File No. 333-26809 CIK #910926
Securities and Exchange Commission
Washington, D. C. 20549
Post-Effective
Amendment No. 1
to
Form S-6
For Registration under the Securities Act of 1933
of Securities of Unit Investment Trusts Registered
on Form N-8B-2
Ranson Unit Investment Trusts Series 58
Name and executive office address of Depositor:
Ranson & Associates, Inc.
250 North Rock Road, Suite 150
Wichita, Kansas 67206
Name and complete address of agent for service:
Robin Pinkerton
Ranson & Associates, Inc.
250 North Rock Road, Suite 150
Wichita, Kansas 67206
( X ) Check box if it is proposed that this filing will
become effective at 2:00 p.m. on April 30, 1998
pursuant to paragraph (b) of Rule 485.
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KEMPER GOVERNMENT SECURITIES TRUST
KEMPER DEFINED FUNDS GNMA PORTFOLIO
KEMPER DEFINED FUNDS U.S. TREASURY PORTFOLIO
EVEREN UNIT INVESTMENT TRUSTS GNMA PORTFOLIO
EVEREN UNIT INVESTMENT TRUSTS U.S TREASURY PORTFOLIO
PART ONE
Each Series of the Kemper Government Securities Trust, GNMA
Portfolio, Kemper Defined Funds GNMA Portfolio and EVEREN Unit Investment
Trusts GNMA Portfolio (collectively, the "GNMA Trust") was formed for the
purpose of obtaining safety of capital and current monthly distributions
of interest and principal through investment in a portfolio consisting of
mortgage-backed Securities of the modified pass-through type. All
payments of principal and interest on the mortgage-backed Securities are
fully guaranteed by the Government National Mortgage Association
("GNMA"). The full faith and credit of the United States is pledged to
the payment of the Securities in the GNMA Trust but the Units of such
Series are not backed by such full faith and credit.
Each Series of the Kemper Government Securities Trust, U.S. Treasury
Portfolio, Kemper Defined Funds U.S. Treasury Portfolio and EVEREN Unit
Investment Trusts U.S. Treasury Portfolio (collectively, the "U.S.
Treasury Portfolio Series") was formed for the purpose of providing
safety of capital and investment flexibility through an investment in a
portfolio of interest-bearing (or in certain Series zero coupon) U.S.
Treasury obligations that are backed by the full faith and credit of the
United States Government. Interest income distributed by the U.S.
Treasury Portfolio Series is generally exempt from state personal income
taxes in all states.
Certain Series are available to non-resident aliens and the income
from such Series, provided certain conditions are met, will be exempt
from withholding for U.S. Federal income tax for such foreign investors.
A foreign investor must provide a completed W-8 form to his financial
representative or the trustee to avoid withholding on his account.
Units of the Trusts are not deposits or obligations of, or
guaranteed by, any bank, and are not Federally insured or otherwise
protected by the Federal Deposit Insurance Corporation and involve
investment risk including loss of principal.
SPONSOR: RANSON & ASSOCIATES, INC.
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 both parts
of this Prospectus for future reference.
The date of this Part One is that date set forth in
Part Two of the Prospectus
TABLE OF CONTENTS
Page
SUMMARY - GNMA PORTFOLIO 4
GNMA PORTFOLIO 6
The GNMA Trust 6
Risk Factors 7
Portfolios 7
Origination 8
Nature of Ginnie Maes and GNMA Guaranty 9
Life of the Securities and of the Series of the GNMA Trust 10
SUMMARY - U.S. TREASURY PORTFOLIO 12
THE U.S. TREASURY PORTFOLIO SERIES 15
Risk Factors 15
General 16
PORTFOLIO SELECTION 16
THE UNITS 17
ESTIMATED LONG-TERM AND CURRENT RETURNS 17
PUBLIC OFFERING OF UNITS 18
Public Offering Price 18
Public Distribution 22
Profits of Sponsor 23
TAX STATUS OF THE TRUSTS 24
Regulated Investment Companies 24
U.S. Treasury Portfolio Series 26
Kemper Government Securities Trust, GNMA Portfolio (Foreign
Investors Trust) and Kemper Defined Funds, GNMA Portfolio,
Series 1 31
RETIREMENT PLANS 35
DISTRIBUTION REINVESTMENT 37
REDEMPTION 38
Right of Redemption 38
Computation of Redemption Value 39
Postponement of Redemption 40
RIGHTS OF UNITHOLDERS 40
Unitholders 40
Ownership of Units 41
Certain Limitations 41
EXPENSES AND CHARGES 42
Initial Expenses 42
Fees 42
Other Charges 42
DISTRIBUTIONS FROM THE INTEREST, PRINCIPAL AND
CAPITAL GAINS ACCOUNTS. 43
GNMA Trust 43
U.S. Treasury Portfolio Series 43
General 44
ADMINISTRATION OF THE TRUST 45
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Records and Accounts 45
Portfolio Supervision 45
Reports to Unitholders 46
Amendments 48
Termination 49
RESIGNATION, REMOVAL AND LIABILITY 49
Regarding the Trustee 49
Regarding the Sponsor 50
Regarding the Evaluator 50
MISCELLANEOUS 50
Sponsor 50
Trustee 51
Legal Opinions 51
INDEPENDENT AUDITORS 51
Essential Information*
Report of Independent Auditors*
Statement of Assets and Liabilities*
Statement of Operations*
Statement of Changes in Net Assets*
Schedule of Investments*
Notes to Schedule of Investments*
Notes to Financial Statements*
*INFORMATION ON THESE ITEMS APPEARS IN PART TWO
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KEMPER GOVERNMENT SECURITIES TRUST
KEMPER DEFINED FUNDS, GNMA PORTFOLIO
KEMPER DEFINED FUNDS, U.S. TREASURY PORTFOLIO
EVEREN UNIT INVESTMENT TRUSTS GNMA PORTFOLIO
SUMMARY - GNMA PORTFOLIO
General. Each Series of the Kemper Government Securities Trust,
GNMA Portfolio, Kemper Defined Funds, GNMA Portfolio and EVEREN Unit
Investment Trusts GNMA Portfolio (each a "GNMA Trust" or "Trust"), is one
of a series of unit investment trusts whose objective is to obtain safety
of capital and to provide current monthly distributions of interest and
principal through investment in a fixed portfolio initially consisting of
contracts to purchase taxable mortgage-backed securities of the modified
pass-through type ("Ginnie Maes" or "Securities"), including so-called
"Ginnie Mae II's" (see "GNMA Portfolios-Origination"), which involve
larger pools of mortgages and which have a central paying agent, fully
guaranteed as to principal and interest by the Government National
Mortgage Association ("GNMA"). Certain Series of the GNMA Trust contain
Ginnie Maes which consist of pools of long term (i.e., 30 year) mortgages
on 1- to 4-family dwellings. Other Series contain Ginnie Maes consisting
of pools of mortgages on 1- to 4-family dwellings which have stated
maturity of 15 years (so called "Ginnie Mae Midgets"). See "GNMA
Portfolios" and the "Schedule of Investments" in Part Two. Under certain
circumstances, the Sponsor may direct the Trustee to reinvest certain
surplus monies in the principal account of a Series in additional Ginnie
Maes. See "Administration of the Trust - Portfolio Supervision."
The guaranteed payment of principal and interest afforded by Ginnie
Maes may make an investment in a Series of the GNMA Trust particularly
well suited for purchase by Individual Retirement Accounts, Keogh Plans,
pension funds and other tax-deferred retirement plans. In addition, the
ability to buy whole or fractional Units (minimum purchase $1,000, $250
for IRA accounts) enables such investors to tailor the dollar amount of
their purchases of Units to take maximum possible advantage of the annual
deductions available for contributions to such plans. Investors should
consult with their tax advisers before investing. See "Retirement
Plans."
Monthly Distributions. Monthly distributions of principal,
prepayments of principal, if any, and interest received by a Series of
the GNMA Trust will be paid in cash unless the Unitholder elects to have
them automatically reinvested in any open-end mutual fund underwritten or
advised by Zurich Kemper Investments, Inc. (the "Kemper Funds"), other
than those Kemper Funds sold with a contingent deferred sales charge.
Since the portfolio securities and investment objectives of such Kemper
Funds may differ significantly from that of the GNMA Trusts, Unitholders
should carefully consider the consequences before selecting such Kemper
Funds for reinvestment. Any such reinvestment is made at net asset
value, that is, without a sales charge. Investors have the ability to
designate that only principal payments (including prepayments) or only
interest payments or both are to be reinvested. Investors who intend to
participate in the Reinvestment Program should so indicate at the time of
their purchase. See "Distribution Reinvestment." It should be noted by
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purchasers of Midget Foreign Investors Trusts that distributions from the
reinvestment fund chosen generally will be subject to U.S. Federal income
tax withholding. Distributions will be made on or about the last day of
each month to Unitholders of record on the 1st day of such month.
Securities. One or more different issues of Ginnie Maes were
deposited in the GNMA Trust on the Initial Date of Deposit. The current
percentage relationship among the Ginnie Maes in a GNMA Series is shown
under "Essential Information" and "Schedule of Investments" in Part Two.
Risk Factors. An investment in Units of a Series of the GNMA Trust
should be made with an understanding of the risks which an investment in
fixed rate long term debt obligations may entail, including the risk that
the value of the Portfolio and hence of the Units will decline with
increases in interest rates. Because of the shorter average life of the
Securities in certain Series of the GNMA Trust and the lower coupon
interest rates on such Securities, the value of such Series should tend
to fluctuate less than longer term obligations. Some or all of the
Securities in a Series of the GNMA Trust may have been purchased at a
market discount.
Estimated Current and Long-Term Returns. The Estimated Current
Return shown under "Essential Information" in Part Two, shows the return
based on the Public Offering Price which includes a sales charge and is
computed by dividing the estimated net annual interest income by the
Public Offering Price. The net annual interest rate will vary with
changes in the fees and expenses of the Trustee, Sponsor and Evaluator
and with the exchange, redemption, sale, scheduled payments, prepayments
or maturity of underlying Securities. The Public Offering Price will
also vary with fluctuations in the evaluation of the underlying
Securities and accrued interest, and, in the case of certain Trusts, with
changes in Purchased Interest and Daily Accrued Interest. Therefore, it
can be expected that the Estimated Current Return will fluctuate in the
future. The Estimated Long-Term Return is calculated using a formula
which (1) takes into consideration, and determines and factors in the
relative weightings of, the market values, yields (which takes into
account the amortization of premiums and the accretion of discounts) and
estimated average life of all of the Securities in the Trusts and
(2) takes into account the expenses and sales charge associated with each
Unit of each Trust. Since the market values and estimated average life
of the Securities and the expenses of the Trusts will change, it can be
expected that the Estimated Long-Term Returns will fluctuate in the
future. The Estimated Current Return and Estimated Long-Term Return are
expected to differ because the calculation of the Estimated Long-Term
Return reflects the estimated date and amount of principal returned while
the Estimated Current Return calculation includes only the net annual
interest rate and Public Offering Price. See "Estimated Long-Term and
Current Returns." The net annual income is, of course, taxable to a
Unitholder. The net annual income is not taxable for Federal income tax
purposes to qualified foreign investors who have purchased Midget Foreign
Investors Trusts. See "Tax Status of the Trusts" and "Retirement Plans."
Market for Units. The Sponsor, though not obligated to do so,
intends to maintain a market for the Units of the Series of the GNMA
Trust based on the aggregate bid side evaluation of the underlying
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Securities plus, in the case of certain Trusts, Purchased Interest and
Daily Accrued Interest. If such market is not maintained, a Unitholder
will, nevertheless, be able to dispose of his Units through redemption at
prices based on the aggregate bid side evaluation of the underlying
Securities in each Series. See "Redemption." Market conditions may
cause such prices to be greater or less than the amount paid for Units.
GNMA PORTFOLIO
The GNMA Trust. Each Series of the GNMA Trust is a "unit investment
trust" created under Missouri or New York law pursuant to a Trust
Indenture and Agreement (hereinafter collectively referred to as the
"Indenture").* Ranson & Associates, Inc. is the Sponsor and Evaluator of
the Trusts and is successor sponsor and evaluator of all unit investment
trusts formerly sponsored by EVEREN Unit Investment Trusts, a service of
EVEREN Securities, Inc. The Bank of New York is the Trustee of the Trusts
as successor to Investors Fiduciary Trust Company.
The purpose and objective of the GNMA Trust is to provide investors
with an appropriate vehicle to obtain safety of capital and monthly
distributions of interest and principal through investment in a fixed
portfolio of securities (the "GNMA Portfolio") consisting of taxable
mortgage-backed securities of the modified pass-through type ("Ginnie
Maes") guaranteed by the Government National Mortgage Association
("GNMA") and backed by the full faith and credit of the United States.
In addition, the Midget Foreign Investors Trusts and GNMA Foreign
Investors Portfolio Series, which are available only to non-resident
alien investors, have an additional purpose of providing income which is
exempt from withholding for U.S. Federal income taxes for such foreign
investors. A foreign investor must provide a completed W-8 Form to his
financial representative or the Trustee to avoid withholding on his
account. See "Tax Status of the Trusts."
As used herein, the term "Securities" means the Ginnie Maes
described in Part Two under "Schedule of Investments."
On the date shown, each Unit represented the fractional undivided
interest in the Securities and estimated net income of the Series of the
GNMA Trust set forth in Part Two under "Essential Information." Because
regular payments of principal are to be received and certain of the
Securities from time to time may be redeemed or will mature in accordance
with their terms or may be sold under certain circumstances described
herein, the Series of the GNMA Trust is not expected to retain its
present size and composition. Units will remain outstanding until
redeemed upon tender to the Trustee by any Unitholder (which may include
the Sponsor) or until the termination of a Series of the GNMA Trust
pursuant to the Indenture.
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* To the extent reference is made to the Indenture, any statements
herein are qualified in their entirety by the provisions of said
Indenture.
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Risk Factors. An investment in Units of a Series of the GNMA Trust
should be made with an understanding of the risks which an investment in
fixed rate long term debt obligations may entail, including the risk that
the value of the GNMA Portfolio and hence of the Units will decline with
increases in interest rates. Because of the shorter average life of the
Ginnie Mae Midgets in certain Series of the GNMA Trust, and the lower
coupon interest rate on such Securities, the value of the Units of such
Series should tend to fluctuate less than that of Series composed of
longer term obligations. The value of the underlying Securities will
fluctuate inversely with changes in interest rates. In addition, the
potential for appreciation of the underlying Securities, which might
otherwise be expected to occur as a result of a decline in interest rates
may be limited or negated by increased principal prepayments on the
underlying mortgages. The high inflation of prior years, together with
the fiscal measures adopted to attempt to deal with it, have resulted in
wide fluctuations in interest rates and, thus, in the value of fixed rate
long term debt obligations generally. The Sponsor cannot predict whether
such fluctuations will continue in the future.
The Securities in the Series of the GNMA Trust were chosen in part
on the basis of their respective stated maturity dates. The ranges of
maturity dates of the Securities contained in a Series of the Trust are
shown in Part Two on the "Schedule of Investments." See "Life of the
Securities and of the Series of the GNMA Trust."
A Series of the GNMA Trust may be an appropriate medium for
investors who desire to participate in a portfolio of taxable fixed
income securities offering the safety of capital provided by securities
backed by the full faith and credit of the United States but who do not
wish to invest the minimum $25,000 which is required for a direct
investment in GNMA guaranteed securities.
Portfolios. The GNMA Portfolios of the Series of the GNMA Trust
consist of Ginnie Maes, including so-called Ginnie Mae II's and, in the
case of certain designated Series, Ginnie Mae Midgets, fully guaranteed
as to payment of principal and interest by the Government National
Mortgage Association. In order for Ginnie Maes to be eligible for
inclusion in Midget Foreign Investors Trusts or GNMA Foreign Investors
Portfolio Series, evidence must be received by the Sponsor that the
underlying mortgages were originated after July 18, 1984. Although the
Sponsor believes that all the underlying mortgages were originated after
July 18, 1984, to the extent that this is not the case, a Foreign
Investor will be subject to withholding for U.S. Federal income taxes on
income derived from mortgages that were originated on or prior to
July 18, 1984. See "Tax Status of the Trusts." Each group of Ginnie
Maes described herein as having a specified range of maturities includes
individual mortgage-backed securities which have varying ranges of
maturities. Each such group of Ginnie Maes is described as one category
of securities because current market conditions accord no difference in
price among the individual Ginnie Mae securities within such group on the
basis of the difference in the maturity dates of each Ginnie Mae. As
long as this market condition prevails, a purchase of Ginnie Maes with
the same coupon rate and a maturity date within the range mentioned above
will be considered an acquisition of the same Security. In the future,
however, the difference in maturity ranges could affect the market value
of the individual Ginnie Maes. At such time, any additional purchases by
a GNMA Portfolio Series of the Trust will take into account the
maturities of the individual Securities.
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A Series of the GNMA Trust may contain Securities which were
acquired at a market discount. Such Securities trade at less than par
value because the interest rates thereon are lower than interest rates on
comparable debt securities being issued at currently prevailing interest
rates. If interest rates for newly issued and otherwise comparable
securities increase, the market discount of previously issued securities
will increase and if interest rates for newly issued comparable
securities decline, the market discount of previously issued securities
will decrease, other things being equal. Market discount attributable to
interest rate changes does not indicate a lack of market confidence in
the issue.
Holders of Units will be "at risk" with respect to such Securities
(i.e., may derive either gain or loss from fluctuations in the evaluation
of the Securities) from the date they commit for Units. See "Estimated
Long - Term and Current Returns."
The mortgages underlying a Ginnie Mae may be prepaid at any time
without penalty. A lower or higher return on Units may occur depending
on whether the price at which the respective Ginnie Maes were acquired by
a Series of the Trust is lower or higher than par (which represents the
price at which such Ginnie Maes will be redeemed upon prepayment).
Redemption of premium Ginnie Maes at par pursuant to prepayments of
mortgages will operate to lower the current return on Units outstanding
at that time since premium Ginnie Maes normally carry higher interest
coupons than par or discount Ginnie Maes. If mortgages rates decline in
the future, such prepayments may occur with increasing frequency because,
among other reasons, mortgagors may be able to refinance their
outstanding mortgages at lower interest rates. See "Life of the
Securities and of the Series of the GNMA Trust."
Set forth below is a brief description of the current method of
origination of Ginnie Maes; the nature of such securities, including the
guaranty of GNMA; the basis of selection and acquisition of the Ginnie
Maes included in the GNMA Portfolios; and the expected life of the Ginnie
Maes in the Series of the GNMA Trust. The "Schedule of Investments" in
Part Two contains information concerning the coupon rate and range of
stated maturities of the Ginnie Maes in such Series of the GNMA Trust.
Origination. The Ginnie Maes included in the GNMA Portfolios are
backed by the indebtedness secured by underlying mortgage pools of long
term mortgages on 1- to 4-family dwellings. In the case of The Midget
Foreign Investors Trusts or GNMA Foreign Investors Portfolio Series,
which may be acquired only by qualified foreign investors, the Sponsor
has acquired only pools containing mortgages which it believes were
originated after July 18, 1984. The pool of mortgages which is to
underlie a particular new issue of Ginnie Maes is assembled by the
proposed issuer of such Ginnie Maes. The issuer is typically a mortgage
banking firm, and in every instance must be a mortgagee approved by and
in good standing with the Federal Housing Administration ("FHA"). In
addition, GNMA imposes its own criteria on the eligibility of issuers,
including a net worth requirement.
The mortgages which are to comprise a new Ginnie Mae pool may have
been originated by the issuer itself in its capacity as a mortgage lender
or may be acquired by the issuer from a third party. Such third party
may be another mortgage banker, a banking institution, the Veterans
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Administration ("VA") (which in certain instances acts as a direct lender
and thus originates its own mortgages) or one of several other
governmental agencies. All mortgages in any given pool will be insured
under the National Housing Act, as amended ("FHA-insured") or Title V of
the Housing Act of 1949 ("FMHA-insured") or guaranteed under the
Servicemen's Readjustment Act of 1944, as amended, or Chapter 37 of
Title 38, U.S.C. ("VA-guaranteed"). Such mortgages will have a date for
the first scheduled monthly payment of principal that is not more than
one year prior to the date on which GNMA issues its guaranty commitment
as described below, will have comparable interest rates and maturity
dates, and will meet additional criteria of GNMA. All mortgages in the
pools backing the Ginnie Maes contained in the Portfolios are mortgages
on 1- to 4-family dwellings (having a stated maturity of up to 30 years,
except in the case of certain Series containing Ginnie Mae Midgets, whose
stated maturity is 15 years). In general, the mortgages in these pools
provide for monthly payments over the life of the mortgage (aside from
prepayments) designed to repay the principal of the mortgage over such
period, together with interest at the fixed rate of the unpaid balance.
To obtain GNMA approval of a new pool of mortgages, the issuer will
file with GNMA an application containing information concerning itself,
describing generally the pooled mortgages, and requesting that GNMA
approve the issue and issue its commitment (subject to GNMA's
satisfaction with the mortgage documents and other relevant
documentation) to guarantee the timely payment of principal of and
interest on the Ginnie Maes to be issued by the issuer. If the
application is in order, GNMA will issue its commitment and will assign a
GNMA pool number to the pool. Upon completion of the required
documentation (including detailed information as to the underlying
mortgages, a custodial agreement with a Federal or state regulated
financial institution satisfactory to GNMA pursuant to which the
underlying mortgages will be held in safekeeping, and a detailed guaranty
agreement between GNMA and the issuer) the issuance of the Ginnie Maes is
permitted. When the Ginnie Maes are issued, GNMA will endorse its
guaranty thereon. The aggregate principal amount of Ginnie Maes issued
will be equal to the then unpaid aggregate principal balances of the
pooled mortgages. The interest rate borne by the Ginnie Maes is
currently fixed at 1/2 of 1% below the interest rate of the pooled 1- to
4-family mortgages, the differential being applied to the payment of
servicing and custodial charges as well as GNMA's guaranty fee.
Ginnie Mae II's consist of jumbo pools of mortgages consisting of
pools of mortgages from more than one issuer. The major advantage of
Ginnie Mae II's lies in the fact that a central paying agent sends one
check to the holder on the required payment date. This greatly
simplifies the current procedure of collecting distributions from each
issuer of a Ginnie Mae, since such distributions are often received late.
Nature of Ginnie Maes and GNMA Guaranty. All of the Ginnie Maes in
the GNMA Portfolio, including the Ginnie Mae II's, are of the "modified
pass-through" type, i.e., they provide for timely monthly payments to the
registered holders thereof (including the Series of the GNMA Trust) of a
pro rata share of the scheduled principal payments on the underlying
mortgages, whether or not collected by the issuers. Such monthly
payments will also include, on a pro rata basis, any prepayments of
principal of such mortgages received and interest (net of the servicing
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and other charges described above) on the aggregate unpaid principal
balance of such Ginnie Maes, whether or not the interest on the
underlying mortgage has been collected by the issuers.
The Ginnie Maes in the GNMA Portfolios are guaranteed as to timely
payment of principal and interest by GNMA. Funds received by the issuers
on account of the mortgages backing the Ginnie Maes in the GNMA
Portfolios are intended to be sufficient to make the required payments of
principal of and interest on such Ginnie Maes but, if such funds are
insufficient for that purpose, the guaranty agreements between the
issuers and GNMA require the issuers to make advances sufficient for such
payments. If the issuers fail to make such payments, GNMA will do so.
GNMA is authorized by Section 306(g) of Title III of the National
Housing Act to guarantee the timely payment of principal of and interest
on securities which are based on or backed by a trust or pool composed of
mortgages insured by FHA, the Farmers' Home Administration ("FMHA") or
guaranteed by the VA. Section 306(g) provides further that the full
faith and credit of the United States is pledged to the payment of all
amounts which may be required to be paid under any guaranty under such
subsection. An opinion of an Assistant Attorney General of the United
States, dated December 9, 1969, states that such guaranties "constitute
general obligations of the United States backed by its full faith and
credit."* GNMA is empowered to borrow from the United States Treasury to
the extent necessary to make any payments of principal and interest
required under such guaranties.
Ginnie Maes are backed by the aggregate indebtedness secured by the
underlying FHA-insured, FMHA-insured or VA-guaranteed mortgages and,
except to the extent of funds received by the issuers on account of such
mortgages, Ginnie Maes do not constitute a liability of nor evidence any
recourse against such issuers, but recourse thereon is solely against
GNMA. Holders of Ginnie Maes (such as the GNMA Trust) have no security
interest in or lien on the underlying mortgages.
The GNMA guaranties referred to herein relate only to payment of
principal of and interest on the Ginnie Maes in the GNMA Portfolios and
not to the Units offered hereby.
Life of the Securities and of the Series of the GNMA Trust. Monthly
payments of principal will be made, and additional prepayments of
principal may be made, to the Series of the GNMA Trust in respect of the
mortgages underlying the Ginnie Maes in the GNMA Portfolios. All of the
mortgages in the pools relating to the Ginnie Maes in the GNMA Portfolios
are subject to prepayment without any significant premium or penalty at
the option of the mortgagors. While the mortgages on 1- to 4-family
dwellings underlying the Ginnie Maes have a stated maturity of up to 30
years (15 years for Ginnie Mae Midgets), it has been the experience of
the mortgage industry that the average life of comparable mortgages,
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* Any statement in this Prospectus that a particular Security is
backed by the full faith and credit of the United States is based
upon the opinion of an Assistant Attorney General of the United
States and should be so construed.
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owing to prepayments, refinancings and payments from foreclosures is
considerably less.
In the mid 1970s, published tables for Ginnie Maes utilized a 12-
year average life assumption for Ginnie Mae pools of 26-30 year mortgages
on 1- to 4-family dwellings. This assumption was derived from the FHA
experience relating to prepayments on such mortgages during the period
from the mid 1950s to the mid 1970s. This 12-year average life
assumption was calculated in respect of a period during which mortgage
lending rates were fairly stable. That assumption is probably no longer
an accurate measure of the life of Ginnie Maes or their underlying single
family mortgage pools. However, current yield tables, published in 1981,
still utilize the 12-year average life assumption and Ginnie Maes
continue to be traded based on this assumption. Recently, mortgages
issued at high interest rates have experienced accelerated prepayment
rates which would indicate a shorter average life than 12 years.
A number of factors, including homeowner's mobility, change in
family size and mortgage market interest rates will affect the average
life of the Ginnie Maes in the GNMA Portfolios. For example, Ginnie Maes
issued during a period of high interest rates will be backed by a pool of
mortgage loans bearing similarly high rates. In general, during a period
of declining interest rates, new mortgage loans with interest rates lower
than those charged during periods of high rates will become available.
To the extent a homeowner has an outstanding mortgage with a high rate,
he may refinance his mortgage at a lower interest rate or he may rapidly
repay his old mortgage. Should this happen, a Ginnie Mae issued with a
high interest rate may experience a rapid prepayment of principal as the
underlying mortgage loans prepay in whole or in part. Accordingly, there
can be no assurance that the prepayment levels which will be actually
realized will conform to the experience of the FHA, other mortgage
lenders or other Ginnie Mae investors.
It is not possible to meaningfully predict prepayment levels
regarding the Ginnie Maes in the GNMA Portfolios. Therefore, the
termination of a Series of the GNMA Trust might be accelerated as a
result of prepayments made as described herein.
In addition to prepayments as described above, sales of Securities
in the GNMA Portfolios under certain permitted circumstances may result
in an accelerated termination of a Series of the GNMA Trust. Also, it is
possible that, in the absence of a secondary market for the Units or
otherwise, redemptions of Units may occur in sufficient numbers to reduce
the GNMA Portfolios to a size resulting in such termination. Early
termination of a Series of the GNMA Trust may have important consequences
to the Unitholder, e.g., to the extent that Units were purchased with a
view to an investment of longer duration, the overall investment program
of the investor may require readjustment; or the overall return on
investment may be less or greater than anticipated, depending, in part,
on whether the purchase price paid for Units represented the payment of
an overall premium or a discount, respectively, above or below the stated
principal amounts of the underlying mortgages. In addition, a capital
gain or loss may result for tax purposes from termination of the GNMA
Portfolios.
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<PAGE>
SUMMARY - U.S. TREASURY PORTFOLIO
Each Kemper Government Securities Trust, U.S. Treasury Portfolio,
Kemper Defined Funds, U.S. Treasury Portfolio and EVEREN Unit Investment
Trusts U.S. Treasury Portfolio (collectively, the "U.S. Treasury
Portfolio Series") is a unit investment trust whose objective is to
obtain safety of capital and investment flexibility as well as current
monthly distributions of interest through investment in a fixed, laddered
portfolio consisting of interest-bearing U.S. Treasury obligations or, in
certain U.S. Treasury Portfolio Series, consisting of some or almost all
zero coupon U.S. Treasury obligations (the "U.S. Treasury Obligations").
The U.S. Treasury Portfolio Series is formed for the purpose of providing
protection against changes in interest rates and also passing through to
Unitholders in all states the exemption from state personal income taxes
afforded to direct owners of U.S. obligations. Each U.S. Treasury
Portfolio Series has an additional purpose of providing income which is
exempt from withholding for U.S. Federal income taxes for non-resident
alien investors. A foreign investor must provide a completed W-8 Form to
his financial representative or the Trustee to avoid withholding on his
account. The Securities are direct obligations of the United States and
are backed by its full faith and credit. The value of the Units, the
estimated current return and estimated long-term return to new purchasers
will fluctuate with the value of the portfolio which will generally
decrease or increase inversely with changes in interest rates.
The guaranteed payment of principal and interest afforded by U.S.
Treasury Obligations, and, with respect to those Series which own zero
coupon U.S. Treasury Obligations ("Stripped Treasury Securities"), the
additional fact that no interest distributions will be made prior to
maturity of the Stripped Treasury Securities may make investment in U.S.
Treasury Portfolio Series particularly well suited for purchase by
Individual Retirement Accounts, Keogh Plans, pension funds and other tax-
deferred retirement plans. In addition, the ability to buy Units
(minimum purchase $1,000 per Series, $250 for IRA accounts) at a Public
Offering Price of approximately $1.00 per Unit ($10.00 per Unit for
Kemper Defined Funds and EVEREN Unit Investment Trusts) enables such
investors to tailor the dollar amount of their purchases of Units to take
maximum possible advantage of the annual deductions available for
contributions to such plans. Investors should consult with their tax
advisers before investing. See "Retirement Plans."
Monthly Distributions. Monthly distributions of interest received
by each U.S. Treasury Portfolio Series will be paid in cash unless the
Unitholder elects to have them automatically reinvested in any mutual
fund underwritten or advised by Zurich Kemper Investments, Inc. (the
"Kemper Funds"), other than those Kemper Funds sold with a contingent
deferred sales charge. Since the portfolio securities and investment
objectives of such Kemper Funds may differ significantly from that of the
U.S. Treasury Portfolio, Unitholders should carefully consider the
consequences before selecting such Kemper Funds for reinvestment. Any
such reinvestment is made at net asset value (that is, without a sales
charge). Investors have the ability to designate that only principal
payments or only interest payments or both are to be reinvested (see
"Reinvestment Program"). Distributions of principal will be made in
accordance with the instructions of the investor in any month the amount
in the Principal Account equals or exceeds $1.00 per 1,000 Units ($1.00
-12-
<PAGE>
per 100 Units for certain Trusts). Distributions will be made as
specified in Part Two for each Trust.
Stripped Treasury Securities. Stripped Treasury Securities are sold
at a deep discount because the buyer of those securities obtains only the
right to receive a future fixed payment on the security and not any
rights to periodic interest payments thereon. Purchasers of these
Securities acquire, in effect, discount obligations that are economically
identical to the "zero-coupon bonds" that have been issued by
corporations. Zero coupon bonds are debt obligations which do not make
any periodic payments of interest prior to maturity and accordingly are
issued at a deep discount.
Stripped Treasury Securities held by any Series of the U.S. Treasury
Portfolio Series Trust shall consist solely of either of the following
types of the registered securities: (a) U.S. Treasury debt obligations
originally issued as bearer coupon bonds which have been stripped of
their unmatured interest coupons and (b) coupons which have been stripped
from U.S. Treasury bearer bonds, either of which may be held through the
Federal Reserve Bank's book entry system called "Separate Trading of
Registered Interest and Principal of Securities" ("STRIPS"). The
Stripped Treasury Securities are payable in full at maturity at their
stated maturity amount and are not subject to redemption prior to
maturity. In addition, the Stripped Treasury Securities do not make any
periodic payments of interest.
The Stripped Treasury Securities are sold at a substantial discount
from their face amounts payable at maturity. The holder of Stripped
Treasury Securities will be required to include annually in gross income
an allocable portion of the deemed original issue discount, prior to
receipt of cash attributable to that income. Accordingly, any Series
owning Stripped Treasury Securities may not be a suitable investment
unless these taxes can be paid from other funds or unless such Series is
purchased by Individual Retirement Accounts, Keogh plans or other tax-
deferred retirement plans. Stripped Treasury Securities are marketable
in substantially the same manner as other discount Treasury Securities.
