each Unitholder holding
Certificates shall be that pro rata share of the balance of the total
Interest and Principal Accounts as shall be represented by the Units held of
record by such Unitholder.
The Trustee shall be under no liability with respect to moneys held by
it in the Interest, Reserve and Principal Accounts upon termination except to
hold the same in trust without interest until disposed of in accordance with
the terms of this Indenture.
In the event that all of the Unitholders holding Certificates shall
not surrender their Certificates for cancellation within six months after the
time specified in the above-mentioned written notice, the Trustee shall give
a second written notice to the remaining Unitholders to surrender their
Certificates for cancellation and receive the liquidating distribution with
respect thereto. If within one year after the second notice all the
Certificates shall not have been surrendered for cancellation, the Trustee
may take steps, or may appoint an agent to take appropriate steps, to contact
the remaining Unitholders concerning surrender of their Certificates and the
cost thereof shall be paid out of the moneys and other assets which remain in
the Trust hereunder.
Section 8.03. Construction. This Indenture is executed and
delivered in the State of New York, and all laws or rules of construction of
such State shall govern the rights of the parties hereto and the Unitholders
and the interpretation of the provisions hereof.
Section 8.04. Registration of Units. Except as provided in Sections
3.01 and 3.05, the Depositor agrees and undertakes on its own part to
register the Units with the Securities and Exchange Commission or other
applicable governmental agency, federal or state, pursuant to applicable
federal or state statutes, if such registration shall be required, and to do
all things that may be necessary or required to comply with this provision
during the term of the Trust created hereunder, and the Trustee shall incur
no liability or be under any obligation for expenses in connection therewith.
Section 8.05. Written Notice. Any notice, demand, direction or
instruction to be given to the Depositor or the Evaluator hereunder shall be
in writing and shall be duly given if mailed or delivered to the Depositor or
the Evaluator, 250 North Rock Road, Suite 150, Wichita, Kansas 67206-2241, or
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at such other address as shall be specified by the Depositor or the Evaluator
to the other parties hereto in writing. Any notice, demand, direction or
instruction to be given to the Trustee hereunder shall be in writing and
shall be duly given if mailed or delivered to the unit investment trust
division office of the Trustee at 101 Barclay Street, New York, New York
10286, Attention: Unit Investment Trust Division, or at such other address
as shall be specified by the Trustee to the other parties hereto in writing.
Any notice to be given to the Unitholders shall be duly given if
mailed or delivered to each Unitholder at the address of such holder
appearing on the registration books of the Trustee.
Section 8.06. Severability. If any one or more of the covenants,
agreements, provisions or terms of this Indenture shall be held contrary to
any express provision of law or contrary to policy of express law, though not
expressly prohibited, or against public policy, or shall for any reason
whatsoever be held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Indenture and shall in no way affect the validity
or enforceability of the other provisions of this Indenture or the rights of
the Unitholders.
Section 8.07. Dissolution of Depositor Not to Terminate. The
dissolution of the Depositor from or for any cause whatsoever shall not
operate to terminate this Indenture or the Trust insofar as the duties and
obligations of the Trustee are concerned.
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IN WITNESS WHEREOF, Ranson & Associates, Inc. and The Bank of New York
have caused this Indenture to be executed by their President or one of their
Vice Presidents as of the day, month and year first above written.
RANSON & ASSOCIATES, INC.,
Depositor and Evaluator
By ROBIN K. PINKERTON
------------------------------------
President
THE BANK OF NEW YORK,
Trustee
By TED RUDICH
------------------------------------
Vice President
EXHIBIT 3.1
CHAPMAN AND CUTLER
111 West Monroe Street
Chicago, Illinois 60603
February 4, 1997
Ranson & Associates, Inc.
250 North Rock Road, Suite 150
Wichita, Kansas 67206
Re: Ranson Unit Investment Trusts Series 54
---------------------------------------
Gentlemen:
We have served as counsel for Ranson & Associates, Inc., as Sponsor and
Depositor of Ranson Unit Investment Trusts Series 54 (the "Fund"), in
connection with the preparation, execution and delivery of Trust Agreements
dated the date of this opinion between Ranson & Associates, Inc., as
Depositor, and The Bank of New York, as Trustee, pursuant to which the
Depositor has delivered to and deposited the Bonds listed in the Schedules
to the Trust Agreement with the Trustee and pursuant to which the Trustee
has issued to or on the order of the Depositor a certificate or certificates
representing all the Units of fractional undivided interest in, and ownership
of, the Fund, created under said Trust Agreement.
