AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 30, 1997
REGISTRATION NO. 333-_____
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
----------------------
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:
RANSON & ASSOCIATES, INC.
250 North Rock Road, Suite 150
Wichita, Kansas 37206-2241
D. NAME AND COMPLETE ADDRESS OF AGENT FOR SERVICE:
Copy to:
ALEX R. MEITZNER MARK J. KNEEDY
Ranson & Associates, Inc. c/o Chapman and Cutler
250 North Rock Road, Suite 150 111 West Monroe Street
Wichita, Kansas 67206-2241 Chicago, Illinois 60603
CALCULATION OF REGISTRATION FEE
===============================================================================
<TABLE>
<CAPTION>
TITLE AND AMOUNT
OF SECURITIES PROPOSED MAXIMUM AMOUNT OF
BEING REGISTERED AGGREGATE OFFERING PRICE REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Series 54 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.
===============================================================================
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
<C> <S> <C>
1. (a)Name of trust................... Prospectus front cover
(b)Title of securities issued...... Essential Information
2. Name and address of each depositor. General Information--Administration of
the Trusts
3. Name and address of trustee........ *
4. Name and address of principal
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;
(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
</TABLE>
- - --------
* Inapplicable, answer negative or not required.
i
<PAGE>
<TABLE>
<CAPTION>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
----------- ---------------------
<C> <S> <C>
(b)Certain information regarding *
periodic payment certifi-
cates.......................
(c)Certain percentages........... Essential Information; Public Offering
of Units
(d)Certain other fees, etc. pay- General Information--Unitholders
able by holders.............
(e)Certain profits receivable by General Information--Expenses of the
depositor, principal under- Trusts; Public Offering of Units
writers, trustee or affili-
ated persons................
(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
17. Withdrawal or redemption......... Market for Units;
General Information--Redemption;
Public Offering of Units
18. (a)Receipt, custody and disposi- General Information--Unitholders
tion of income..............
(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--Unitholders;
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>
ii
<PAGE>
<TABLE>
<CAPTION>
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
----------- ---------------------
<C> <S> <C>
29. Voting securities of depos- General Information--Administration of the
itor...................... Trusts
30. Persons controlling deposi- *
tor.......................
31. Payment by depositor for *
certain services rendered
to trust..................
32. Payment by depositor for *
certain other services
rendered to trust.........
33. Remuneration of employees *
of depositor for certain
services rendered to
trust.....................
34. Remuneration of other per- *
sons for certain services
rendered to trust.........
IV. DISTRIBUTION AND REDEMPTION
35. Distribution of trust's se- Public Offering of Units
curities by states........
36. Suspension of sales of *
trust's securities........
37. Revocation of authority to *
distribute................
38. (a)Method of distribution.. Public Offering of Units;
(b)Underwriting agreements. General Information--Market for Units;
(c)Selling agreements...... Public Offering of Units
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 See Items 13(a) and 13(e)
principal underwriters....
41. (a)Business of principal General Information--Administration
underwriters.............. of the Trusts
(b)Branch offices of prin- *
cipal underwriters........
(c)Salesmen of principal *
underwriters..............
42. Ownership of trust's secu- *
rities by certain persons.
43. Certain brokerage commis- Public Offering of Units
sions received by princi-
pal underwriters..........
44. (a)Method of valuation..... Public Offering of Units
(b)Schedule as to offering *
price.....................
(c)Variation in offering Public Offering of Units
price to certain persons..
45. Suspension of redemption General Information--Redemption
rights....................
46. (a)Redemption valuation.... General Information--Redemption;
General Information--Market for Units;
Public Offering of Units
(b)Schedule as to redemp- *
tion price................
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............. *
</TABLE>
- - --------
* Inapplicable, answer negative or not required.
iii
<PAGE>
<TABLE>
<CAPTION>
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
----------- ---------------------
VI. INFORMATION CONCERNING INSURANCE OF
HOLDERS OF SECURITIES
<C> <S> <C>
51. Insurance of holders of trust's Cover Page; General Information--
securities.................. Expenses of the Trusts
VII. POLICY OF REGISTRANT
52. (a) Provisions of trust agreement The Trust Funds; The High Yield
with respect to selection or Series--Portfolio; General
elimination of underlying se- Information--Investment Supervision
curities.....................
(b) Transactions involving elimi- *
nation of underlying securi-
ties.........................
(c) Policy regarding substitution General Information--Investment
or elimination of underlying Supervision;
securities...................
(d) Fundamental policy not other- *
wise covered.................
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.
iv
<PAGE>
Preliminary Prospectus Dated January 30, 1997
Ranson Unit Investment Trusts, Series 54
(A Unit Investment Trust)
The attached final Prospectus for a prior Series of the Fund is
hereby used as a preliminary Prospectus for the above stated Series. The
narrative information and structure of the attached final Prospectus will
be substantially the same as that of the final Prospectus for this
Series. Information with respect to pricing, the number of Units, dates
and summary information regarding the characteristics of securities to be
deposited in this Series is not now available and will be different since
each Series has a unique Portfolio. Accordingly the information
contained herein with regard to the previous Series should be considered
as being included for informational purposes only. In addition, Ranson &
Associates, Inc. is the Sponsor of this Series of the Fund and is
successor sponsor of all unit investment trusts formerly sponsored by
EVEREN Unit Investment Trusts, a service of EVEREN Securities, Inc.,
including previous Series of the Fund.
A registration statement relating to the units of this Series will
be filed with the Securities and Exchange Commission but has not yet
become effective. Information contained herein is subject to completion
or amendment. Such Units may not be sold nor may offer to buy be
accepted prior to the time the registration statement becomes effective.
This Prospectus shall not constitute an offer to sell or the solicitation
of an offer to buy nor shall there be any sale of the Units in any state
in which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such
state.
[Incorporated herein by reference is the final prospectus from EVEREN
Unit Investment Trusts, Series 43 (Registration No. 333-01445) as filed
on March 13, 1996, which shall be used as a preliminary prospectus for
the current Series of the Fund.]
<PAGE>
EVEREN UNIT INVESTMENT TRUSTS, SERIES 43
Defined High Yield Corporate Income Series 5 (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
foreign and domestic 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 FOREIGN AND DOMESTIC 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 MARCH 13, 1996.
<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 Kemper Financial
Services, Inc. See "General Information--Distribution Reinvestment."
ESTIMATED LONG-TERM RETURN AND ESTIMATED CURRENT RETURN. As of the opening of
business on the Initial Date of Deposit, the Estimated Long-Term Return and
the Estimated Current Return, if applicable, for each Trust were as set forth
in "Essential Information." The Estimated Current Return is calculated by
dividing the estimated net annual interest income per Unit by the Public
Offering Price. The estimated net annual interest income per Unit will vary
with changes in fees and expenses of the Trustee, the Sponsor and Evaluator
and with the principal prepayment, redemption, maturity 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 to pay the principal of or interest on a
security when due, volatile interest rates, early call provisions, and changes
to the tax status of the Securities. See "The High Yield Series--Risk
Factors."
2
<PAGE>
EVEREN UNIT INVESTMENT TRUSTS, SERIES 43
ESSENTIAL INFORMATION
AS OF THE OPENING OF BUSINESS ON THE INITIAL DATE OF DEPOSIT
SPONSOR AND EVALUATOR: EVEREN UNIT INVESTMENT TRUSTS, A SERVICE OF
EVEREN SECURITIES, 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 5
------------
<S> <C>
Public Offering Price per Unit (1)(2)............................ $ 10.148
Principal Amount of Securities per Unit.......................... $ 10.000
Estimated Current Return based on Public Offering
Price (3)(4)(5)(6).............................................. 7.45%
Estimated Long-Term Return (3)(4)(5)(6).......................... 7.37%
Estimated Normal Annual Distribution per Unit (6)................ $ 0.75552
Principal Amount of Securities................................... $ 650,000
Number of Units.................................................. 65,000
Fractional Undivided Interest per Unit........................... 1/65,000
Calculation of Public Offering Price:
Aggregate Offering Price of Securities.......................... $ 636,568
Aggregate Offering Price of Securities per Unit................. $ 9.793
Plus Sales Charge per Unit (7).................................. $ 0.355
Public Offering Price per Unit (1)(2)........................... $ 10.148
Redemption Price per Unit........................................ $ 9.641
Sponsor's Initial Repurchase Price per Unit...................... $ 9.793
Excess of Public Offering Price per Unit over Redemption Price
per Unit........................................................ $ 0.507
Excess of Public Offering Price per Unit over Sponsor's Initial
Repurchase Price per Unit....................................... $ 0.355
Calculation of Estimated Net Annual Interest Income per Unit (6):
Estimated Annual Interest....................................... $ 0.77443
Less: Estimated Annual Expense.................................. $ 0.01890
Estimated Net Annual Interest Income............................ $ 0.75553
Estimated Daily Rate of Net Interest Accrual per Unit............ $0.002098690
Minimum Principal Value of the Trust under which Trust Agreement
may be terminated (8)........................................... $ 130,000
</TABLE>
Evaluations for purposes of sale, purchase or redemption of Units are made as
of the close of business of the Sponsor (currently 3:15 p.m. Central Time)
(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 5
--------
<S> <C>
Trustee's Annual Fee per $1,000 principal amount of Securities (9).... $ 1.090
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)... $0.77443
Interest Payments (10):
First Payment per Unit, representing 13 days......................... $0.02728
Estimated Normal Monthly Distribution per Unit....................... $0.06296
Estimated Normal Annual Distribution per Unit........................ $0.75552
Sales Charge (7):
As a percentage of Public Offering Price per Unit.................... 3.500%
As a percentage of net amount invested............................... 3.625%
As a percentage of net amount invested in earning assets............. 3.625%
</TABLE>
<TABLE>
<S> <C>
Date of Trust
Agreements............. March 13, 1996
First Settlement Date... March 18, 1996
Mandatory Termination
Date................... December 31, 2001
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 April 1, 1996, and the
distribution date is the fifteenth day of the month, commencing April 15,
1996.