Risk Factors. An investment in Units of the U.S. Treasury Portfolio
should be made with an understanding of the risks which an investment in
fixed-rate U.S. Treasury obligations may entail, including the risk that
the value of the portfolio and hence of the Units will decline with
increases in interest rates. Some or all of the Securities in the Trust
Fund have been purchased at a market discount. The current returns
(coupon interest rate) of such Securities are lower than the current
returns of similar, comparably rated, Securities issued at currently
prevailing interest rates.
Additionally, an investment in a Series holding Stripped Treasury
Securities should be made with an understanding of the risks which an
investment in debt obligations, most of which were purchased at a deep
discount, may entail, including the risk that the value of the underlying
debt obligations and hence of the Units will decline with increases in
interest rates. The market value of Stripped Treasury Securities, and
therefore the value of the Units, may be subject to greater fluctuations
in response to changing interest rates than debt obligations of
comparable maturities which pay interest currently. This risk is greater
when the period to maturity is longer. No distributions of income are
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<PAGE>
anticipated until maturity of the Stripped Treasury Securities. The
price per Unit will vary in accordance with fluctuations in the values of
the Stripped Treasury Securities, and the distributions could change if
Stripped Treasury Securities are paid or sold, or if the expenses of the
Trust change.
The Stripped Treasury Securities will mature at one year intervals
in consecutive years and do not make any periodic payment of income prior
to maturity. Accordingly, it is not anticipated that there will be any
periodic distributions of income.
Because interest on "zero coupon" debt obligations is not
distributed on a current basis but in effect compounded, the value of
securities of this type, including the value of accreted and reinvested
interest (and of a trust comprised of these obligations), is subject to
greater fluctuations than of obligations which distribute income
regularly. Accordingly, while the full faith and the credit of the U.S.
government provides a high level of protection against credit risks on
the Securities, sale of Units before maturity of the Securities at a time
when interest rates have increased would involve greater risk than in a
trust which is invested in debt obligations or comparable maturity which
pay interest currently. This risk is greater when the period to maturity
is longer.
Estimated Current and Long-Term Returns. The Estimated Current
Return is calculated by dividing the estimated net annual interest rate
per Unit by the Public Offering Price. The net estimated annual interest
rate per Unit will vary with changes in the fees and expenses of the
Trustee, Sponsor and Evaluator and with the exchange, redemption, sales,
scheduled payments, prepayments or maturity of underlying Securities in
the portfolio. The Public Offering Price of a Trust will also vary with
fluctuations in the evaluation of the underlying Securities and accrued
interest, and in the case of certain Trusts with changes in the Purchased
Interest and Daily Accrued Interest; therefore, there is no assurance
that the present Estimated Current Return will be realized in the future.
The Estimated Long-Term Return is calculated using a formula which
(1) takes into account the amortization of premiums and the accretion of
discounts, the estimated retirements of all the Securities in such Series
and (2) takes into account the expenses and sales charge associated with
each Unit of the Trust. Since the market values and the estimated
average lives or estimated retirements, as the case may be, of the
Securities and the expenses of a Trust will change, it can be expected
that the Estimated Long-Term Returns will fluctuate in the future.
Estimate Current Return and Estimated Long-Term Return are expected to
differ because the calculation of the Estimated Long-Term Return reflects
the estimated date and amount of principal returned while the Estimated
Current Return calculation includes only the net annual interest rate and
Public Offering Price.
Market for Units. The Sponsor, though not obligated to do so, after
the initial offering period, intends to maintain a market for the Units
based on the aggregate bid side evaluation of the underlying Securities
plus Purchased Interest, if any, and accrued interest (or Daily Accrued
Interest). If such market is not maintained, a Unitholder will,
nevertheless, be able to dispose of his Units through redemption at
prices based on the aggregate bid side evaluation of the underlying
Securities. See "Redemption." Market conditions may cause such prices
to be greater or less than the amount paid for Units.
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<PAGE>
THE U.S. TREASURY PORTFOLIO SERIES
Each Kemper Government Securities Trust, U.S. Treasury Portfolio,
Kemper Defined Funds, U.S. Treasury Portfolio and EVEREN Unit Investment
Trusts U.S. Treasury Portfolio (collectively, the "U.S. Treasury
Portfolio Series") is a "unit investment trust" created under Missouri or
New York law pursuant to a Trust Indenture and Agreement (hereinafter
collectively referred to as the "Indenture").* Ranson & Associates, Inc.
is the Sponsor and Evaluator of the Trusts and is successor sponsor and
evaluator of all unit investment trusts formerly sponsored by EVEREN Unit
Investment Trusts, a service of EVEREN Securities, Inc. The Bank of New
York is the Trustee of the Trusts as successor to Investors Fiduciary
Trust Company.
The objective of the U.S. Treasury Portfolio is to obtain safety of
capital and investment flexibility through investment in a fixed,
laddered portfolio consisting of interest-bearing (or in some cases zero
coupon) U.S. Treasury obligations. The U.S. Treasury Portfolio Series is
formed for the purpose of providing protection against changes in
interest rates and also passing through to Unitholders in all states the
exemption from state personal income taxes afforded to direct owners of
U.S. obligations. The Securities are direct obligations of the United
States and are backed by its full faith and credit. The value of the
Units, the estimated current return and estimated long-term return to new
purchasers will fluctuate with the value of the Securities included in
the portfolio which will generally decrease or increase inversely with
changes in interest rates. See "Tax Status of the Trusts."
Risk Factors. An investment in Units of the U.S. Treasury Portfolio
Series should be made with an understanding of the risks which an
investment in fixed rate debt obligations may entail, including the risks
that the value of the Portfolio and hence of the Units will decline with
increases in interest rates. The value of the underlying Securities will
fluctuate inversely with changes in interest rates. The high inflation
of prior years, together with the fiscal measures adopted to attempt to
deal with it, have resulted in wide fluctuations in interest rates and,
thus, in the value of fixed rate long term debt obligations generally.
The Sponsor cannot predict whether such fluctuations will continue in the
future.
In selecting Securities for deposit in the U.S. Treasury Portfolio
Series, the following factors, among others, were considered by the
Sponsor: (i) the prices of the Securities relative to other comparable
Securities; (ii) the maturities of these Securities; and (iii) whether
the Securities were issued after July 18, 1984.
The U.S. Treasury Portfolio Series may be an appropriate medium for
investors who desire to participate in a portfolio of taxable fixed
income securities offering the safety of capital provided by an
investment backed by the full faith and credit of the United States. In
addition, many investors may benefit from the exemption from state and
- -----------------
* To the extent reference is made to the Indenture, any statements
herein are qualified in their entirety by the provisions of said
indenture.
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<PAGE>
local personal income taxes that will pass through the U.S. Treasury
Portfolio Series to Unitholders in virtually all states.
Since Unitholders of a Series holding Stripped Treasury Securities
will be required for Federal income tax purposes to include amounts in
ordinary gross income in advance of the receipt of the cash attributable
to such income, such Series may be appropriate only for an account which
can pay taxes with other funds in advance of the receipt of the cash
attributable to such income or for Individual Retirement Accounts, Keogh
plans or other tax-deferred retirement plans.
General. Each Unit in a Series represents the fractional undivided
interest in the U.S. Treasury Portfolio Series as set forth under
"Essential Information" in Part Two. Because certain of the Securities
from time to time may be redeemed or will mature in accordance with their
terms or may be sold under certain circumstances described herein, the
U.S. Treasury Portfolio Series of the Trust is not expected to retain its
present size and composition. Units will remain outstanding until
redeemed upon tender to the Trustee by any Unitholder (which may include
the Sponsor) or until the termination of the Trust pursuant to the
Indenture.
PORTFOLIO SELECTION
In selecting Ginnie Maes and U.S. Treasury Obligations (collectively
referred to herein as the "Portfolio Obligations") for deposit in a
Series of the appropriate Trusts, the following factors, among others,
were considered by the Sponsor: (i) the types of such obligations
available; (ii) the prices and yields of such obligations relative to
other comparable obligations including the extent to which such
obligations are trading at a premium or at a discount from par; and
(iii) the maturities of such obligations.
Each Series of the Trusts consists of the unamortized principal
amount of the Portfolio Obligations listed in Part Two under "Schedule of
Investments" as may continue to be held from time to time in such Series
together with accrued and undistributed interest thereon and
undistributed cash representing payments and prepayments of principal and
proceeds realized from the disposition of Portfolio Obligations. Neither
the sponsor nor the Trustee shall be liable in any way for any default,
failure or defect in any of the Securities.
Each series of the Trust may contain "zero coupon" U.S. Treasury
Obligations. See "Schedule of Investments" in Part Two of this
Prospectus. Zero coupon obligations are purchased at a deep discount
because the buyer receives only the right to receive a final payment at
the maturity of the obligations and does not receive any periodic
interest payments. The effect of owning deep discount obligations which
do not make current interest payments (such as the zero coupon
obligations) is that a fixed yield is earned not only on the original
investment but also, in effect, on all discount earned during the life of
such income on such obligation at a rate as high as the implicit yield on
the discount obligation, but at the same time eliminates the holder's
ability to reinvest at higher rates in the future. For this reason, zero
coupon obligations are subject to substantially greater price
-16-
<PAGE>
fluctuations during periods of changing market interest rates than are
securities of comparable quality which pay interest.
Because regular payments of principal are to be received and certain
of the Portfolio Obligations from time to time may be redeemed or will
mature in accordance with their terms or may be sold under certain
circumstances described herein, the Series of the Trusts are not expected
to retain their present size and composition.
THE UNITS
Each Unit represents the fractional undivided interest in a Series
of the Trusts set forth in Part Two under "Essential Information." If
any Units are redeemed by the Trustee, the principal amount of Portfolio
Obligations in such Series of the Trusts will be reduced by amounts
allocable to redeemed Units, and the fractional undivided interest
represented by each Unit in the balance will be increased. Units will
remain outstanding until redeemed upon tender to the Trustee by any
Unitholder (which may include the Sponsor) or until the termination of
the Series of the Trusts. See "Redemption" and "Administration of the
Trust - Termination."
ESTIMATED LONG-TERM AND CURRENT RETURNS
The Estimated Current Return and Estimated Long-Term Return for each
trust are the amounts set forth in Part Two under "Essential Information"
as of the date shown on that page. Estimated Current Return is
calculated by dividing the estimated net annual interest rate per Unit by
the Public Offering Price. The estimated net annual interest rate per
Unit will vary with changes in fees and expenses of the Trustee, the
Sponsor and the Evaluator and with the principal prepayment, redemption,
maturity, exchange or sale of Portfolio Obligations while the Public
Offering Price will vary with changes in the offering price of the
underlying Portfolio Obligations and accrued interest, and in the case of
certain Trusts, with changes in Purchased Interest and Daily Accrued
Interest; therefore, there is no assurance that the present Estimated
Current Return will be realized in the future. The Estimated Long-Term
Return is calculated using a formula which (1) takes into consideration,
and determines and factors in the relative weightings of, the market
values, yields (which takes into account the amortization of premiums and
the accretion of discounts) and, in the case of GNMA Portfolio Series,
the estimated average life of all the Portfolio Obligations in such
Series or, in the case of U.S. Treasury Portfolio Series, the estimated
retirements of all of the Portfolio Obligations in such Series and
(2) takes into account the expenses and sales charge associated with each
Trust Unit. Since the market values and the estimated average lives or
estimated retirements, as the case may be, of the Portfolio Obligations
and the expenses of the Trust will change, there is no assurance that the
present Estimated Long-Term Return will be realized in the future. The
Estimated Current Return and Estimated Long-Term Return are expected to
differ because the calculation of the Estimated Long-Term Return reflects
the estimated dates and amounts of principal returned while the Estimated
Current Return calculations include only net annual interest rates and
Public Offering Price. See "Summary - GNMA Portfolio - Estimated Current
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<PAGE>
and Long-Term Returns" and "Summary - U.S. Treasury Portfolio - Estimated
Current and Long-Term Returns."
Payments received in respect of the mortgages underlying the Ginnie
Maes in the GNMA Trust Portfolios will consist of a portion representing
interest and a portion representing principal. Although the aggregate
monthly payment made by the obligor on each mortgage remains constant
(aside from optional prepayments of principal), in the early years most
of each such payment will represent interest, while in later years, the
proportion representing interest will decline and the proportion
representing principal will increase. However, by reason of optional
prepayments, principal payments in the earlier years on the mortgages
underlying the Ginnie Maes may be substantially in excess of those
required by the amortization schedules of such mortgages. Therefore,
principal payments in later years may be substantially less since the
aggregate unpaid principal balances of such underlying mortgages may have
been greatly reduced. To the extent that the underlying mortgages
bearing higher interest rates in the GNMA Trust Portfolios are pre-paid
faster than the other underlying mortgages, the net annual interest rate
per Unit and the Estimated Current Return on the Units can be expected to
decline. Monthly payments to the Unitholders will reflect all of the
foregoing factors.
In addition to the Public Offering Price, the price of a Unit will
include accrued interest on the Portfolio Obligations from the last
Record Date of that Series of the Trusts to the date of settlement for
any purchase. Therefore, accrued interest will generally be added to the
value of the Units. If a Unitholder sells all or a portion of his Units,
he will receive his proportionate share of the accrued interest on such
Series from the purchaser of his Units. Similarly, if a Unitholder
redeems all or a portion of his Units, the Redemption Price per Unit will
include accrued interest on the Portfolio Obligations.
PUBLIC OFFERING OF UNITS
Public Offering Price. The Public Offering Price of Units is
computed by adding to the aggregate bid price of the Portfolio
Obligations in that Series of the Trusts as determined by the Evaluator
(see below) plus any money in the Principal Account of such Series other
than money required to redeem tendered Units, plus Purchased Interest, if
any, and accrued interest (or Daily Accrued Interest), then dividing such
sum by the number of Units of such Series outstanding and then adding
that sales charge referred to below.
Although under no obligation to do so, the Sponsor intends to permit
volume purchasers of Units to purchase Units at a reduced sales charge.
The Sponsor may at any time change the amount by which the sales charge
is reduced or may discontinue the discount altogether.
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<PAGE>
The sales charge per Unit for the GNMA Portfolio Series will be
reduced pursuant to the following graduated scale:
<TABLE>
<CAPTION>
GNMA MIDGET SERIES GNMA SERIES
------------------------ ------------------------
PERCENT OF PERCENT OF PERCENT OF PERCENT OF
OFFERING NET AMOUNT OFFERING NET AMOUNT
TICKET SIZE PRICE INVESTED PRICE INVESTED
- ----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Less than $100,000 3.50% 3.627% 3.95% 4.112%
$100,000 to $249,999 3.25 3.359 3.70 3.842
$250,000 to $499,999 2.85 2.934 3.35 3.466
$500,000 to $999,999* 2.60 2.669 3.10 3.199
</TABLE>
- ----------------
* For any transaction in excess of this amount, contact the Sponsor
for the applicable sales charge.
The sales charge per Unit for U.S. Treasury Portfolio Series will be
reduced pursuant to the following graduated scale:
<TABLE>
<CAPTION>
DOLLAR WEIGHTED AVERAGE YEARS TO MATURITY
0-1.99 YEARS 2-2.99 YEARS 3-4.99 YEARS 5-6.99 YEARS 7-9.99 YEARS
------------ ------------ ------------ ------------ ------------
TICKET SIZE SALES CHARGE (PERCENT OF PUBLIC OFFERING PRICE)
- ----------- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Less than $500,000 1.25% 1.50% 1.75% 2.25% 3.00%
$500,000 to $999,999 1.00 1.25 1.50 1.75 2.50
$1,000,000 to $1,499,999* 1.00 1.00 1.25 1.50 2.00
</TABLE>
- ----------------
* For any transaction in excess of $1,499,999, please contact the
Sponsor for the applicable sales charge.
The reduced sales charges as shown on the tables above will apply to
all purchases of Units on any one day by the same person from the same
firm, and for this purpose, purchases of Units of one or more Series of
the Trusts will be aggregated with concurrent purchases of Units of any
other unit investment trust that may be offered by the Sponsor.
Additionally, Units purchased in the name of a spouse or child
(under 21) of such purchaser will be deemed to be additional purchases by
such purchaser. The reduced sales charge is also applicable to a trustee
or other fiduciary purchasing Units for a single trust estate or single
fiduciary account.
The Sponsor will also allow purchasers who commit to purchase $1
million or more of a Series units during a 12 month period to do so at
the applicable sales charge for such series pursuant to a letter of
intent, subject to certain restrictions.
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<PAGE>
The Sponsor intends to permit officers, directors and employees of
the Sponsor and Evaluator to purchase Units of any Series of the Trusts
without a sales charge, although a transaction processing fee may be
imposed on such trades. The Sponsor reserves the right to reject, in
whole or in part, any order for the purchase of Units and the right to
charge the amount of the sales charge from time to time.
Units may be purchased at the Public Offering Price less the
concession the Sponsor typically allows to dealers and other selling
agents for purchases (see "Public Distribution of Units") by investors
who purchase Units through registered investment advisers, certified
financial planners or registered broker-dealers who in each case either
charge periodic fees for financial planning, investment advisory or asset
management services, or provide such services in connection with the
establishment of an investment account for which a comprehensive "wrap
fee" charge is imposed.
In addition to the Public Offering Price, the price of a Unit of a
Series of the Kemper Government Securities Trust will include accrued
interest on the Portfolio Obligations from the last Record Date of that
Series of such Trust to the date of settlement for any purchase.
Therefore, accrued interest will generally be added to the value of the
Units of such Trust. If a Unitholder of the Kemper Government Securities
Trust sells all or a portion of his Units, he will receive his
proportionate share of the accrued interest for that Series of the Trusts
from the purchaser of his Units. Similarly, if a Unitholder of the
Kemper Government Securities Trust redeems all or a portion of his Units,
the Redemption Price per Unit will include accrued interest on the
Portfolio Obligations in such Series.
In the case of certain Series of Kemper Defined Funds, the Public
Offering Price includes accrued interest which consists of two elements.
The first element arises as a result of accrued interest which is the
accumulation of unpaid interest on a security from the later of the last
day on which interest thereon was paid or the date of original issuance
of the security. Interest on the Portfolio Obligations in a Trust is
paid monthly or semi-annually to the Trust. The aggregate amount of such
accrued interest on the Portfolio Obligations in a Trust in certain
Series of Kemper Defined Funds to the First Settlement Date of such Trust
is referred to herein as "Purchased Interest." Included in the Public
Offering Price of the Trust Units is Purchased Interest. The second
element of accrued interest arises because the estimated net interest on
the Units in a Trust is accounted for daily on an accrual basis (herein
referred to as "Daily Accrued Interest" for purposes of certain Kemper
Defined Funds Trusts). Because of this, the Units always have an amount
of interest earned but not yet paid or reserved for payment. For this
reason, the Public Offering Price of Units in certain Series of Kemper
Defined Funds will include the proportionate share of Daily Accrued
Interest to the date of settlement. If a Unitholder in certain Series of
Kemper Defined Funds sells or redeems all or a portion of his Units or if
the Portfolio Obligations are sold or otherwise removed or if the Trust
is liquidated, he will receive at that time his proportionate share of
the Purchased Interest and Daily Accrued Interest computed to the
settlement date in the case of sale or liquidation and to the date of
tender in the case of redemption in the Trust.
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<PAGE>
In the case of certain other Series of Kemper Defined Funds and all
Series of EVEREN Unit Investment Trusts, the Public Offering Price
includes accrued interest as described in this paragraph. Accrued
interest is the accumulation of unpaid interest on a security from the
last day on which interest thereon was paid. Interest on Securities
generally is paid semi-annually (monthly in the case of Ginnie Maes, if
any) although a Trust accrues such interest daily. Because of this, a
Trust always has an amount of interest earned but not yet collected by
the Trustee. For this reason, with respect to sales settling subsequent
to the First Settlement Date, the Public Offering Price of Units will
have added to it the proportionate share of accrued interest to the date
of settlement. Unitholders will receive on the next distribution date of
a Trust the amount, if any, of accrued interest paid on their Units. In
an effort to reduce the amount of accrued interest which would otherwise
have to be paid in addition to the Public Offering Price in the sale of
Units to the public, the Trustee will advance the amount of accrued
interest as of the First Settlement Date and the same will be distributed
to the Sponsor as the Unitholder of record as of the First Settlement
Date. Consequently, the amount of accrued interest to be added to the
Public Offering Price of Units will include only accrued interest from
the First Settlement Date to the date of settlement, less any
distributions from the Interest Account subsequent to the First
Settlement Date. Because of the varying interest payment dates of the
Securities, accrued interest at any point in time will be greater than
the amount of interest actually received by the Trusts and distributed to
Unitholders. Therefore, there will always remain an item of accrued
interest that is added to the value of the Units. If a Unitholder sells
or redeems all or a portion of his Units, he will be entitled to receive
his proportionate share of the accrued interest from the purchaser of his
Units. Since the Trustee has the use of the funds held in the Interest
Account for distributions to Unitholders and since such Account is non-
interest bearing to Unitholders, the Trustee benefits thereby.
The Public Offering Price on any date will vary from the amount
stated under "Essential Information" in Part Two due to fluctuations in
the valuation of the underlying Portfolio Obligations in such Series of
the Trusts and accrued interest, and, in the case of certain Trusts, the
additions or deletions of Purchased Interest and Daily Accrued Interest.
The aggregate bid prices of the Portfolio Obligations in a Series of
the Trusts, are determined for each Series of the Trusts by the
Evaluator, in the following manner: (a) on the basis of current bid
prices for the Portfolio Obligations, (b) if bid prices are not available
for the Portfolio Obligations, on the basis of current bid prices for
comparable securities, (c) by determining the value of the Portfolio
Obligations on the bid side of the market by appraisal, or (d) by any
combination of the above. The Evaluator may obtain current price
information as to the Portfolio Obligations from investment dealers or
brokers, including the Sponsor. Such evaluations and computations will
be made as of the close of business on each business day and will be
effective for all sales of Units made during the preceding 24-hour
period. Evaluations, for purposes of redemptions by the Trustee, will be
made each business day as of the Evaluation Time stated under "Essential
Information" in Part Two, effective for all redemptions made subsequent
to the last preceding determination.
In connection with the Ginnie Maes deposited in the GNMA Trusts,
there is a period of time beginning on the first day of each month,
during which the total amount of payments (including prepayments, if any)
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<PAGE>
of principal for the preceding month on the various mortgages underlying
each of the Ginnie Maes in the Portfolio of a Series will not yet have
been reported by the issuer to GNMA and made generally available to the
public. During this period, the precise principal amount of the
underlying mortgages remaining outstanding for each Ginnie Mae in the
Portfolios, and therefore the precise principal amount of such Security,
will not be known, although the principal amount outstanding for the
preceding month will be known. Therefore, the exact amount of principal
to be acquired by the Trustee as a holder of such Securities which may be
distributed to Unitholders of such Series with the next monthly
distribution will not be known. The Sponsor does not expect that the
amounts of such prepayments and the differences in such principal amounts
from month to month will be material in relation to a Series of the GNMA
Trusts due to the number of mortgages underlying each Ginnie Mae and the
number of such Ginnie Maes in each Series of the GNMA Trusts. However,
there can be no assurance that they will not be material. For purposes
of the determination by the Evaluator of the bid prices of the Ginnie
Maes in the GNMA Portfolios and for purposes of calculations of accrued
interest on the Units, during the period in each month prior to the time
when the precise amounts of principal of the Ginnie Maes for the month
become publicly available, the Evaluator will base its evaluations and
calculations, which are the basis for calculations of the Public Offering
Price, the Sponsor's Repurchase Price and the Redemption Price per Unit,
upon the principal amount of such Series outstanding for the preceding
month. The Sponsor expects that the differences in such principal
amounts from month to month will not be material to each GNMA Portfolio
Series of the Trusts. Nevertheless, the Sponsor will adopt procedures as
to pricing and evaluation for the Units of each Series of the GNMA
Trusts, with such modifications, if any, deemed necessary by the Sponsor
for the protection of Unitholders, designed to minimize the impact of
such differences upon the calculation of the Public Offering Price per
Unit, the Sponsor's Repurchase Price per Unit and the Redemption Price
per Unit of such Series.
Public Distribution. The Sponsor has qualified Units for sale in
various states. Units will be sold through dealers who are members of
the National Association of Securities Dealers, Inc. and through others.
Such firms receive a discount from the Public Offering Price as indicated
in the tables under "Profit of Sponsor" below. Certain commercial banks
are making Units of the Trust available to their customers on an agency
basis. A portion of the sales charge paid by their customers is retained
by or remitted to the banks in an amount as indicated in the tables under
"Profit of Sponsor" below. Under the Glass-Steagall Act, banks are
prohibited from underwriting Trust Units; however, the Glass-Steagall Act
does permit certain agency transactions and the banking permitted
regulators have indicated that these particular agency transactions are
permitted under such Act. In addition, state securities laws on this
issue may differ from the interpretations of Federal law expressed herein
and banks and financial institutions may be required to register as
dealers pursuant to state law. The Sponsor reserves the right to reject,
in whole or in part, any order for the purchase of Units. The Sponsor
reserves the right to change the discounts from time to time. The
difference between the discounts and the sales charge will be retained by
the Sponsor.
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The Sponsor also reserves the right to change the discounts set
forth above from time to time. In addition to such discounts, the
Sponsor may, from time to time, pay or allow an additional discount, in
the form of cash or other compensation, to dealers employing registered
representatives who sell, during a specified time period, a minimum
dollar amount of Units of the Series of the Trusts and other unit
investment trusts underwritten by the Sponsor.
While not obligated to do so, the Sponsor intends, subject to change
at any time, to maintain a market for Units of the Series of the Trusts
offered hereby and to continuously offer to purchase said Units at prices
based on the aggregate bid prices of the underlying Portfolio Obligations
in such Series, together with accrued interest to the expected date of
settlement.
The Sponsor may suspend or discontinue purchases of Units at prices
based on the bid prices of Securities in any Series of the Trusts if the
supply of Units exceeds demand, or for other business reasons.
Profits of Sponsor. Sales of Units may be made to or through
dealers or through others at prices which represent discounts from the
Public Offering Price as set forth below. Discounted rates for the GNMA
Portfolio Series are as follows:
<TABLE>
<CAPTION>
GNMA GNMA
Ticket Size* Midget Series Series
- ------------ ------------- ------
<S> <C> <C>
Less than $100,000 2.10% 2.60%
$100,000 to $249,999 2.10 2.60
$250,000 to $499,999 1.80 2.30
$500,000 to $999,999** 1.55 2.05
</TABLE>
- ----------------
* The breakpoint is applied on a Unit basis utilizing a breakpoint
equivalent in the above table of $1.00 per Unit for $1 Units and
$1000 per 100 Units for $10 Units.
** For transactions in excess of this amount, contact the Sponsor for
the applicable rates.
On the sale of Units, the Sponsor will retain the difference between
the discount and the sales charge. The Sponsor may also realize profits
or sustain losses while maintaining a market in the Units, in the amount
of any difference between the prices at which it buys Units and the
prices at which Units are resold after allowing for the discount.
Cash, if any, received by a dealer from Unitholders prior to the
settlement date for a purchase of Units of any Series may be used in such
dealer's business subject to the limitations of Rule 15c3-3 under the
Securities Exchange Act of 1934 and may be of benefit to the dealer.
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TAX STATUS OF THE TRUSTS
Regulated Investment Companies. Each Series of the GNMA Trusts
(except for Kemper Government Securities Trust GNMA Portfolio (Foreign
Investors Trusts) and Kemper Defined Funds, GNMA Portfolio, Series 1) is
an association taxable as a corporation under the Internal Revenue Code
and intends to qualify on a continuing basis for special Federal income
tax treatment as a "regulated investment company" under the Internal
Revenue Code of 1986 (the "Code"). If the Trust so qualifies and timely
distributes to Unitholders 90% or more of its taxable income (without
regard to its net capital gain, i.e., the excess of its long-term capital
gain over its net short-term capital loss), it will not be subject to
Federal income tax on the portion of its taxable income (including any
net capital gain) that it distributes to Unitholders. In addition, to
the extent the Trust distributes to Unitholders at least 98% of its
taxable income (including any net capital gain), it will not be subject
to the 4% excise tax on certain undistributed income of "regulated
investment companies." Each Series of the GNMA Portfolio intends to
timely distribute its taxable income (including any net capital gains) to
avoid the imposition of Federal income tax or the excise tax.
Distributions of the entire net investment income of each Series of such
Trusts is required by the Indenture.
In any taxable year of the Trusts, the distributions of its income,
other than distributions which are designated as capital gain dividends,
will, to the extent of the earnings and profits of such Series,
constitute dividends for Federal income tax purposes which are taxable as
ordinary income to Unitholders. To the extent that the distributions to
a Unitholder in any year exceed the Trust's current and accumulated
earnings and profits, they will be treated as a return of capital and
will reduce the Unitholder's basis in his Units, and to the extent that
they exceed his basis, will be treated as a gain from the sale of his
Units as discussed below. Distributions from each Series of the GNMA
Trusts will not be eligible for the 70% dividends received deduction for
corporations. Although distributions generally will be treated as
distributed when paid, distributions declared in October, November or
December, payable to Unitholders of record on a specified date in one of
those months and paid during January of the following year will be
treated as having been distributed by each Series of such Trusts (and
received by the Unitholders) on December 31 of the year such
distributions are declared. Under the Code, certain miscellaneous
itemized deductions, such as investment expenses, tax return preparation
fees and employee business expenses, will be deductible by individuals
only to the extent they exceed 2% of adjusted gross income.
Miscellaneous itemized deductions subject to this limitation under
present law do not include expenses incurred by the GNMA Trusts, as long
as the Units of such Trusts are held by or for 500 or more persons at all
times during the taxable year or another exception is met. In the event
the Units of any Series of a GNMA Trust are held by fewer than 500
persons, additional taxable income will be realized by the individual
(and other noncorporate) Unitholders in excess of the distributions
received from such Series.
Distributions of the Trusts' net capital gain which the Trusts
designate as capital gain dividends will be taxable to Unitholders
thereof as long-term capital gains, regardless of the length of time the
Units have been held by a Unitholder. However, if a Unitholder receives
a long-term capital gain dividend (or is allocated a portion of the
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Trust's undistributed long-term capital gain) and sells his Units at a
loss prior to holding them for 6 months, such loss will be
recharacterized as long-term capital loss to the extent of such long-term
capital gain received as a dividend or allocated to a Unitholder.
Distributions in partial liquidation, reflecting the proceeds of
prepayments, redemptions, maturities (including monthly mortgage payments
of principal in GNMA Series) or sales of Portfolio Obligations from a
Series of such Trusts (exclusive of net capital gain) will not be taxable
to Unitholders of such Series to the extent that they represent a return
of capital for tax purposes. The portion of distributions which
represents a return of capital will, however, reduce a Unitholder's basis
in his Units, and to the extent they exceed the basis of his Units will
be taxable as a capital gain. A Unitholder may recognize a taxable gain
or loss when his Units are sold or redeemed. Such gain or loss will
generally constitute either a long-term or short-term capital gain or
loss depending upon the length of time the Unitholder has held his Units.
Any loss on Units held six months or less will be treated as long-term
capital loss to the extent of any long-term capital gains dividends
received (or deemed to have been received) by the Unitholder with respect
to such Units. For taxpayers other than corporations, net capital gains
are presently subject to a maximum stated marginal tax rate of 28%.
However, it should be noted that legislative proposals are introduced
from time to time that affect tax rates and could affect relative
differences at which ordinary income and capital gains are taxed. A
capital loss is long-term if the asset is held for more than one year and
short-term if held for one year or less.
"The Revenue Reconciliation Act of 1993" (the "Tax Act") raised tax
rates on ordinary income while capital gains remain subject to a 28%
maximum stated rate for taxpayers other than corporations. Because some
or all capital gains are taxed at a comparatively lower rate under the
Tax Act, the Tax Act 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. If a Ginnie Mae or Fannie Mae
has been purchased by a GNMA Trust at a market discount (i.e., for a
purchase price less than its stated redemption price at maturity (or if
issued with original issue discount, its "revised issue price")) unless
the amount of market discount is "de minimis" as specified in the Code
each payment of principal on such security will generally constitute
ordinary income to such Series of the Trust to the extent of any accrued
market discount unless the Trust elects to include the accrued market
discount in taxable income as it accrues. In the case of a Ginnie Mae,
the amount of market discount that is deemed to accrue each month shall
generally be the amount of discount that bears the same ratio to the
total amount of remaining market discount that the amount of interest
paid during the accrual period (each month) bears to the total amount of
interest remaining to be paid on the Ginnie Mae as of the beginning of
the accrual period.