In connection therewith we have examined such pertinent records and documents
and matters of law as we have deemed necessary in order to enable us to
express the opinions hereinafter set forth.
Based upon the foregoing, we are of the opinion that:
1. The execution and delivery of the Trust Agreement and the
execution and issuance of certificates evidencing the Units of the
Fund have been duly authorized; and
2. The certificates evidencing the Units of the Fund, when duly
executed and delivered by the Depositor and the Trustee in accordance
with the aforementioned Trust Agreement, will constitute valid and
binding obligations of the Fund and the Depositor in accordance with
the terms thereof.
<PAGE>
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We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement (File No. 333-20717) relating to the Units referred
to above and to the use of our name and to the reference to our firm in
said Registration Statement and in the related Prospectus.
Respectfully submitted,
CHAPMAN AND CUTLER
EXHIBIT 3.2
Chapman and Cutler
111 West Monroe Street
Chicago, Illinois 60603
February 4, 1997
Ranson & Associates, Inc.
250 North Rock Road, Suite 150
Wichita, Kansas 67206
The Bank of New York
101 Barclay Street
New York, New York 10286
Re: Ranson Unit Investment Trusts, Series 54
----------------------------------------
Gentlemen:
We have acted as counsel for Ranson & Associates, Inc., as Sponsor
and Depositor of Ranson Unit Investment Trusts Series 54 (the "Trust"),
in connection with the issuance of Units of fractional undivided interest
in the Trust, under a Trust Agreement dated February 4, 1997 (the
"Indenture") between Ranson & Associates, Inc., as Depositor, and The
Bank of New York, as Trustee.
In this connection, we have examined the Registration Statement, the
Prospectus, the Indenture, and such other instruments and documents as we
have deemed pertinent.
The assets of the Trust will consist of a portfolio of high yield,
high risk corporate debt obligations (the "Corporate Bonds" or the
"Obligations") as set forth in the Prospectus. All Obligations have been
issued after July 18, 1984. For purpose of the following discussions and
opinions, it is assumed that the Obligations are debt for Federal income
tax purposes.
Based upon the foregoing and upon an investigation of such matters
of law as we consider to be applicable, we are of the opinion that, under
existing Federal income tax law:
(i) The Trust is not an association taxable as a corporation
for Federal income tax purposes but will be governed by the
provisions of subpart E, subchapter J (relating to trusts) of
chapter 1, Internal Revenue Code of 1986 (the "Code").
(ii) Each Unitholder will be considered as owning a pro rata
share of each asset of the Trust for Federal income tax
purposes. Under subpart E, subchapter J of chapter 1 of the
Code, income of the Trust will be treated as income of each
<PAGE>
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Unitholder. 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 the
Trust. Each Unitholder will also be required to include in
taxable income for Federal income tax purposes, original issue
discount with respect to his interest on any Obligation held by
the Trust at the same time and in the same manner as though the
Unitholder were the direct owner of such interest. Original
issue discount will be treated as zero if it is "de minimis"
within the meaning of Section 1273 of the Code. If a Corporate
Bond is a "high-yield discount obligation" within the meaning
of Section 163(e)(5) of the Code, certain special rules may
apply. A Unitholder may elect to include in taxable income for
Federal income tax purposes, market discount as it accrues with
respect to his interest in any Corporate Bond held by the Trust
which he is considered as having acquired with market discount
at the same time and in the same manner as though the
Unitholder were the direct owner of such interest
(iii) The price a Unitholder pays for his Units,
generally including sales charges, is allocated among his pro
rata portion of each Obligation held by a Trust (in proportion
to the fair market values thereof on the valuation date closest
to the date the Unitholder purchases his Units), in order to
determine his tax basis for his pro rata portion of each
Obligation held by the Trust. 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
Obligations held by the 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 greater than or equal to the "de minimis" amount
described below. 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.