4
<PAGE>
THE TRUST FUNDS
EVEREN Unit Investment Trusts, Series 43 includes the following separate unit
investment trusts created by the Sponsor under the name EVEREN Unit Investment
Trusts: "Defined High Yield Corporate Income Series 5" (collectively, the
"Trusts" or "Trust Funds"). Defined High Yield Corporate Income Series 5 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 EVEREN Unit Investment
Trusts, a service of EVEREN Securities, Inc. (the "Sponsor") and The Bank of
New York (the "Trustee").*
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 foreign and domestic 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 short-
intermediate term taxable fixed income securities issued by corporate obligors
with greater diversification than investors might be able to acquire
individually. Diversification of the Trust assets will not eliminate the risk
of loss always inherent in the ownership of securities.
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 to purchase thereof together with irrevocable letters of credit or
cash. As additional Units are issued by a Trust as a result of the deposit of
additional Securities by the Sponsor, the aggregate value of the Securities in
the Trust will be increased and the fractional undivided interest in the Trust
represented by each Unit will be decreased. The Sponsor may continue to make
additional deposits of Securities into a Trust following the Initial Date of
Deposit, provided that such additional deposits will be in principal amounts
which will maintain the same original percentage relationship among the
principal amounts of the Securities in such Trust established by the initial
deposit of the Securities. Thus, although additional Units will be issued, each
Unit will continue to represent the same principal amount of each Security, and
the percentage relationship among the principal amount of each Security in the
related Trust will remain the same.
Each Unit initially offered represents that undivided interest in the
appropriate Trust indicated under "Essential Information." To the extent that
any Units are redeemed by the Trustee or additional Units are
- - ---------------------
* 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>
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
EVEREN UNIT INVESTMENT TRUSTS, SERIES 43
We have audited the accompanying statement of condition and the related
portfolio of EVEREN Unit Investment Trusts, Series 43 as of March 13, 1996.
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 March 13, 1996 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 EVEREN Unit Investment
Trusts, Series 43 as of March 13, 1996, in conformity with generally accepted
accounting principles.
GRANT THORNTON LLP
Chicago, Illinois
March 13, 1996
7
<PAGE>
EVEREN UNIT INVESTMENT TRUSTS, SERIES 43
STATEMENT OF CONDITION AT THE OPENING OF BUSINESS ON MARCH 13, 1996, THE
INITIAL DATE OF DEPOSIT
<TABLE>
<CAPTION>
HIGH
YIELD
SERIES 5
--------
<S> <C>
INVESTMENT IN SECURITIES
Securities deposited in the Trusts.................................... $ --
Contracts to purchase Securities...................................... 636,568
Accrued interest to First Settlement Date on Securities............... 10,372
--------
Total................................................................ $646,940
========
Units of fractional undivided interest outstanding.................... 65,000
LIABILITY AND INTEREST OF UNITHOLDERS
Accrued interest payable to Sponsor.................................. $ 10,372
Cost to investors (3)................................................ 659,620
Less: Gross underwriting commission (3).............................. 23,052
--------
Net interest to Unitholders (1)(3)................................... 636,568
--------
Total.............................................................. $646,940
========
</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". The contracts to purchase Securities are
collateralized by an irrevocable letter of credit of $646,940 which has
been deposited with the Trustee. Of this amount, $636,568 relates to the
offering price of Securities to be purchased and $10,372 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. Investors who
purchase Units through brokers or dealers pursuant to a current management
agreement which by contract or operation of law does not allow such broker or
dealer to earn an additional commission (other than any fee or commission paid
for maintenance of such investor's account under the management agreement) on
such transactions may purchase such Units at the current Public Offering Price
net of the applicable broker or dealer concession. See "Public Offering of
Units--Public Distribution of Units" below.
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
--------------------- ---------------------
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 5 during the initial offering period only the
reduced sales charges resulting from quantity discounts as shown in the tables
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.
Unitholders of the various series of 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
10
<PAGE>
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 on the Sponsor's business and may be deemed to be
a benefit to the Sponsor, subject to the limitations of the Securities Exchange
Act of 1934. If a Unitholder desires to have certificates representing Units
purchased, such certificates will be delivered as soon as possible following
his written request therefor. For information with respect to redemption of
Units purchased, but as to which certificates requested have not been received,
see "General Information--Redemption" below.
ACCRUED INTEREST. Accrued interest is the accumulation of unpaid interest on a
security from the last day on which interest thereon was paid. Interest on
Securities generally is paid semi-annually (monthly in the case of Ginnie Maes,
if any) although a Trust accrues such interest daily. Because of this, a Trust
always 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
11
<PAGE>
share of the accrued interest from the purchaser of his Units. Since the
Trustee has the use of the funds held in the Interest Account for distributions
to Unitholders and since such Account is non-interest-bearing to Unitholders,
the Trustee benefits thereby.
COMPARISON OF PUBLIC OFFERING PRICE AND REDEMPTION PRICE. While the Initial
Public Offering Price of Units will be determined on the basis of the current
offering prices of the Securities in a Trust, the redemption price per Unit (as
well as the secondary market price per Unit) at which Units may be redeemed
(see "General Information--Redemption") will be determined on the basis of the
current bid prices of the Securities. As of the opening of business on the
Initial Date of Deposit, the Public Offering Price per Unit (based on the
offering prices of the Securities in a Trust and including the sales charge)
exceeded the redemption price at which Units could have been redeemed (based
upon the current bid prices of the Securities in a Trust) by the amount shown
under "Essential Information." 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 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.
12
<PAGE>
For the High Yield Series, and the primary market concessions or agency
commissions are as follows:
<TABLE>
<CAPTION>
PRIMARY MARKET
-----------------------------------------------------------------
VOLUME DISCOUNTS PER UNIT*
---------------------------------------------------
FIRM SALES OR FIRM SALES OR FIRM SALES OR
REGULAR SALE SALE SALE
CONCESSION ARRANGEMENTS ARRANGEMENTS ARRANGEMENTS
OR AGENCY 25,000 TO 50,000 TO 100,000 OR
COMMISSION 49,999 99,999 MORE
------------ --------------- --------------- ---------------
WEIGHTED AVERAGE YEARS TO MATURITY
UNDER 5 TO UNDER 5 TO UNDER 5 TO UNDER 5 TO
NUMBER OF $10 UNITS 5 14.99 5 14.99 5 14.99 5 14.99
- - ------------------- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 to 9,999 Units........ 2.30% 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 EVEREN 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.
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.
13
<PAGE>
H
I
G
H
Y
I
E
L
D
S
E
R
I
E
S
THE 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 foreign and domestic 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 short-intermediate term taxable fixed
income securities issued by foreign and domestic 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 or Duff &
Phelps Credit Rating Co. See "Appendix: Description of Ratings" and
"Portfolio" below. Subsequent to the Initial Date of Deposit, a Bond may cease
to be so rated. If this should occur, the Trust would not be required to
eliminate the Bond from the Trust, but such event may be considered in the
Sponsor's determination to direct the Trustee to dispose of such investment.
See "General Information--Investment Supervision." The Trust consists of that
number of Bonds divided by type (and percentage of principal amount of the
Trust) as set forth in the following table.
SERIES INFORMATION
<TABLE>
<S> <C> <C>
Number of Bonds......................................... 9
Debt Obligations(1):
U.S. Corporate......................................... 7(75%)
Foreign Corporate...................................... 2(25%)
Average life of the Bonds in the Trust(2)............... 3.4 years
Percentage of "when, as and if issued" or "delayed de-
livery" 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.
HY-1
HIGH YIELD SERIES
<PAGE>
EVEREN UNIT INVESTMENT TRUSTS SERIES 43
DEFINED HIGH YIELD CORPORATE INCOME SERIES 5 PORTFOLIO
AS OF THE INITIAL DATE OF DEPOSIT: MARCH 13, 1996
<TABLE>
<CAPTION>
RATING(2)
-----------------------
STANDARD COST OF
AGGREGATE & DUFF & REDEMPTION BONDS
PRINCIPAL NAME OF ISSUER(1)(5) COUPON MATURITY MOODY'S POOR'S PHELPS PROVISIONS(3) TO TRUST(4)
- - -------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C> <C> <C> <C>
$ 80,000 Cemex S.A. (7) 8.875% of 06/10/98 Ba3 NR BB Non-callable $ 77,600
80,000 Bancomer S.A. (7) 8.000% of 07/07/98 Ba2 NR BB Non-callable 76,400
60,000 G-I Holdings (6) 0.000% of 10/01/98 Ba3 B+ NR [email protected] 48,750
50,000 Domtar Inc. 11.750% of 03/15/99 Ba1 BB NR Non-callable 55,488
80,000 Valassis Inserts 9.375% of 03/15/99 Ba3 BB- NR Non-callable 82,900
40,000 Six Flags Entertainment 0.000% of 12/15/99 Baa3 BBB- NR Non-callable 31,324
(6)
80,000 Century Communications 9.500% of 08/15/2000 Ba3 BB- NR Non-callable 82,620
Inc.