Each Unitholder of each Series of the GNMA Trusts shall receive an
annual statement describing the tax status of the distributions paid by
such Series of such Trust.
Each Unitholder will be requested to provide the Unitholder's
taxpayer identification number to the Trustee and to certify that the
Unitholder has not been notified that payments to the Unitholder are
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<PAGE>
subject to back-up withholding. If the proper taxpayer identification
number and appropriate certification are not provided when requested,
distributions by the Trust to such Unitholder (including amounts received
upon the redemption of Units) will be subject to back-up withholding.
The foregoing discussion relates only to the Federal income tax
status of the Trust and to the tax treatment of distributions by the
Trust to United States Unitholders.
A Unitholder who is a foreign investor (i.e., an investor other than
a United States citizen or resident or a United States corporation,
partnership, estate or trust) should be aware that, generally, subject to
applicable tax treaties, distributions from the Trust which constitute
dividends for Federal income tax purposes (other than dividends which the
Trust designates as capital gain dividends) will be subject to United
States income taxes, including withholding taxes. However, distributions
received by a foreign investor from the Trust that are designated by the
Trust as capital gain dividends should not be subject to United States
Federal income taxes, including withholding taxes, if all of the
following conditions are met (i) the capital gain dividend is not
effectively connected with the conduct by the foreign investor of a trade
or business within the United States, (ii) the foreign investor (if an
individual) is not present in the United States for 183 days or more
during his or her taxable year, and (iii) the foreign investor provides
all certification which may be required of his status (foreign investors
may contact the Sponsor to obtain a Form W-8 which must be filed with the
Trustee and refiled every three calendar years thereafter). Foreign
investors should consult their tax advisers with respect to United States
tax consequences of ownership of Units. Units in the Trust and Trust
distributions may also be subject to state and local taxation and
Unitholders should consult their tax advisers in this regard.
U.S. Treasury Portfolio Series. In the opinion of Chapman and
Cutler, counsel for the Sponsor:
(1) Each Series of the U.S. Treasury Portfolio is not an
association taxable as a corporation for Federal income tax
purposes; each Unitholder will be treated as the owner of a pro rata
portion of the U.S. Treasury Portfolio Series of the Trust under the
Code and income of such Series will be treated as the income of the
Unitholders under the Code. Each Unitholder will be considered to
have received his or her pro rata share of income derived from each
Series asset when such income is considered to be received by each
U.S. Treasury Portfolio Series.
(2) Each Unitholder will have a taxable event when the U.S.
Treasury Portfolio Series disposes of a U.S. Treasury Obligation, or
when the Unitholder redeems or sells his Units. Unitholders must
reduce the tax basis of their Units for their share of accrued
interest received by the U.S. Treasury Portfolio Series, if any, on
U.S. Treasury Obligations delivered after the Unitholder pay for
their Units to the extent that such interest accrued on such U.S.
Treasury Obligations before the date each U.S. Treasury Portfolio
Series acquired ownership of the U.S. Treasury Obligations (and the
amount of this reduction may exceed the amount of accrued interest
paid to the seller) and, consequently, such Unitholders may have an
-26-
<PAGE>
increase in taxable gain or reduction in capital loss upon the
disposition of such Units. Gain or loss upon the sale or redemption
of Units is measured by comparing the proceeds of such sale or
redemption with the adjusted basis of the Units. If the Trustee
disposes of U.S. Treasury Obligations (whether by sale, payment on
maturity, redemption or otherwise), gain or loss is recognized to
the Unitholder. The amount of any such gain or loss is measured by
comparing the Unitholder's pro rata share of the total proceeds from
such disposition with the Unitholder's basis for his or her
fractional interest in the asset disposed of. In the case of a
Unitholder who purchases Units, such basis (before adjustment for
earned original issue discount, amortized bond premium and accrued
market discount (if the Unitholder has elected to include such
market discount in income as it accrues), if any) is determined by
apportioning the cost of the Units among each of the U.S. Treasury
Portfolio Series assets ratably according to value as of the
valuation date nearest the date of acquisition of the Units. The
tax basis reduction requirements of said Code relating to
amortization of bond premium may, under some circumstances, result
in the Unitholder realizing a taxable gain when his Units are sold
or redeemed for an amount equal to or less than his original cost.
(3) Certain Series of the U.S. Treasury Portfolio Series
contain Stripped Treasury Securities. The basis of each Unit and of
each U.S. Treasury Obligation which was issued with original issue
discount must be increased by the amount of accrued original issue
discount and the basis of each Unit and of each U.S. Treasury
Obligation which was purchased by such Trusts at a premium must be
reduced by the annual amortization of bond premium which the
Unitholder has properly elected to amortize under Section 171 of the
Code. A Trust may contain certain "zero coupon" Securities (the
"Stripped Treasury Securities") that are treated as bonds that were
originally issued at an original issue discount provided, pursuant
to a Treasury Regulation (the "Regulation") issued on December 28,
1992, that the amount of original issue discount determined under
Section 1286 of the Code is not less than a "de minimis" amount as
determined thereunder. Because the Stripped Treasury Securities
represent interests in "stripped" U.S. Treasury bonds, a
Unitholder's initial cost for his pro rata portion of each Stripped
Treasury Securities held by the Trust (determined at the time he
acquires his Units, in the manner described above) shall be treated
as its "purchase price" by the Unitholder. Original issue discount
is effectively treated as interest for Federal income tax purposes,
and the amount of original issue discount in this case is generally
the difference between the bond's purchase price and its stated
redemption price at maturity. A Unitholder will be required to
include in gross income for each taxable year the sum of his daily
portions of original issue discount attributable to the Stripped
Treasury Securities held by the U.S. Treasury Portfolio Series as
such original issue discount accrues and will, in general, be
subject to Federal income tax with respect to the total amount of
such original issue discount that accrues for such year even though
the income is not distributed to the Unitholders during such year to
the extent it is not less than a "de minimis" amount as determined
under the Regulation. To the extent that the amount of such
discount is less than the respective "de minimis" amount, such
discount shall be treated as zero. In general, original issue
discount accrues daily under a constant interest rate method which
takes into account the semi-annual compounding of accrued interest.
-27-
<PAGE>
In the case of the Stripped Treasury Securities, this method will
generally result in an increasing amount of income to the
Unitholders each year. Unitholders should consult their tax
advisers regarding the Federal income tax consequences and accretion
of original issue discount.
(4) The Unitholder's aliquot share of the total proceeds
received on the disposition of, or principal paid with respect to, a
U.S. Treasury Obligation held by the U.S. Treasury Portfolio Series
will constitute ordinary income (which will be treated as interest
income for most purposes) to the extent it does not exceed the
accrued market discount on such U.S. Treasury Obligation issued that
has not previously been included in taxable income by such
Unitholder. A Unitholder may generally elect to include market
discount in income as such discount accrues. In general, market
discount is the excess, if any, of the Unitholder's pro rata portion
of the outstanding principal balance of a U.S. Treasury Obligation
over the Unitholder's initial tax basis for such pro rata portion,
determined at the time such Unitholder acquires his Units. However,
market discount with respect to any U.S. Treasury Obligation will
generally be considered zero if it amounts to less than 0.25% of the
obligation's stated redemption price at maturity times the number of
years to maturity. The market discount rules do not apply to
Stripped Treasury Securities because they are stripped debt
instruments subject to special original issue discount rules as
discussed above. If a Unitholder sells his Units, gain, if any,
will constitute ordinary income to the extent of the aggregate of
the accrued market discount on the Unitholder's pro rata portion of
each U.S. Treasury Obligation that is held by the U.S. Treasury
Portfolio Series that has not previously been included in taxable
income by such Unitholder. In general, market discount accrues on a
ratable basis unless the Unitholder elects to accrue such discount
on a constant interest rate basis. However, a Unitholder should
consult his own tax adviser regarding the accrual of market
discount. The deduction by a Unitholder for any interest expense
incurred to purchase or carry Units will be reduced by the amount of
any accrued market discount that has not yet been included in
taxable income by such Unitholder. In general, the portion of any
interest expense which is not currently deductible would be
ultimately deductible when the accrued market discount is included
in income. Unitholders should consult their tax advisers regarding
whether an election should be made to include market discount in
income as it accrues and as to the amount of interest expense which
may not be currently deductible.
(5) The Code provides that "miscellaneous itemized deductions"
are allowable only to the extent that they exceed two percent of an
individual taxpayer's adjusted gross income. Miscellaneous itemized
deductions subject to this limitation under present law include a
Unitholder's pro rata share of expenses paid by the applicable
Series of the U.S. Treasury Portfolio Series, including fees of the
Trustee, and the Evaluator, but does not include amortizable bond
premium on U.S. Treasury Obligations held by the U.S. Treasury
Portfolio Series.
"The Revenue Reconciliation Act of 1993" (the "Tax Act") raised tax
rates on ordinary income while capital gains remain subject to a 28%
-28-
<PAGE>
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.
The tax basis of a Unitholder with respect to his interest in a U.S.
Treasury Obligation is increased by the amount of original issue discount
(and market discount, if the Unitholder elects to include market
discount, if any, on the U.S. Treasury Obligations held by the Trust in
income as it accrues) thereon properly included in the Unitholder's gross
income as determined for Federal income tax purposes and reduced by the
amount of any amortized acquisition premium which the Unitholder has
properly elected to amortize under Section 171 of the Code. A
Unitholder's tax basis in his Units will equal his tax basis in is pro
rata portion of all of the asset of the Trust.
A Unitholder will recognize taxable capital gain (or loss) when all
or part of his pro rata interest in a U.S. Treasury Obligation is
disposed of in a taxable transaction for an amount greater (or less) than
his tax basis therefor. Any gain recognized on a sale or exchange and
not constituting a realization of accrued "market discount," and any loss
will, under current law, generally be capital gain or loss except in the
case of a dealer or financial institution. As previously discussed, gain
realized on the disposition of the interest of a Unitholder in any U.S.
Treasury Obligation deemed to have been acquired with market discount
will be treated as ordinary income to the extent the gain does not exceed
the amount of accrued market discount not previously taken into income.
Any capital gain or loss arising from the disposition of a U.S. Treasury
Obligation by the Trust or the disposition of Units by a Unitholder will
be short-term capital gain or loss unless the Unitholder has held his
Units for more than one year in which case such capital gain or loss will
be long-term. The tax basis reduction requirements of the Code relating
to amortization of bond premium may under some circumstances, result in
the Unitholder realizing taxable gain when his Units are sold or redeemed
for an amount equal to or less than his original cost.
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 the U.S. Treasury Obligations represented by the
Unit. This may result in a portion of the gain, if any, on such sale
being taxable as ordinary income under the market discount rules
(assuming no election was made by the Unitholder to include market
discount in income as it accrues) as previously discussed.
The Sponsor believes that Unitholders who are individuals will not
be subject to any state personal income taxes on the interest received by
a U.S. Treasury Portfolio Series and distributed to them. However,
Unitholders (including individuals) may be subject to state and local
taxes on any capital gains (or market discount treated as ordinary
income) derived from a U.S. Treasury Portfolio Series and to other state
and local taxes (including corporate income or franchise taxes, personal
property or intangibles taxes, and estate or inheritance taxes) on their
Units or the income derived therefrom. In addition, individual
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<PAGE>
Unitholders (and any other Unitholders which are not subject to state and
local taxes on the interest income derived from U.S. Treasury Portfolio
Series) will probably not be entitled to a deduction for state and local
tax purposes for their share of the fees and expenses paid by a U.S.
Treasury Portfolio Series, for any amortized bond premium or for any
interest on indebtedness incurred to purchase or carry their Units.
Therefore, even though the Sponsor believes that interest income from a
U.S. Treasury Portfolio Series is exempt from state personal income taxes
in all states, Unitholders should consult their own tax advisers with
respect to state and local taxation of the purchase, ownership and
disposition of Units.
A Unitholder of a U.S. Treasury Portfolio Series who is not a
citizen or resident of the United States or a United States domestic
corporation (a "Foreign Investor") will not be subject to U.S. Federal
income taxes, including withholding taxes on amounts distributed from the
U.S. Treasury Portfolio Series (including any original issue discount)
on, or any gain from the sale or other disposition of, his Units or the
sale or disposition of any U.S. Treasury Obligations by the Trustee,
provided that (i) the interest income or gain is not effectively
connected with the conduct by the Foreign Investor of a trade or business
within the United States, (ii) with respect to any gain, the Foreign
Investor (if an individual) is not present in the United States for 183
days or more during the taxable year, and (iii) the Foreign Investor
provides the required certification of his status and of the matters
contained in clauses (i) and (ii) above, and further provided that the
exemption from withholding for U.S. Federal income taxes for interest on
any U.S. Treasury Obligation shall only apply to the extent the U.S.
Treasury Obligation was issued after July 18, 1984.
Unless an applicable treaty exemption applies and proper
certification is made, amounts otherwise distributable by the U.S.
Treasury Portfolio Series to a Foreign Investor will generally be subject
to withholding taxes under Section 1441 of the Code unless the Unitholder
timely provides his financial representative or the Trustee with a
statement that (i) is signed by the Unitholder under penalties of
perjury, (ii) certifies that such Unitholder is not a United States
person, or in the case of an individual, that he is neither a citizen nor
a resident of the United States, and (iii) provides the name and address
of the Unitholder. The statement may be made, at the option of the
person otherwise required to withhold, on Form W-8 or on a substitute
form that is substantially similar to Form W-8. If the information
provided on the statement changes, the beneficial owner must so inform
the person otherwise required to withhold within 30 days of such change.
Foreign Unitholders should consult their own tax advisers with
respect to the foreign and United States tax consequences on ownership of
Units.
It should be remembered that even if distributions are reinvested
they are still treated as distributions for income tax purposes.
It should also be remembered that Unitholders of Series holding
Stripped Treasury Securities will be required for Federal income tax
purposes to include amounts in ordinary gross income in advance of the
receipt of the cash attributable to such income.
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<PAGE>
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 by the Internal Revenue
Service that payments to the Unitholder are subject to back-up
withholding. If the proper taxpayer identification number and
appropriate certification are not provided when requested, distributions
by a Trust to such Unitholder will be subject to back-up withholding.
Kemper Government Securities Trust, GNMA Portfolio (Foreign
Investors Trust) and Kemper Defined Funds, GNMA Portfolio, Series 1. In
the opinion of Chapman and Cutler, counsel for the Sponsor:
(1) Each GNMA Portfolio Series is not an associate
taxable as a corporation for Federal income tax purposes; each
Unitholder will be treated as the owner of a pro rata portion of the
GNMA Portfolio Series of the respective Trust under the Code and
income of such Series will be treated as the income of the
Unitholders under the Code. Each Unitholder will be considered to
have received his or her pro rata share of income derived from each
GNMA Portfolio Series asset when income is received by a GNMA
Portfolio Series.
(2) Each Unitholder will have a taxable event when a GNMA
Portfolio Series disposes of a Security, or when the Unitholder
redeems or sells his Units. Unitholders must reduce the tax basis
of their Units for their share of accrued interest received by a
GNMA Portfolio Series, if any, on Securities delivered after the
Unitholders pay for their Units to the extent that such interest
accrued on such Securities before the date each GNMA Portfolio
Series acquired ownership of the GNMA Portfolio Series (and the
amount of this reduction may exceed the amount of accrued interest
paid to the seller) and, consequently, such Unitholders may have an
increase in taxable gain or reduction in capital loss upon the
disposition of such Units. Gain or loss upon the sale or redemption
of Units is measured by comparing the proceeds of such sale or
redemption with the adjusted basis of the Units. If the Trustee
disposes of Securities (whether by sale, payment on maturity,
redemption or otherwise), gain or loss is recognized to the
Unitholder. The amount of any such gain or loss is measured by
comparing the Unitholder's pro rata share of the total proceeds for
such disposition with the Unitholder's basis for his or her
fractional interest in the asset disposed of. In the case of a
Unitholder who purchases Units, such basis (before adjustment for
earned original issue discount, amortized bond premium and accrued
market discount (if the Unitholder has elected to include such
market discount in income as it accrues), if any) is determined by
apportioning the cost of the Units among each of a GNMA Portfolio
Series assets ratably according to value as of the valuation date
nearest the date of acquisition of the Units. The tax basis
reduction requirements of said Code relating to amortization of bond
premium may, under some circumstances, result in the Unitholder
realizing a taxable gain when his Units are sold or redeemed for an
amount equal to or less than his original cost.
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(3) Each GNMA Portfolio Series contains Stripped Treasury
Securities. The basis of each Unit and of each U.S. Treasury
Obligation which was issued with original issue discount must be
increased by the amount of accrued original issue discount and the
basis of each Unit and of each U.S. Treasury Obligation which was
purchased by such Trusts at a premium must be reduced by the annual
amortization of bond premium which the Unitholder has properly
elected to amortize under Section 171 of the Code. The Stripped
Treasury Securities held by the Trusts are treated as bonds that
were originally issued at an original issue discount provided,
pursuant to a Treasury Regulation (the "Regulation") issued on
December 28, 1992, that the amount of original issue discount
determined under Section 1286 of the Code is not less than a "de
minimis" amount as determined thereunder. Because the Stripped
Treasury Securities represent interests in "stripped" U.S. Treasury
bonds, a Unitholder's initial cost for his pro rata portion of each
Stripped Treasury Security held by a Trust (determined at the time
he acquires his Units, in the manner described above) shall be
treated as its "purchase price" by the Unitholder. Original issue
discount is effectively treated as interest for Federal income tax
purposes, and the amount of original issue discount in this case is
generally the difference between the bond's purchase price and its
stated redemption price at maturity. A Unitholder will be required
to include in gross income for each taxable year the sum of his
daily portions of original issue discount attributable to the
Stripped Treasury Securities held by a Trust as such original
discount accrues and will, in general, be subject to Federal income
tax with respect to the total amount of such original issue discount
that accrues for such year even though the income is not distributed
to the Unitholders during such year to the extent it is not less
than a "de minimis" amount as determined under the Regulation. To
the extent that the amount of such discount is less than the
respective "de minimis" amount such discount shall be treated as
zero. In general, original issue discount accrues daily under a
constant interest rate method which takes into account the semi-
annual compounding of accrued interest. In the case of the Stripped
Treasury Securities this method will generally result in an
increasing amount of income to the Unitholders each year.
Unitholders should consult their tax advisers regarding the Federal
income tax consequences and accretion of original issue discount.
(4) The Unitholder's aliquot share of the total proceeds
received on the disposition of, or principal paid with respect to, a
Security held by a Trust will constitute ordinary income (which will
be treated as interest income for most purposes) to the extent it
does not exceed the accrued market discount on such Security that
has not previously been included in taxable income by such
Unitholder. A Unitholder may generally elect to include market
discount in income as such discount accrues. In general, market
discount is the excess, if any, of the Unitholder's pro rata portion
of the outstanding principal balance of a Security over the
Unitholder's initial tax basis for such pro rata portion, determined
at the time such Unitholder acquires his Units. However, market
discount with respect to any Security will generally be considered
zero if it amounts to less than 0.25% of the obligation's stated
redemption price at maturity times the number of years to maturity.
The market discount rules do not apply to Stripped Treasury
Securities because they are stripped debt instruments subject to
special original issue discount rules as discussed above. If a
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Unitholder sells his Units, gain, if any, will constitute ordinary
income to the extent of the aggregate of the accrued market discount
on the Unitholder's pro rata portion of each Security issued that is
held by a Trust that has not previously been included in taxable
income by such Unitholder. In general, market discount accrues on a
ratable basis unless the Unitholder elects to accrue such discount
on a constant interest rate basis. However, a Unitholder should
consult his own tax adviser regarding the accrual of market
discount. The deduction by a Unitholder for any interest expense
incurred to purchase or carry Units will be reduced by the amount of
any accrued market discount that has not yet been included in
taxable income by such Unitholder. In general, the portion of any
interest expense which is not currently deductible would be
ultimately deductible when the accrued market discount is included
in income. Unitholders should consult their tax advisers regarding
whether an election should be made to include market discount in
income as it accrues and as to the amount of interest expense which
may not be currently deductible.
(5) The Code provides that "miscellaneous itemized deductions"
are allowable only to the extent that they exceed two percent of an
individual taxpayer's adjusted gross income. Miscellaneous itemized
deductions subject to this limitation under present law include a
Unitholder's pro rata share paid by the Trust, including fees of the
Trustee and the Evaluator but does not include amortizable bond
premium on Securities held by the Trusts.
"The Revenue Reconciliation Act of 1993" (the "Tax Act") raised tax
rates on ordinary income while capital gains remain subject to a 28%
maximum stated rate for taxpayers other than corporations. Because some
or all capital gains are taxed at a comparatively lower rate under the
Tax Act, the Tax Act included a provision that recharacterizes capital
gains as ordinary income in the case of certain financial transactions
that are "conversion transactions" effective for transactions entered
into after April 30, 1993. Unitholders and prospective investors should
consult with their tax advisers regarding the potential effect of this
provision on their investment in Units.
A Unitholder of a GNMA Portfolio Series who is not a citizen or
resident of the United States or a United States domestic corporation (a
"Foreign Investor") will generally not be subject to U.S. Federal income
taxes, including withholding taxes on amounts distributed from the Trusts
(including any original issue discount) on, or any gain from the sale or
other disposition of, his Units or the sale or disposition of any
Securities by the Trustee, provided that (i) the interest income or gain
is not effectively connected with the conduct by the Foreign Investor of
a trade or business within the United States, (ii) with respect to any
gain, the Foreign Investor (if an individual) is not present in the
United States for 183 days or more during the taxable year, and (iii) the
Foreign Investor provides the required certification of his status and of
the matters contained in clauses (i) and (ii) above, and further provided
that the exemption from withholding for U.S. Federal income taxes for
interest on any Stripped Treasury Security shall only apply to the extent
the Stripped Treasury Security was issued after July 18, 1984 and for
interest on any Ginnie Mae to the extent the mortgages underlying such
Ginnie Mae were originated after July 18, 1984.
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Unless an applicable treaty exemption applies and proper
certification is made, amounts otherwise distributable by the Trusts to a
Foreign Investor will generally be subject to withholding taxes under
Section 1441 of the Code unless the Unitholder timely provides his
financial representative or the Trustee with a statement that (i) is
signed by the Unitholder under penalties of perjury, (ii) certifies that
such Unitholder is not a United States person, or in the case of an
individual, that he is neither a citizen nor a resident of the United
States, and (iii) provides the name and address of the Unitholder. The
statement may be made, at the option of the person otherwise required to
withhold, on Form W-8 or on a substitute form that is substantially
similar to Form W-8. If the information provided on the statement
changes, the beneficial owner must so inform the person otherwise
required to withhold within 30 days of such change.
The foregoing discussions relate only to Federal income taxes on
distributions by the Trusts; such distributions may also be subject to
state and local taxation. Unitholders should consult their own tax
advisers regarding questions of state and local taxation applicable to
the Units.
Foreign Unitholders should consult their own tax advisers with
respect to the foreign and United States tax consequences or ownership of
Units.
It should be remembered that even if distributions are reinvested,
they are still treated as distributions for income tax purposes.
It should also be remembered that Unitholders may be required for
Federal income tax purposes to include amounts in ordinary gross income
in advance of the receipt of the cash attributable to such income.
Each Unitholder (other than a foreign investor who has properly
provided the certifications described above) will be requested to provide
the Unitholder's taxpayer identification number to the Trustee and to
certify that the Unitholder has not been notified that payments to the
Unitholder are subject to back-up withholding. If the proper taxpayer
identification number and appropriate certification are not provided when
requested, distributions by a Trust to such Unitholder will be subject to
back-up withholding.
Foreign Investors Trust - Each Kemper Government Securities Trust,
GNMA Portfolio Series of Midget Foreign Investors Trust, which is
available only to non-resident alien investors, is not an association
taxable as a corporation for Federal income tax purposes and income
received by such Series will be treated as the income of the Unitholders.
A Unitholder of a Series of a Midget Foreign Investors Trust who is
not a citizen or resident of the United States or a United States
domestic corporation (a "Foreign Investor") will not be subject to U.S.
Federal income taxes, including withholding taxes on amounts distributed
from a Trust (including any original issue discount) on, or any gain from
the sale or other disposition of, his Units or the sale or disposition of
any Ginnie Mae by the trustee, provided that (i) the interest income or
gain is not effectively connected with the conduct by the Foreign
Investor of a trade or business within the United States, (ii) with
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respect to any gain, the Foreign Investor (if an individual) is not
present in the United States for 183 days or more during the taxable
year, and (iii) the Foreign Investor provides the required certification
of his status and of the matters contained in clauses (i) and (ii) above,
and further provided that the exemption from withholding for U.S. Federal
income taxes for interest on any Ginnie Mae shall only apply to the
extent the mortgages underlying the Ginnie Mae were originated after
July 18, 1984.
Interest income received by the Trust is subject to withholding
taxes under Section 1441 of the Code prior to distribution of such
interest income to each Unitholder unless the Unitholder provides his
financial representative or the Trustee with a statement that (i) is
signed by the Unitholder under penalties of perjury, (ii) certifies that
such Unitholder is not a United States person, or in the case of an
individual, that he is neither a citizen nor a resident of the United
States, and (iii) provides the name and address of the Unitholder. The
statement may be made, at the option of the person otherwise required to
withhold, on Form W-8 or on a substitute form that is substantially
similar to Form W-8. If the information provided on the statement
changes, the beneficial owner must so inform the person otherwise
required to withhold within 30 days of such change.
The foregoing discussions relate only to Federal income taxes on
distributions by each Series of a Trust; such distributions may also be
subject to state and local taxation. Unitholders should consult their
own tax advisers regarding questions of state and local taxation
applicable to the Units. Foreign Unitholders should consult their own
tax advisers with respect to United States Federal income tax
consequences or ownership of Units.
It should be remembered that even if distributions are reinvested,
they are still treated as distributions for income tax purposes.
RETIREMENT PLANS
As indicated under "Tax Status of the Trusts" above, Unitholders of
a U.S. Treasury Portfolio Series will be required for Federal income tax
purposes to include amounts in ordinary gross income in advance of the
receipt of the cash attributable to such income. Therefore, purchase of
Units may be appropriate only for an account which can pay taxes with
other funds in advance of the receipt of the cash attributable to such
income or for Individual Retirement Accounts, Keogh plans, pension funds
and other qualified retirement plans, certain of which are briefly
described below.
The various Series of the Trusts which are not Foreign Investors
Trusts, may be well suited for purchase by Individual Retirement
Accounts, Keogh Plans, pension funds and other qualified retirement
plans, certain of which are briefly described below.
Generally, capital gains and income received in each of the
foregoing plans are deferred from Federal taxation. All distributions
from such plans are generally treated as ordinary income but may, in some
cases, be eligible for special income averaging or tax-deferred rollover
treatment. Investors considering participation in any such plan should
review specific tax laws related thereto and should consult their
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attorneys or tax advisers with respect to the establishment and
maintenance of any such plan. Such plans are offered by brokerage firms
and other financial institutions. Each Series of the Trusts will waive
the $1,000 minimum investment requirement for IRA accounts. The minimum
investment is $250 for tax-deferred plans such as IRA accounts. Fees and
charges with respect to such plans may vary.
Individual Retirement Account - IRA. Any individual under age
70-1/2 may contribute the lesser of $2,000 or 100% of compensation to an
IRA annually. Such contributions are fully deductible if the individual
(and spouse if filing jointly) are not covered by a retirement plan at
work. The deductible amount an individual may contribute to an IRA will
be reduced $10 for each $50 of adjusted gross income over $25,000
($40,000 if married, filing jointly or $0 if married, filing separately),
if either an individual or their spouse (if married, filing jointly) is
an active participant in an employer maintained retirement plan. Thus,
if an individual has adjusted gross income over $35,000 ($50,000 if
married, filing jointly or $0 if married, filing separately) and if an
individual or their spouse is an active participant in an employer
maintained retirement plan, no IRA deduction is permitted. Under the
Code, an individual may make nondeductible contributions to the extent
deductible contributions are not allowed. All distributions from an IRA
(other than the return of certain excess contributions) are treated as
ordinary income for Federal income taxation purposes provided that under
the Code an individual need not pay tax on the return of nondeductible
contributions, the amount includable in income for the taxable year is
the portion of the amount withdrawn for the taxable year as the
individual's aggregate nondeductible IRA contributions bear to the
aggregate balance of all IRAs of the individual.
A participant's interest in an IRA must be, or commence to be,
distributed to the participant not later than April 1 of the calendar
year following the year during which the participant attains at 70-1/2.
Distributions made before attainment of age 59-1/2, except in the case of
the participant's death or disability, or where the amount distributed is
to be rolled over to another IRA, or where the distributions are taken as
a series of substantially equal periodic payments over the participant's
life or life expectancy (or the joint lives or life expectancies of the
participant and the designated beneficiary) are generally subject to a
surtax in an amount equal to 10% of the distribution. The amount of such
periodic payments may not be modified before the later of five years or
attainment of age 59-1/2. Excess contributions are subject to an annual
6% excise tax.
IRA applications, disclosure statement and trust agreements are
available from the Sponsor upon request.
Qualified Retirement Plans. Units of a Series of the Trust which
are not Foreign Investors Trusts may be purchased by qualified pension or
profit sharing plans maintained by corporations, partnerships or sole
proprietors. The maximum annual contribution for a participant in a
money purchase pension plan or to paired profit sharing and pension plans
is the lesser of 25% of compensation or $30,000. Prototype plan
documents for establishing qualified retirement plans are available from
the Sponsor upon request.
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Excess Distributions Tax. In addition to the other taxes due by
reason of a plan distribution, a tax of 15% may apply to certain
aggregate distributions from IRAs, Keogh plans, and corporate retirement
plans to the extent such aggregate taxable distributions exceed specified
amounts (generally $150,000, as adjusted) during a tax year. This 15%
tax will not apply to distributions on account of death, qualified
domestic relations orders or amounts eligible for tax-deferred rollover
treatment. In general, for lump sum distributions the excess
distribution over $750,000 (as adjusted) will be subject to the 15% tax.
The Trustee has agreed to act as custodian for certain retirement
plan accounts. An annual fee per account, if not paid separately, will
be assessed by the Trustee and paid through the liquidation of shares of
the retirement account. An individual wishing the Trustee to act as
custodian must complete a Ranson UIT/IRA application and forward it along
with a check made payable to the Trustee. Certificates for Individual
Retirement Accounts can not be issued.
DISTRIBUTION REINVESTMENT
Each Unitholder of the Trust may elect, at the time of purchase, to
have distributions of principal (including capital gains, if any) or
interest or both automatically invested without charge in shares of any
mutual fund registered in such Unitholder's state of residence which is
underwritten or advised by Zurich Kemper Investments, Inc. (the "Kemper
Funds"), other than those Kemper Funds sold with a contingent deferred
sales charge. Since the portfolio securities and investment objectives
of such Kemper Funds may differ significantly from that of the Trusts,
Unitholders should carefully consider the consequences before selecting
such Kemper Funds for reinvestment.
Detailed information with respect to the investment objectives and
management of these Kemper Funds is contained in their respective
prospectuses, which can be obtained from the Sponsor or an investor's
financial representative upon request. An investor should read the
appropriate prospectus prior to making the election to reinvest.
Unitholders who desire to have their distributions automatically
reinvested should inform their financial representative at the time of
purchase or should file with the Program Agent referred to below a
written notice of such election.
Unitholders who initially elect to receive distributions in cash may
elect to participate in the reinvestment program by filing with the
Program Agent an election to have such distributions reinvested without
charge. The election must be received by the Program Agent at least ten
days prior to the Record Date applicable to any distribution in order to
be in effect for such distribution. The election to participate in the
reinvestment program shall remain in effect until a subsequent notice is
received in writing by the Program Agent. See "Administration of the
Trust-Distributions from the Interest, Principal and Capital Gains
Accounts."
The Program Agent is the Trustee. All inquiries concerning
participation in the Reinvestment Plan should be directed to the Program
Agent its unit investment trust office.
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Unitholders participating in IRA's, Keogh Plans and other tax
deferred retirement plans, may find it highly advantageous to participate
in the Reinvestment Program in order to keep the monies in the account
fully invested at all times. Should reinvestment be selected, an account
with an identical registration to that established at the time the Trust
Units are purchased will be set up in the reinvestment Fund selected by
the investor. Investors should consult with their plan custodian as to
the appropriate disposition of distributions. If participants in IRA's,
Keogh Plans and other tax deferred retirement plans do not elect a
reinvestment option, cash distributions will be sent to the custodian of
the retirement plan and will not be sent to the investor, since payments
to the investor would constitute a distribution from the plan which would
result in tax penalties for premature withdrawals from such programs.
See "Retirement Plans."