(iv) Each Unitholder will have a taxable event when an
Obligation is disposed of (whether by sale, exchange,
liquidation, redemption, payment on maturity or otherwise) 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 their tax basis of their Units for their share of
accrued interest, if any on Obligations delivered after the
date the Unitholders pay for their Units to the extent such
interest accrued on such Obligations before the date the Trust
<PAGE>
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acquired ownership of the Obligations (and the amount of this
reduction may exceed the amount of accrued interest paid to the
sellers) and, consequently such Unitholder 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 Obligations (whether by sale,
exchange, payment on maturity, redemption or otherwise), gain
or loss is recognized to the Unitholder (subject to various
nonrecognition provisions of the Code). The amount of any such
gain or loss is measured by comparing the Unitholder's pro rata
portion 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 Obligation which was issued
with original issue discount (or which has market discount)
must be increased by the amount of accrued original issue
discount (and market discount if the Unitholder elects to
include market discount in income as it accrues) and the basis
of each Unit and of each Obligation which was purchased by the
Trust at a premium must be reduced by the annual amortization
of bond premium which the Unitholder has properly elected to
amortize under Section 171 of the Code. The tax 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.
Each Unitholder's pro rata share of each expense paid by the Trust
is deductible by the Unitholder to the same extent as though the expense
had been paid directly by him. 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
(similar limitations also apply to estates and trusts). Unitholders may
be required to treat some or all of the expenses paid by the Trust as
miscellaneous itemized deductions subject to this limitation.
The Code provides a complex set of rules governing the accrual of
original issue discount. These rules provide that original issue
discount generally accrues on the basis of a constant compound interest
rate over the term of the Obligations. Special rules apply if the
purchase price of an Obligation exceeds its original issue price plus the
amount of original issue discount which would have previously accrued,
based upon its issue price (its "adjusted issue price"). Similarly,
these special rules would apply to a Unitholder if the tax basis of his
pro rata portion of an Obligation issued with original issue discount
exceeds his pro rata portion of its adjusted issue price. 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.,
<PAGE>
-4-
dividends) for purposes of the dividends received deduction which is
available to certain corporations with respect to certain dividends
received by such corporations.
If a Unitholder's tax basis in his pro rata portion of any Corporate
Bond held by the Trust is less than his allocable portion of such
Corporate Bond's stated redemption price at maturity (or, if issued with
original issue discount, 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. To the
extent the amount of such discount is less than the respective "de
minimis" amount, such discount shall be treated as zero. Market discount
accrues daily computed on a straight line basis, unless the Unitholder
elects to calculate accrued market discount under a constant yield
method.
Accrued market discount is generally includible in taxable income of
the Unitholders as ordinary income for Federal tax purposes upon the
receipt of serial principal payments on Corporate Bonds held by the
Trust, on the sale, maturity or disposition of such Corporate Bonds by
the Trust and on the sale of a Unitholder's Units unless a Unitholder
elects to include the accrued market discount in taxable income as such
discount accrues. If a Unitholder does not elect to annually include
accrued market discount in taxable income as it accrues, deductions for
any interest expense incurred by the Unitholder to purchase or carry his
Units will be reduced by such accrued market discount. In general, the
portion of any interest which was not currently deductible would
ultimately be deductible when the accrued market discount is included in
income.
The tax basis of a Unitholder with respect to his interest in an
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 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 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 the assets of the
Trust.
A Unitholder will recognize taxable gain (or loss) when all or part
of the pro rata interest in an Obligation is disposed of for an amount
greater (or less) than his tax basis therefor in a taxable transaction,
subject to various non-recognition provisions of the Code.
As previously discussed, gain attributable to any Corporate Bond
deemed to have been acquired by the Unitholder with market discount will
be treated as ordinary income to the extent the gain does not exceed the
amount of accrued market discount not previously taken into income. The
tax basis reduction requirements of the Code relating to amortization of
bond premium may, under certain 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.
<PAGE>
-5-
If a Unitholder disposes of a Unit, he is deemed thereby to have
disposed of his entire pro rata interest in all Trust assets including
his pro rata portion of all of the Corporate Bonds represented by the
Unit. This may result in a portion of the gain, if any, on such sale
being taxable as ordinary income under the market discount rules
(assuming no election was made by the Unitholder to include market
discount in income as it accrues) as previously discussed.