90,000 Best Buy, Inc. 8.625% of 10/01/2000 Ba3 B+ BBB- [email protected] 89,168
90,000 Reliance Group Holdings 9.000% of 11/15/2000 Ba3 BB+ NR Non-callable 92,318
-------- --------
$650,000 $636,568
======== ========
</TABLE>
<TABLE>
<S> <C>
Diversification: [Diversification Pie Chart Appears here.]
Telecommunications--Cable 12%
Retail 14%
Marketing Services 12%
Diversified Conglomerate 9%
Cement Manufacturing 12%
Banking 13%
Paper Products 8%
Leisure Activities 6%
Insurance 14%
</TABLE>
HY-2
HIGH YIELD SERIES
<PAGE>
NOTES TO PORTFOLIO:
* These Bonds are "when, as and if issued" or "delayed delivery" and have
expected settlement dates after the "First Settlement Date."
(1) Contracts to acquire Bonds were entered into by the Sponsor between March
11, 1996 and March 12, 1996. 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, Moody's and Duff
& Phelps Credit Rating Co. rating symbols and their meanings is set forth
under "Appendix: Description of Ratings." "N.R." indicates that the issue
has not been rated by that rating agency. 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): Baa3, 6%; Ba1, 8%; Ba2, 12%, Ba3, 74%.
(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 5.................... $634,129 $2,439 $50,338 $626,693
</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 15% of the
aggregate principal amount of the Bonds in the Trust were issued at an
original issue discount.
(7) This Bond is as obligation of a Mexican corporation.
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HIGH YIELD SERIES
<PAGE>
RISK FACTORS
General. An investment in Units of the Trust should be made with an
understanding of the risks that an investment in "high yield", high risk,
fixed rate, corporate debt obligations or "junk bonds" may entail, including
increased credit risks and the risk that the value of the Units will decline,
and may decline precipitously, with increases in interest rates. In recent
years there have been wide fluctuations in interest rates and thus in the
value of fixed-rate, debt obligations generally, Securities such as those
included in the Trust are, under most circumstances, subject to greater market
fluctuations and risk of loss of income and principal than are investments in
lower-yielding, higher rated securities, and their value may decline
precipitously because of increases in interest rates not only because the
increases in rates generally decrease values but also because increased rates
may indicate a slowdown in the economy and a decrease in the value of assets
generally that may adversely affect the credit of issuers of high yield, high
risk securities resulting in a higher incidence of defaults among high yield,
high risk securities. A slowdown in the economy, or a development adversely
affecting an issuer's creditworthiness, may result in the issuer being unable
to maintain earnings or sell assets at the rate and at the prices,
respectively, that are required to produce sufficient cash flow to meet its
interest and principal requirements. For an issuer that has outstanding both
senior commercial bank debt and subordinated high yield, high risk securities,
an increase in interest rates will increase that issuer's interest expense
insofar as the interest rate on the bank debt is fluctuating. However, many
leveraged issuers enter into interest rate protection agreements to fix or cap
the interest on a large portion of their bank debt. This reduces exposure to
increasing interest rates but reduces the benefit to the issuer of declining
rates. The Sponsor cannot predict future economic policies or their
consequences or, therefore, the course or extent of any similar market
fluctuations in the future. The portfolio consists of Bonds that, in many
cases, do not have the benefit of covenants that would prevent the issuer from
engaging in capital restructurings or borrowing transactions in connection
with corporate acquisitions, leveraged buy outs or restructurings that could
have the effect of reducing the ability of the issuer to meet its obligations
and might result in the ratings of the Bonds and the value of the underlying
portfolio being reduced.
The Bonds in the Trust consist of "high yield, high risk" corporate bonds.
"High yield" or "junk" bonds, the generic names for corporate bonds rated
below BBB by Standard & Poor's or Duff & Phelps Credit Rating Co. or below Baa
by Moody's Investor Service, Inc., are frequently issued by corporations in
the growth stage of their development, by established companies whose
operations or industries are depressed or by highly leveraged companies
purchased in leveraged buyout transactions. The market for high yield bonds is
very specialized and investors in it have been predominantly financial
institutions. High yield bonds are generally not listed on a national
securities exchange. Trading of high yield bonds, therefore, takes place
primarily in over-the-counter markets which consist of groups of dealer firms
that are typically major securities firms. Because the high yield bond market
is a dealer market, rather than an auction market, no single obtainable price
for a given bond prevails at any given time. Prices are determined by
negotiation between traders. The existence of a liquid trading market for the
Bonds may depend on whether dealers will make a market in the Bonds. There can
be no assurance that a market will be made for any of the Bonds, that any
market for the Bonds will be maintained or of the liquidity of the Bonds in
any markets made. Not all dealers maintain markets in all high yield bonds.
Therefore, since there are fewer traders in these bonds than there are in
"investment grade" bonds, the bid-offer spread is usually greater for high
yield bonds than it is for investment grade bonds. The price at which the
Securities may be sold to meet redemptions and the value of the Trust will be
adversely affected if trading markets for the Bonds are limited or absent. If
the rate of redemptions is great, the value of the Trust may decline to a
level that requires liquidation (see "General Information--Administration of
the Trusts--Amendment and Termination").
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HIGH YIELD SERIES
<PAGE>
Lower-rated securities tend to offer higher yields than higher-rated
securities with the same maturities because the creditworthiness of the
issuers of lower-rated securities may not be as strong as that of other
issuers. Moreover, if a Bond is recharacterized as equity by the Internal
Revenue Service for Federal income tax purposes, the issuer's interest
deduction with respect to the Bond will be disallowed and this disallowance
may adversely affect the issuer's credit rating. Because investors generally
perceive that there are greater risks associated with the lower-rated
securities in the Trust, the yields and prices of these securities tend to
fluctuate more than higher-rated securities with changes in the perceived
quality of the credit of their issuers. In addition, the market value of high
yield, high risk, fixed-income securities may fluctuate more than the market
value of higher-rated securities since high yield, high risk, fixed-income
securities tend to reflect short-term credit development to a greater extent
than higher-rated securities. Lower-rated securities generally involve greater
risks of loss of income and principal than higher-rated securities. Issuers of
lower-rated securities may possess less creditworthiness characteristics than
issuers of higher-rated securities and, especially in the case of issuers
whose obligations or credit standing have recently been downgraded, may be
subject to claims by debtholders, owners of property leased to the issuer or
others which, if sustained, would make it more difficult for the issuers to
meet their payment obligations. High yield, high risk bonds are also affected
by variables such as interest rates, inflation rates and real growth in the
economy. Therefore, investors should consider carefully the relative risks
associated with investment in securities which carry lower ratings.
The value of the Units reflects the value of the portfolio securities,
including the value (if any) of securities in default. Should the issuer of
any Bond default in the payment of principal or interest, the Trust may incur
additional expenses seeking payment on the defaulted Bond. Because amounts (if
any) recovered by the Trust in payment under the defaulted Bond may not be
reflected in the value of the Units until actually received by the Trust, and
depending upon when a Unitholder purchases or sells his Units, it is possible
that a Unitholder would bear a portion of the cost of recovery without
receiving any portion of the payment recovered.
High yield, high risk bonds are generally subordinated bonds. The payment of
principal (and premium, if any), interest and sinking fund requirements with
respect to subordinated bonds of an issuer is subordinated in right of payment
to the payment of senior bonds of the issuer. Senior bonds generally include
most, if not all, significant debt bonds of an issuer, whether existing at the
time of issuance of subordinated debt or created thereafter. Upon any
distribution of the assets of an issuer with subordinated bonds upon
dissolution, total or partial liquidation or reorganization of or similar
proceeding relating to the issuer, the holders of senior indebtedness will be
entitled to receive payment in full before holders of subordinated
indebtedness will be entitled to receive any payment. Moreover, generally no
payment with respect to subordinated indebtedness may be made while there
exists a default with respect to any senior indebtedness. Thus, in the event
of insolvency, holders of senior indebtedness of an issuer generally will
recover more, ratably, than holders of subordinated indebtedness of that
issuer.
Bonds that are rated lower than BBB by Standard & Poor's or Duff & Phelps or
Baa by Moody's, respectively, should be considered speculative as such ratings
indicate a quality of less than investment grade. Investors should carefully
review the objective of the Trust and consider their ability to assume the
risks involved before making an investment in the Trust. See "Appendix:
Description of Ratings" for a description of speculative ratings issued by
Standard & Poor's, Duff & Phelps and Moody's.