REDEMPTION
Right of Redemption. It may be possible, in some cases, for Units
to be sold in the over-the-counter market for a higher price than the
Redemption Value for such Units. Therefore, a Unitholder who wishes to
dispose of his Units is advised to inquire through his financial
representative as to current market prices for Units in order to
determine if there is an over-the-counter price in excess of Redemption
Value per Unit or the Sponsor's Repurchase Price for such Series of the
Trust.
A Unitholder who does not dispose of Units in the secondary market
described above may cause Units to be redeemed by the Trustee by making a
written request to the Trustee, The Bank of New York, 101 Barclay Street,
New York, New York 10286 and, in the case of Units evidenced by a
certificate, by tendering such certificate to the Trustee, properly
endorsed or accompanied by a written instrument or instruments of
transfer in form satisfactory to the Trustee. Unitholders must sign the
request, and such certificate or transfer instrument, exactly as their
names appear on the records of the Trustee and on any certificate
representing the Units to be redeemed. If the amount of the redemption
is $25,000 or less and the proceeds are payable to the Unitholder(s) of
record at the address of record, no signature guarantee is necessary for
redemption by individual account owners (including joint owners) or
fiduciary accounts where the fiduciary is named in the account
registration. Additional documentation may be requested, and a signature
guarantee is always required, from corporations, executors,
administrators, trustees, guardians or associations. If required, the
signatures must be guaranteed by a participant in the Securities Transfer
Agents Medallion Program ("STAMP") or such other signature guarantee
program in addition to or in substitution for STAMP as may be accepted by
the Trustee. A certificate should only be sent by registered or
certified mail for the protection of the Unitholder. Since tender of the
certificate is required for redemption when one has been issued, Units
represented by a certificate cannot be redeemed until the certificate
representing such Units has been received by the purchaser.
Redemption shall be made by the Trustee on the third business day
following the day on which a tender for redemption is received (the
"Redemption Date") by payment of cash equivalent to the Redemption Value
of such Series, determined as set forth below under "Computation of
Redemption Value," next following such tender, multiplied by the number
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of Units of such Series being redeemed. Any Units redeemed shall be
cancelled and any undivided fractional interest in such Series of the
Trusts extinguished. The price received upon redemption might be more or
less than the amount paid by the Unitholder depending on the value of the
Portfolio Obligations in the Portfolio of the Series at the time of
redemption.
During the period in which the Sponsor maintains a market for Units,
the Sponsor has the right to repurchase any Unit presented for tender to
the Trustee for redemption no later than the close of business on the
second business day following such presentation.
The Trustee is irrevocably authorized in its discretion, if the
Sponsor does not elect to repurchase any Unit tendered for redemption or
if the Sponsor itself tenders Units for redemption, in lieu of redeeming
Units presented for tender at the Redemption Value, to sell such Units in
the over-the-counter market for the account of a tendering Unitholder at
prices which will return to the Unitholder monies, net after brokerage
commissions, transfer taxes and other charges, equal to or in excess of
the Redemption Value for such Units. In the event of any such sale, the
Trustee will pay the net proceeds thereof to the Unitholder on the day he
would otherwise be entitled to receive payment of the Redemption Value.
Any amounts to be paid on redemption representing interest shall be
withdrawn from the Interest Account of such Series to the extent funds
are available. All other amounts paid on redemption shall be withdrawn
from the Principal Account of such Series. The Trustee is authorized by
the Indenture to sell Portfolio Obligations from a Series in order to
provide funds for redemption. To the extent Portfolio Obligations are
sold, the size of that Series of the Trusts will be reduced. Portfolio
Obligations will be sold by the Trustee so as to maintain, as closely as
practicable, the original percentage relationship between the principal
amounts of the Portfolio Obligations in such Series. The Portfolio
Obligations to be sold for purposes of redeeming Units will be selected
from a list supplied by the Sponsor. The Portfolio Obligations will be
chosen for this list by the Sponsor on the basis of such market and
credit factors as it may determine are in the best interests of such
Series of the Trust. Provision is made under the Indenture for the
Sponsor to specify minimum face amounts in which blocks of Portfolio
Obligations are to be sold in order to obtain the best price available.
While such minimum amounts may vary from time to time in accordance with
market conditions, it is anticipated that the minimum face amounts which
would be specified would range from $25,000 to $100,000. Sales may be
required at a time when the Portfolio Obligations would not otherwise be
sold and might result in lower prices than might otherwise be realized.
Moreover, due to the minimum principal amount in which Portfolio
Obligations may be required to be sold, the proceeds of such sales may
exceed the amount necessary for payment of Units redeemed. To the extent
not used to meet other redemption requests in such Series, such excess
proceeds will be distributed pro rata to all remaining Unitholders of
record of such Series, unless reinvested in substitute Portfolio
Obligations. See "Administration of the Trust - Portfolio Supervision."
Computation of Redemption Value. The value of a Unit of a Series of
the Trust is determined as of the Evaluation Time stated under "Essential
Information" in Part Two (a) semiannually, on June 30 and December 31 of
each year (or the last business day prior thereto), (b) on any business
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day as of the Evaluation Time next following the tender of any Unit and
(c) on any other business day desired by the Sponsor or the Trustee,
(1) by adding:
a. The aggregate bid side evaluation of the Portfolio
Obligations in a Series of the Trust, as determined by the
Evaluator;
b. Cash on hand in such Series of the Trusts, other than
money deposited to purchase contract obligations or money
credited to the Reserve Account; and
c. Accrued but unpaid interest on the Portfolio
Obligations in such Series to the redemption date.
(2) and then deducting from the resulting figure: amounts
representing any applicable taxes or governmental charges payable by
such Series of the Trusts for the purpose of making an addition to
the reserve account (as defined in the Indenture), amounts
representing estimated accrued expenses (including audit fees) of
the Series, amounts representing unpaid fees and expenses of the
Trustee, the Sponsor (if applicable), counsel and the Evaluator and
monies held for distribution to Unitholders of record of such Series
as of the business day prior to the evaluation being made on the
days or dates set forth above;
(3) and then dividing the result of the above computation by
the total number of Units of such Series outstanding on the date of
evaluation. The resulting figure equals the Redemption Value for
each Unit of such Series. The Evaluator will determine the
aggregate current bid price evaluation of the Portfolio Obligations
in each Series of the Trusts as set forth under "Public Offering of
Units - Public Offering Price."
Postponement of Redemption. The right of redemption of any Series
may be suspended and payment of the Redemption Value per Unit postponed
for more than seven calendar days following a tender of Units for
redemption for any period (as determined by the Securities and Exchange
Commission) during which the New York Stock Exchange is closed, other
than for customary weekend and holiday closings, or during which trading
on that Exchange is restricted or an emergency exists as a result of
which disposal or evaluation of the Portfolio Obligations is not
reasonably practicable, or for such other periods as the Securities and
Exchange Commission may by order permit. The Trustee is not liable to
any person in any way for any loss or damage which may result from any
such suspension or postponement.
RIGHTS OF UNITHOLDERS
Unitholders. A Unitholder is deemed to be a beneficiary of the
Series of the Trusts which he purchased and is vested with all right,
title and interest in the appropriate Series of the Trusts, each of which
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was created by the Indenture. A Unitholder may at any time tender his
Units to the Trustee for redemption.
Ownership of Units. Ownership of Units of a Series of the Trusts
will not be evidenced by Certificates unless a Unitholder or the
Unitholder's registered broker/dealer makes a written request to the
Trustee. Units are transferable by making a written request to the
Trustee and, in the case of Units evidenced by a certificate, by
presenting and surrendering such certificate to the Trustee properly
endorsed or accompanied by a written instrument or instruments of
transfer which should be sent registered or certified mail for the
protection of the Unitholder. Unitholders must sign such written
request, and such certificate or transfer instrument, exactly as their
names appear on the records of the Trustee and on any certificate
representing the Units to be transferred. Such signatures must be
guaranteed by a participant in the Securities Transfer Agents Medallion
Program ("STAMP") or such other signature guarantee program in addition
to or in substitution for STAMP as may be accepted by the Trustee.
Certificates will be issued in denominations of 1,000 Units (100
Units for Kemper Defined Funds and EVEREN Unit Investment Trusts) or any
whole number of Units in excess thereof. The Trustee may require a
Unitholder to pay a reasonable fee, to be determined in the sole
discretion of the Trustee, for each certificate reissued or transferred
and to pay any governmental charge that may be imposed in connection with
each such transfer or exchange. The Trustee at the present time does not
intend to charge for the normal transfer or exchange of certificates.
Destroyed, stolen, mutilated or lost certificates will be replaced upon
delivery to the Trustee of satisfactory indemnity (generally amounting to
3% of the market value of the Units), affidavit of loss, if appropriate,
evidence of ownership and payment of expenses incurred. Any mutilated
certificate must be presented to the Trustee before a substitute
certificate will be issued.
Certain Limitations. The death or incapacity of any Unitholder (or
the dissolution of the Sponsor) will not operate to terminate the Trusts
or any Series thereof nor entitle the legal representatives or heirs of
such Unitholder to claim an accounting or to take any other action or
proceeding in any court for a partition or winding up of the Trusts or
any Series thereof.
No Unitholder shall have the right to vote except with respect to
removal of the Trustee or amendment and termination of the Trust or of
the Series of which they are a Unitholder. See "Administration of the
Trust - Amendment" and "Administration of the Trust - Termination."
Unitholders shall have no right to control the operation or
administration of the Trust or any Series thereof in any manner, except
upon the vote of Unitholders representing 66-2/3% of the Units of a
Series outstanding for purposes of amendment, termination or discharge of
the Trustee, all as provided in the Indenture; however, no Unitholder
shall ever be under any liability to any third party for any action taken
by the Trustee, Evaluator or Sponsor.
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EXPENSES AND CHARGES
Initial Expenses. All expenses and charges incurred prior to or in
establishment of the Series of the Trusts, including the cost of the
initial preparation, printing and execution of the Indenture and the
certificate, the initial fees of the Trustee and the Evaluator, initial
legal and auditing expenses, the cost of the preparation and printing of
the Prospectus and all other advertising and selling expenses were paid
by the Sponsor.
Fees. The Sponsor will receive no fee from the Trusts or any Series
thereof for its services as such. However, the Sponsor does receive a
portfolio surveillance fee, which is earned for portfolio supervisory
services, at the rate set forth under "Essential Information" in Part Two
for the appropriate Series, computed monthly on the basis of the largest
principal amount of Portfolio Obligations in such Series of the Trusts at
any time during the preceding month. The portfolio surveillance fee,
which may not exceed the amount set forth under "Essential Information"
in Part Two, may exceed the actual costs of providing portfolio
supervisory services for these Series of the Trusts, but at no time will
the total amount the Sponsor receives for supervisory services rendered
to all unit investment trusts sponsored by the Sponsor in any calendar
year exceed the aggregate cost of providing such services in that year.
The Trustee will receive for its services under the Indenture the
fee set forth in Part Two under "Essential Information," computed monthly
on the basis of the largest principal amount of Portfolio Obligations in
such Series at any time during the preceding month. In no event will the
Trustee be paid less than $2,000 per Series in any one year.
For evaluation of Portfolio Obligations in a Series of the Trusts,
the Evaluator shall receive the fee set forth in Part Two under
"Essential Information," computed monthly on the basis of the largest
aggregate principal amount of Portfolio Obligations in such Series at any
time during the preceding month.
The Trustee's fees, Sponsor's portfolio surveillance fees and the
Evaluator's fees are payable monthly on or before each Distribution Date
from the Interest Account of each Series to the extent funds are
available and thereafter from the Principal Account of such Series. Any
of such fees may be increased without approval of the Unitholders in
proportion to increases under the category "All Services Less Rent of
Shelter" in the Consumer Price Index published by the United States
Department of Labor or if such category is no longer published, in a
comparable category. The Trustee also receives benefits to the extent
that it holds funds on deposits in various non-interest bearing accounts
created under the Indenture.
Other Charges. The following additional charges are or may be
incurred by a Series of the Trusts as more fully described in the
Indenture: (a) fees of the Trustee for extraordinary services,
(b) expenses of the Trustee (including legal and auditing expenses, but
not including any fees and expenses charged by any agent for custody and
safeguarding the Portfolio Obligations) and of counsel designated by the
Sponsor, (c) various governmental charges, (d) expenses and costs of any
action taken by the Trustee to protect the Series of the Trusts and the
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rights and interests of the Unitholders thereof, (e) indemnification of
the Trustee for any loss, liability or expense incurred by it in the
administration of the Series of the Trusts without gross negligence, bad
faith, willful malfeasance or willful misconduct on its part or reckless
disregard of its obligations and duties, (f) indemnification of the
Sponsor for any losses, liabilities and expenses incurred in acting as
Sponsor under the Indenture without gross negligence, bad faith, willful
malfeasance or willful misconduct or reckless disregard of its
obligations and duties, and (g) expenditures incurred in contacting
Unitholders upon termination of such Series of the Trusts.
The fees and expenses set forth herein are payable out of a Series
of the Trusts and when so paid by or owing to the Trustee are secured by
a lien on such Series. If the balances in the Interest and Principal
Accounts are insufficient to provide for amounts payable by any Series of
the Trusts, the Trustee has the power to sell Portfolio Obligations from
such Series to pay such amounts. To the extent Portfolio Obligations are
sold, the size of that Series of the Trusts will be reduced and the
proportions of the types of Portfolio Obligations will change. Such
sales might be required at a time when Portfolio Obligations would not
otherwise be sold and might result in lower prices than might otherwise
be realized. Moreover, due to the minimum principal amount in which
Portfolio Obligations may be required to be sold, the proceeds of such
sales may exceed the amount necessary for the payment of such fees and
expenses.
DISTRIBUTIONS FROM THE INTEREST, PRINCIPAL AND CAPITAL GAINS ACCOUNTS.
GNMA Trust. The terms of the Ginnie Maes provide for payment to the
holders thereof (including the Series of the GNMA Trust) on the fifteenth
day of each month (the 25th day in the case of Ginnie Mae II's) of
amounts collected by or due to the issuers thereof with respect to the
underlying mortgages during the preceding month. The Trustee will
collect the interest due each Series on the Securities therein as it
becomes payable and credit such interest to a separate Interest Account
created by the Indenture for such Series.
Distributions will be made to each Unitholder of record of each
Series of the GNMA Trust on the appropriate Distribution Date and will
consist of an amount substantially equal to such Unitholder's pro rata
share of the cash balances in the Interest Account, the Principal Account
and the Capital Gains Account, if any, of such Series computed as of the
close of business on the preceding Record Date.
U.S. Treasury Portfolio Series. The terms of the U.S. Treasury
Obligations (other than Stripped Treasury Securities) provide for semi-
annual payments of interest on or about the 15th day of the designated
months. Interest received by a U.S. Treasury Portfolio Series, including
any portion of the proceeds from a disposition of the U.S. Treasury
Obligations which represents accrued interest, is credited by the Trustee
to the Interest Account for such Trust Fund. All other receipts are
credited by the Trustee to a separate Principal Account for such Trust
Fund.
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Since interest on the U.S. Treasury Obligations (other than Stripped
Treasury Securities) in U.S. Treasury Portfolio Series is payable in semi-
annual installments, and distributions of income are made to Unitholders
at different intervals from receipt of interest, the interest accruing to
Unitholders in the U.S. Treasury Portfolio Series may not be equal to the
amount of money received and available for distribution from the Interest
Account. Therefore, on each Distribution Date the amount of interest
actually deposited in the Interest Account of a U.S. Treasury Portfolio
Series and available for distribution may be slightly more or less than
the interest distribution made. In order to eliminate fluctuations in
interest distributions resulting from such variances, the Trustee is
authorized by the Indenture to advance such amounts as may be necessary
to provide interest distributions of approximately equal amounts. The
Trustee will be reimbursed, without interest, for any such advances from
funds available in the Interest Account for such U.S. Treasury Portfolio
Series.
Stripped Treasury Securities are sold at a deep discount because the
buyer of those securities obtains only the right to receive a future
fixed payment on the security and not any rights to periodic interest
payments thereon. Purchasers of these Securities acquire, in effect,
discount obligations that are economically identical to the "zero-coupon
bonds" that have been issued by corporations. Zero coupon bonds are debt
obligations which do not make any periodic payments of interest prior to
maturity and accordingly are issued at a deep discount.
Under generally accepted accounting principles, a holder of a
security purchased at a discount normally must report as an item of
income for financial accounting purposes the portion of the discount
attributable to the applicable reporting period. The calculation of this
attributable income would be made on the "interest" method which
generally will result in a lesser amount of includable income in earlier
periods and a correspondingly larger amount in later periods. For
Federal income tax purposes, the inclusion will be on a basis that
reflects the effective compounding of accrued but unpaid interest
effectively represented by the discount. Although this treatment is
similar to the "interest" method described above, the "interest" method
may differ to the extent that generally accepted accounting principles
permit or require the inclusion of interest on the basis of a compounding
period other than the semi-annual period. See "Tax Status of the
Trusts."
The Trustee will distribute on each Distribution Date or shortly
thereafter, to each Unitholder of record of U.S. Treasury Portfolio
Series on the preceding Record Date, an amount substantially equal to
such holder's pro rata share of the cash balance, if any, in the
Principal Account of U.S. Treasury Portfolio Series computed as of the
close of business on the preceding Record Date. However, no distribution
will be required if the balance in the Principal Account is less than
$1.00 per 1,000 Units (or in the case of certain Trusts, less than $1.00
per 100 Units). Notwithstanding the foregoing, the Trustee will make a
distribution to Unitholders of all principal relating to maturing
Treasury Obligations within seven business days of the date of each such
maturity.
General. Distributions for an IRA, Keogh or other tax-deferred
retirement plan will not be sent to the individual Unitholder. These
distributions will go directly to the custodian of the plan to avoid the
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penalties associated with premature withdrawals from such accounts. See
"Retirement Plans."
All funds collected or received will be held by the Trustee in
trust, without interest to Unitholders, as part of the appropriate Series
of the Trusts or the Reserve Account for such Series referred to below
until required to be disbursed in accordance with the provisions of the
Indenture. Such funds will be segregated on the trust ledger of the
Trustee so long as such practice preserves a valid preference of
Unitholders of such Series under the bankruptcy laws of the United
States, or if such preference is not preserved, the Trustee shall handle
such funds in such other manner as shall constitute the segregation and
holding thereof in trust within the meaning of the Investment Company Act
of 1940, as the same may from time to time be amended. To the extent
permitted by the Indenture and applicable banking regulations, such funds
are available for use by the Trustee pursuant to normal banking
procedures.
The first distribution for persons who purchase Units between a
Record Date and a Distribution Date will be made on the second
Distribution Date following their purchase of Units.
The Trustee is authorized by the Indenture to withdraw from the
Principal and/or Interest Accounts of each Series such amounts as it
deems necessary to establish a reserve for any taxes or other
governmental charges that may be payable out of such Series of the Trust,
which amounts will be deposited in a separate Reserve Account. If the
Trustee determines that the amount in the Reserve Account is greater than
the amount necessary for payment of any taxes or other governmental
charges, it will promptly deposit the excess back in the Account from
which it was withdrawn.
ADMINISTRATION OF THE TRUST
Records and Accounts. In accordance with the Indenture, the Trustee
shall keep records of all transactions at its office. Such records shall
include the name and address of, and the number of Units held by, each
Unitholder of each Series of the Trusts. Such books and records shall be
open to inspection by any Unitholder of such Series at all reasonable
times during the usual business hours. The Trustee shall make such
annual or other reports as may from time to time be required under any
applicable state or Federal statute, rule or regulation. The Trustee
shall keep a certified copy or duplicate original of the Indenture on
file in its office available for inspection at all reasonable time during
usual business hours by any Unitholder of such Series, together with a
current list of the Portfolio Obligations held in each Series of the
Trusts. Pursuant to the Indenture, the Trustee may employ one or more
agents for the purpose of custody and safeguarding of the Portfolio
Obligations comprising the Portfolios.
Portfolio Supervision. The Indenture permits the Sponsor to direct
the Trustee to dispose of any Portfolio Obligation in a Series of the
Trusts upon the happening of any of the following events:
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(1) Default in the payment of principal or interest on any of
the Portfolio Obligations when due and payable,
(2) Institution of legal proceedings seeking to restrain or
enjoin the payment of any of the Portfolio Obligations or attacking
their validity,
(3) A breach of covenant or warranty which could adversely
affect the payment of debt service on the Portfolio Obligations,
(4) Default in the payment of principal or interest on any
other outstanding obligation guaranteed or backed by the full faith
and credit of the United States of America,
(5) A decline in market price to such an extent or such other
market credit or other factors exist, as in the opinion of the
Sponsor would make retention of any of the Portfolio Obligations
detrimental to the Trusts or any Series thereof and to the interests
of the Unitholders,
(6) An offer is made to refund or refinance any of the
Portfolio Obligations, or
(7) Termination of the Trusts or any Series thereof.
The Trustee shall also sell any Portfolio Obligation in a Series of
the Trusts if there is a default in the payment of principal and interest
on such Portfolio Obligation and no provision for payment is made
therefor and the Sponsor fails to instruct the Trustee to sell or hold
such Portfolio Obligation within thirty days after notice to the Sponsor
from the Trustee of such default. The Trustee shall not be liable for
any depreciation or loss by reason of any sale of Portfolio Obligations
or by reason of the failure of the Sponsor to give directions to the
Trustee.
Amounts received by a Series of the Trusts upon the sale of any
Portfolio Obligation under the conditions set forth above will be
deposited in the Principal Account, Interest Account or Capital Gains
Account for such Series, as appropriate, when received and pursuant to
the Sponsor's instructions will be either distributed by the Trustee on
the next Distribution Date to Unitholders of record of such Series on the
Record Date prior to such Distribution Date.
Reports to Unitholders. With each distribution, the Trustee will
furnish or cause to be furnished to the Unitholders of each Series a
statement of the amount of interest and other receipts, if any,
distributed, expressed in each case as a dollar amount per Unit of such
Series.
The accounts of each Series of the Trusts are required to be audited
annually, at such Series' expense, by independent certified public
accountants designated by the Sponsor, unless the Trustee determines that
such an audit would not be in the best interest of the Unitholders of
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that Series of the Trust. The accountants' report will be furnished by
the Trustee to any Unitholder of such Series upon written request.
Within a reasonable period of time after the end of each calendar
year, the Trustee will furnish to each person who at any time during such
calendar year was a Unitholder of record of a Series of the Trusts a
statement setting forth for the applicable Series:
(1) As to the Interest Account for such Series:
(a) the amount of interest received on the Portfolio
Obligations, including amounts received as a portion of the
proceeds of any disposition of Portfolio Obligations;
(b) the amount paid from the Interest Account
representing accrued interest for any Units redeemed and
amounts paid or reserved for purchases of substitute Portfolio
Obligations;
(c) the deductions from the Interest Account for
applicable taxes or other governmental charges, if any, and
fees and expenses of the Trustee (including auditing fees), the
Sponsor, the Evaluator and counsel;
(d) the deductions from the Interest Account for payment
into the Reserve Account; and
(e) the net amount remaining after such payments and
deductions expressed both as a total dollar amount and as a
dollar amount per Unit or appropriate multiple thereof
outstanding on the last business day of such calendar year.
(2) As to the Principal Account for such Series:
(a) the dates of the sale, maturity, liquidation or
redemption of any of the Portfolio Obligations and the net
proceeds received therefrom, excluding any portion credited to
the Interest Account;
(b) the amount paid from the Principal Account
representing the principal of any Units redeemed and amounts
paid or reserved for purchases of substitute Portfolio
Obligations;
(c) the deductions from the Principal Account, if any,
for payment of applicable taxes or other governmental charges,
fees and expenses of the Trustee (including auditing fees), the
Sponsor, the Evaluator and counsel;
(d) the deductions from the Principal Account for payment
into the Reserve Account; and
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(e) the net amounts remaining after such payments and
deductions expressed both as a total dollar amount and as a
dollar amount per Unit or appropriate multiple thereof
outstanding on the last business day of such calendar year.
(3) The following information with respect to such Series:
(a) a list of the Portfolio Obligations, as appropriate,
as of the last business day of such calendar year grouped by
coupon and maturity range;
(b) the number of Units outstanding on the last business
day of such calendar year;
(c) the Unit Value (as defined in the Indenture) based on
the last Trust evaluation made during such calendar year; and
(d) the amounts actually distributed during such calendar
year from the Interest and Principal Accounts, separately
stated, expressed both as total dollar amounts and as dollar
amounts per Unit or appropriate multiple thereof outstanding on
the Record Dates for such distributions.
Amendments. The Indenture and the Agreement with respect to each
Series may be amended by the Trustee and the Sponsor without the consent
of Unitholders (a) to cure any ambiguity or to correct or supplement any
provision thereof which may be defective or inconsistent, (b) to change
any provision thereof as may be required by the Securities and Exchange
Commission or any successor governmental agency, (c) for those Trusts
that have qualified as "regulated investment companies," to add or change
any provision thereof which may be necessary or advisable for the
continuing qualification as a regulated investment company under the
Internal Revenue Code of 1986 and (d) to make such other provisions as
shall not adversely affect the interest of the Unitholders (as determined
in good faith by the Sponsor and the Trustee); provided, however, that
the Indenture may also be amended with respect to any Series by the
Sponsor and the Trustee (or the performance of any of the provisions of
the Indenture may be waived) with the consent of holders of Units
representing 66-2/3% of the Units then outstanding of such Series for the
purposes of adding any provisions to or changing in any manner or
eliminating any of the provisions of the Indenture of such Series or of
modifying in any manner the rights of Unitholders thereof. However, the
Indenture may not be amended, without the consent of the holders of all
Units of a Series then outstanding, so as (1) to permit, except in
accordance with the terms and conditions of the Indenture, the
acquisition of any Portfolio Obligations other than those specified in
the Indenture, or (2) to reduce the aforesaid percentage of Units of a
Series the holders of which are required to consent to certain of such
amendments and may not be amended so as to reduce the interest in such
Series represented by Units without the consent of the holder of such
Units. The Trustee shall promptly notify Unitholders of the substance of
any such amendment.
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Termination. The Indenture provides that a Series of the Trusts
will terminate after the maturity, redemption, sale or other disposition
of the last of the Portfolio Obligations held in such Series. If the
value of a Series of the Trusts, as shown by an evaluation, is less than
forty percent (40%) of the par value of the Portfolio Obligations
deposited in such Series of the Trust, the Trustee shall, if directed by
the Sponsor in writing, terminate such Series. A Series of the Trust may
also be terminated at any time by the written consent of holders of
66-2/3% of the Units of such Series outstanding.
Upon termination, the Trustee will sell the Portfolio Obligations
then held in the appropriate Series of the Trust and credit the moneys
derived from such sale to the Principal Capital Gains and Interest
Accounts thereof. The Trustee will then, after deduction of any fees and
expenses of such Series and payment into the Reserve Account of any
amount required for taxes or other governmental charges that may be
payable by such Series, distribute to each Unitholder of such Series,
only upon surrender for cancellation of his certificate, if issued, after
due notice of such termination, such Unitholder's pro rata share in the
Interest, Capital Gains and Principal Accounts for such Series. The sale
of Portfolio Obligations in a Series of the Trusts upon termination may
result in a lower amount than might otherwise be realized if such sale
were not required at such time. For this reason, among others, the
amount realized by a Unitholder upon termination may be less than the
principal amount of Portfolio Obligations represented by the Units held
by such Unitholder.
RESIGNATION, REMOVAL AND LIABILITY
Regarding the Trustee. The Trustee shall be under no liability for
any action taken in good faith in reliance on prima facie properly
executed documents or for the disposition of moneys or Portfolio
Obligations from any Series of the Trust, nor shall the Trustee be liable
or responsible in any way for depreciation or loss incurred by reason of
the disposition of any Portfolio Obligations by the Trustee. However,
the Trustee shall be liable for willful malfeasance, willful misconduct,
bad faith or gross negligence in the performance of its duties or by
reason of its reckless disregard of its obligations and duties under the
Indenture. In the event of a failure of the Sponsor to act, the Trustee
may act under the Indenture and shall not be liable for any action taken
by it in good faith. The Trustee shall not be personally liable for any
taxes or other governmental charges imposed upon a Series of the Trust or
in respect of the Portfolio Obligations or the interest thereon. The
Indenture also contains other customary provisions limiting the liability
of the Trustee and providing for the indemnification of the Trustee for
any loss or claim accruing to it without gross negligence, bad faith,
willful misconduct, willful malfeasance or reckless disregard of its
duties and obligations under the Indenture on its part.
The Trustee or any successor may resign by executing an instrument
in writing, filing the same with the Sponsor and mailing a copy of such
notice or resignation to all Unitholders then of record. Upon receiving
such notice the Sponsor will use its best efforts to appoint a successor
Trustee promptly. The Sponsor may at any time remove the Trustee with or
without cause and appoint a successor as provided in the Indenture. If
within 30 days of the resignation of a Trustee no successor has been
appointed or, if appointed, has not accepted the appointment, the
retiring Trustee may apply to a court of competent jurisdiction for the
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appointment of a successor. The resignation or removal of a Trustee
becomes effective only when the successor Trustee accepts its appointment
as such or when a court of competent jurisdiction appoints a successor
Trustee.
Regarding the Sponsor. The Sponsor shall be under no liability to
the Series of the Trust or to Unitholders for taking any action or for
refraining from any action in good faith or for errors in judgment, nor
shall the Sponsor be liable or responsible in any way for depreciation or
loss incurred by reason of the disposition of any Portfolio Obligation.
The Sponsor will, however, be liable for its own willful malfeasance,
willful misconduct, bad faith, gross negligence or reckless disregard of
its duties and obligations under the Indenture.
If at any time the Sponsor shall resign under the Indenture or shall
fail or be incapable of performing its duties thereunder or shall become
bankrupt or its affairs are taken over by public authorities, the
Indenture directs the Trustee to either (1) appoint a successor sponsor
or sponsors at rates of compensation deemed reasonable by the Trustee and
not exceeding amounts prescribed by the Securities and Exchange
Commission or (2) continue to act as sponsor itself without terminating
the Indenture.
Regarding the Evaluator. The Trustee, Sponsor and Unitholders may
rely on any evaluation furnished by the Evaluator and shall have no
responsibility for the accuracy thereof. Determinations by the Evaluator
under the Indenture shall be made in good faith upon the basis of the
best information available to it, provided, however, that the Evaluator
shall be under no liability to the Trustee, Sponsor or Unitholders for
errors in judgment. The Evaluator shall, however, be liable for its own
willful malfeasance, bad faith, gross negligence or reckless disregard of
its obligations and duties under the Indenture.
The Evaluator may resign or may be removed by the Sponsor and the
Trustee, and the Sponsor and the Trustee are to use their best efforts to
appoint a satisfactory successor. Such resignation or removal shall
become effective upon the acceptance of appointment by the successor
Evaluator. If upon resignation of the Evaluator no successor accepts
appointment within thirty days after notice of resignation, the Evaluator
may apply to a court of competent jurisdiction for the appointment of a
successor.
MISCELLANEOUS
Sponsor. Ranson & Associates, Inc., the Sponsor of the Trusts, is
an investment banking firm created in 1995 by a number of former owners
and employees of Ranson Capital Corporation. On November 26, 1996,
Ranson & Associates, Inc. purchased all existing unit investment trusts
sponsored by EVEREN Securities, Inc. Accordingly, Ranson & Associates is
the successor sponsor to unit investment trusts formerly sponsored by
EVEREN Unit Investment Trusts, a service of EVEREN Securities, Inc.
Ranson & Associates, is also the sponsor and successor sponsor of Series
of The Kansas Tax-Exempt Trust and Multi-State Series of The Ranson
Municipal Trust. Ranson & Associates, Inc. is the successor to a series
of companies, the first of which was originally organized in Kansas in
1935. During its history, Ranson & Associates, Inc. and its predecessors
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have been active in public and corporate finance and have sold bonds and
unit investment trusts and maintained secondary market activities
relating thereto. At present, Ranson & Associates, Inc., which is a
member of the National Association of Securities Dealers, Inc., is the
sponsor to each of the above-named unit investment trusts and serves as
the financial advisor and as an underwriter for issuers in the Midwest
and Southwest, especially in Kansas, Missouri and Texas. The Company's
offices are located at 250 North Rock Road, Suite 150, Wichita, Kansas
67206-2241.
The foregoing information with regard to the Sponsor relates to the
Sponsor only and not to any Series of the Trust. Such information is
included in this Prospectus only for the purpose of informing investors
as to the financial responsibility of the Sponsor and its ability to
carry out its contractual obligations shown herein. More comprehensive
financial information can be obtained from the Sponsor upon request.