"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.
A Unitholder who is a foreign investor (i.e., an investor other than
a U.S. citizen or resident or a U.S. corporation, partnership, estate or
trust) will not be subject to United States Federal income taxes,
including withholding taxes on interest income (including any original
issue discount) on, or any gain from the sale or other disposition of,
his pro rata interest in any Obligation held by the Trust or the sale of
his Units provided that all of the following conditions are met:
(i) the interest income or gain is not effectively connected with
the conduct by the foreign investor of a trade or business within
the United States;
(ii) if the interest is United States source income (which is the
case for most securities issued by United States issuers), the
Obligation is issued after July 18, 1984, (which is the case for
each Obligation held by the Trust) the foreign investor does not
own, directly or indirectly, 10% or more of the total combined
voting power of all classes of voting stock of the issuer of the
Obligation 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 Obligation;
(iii) with respect to any gain, the foreign investor (if an
individual) is not present in the United States for 183 days or more
during his or her taxable year; and
(iv) the foreign investor provides all certification which may be
required of his status.
It should be noted that the Tax Act includes a provision which
eliminates the exemption from United States taxation, including
withholding taxes, for certain "contingent interest." This provision
applies to interest received after December 31, 1993. No opinion is
expressed herein regarding the potential applicability of this provision
and whether United States taxation or withholding taxes could be imposed
with respect to income derived from the Units as a result thereof.
The scope of this opinion is expressly limited to the matters set
forth herein, and, except as expressly set forth above, we express no
opinion with respect to any other taxes, including foreign, state or
local taxes or collateral tax consequences with respect to the purchase,
ownership and disposition of Units.
Very truly yours
CHAPMAN AND CUTLER
MJK/ch
EXHIBIT 4.1
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS' CONSENT
-------------------------------------------------
We have issued our report dated February 4, 1997 on the statement of
condition and related bond portfolio of Ranson Unit Investment Trusts Series
54 as of February 4, 1997 contained in the Registration Statement on Form S-6
and in the Prospectus. We consent to the use of our report in the
Registration Statement and in the Prospectus and to the use of our name as it
appears under the caption "Other Matters-Independent Certified Public
Accountants".
GRANT THORNTON LLP
Chicago, Illinois
February 4, 1997
EXHIBIT 4.2
CANTOR FITZGERALD
ONE WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
(212) 938-5000
February 4, 1997
Ranson & Associates, Inc.
250 North Rock Road, Suite 150
Wichita, Kansas 67206
Re: Defined High Yield Corporate Income, Series 6
Gentlemen:
We have examined the listing of securities within Registration Statement
No. 333-20717 for the above captioned trust. We hereby acknowledge that
Cantor Fitzgerald & Co. ("Cantor") will act as the evaluator of the trust
pursuant to the terms and conditions of the Information Evaluation Service
Agreement between Cantor and Ranson & Associates, Inc. ("Ranson") dated as
of February 4, 1997 (the "IES Agreement"). We hereby consent to the use in
the Registration Statement of the reference to Cantor Fitzgerald & Co. as
evaluator.
You acknowledge that this letter shall not confer upon you any rights or
impose on Cantor any obligations, other than those expressly set forth in
the IES Agreement.
You are hereby authorized to file a copy of this letter with the
Securities and Exchange Commission.
Sincerely,
CANTOR FITZGERALD & CO.
By ARTHUR J. GILLIN
------------------------------------
Arthur J. Gillin
Managing Director
Acknowledged and Agreed:
RANSON & ASSOCIATES, INC.
By:
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from
Amendment Number 1 to Form S-6 and is qualified in its entirety by
reference to such Amendment Number 1 to Form S-6.
</LEGEND>
<SERIES>
<NUMBER> 6
<NAME> HIGH YIELD
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> FEB-04-1997
<PERIOD-END> FEB-04-1997
<INVESTMENTS-AT-COST> 1,288,067
<INVESTMENTS-AT-VALUE> 1,288,067
<RECEIVABLES> 26,937
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,315,004
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 26,937
<TOTAL-LIABILITIES> 26,937
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,288,067
<SHARES-COMMON-STOCK> 132,500
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1,288,067
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