Foreign Issuers. Certain of the Bonds in a Trust may be securities of foreign
issuers. It is appropriate for investors in such a Trust to consider certain
investment risks that distinguish investments in Bonds of foreign issuers from
those of domestic issuers. Those investment risks include future political and
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HIGH YIELD SERIES
<PAGE>
economic developments, the possible imposition of withholding taxes on
interest income payable on the Bonds held in a portfolio, the possible seizure
or nationalization of foreign deposits, the possible establishment of exchange
controls or the adoption of other foreign governmental restrictions (including
expropriation, burdensome or confiscatory taxation and moratoriums) which
might adversely affect the payment or receipt of payment of amounts due on the
Bonds. Investors should realize that, although a Trust invests in U.S. dollar
denominated investments, the foreign issuers which operate internationally are
subject to currency risks. The value of Bonds can be adversely affected by
political or social instability and unfavorable diplomatic or other negative
developments. In addition, because many foreign issuers are not subject to the
reporting requirements of the Securities Exchange Act of 1934, there may, be
less publicly available information about the foreign issuer than a U.S.
domestic issuer. Foreign issuers also are not necessarily subject to uniform
accounting, auditing and financial reporting standards, practices and
requirements comparable to those applicable to U.S. domestic issuers.
Liquidity. The Bonds in a Trust may not have been registered under the
Securities Act of 1933 and may not be exempt from the registration
requirements of the Act. Most of the Bonds will not be listed on a securities
exchange. Whether or not the Bonds are listed, the principal trading market
for the Bonds will generally be in the over-the-counter market. As a result,
the existence of a liquid trading market for the Bonds may depend on whether
dealers will make a market in the Bonds. There can be no assurance that a
market will be made for any of the Bonds, that any market for the Bonds will
be maintained, or of the liquidity of the Bonds in any markets made. The price
at which the Bonds may be sold to meet redemptions and the value of a Trust
will be adversely affected if trading markets for the Bonds are limited or
absent. A Trust may also contain nonexempt Bonds in registered form which have
been purchased on a private placement basis. Sales of theses Bonds may not be
practicable outside the United States, but can generally be made in U.S.
institutions in the private placement market which may not be as liquid as the
general U.S. securities market. Since the private placement market is less
liquid, the prices received may be less than would have been received had the
markets been broader.
Exchange Controls. On the basis of the best information available to the
Sponsor at the present time none of the Bonds is subject to exchange control
restrictions under existing law which would materially interfere with payment
to a Trust of amounts due on the Bonds. However, there can be no assurance
that exchange control regulations might not be adopted in the future which
might adversely affect payments to a Trust. In addition, the adoption of
exchange control regulations and other legal restrictions could have an
adverse impact on the marketability of the Bonds in a Trust and on the ability
of a Trust to satisfy its obligation to redeem Units tendered to the Trustee
for redemption.
Jurisdiction over, and U.S. Judgments Concerning, Foreign Obligors. Non-U.S.
issuers of the Bonds will generally not have submitted to the jurisdiction of
U.S. courts for purposes of lawsuits relating to those Bonds. If a Trust
contains Bonds of such an issuer, the Trust as a holder of those obligations
may not be able to assert its rights in U.S. courts under the documents
pursuant to which the Bonds are issued. Even if a Trust obtains a U.S.
judgment against a foreign obligor, there can be no assurance that the
judgment will be enforced by a court in the country in which the foreign
obligor is located. In addition, a judgment for money damages by a court in
the United States if obtained, will ordinarily be rendered only in U.S.
dollars. It is not clear, however, whether, in granting a judgment, the rate
of conversion of the applicable foreign currency into U.S. dollars would be
determined with reference to the due date or the date the judgment is
rendered. Courts in other countries may have rules that are similar to, or
different from, the rules of the U.S. courts.
Mexico. Certain of the Bonds are issued by companies incorporated or
headquartered in Mexico. Investment in Securities issued by Mexican companies
involves risks not typically associated with investments in securities of U.S.
companies. Certain of these risks include high rates of inflation and
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HIGH YIELD SERIES
<PAGE>
interest with respect to the Mexican economy, the limited liquidity and
relatively small market capitalization of the Mexican securities market,
potential delays in settlement transactions, relatively higher price
volatility, restrictions on foreign investment, political and social
uncertainties, governmental involvement in the economy and significant foreign
currency devaluations and fluctuations.
Throughout much of the 1980s the Mexican economy experienced high rates of
inflation and interest, low or negative rates of growth, declining savings and
investment, capital flight and excessive domestic and foreign indebtedness.
Mexico is currently one of the largest debtor nations among developing
countries to commercial banks and foreign governments. However, the Mexican
economy experienced gradual improvements in many areas from 1988 to late 1994.
The implementation of restrictive fiscal and monetary policies, price and wage
agreements and restructuring of public foreign debt contributed to a reduction
of inflation rates from 51.7% in 1988 to 11.9% in 1992. These policies also
contributed to a reduction in interest rates from 157.1% per annum on 28-day
Cetes (Mexican Treasury Bills) in January 1988 to 13.86% on September 8, 1993.
Effective January 1, 1993, the Mexican Congress approved the establishment of
a new currency unit, the "New Peso," to replace the Peso at a rate of one New
Peso per one thousand Pesos.
The Mexican Peso has historically been subject to large devaluations. The
value of the Peso is determined by a free market exchange rate monitored by
Banco de Mexico. Prior to December 20, 1994 the devaluation of the Peso
against the U.S. Dollar was allowed at a maximum rate of 0.40 Peso per U.S.
Dollar per day. On December 16, 1994, Mexico's Finance Minister stated that
there would be no change in Peso policy. However, on December 20, 1994, the
Mexican government altered this policy and the maximum devaluation rate of the
Peso against the U.S. Dollar was lowered by 0.53 Peso, increasing the
devaluation limit to 13.25%. Consequently, on December 20, 1994, the Peso
closed at 3.96 Pesos per U.S. Dollar, a decline of 12.7% from the previous
day. Following the December 20 devaluation the Mexican government resumed the
previous policy of limiting the maximum daily devaluation of 0.40 Peso per
U.S. Dollar. Two months after the devaluation, the Peso had lost approximately
40% of its value against the U.S. Dollar and the interest rate on 28-day
Mexican Treasury Bills was approximately 60% (up from approximately 15% prior
to the devaluation).
In addition to various international loan and credit packages provided to
Mexico, the United States has reached agreement with Mexico on a multi-billion
dollar loan plan to aid Mexico. The U.S. plan generally provides for the U.S.
to make substantial loans available to Mexico over several months provided
Mexico meets various economic policy conditions set forth in the agreement
relating to government spending, money-supply growth and inflation. There can
be no assurance of the effects, if any, that any loan plan will have on the
Mexican economy. In recent months, the Mexican economy has been subject to
increasing inflation and interest rates, low economic growth and large
fluctuations in the value of the Peso. The Sponsor cannot predict whether
these trends will continue or the effect, if any, they will have on the
Securities in the Trust.
Significant future devaluations of the Peso, or the imposition of restrictive
exchange control policies by the Mexican government, could adversely impact
the ability of the Mexican companies which make up the Trust to obtain or
transfer U.S. Dollars in order to satisfy their U.S. Dollar denominated
obligations. Any economic setback or perceived economic instability in the
United States may have an adverse effect upon the value of the Securities
issued by Mexican companies.
A significant portion of the revenues of the companies in which the Trust
invests will result from international sales. The international business of
these companies is subject to risks common to
HY-7
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<PAGE>
international activities (in addition to those risks described herein regarding
Mexican economic and trade factors) such as political and economic instability,
the difficulty of administering business abroad and the need to comply with
export laws, tariff regulations and regulatory requirements. The dollar cost of
the operations of these companies, and the dollar "carrying value" of certain
assets and liabilities of these companies will be influenced by relative rates
of inflation between the countries in which they do business and prevailing
exchange rates.
COMPENSATION FOR FOREIGN WITHHOLDING TAX
Certain of the Bonds are subject to non-U.S. ("foreign") withholding taxes.
Certain issuers of Bonds which are subject to foreign withholding taxes have
generally agreed, subject to certain exceptions, to make additional payments
("Additional Payments") which together with other payments are intended to
compensate the holder of the Bond for the imposition of certain withholding
taxes. However, both the calculation of the Additional Payment and whether the
Additional Payment compensates the holder of the Bond for any related
penalties, interest or other charges imposed in connection with any applicable
foreign withholding taxes are likely to differ from Bond to Bond. Moreover, the
Additional Payment is itself treated as taxable income to Unitholders for U.S.
income tax purposes. The Additional Payment may not be based upon a "gross-up"
formula which would otherwise compensate an investor for the tax liability
triggered by the receipt of the Additional Payment. For any of these reasons,
an investor may not be adequately compensated for the actual foreign
withholding tax liabilities incurred. If the Trust obtains a certificate from
an issuer evidencing payment of foreign withholding taxes with respect to a
Bond, the Trust will so notify Unitholders. A Unitholder is required to include
in his gross income the entire amount of interest paid on his pro rata portion
of the Bond including the amount of tax withheld therefrom and the amount of
any Additional Payment. However, if the foreign tax withheld constitutes an
income tax for which U.S. foreign tax credits may be taken, the Unitholder may
be able to obtain applicable foreign tax credits (subject to statutory
limitations) or deductions. See "Federal Tax Status."