Trustee. The Trustee is The Bank of New York, a trust company
organized under the laws of New York. The Bank of New York has its unit
investment trust division offices at 101 Barclay Street, New York, New
York 10286, telephone 1-800-701-8178. The Bank of New York is subject to
supervision and examination by the Superintendent of Banks of the State
of New York and the Board of Governors of the Federal Reserve System, and
its deposits are insured by the Federal Deposit Insurance Corporation to
the extent permitted by law.
The Trustee, whose duties are ministerial in nature, has not
participated in selecting the Portfolio Obligations. For information
relating to the responsibilities of the Trustee under the Indenture,
reference is made to the material set forth under "Administration of the
Trust."
Legal Opinions. The legality of the Units offered hereby and
certain matters relating to Federal tax law were originally passed upon
by Chapman and Cutler, 111 West Monroe Street, Chicago, Illinois 60603,
as counsel for the Sponsor.
INDEPENDENT AUDITORS
The financial statements appearing in Part Two of this Prospectus
and Registration Statement, with information pertaining to the specific
Series of the Trusts to which such statements relate, have been audited
by Ernst & Young LLP, independent auditors, as set forth in their report
appearing in Part Two and are included in reliance upon such report given
upon the authority of such firm as experts in auditing and accounting.
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Ranson Defined Funds
U.S. Treasury Portfolio Series 19
Part Two
Dated April 30, 1998
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
NOTE: Part Two of this Prospectus May Not Be Distributed Unless Accompanied by
Part One.
<PAGE>
Ranson Defined Funds
U.S. Treasury Portfolio Series 19
Essential Information
As of December 31, 1997
Sponsor and Evaluator: Ranson & Associates, Inc.
Trustee: The Bank of New York Co.
<TABLE>
<CAPTION>
General Information
<S> <C>
Principal Amount of Securities $4,600,000
Number of Units 460,000
Fractional Undivided Interest in the Trust per Unit 1/460,000
Principal Amount of Securities per Unit $10.000
Calculation of Public Offering Price:
Aggregate Value of Securities in the Trust $4,699,965
Aggregate Value of Securities per Unit $10.217
Principal Cash per Unit (1) $.000
Accrued Interest per Unit through settlement date of January 6, 1998 $.009
Total Price including Accrued Interest per Unit $10.226
Sales Charge of 1.95% of Public Offering Price (1.989%
of net amount invested) per Unit $.203
Public Offering Price per Unit $10.429
Redemption Price per Unit $10.226
Calculation of Estimated Net Annual Interest Income per Unit:
Estimated Annual Interest Income $.5640
Less: Estimated Annual Expense $.0164
Estimated Net Annual Interest Income $.5476
Daily Rate at which Estimated Annual Interest Income Accrues per Unit $.001521
Estimated Current Return Based on Public Offering Price (2) 5.25%
Estimated Long-Term Return (2) 5.13%
</TABLE>
[FN]
1. This amount, if any, represents principal cash or overdraft which is an
asset or liability of the Trust and is included in the Public Offering Price.
2. The Estimated Current Return and Estimated Long-Term Return will vary with
changes in the Public Offering Price and there is no assurance that such returns
on the date hereof will be applicable on a subsequent date of purchase. These
estimated returns are increased for transactions entitled to a reduced sales
charge (see "Public Offering of Units - Public Offering Price" - Part One).
<PAGE>
Ranson Defined Funds
U.S. Treasury Portfolio Series 19
Essential Information (continued)
As of December 31, 1997
Sponsor and Evaluator: Ranson & Associates, Inc.
Trustee: The Bank of New York Co.
<TABLE>
<CAPTION>
<S> <C>
Record and Distribution Date Record Date is the first of each month
and distributions to Unitholders on such
record dates will be made on the 15th day
of the month.
Distribution Dates No distribution (other than capital gains
distributions) need be made from the
Principal Account if the balance therein,
excluding capital gains, is less than
$1.00 per 100 Units.
Trustee's Annual Fee (including
estimated expenses) $1.00 per 100 Units (includes $.99 of
Trustee's annual fee per $1,000 principal
amount of underlying Securities and $.09
of out-of-pocket expenses per 100 Units).
Evaluator's Annual Fee $.10 per $1,000 principal amount of
underlying Securities.
Surveillance Fee $.15 per $1,000 principal amount of
underlying Securities.
Date of Trust Agreement and
Initial Deposit May 22, 1997
Mandatory Termination Date December 31, 2035
Discretionary Liquidation Amount The Trust may be terminated if the value
thereof is less than $100,000 (40% of the
par value of the Securities deposited in
the Trust).
</TABLE>
[FN]
<PAGE>
Report of Independent Auditors
Unitholders
Ranson Defined Funds
U. S. Treasury Portfolio Series 19
We have audited the accompanying statement of assets and liabilities of Ranson
Defined Funds U. S. Treasury Portfolio Series 19, including the schedule of
investments, as of December 31, 1997, and the related statements of operations
and changes in net assets for the period from May 22, 1997 (Date of Deposit) to
December 31, 1997. These financial statements are the responsibility of the
Trust's sponsor. Our responsibility is to express an opinion on these financial
statements based on our 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 investments owned as of December 31, 1997, by
correspondence with the custodial bank. An audit also includes assessing the
accounting principles used and significant estimates made by the sponsor, as
well as evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Ranson Defined Funds U. S.
Treasury Portfolio Series 19 at December 31, 1997, and the results of its
operations and changes in its net assets for the period indicated above in
conformity with generally accepted accounting principles.
Ernst & Young LLP
Kansas City, Missouri
April 16, 1998
<PAGE>
Ranson Defined Funds
U.S. Treasury Portfolio Series 19
Statement of Assets and Liabilities
December 31, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
Assets
Government Securities, at value (cost $4,619,482) $4,699,965
Interest receivable 113,542
Organization costs 4,000
---------
Total assets 4,817,507
Liabilities and net assets
Cash overdraft 94,411
Accrued liabilities 1,944
---------
96,355
Net assets, applicable to 460,000 Units outstanding:
Cost of Trust assets, exclusive of interest $4,619,482
Unrealized appreciation 80,483
Distributable funds 21,187
--------- ---------
Net assets $4,721,152
=========
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
Ranson Defined Funds
U.S. Treasury Portfolio Series 19
Statement of Operations
<TABLE>
<CAPTION>
Period from
May 22,
1997 to
December 31,
1997
<S> <C>
---------
Investment income - interest $187,260
Expenses:
Trustee's fees and related expenses 3,982
Evaluator's fees 361
Amortization of organizational expenses
1,000
---------
Total expenses 5,343
---------
Net investment income 181,917
Unrealized appreciation on investments during the period
80,483
---------
Net increase in net assets resulting from operations $262,400
=========
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
Ranson Defined Funds
U.S. Treasury Portfolio Series 19
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Period from
May 22,
1997 to
December 31,
<S> <C>
1997
---------
Operations:
Net investment income $181,917
Unrealized appreciation on investments during the period 80,483
---------
Net increase in net assets resulting from operations 262,400
Distributions to Unitholders:
Net investment income (157,302)
Capital transactions:
Issuance of 460,000 Units 4,616,054
---------
Total increase in net assets 4,721,152
Net assets:
At the beginning of the period -
---------
End of the period (including distributable funds applicable
to Trust Units of $21,187 at December 31, 1997) $4,721,152
=========
Trust Units outstanding at the end of the period 460,000
=========
Net asset value per Unit at the end of the period $10.26
=========
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
Ranson Defined Funds
U.S. Treasury Portfolio Series 19
Schedule of Investments
December 31, 1997
U.S. Treasury Securities
<TABLE>
<CAPTION>
Principal Maturity
Amount Coupon Date Value
<S> <C> <C> <C> <C>
--------- --- --- ---
$920,000 6.125% 7/31/2000 $929,991
920,000 6.625% 7/31/2001 946,524
920,000 6.375% 8/15/2002 944,278
782,000 5.750% 8/15/2003 783,165
138,000 0.000% 8/15/2003 100,438 (1)
920,000 7.250% 8/15/2004 995,569
--------- ---------
$4,600,000 $4,699,965
========= =========
</TABLE>
[FN]
Note to Schedule of Investments
1. These Securities have been purchased at a discount from the par value
because there is no stated interest income thereon. Such Securities are
normally described as "zero coupon" Securities. Over the life of these
Securities the value increases, so that upon maturity, the holders of these
Securities will receive 100% of the principal amount thereof.
See accompanying notes to financial statements.
<PAGE>
Ranson Defined Funds
U.S. Treasury Portfolio Series 19
Notes to Financial Statements
1. Significant Accounting Policies
Trust Sponsor and Evaluator
Ranson & Associates, Inc, serves as the Trust's sponsor and evaluator.
Valuation of Securities
As of the date of the of the financial Statements and during the Trust's primary
offering period, Government Securities are stated at offering prices as
determined by Ranson & Associates, Inc.. At the end of the primary (May 22,
1998) and thereafter, the Securities are stated at bid prices as determined by
Ranson & Associates, Inc. The aggregate bid prices of the Securities are
determined by the Evaluator based on (a) current bid prices of the Securities,
(b) current bid prices for comparable securities, (c) appraisal, or (d) any
combination of the above.
Cost of Securities
Cost of the Trust's Government Securities is based on the offering prices of the
Securities on the dates of deposit of such Securities acquired during the
primary sales period, plus amortization of original issue discount for the zero
coupon obligation. The premium or discount for the fixed rate obligations is
not being amortized. Realized gain (loss) from Security transactions is
reported on an identified cost basis.
Investment Income
Interest income consists of amortization of the original issue discount on the
zero coupon obligation and interest accrues as earned on the fixed rate
obligations.
2. Unrealized Appreciation and Depreciation
Following is an analysis of net unrealized appreciation at December 31, 1997:
<TABLE>
<CAPTION>
<S> <C>
Gross unrealized appreciation $80,483
Gross unrealized depreciation -
----------
Net unrealized appreciation $80,483
=========
</TABLE>
3. Federal Income Taxes
The Trust is not an association taxable as a corporation for federal income tax
purposes. Each Unitholder is considered to be the owner of a pro rata portion
of the Trust under Subpart E, Subchapter J of Chapter 1 of the Internal Revenue
Code of 1986, as amended. Accordingly, no provision has been made for federal
income taxes.
4. Other Information
Cost to Investors
The cost to original investors of Units of the Trust was based on the aggregate
offering price of the Bonds on the date of an investor's purchase, plus a sales
charge of 1.95% of the Public Offering Price (equivalent to 1.989% of the net
amount invested). The Public Offering Price for secondary market transactions
is based on the aggregate bid price of the Bonds plus or minus a pro rata share
of cash or overdraft in the Principal Account, if any, on the date of an
investor's purchase, plus a sales charge of 1.95% of the Public Offering Price
(equivalent to 1.989% of the net amount invested).
<PAGE>
Ranson Defined Funds
U.S. Treasury Portfolio Series 19
Notes to Financial Statements (continued)
Distributions
Distributions of net investment income to Unitholders are declared and paid
monthly. Income distribution per Unit on a record date basis is $.31 for the
year ended December 31, 1997.
<PAGE>
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Independent Auditors"
and to the use of our report dated April 16, 1998, in this Post-Effective
Amendment to the Registration Statement (Form S-6) and related Prospectus of
Ranson Defined Funds U. S. Treasury Portfolio Series 19 dated April 30, 1998.
Ernst & Young LLP
Kansas City, Missouri
April 30, 1998
<PAGE>
Ranson Defined Funds
GNMA Portfolio Series 8
Part Two
Dated April 30, 1998
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
NOTE: Part Two of this Prospectus May Not Be Distributed Unless Accompanied by
Part One.
<PAGE>
Ranson Defined Funds
GNMA Portfolio Series 8
Essential Information
As of December 31, 1997
Sponsor and Evaluator: Ranson & Associates, Inc.
Trustee: The Bank of New York Co.
<TABLE>
<CAPTION>
General Information
<S> <C>
Principal Amount of Securities $1,658,607
Number of Units 171,513
Fractional Undivided Interest in the Trust per Unit 1/171,513
Principal Amount of Securities per Unit $9.670
Calculation of Public Offering Price:
Aggregate Value of Securities in the Trust $1,665,204
Aggregate Value of Securities per Unit $9.709
Principal Cash per Unit (1) $.007
Accrued Interest per Unit through settlement date of
January 6, 1998 $.010
Total Price including Accrued Interest per Unit $9.726
Sales Charge of 3.50% (3.627% of Public Offering Price) $.353
Public Offering Price per Unit $10.079
Redemption Price per Unit $9.726
Calculation of Estimated Net Annual Interest Income per Unit:
Estimated Annual Interest Income $.6212
Less: Estimated Annual Expense $.0181
Estimated Net Annual Interest Income $.6031
Daily Rate at which Estimated Annual Interest Income Accrues per Unit $.001675
Estimated Current Return Based on Public Offering Price (2) 6.18%
Estimated Long-Term Return (2) 5.57%
</TABLE>
[FN]
1. This amount, if any, represents principal cash or overdraft which is an
asset or liability of the Trust and is included in the Public Offering Price.
2. The Estimated Current Return and Estimated Long-Term Return will vary with
changes in the Public Offering Price and there is no assurance that such returns
on the date hereof will be applicable on a subsequent date of purchase. These
estimated returns are increased for transactions entitled to a reduced sales
charge (see "Public Offering of Units - Public Offering Price" - Part One).
<PAGE>
Ranson Defined Funds
GNMA Portfolio Series 8
Essential Information (continued)
As of December 31, 1997
Sponsor and Evaluator: Ranson & Associates, Inc.
Trustee: The Bank of New York Co.
<TABLE>
<CAPTION>
<S> <C>
Record and Distribution Date Record Date is the first of each month
and distributions to Unitholders on such
record dates will be made on the
15th day of the month.
Distribution Dates No distribution (other than capital gains
distributions) need be made from the
Principal Account if the balance therein,
excluding capital gains, is less than
$1.00 per 100 Units.
Trustee's Annual Fee (including
estimated expenses) $1.00 per 100 Units (includes $.86 of
Trustee's annual fee per $1,000 principal
amount of underlying Securities and $.09
of out-of-pocket expenses per 100 Units).
Evaluator's Annual Fee $.18 per $1,000 principal amount of
underlying Securities.
Surveillance Fee $.25 per $1,000 principal amount of
underlying Securities.
Date of Trust Agreement and
Initial Deposit May 22, 1997
Mandatory Termination Date December 31, 2035
Discretionary Liquidation Amount The Trust may be terminated if the value
thereof is less than $671,134 (40% of the
par value of the Securities deposited in
the Trust).
</TABLE>
[FN]
<PAGE>
Report of Independent Auditors
Unitholders
Ranson Defined Funds
GMNA Portfolio Series 8
We have audited the accompanying statement of assets and liabilities of Ranson
Defined Funds GMNA Portfolio Series 8, including the schedule of investments, as
of December 31, 1997, and the related statements of operations and changes in
net assets for the period from May 22, 1997 (Date of Deposit) to December 31,
1997. These financial statements are the responsibility of the Trust's sponsor.
Our responsibility is to express an opinion on these financial statements based
on our 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 investments owned as of December 31, 1997, by
correspondence with the custodial bank. An audit also includes assessing the
accounting principles used and significant estimates made by the sponsor, as
well as evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Ranson Defined Funds GNMA
Portfolio Series 8 at December 31, 1997, and the results of its operations and
changes in its net assets for the period indicated above in conformity with
generally accepted accounting principles.
Ernst & Young LLP
Kansas City, Missouri
April 16, 1998
<PAGE>
Ranson Defined Funds
GNMA Portfolio Series 8
Statement of Assets and Liabilities
December 31, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
Assets
GNMA Securities, at value (cost $1,656,337) $1,665,204
Interest receivable 7,546
Organization costs 1,380
Cash 3,766
---------
Total assets 1,677,896
Liabilities and net assets
Accrued liabilities 2,404
Net assets, applicable to 171,513 Units outstanding:
Cost of Trust assets, exclusive of interest $1,656,337
Unrealized appreciation 8,867
Distributable funds 10,288
--------- ---------
Net assets $1,675,492
=========
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
Ranson Defined Funds
GNMA Portfolio Series 8
Statement of Operations
<TABLE>
<CAPTION>
Period from
May 22,
1997 to
December 31,
1997
<S> <C>
---------
Investment income - interest $34,530
Expenses:
Trustee's fees and related expenses 3,647
Evaluator's and portfolio surveillance fees 171
Amortization of organizational expenses 345
---------
Total expenses 4,163
---------
Net investment income 30,367
Realized and unrealized gain on investments:
Realized gain 167
Unrealized appreciation during the period 8,867
---------
Net gain on investments 9,034
---------
Net increase in net assets resulting from operations $39,401
=========
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
Ranson Defined Funds
GNMA Portfolio Series 8
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Period from
May 22,
1997 to
December 31,
1997
<S> <C>
---------
Operations:
Net investment income $30,367
Realized gain on investments 167
Unrealized appreciation on investments during the period 8,867
---------
Net increase in net assets resulting from operations 39,401
Distributions to Unitholders:
Net investment income (25,305)
Principal from investment transactions (14,002)
---------
Total distributions to Unitholders (39,307)
Capital transactions:
Issuance of 171,513 Units 1,675,398
---------
Total increase in net assets 1,675,492
Net assets:
At the beginning of the period -
---------
End of the period (including distributable funds applicable
to Trust Units of $10,288 at December 31, 1997) $1,675,492
=========
Trust Units outstanding at the end of the period 171,513
=========
Net asset value per Unit at the end of the period $9.77
=========
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
Kemper Defined Funds
GNMA Portfolio Series 8
Schedule of Investments
December 31, 1996
<TABLE>
<CAPTION>
Government National Mortgage Association
Modified Pass-Through Mortgage-Backed Securities
Principal Range of Stated
Amount Coupon Maturities (1) Value
<S> <C> <C> <C> <C>
--------- --- ---------- ----------
$1,247,854 6.50% 2012 to 2013 $1,248,562
410,753 7.00% 2012 to 2013 416,642
---------- ----------
$1,658,607 $1,665,204
========= =========
</TABLE>
Note to Schedule of Investments
1. The principal amount of Securities listed as having the range of maturities
shown is an aggregate of individual Securities having varying stated maturities
within that shown. They are listed as one category of Securities with a single
range of maturities because current market conditions do not accord a
significant difference in price among the Securities grouped together on the
basis of the differences in their stated maturities. At some time in the future,
however, the differences in stated maturities could affect the market value of
the individual Securities.
[FN]
<PAGE>
Ranson Defined Funds
GNMA Portfolio Series 8
Notes to Financial Statements
1. Significant Accounting Policies
Trust Sponsor and Evaluator
From the Trust's date of deposit through November 26, 1996, the Trust's sponsor
and evaluator was EVEREN Unit Investment Trusts (EVEREN), or its predecessor
entity, Kemper Unit Investment Trusts. On that date, Zurich Kemper Investments,
Inc. acquired EVEREN and assigned substantially all of its unit investment trust
business to Ranson & Associates, Inc., which will serve as the Trust's sponsor
and evaluator.
Valuation of Securities
GNMA Securities are stated at bid prices as determined by EVEREN Unit Investment
Trusts. The aggregate bid prices of the Securities are determined by the
Evaluator based on (a) current bid prices of the Securities, (b) current bid
prices for comparable securities, (c) appraisal, or (d) any combination of the
above.
Cost of Securities
Cost of the Trust's Securities is based on the offering prices of the Securities
on the dates of deposit of such Securities acquired during the primary sales
period. The premium or discount, if any, is recognized as an adjustment of
investment income on apro rata basis as principal repayments are received.
Realized gain (loss) from Security transactions is reported on an identified
cost basis.
2. Unrealized Appreciation and Depreciation
Following is an analysis of net unrealized appreciation at December 31, 1997:
<TABLE>
<CAPTION>
<S> <C>
Gross unrealized appreciation $8,867
Gross unrealized depreciation -
----------
Net unrealized appreciation $8,867
=========
</TABLE>
3. Federal Income Taxes
The Trust is organized as a regulated investment company under Subchapter M of
the Internal Revenue Code of 1986, as amended (the "Code"). It is the Trust's
policy to comply with the special provisions of the Code available to regulated
investment companies. Such provisions were complied with and, therefore, no
federal income tax provision is required.
4. Other Information
Cost to Investors
The cost to original investors of Units of the Trust was based on the aggregate
offering price of the Securities on the date of an investor's purchase plus or
minus a pro rata share of cash or overdraft in the Principal Account and daily
accrued interest, plus a sales charge of 3.50% of the Public Offering Price
(equivalent to 3.627% of the net amount invested). The Public Offering Price
for secondary market transactions is based on the aggregate bid prices of the
Securities plus or minus a pro rata share of cash or overdraft in the Principal
Account and daily accrued interest on the date of an investor's purchase, plus a
sales charge of 3.50% of the Public Offering Price (equivalent to 3.627% of the
net amount invested).
<PAGE>
Ranson Defined Funds
GNMA Portfolio Series 8
Notes to Financial Statements (continued)
Distributions
Distributions of net investment income to Unitholders are declared and paid
monthly. Income distributions per Unit on a record date basis, is $.32 for the
period ended December 31, 1997. In addition, distribution of principal related
to the sale or call of securities is $.17 per unit for the period ended December
31, 1997.
<PAGE>
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Independent Auditors"
and to the use of our report dated April 16, 1998, in this Post-Effective
Amendment to the Registration Statement (Form S-6) and related Prospectus of
Ranson Defined Funds GNMA Portfolio Series 8 dated April 30, 1998.
Ernst & Young LLP
Kansas City, Missouri
April 30, 1998
<PAGE>
Ranson Defined Funds
GNMA Portfolio Series 9
Part Two
Dated April 30, 1998
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
NOTE: Part Two of this Prospectus May Not Be Distributed Unless Accompanied by
Part One.
<PAGE>
Ranson Defined Funds
GNMA Portfolio Series 9
Essential Information
As of December 31, 1997
Sponsor and Evaluator: Ranson & Associates, Inc.
Trustee: The Bank of New York Co.
<TABLE>
<CAPTION>
General Information
<S> <C>
Principal Amount of Securities $1,869,922
Number of Units 191,099
Fractional Undivided Interest in the Trust per Unit 1/191,099
Principal Amount of Securities per Unit $9.785
Calculation of Public Offering Price:
Aggregate Value of Securities in the Trust $1,893,607
Aggregate Value of Securities per Unit $9.909
Principal Cash per Unit (1) $.000
Accrued Interest per Unit through settlement date of
January 6, 1998 $.009
Total Price including Accrued Interest per Unit $9.918
Sales Charge of 3.95% of Public Offering Price (4.112%
of net amount invested) per Unit $.408
Public Offering Price per Unit $10.326
Redemption Price per Unit $9.918
Calculation of Estimated Net Annual Interest Income per Unit:
Estimated Annual Interest Income $.7146
Less: Estimated Annual Expense $.0182
Estimated Net Annual Interest Income $.6964
Daily Rate at which Estimated Annual Interest Income Accrues per Unit $.001934
Estimated Current Return Based on Public Offering Price (2) 6.74%
Estimated Long-Term Return (2) 6.10%
</TABLE>
[FN]
1. This amount, if any, represents principal cash or overdraft which is an
asset or liability of the Trust and is included in the Public Offering Price.
2. The Estimated Current Return and Estimated Long-Term Return will vary with
changes in the Public Offering Price and there is no assurance that such returns
on the date hereof will be applicable on a subsequent date of purchase. These
estimated returns are increased for transactions entitled to a reduced sales
charge (see "Public Offering of Units - Public Offering Price" - Part One).
<PAGE>
Ranson Defined Funds
GNMA Portfolio Series 9
Essential Information (continued)
As of December 31, 1997
Sponsor and Evaluator: Ranson & Associates, Inc.
Trustee: The Bank of New York Co.
<TABLE>
<CAPTION>
<S> <C>
Record and Distribution Date Record Date is the first of each month
and distributions to Unitholders on such
record dates will be made on the
15th day of the month.
Distribution Dates No distribution (other than capital gains
distributions) need be made from the
Principal Account if the balance therein,
excluding capital gains, is less than
$1.00 per 100 Units.
Trustee's Annual Fee (including
estimated expenses) $1.00 per 100 Units (includes $.86 of
Trustee's annual fee per $1,000 principal
amount of underlying Securities and $.09
of out-of-pocket expenses per 100 Units).
Evaluator's Annual Fee $.18 per $1,000 principal amount of
underlying Securities.
Surveillance Fee $.25 per $1,000 principal amount of
underlying Securities.
Date of Trust Agreement and
Initial Deposit May 22, 1997
Mandatory Termination Date December 31, 2035
Discretionary Liquidation Amount The Trust may be terminated if the value
thereof is less than $756,573 (40% of the
par value of the Securities deposited in
the Trust).
</TABLE>
[FN]
<PAGE>
Report of Independent Auditors
Unitholders
Ranson Defined Funds
GNMA Portfolio Series 9
We have audited the accompanying statement of assets and liabilities of Ranson
Defined Funds GNMA Portfolio Series 9, including the schedule of investments, as
of December 31, 1997, and the related statements of operations and changes in
net assets for the period from May 22, 1997 (Date of Deposit) to December 31,
1997. These financial statements are the responsibility of the Trust's sponsor.
Our responsibility is to express an opinion on these financial statements based
on our 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 investments owned as of December 31, 1997, by
correspondence with the custodial bank. An audit also includes assessing the
accounting principles used and significant estimates made by the sponsor, as
well as evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Ranson Defined Funds GNMA
Portfolio Series 9 at December 31, 1997, and the results of its operations and
changes in its net assets for the period indicated above in conformity with
generally accepted accounting principles.
Ernst & Young LLP
Kansas City, Missouri
April 16, 1998
<PAGE>
Ranson Defined Funds
GNMA Portfolio Series 9
Statement of Assets and Liabilities
December 31, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
Assets
GNMA Securities, at value (cost $1,872,609) $1,893,607
Interest receivable 11,288
Organization costs 1,380
Cash 7,055
---------
Total assets 1,913,330
Liabilities and net assets
Accrued liabilities 2,426
Net assets, applicable to 191,099 Units outstanding:
Cost of Trust assets, exclusive of interest $1,872,609
Unrealized appreciation 20,998
Distributable funds 17,297
--------- ---------
Net assets $1,910,904
=========
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
Ranson Defined Funds
GNMA Portfolio Series 9
Statement of Operations
<TABLE>
<CAPTION>
Period from
May 22,
1997 to
December 31,
1997
<S> <C>
---------
Investment income - interest $49,074
Expenses:
Trustee's fees and related expenses 3,015
Evaluator's and portfolio surveillance fees 211
Amortization of organizational expenses
345
---------
Total expenses 3,571
---------
Net investment income 45,503
Realized and unrealized gain (loss) on investments:
Realized loss (219)
Unrealized appreciation during the period 20,998
---------
Net gain on investments 20,779
---------
Net increase in net assets resulting from operations $66,282
=========
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
Ranson Defined Funds
GNMA Portfolio Series 9
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Period from
May 22,
1997 to
December 31,
1997
<S> <C>
---------
Operations:
Net investment income $45,503
Realized loss on investments (219)
Unrealized appreciation on investments during the period 20,998
---------
Net increase in net assets resulting from operations 66,282
Distributions to Unitholders:
Net investment income (35,690)
Principal from investment transactions (14,028)
---------
Total distributions to Unitholders (49,718)
Capital transactions:
Issuance of 191,099 Units 1,894,340
---------
Total increase in net assets 1,910,904
Net assets:
At the beginning of the period -
---------
End of the period (including distributable funds applicable
to Trust Units of $17,297 at December 31, 1997) $1,910,904
=========
Trust Units outstanding at the end of the period 191,099
=========
Net asset value per Unit at the end of the period $10.00
=========
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
Ranson Defined Funds
GNMA Portfolio Series 9
Schedule of Investments
December 31, 1997
Government National Mortgage Association
Modified Pass-Through Mortgage-Backed Securities
<TABLE>
<CAPTION>
Principal Range of Stated
Amount Coupon Maturities (1) Value
<S> <C> <C> <C> <C>
--------- --- ---------- ----------
$1,414,436 7.00% 4/20/2027 to 10/20/2027 $1,421,778
455,486 8.00% 7/20/2026 to 11/20/2028 471,829
---------- ----------
$1,869,922 $1,893,607
========= =========
</TABLE>
Note to Schedule of Investments
1. The principal amount of Securities listed as having the range of maturities
shown is an aggregate of individual Securities having varying stated maturities
within that shown. They are listed as one category of Securities with a single
range of maturities because current market conditions do not accord a
significant difference in price among the Securities grouped together on the
basis of the differences in their stated maturities. At some time in the future,
however, the differences in stated maturities could affect the market value of
the individual Securities.
[FN]
See accompanying notes to financial statements.
<PAGE>
Ranson Defined Funds
GNMA Portfolio Series 9
Notes to Financial Statements
1. Significant Accounting Policies
Trust Sponsor and Evaluator
Ranson & Associates, Inc., serves as the Trust's sponsor and evaluator.
Valuation of Securities
As of the date of the financial statements and during the Trust's primary
offering period, GNMA Securities are stated at offering prices as determined by
Ranson & Associates, Inc. At the end of the primary period (May 22, 1998) and
thereafter, the Trust's securities will be stated at bid prices as determined by
Ranson & Associates, Inc. The aggregate bid prices of the Securities are
determined by the Evaluator based on (a) current bid prices of the Securities,
(b) current bid prices for comparable securities, (c) appraisal, or (d) any
combination of the above.
Cost of Securities
Cost of the Trust's Securities is based on the offering prices of the Securities
on the dates of deposit of such Securities acquired during the primary sales
period. The premium or discount, if any, is recognized as an adjustment of
investment income on a pro rata basis as principal repayments are received.
Realized gain (loss) from Security transactions is reported on an identified
cost basis.
2. Unrealized Appreciation and Depreciation
Following is an analysis of net unrealized appreciation at December 31, 1997:
<TABLE>
<CAPTION>
<S> <C>
Gross unrealized appreciation $20,998
Gross unrealized depreciation -
----------
Net unrealized appreciation $20,998
=========
</TABLE>
3. Federal Income Taxes
The Trust is organized as a regulated investment company under Subchapter M of
the Internal Revenue Code of 1986, as amended (the "Code"). It is the Trust's
policy to comply with the special provisions of the Code available to regulated
investment companies. Such provisions were complied with and, therefore, no
federal income tax provision is required. The accumulated net realized capital
loss on sales of investments for federal income tax purposes at December 31,
1997, amounting to $218 is available to offset future taxable gains. If not
applied, the carryover expires in 2005.
4. Other Information
Cost to Investors
The cost to original investors of Units of the Trust was based on the aggregate
offering price of the Securities on the date of an investor's purchase plus or
minus a pro rata share of cash or overdraft in the Principal Account and daily
accrued interest, plus a sales charge of 3.95% of the Public Offering Price
(equivalent to 4.112% of the net amount invested). The Public Offering Price
for secondary market transactions is based on the aggregate bid prices of the
Securities plus or minus a pro rata share of cash or overdraft in the Principal
Account and daily accrued interest on the date of an investor's purchase, plus a
sales charge of 3.95% of the Public Offering Price (equivalent to 4.112% of the
net amount invested).
<PAGE>
Ranson Defined Funds
GNMA Portfolio Series 9
Notes to Financial Statements (continued)
Distributions
Distributions of net investment income to Unitholders are declared and paid
monthly. Income distributions per Unit on a record date basis, are $.35 for the
period ended December 31, 1997. In addition, distribution of principal related
to the sale or call of securities is $.11 per unit for the period ended December
31, 1997.
<PAGE>
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Independent Auditors"
and to the use of our report dated April 16, 1998, in this Post-Effective
Amendment to the Registration Statement (Form S-6) and related Prospectus of
Ranson Defined Funds GNMA Portfolio Series 9 dated April 30, 1998.
Ernst & Young LLP
Kansas City, Missouri
April 30, 1998
<PAGE>
KEMPER INSURED CORPORATE TRUST
KEMPER DEFINED FUNDS INSURED CORPORATE SERIES
EVEREN UNIT INVESTMENT TRUSTS INSURED CORPORATE SERIES
PROSPECTUS PART ONE
Kemper Insured Corporate Trust, Kemper Defined Funds Insured
Corporate Series and EVEREN Unit Investment Trusts Insured Corporate
Series (the "Trusts") were formed for the purpose of providing a high
level of current income through investment in a fixed portfolio
consisting primarily of corporate debt obligations issued after July 18,
1994 by utility companies. Certain Trusts also contain zero coupon U.S.
Treasury obligations.