FEDERAL TAX STATUS
In the opinion of Chapman and Cutler, special counsel for the Sponsor, under
existing law:
1. The Trust is not an association taxable as a corporation for Federal
income tax purposes.
2. Each Unitholder will be considered the owner of a pro rata portion of
each of the Trust assets for Federal income tax purposes under Subpart E,
Subchapter J of Chapter 1 of the Internal Revenue Code of 1986 (the
"Code"); 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
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<PAGE>
their Units to the extent such interest accrued on such Bonds during the
period from the Unitholder's settlement date to the date such Bonds are
delivered to the Trust and, consequently, such Unitholders may have an
increase in taxable gain or reduction in capital loss upon the disposition
of such Units. Gain or loss upon the sale or redemption of Units is
measured by comparing the proceeds of such sale or redemption with the
adjusted basis of the Units. If the Trustee disposes of Bonds, gain or loss
is recognized to the Unitholder (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
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 even though the income is not distributed to the
Unitholders during such year unless a Bond's original issue discount is
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. 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
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<PAGE>
Bonds are received. The Code provides a complex set of rules regarding the
accrual of original issue discount. These rules provide that original issue
discount generally accrues on the basis of a constant compound interest rate
over the term of the Bonds. Unitholders should consult their tax advisers as to
the amount of original issue discount which accrues.
Special original issue discount rules apply if the purchase price of the Bond
by the Trust exceeds its original issue price plus the amount of original issue
discount which would have previously accrued based upon its issue price (its
"adjusted issue price"). Similarly these special rules would apply to a
Unitholder if the tax basis of his pro rata portion of a Bond issued with
original issue discount exceeds his pro rata portion of its adjusted issue
price. Unitholders should also consult their tax advisers regarding these
special rules.
It is possible that a corporate Bond that has been issued at an original issue
discount may be characterized as a "high-yield discount obligation" within the
meaning of Section 163(e)(5) of the Code. To the extent that such an obligation
is issued at a yield in excess of six percentage points over the applicable
Federal rate, a portion of the original issue discount on such obligation will
be characterized as a distribution on stock (e.g. dividends) for purposes of
the dividends received deduction which is available to certain corporations
with respect to certain dividends received by such corporation.
Market Discount. If a Unitholder's tax basis in his pro rata portion of Bonds
is less than the allocable portion of such Bond's stated redemption price at
maturity (or, if issued with original issue discount, the allocable portion of
its "revised issue price"), such difference will constitute market discount
unless the amount of market discount is "de minimis" as specified in the Code.
Market discount accrues daily computed on a straight line basis, unless the
Unitholder elects to calculate accrued market discount under a constant yield
method. Unitholders should consult their tax advisors 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.
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<PAGE>
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 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 under the
market discount rules (assuming no election was made by the Unitholder to
include market discount in income as it accrues) as previously discussed.
"The Revenue Reconciliation Act of 1993" (the "Tax Act") raised tax rates on
ordinary income while capital gains remain subject to a 28 percent maximum
stated rate for taxpayers other than corporations. Because some or all capital
gains are taxed at a comparatively lower rate under the Tax Act, the Tax Act
includes a provision that recharacterizes capital gains as ordinary income in
the case of certain financial transactions that are "conversion transactions"
effective for transactions entered into after April 30, 1993. Unitholders and
prospective investors should consult with their tax advisers regarding the
potential effect of this provision on their investment in Units.
Foreign Investors. A Unitholder who is a foreign investor (i.e., an investor
other than a U.S. citizen or resident or a U.S. corporation, partnership,
estate or trust) will not be subject to United States federal income taxes,
including withholding taxes, on interest income (including any original issue
discount) on, or any gain from the sale or other disposition of, his pro rata
interest in any Bond or the sale of his Units provided that all of the
following conditions are met: (i) the interest income or gain is not
effectively connected with the conduct by the foreign investor of a trade or
business within the United States, (ii) 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), then the foreign investor does not own, directly or indirectly, 10%
or more of the total combined voting power of all classes of voting stock of
the issuer of the Bond and the foreign investor is not a controlled foreign
corporation related (within the meaning of Section 864(d)(4) of the Code) to
the issuer of the Bond, or (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. On December 7, 1995, the U.S. Treasury Department released
proposed legislation that, if adopted, could affect the United States federal
income taxation of such non-United States Unitholders and the portion of the
Trust's income allocable to non-United States Unitholders.
HY-11
HIGH YIELD SERIES
<PAGE>
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.
It should be noted that payments to the Trust of interest on Bonds that are
attributable to foreign corporations may be subject to foreign withholding
taxes and Unitholders should consult their tax advisers regarding the
potential tax consequences relating to the payment of any such withholding
taxes by the Trust. Any interest withheld as a result thereof will
nevertheless be treated as income to the Unitholders. Because under the
grantor trust rules, an investor is deemed to have paid directly his share of
foreign taxes that have been paid or accrued, if any, an investor may be
entitled to a foreign tax credit or deduction for United States tax purposes
with respect to such taxes. Investors should consult their tax advisers with
respect to foreign withholding taxes and foreign tax credits.
The foregoing discussion relates only to United States Federal income taxes;
Unitholders may be subject to state and local taxation in other jurisdictions
(including a foreign investor's country of residence). Unitholders should
consult their tax advisers regarding potential state, local, or foreign
taxation with respect to the Units.
TAX REPORTING AND REALLOCATION
Because 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.
HY-12
HIGH YIELD SERIES
<PAGE>
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
----------------------------- ------------ ------------ ------------
<S> <C> <C> <C>
Monthly
Apr 15, 1996 $0.02728 $0.02728
May 15, 1996 to Jun 15, 1998 $0.06296 $0.06296
Jul 15, 1998 $0.05841 $1.23077 $1.28918
Aug 15, 1998 $0.04996 $1.23077 $1.28073
Sep 15, 1998 $0.04606 $0.04606
Oct 15, 1998 $0.04606 $0.92308 $0.98914
Nov 15, 1998 to Mar 15, 1999 $0.04616 $0.04616
Apr 15, 1999 $0.03759 $2.00000 $2.03759
May 15, 1999 to Dec 15, 1999 $0.02936 $0.02936
Jan 15, 2000 $0.02936 $0.61538 $0.64474
Feb 15, 2000 to Aug 15, 2000 $0.02946 $0.02946
Sep 15, 2000 $0.02459 $1.23077 $1.25536
Oct 15, 2000 $0.01986 $1.38462 $1.40448
Nov 15, 2000 $0.01006 $0.01006
Dec 15, 2000 $0.00487 $1.38462 $1.38949
</TABLE>
HY-13
HIGH YIELD SERIES
<PAGE>
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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.
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
GI-1
GENERAL INFORMATION
<PAGE>
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
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
GI-2
GENERAL INFORMATION
<PAGE>
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
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
GI-3
GENERAL INFORMATION
<PAGE>
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.
RETIREMENT PLANS
Units of the Trusts (other than a Tax-Exempt Portfolio) may be well suited for
purchase by Individual Retirement Accounts, Keogh Plans, pension funds and
other qualified retirement plans, certain of which are briefly described
below.
GI-4
GENERAL INFORMATION
<PAGE>
Generally, capital gains and income received under each of the foregoing plans
are deferred from federal taxation. All distributions from such plans are
generally treated as ordinary income but may, in some cases, be eligible for
special income averaging or tax-deferred rollover treatment. Investors
considering participation in any such plan should review specific tax laws
related thereto and should consult their attorneys or tax advisers with
respect to the establishment and maintenance of any such plan. Such plans are
offered by brokerage firms and other financial institutions. The Trusts will
waive the $1,000 minimum investment requirement for IRA accounts. The minimum
investment is $250 for tax-deferred plans such as IRA accounts. Fees and
charges with respect to such plans may vary.
Individual Retirement Account--IRA. Any individual under age 70 1/2 may
contribute the lesser of $2,000 or 100% of compensation to an IRA annually.
Such contributions are fully deductible if the individual (and spouse if
filing jointly) are not covered by a retirement plan at work. The deductible
amount an individual may contribute to an IRA will be reduced $10 for each $50
of adjusted gross income over $25,000 ($40,000 if married, filing jointly or
$0 if married, filing separately), if either an individual or their spouse (if
married, filing jointly) is an active participant in an employer maintained
retirement plan. Thus, if an individual has adjusted gross income over $35,000
($50,000 if married, filing jointly or $0 if married, filing separately) and
if an individual or their spouse is an active participant in an employer
maintained retirement plan, no IRA deduction is permitted. Under the Internal
Revenue Code of 1986, as amended (the "Code"), an individual may make
nondeductible contributions to the extent deductible contributions are not
allowed. All distributions from an IRA (other than the return of certain
excess contributions) are treated as ordinary income for federal income
taxation purposes provided that under the Code an individual need not pay tax
on the return of nondeductible contributions. The amount includable in income
for the taxable year is the portion of the amount withdrawn for the taxable
year as the individual's aggregate deductible IRA contributions bear to the
aggregate balance of all IRAs of the individual.
A participant's interest in an IRA must be, or commence to be, distributed to
the participant not later than April 1 of the calendar year following the year
during which the participant attains age 70 1/2. Distributions made before
attainment of age 59 1/2, except in the case of the participant's death or
disability, or where the amount distributed is to be rolled over to another
IRA, or where the distributions are taken as a series of substantially equal
periodic payments over the participant's life or life expectancy (or the joint
lives or life expectancies of the participant and the designated beneficiary)
are generally subject to a surtax in an amount equal to 10% of the
distribution. The amount of such periodic payments may not be modified before
the later of five years or attainment of age 59 1/2. Excess contributions are
subject to an annual 6% excise tax.
IRA applications, disclosure statements and trust agreements are available
from the Sponsor upon request.
Qualified Retirement Plans. Units of a Trust may be purchased by qualified
pension or profit sharing plans maintained by corporations, partnerships or
sole proprietors. The maximum annual contribution for a participant in a money
purchase pension plan or to paired profit sharing and pension plans is the
lesser of 25% of compensation or $30,000. Prototype plan documents for
establishing qualified retirement plans are available from the Sponsor upon
request.
Excess Distributions Tax. In addition to the other taxes due by reason of a
plan distribution, a tax of 15% may apply to certain aggregate distributions
from IRAs, Keogh plans, and corporate retirement plans to the extent such
aggregate taxable distributions exceed specified amounts (generally $150,000,
as adjusted) during a tax year. This 15% tax will not apply to distributions
on account of death, qualified
GI-5
GENERAL INFORMATION
<PAGE>
domestic relations orders or amounts eligible for tax-deferred rollover
treatment. In general, for lump sum distributions the excess distributions
over $750,000 (as adjusted) will be subject to the 15% tax.
The Trustee has agreed to act as custodian for certain retirement plan
accounts. An annual fee 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 EVEREN 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 Kemper
Financial Services, Inc. (the "Kemper Funds"), other than those Kemper Funds
sold with a contingent deferred sales charge.
If individuals indicate they wish to participate in the Reinvestment Program
but do not designate a reinvestment fund, the Program Agent referred to below
will contact such individuals to determine which reinvestment fund or funds
they wish to elect. Since the portfolio securities and investment objectives
of such Kemper Funds generally will differ significantly from that of the
Trusts, Unitholders should carefully consider the consequences before
selecting such Kemper Funds for reinvestment. Detailed information with
respect to the investment objectives and the management of the Funds is
contained in their respective prospectuses, which can be obtained from the
Sponsor upon request. An investor should read the prospectus of the
reinvestment fund selected prior to making the election to reinvest.
Unitholders who desire to have such distributions automatically reinvested
should inform their broker at the time of purchase or should file with the
Program Agent a written notice of election.
Unitholders who are receiving distributions in cash may elect to participate
in distribution reinvestment by filing with the Program Agent an election to
have such distributions reinvested without charge. Such election must be
received by the Program Agent at least ten days prior to the Record Date
applicable to any distribution in order to be in effect for such Record Date.
Any such election shall remain in effect until a subsequent notice is received
by the Program Agent. See "General Information--Unitholders--Distributions to
Unitholders."
The Program Agent is The Bank of New York. All inquiries concerning
participation in distribution reinvestment should be directed to the Program
Agent at its corporate trust office.
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
GI-6
GENERAL INFORMATION
<PAGE>
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
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
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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 cancelled and any undivided fractional interest in the Trust
extinguished. The price received upon redemption might be more or less than
the amount paid by the Unitholder depending on the value of the Securities in
the Trust at the time of redemption.
Under regulations issued by the Internal Revenue Service, the Trustee is
required to withhold a certain percentage of the principal amount of a Unit
redemption if the Trustee has not been furnished the redeeming Unitholder's
tax identification number in the manner required by such regulations. Any
amount so withheld is transmitted to the Internal Revenue Service and may be
recovered by the Unitholder only when filing a tax return. Under normal
circumstances the Trustee obtains the Unitholder's tax identification number
from the selling broker. However, any time a Unitholder elects to tender Units
for redemption, such Unitholder should make sure that the Trustee has been
provided a certified tax identification number in order to avoid this possible
"back-up withholding." In the event the Trustee has not been previously
provided such number, one must be provided at the time redemption is
requested.
Any amounts paid on redemption representing interest shall be withdrawn from
the Interest Account for such Trust to the extent that funds are available for
such purpose. All other amounts paid on redemption shall be withdrawn from the
Principal Account for such Trust. The Trustee is empowered to sell Securities
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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.
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;
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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
replaced upon delivery to the Trustee of satisfactory indemnity (generally
amounting to 3% of the market value of the Units), affidavit of loss, evidence
of ownership and payment of expenses incurred.
Distributions to Unitholders. Interest received by each Trust, including any
portion of the proceeds from a disposition of Securities which represents
accrued interest, is credited by the Trustee to the Interest Account for such
Trust. All other receipts are credited by the Trustee to a separate Principal
Account for the Trust. The Trustee normally has no cash for distribution to
Unitholders until it receives interest payments on the Securities in the
Trust. Since interest usually is paid semi-annually (monthly in the case of a
GNMA Portfolio), during the initial months of the Trusts, the Interest Account
of each Trust, consisting of accrued but uncollected interest and collected
interest (cash), will be predominantly the uncollected accrued interest that
is not available for distribution. On the dates set forth under "Essential
Information" for each Trust, the Trustee will commence distributions, in part
from funds advanced by the Trustee.
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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.
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.
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The Trustee will distribute on each Distribution Date or shortly thereafter,
to each Unitholder of record of a Trust on the preceding Record Date, an
amount substantially equal to such holder's pro rata share of the cash
balance, if any, in the Principal Account of such Trust computed as of the
close of business on the preceding Record Date. However, no distribution will
be required if the balance in the Principal Account is less than $.01 per
Unit. Notwithstanding the foregoing, the Trustee will make a distribution to
Unitholders of all principal relating to maturing U.S. Treasury Obligations in
any U.S. Treasury Portfolio or GNMA Portfolio within twelve business days of
the date of such maturity.
In connection with GNMA Portfolios only, the terms of the Ginnie Maes provide
for payment to the holders thereof (including a GNMA Portfolio) on the
fifteenth day of each month of amounts collected by or due to the issuers
thereof with respect to the underlying mortgages during the preceding month.
The Trustee will collect the interest due a GNMA Portfolio on the Securities
therein as it becomes payable and credit such interest to a separate Interest
Account for such GNMA Portfolio created by the Indenture. Distributions will
be made to each Unitholder of record of a GNMA Portfolio on the appropriate
Distribution Date (see "Essential Information") and will consist of an amount
substantially equal to such Unitholder's pro rata share of the cash balances,
if any, in the Interest Account, the Principal Account and any Capital Gains
Account of such GNMA Portfolio, computed as of the close of business on the
preceding Record Date.
Statements to Unitholders. With each distribution, the Trustee will furnish or
cause to be furnished to each Unitholder a statement of the amount of interest
and the amount of other receipts, if any, which are being distributed,
expressed in each case as a dollar amount per Unit.
The accounts of each Trust are required to be audited annually, at the Trust's
expense, by independent auditors designated by the Sponsor, unless the Sponsor
determines that such an audit would not be in the best interest of the
Unitholders of such Trust. The accountants' report will be furnished by the
Trustee to any Unitholder of such Trust upon written request. Within a
reasonable period of time after the end of each calendar year, the Trustee
shall furnish to each person who at any time during the calendar year was a
Unitholder of a Trust a statement, covering the calendar year, setting forth
for the applicable Trust:
A. As to the Interest Account:
1. The amount of interest received on the Securities (and for Tax-Exempt
Portfolios, the percentage of such amount by states and territories in which
the issuers of such Securities are located);
2. The amount paid from the Interest Account representing accrued interest of
any Units redeemed;
3. The deductions from the Interest Account for applicable taxes, if any, fees
and expenses (including auditing fees) of the Trustee, the Sponsor, the
Evaluator, and, if any, of bond counsel;
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;
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2. The amount paid from the Principal Account representing the principal of
any Units redeemed;
3. The deductions from the Principal Account for payment of applicable taxes,
if any, fees and expenses (including auditing fees) of the Trustee, the
Sponsor, the Evaluator, and, if any, of bond counsel;
4. The amount of when-issued interest treated as a return of capital, if any;
5. Any amounts credited by the Trustee to the Reserve Account described under
"General Information--Expenses of the Trusts";
6. The net amount remaining after distributions of principal and deductions,
expressed both as a dollar amount and as a dollar amount per Unit outstanding
on the last business day of the calendar year; and
C. The following information:
1. A list of the Securities as of the last business day of such calendar year;
2. The number of Units outstanding on the last business day of such calendar
year;
3. The Redemption Price based on the last evaluation made during such calendar
year;
4. The amount actually distributed during such calendar year from the Interest
and Principal Accounts (and Capital Gains Account, if applicable) separately
stated, expressed both as total dollar amounts and as dollar amounts per Unit
outstanding on the Record Dates for each such distribution.