Insurance guaranteeing the scheduled payment of principal and
interest on all of the Bonds (other than any U.S. Treasury obligations)
in the portfolio listed in Part Two has been obtained directly by the
issuer of such Bonds or by the Sponsor of the Trusts from MBIA Insurance
Corporation. See "Insurance on the Portfolios" and "Portfolio" appearing
in Part Two for each Trust. This insurance is effective so long as the
Bonds are outstanding. As a result of such insurance, the Bonds so
insured in each Trust and the Units of each Trust received on the
original date of deposit a rating of "Aaa" by Moody's Investors Service,
Inc. ("Moody's"). All the Bonds in each Trust have received a rating of
"AAA" by Standard & Poor's, a Division of The McGraw-Hill Companies, Inc.
("Standard & Poor's") as of the original date of deposit. The insurance
does not relate to the Units of the respective Trusts offered hereby or
to their market value. See "Insurance on the Portfolios." No
representation is made as to any insurer's ability to meet its
commitments.
Units of the Trusts are not deposits or obligations of, or
guaranteed by, any bank, and Units are not federally insured or otherwise
protected by the Federal Deposit Insurance Corporation and involve
investment risk including loss of principal. The use of the term
"Insured" in the name of the Trust Funds does not mean that the Units of
the Trusts are insured by any governmental or private organization. The
Units are not insured.
For foreign investors who are not United States citizens or
residents, interest income from each Trust may not be subject to federal
withholding taxes if certain conditions are met. See "Federal Tax
Status."
This Prospectus is in two parts.
Read and retain both parts for future reference.
The date of this Part One is that date which is set forth
in Part Two of the Prospectus.
SPONSOR: RANSON & ASSOCIATES, INC.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COM-MISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
PAGE
SUMMARY 1
THE TRUST 2
TRUST PORTFOLIOS 2
PORTFOLIO SELECTION 2
RISK FACTORS 3
GENERAL TRUST INFORMATION 6
INSURANCE ON THE PORTFOLIOS 6
RETIREMENT PLANS 8
INDIVIDUAL RETIREMENT ACCOUNT--IRA 8
QUALIFIED RETIREMENT PLANS 9
EXCESS DISTRIBUTIONS TAX 9
DISTRIBUTION REINVESTMENT 9
INTEREST, ESTIMATED LONG-TERM RETURN
AND ESTIMATED CURRENT RETURN 10
FEDERAL TAX STATUS 11
TAX REPORTING AND REALLOCATION 16
PUBLIC OFFERING OF UNITS 16
PUBLIC OFFERING PRICE 16
ACCRUED INTEREST 18
PURCHASED AND DAILY ACCRUED INTEREST 19
PUBLIC DISTRIBUTION OF UNITS 20
PROFITS OF SPONSOR 20
MARKET FOR UNITS 21
REDEMPTION 21
COMPUTATION OF REDEMPTION PRICE 22
UNITHOLDERS 23
OWNERSHIP OF UNITS 23
DISTRIBUTIONS TO UNITHOLDERS 24
STATEMENT TO UNITHOLDERS 25
RIGHTS OF UNITHOLDERS 26
INVESTMENT SUPERVISION 27
ADMINISTRATION OF THE TRUST 27
THE TRUSTEE 27
THE EVALUATOR 28
AMENDMENT AND TERMINATION 29
LIMITATIONS ON LIABILITY 29
EXPENSES OF THE TRUST 30
THE SPONSOR 31
LEGAL OPINIONS 32
INDEPENDENT AUDITORS 32
Essential Information*
Report of Independent Auditors*
Statement of Assets and Liabilities*
Statement of Operations*
Statement of Changes in Net Assets*
Schedule of Investments*
Notes to Schedules of Investments*
Notes to Financial Statements*
- -----------------
* Information on these items appears in Part Two
<PAGE>
SUMMARY
Public Offering Price. The Public Offering Price per Unit of a
Series of the Trust is equal to a pro rata share of the aggregate bid
prices of the Bonds in such Series plus or minus a pro rata share of
cash, if any, in the Principal Account, held or owned by the Series plus
accrued interest or Purchased Interest and Daily Accrued Interest, as
applicable, plus a sales charge shown under "Public Offering of Units."
The sales charge is reduced on a graduated scale as indicated under
"Public Offering of Units - Public Offering Price."
Interest and Principal Distributions. Distributions of the
estimated annual interest income to be received by a Series of the Trust,
after deduction of estimated expenses, will be made monthly unless the
Unitholder elects to receive such distributions semi-annually (if
available). Distributions will be paid on the Distribution Dates to
Unitholders of record of such Series on the Record Dates set forth for
the applicable option. See "Essential Information" in Part Two.
Unitholders of Kemper Defined Funds Insured Corporate Series or EVEREN
Unit Investment Trusts Insured Corporate Series will receive
distributions monthly.
The distribution of funds, if any, in the Principal Account of each
Series, will be made as provided in "Unitholders-Distributions to
Unitholders."
Reinvestment. Each Unitholder may elect to have distributions of
principal or interest or both automatically invested without charge in
shares of certain Zurich Kemper Investment, Inc. mutual funds. See
"Distribution Reinvestment."
Estimated Current Return and Estimated Long-Term Return. The
Estimated Current Return is calculated by dividing the estimated net
annual interest income per Unit by the Public Offering Price of such
Trust. The estimated net annual interest income per Unit will vary with
changes in fees and expenses of the Trustee, Sponsor and Evaluator and
with the principal prepayment, redemption, maturity, exchange or sale of
Bonds while the Public Offering Price will vary with changes in the bid
price of the underlying Bonds and with changes in accrued interest or
Purchased Interest and Daily Accrued Interest, as applicable; therefore,
there is no assurance that the present Estimated Current Returns will be
realized in the future. Estimated Long-Term Return is calculated using a
formula which (1) takes into consideration, and determines and factors in
the relative weightings of, the market values, yields (which takes into
account the amortization of premiums and the accretion of discounts) and
estimated retirements of all of the Bonds in the Trust and (2) takes into
account the expenses and sales charge associated with each Trust Unit.
Since the market values and estimated retirement dates of the Bonds and
the expenses of the Trust will change, there is no assurance that the
present Estimated Long-Term Return will be realized in the future.
Estimated Current Return and Estimated Long-Term Return are expected to
differ because the calculation of Estimated Long-Term Return reflects the
estimated date and amount of principal returned while Estimated Current
Return calculations include only net annual interest income and Public
Offering Price.
Market for Units. While under no obligation to do so, the Sponsor
intends, subject to change at any time, to maintain a market for the
Units of each Series of the Trust and to continuously offer to repurchase
such Units at prices which are based on the aggregate bid side evaluation
of the Bonds in such Series of the Trust plus accrued interest or
Purchased Interest and Daily Accrued Interest, as applicable.
Risk Factors. An investment in the Trusts should be made with an
understanding of the risks associated therewith, including, among other
factors, the inability of the issuer or an insurer to pay the principal
of or interest on a bond when due, volatile interest rates, early call
provisions and general economic conditions. See "Trust Portfolio-Risk
Factors."
<PAGE>
THE TRUST
Each Series of the Trust is one of a series of unit investment
trusts created by the Sponsor under the name Kemper Insured Corporate
Trust, Kemper Defined Funds Insured Corporate Series or EVEREN Unit
Investment Trusts Insured Corporate Series, all of which are similar, and
each of which was created under the laws of the State of Missouri or New
York pursuant to a Trust Agreement* (the "Trust Agreement"). Ranson &
Associates, Inc. is the Sponsor and Evaluator of the Trusts and is
successor sponsor and evaluator of all unit investment trusts formerly
sponsored by EVEREN Unit Investment Trusts, a service of EVEREN
Securities, Inc. The Bank of New York is the Trustee of the Trusts as
successor to Investors Fiduciary Trust Company.
The objective of each Trust is to provide a high level of current
income through investment in the Bonds. There is, of course, no
guarantee that a Trust's objectives will be achieved.
The Trusts may be appropriate investment vehicles for investors who
desire to participate in a portfolio of taxable fixed income securities
issued primarily by public utilities with greater diversification than
investors might be able to acquire individually. Diversification of a
Trust's assets will not eliminate the risk of loss always inherent in the
ownership of securities. In addition, Bonds of the type deposited in the
Trusts often are not available in small amounts.
An investment in Units should be made with an understanding of the
risks which an investment in fixed rate debt obligations may entail,
including the risk that the value of the portfolio and hence of the Units
will decline with increases in interest rates. The value of the
underlying Bonds will fluctuate inversely with changes in interest rates.
The uncertain economic conditions of recent years, together with the
fiscal measures adopted to attempt to deal with them, have resulted in
wide fluctuations in interest rates and, thus, in the value of fixed rate
debt obligations generally and intermediate and long-term obligations in
particular. The Sponsor cannot predict the degree to which such
fluctuations will continue in the future.
TRUST PORTFOLIOS
Portfolio Selection. The Bonds for each Trust was based largely
upon the experience and judgment of the Sponsor. In making such
selections the Sponsor considered the following factors: (a) the price
of the Bonds relative to other issues of similar quality and maturity;
(b) whether the Bonds were issued by a utility company; (c) the
diversification of the bonds as to location of issuer; (d) the income to
the Unitholders of the Trusts; (e) whether the Bonds were insured or the
availability and cost of insurance for the scheduled payment of principal
- ---------------
* Reference is made to the Trust Agreement, and any statements contained
herein are qualified in their entirety by the provisions of the Trust
Agreement.
-2-
<PAGE>
and interest on the Bonds; (f) in certain Series whether the Bonds were
issued after July 18, 1984 (g) the stated maturity of the bonds.
The Sponsor may not alter the portfolio of a Series of the Trust,
except upon the happening of certain extraordinary circumstances. See
"Investment Supervision." Certain Series of the Trust contain Bonds which
may be subject to optional call or mandatory redemption pursuant to
sinking fund provisions, in each case prior to their stated maturity. A
bond subject to optional call is one which is subject to redemption or
refunding prior to maturity at the option of the issuer, often at a
premium over par. A refunding is a method by which a bond issue is
redeemed, at or before maturity, by the proceeds of a new bond issue. A
bond subject to sinking fund redemption is one which is subject to
partial call from time to time at par from a fund accumulated for the
scheduled retirement of a portion of an issue prior to maturity. Special
or extraordinary redemption provisions may provide for redemption at par
of all or a portion of an issue upon the occurrence of certain
circumstances, which may be prior to the optional call dates shown in the
"Schedules of Investments of the Trust" in Part Two. Redemption pursuant
to optional call provisions is more likely to occur, and redemption
pursuant to special or extraordinary redemption provisions may occur,
when the Bonds have an offering side evaluation which represents a
premium over par, that is, when they are able to be refinanced at a lower
cost. The proceeds from any such call or redemption pursuant to sinking
fund provisions as well as proceeds from the sale of Bonds and from Bonds
which mature in accordance with their terms, unless utilized to pay for
Units tendered for redemption, will be distributed to Unitholders and
will not be used to purchase additional Bonds for the Trust.
Accordingly, any such call, redemption, sale or maturity will reduce the
size and diversity of the Trust and the net annual interest income and
may reduce the Estimated Current Return and the Estimated Long-Term
Return. See "Interest, Estimated Long-Term Return and Estimated Current
Return." The call, redemption, sale or maturity of Bonds also may have
tax consequences to a Unitholder. See "Federal Tax Status." Information
with respect to the call provisions and maturity dates of the Bonds is
contained in "Schedules of Investments."
Risk Factors. Public Utility Issues. Certain of the Bonds in each
Trust are obligations of public utility issuers. In general, public
utilities are regulated monopolies engaged in the business of supplying
light, water, power, heat, transportation or means of communication.
Historically, the utilities industry has provided investors in securities
issued by companies in this industry with high levels of reliability,
stability and relative total return on their investments. However, an
investment in the Trusts should be made with an understanding of the
characteristics of such issuers and the risks which such an investment
may entail. General problems of such issuers would include the
difficulty in financing large construction programs in an inflationary
period, the limitations on operations and increased costs and delays
attributable to environmental considerations, the difficulty of the
capital market in absorbing utility debt, the difficulty in obtaining
fuel at reasonable prices and the effect of energy conservation. All of
such issuers have been experiencing certain of these problems in varying
degrees. In addition, federal, state and municipal governmental
authorities may from time to time review existing, and impose additional,
regulations governing the licensing, construction and operation of
nuclear power plants, which may adversely affect the ability of the
-3-
<PAGE>
issuers of certain of the Bonds in the portfolio to make payments of
principal and/or interest on such Bonds.
Utilities are generally subject to extensive regulation by state
utility commissions which, for example, establish the rates which may be
charged and the appropriate rate of return on an approved asset base,
which must be approved by the state commissions. Certain utilities have
had difficulty from time to time in persuading regulators, who are
subject to political pressures, to grant rate increases necessary to
maintain an adequate return on investment and voters in many states have
the ability to impose limits on rate adjustments (for example, by
initiative or referendum). Any unexpected limitations could negatively
affect the profitability of utilities whose budgets are planned far in
advance. Also, changes in certain accounting standards currently under
consideration by the Financial Accounting Standards Board could cause
significant write-downs of assets and reductions in earnings for many
investor-owned utilities. In addition, gas pipeline and distribution
companies have had difficulties in adjusting to short and surplus energy
supplies, enforcing or being required to comply with long-term contracts
and avoiding litigation from their customers, on the one hand, or
suppliers, on the other.
Certain of the issuers of the Bonds in a Trust may own or operate
nuclear generating facilities. Governmental authorities may from time to
time review existing, and impose additional, requirements governing the
licensing, construction and operation of nuclear power plants. Nuclear
generating projects in the electric utility industry have experienced
substantial cost increases, construction delays and licensing
difficulties. These have been caused by various factors, including
inflation, high financing costs, required design changes and rework,
allegedly faulty construction, objections by groups and governmental
officials, limits on the ability to finance, reduced forecasts of energy
requirements and economic conditions. This experience indicates that the
risk of significant cost increases, delays and licensing difficulties
remains present through completion and achievement of commercial
operation of any nuclear project. Also, nuclear generating units in
service have experienced unplanned outages or extensions of scheduled
outages due to equipment problems or new regulatory requirements
sometimes followed by a significant delay in obtaining regulatory
approval to return to service. A major accident at a nuclear plant
anywhere, such as the accident at a plant in Chernobyl, U.S.S.R., could
cause the imposition of limits or prohibitions on the operation,
construction or licensing of nuclear units in the United States.
In view of the uncertainties discussed above, there can be no
assurance that any bond issuer's share of the full cost of nuclear units
under construction ultimately will be recovered in rates or of the extent
to which a bond issuer could earn an adequate return on its investment in
such units. The likelihood of a significantly adverse event occurring in
any of the areas of concern described above varies, as does the potential
severity of any adverse impact. It should be recognized, however, that
one or more of such adverse events could occur and individually or
collectively could have a material adverse impact on the financial
condition or the results of operations or on a bond issuer's ability to
make interest and principal payments on its outstanding debt.
-4-
<PAGE>
Other general problems of the gas, water, telephone and electric
utility industry (including state and local joint action power agencies)
include difficulty in obtaining timely and adequate rate increases,
difficulty in financing large construction programs to provide new or
replacement facilities during an inflationary period, rising costs of
rail transportation to transport fossil fuels, the uncertainty of
transmission service costs for both interstate and intrastate
transactions, changes in tax laws which adversely affect a utility's
ability to operate profitably, increased competition in service costs,
reductions in estimates of future demand for electricity and gas in
certain areas of the country, restrictions on operations and increased
cost and delays attributable to environmental considerations, uncertain
availability and increased cost of capital, unavailability of fuel for
electric generation at reasonable prices, including the steady rise in
fuel costs and the costs associated with conversion to alternate fuel
sources such as coal, availability and cost of natural gas for resale,
technical and cost factors and other problems associated with
construction, licensing, regulation and operation of nuclear facilities
for electric generation, including among other considerations the
problems associated with the use of radioactive materials and the
disposal of radioactive wastes, and the effects of energy conservation.
Each of the problems referred to could adversely affect the ability of
the issuers of any utility Bonds in a Trust to make payments due on these
Bonds.
In addition, the ability of state and local joint action power
agencies to make payments on bonds they have issued is dependent in large
part on payments made to them pursuant to power supply or similar
agreements. Courts in Washington and Idaho have held that certain
agreements between Washington Public Power Supply System ("WPPSS") and
the WPPSS participants are unenforceable because the participants did not
have the authority to enter into the agreements. While these decisions
are not specifically applicable to agreements entered into by public
entities in other states, they may cause a reexamination of the legal
structure and economic viability of certain projects financed by joint
action power agencies, which might exacerbate some of the problems
referred to above and possibly lead to legal proceedings questioning the
enforceability of agreements upon which payment of these bonds may
depend.
In addition, business conditions of the telephone industry in
general may affect the performance of the Trust Fund. General problems
of telephone companies include regulation of rates for service by the FCC
and various state or other regulatory agencies. However, over the last
several years regulation has been changing, resulting in increased
competition. The new approach is more market oriented, more flexible and
more complicated. For example, Federal and certain state regulators have
instituted "price cap" regulation which couples protection of rate payers
for basic services with flexible pricing for ancillary services. These
new approaches to regulation could lead to greater risks as well as
greater rewards for operating telephone companies such as those in the
Trust Funds. Inflation has substantially increased the operating
expenses and costs of plants required for growth, service, improvement
and replacement of existing plants. Continuing cost increases, to the
extent not offset by improved productivity and revenues from increased
business, would result in a decreasing rate of return and a continuing
need for rate increases. Although allowances are generally made in rate-
making proceedings for cost increases, delays may be experienced in
obtaining the necessary rate increases and there can be no assurance that
-5-
<PAGE>
the regulatory agencies will grant rate increases adequate to cover
operating and other expenses and debt service requirements. To meet
increasing competition, telephone companies will have to commit
substantial capital, technological and marketing resources. Telephone
usage, and therefore revenues, could also be adversely affected by any
sustained economic recession. New technology such as cellular service
and fiber optics, will require additional capital outlays. The uncertain
outcomes of future labor agreements may also have a negative impact on
the telephone companies. Each of these problems could adversely affect
the ability of the telephone company issuers of any Bonds in a portfolio
to make payments of principal and interest on their Bonds.
Zero Coupon U.S. Treasury Obligations;. Certain of the Bonds in
certain of the Trusts are "zero coupon" U.S. Treasury bonds. Zero coupon
bonds are purchased at a deep discount because the buyer receives only
the right to receive a final payment at the maturity of the bond and does
not receive any periodic interest payments. The effect of owning deep
discount bonds which do not make current interest payments (such as the
zero coupon bonds) is that a fixed yield is earned not only on the
original investment but also, in effect, on all discount earned during
the life of such income on such obligation at a rate as high as the
implicit yield on the discount obligation, but at the same time
eliminates the holder's ability to reinvest at higher rates in the
future. For this reason, zero coupon bonds are subject to substantially
greater price fluctuations during periods of changing market interest
rates than are securities of comparable quality which pay interest.
General Trust Information. Because certain of the Bonds in each
Trust may from time to time under certain circumstances be sold or
redeemed or will mature in accordance with their terms and because the
proceeds from such events will be distributed to Unitholders and will not
be reinvested, no assurance can be given that a Trust will retain for any
length of time its present size and composition. Neither the Sponsor nor
the Trustee shall be liable in any way for any default, failure or defect
in any Bond. The Trustee will have no power to vary the investment of a
Trust; i.e., the Trustee will have no managerial power to take advantage
of market variations to improve a Unitholder's investment.
To the best of the Sponsor's knowledge, there is no litigation
pending as of the date of this Part One Prospectus in respect of any Bond
which might reasonably be expected to have a material adverse effect on
the Trust Funds. At any time after the date of this Part One Prospectus,
litigation may be instituted on a variety of grounds with respect to the
Bonds. The Sponsor is unable to predict whether any such litigation may
be instituted, or if instituted, whether such litigation might have a
material adverse effect on the Trust Funds. The Sponsor and the Trustee
shall not be liable in any way for any default, failure or defect in any
Bond.
INSURANCE ON THE PORTFOLIOS
All Bonds in each Series of the Trust, except for the U.S. Treasury
obligations, are insured as to the scheduled payment of interest and
principal, either by the Sponsor or by the Bond issuer under a financial
guaranty insurance policy obtained from MBIA Insurance Corporation ("MBIA
Corporation"). See "Schedules of Investments" in Part Two. The premium
-6-
<PAGE>
for each such insurance policy has been paid in advance by such issuer or
the Sponsor and each such policy is non-cancelable and will remain in
force so long as the Bonds are outstanding and MBIA Corporation remains
in business. No premiums for such insurance are paid by the Trusts. If
MBIA Corporation is unable to meet its obligations under its policy or if
the rating assigned to the claims-paying ability of MBIA Corporation
deteriorates, no other insurer has any obligation to insure any issue
adversely affected by either of these events.
The aforementioned insurance guarantees the scheduled payment of
principal and interest on all of the Bonds in each Trust, except for the
U.S. Treasury obligations. It does not guarantee the market value of the
Bonds or the value of the Units of a Series of the Trust. This insurance
is effective so long as the Bond is outstanding, whether or not held by a
Trust. Therefore, any such insurance may be considered to represent an
element of market value in regard to the Bonds, but the exact effect, if
any, of this insurance on such market value cannot be predicted.
MBIA Corporation is the principal operating subsidiary of MBIA,
Inc., a New York Stock Exchange listed company. MBIA, Inc. is not
obligated to pay the debts of or claims against MBIA Corporation. MBIA
Corporation, which commenced municipal bond insurance operations on
January 5, 1987, is a limited liability corporation rather than a several
liability association. MBIA Corporation is domiciled in the State of New
York and licensed to do business in all 50 states, the District of
Columbia, the Commonwealth of the Northern Mariana Islands, the
Commonwealth of Puerto Rico, the Virgin Islands of the United States and
the Territory of Guam.
As of September 30, 1996, MBIA Corporation had admitted assets of
$4.3 billion (unaudited), total liabilities of $2.9 billion (unaudited),
and total policyholder's surplus of $1.4 billion (unaudited), prepared in
accordance with statutory accounting practices prescribed or permitted by
insurance regulatory authorities. As of December 31, 1995, MBIA
Corporation had admitted assets of $3.8 billion (audited), total
liabilities of $2.5 billion (audited) and total capital and surplus of
$1.3 billion (audited) determined in accordance with statutory accounting
practices prescribed or permitted by insurance regulatory authorities.
Copies of MBIA Corporation's financial statements prepared in accordance
with statutory accounting practices are available from MBIA Corporation.
The address of MBIA Corporation is 113 King Street, Armonk, New York
10504.
Effective December 31, 1989, MBIA, Inc. acquired Bond Investors
Group, Inc. On January 5, 1990, the Insurer acquired all of the
outstanding stock of Bond Investors Group, Inc., the parent of BIG, now
known as MBIA Insurance Corp. of Illinois. Through a reinsurance
agreement, BIG had ceded all of its net insured risks, as well as its
unearned premium and contingency reserves, to the Insurer and the Insurer
has reinsured BIG's net outstanding exposure.
Moody's Investors Service rates all bonds issues insured by MBIA
"Aaa" and short-term loans "MIG1," both designated to be of the highest
quality. Standard & Poor's rates all new issues insured by MBIA "AAA."
-7-
<PAGE>
Because the Bonds in each Series of the Trust (other than the U.S.
Treasury obligations) are insured as to the scheduled payment of
principal and interest and on the basis of the financial condition and
the method of operation of MBIA Corporation, Moody's Investors Service,
Inc., on the original Date of Deposit of each Series, assigned to each
Trust's Units its "AAA" investment rating. This is the highest rating
assigned to securities by such rating agency. These ratings should not
be construed as an approval of the offering of the Units by Standard &
Poor's or as a guarantee of the market value of a Trust or the Units
thereof.
Bonds in a Trust for which insurance has been obtained by the issuer
thereof or by the Sponsor from MBIA Corporation (all of which were rated
"AAA") may or may not have a higher yield than uninsured bonds rated
"AAA" by Standard & Poor's. In selecting Bonds for the portfolio of the
Trusts, the Sponsor has applied the criteria herein before described.
RETIREMENT PLANS
Units of the Trust Funds may be well suited for purchase by
Individual Retirement Accounts, Keogh Plans, pension funds and other
qualified retirement plans, certain of which are briefly described below.
Generally, capital gains and income received under each of the
foregoing plans are deferred from federal taxation. All distributions
from such plans are generally treated as ordinary income but may, in some
cases, be eligible for special income averaging or tax-deferred rollover
treatment. Investors considering participation in any such plan should
review specific tax laws related thereto and should consult their
attorneys or tax advisers with respect to the establishment and
maintenance of any such plan. Such plans are offered by brokerage firms
and other financial institutions. The Trust Funds will waive the $1,000
minimum investment requirement for IRA accounts. The minimum investment
is $250 for tax-deferred plans such as IRA accounts. Fees and charges
with respect to such plans may vary.
Individual Retirement Account--IRA. Any individual under age 70 1/2
may contribute the lesser of $2,000 or 100% of compensation to an IRA
annually. Such contributions are fully deductible if the individual (and
spouse if filing jointly) are not covered by a retirement plan at work.
The deductible amount an individual may contribute to an IRA will be
reduced $10 for each $50 of adjusted gross income over $25,000 ($40,000
if married, filing jointly or $0 if married, filing separately), if
either an individual or their spouse (if married, filing jointly) is an
active participant in an employer maintained retirement plan. Thus, if
an individual has adjusted gross income over $35,000 ($50,000 if married,
filing jointly or $0 if married, filing separately) and if an individual
or their spouse is an active participant in an employer maintained
retirement plan, no IRA deduction is permitted. Under the Internal
Revenue Code of 1986, as amended (the "Code"), an individual may make
nondeductible contributions to the extent deductible contributions are
not allowed. All distributions from an IRA (other than the return of
certain excess contributions) are treated as ordinary income for federal
income taxation purposes provided that under the Code an individual need
not pay tax on the return of nondeductible contributions. The amount
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<PAGE>
includable in income for the taxable year is the portion of the amount
withdrawn for the taxable year as the individual's aggregate deductible
IRA contributions bear to the aggregate balance of all IRAs of the
individual.
A participant's interest in an IRA must be, or commence to be,
distributed to the participant not later than April 1 of the calendar
year following the year during which the participant attains age 70 1/2.
Distributions made before attainment of age 59 1/2, except in the case of
the participant's death or disability, or where the amount distributed is
to be rolled over to another IRA, or where the distributions are taken as
a series of substantially equal periodic payments over the participant's
life or life expectancy (or the joint lives or life expectancies of the
participant and the designated beneficiary) are generally subject to a
surtax in an amount equal to 10% of the distribution. The amount of such
periodic payments may not be modified before the later of five years or
attainment of age 59 1/2. Excess contributions are subject to an annual
6% excise tax.
IRA applications, disclosure statements and trust agreements are
available from the Sponsor upon request.
Qualified Retirement Plans. Units of a Trust may be purchased by
qualified pension or profit sharing plans maintained by corporations,
partnerships or sole proprietors. The maximum annual contribution for a
participant in a money purchase pension plan or to paired profit sharing
and pension plans is the lessor of 25% of compensation or $30,000.
Prototype plan documents for establishing qualified retirement plans are
available from the Sponsor upon request.
Excess Distributions Tax. In addition to the other taxes due by
reason of a plan distribution, a tax of 15% may apply to certain
aggregate distributions from IRAs, Keogh plans, and corporate retirement
plans to the extent such aggregate taxable distributions exceed specified
amounts (generally $150,000, as adjusted) during a tax year. This 15%
tax will not apply to distributions on account of death, qualified
domestic relations orders or amounts eligible for tax-deferred rollover
treatment. In general, for lump sum distributions the excess
distributions over $750,000 (as adjusted) will be subject to the 15% tax.
The Trustee, has agreed to act as custodian for certain retirement
plan accounts. An annual fee, if not paid separately, will be assessed
by the Trustee and paid through the liquidation of shares of the
reinvestment account. An individual wishing the Trustee to act as
custodian must complete a Ranson UIT/IRA application and forward it along
with a check made payable to the Trustee. Certificates for Individual
Retirement Accounts cannot be issued.
DISTRIBUTION REINVESTMENT
Each Unitholder of a Trust may elect to have distributions of
principal (including capital gains, if any) or interest or both
automatically invested without charge in shares of any open-end mutual
fund registered in such Unitholder's state of residence which is
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underwritten or advised by Zurich Kemper Investments, Inc. (the "Kemper
Funds"), other than those Kemper Funds sold with a contingent deferred
sales charge.
If individuals indicate they wish to participate in the Reinvestment
Program but do not designate a reinvestment fund, the Program Agent
referred to below will contact such individuals to determine which
reinvestment fund or funds they wish to elect. Since the portfolio
securities and investment objectives of such Kemper Funds may differ
significantly from that of the Trust Funds, Unitholders should carefully
consider the consequences before selecting such Kemper Funds for
reinvestment. Detailed information with respect to the investment
objectives and the management of the Funds is contained in their
respective prospectuses, which can be obtained from any Trust Underwriter
upon request. An investor should read the prospectus of the reinvestment
fund selected prior to making the election to reinvest. Unitholders who
desire to have such distributions automatically reinvested should inform
their broker at the time of purchase or should file with the Program
Agent a written notice of election.
Unitholders who are receiving distributions in cash may elect to
participate in distribution reinvestment by filing with the Program Agent
an election to have such distributions reinvested without charge. Such
election must be received by the Program Agent at least ten days prior to
the Record Date applicable to any distribution in order to be in effect
for such Record Date. Any such election shall remain in effect until a
subsequent notice is received by the Program Agent. See "Distributions
to Unitholders."
The Program Agent is the Trustee. All inquiries concerning
participation in distribution reinvestment should be directed to the
Program Agent at its unit investment trust division office.
INTEREST, ESTIMATED LONG-TERM RETURN AND ESTIMATED CURRENT RETURN
As of the opening of business on the date indicated therein, the
Estimated Long-Term Returns and the Estimated Current Returns for each
Series of the Trust were as set forth under "Essential Information" for
the applicable Trust in Part Two of this Prospectus. Estimated Current
Returns are calculated by dividing the estimated net annual interest
income per Unit by the Public Offering Price. The estimated net annual
interest income per Unit will vary with changes in fees and expenses of
the Trustee, the Sponsor and the Evaluator and with the principal
prepayment, redemption, maturity, exchange or sale of Bonds while the
Public Offering Price will vary with changes in the offering price of the
underlying Bonds and with changes in accrued interest or Purchased
Interest and Daily Accrued Interest, as applicable; therefore, there is
no assurance that the present Estimated Current Returns will be realized
in the future. Estimated Long-Term Returns are calculated using a
formula which (1) takes into consideration, and determines and factors in
the relative weightings of, the market values, yields (which takes into
account the amortization of premiums and the accretion of discounts) and
estimated retirements of all of the Bonds in a Trust and (2) takes into
account the expenses and sales charge associated with each Trust Unit.
Since the market values and estimated retirements of the Bonds and the
expenses of the Trust will change, there is no assurance that the present
Estimated Long-Term Returns will be realized in the future. Estimated
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Current Returns and Estimated Long-Term Returns are expected to differ
because the calculation of Estimated Long-Term Returns reflects the
estimated date and amount of principal returned while Estimated Current
Returns calculations include only net annual interest income and Public
Offering Price.
FEDERAL TAX STATUS
For purposes of the following discussion and opinions, it is assumed
that each of the obligations is debt for Federal income tax purposes. In
the opinion of Chapman and Cutler, special counsel for the Sponsor, under
existing law:
1. Each Trust is not an association taxable as a corporation
for Federal income tax purposes.
2. Each Unitholder of the Trust is considered to be the owner
of a pro rata portion of each of a Trust's assets for Federal income
tax purposes under Subpart E, Subchapter J of Chapter 1 of the
Internal Revenue Code of 1986 (the "Code"); and the income will be
treated as income of the Unitholders. Each Unitholder will be
considered to have received his pro rata share of income derived
from each Trust asset when such income is considered to be received
by a Trust. Each Unitholder will also be required to include in
taxable income for Federal income tax purposes, original issue
discount with respect to his interest in any Bonds held by a Trust
at the same time and in the same manner as though the Unitholder
were the direct owner of such interest.