Rights of Unitholders. A Unitholder may at any time tender Units to the
Trustee for redemption. The death or incapacity of any Unitholder will not
operate to terminate a Trust nor entitle legal representatives or heirs to
claim an accounting or to bring any action or proceeding in any court for
partition or winding up of a Trust.
No Unitholder shall have the right to control the operation and management of
any Trust in any manner, except to vote with respect to the amendment of the
Trust Agreements or termination of any Trust.
INVESTMENT SUPERVISION
The Sponsor may not alter the portfolios of the Trusts by the purchase, sale
or substitution of Securities, except in the special circumstances noted below
and as indicated earlier under "General Information--Trust Information"
regarding the substitution of Replacement Securities for any Failed
Securities. Thus, with the exception of the redemption or maturity of
Securities in accordance with their terms, the assets of the Trusts will
remain unchanged under normal circumstances.
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
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respect to such Securities in the reasonably forseeable future. Any obligation
so received in exchange or substitution will be held by the Trustee subject to
the terms and conditions of the Trust Agreement to the same extent as
Securities originally deposited thereunder. Within five days after deposit of
obligations in exchange or substitution for underlying Securities, the Trustee
is required to give notice thereof to each Unitholder, identifying the
Securities eliminated and the Securities substituted therefor.
The Trustee may sell Securities, designated by the Sponsor, from a Trust for
the purpose of redeeming Units of such Trust tendered for redemption and the
payment of expenses.
ADMINISTRATION OF THE TRUSTS
The Trustee. The Trustee 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."
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.
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The Evaluator. EVEREN Unit Investment Trusts, a service of EVEREN Securities,
Inc., the Sponsor, also serves as Evaluator. The Evaluator may resign or be
removed by the Trustee in which event the Trustee is to use its best efforts
to appoint a satisfactory successor. Such resignation or removal shall become
effective upon acceptance of appointment by the successor evaluator. If upon
resignation of the Evaluator no successor has accepted appointment within 30
days after notice of resignation, the Evaluator may apply to a court of
competent jurisdiction for the appointment of a successor. Notice of such
resignation or removal and appointment shall be mailed by the Trustee to each
Unitholder. At the present time, pursuant to a contract with the Evaluator,
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 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.
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The Trustee: The Trust Agreements provide that the Trustee shall be under no
liability for any action taken in good faith in reliance upon prima facie
properly executed documents or for the disposition of monies, Securities or
certificates except by reason of its own gross negligence, bad faith or
willful misconduct, nor shall the Trustee be liable or responsible in any way
for depreciation or loss incurred by reason of the sale by the Trustee of any
Securities. In the event that the Sponsor shall fail to act, the Trustee may
act and shall not be liable for any such action taken by it in good faith. The
Trustee shall not be personally liable for any taxes or other governmental
charges imposed upon or in respect of the Securities or upon the interest
thereon. In addition, the Trust Agreements contain other customary provisions
limiting the liability of the Trustee.
The Evaluator: The Trustee and Unitholders may rely on any evaluation
furnished by the Evaluator and shall have no responsibility for the accuracy
thereof. The Trust Agreements provide that the determinations made by the
Evaluator shall be made in good faith upon the basis of the best information
available to it, provided, however, that the Evaluator shall be under no
liability to the Trustee or Unitholders for errors in judgment, but shall be
liable only for its gross negligence, lack of good faith or willful
misconduct.
EXPENSES OF THE TRUSTS
The Sponsor will charge the Trusts a surveillance fee for services performed
for the Trusts in an amount not to exceed that amount set forth in "Essential
Information" but in no event will such compensation, when combined with all
compensation received from other unit investment trusts for which the Sponsor
both acts as sponsor and provides portfolio surveillance, exceed the aggregate
cost to the Sponsor for providing such services. Such fee shall be based on
the total number of Units of the related Trust outstanding as of the January
Record Date for any annual period. The Sponsor will receive a portion of the
sales commissions paid in connection with the purchase of Units and will share
in profits, if any, related to the deposit of Securities in the Trusts. The
Sponsor and other Underwriters have borne all the expenses of creating and
establishing the Trusts including the cost of the initial preparation,
printing and execution of the Prospectus, Trust Agreements and certificates,
legal and accounting expenses, advertising and selling expenses, payment of
closing fees, the expenses of the Trustee, evaluation fees relating to the
deposit and other out-of-pocket expenses.
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.
GI-16
GENERAL INFORMATION
<PAGE>
The Trustee's and Evaluator's fees are deducted first from the Interest
Account of a Trust to the extent funds are available and then from the
Principal Account. Such fees may be increased without approval of Unitholders
by amounts not exceeding a proportionate increase in the Consumer Price Index
entitled "All Services Less Rent of Shelter," published by the United States
Department of Labor, or any equivalent index substituted therefor. In
addition, the Trustee's fee may be periodically adjusted in response to
fluctuations in short-term interest rates (reflecting the cost to the Trustee
of advancing funds to a Trust to meet scheduled distributions).
The following additional charges are or may be incurred by the Trusts: (a)
fees for the Trustee's extraordinary services; (b) expenses of the Trustee
(including legal and auditing expenses and insurance costs for Insured Trust
Funds, but not including any fees and expenses charged by any agent for
custody and safeguarding of Securities) and of bond counsel, if any; (c)
various governmental charges; (d) expenses and costs of any action taken by
the Trustee to protect a Trust or the rights and interests of the Unitholders;
(e) indemnification of the Trustee for any loss, liability or expense incurred
by it in the administration of a Trust not resulting from gross negligence,
bad faith or willful misconduct on its part; (f) indemnification of the
Sponsor for any loss, liability or expense incurred in acting in that capacity
without gross negligence, bad faith or willful misconduct; and (g)
expenditures incurred in contacting Unitholders upon termination of the
Trusts. The fees and expenses set forth herein are payable out of the
appropriate Trust and, when owing to the Trustee, are secured by a lien on
such Trust. Fees or charges relating to a Trust shall be allocated to each
Trust in the same ratio as the principal amount of such Trust bears to the
total principal amount of all Trusts. Fees or charges relating solely to a
particular Trust shall be charged only to such Trust.
Fees and expenses of the Trusts shall be deducted from the Interest Account
thereof, or, to the extent funds are not available in such Account, from the
Principal Accounts. The Trustee may withdraw from the Principal Account or the
interest Account of any Trust such amounts, if any, as it deems necessary to
establish a reserve for any taxes or other governmental charges or other
extraordinary expenses payable out of the Trust. Amounts so withdrawn shall be
credited to a separate account maintained for a Trust known as the Reserve
Account and shall not be considered a part of the Trust when determining the
value of the Units until such time as the Trustee shall return all or any part
of such amounts to the appropriate account.
THE SPONSOR
The Sponsor, EVEREN Unit Investment Trusts, with an office at 77 West Wacker
Drive, 29th Floor, Chicago, Illinois 60601, (800) 621-5024, is a service of
EVEREN Securities, Inc., which is a wholly-owned subsidiary of EVEREN Capital
Corporation. The Sponsor acts as underwriter of a number of other unit
investment trusts and will act as underwriter of any other unit investment
trust products developed by the Sponsor in the future. As of December 31,
1995, the total stockholder's equity of EVEREN Securities, Inc. was
$261,286,862.
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.
GI-17
GENERAL INFORMATION
<PAGE>
The foregoing financial information with regard to the Sponsor relates to the
Sponsor only and not to these Trusts. Such information is included in this
Prospectus only for the purpose of informing investors as to the financial
responsibility of the Sponsor and its ability to carry out its contractual
obligations with respect to the Trusts. More comprehensive financial
information can be obtained upon request from the Sponsor.
LEGAL OPINIONS
The legality of the Units offered hereby and certain matters relating to
Federal tax law have been passed upon by Chapman and Cutler, 111 West Monroe
Street, Chicago, Illinois 60603, as counsel for the Sponsor.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The statements of condition and the related portfolios at the Initial Date of
Deposit included in this Prospectus have been audited by Grant Thornton LLP,
independent certified public accountants, as set forth in their report in the
Prospectus, and are included herein in reliance upon the authority of said
firm as experts in accounting and auditing.
GI-18
GENERAL INFORMATION
<PAGE>
APPENDIX
DESCRIPTION OF RATINGS*
Standard & Poor's -- 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.
Bonds rated "BB,' "B,' "CCC,' "CC,' and "C' are regarded as having
predominantly speculative characteristics with respect to capacity to pay
interest and repay principal.
- - --------
*As described by the rating company itself.
A-1
<PAGE>
"BB' indicates the least degree of speculation and "C,' the highest degree of
speculation. While such Bonds will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
BB -- Bonds rated BB have less near-term vulnerability to default than other
speculative grade debt. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions that could
lead to inadequate capacity to meet timely interest and principal payments.
B -- Bonds rated B have greater vulnerability to default but presently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions would likely impair capacity or willingness
to pay interest and repay principal.
CCC -- Bonds rated CCC have a current identifiable vulnerability to default,
and is dependent on favorable business, financial, and economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial, or economic conditions, it is not likely to have
the capacity to pay interest and repay principal.
CC -- The rating CC is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC rating.
C -- The rating C is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC debt rating.
D -- Bonds are rated D when the issue is in payment default, or the obligor
has filed for bankruptcy. The D rating is used when interest or principal
payments are not made on the date due, even if the applicable grace period has
not expired, unless S&P believes that such payments will be made during such
grace period.
Plus (+) or Minus (-): The ratings from "AA" to "A" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
Provisional Ratings: The letter "p" indicates the rating is provisional. A
provisional rating assumes the successful completion of the project being
financed by the bonds being rated and indicates that payment of debt service
requirements is largely or entirely dependent upon the successful and timely
completion of the project. This rating, however, while addressing credit
quality subsequent to completion of the project, makes no comment on the
likelihood of, or the risk of default upon failure of, such completion. The
investor should exercise his own judgment with respect to such likelihood and
risk.
Moody's Investors Service, Inc.--A brief description of the applicable Moody's
Investors Service, Inc. rating symbols and their meanings follow:
Aaa -- Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues. Their safety is so
absolute that with the occasional exception of oversupply in a few specific
instances, characteristically, their market value is affected solely by money
market fluctuations.
A-2
<PAGE>
Aa -- Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuations of
protective elements may be of greater amplitude or there may be other elements
present which make the long term risks appear somewhat larger than in Aaa
securities. Their market value is virtually immune to all but money market
influences, with the occasional exception of oversupply in a few specific
instances.
A -- Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may
be present which suggest a susceptibility to impairment sometime in the
future. The market value of A-rated bonds may be influenced to some degree by
economic performance during a sustained period of depressed business
conditions, but, during periods of normalcy, A-rated bonds frequently move in
parallel with Aaa and Aa obligations, with the occasional exception of
oversupply in a few specific instances.
A1 -- Bonds which are rated A1 offer the maximum in security within their
quality group, can be bought for possible upgrading in quality, and
additionally, afford the investor an opportunity to gauge more precisely the
relative attractiveness of offerings in the marketplace.
Baa -- Bonds which are rated Baa are considered as lower medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and, in fact, have speculative characteristics as
well. The market value of Baa-rated bonds is more sensitive to changes in
economic circumstances and, aside from occasional speculative factors applying
to some bonds of this class, Baa market valuations move in parallel with Aaa,
Aa and A obligations during periods of economic normalcy, except in instances
of oversupply.
Ba -- Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B -- Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa -- Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal
or interest.
Ca -- Bonds which are rated Ca represent obligations which are speculative in
a high degree. Such issues are often in default or have other marked
shortcomings.
C -- bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
Conditional Ratings: Bonds rated "Con(--)" are ones for which the security
depends upon the completion of some act or the fulfillment of some condition.
These are bonds secured by (a) earnings of projects under construction, (b)
earnings of projects unseasoned in operation experience, (c) rentals
A-3
<PAGE>
which begin when facilities are completed, or (d) payments to which some other
limiting conditions attaches. Parenthetical rating denotes probable credit
stature upon completion of construction or elimination of basis of condition.
Note: Moody's applies numerical modifiers, 1, 2, and 3 in each generic rating
classification from Aa through B in certain areas of its bond rating system.
The modifier 1 indicates that the security ranks in the higher end of its
generic rating category; the modifier 2 indicates a mid-range ranking; and the
modifier 3 indicates that the issue ranks in the lower end of its generic
rating category.
Duff & Phelps Credit Rating Co. -- A brief description of the applicable Duff
& Phelps Credit Rating Co. rating symbols and their meanings follow:
These ratings represent a summary opinion of the issuer's long-term
fundamental quality. Rating determination is based on qualitative and
quantitative factors which may vary according to the basic economic and
financial characteristics of each industry and each issuer. Important
considerations are vulnerability to economic cycles as well as risks related
to such factors as competition, government action, regulation, technological
obsolescence, demand shifts, cost structure, and management depth and
expertise. The projected viability of the obligor at the trough of the cycle
is a critical determination.
AAA -- Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.
AA -- High credit quality. Protection factors are strong. Risk is modest but
may vary slightly from time to time because of economic conditions.
A -- Protection factors are average but adequate. However, risk factors are
more variable and greater in periods of economic stress.
BBB -- Below average protection factors but still considered sufficient for
prudent investment. Considerable variability in risk during economic cycles.
BB -- Below investment grade but deemed likely to meet obligations when due.
Present or prospective financial protection factors fluctuate according to
industry conditions or company fortunes. Overall quality may move up or down
frequently within this category.
B -- Below investment grade and possessing risk that obligations will not be
met when due. Financial protection factors will fluctuate widely according to
economic cycles, industry conditions and/or company fortunes. Potential exists
for frequent changes in the rating within this category or into a higher or
lower rating grade.
CCC -- Well below investment grade securities. Considerable uncertainty exists
as to timely payment of principal, interest or preferred dividends. Protection
factors are narrow and risk can be substantial with unfavorable
economic/industry conditions, and/or with unfavorable company developments.
DD -- Defaulted debt obligations. Issuer failed to meet scheduled principal
and/or interest payments.
A-4
<PAGE>
<TABLE>
<CAPTION>
PAGE
CONTENTS -----
<S> <C>
SUMMARY................................................................... 2
ESSENTIAL INFORMATION..................................................... 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......................................................... 11
Comparison of Public Offering Price and Redemption Price................. 12
Public Distribution of Units............................................. 12
Profits of Sponsor and Underwriters...................................... 13
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
Compensation for Foreign Withholding Tax................................. HY-8
Federal Tax Status....................................................... HY-8
Tax Reporting and Reallocation........................................... HY-12
Estimated Cash Flows to Unitholders...................................... HY-13
GENERAL INFORMATION....................................................... GI-1
Rating of Units.......................................................... GI-1
Trust Information........................................................ GI-1
Retirement Plans......................................................... GI-4
Distribution Reinvestment................................................ GI-6
Interest, Estimated Long-Term Return and Estimated Current Return........ GI-6
Market for Units......................................................... GI-7
Redemption............................................................... GI-8
Unitholders.............................................................. GI-10
Investment Supervision................................................... GI-13
Administration of the Trusts............................................. GI-14
Expenses of the Trusts................................................... GI-16
The Sponsor.............................................................. GI-17
Legal Opinions........................................................... GI-18
Independent Certified Public Accountants................................. GI-18
APPENDIX
Description of Ratings................................................... A-1
</TABLE>
-----------------------------------
THIS PROSPECTUS DOES NOT CONTAIN ALL OF THE INFORMATION SET FORTH IN THE
REGISTRATION STATEMENT AND EXHIBITS RELATING THERETO, FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION, WASHINGTON, D.C. UNDER THE SECURITIES ACT OF 1933 AND
THE INVESTMENT COMPANY ACT OF 1940, AND TO WHICH REFERENCE IS MADE.
-----------------------------------
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS
NOT CONTAINED IN THIS PROSPECTUS AND ANY INFORMATION OR REPRESENTATION NOT
CONTAINED HEREIN MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
TRUSTS, THE TRUSTEE, OR THE SPONSOR. THE TRUSTS ARE REGISTERED AS UNIT
INVESTMENT TRUSTS UNDER THE INVESTMENT COMPANY ACT OF 1940. SUCH REGISTRATION
DOES NOT IMPLY THAT THE TRUSTS OR THE UNITS HAVE BEEN GUARANTEED, SPONSORED,
RECOMMENDED OR APPROVED BY THE UNITED STATES OR ANY STATE OR ANY AGENCY OR
OFFICER THEREOF.
-----------------------------------
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN
OFFER TO BUY, SECURITIES IN ANY STATE TO ANY PERSON TO WHOM IT IS NOT LAWFUL TO
MAKE SUCH OFFER IN SUCH STATE.
EVEREN
Unit
Investment
Trusts
Prospectus
Defined High Yield Corporate
Income Series 5
March 13, 1996
EVEREN Unit Investment Trusts.
<PAGE>
This Registration Statement on Form S-6 comprises the following papers and
documents.
<TABLE>
<C> <S>
The facing sheet of Form S-6.
The cross-reference sheet.
The prospectus.
The signatures.
The following exhibits.
1.1. Form of Trust Agreement.
1.1.1. Standard Terms and Conditions of Trust. Reference is made to Exhibit
1.1.1 to the Registration Statement on Form S-6 with respect to EVEREN
Unit Investment Trusts, Series 40 (Registration No. 33-64619) as filed
on December 5, 1995.
2.1. Form of Certificate of Ownership (pages two to four, inclusive, 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 the
headings "Federal Tax Status" for each Trust and "Legal Opinions" in
the Prospectus and opinion of counsel as to the Federal income tax
status of the securities being registered.
4.1. Consent of Cantor Fitzgerald & Co.
4.2. Consent of Grant Thornton LLP.
Ex-27. Financial Data Schedule.
</TABLE>
S-1
<PAGE>
<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 (to be filed by amendment).
1.1.1. Standard Terms and Conditions of Trust (to be filed by amendment).
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)
(to be filed by amendment).
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 (to be filed by amendment).
4.1. Consent of Independent Evaluators (to be filed by amendment).
4.2. Consent of Independent Certified Public Accountants (to be filed by
amendment).
S-1
<PAGE>
SIGNATURES
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 30th day of January, 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 January 30, 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