3. Each Unitholder will have a taxable event when a Bond is
disposed of (whether by sale, exchange, liquidation, redemption, or
payment at maturity) or when the Unitholder redeems or sells his
Units. A Unitholder's tax basis in his Units will equal his tax
basis in his pro rata portion of all the assets of the Trust. Such
basis is determined (before the adjustments described below) by
apportioning the tax basis for the Units among each of the Trust
assets according to value as of the valuation date nearest the date
of acquisition of the Units. Unitholders must reduce the tax basis
of their Units for their share of accrued interest received, if any,
on Bonds delivered after the date the Unitholders pay for their
Units to the extent such interest accrued on such Bonds before the
date the Trust acquired ownership of the Bonds (and the amount of
this reduction may exceed the amount of accrued interest paid to the
sellers) and, consequently, such Unitholders may have an increase in
taxable gain or reduction in capital loss upon the disposition of
such Units. Gain or loss upon the sale or redemption of Units is
measured by comparing the proceeds of such sale or redemption with
the adjusted basis of the Units. If the Trustee disposes of Bonds
(whether by sale, exchange, payment at maturity, redemption or
otherwise), gain or loss is recognized to the Unitholder (subject to
various nonrecognition provisions of the Code). The amount of any
such gain or loss is measured by comparing the Unitholders pro rata
share of the total proceeds from such disposition with his basis for
his fractional interest in the asset disposed of. The basis of each
Unit and of each Bond which was issued with original issue discount
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(or which has market discount) (including any U.S. Treasury
obligations) must be increased by the amount of accrued original
issue discount (and accrued market discount if the Unitholder elects
to include market discount in income as it accrues) and the basis of
each Unit and of each Bond which was purchased by a Trust at a
premium must be reduced by the annual amortization of bond premium
which the Unitholder has properly elected to amortize under
Section 171 of the Code. The tax basis reduction requirements of
the Code relating to amortization of bond premium may, under some
circumstances, result in the Unitholder realizing a taxable gain
when his Units are sold or redeemed for an amount equal to or less
than his original cost. The U.S. Treasury obligations held by a
Trust, if any, are treated as bonds that were originally issued at
an original issue discount provided, pursuant to a Treasury
Regulation (the "Regulation") issued on December 28, 1992, that the
amount of original issue discount determined under Section 1286 of
the Code is not less than a "de minimis" amount as determined
thereunder (as discussed below under "Original Issue Discount").
Because U.S. Treasury obligations represent interests in "stripped"
U.S. Treasury bonds, a Unitholder's initial cost for his pro rata
portion of each U.S. Treasury obligation held by a Trust (determined
at the time he acquires his Units, in the manner described above)
shall be treated as its "purchase price" by the Unitholder.
Original issue discount is effectively treated as interest for
Federal income tax purposes, and the amount of original issue
discount in this case is generally the difference between the Bond's
purchase price and its stated redemption price at maturity. A
Unitholder will be required to include in gross income for each
taxable year the sum of his daily portions of original issue
discount attributable to the Bonds held by a Trust as such original
issue discount accrues and will, in general, be subject to Federal
income tax with respect to the total amount of such original issue
discount that accrues for such year even though the income is not
distributed to the Unitholders during such year to the extent it is
not less than a "de minimis" amount as determined under the
Regulation. To the extent the amount of such discount is less than
the respective "de minimis" amount, such discount shall be treated
as zero. In general, original issue discount accrues daily under a
constant interest rate method which takes into account the semi-
annual compounding of accrued interest. In the case of U.S Treasury
obligations, this method will generally result in an increasing
amount of income to the Unitholders each year. Unitholders should
consult their tax advisers regarding the Federal income tax
consequences and accretion of original issue discount.
Limitations on Deductibility of Trust Expenses by Unitholders. Each
Unitholder's pro rata share of each expense paid by a Trust is deductible
by the Unitholder to the same extent as though the expense had been paid
directly by him. It should be noted that as a result of the Tax Reform
Act of 1986 (the "Act"), certain miscellaneous itemized deductions, such
as investment expenses, tax return preparation fees and employee business
expenses will be deductible by an individual only to the extent they
exceed 2% of such individual's adjusted gross income. Unitholders may be
required to treat some or all of the expenses paid by a Trust as
miscellaneous itemized deductions subject to this limitation.
Premium. If a Unitholder's tax basis of his pro rata portion in any
Bonds held by a Trust exceeds the amount payable by the issuer of the
Bond with respect to such pro rata interest upon the maturity of the
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Bond, such excess would be considered premium which may be amortized by
the Unitholder at the Unitholder's election as provided in Section 171 of
the Code. Unitholders should consult their tax advisors regarding
whether such election should be made and the manner of amortizing
premium.
Original Issue Discount. Certain of the Bonds in each Trust may
have been acquired with "original issue discount." In the case of any
Bonds in a Trust acquired with "original issue discount" that exceeds a
"de minimis" amount as specified in the Code or in the case of U.S.
Treasury obligations as specified in the Regulation, such discount is
includable in taxable income of the Unitholders on an accrual basis
computed daily, without regard to when payments of interest on such Bonds
are received. The Code provides a complex set of rules regarding the
accrual of original issue discount. These rules provide that original
issue discount generally accrues on the basis of a constant compound
interest rate over the term of the Bonds. Unitholders should consult
their tax advisers as to the amount of original issue discount which
accrues.
Special original issue discount rules apply if the purchase price of
the Bond by a Trust exceeds its original issue price plus the amount of
original issue discount which would have previously accrued based upon
its issue price (its "adjusted issue price"). Similarly these special
rules would apply to a Unitholder if the tax basis of his pro rata
portion of a Bond issued with original issue discount exceeds his pro
rata portion of its adjusted issue price. Unitholders should also
consult their tax advisers regarding these special rules.
It is possible that a corporate Bond that has been issued at an
original issue discount may be characterized as a "high-yield discount
obligation" within the meaning of Section 163(e)(5) of the Code. To the
extent that such an obligation is issued at a yield in excess of six
percentage points over the applicable Federal rate, a portion of the
original issue discount on such obligation will be characterized as a
distribution on stock (e.g., dividends) for purposes of the dividends
received deduction which is available to certain corporations with
respect to certain dividends received by such corporation.
Market Discount. If a Unitholder's tax basis in his pro rata
portion of Bonds is less than the allocable portion of such Bond's stated
redemption price at maturity (or, if issued with original issue discount,
the allocable portion of its "revised issue price"), such difference will
constitute market discount unless the amount of market discount is "de
minimis" as specified in the Code. Market discount accrues daily
computed on a straight line basis, unless the Unitholder elects to
calculate accrued market discount under a constant yield method. The
market discount rules do not apply to U.S. Treasury obligations because
they are stripped debt instruments subject to special original issue
discount rules as discussed above. Unitholders should consult their tax
advisors regarding whether such election should be made and as to the
amount of market discount which accrues.
Accrued market discount is generally includable in taxable income to
the Unitholders as ordinary income for Federal tax purposes upon the
receipt of serial principal payments on the Bonds, on the sale, maturity
or disposition of such Bonds by a Trust, and on the sale by a Unitholder
of Units, unless a Unitholder elects to include the accrued market
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discount in taxable income as such discount accrues. If a Unitholder
does not elect to annually include accrued market discount in taxable
income as it accrues, deductions for any interest expense incurred by the
Unitholder which is incurred to purchase or carry his Units will be
reduced by such accrued market discount. In general, the portion of any
interest expense which was not currently deductible would ultimately be
deductible when the accrued market discount is included in income.
Unitholders should consult their tax advisers regarding whether an
election should be made to include market discount in income as it
accrues and as to the amount of interest expense which may not be
currently deductible.
Computation of the Unitholder's Tax Basis. The tax basis of a
Unitholder with respect to his interest in a Bond is increased by the
amount of original issue discount (and market discount, if the Unitholder
elects to include market discount, if any, on the Bonds held by a Trust
in income as it accrues) thereon properly included in the Unitholder's
gross income as determined for Federal income tax purposes and reduced by
the amount of any amortized premium which the Unitholder has properly
elected to amortize under Section 171 of the Code. A Unitholder's tax
basis in his Units will equal his tax basis in his pro rata portion of
all of the assets of the Trust.
Recognition of Taxable Gain or Loss upon Disposition of Obligations
by a Trust or Disposition of Units. A Unitholder will recognize taxable
capital gain (or loss) when all or part of his pro rata interest in a
Bond is disposed of in a taxable transaction for an amount greater (or
less) than his tax basis therefor subject to various non-recognition
provisions of the Code. As previously discussed, gain realized on the
disposition of the interest of a Unitholder in any Bond deemed to have
been acquired with market discount will be treated as ordinary income to
the extent the gain does not exceed the amount of accrued market discount
not previously taken into income. Any capital gain or loss arising from
the disposition of a Bond by a Trust or the disposition of Units by a
Unitholder will generally be short-term capital gain or loss unless the
Unitholder has held his Units for more than one year in which case such
capital gain or loss will be generally long-term. For taxpayers other
than corporations, net capital gains (which is defined as net long-term
capital gain over net short-term capital loss for a taxable year) are
subject to a maximum marginal stated tax rate of 28 percent. However, it
should be noted that legislative proposals are introduced from time to
time that affect tax rates and could affect relative differences at which
ordinary income and capital gains are taxed. The tax basis reduction
requirements of the Code relating to amortization of bond premium may
under some circumstances, result in the Unitholder realizing taxable gain
when his Units are sold or redeemed for an amount equal to or less than
his original cost.
"The Revenue Reconciliation Act of 1993" (the "Tax Act") raised tax
rates on ordinary income while capital gains remain subject to a 28
percent maximum stated rate for taxpayers other than corporations.
Because some or all capital gains are taxed at a comparatively lower rate
under the Tax Act, the Tax Act includes a provision that recharacterizes
capital gains as ordinary income in the case of certain financial
transactions that are "conversion transactions" effective for
transactions entered into after April 30, 1993. Unitholders and
prospective investors should consult with their tax advisers regarding
the potential effect of this provision on their investment in Units.
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If the Unitholder disposes of a Unit, he is deemed thereby to have
disposed of his entire pro rata interest in all Trust assets including
his pro rata portion of all of the Bonds represented by the Unit. This
may result in a portion of the gain, if any, on such sale being taxable
as ordinary income under the market discount rules (assuming no election
was made by the Unitholder to include market discount in income as it
accrues) as previously discussed.
Foreign Investors. A Unitholder who is a foreign investor (i.e., an
investor other than a U.S. citizen or resident or a U.S. corporation,
partnership, estate or trust) will generally not be subject to United
States federal income taxes, including withholding taxes, on interest
income (including any original issue discount) on, or any gain from the
sale or other disposition of, his pro rata interest in any Bond or the
sale of his Units provided that all of the following conditions are met:
(i) the interest income or gain is not effectively connected with the
conduct by the foreign investor of a trade or business within the United
States, (ii) if the interest is United States source income (which is the
case for most securities issued by United States issuers), the Bond is
issued after July 18, 1984 (which is the case for each Bond held by a
Trust), then the foreign investor does not own, directly or indirectly,
10% or more of the total combined voting power of all classes of voting
stock of the issuer of the Bond and the foreign investor is not a
controlled foreign corporation related (within the meaning of
Section 864(d)(4) of the Code) to the issuer of the Bond, (iii) with
respect to any gain, the foreign investor (if an individual) is not
present in the United States for 183 days or more during his or her
taxable year, and (iv) the foreign investor provides all certification
which may be required of his status (foreign investors may contact the
Sponsor to obtain a Form W-8 which must be filed with the Trustee and
refiled every three calendar years thereafter). Foreign investors should
consult their tax advisers with respect to United States tax consequences
of ownership of Units.
It should be noted that the Tax Act includes a provision which
eliminates the exemption from United States taxation, including
withholding taxes, for certain "contingent interest." The provision
applies to interest received after December 31, 1993. No opinion is
expressed herein regarding the potential applicability of this provision
and whether United States taxation or withholding taxes could be imposed
with respect to income derived from the Units as a result thereof.
Unitholders and prospective investors should consult with their tax
advisers regarding the potential effect of this provision on their
investment in Units.
General. Each Unitholder (other than a foreign investor who has
properly provided the certifications described in the preceding
paragraph) will be requested to provide the Unitholder's taxpayer
identification number to the Trustee and to certify that the Unitholder
has not been notified that payments to the Unitholder are subject to back-
up withholding. If the proper taxpayer identification number and
appropriate certification are not provided when requested, distributions
by a Trust to such Unitholder including amounts received upon the
redemption of the Units will be subject to back-up withholding.
The foregoing discussion relates only to United States Federal
income taxes; Unitholders may be subject to state and local taxation in
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other jurisdictions (including a foreign investor's country of
residence). Unitholders should consult their tax advisers regarding
potential state, local, or foreign taxation with respect to the Units.
TAX REPORTING AND REALLOCATION
Because the Trusts receive interest and makes monthly distributions
based upon a Trust's expected total collections of interest and any
anticipated expenses, certain tax reporting consequences may arise. A
Trust is required to report Unitholder information to the Internal
Revenue Service ("IRS"), based upon the actual collection of interest by
such Trust on the securities in such Trust, without regard to such
Trust's expenses or to such Trust's payments to Unitholders during the
year. If distributions to Unitholders exceed interest collected, the
difference will be reported as a return of principal which will reduce a
Unitholder's cost basis in its Units (and its pro rata interest in the
securities in a Trust). A Unitholder must include in taxable income the
amount of income reported by a Trust to the IRS regardless of the amount
distributed to such Unitholder. If a Unitholder's share of taxable
income exceeds income distributions made by a trust to such Unitholder,
such excess is in all likelihood attributable to the payment of
miscellaneous expenses of such Trust which will not be deductible by an
individual Unitholder as an itemized deduction except to the extent that
the total amount of certain itemized deductions, such as investments
expenses (which would include the Unitholder's share of Trust expenses),
tax return preparation fees and employee business expenses, exceeds 2% of
such Unitholders's adjusted gross income. Alternatively, in certain
cases, such excess may represent an increase in the Unitholder's tax
basis in the Units owned. Investors with questions regarding these
issues should consult with their tax advisers.
PUBLIC OFFERING OF UNITS
Public Offering Price. Units of each Series of the Trust are
offered at the Public Offering Price. The Public Offering Price per Unit
of a Series is equal to the aggregate bid side evaluation of the Bonds in
the Series' portfolio (as determined pursuant to the terms of a contract
with the Evaluator, Cantor Fitzgerald & Co., a non-affiliated firm
regularly engaged in the business of evaluating, quoting or appraising
comparable securities), plus or minus (a) cash, if any, in the Principal
Account, held or owed by the Series, (b) Purchased Interest (if any) and
(c) Daily Accrued Interest, divided by the number of outstanding Units of
that Series of the Trust, plus the sales charge applicable. The sales
charge is based upon the dollar weighted average maturity of a Trust and
is determined in accordance with the table set forth below. For purposes
of this computation, Bonds will be deemed to mature on their expressed
maturity dates unless: (a) the Bonds have been called for redemption or
funds or securities have been placed in escrow to redeem them on an
earlier call date, in which case such call date will be deemed to be the
date upon which they mature; or (b) such Bonds are subject to a
"mandatory tender," in which case such mandatory tender will be deemed to
be the date upon which they mature. The effect of this method of sales
charge computation will be that different sales charge rates will be
applied to a Trust based upon the dollar weighted average maturity of
such Trust's portfolio, in accordance with the following schedule:
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<TABLE>
<CAPTION>
PERCENT OF
DOLLAR PUBLIC
WEIGHTED AVERAGE OFFERING AMOUNT
YEARS TO MATURITY PRICE INVESTED
----------------- ------------- --------------
<S> <C> <C>
0 to .99 years 0.00% 0.00%
1 to 3.99 years 2.00 2.041
4 to 7.99 years 3.50 3.627
8 to 14.99 years 4.50 4.712
15 or more years 5.50 5.820
</TABLE>
The sales charge per Unit will be reduced as set forth below:
<TABLE>
<CAPTION>
DOLLAR WEIGHTED AVERAGE
YEARS TO MATURITY*
4 TO 7.99 8 TO 14.99 15 OR MORE
--------- ---------- ----------
AMOUNT OF INVESTMENT SALES CHARGE (% OF PUBLIC OFFERING PRICE)
- -------------------- -----------------------------------------
<S> <C> <C> <C>
$1 to $99,999 3.50% 4.50% 5.50%
$100,000 to $499,999 3.25 4.25 5.00
$500,000 to $999,999 3.00 4.00 4.50
$1,000,000 or more 2.75 3.75 4.00
</TABLE>
- -----------------
*If the dollar weighted average maturity of a Trust is from 1 to
3.99 years, the sales charge is 2% and 1.5% of the Public Offering Price
for purchases of $1 to $249,999 and $250,000 or more, respectively.
The reduced sales charge as shown on the preceding charts will apply
to all purchases of Units on any one day by the same purchaser from the
same firm in the amounts stated herein, and for this purpose, purchases
of Units of a Series of the Trust will be aggregated with concurrent
purchases of Units of any other unit investment trust that may be offered
by the Sponsor. Additionally, Units purchased in the name of a spouse or
child (under 21) of such purchaser will be deemed to be additional
purchases by such purchaser. The reduced sales charge will also be
applicable to a trust or other fiduciary purchasing for a single trust
estate or single fiduciary account.
Units may be purchased at the Public Offering Price less the
concession the Sponsor typically allows to dealers and other selling
agents for purchases (see "Public Distribution of Units") by investors
who purchase Units through registered investment advisers, certified
financial planners or registered broker-dealers who in each case either
charge periodic fees for financial planning, investment advisory or asset
management services, or provide such services in connection with the
establishment of an investment account for which a comprehensive "wrap
fee" charge is imposed.
The Sponsor intends to permit officers, directors and employees of
the sponsor and Evaluator and, at the discretion of the Sponsor,
registered representatives of selling firms to purchase Units of the
Trust without a sales charge, although a transaction processing fee may
be imposed on such trades.
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The Public Offering Price on the date shown on the cover page of
Part Two of the Prospectus or on any subsequent date will vary from the
amounts stated under "Essential Information" in Part Two due to
fluctuations in the prices of the underlying Bonds. The aggregate bid
side evaluation of the Bonds shall be determined (a) on the basis of
current bid prices of the Bonds, (b) if bid prices are not available for
any particular Bond, on the basis of current bid prices for comparable
bonds, (c) by determining the value of the Bonds on the bid side of the
market by appraisal, or (d) by any combination of the above. The value of
insurance obtained by an issuer of Bonds or by the Sponsor is reflected
and included in the market value of such Bonds.
The foregoing evaluations and computations shall be made as of the
Evaluation Time stated under "Essential Information" in Part Two, on each
business day effective for all sales made during the preceding 24-hour
period, and for purposes of resales and repurchases of Units.
The interest on the Bonds in each Series of the Trust, less the
related estimated fees and expenses, is estimated to accrue in the annual
amounts per Unit set forth under "Essential Information" in Part Two.
The amount of net interest income which accrues per Unit may change as
Bonds mature or are redeemed, exchanged or sold, or as the expenses of a
Series of the Trust change or as the number of outstanding Units of such
Series changes.
Payment for Units must be made on or before the third business day
following purchase. If a Unitholder desires to have certificates
representing Units purchased, such certificates will be delivered as soon
as possible following a written request therefor. For information with
respect to redemption of Units purchased, but as to which certificates
requested have not been received, see "Redemption" below.
Accrued Interest. Included in the Public Offering Price of Units
for certain series of Kemper Defined Funds Insured Corporate Series and
all EVEREN Unit Investment Trusts Insured Corporate Series is accrued
interest as described herein. Accrued interest consists of two elements.
The first element arises as a result of accrued interest which is the
accumulation of unpaid interest on a bond from the last day on which
interest thereon was paid. Interest on the Bonds is actually paid either
monthly or semi-annually to a Trust. However, interest on the Bonds is
accounted for daily on an accrual basis. Because of this, a Trust always
has an amount of interest earned but not yet collected by the Trustee
because of coupons that are not yet due. For this reason, the Public
Offering Price of Units of certain Trusts will have added to it the
proportionate share of accrued and undistributed interest to the date of
settlement.
The Trustee advanced the amount of accrued interest on the First
Settlement Date and the same was distributed to the Sponsor. Such
advance was repaid to the Trustee through the first receipts of interest
received on the Bonds. Consequently, the amount of accrued interest
added to the Public Offering Price of Units of certain Trusts included
only accrued interest arising after the First Settlement Date of a Trust,
less any distributions from the Interest Account subsequent to this First
Settlement Date. Since the First Settlement Date was the date of
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<PAGE>
settlement for anyone who ordered Units on the Date of Deposit, no
accrued interest was added to the Public Offering Price of Units ordered
on the Date of Deposit.
The second element of accrued interest arises because of the
structure of the Interest Account. The Trustee has no cash for
distribution to Unitholders until it receives interest payments on the
Bonds in a Trust. The Trustee is obligated to provide its own funds, at
times, in order to advance interest distributions. The Trustee will
recover these advancements when such interest is received. Interest
Account balances are established so that it will not be necessary on a
regular basis for the Trustee to advance its own funds in connection with
such interest distributions. The Interest Account balances are also
structured so that there will generally be positive cash balances and
since the funds held by the Trustee will be used by it to earn interest
thereon, it benefits thereby (see "Expenses of the Trust").
Accrued interest is computed as of the initial record date of the
Trusts. On the date of the first distribution of interest to Unitholders
after the First Settlement Date, the interest collected by the Trustee
will be sufficient to repay its advances, to allow for accrued interest
under the monthly, quarterly and semi-annual plans of distribution and to
generate enough cash to commence distributions to Unitholders. If a
Unitholder sells or redeems all or a portion of his Units or if the Bonds
in a Trust are sold or otherwise removed or if a Trust is liquidated, he
will receive at that time his proportionate share of the accrued interest
computed to the settlement date in the case of sale or liquidation and to
the date of tender in the case of redemption of such Trust.
Purchased and Daily Accrued Interest. Included in the Public
Offering Price of Units for certain series of Kemper Defined Funds
Insured Corporate Series is accrued interest as described herein.
Accrued interest consists of two elements. The first element arises as a
result of accrued interest which is the accumulation of unpaid interest
on a bond from the later of the last day on which interest thereon was
paid or the date of original issuance of the bond. Interest on the coupon
Bonds in a Trust Fund is paid semi-annually to the Trust. A portion of
the aggregate amount of such accrued interest on the Bonds in a Trust to
the First Settlement Date of the Trust is referred to herein as
"Purchased Interest." Included in the Public Offering Price of the Trust
Units is the Purchased Interest. In an effort to reduce the amount of
Purchased Interest which would otherwise have to be paid by Unitholders,
the Trustee may advance a portion of the accrued interest to the Sponsor
as the unitholder of record as of the First Settlement Date. The second
element of accrued interest arises because the estimated net interest on
the Units in the Trust Fund is accounted for daily on an accrual basis
(herein referred to as "Daily Accrued Interest"). Because of this, the
Units always have an amount of interest earned but not yet paid or
reserved for payment. For this reason, the Public Offering Price of
Units will include the proportionate share of Daily Accrued Interest to
the date of settlement.
If a unitholder sells or redeems all or a portion of his Units or if
the Bonds are sold or otherwise removed or if a Trust Fund is liquidated,
he will receive at that time his proportionate share of the Purchased
Interest (if any) and Daily Accrued Interest computed to the settlement
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date in the case of sale or liquidation and to the date of tender in the
case of redemption in a Trust Fund.
Accrued Interest;. Included in the Public Offering Price of Units
for Kemper Insured Corporate Trust series is accrued interest as
described herein. Accrued interest is the accumulation of unpaid
interest on a security from the last day on which interest thereon was
paid. Interest on Securities generally is paid semi-annually although a
Trust accrues such interest daily. Because of this, a Trust always has
an amount of interest earned but not yet collected by the Trustee. For
this reason, with respect to sales settling subsequent to the First
Settlement Date, the Public Offering Price of Units will have added to it
the proportionate share of accrued interest to the date of settlement.
Unitholders will receive on the next distribution date of a Trust the
amount, if any, of accrued interest paid on their Units.
In an effort to reduce the amount of accrued interest which would
otherwise have to be paid in addition to the Public Offering Price in the
sale of Units to the public, the Trustee will advance the amount of
accrued interest as of the First Settlement Date and the same will be
distributed to the Sponsor as the Unitholder of record as of the First
Settlement Date. Consequently, the amount of accrued interest to be
added to the Public Offering Price of Units will include only accrued
interest from the First Settlement Date to the date of settlement, less
any distributions from the Interest Account subsequent to the First
Settlement Date.
Because of the varying interest payment dates of the Securities,
accrued interest at any point in time will be greater than the amount of
interest actually received by the Trusts and distributed to Unitholders.
Therefore, there will always remain an item of accrued interest that is
added to the value of the Units. If a Unitholder sells or redeems all or
a portion of his Units, he will be entitled to receive his proportionate
share of the accrued interest from the purchaser of his Units. Since the
Trustee has the use of the funds held in the Interest Account for
distributions to Unitholders and since such Account is non-interest-
bearing to Unitholders, the Trustee benefits thereby.
Public Distribution of Units. The Sponsor has qualified Units for
sale in a number of states. Units will be sold through dealers who are
members of the National Association of Securities Dealers, Inc. and
through others. Sales may be made to or through dealers at prices which
represent discounts from the Public Offering Price as set forth in the
table below. Certain commercial banks are making Units of the Trusts
available to their customers on an agency basis. A portion of the sales
charge paid by their customers is retained by or remitted to the banks in
the amounts shown in the table below. Under the Glass-Steagall Act,
banks are prohibited from underwriting Trust Units; however, the Glass-
Steagall Act does permit certain agency transactions and the banking
regulators have indicated that these particular agency transactions are
permitted under such Act. In addition, state securities laws on this
issue may differ from the interpretations of Federal law expressed herein
and banks and financial institutions may be required to register as
dealers pursuant to state law.
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<TABLE>
<CAPTION>
DOLLAR WEIGHTED AVERAGE
YEARS TO MATURITY*
4 TO 7.99 8 TO 14.99 15 OR MORE
--------- ---------- ----------
AMOUNT OF INVESTMENT Discount per Unit (% of Public Offering Price)
- -------------------- ----------------------------------------------
<S> <C> <C> <C>
$1,000 to $99,999 2.00% 3.00% 4.00%
$100,000 to $499,999 1.75 2.75 3.50
$500,000 to $999,999 1.50 2.50 3.00
$1,000,000 or more 1.25 2.25 2.50
</TABLE>
- ---------------------
*If the dollar weighted average maturity of a Trust is from 1 to
3.99 years, the concession or agency commission is 1.00% of the Public
Offering Price.
In addition to such discounts, the Sponsor may, from time to time,
pay or allow an additional discount, in the form of cash or other
compensation, to dealers employing registered representatives who sell,
during a specified time period, a minimum dollar amount of Units of the
Trust and other unit investment trusts underwritten by the Sponsor.
The Sponsor reserves the right to change the levels of discounts at
any time. The difference between the discount and the sales charge will
be retained by the Sponsor.
The Sponsor reserves the right to reject, in whole or in part, any
order for the purchase of Units.
Profits of Sponsor. The Sponsor will retain a portion of the sales
charge on each Unit sold, representing the difference between the Public
Offering Price of the Units and the discounts allowed to firms selling
such Units. The Sponsor may realize additional profit or loss as a
result of the possible change in the daily evaluation of the Bonds in a
Trust, since the value of its inventory of Units may increase or
decrease.
MARKET FOR UNITS
While not obligated to do so, the Sponsor intends to, subject to
change at any time, maintain a market for Units of each Series of the
Trust offered hereby and to continuously offer to purchase said Units at
prices, as determined by the Evaluator, based on the aggregate bid prices
of the underlying Bonds of such Series, together with Purchased Interest
(if any) and Daily Accrued Interest to the expected date of settlement.
Accordingly, Unitholders who wish to dispose of their Units should
inquire of their broker or bank as to the current market price of the
Units prior to making a tender for redemption to the Trustee.
REDEMPTION
If more favorable terms do not exist in the over-the-counter market
described above, Unitholders of a Series of the Trust may cause their
Units to be redeemed by the Trustee by making a written request to the
Trustee, The Bank of New York, 101 Barclay Street, New York, New York
10286 and, in the case of Units evidenced by a certificate, by tendering
such certificate to the Trustee, properly endorsed or accompanied by a
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written instrument or instruments of transfer in form satisfactory to the
Trustee. Unitholders must sign such written request, and such certificate
or transfer instrument, exactly as their names appear on the records of
the Trustee and on any certificate representing the Units to be redeemed.
If the amount of the redemption is $25,000 or less and the proceeds are
payable to the Unitholder(s) of record at the address of record, no
signature guarantee is necessary for redemptions by individual account
owners (including joint owners). Additional documentation may be
requested, and a signature guarantee is always required, from
corporations, executors, administrators, trustees, guardians or
associations. The signatures must be guaranteed by a participant in the
Securities Transfer Agents Medallion Program ("STAMP") or such other
signature program in addition to, or in substitution for, STAMP, as may
be accepted by the Trustee. A certificate should only be sent by
registered or certified mail for the protection of the Unitholder. Since
tender of the certificate is required for redemption when one has been
issued, Units represented by a certificate cannot be redeemed until the
certificate representing such Units has been received by the purchaser.
Redemption shall be made by the Trustee on the third business day
following the day on which a tender for redemption is received, (the
"Redemption Date"), by payment of cash equivalent to the Redemption Price
for that Series of the Trust, determined as set forth below under
"Computation of Redemption Price," as of the Evaluation Time stated under
"Essential Information" in Part Two, next following such tender,
multiplied by the number of Units being redeemed. The price received
upon redemption might be more or less than the amount paid by the
Unitholder depending on the value of the Bonds in the portfolio at the
time of redemption.
Under regulations issued by the Internal Revenue Service, the
Trustee is required to withhold a certain percentage of the principal
amount of a Unit redemption if the Trustee has not been furnished the
redeeming Unitholder's tax identification number in the manner required
by such regulations. Any amount so withheld is transmitted to the
Internal Revenue Service and may be recovered by the Unitholder only when
filing a tax return. Under normal circumstances the Trustee obtains the
Unitholder's tax identification number from the selling broker. However,
any time a Unitholder elects to tender Units for redemption, such
Unitholder should make sure that the Trustee has been provided a
certified tax identification number in order to avoid this possible "back-
up withholding." In the event the Trustee has not been previously
provided such number, one must be provided at the time redemption is
requested.
Any amounts paid on redemption representing interest shall be
withdrawn from the Interest Account of such Series to the extent that
funds are available for such purpose. All other amounts paid on
redemption shall be withdrawn from the Principal Account of such Series.
The Trustee is empowered to sell Bonds from the portfolio of a Series in
order to make funds available for the redemption of Units of such Series.
Such sale may be required when Bonds would not otherwise be sold and
might result in lower prices than might otherwise be realized. To the
extent Bonds are sold, the size and diversity of that Series of the Trust
will be reduced.
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The Trustee is irrevocably authorized in its discretion, if the
Sponsor does not elect to purchase any Units tendered for redemption, in
lieu of redeeming such Units, to sell such Units in the over-the-counter
market for the account of tendering Unitholders at prices which will
return to such Unitholders amounts in cash, net after brokerage
commissions, transfer taxes and other charges, equal to or in excess of
the Redemption Price for such Units. In the event of any such sale, the
Trustee shall pay the net proceeds thereof to the Unitholders on the day
they would otherwise be entitled to receive payment of the Redemption
Price.
The right of redemption may be suspended and payment postponed (1)
for any period during which the New York Stock Exchange is closed, other
than customary weekend and holiday closings, or during which (as
determined by the Securities and Exchange Commission) trading on the New
York Stock Exchange is restricted; (2) for any period during which an
emergency exists as a result of which disposal by the Trustee of Bonds is
not reasonably practicable or it is not reasonably practicable fairly to
determine the value of the underlying Bonds in accordance with the Trust
Agreement; or (3) for such other period as the Securities and Exchange
Commission may by order permit. The Trustee is not liable to any person
in any way for any loss or damage which may result from any such
suspension or postponement.
Computation of Redemption Price. The Redemption Price for Units of
each Series of the Trust is computed by the Evaluator as of the
Evaluation Time stated under "Essential Information" in Part Two next
occurring after the tendering of a Unit for redemption and on any other
business day desired by it, by
A. adding (1) the cash on hand in such Series of the Trust;
(2) the aggregate value of the Bonds held in such Series of the
Trust, as determined by the Evaluator on the basis of bid prices
therefor; and (3) accrued interest or Purchased Interest and Daily
Accrued Interest (as applicable) on the Bonds in that Series of the
Trust as of the date of computation;
B. deducting therefrom (1) amounts representing any
applicable taxes or governmental charges payable out of that Series
of the Trust and for which no deductions have been previously made
for the purpose of additions to the Reserve Account described under
"Expenses of the Trust"; (2) amounts representing estimated accrued
expenses of that Series of the Trust including, but not limited to,
fees and expenses of the Trustee (including legal and auditing
fees), the Evaluator, the Sponsor and bond counsel, if any; (3) cash
held for distribution to Unitholders of record as of the business
day prior to the evaluation being made; and (4) other liabilities
incurred by such Series of the Trust; and
C. finally, dividing the results of such computation by the
number of Units of such Series of the Trust outstanding as of the
date thereof.
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UNITHOLDERS
Ownership of Units. Ownership of Units of the Trust will not be
evidenced by a certificate unless a Unitholder or the Unitholder's
registered broker/dealer makes a written request to the Trustee.
Units are transferable by making a written request to the Trustee
and, in the case of Units evidenced by a certificate, presenting and
surrendering such certificate to the Trustee properly endorsed or
accompanied by a written instrument or instruments of transfer which
should be sent by registered or certified mail for the protection of the
Unitholder. Unitholders must sign such written request, and such
certificate or transfer instrument (if applicable), exactly as their
names appear on the records of the Trustee and on any certificate
representing the Units to be transferred. Such signatures must be
guaranteed by a participant in the Securities Transfer Agents Medallion
Program ("STAMP") or such other signature program in addition to, or in
substitution for, STAMP, as may be accepted by the Trustee.
Units may be purchased and certificates, if requested, will be
issued in denominations of one Unit or any whole unit multiple thereof
subject to any minimum investment requirement established by the Sponsor
from time to time. Any certificate issued will be numbered serially for
identification, issued in fully registered form and will be transferable
only on the books of the Trustee. The Trustee may require a Unitholder to
pay a reasonable fee to be determined in the sole discretion of the
Trustee, for each certificate re-issued or transferred, and to pay any
governmental charge that may be imposed in connection with each such
transfer or interchange. The Trustee at the present time does not intend
to charge for the normal transfer or interchange of certificates.
Destroyed, stolen, mutilated or lost certificates will be replaced upon
delivery to the Trustee of satisfactory indemnity (generally amounting to
not more than 3% of the market value of the Units), affidavit of loss,
evidence of ownership and payment of expenses incurred.
Distributions to Unitholders. Interest Distributions. Interest
received by a Series of the Trust, including any portion of the proceeds
from a disposition of Bonds which represents accrued interest, is
credited by the Trustee to the Interest Account for such Series. All
other receipts are credited by the Trustee to a separate Principal
Account for such Series. During each year the distributions to the
Unitholders of each Series of the Trust as of each Record Date (see
"Essential Information" in Part Two) will be made on the following
Distribution Date or shortly thereafter and shall consist of an amount
substantially equal to one-twelfth or one-half (depending on the
distribution option selected) of such holders' pro rata share of the net
estimated net annual interest income to the Interest Account for such
Series of the Trust, after deducting estimated expenses.
Persons who purchase Units of the Trust between a Record Date and a
Distribution Date will receive their first distribution on the second
Distribution Date following their purchase of Units. All distributions
of principal and interest will be paid in cash unless a Unitholder has
elected to reinvest principal and/or interest payments in shares of one
of the reinvestment funds. See "Distribution Reinvestment." Interest
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distributions per Unit for each Series will be in the amounts shown under
"Essential Information" in the applicable Part Two and may change as
underlying Bonds are redeemed, paid or sold, or as expenses of such
Series of the Trust change or the number of outstanding Units of such
Series of the Trust changes.
Since interest on Bonds in each Series of the Trust is payable at
varying intervals, usually in semiannual installments, and distributions
of income are made to Unitholders of a Series of the Trust at what may be
different intervals from receipt of interest, the interest accruing to
such Series of the Trust may not be equal to the amount of money received
and available for distribution from the Interest Account of such Series.
Therefore, on each Distribution Date the amount of interest actually on
deposit in the Interest Account and available for distribution may be
slightly more or less than the interest distribution made. In order to
eliminate fluctuations in interest distributions resulting from such
variances, the Trustee is authorized by the Trust Agreement to advance
such amounts as may be necessary to provide interest distributions of
approximately equal amounts. The Trustee will be reimbursed, without
interest, for any such advances from funds available in the Interest
Account of such Series.
Because the interest to which Unitholders of a Series of the Trust
are entitled will at most times exceed the amount available for
distribution, there will almost always remain an item of accrued interest
that is added to the daily value of the Units of such Series. If
Unitholders of a Series sell or redeem all or a portion of their Units
they will be paid their proportionate share of the accrued interest of
such Series to, but not including, the fifth business day after the date
of a sale or to the date of tender in the case of a redemption.
Unitholders purchasing Units will initially receive distributions in
accordance with the election of the prior owner. Unitholders desiring to
change their distribution option may do so by sending written notice to
the Trustee, together with their certificate (if one was issued).
Certificates should only be sent by registered or certified mail to
minimize the possibility of loss. If written notice and any certificate
are received by the Trustee not later than January 1 or July 1 of a year,
the change will become effective on January 2 for distributions
commencing with February 15 or August 15, respectively, of that year. If
notice is not received by the Trustee, the Unitholder will be deemed to
have elected to continue with the same option for the subsequent twelve
months.
Principal Distributions;. In addition, the Trustee will distribute
on each Distribution Date or shortly thereafter, to each Unitholder of
record on the preceding Record Date, an amount substantially equal to
such holders' pro rata share of the cash balance, if any, in the
Principal Account of such Series computed as of the close of business on
the preceding Record Date. However, no distribution will be required if
the balance in the Principal Account of such Series is less than $1.00
per Unit.
Statement to Unitholders. With each distribution, the Trustee will
furnish or cause to be furnished to each Unitholder a statement of the
amount of interest and the amount of other receipts, if any, which are
being distributed, expressed in each case as a dollar amount per Unit.
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The accounts of each Series of the Trust are required to be audited,
at the Series' expense, annually by independent auditors designated by
the Sponsor, unless the Trustee determines that such an audit would not
be in the best interest of the Unitholders of such Series of the Trust.
The accountants' report will be furnished by the Trustee to any
Unitholder of such Series of the Trust upon written request.
Within a reasonable period of time after the end of each calendar
year, the Trustee shall furnish to each person who at any time during the
calendar year was a Unitholder of a Series of the Trust a statement
covering the calendar year, setting forth:
A. As to the Interest Account:
1. The amount of interest received on the Bonds in such
Series including amounts received as a portion of the proceeds
of any disposition of the Bonds;
2. The amount paid from the Interest Account of such
Series representing accrued interest of any Units redeemed;
3. The deductions from the Interest Account of such
Series for applicable taxes, if any, fees and expenses
(including auditing fees) of the Trustee, the Evaluator, the
Sponsor and bond counsel, if any;
4. Any amounts credited by the Trustee to a Reserve
Account for such Series described under "Expenses of the
Trust"; and
5. The net amount remaining after such payments and
deductions, expressed both as a total dollar amount and a
dollar amount per Unit outstanding on the last business day of
such calendar year.
B. As to the Principal Account:
1. The dates of the maturity, liquidation or redemption
of any of the Bonds in such Series and the net proceeds
received therefrom excluding any portion credited to the
Interest Account;
2. The amount paid from the Principal Account of such
Series representing the principal of any Units redeemed;
3. The deductions from the Principal Account of such
Series for payment of applicable taxes, if any, fees and
expenses (including auditing expenses) of the Trustee, the
Evaluator, the Sponsor and of bond counsel, if any;
4. Any amounts credited by the Trustee to a Reserve
Account for such Series described under "Expenses of the
Trust"; and
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5. The net amount remaining after distributions of
principal and deductions, expressed both as a dollar amount and
as a dollar amount per Unit outstanding on the last business
day of such calendar year.
C. The following information:
1. A list of the Bonds in such Series as of the last
business day of such calendar year;
2. The number of Units of such Series outstanding on the
last business day of such calendar year;
3. The Redemption Price of such Series based on the last
Trust Evaluation made during such calendar year;
4. The amount actually distributed during such calendar
year from the Interest and Principal Accounts of such Series
separately stated, expressed both as total dollar amounts and
as dollar amounts per Unit of such Series outstanding on the
Record Date for each such distribution.
Rights of Unitholders. A Unitholder may at any time tender Units to
the Trustee for redemption. No Unitholder of a Series shall have the
right to control the operation and management of such Series or of the
Trust in any manner, except to vote with respect to amendment of the
Trust Agreement or termination of such Series of the Trust. The death or
incapacity of any Unitholder will not operate to terminate the Series or
the Trust nor entitle legal representatives or heirs to claim an
accounting or to bring any action or proceeding in any court for
partition or winding up of such Series or the Trust.
INVESTMENT SUPERVISION
The Sponsor may not alter the portfolio of the Trust by the
purchase, sale or substitution of Bonds, except in the special
circumstances noted below. Thus, with the exception of the redemption or
maturity of Bonds in accordance with their terms, and/or the sale of
Bonds to meet redemption requests, the assets of the Trust will remain
unchanged under normal circumstances.
The Sponsor may direct the Trustee to dispose of Bonds the value of
which has been affected by certain adverse events, including institution
of certain legal proceedings, a decline in their price or the occurrence
of other market factors, including advance refunding, so that in the
opinion of the Sponsor the retention of such Bonds in a Series of the
Trust would be detrimental to the interest of the Unitholders of such
Series. The proceeds from any such sales, exclusive of any portion which
represents accrued interest, will be credited to the Principal Account
for distribution to the Unitholders.
The Sponsor is required to instruct the Trustee to reject any offer
made by an issuer of the Bonds to issue new obligations in exchange or
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substitution for any of such Bonds pursuant to a refunding or refinancing
plan, except that the Sponsor may instruct the Trustee to accept or
reject such an offer or to take any other action with respect thereto as
the Sponsor may deem proper if (1) the issuer is in default with respect
to such Bonds or (2) in the written opinion of the Sponsor the issuer
will probably default with respect to such Bonds in the reasonably
foreseeable future. Any obligation so received in exchange or
substitution will be held by the Trustee subject to the terms and
conditions of the Trust Agreement to the same extent as Bonds originally
deposited thereunder. Within five days after the deposit of obligations
in exchange or substitution for underlying Bonds, the Trustee is required
to give notice thereof to each Unitholder, identifying the Bonds
eliminated and the Bonds substituted therefor.
The Trustee may sell Bonds designated by the Sponsor from a Series
of the Trust for the purpose of redeeming Units of such Series tendered
for redemption and the payment of expenses.
ADMINISTRATION OF THE TRUST
The Trustee. The Trustee is The Bank of New York, a trust company
organized under the laws of New York. The Bank of New York has its unit
investment trust division offices at 101 Barclay Street, New York, New
York 10286, telephone 1-800-701-8178. The Bank of New York is subject to
supervision and examination by the Superintendent of Banks of the State
of New York and the Board of Governors of the Federal Reserve System, and
its deposits are insured by the Federal Deposit Insurance Corporation to
the extent permitted by law.
The Trustee, whose duties are ministerial in nature, has not
participated in selecting the portfolio of any Series of the Trust. For
information relating to the responsibilities of the Trustee under the
Trust Agreements, reference is made to the material set forth under
"Unitholders."
In accordance with the Trust Agreements, the Trustee shall keep
proper records of all transactions at its office. Such records shall
include the name and address of, and the number of Units held by, every
Unitholder of each Series. The books and records with respect to a
Series of the Trust shall be open to inspection by any Unitholder of such
Series at all reasonable times during the usual business hours. The
Trustee shall make such annual or other reports as may from time to time
be required under any applicable state or Federal statute, rule or
regulation. The Trustee shall keep a certified copy or duplicate
original of the Trust Agreements on file in its office available for
inspection at all reasonable times during usual business hours by any
Unitholder, together with a current list of the Bonds held in each Series
of the Trust. Pursuant to the Trust Agreements, the Trustee may employ
one or more agents for the purpose of custody and safeguarding of Bonds
comprising each Trust Fund.
Under the Trust Agreements, the Trustee or any successor trustee may
resign and be discharged of the trust created by the Trust Agreements by
executing an instrument in writing and filing the same with the Sponsor.
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The Trustee or successor trustee must mail a copy of the notice of
resignation to all Unitholders then of record, not less than sixty days
before the date specified in such notice when such resignation is to take
effect. The Sponsor upon receiving notice of such resignation is
obligated to appoint a successor trustee promptly. If, upon such
resignation, no successor trustee has been appointed and has accepted the
appointment within thirty days after notification, the retiring Trustee
may apply to a court of competent jurisdiction for the appointment of a
successor. The Sponsor may at any time remove the Trustee with or
without cause and appoint a successor trustee as provided in the Trust
Agreements. Notice of such removal and appointment shall be mailed to
each Unitholder by the Sponsor. Upon execution of a written acceptance
of such appointment by a successor trustee, all the rights, powers,
duties and obligations of the original Trustee shall vest in the
successor.
The Trustee shall be a corporation organized under the laws of the
United States or any state thereof, which is authorized under such laws
to exercise trust powers. The Trustee shall have at all times an
aggregate capital, surplus and undivided profits of not less than
$5,000,000.
The Evaluator. Ranson & Associates, Inc., the Sponsor, also serves
as Evaluator. The Evaluator may resign or be removed by the Trustee, in
which event the Trustee is to use its best efforts to appoint a
satisfactory successor. Such resignation or removal shall become
effective upon acceptance of appointment by the successor evaluator. If,
upon resignation of the Evaluator, no successor has accepted appointment
within thirty days after notice of resignation, the Evaluator may apply
to a court of competent jurisdiction for the appointment of a successor.
Notice of such resignation or removal and appointment shall be mailed by
the Trustee to each Unitholder. At the present time, pursuant to a
contract with the Evaluator, Cantor Fitzgerald & Co., a non-affiliated
firm regularly engaged in the business of evaluating, quoting or
appraising comparable securities, provides portfolio evaluations of the
Bonds in the Trusts which are then reviewed by the Evaluator. In the
event the Sponsor is unable to obtain current evaluations from Cantor
Fitzgerald & Co., it may make its own evaluations or it may utilize the
services of any other non-affiliated evaluator or evaluators it deems
appropriate.
Amendment and Termination. The Trust Agreements may be amended by
the Trustee and the Sponsor without the consent of any of the
Unitholders: (1) to cure any ambiguity or to correct or supplement any
provision which may be defective or inconsistent; (2) to change any
provision thereof as may be required by the Securities and Exchange
Commission or any successor governmental agency; or (3) to make such
provisions as shall not adversely affect the interests of the
Unitholders. The Trust Agreements may also be amended in any respect by
the Sponsor and the Trustee, or any of the provisions thereof may be
waived, with the written consent of the holders of Units representing 66-
2/3% of the Units then outstanding, provided that no such amendment or
waiver will reduce the interest in a Series of the Trust of any
Unitholder without the consent of such Unitholder or reduce the
percentage of Units required to consent to any such amendment or waiver
without the consent of all Unitholders. In no event shall the Trust
Agreements be amended to increase the number of Units issuable thereunder
or to permit, except in accordance with the provisions of the Trust
-29-
<PAGE>
Agreements, the acquisition of any Bonds in addition to or in
substitution for those in the Trust. The Trustee shall promptly notify
Unitholders of the substance of any such amendment.
The Trust Agreements provide that a Series of the Trust shall
terminate upon the maturity, redemption or other disposition, of the last
of the Bonds held in such Series, but in no event later than the
Mandatory Termination Date set forth under "Essential Information" in
Part Two for each Trust. If the value of a Series of the Trust shall be
less than the applicable minimum Trust value stated under "Essential
Information" in Part Two (40% of the aggregate principal amount of Bonds
deposited in the Trust), the Trustee may, in its discretion, and shall,
when so directed by the Sponsor, terminate such Series of the Trust. A
Series of the Trust may be terminated at any time by the holders of Units
representing 66-2/3% of the Units of such Series then outstanding. In
the event of termination, written notice thereof will be sent by the
Trustee to all Unitholders of such Series. Within a reasonable period
after termination, the Trustee will sell any Bonds remaining in such
Series of the Trust and, after paying all expenses and charges incurred
by such Series of the Trust, will distribute to Unitholders of such
Series (upon surrender for cancellation of certificates for Units, if
issued) their pro rata share of the balances remaining in the Interest
and Principal Accounts of such Series.
Limitations on Liability. The Sponsor: The Sponsor is liable for
the performance of its obligations arising from its responsibilities
under the Trust Agreements, but will be under no liability to the
Unitholders for taking any action or refraining from any action in good
faith pursuant to the Trust Agreements or for errors in judgment, except
in cases of its own gross negligence, bad faith or willful misconduct.
The Sponsor shall not be liable or responsible in any way for
depreciation or loss incurred by reason of the sale of any Bonds.
The Trustee: The Trust Agreements provides that the Trustee shall
be under no liability for any action taken in good faith in reliance upon
prima facie properly executed documents or for the disposition of monies,
Bonds, or certificates except by reason of its own negligence, bad faith
or willful misconduct, nor shall the Trustee be liable or responsible in
any way for depreciation or loss incurred by reason of the sale by the
Trustee of any Bonds. In the event that the Sponsor shall fail to act,
the Trustee may act and shall not be liable for any such action taken by
it in good faith. The Trustee shall not be personally liable for any
taxes or other governmental charges imposed upon or in respect of the
Bonds or upon the interest thereon. In addition, the Trust Agreements
contains other customary provisions limiting the liability of the
Trustee.
The Evaluator: The Trustee and Unitholders may rely on any
evaluation furnished by the Evaluator and shall have no responsibility
for the accuracy thereof. The Trust Agreements provide that the
determinations made by the Evaluator shall be made in good faith upon the
basis of the best information available to it, provided, however, that
the Evaluator shall be under no liability to the Trustee or Unitholders
for errors in judgment, but shall be liable only for its gross
negligence, lack of good faith or willful misconduct.
-30-
<PAGE>
EXPENSES OF THE TRUST
The Sponsor will not charge any Series of the Trust fees for
services performed as Sponsor, except the Sponsor shall receive an annual
surveillance fee for services performed for such Trust Funds in an amount
not to exceed the amount shown under "Essential Information" in Part Two
for performing portfolio surveillance services for each Trust. Such fee
(which is based on the largest number of Units outstanding during each
year) may exceed the actual costs of providing such surveillance services
for a Trust, but at no time will the total amount received for portfolio
surveillance services rendered to such Series in any calendar year exceed
the aggregate cost to the Sponsor for providing such services. The
foregoing fees may be increased without approval of the Unitholders by
amounts not exceeding proportionate increases under the category "All
Services Less Rent of Shelter" in the Consumer Price Index published by
the United States Department of Labor or, if such category is no longer
published, in a comparable category. The Sponsor paid all the expenses
of creating and establishing the Trust, including the cost of the initial
preparation, printing and execution of the Prospectus, Trust Agreements
and the certificates, legal and accounting expenses, advertising and
selling expenses, payment of closing fees, expenses of the Trustee,
initial evaluation fees and other out-of-pocket expenses.
The Trustee receives for its services the fee set forth under
"Essential Information" appearing in Part Two. The Trustee fee which is
calculated monthly is based on the largest aggregate principal amount of
Bonds in each Trust Fund at any time during the period. Funds that are
available for future distributions, redemptions and payment of expenses
are held in accounts which are non-interest bearing to Unitholders and
are available for use by the Trustee pursuant to normal banking
procedures; however, the Trustee is also authorized by the Trust
Agreements to make from time to time certain non-interest bearing
advances to the Trust Funds. The Trustee's fee is payable on or before
each Distribution Date. See "Unitholders-Distributions to Unitholders."
For evaluation of Bonds in a Series of the Trust, the Evaluator
receives a fee payable monthly, calculated on an annual rate as set forth
under "Essential Information" in Part Two, based upon the largest
aggregate principal amount of Bonds in such Series of the Trust at any
time during such monthly period.
The Trustee's fees, the Evaluator's fees and the surveillance fees
are deducted from the Interest Account of each Series to the extent funds
are available and then from the Principal Account of such Series. Such
fees may be increased without approval of Unitholders by amounts not
exceeding a proportionate increase in the Consumer Price Index entitled
"All Services Less Rent of Shelter", published by the United States
Department of Labor, or any equivalent index substituted therefor.
The following additional charges are or may be incurred by a Series
of the Trust: (a) fees for the Trustee's extraordinary services; (b)
expenses of the Trustee (including legal and auditing expenses, but not
including any fees and expenses charged by any agent for custody and
safeguarding of Bonds) and of bond counsel, if any; (c) various
governmental charges; (d) expenses and costs of any action taken by the
Trustee to protect the Trust or such Series, or the rights and interests
-31-
<PAGE>
of the Unitholders; (e) indemnification of the Trustee for any loss,
liability or expense incurred by it in the administration of such Series
of the Trust not resulting from gross negligence, bad faith or willful
misconduct on its part; (f) indemnification of the Sponsor for any loss,
liability or expense incurred in acting as Sponsor of such Series of the
Trust without gross negligence, bad faith or willful misconduct; and (g)
expenditures incurred in contacting Unitholders upon termination of the
Series. The fees and expenses set forth herein are payable out of such
Series of the Trust and, when owed to the Trustee, are secured by a lien
on the assets of the Series of the Trust.
Fees and expenses of a Series of the Trust shall be deducted from
the Interest Account of such Series, or, to the extent funds are not
available in such Account, from the Principal Account of such Series.
The Trustee may withdraw from the Principal Account or the Interest
Account of such Series such amounts, if any, as it deems necessary to
establish a reserve for any taxes or other governmental charges or other
extraordinary expenses payable out of that Series of the Trust. Amounts
so withdrawn shall be credited to a separate account maintained for such
Series known as the Reserve Account and shall not be considered a part of
such Series when determining the value of the Units of such Series until
such time as the Trustee shall return all or any part of such amounts to
the appropriate account.
THE SPONSOR
Ranson & Associates, Inc., the Sponsor of the Trusts, is an
investment banking firm created in 1995 by a number of former owners and
employees of Ranson Capital Corporation. On November 26, 1996, Ranson &
Associates, Inc. purchased all existing unit investment trusts sponsored
by EVEREN Securities, Inc. Accordingly, Ranson & Associates is the
successor sponsor to unit investment trusts formerly sponsored by EVEREN
Unit Investment Trusts, a service of EVEREN Securities, Inc. Ranson &
Associates, is also the sponsor and successor sponsor of Series of The
Kansas Tax-Exempt Trust and Multi-State Series of The Ranson Municipal
Trust. Ranson & Associates, Inc. is the successor to a series of
companies, the first of which was originally organized in Kansas in 1935.
During its history, Ranson & Associates, Inc. and its predecessors have
been active in public and corporate finance and have sold bonds and unit
investment trusts and maintained secondary market activities relating
thereto. At present, Ranson & Associates, Inc., which is a member of the
National Association of Securities Dealers, Inc., is the sponsor to each
of the above-named unit investment trusts and serves as the financial
advisor and as an underwriter for issuers in the Midwest and Southwest,
especially in Kansas, Missouri and Texas. The Company's offices are
located at 250 North Rock Road, Suite 150, Wichita, Kansas 67206-2241.
If at any time the Sponsor shall fail to perform any of its duties
under the Trust Agreements or shall become incapable of acting or shall
be adjudged a bankrupt or insolvent or its affairs are taken over by
public authorities, then the Trustee may (a) appoint a successor sponsor
at rates of compensation deemed by the Trustee to be reasonable and not
exceeding such reasonable amounts as may be prescribed by the Securities
and Exchange Commission, or (b) terminate the Trust Agreements and
-32-
<PAGE>
liquidate the Trust or any Series thereof as provided therein or (c)
continue to act as Trustee without terminating the Trust Agreements.
The foregoing financial information with regard to the Sponsor
relates to the Sponsor only and not to this Trust or any Series. Such
information is included in this Prospectus only for the purposes of
informing investors as to the financial responsibility of the Sponsor and
its ability to carry out its contractual obligations with respect to the
Series of the Trust. More comprehensive financial information can be
obtained upon request from the Sponsor.
LEGAL OPINIONS
The legality of the Units offered hereby and certain matters
relating to federal tax law were passed upon by Chapman and Cutler, 111
West Monroe Street, Chicago, Illinois 60603, as counsel for the Sponsor.
INDEPENDENT AUDITORS
The statement of net assets, including the schedule of investments,
appearing in Part Two of this Prospectus and Registration Statement, with
information pertaining to the specific Series of the Trust to which such
statement relates, has been audited by Ernst & Young LLP, independent
auditors, as set forth in their report appearing in Part Two and is
included in reliance upon such report given upon the authority of such
firm as experts in accounting and auditing.
-33-
<PAGE>
Ranson Defined Funds
Insured Corporate Series 11
Part Two
Dated April 30, 1998
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
NOTE: Part Two of this Prospectus May Not Be Distributed Unless Accompanied by
Part One.
<PAGE>
Ranson Defined Funds
Insured Corporate Series 11
Essential Information
As of December 31, 1997
Sponsor and Evaluator: Ranson & Associates, Inc.
Trustee: The Bank of New York Co.
<TABLE>
<CAPTION>
General Information
<S> <C>
Principal Amount of Securities $4,000,000
Number of Units 400,000
Fractional Undivided Interest in the Trust per Unit 1/400,000
Principal Amount of Securities per Unit $10.000
Calculation of Public Offering Price:
Aggregate Value of Securities in the Trust $4,131,578
Aggregate Value of Securities per Unit $10.329
Principal Cash per Unit (1) $-
Accrued Interest per Unit through settlement date of
January 6, 1998 $.010
Total Price including Accrued Interest per Unit $10.339
Sales Charge of 4.90% of Public Offering Price (equivalent
to 5.152% of the net amount invested) per Unit $.533
Public Offering Price per Unit $10.872
Redemption Price per Unit $10.339
Calculation of Estimated Net Annual Interest Income per Unit:
Estimated Annual Interest Income $.7320
Less: Estimated Annual Expense $.0244
Estimated Net Annual Interest Income $.7076
Daily Rate at which Estimated Annual Interest Income Accrues per Unit $.001966
Estimated Current Return Based on Public Offering Price (2) 6.52%
Estimated Long-Term Return (2) 6.20%
</TABLE>
[FN]
1. This amount, if any, represents principal cash or overdraft which is an
asset or liability of the Trust and is included in the Public Offering Price.
2. The Estimated Current Return and Estimated Long-Term Return will vary with
changes in the Public Offering Price and there is no assurance that such returns
on the date hereof will be applicable on a subsequent date of purchase. These
estimated returns are increased for transactions entitled to a reduced sales
charge (see "Public Offering of Units - Public Offering Price" - Part One).
<PAGE>
Ranson Defined Funds
Insured Corporate Series 11
Essential Information (continued)
As of December 31, 1997
Sponsor and Evaluator: Ranson & Associates, Inc.
Trustee: The Bank of New York Co.
<TABLE>
<CAPTION>
<S> <C>
Record and Distribution Date Record Date is the first of each month
and distributions to Unitholders on such
record dates will be made on the
15th day of the month.
Distribution Dates No distribution (other than capital gains
distributions) need be made from the
Principal Account if the balance therein,
excluding capital gains, is less than
$1.00 per 100 Units.
Trustee's Annual Fee (including
estimated expenses) $1.00 per 100 Units (includes $1.49 of
Trustee's annual fee per $1,000 principal
amount of underlying Securities and $.09
of out-of-pocket expenses per 100 Units).
Evaluator's Annual Fee $.30 per $1,000 principal amount of
underlying Securities.
Surveillance Fee $.25 per $1,000 principal amount of
underlying Securities.
Date of Trust Agreement and
Initial Deposit May 22, 1997
Mandatory Termination Date December 31, 2035
Weighted Average Stated
Maturity of Bonds
Discretionary Liquidation Amount The Trust may be terminated if the value
thereof is less than $160,000 (40% of the
par value of the Securities deposited in
the Trust).
</TABLE>
[FN]
<PAGE>
Report of Independent Auditors
Unitholders
Ranson Defined Funds
Insured Corporate Series 11
We have audited the accompanying statement of assets and liabilities of Ranson
Defined Funds Insured Corporate Series 11, including the schedule of
investments, as of December 31, 1997, and the related statements of operations
and changes in net assets for the period from May 22, 1997 (Date of Deposit) to
December 31, 1997. These financial statements are the responsibility of the
Trust's sponsor. Our responsibility is to express an opinion on these financial
statements based on our 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 investments owned as of December 31, 1997, by
correspondence with the custodial bank. An audit also includes assessing the
accounting principles used and significant estimates made by the sponsor, as
well as evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Ranson Defined Funds Insured
Corporate Series 11 at December 31, 1997, and the results of its operations and
changes in its net assets for the period indicated above in conformity with
generally accepted accounting principles.
Ernst & Young LLP
Kansas City, Missouri
April 16, 1998
<PAGE>
Ranson Defined Funds
Insured Corporate Series 11
Statement of Assets and Liabilities
December 31, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
Assets
Corporate Securities, at value (cost $3,889,086) $4,131,578
Interest receivable 94,991
Organization costs 8,000
---------
Total assets 4,234,569
Liabilities and net assets
Cash overdraft 81,068
Accrued liabilities 3,178
---------
84,246
Net assets, applicable to 400,000 Units outstanding:
Cost of Trust assets, exclusive of interest $3,889,086
Unrealized appreciation 242,492
Distributable funds 18,745
--------- ---------
Net assets $4,150,323
=========
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
Ranson Defined Funds
Insured Corporate Series 11
Statement of Operations
<TABLE>
<CAPTION>
Period from
May 22,
1997 to
December 31,
1997
<S> <C>
---------
Investment income - interest $167,858
Expenses:
Trustee's fees and related expenses 5,648
Evaluator's fees 664
Amortization of organizational expenses
2,000
---------
Total expenses 8,312
---------
Net investment income 159,546
Realized and unrealized gain on investments:
Unrealized appreciation during the period 242,492
---------
Net increase in net assets resulting from operations $402,038
=========
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
Ranson Defined Funds
Insured Corporate Series 11
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Period from
May 22,
1997 to
December 31,
1997
<S> <C>
---------
Operations:
Net investment income $159,546
Unrealized appreciation on investments during the period 242,492
---------
Net increase in net assets resulting from operations 402,038
Distributions to Unitholders:
Net investment income (139,847)
Capital transactions:
Issuance of 400,000 Units 3,888,132
---------
Total increase in net assets 4,150,323
Net assets:
At the beginning of the period -
---------
At the end of the period (including distributable funds applicable
to Trust Units of $18,745 at December 31, 1997) $4,150,323
=========
Trust Units outstanding at the end of the period 400,000
=========
Net asset value per Unit at the end of the period $10.38
=========
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
<TABLE>
Ranson Defined Funds
Insured Corporate Series 11
Schedule of Investments
December 31, 1997
<CAPTION>
Coupon Maturity Redemption Principal
Name of Issuer (4) Rate Date Provisions(2) Rating(1) Amount Value(3)
<S> <C> <C> <C> <C> <C> <C>
- --------------------- --- --- ----- --- --------- ---
Bell South Telephone 7.500% 6/15/2033 2003 @ 104.75 AAA $750,000 $793,950
Commonwealth Edison Co. 7.750 7/15/2023 2003 @ 103.77 AAA 750,000 805,283
Consolidated Edison Company 7.500 6/15/2023 2003 @ 103.27 AAA 500,000 529,595
New York Telephone Company 7.250 2/15/2024 2004 @ 103.06 AAA 375,000 389,662
Pacific Bell Telephone Company 7.500 2/01/2033 2003 @ 102.94 AAA 500,000 527,660
Texas Utilities 7.625 7/01/2025 2003 @ 102.69 AAA 1,000,000 1,056,810
U.S. Treasury Note (5) 0.000 8/15/2022 Non-Callable NR 125,000 28,618
--------- ---------
$4,000,000 $4,131,578
========= =========
</TABLE>
[FN]
See accompanying notes to Schedule of Investments.
<PAGE>
Ranson Defined Funds
Insured Corporate Series 11
Notes to Schedule of Investments
1. All ratings are by Standard & Poor's Corporation, unless marked with the
symbol "*", in which case the rating is by Moody's Investors Service, Inc. The
symbol "NR" indicates Bonds for which no rating is available.
2. There is shown under this heading the year in which each issue of Bonds is
initially redeemable and the redemption price for that year or, if currently
redeemable, the redemption price currently in effect; unless otherwise
indicated, each issue continues to be redeemable at declining prices thereafter,
but not below par value. The prices at which the Bonds may be redeemed or
called prior to maturity may or may not include a premium and, in certain cases,
may be less than the cost of the Bonds in the Trust. In addition, certain Bonds
in the Portfolio may be redeemed in whole or in part other than by operation of
the stated redemption or sinking fund provisions under certain unusual or
extraordinary circumstances specified in the instruments setting forth the terms
and provisions of such Bonds.
3. See Note 1 to the accompanying financial statements for a description of the
method of determining cost and value.
4. All Corporate Bonds are insured either by the issuer of the Bonds or by the
sponsor under a policy obtained from Municipal Bond Investors Assurance
Corporation. The insurance policy has been paid in advance by such issuer or
the sponsor and each such policy is non-cancelable and will remain in force so
long as the Bonds are outstanding. Therefore, the Corporate Bonds are rated AAA
by Standard & Poor's Corporation and Aaa by Moody's Investors Service, Inc.
5. This Note has been purchased at a discount from the par value because there
is no stated interest income thereon. Such Note is normally described as a
"zero coupon" Note. Over the life of the Note the value increases, so that upon
maturity, the holders of the Note will receive 100% of the principal amount
thereof.
See accompanying notes to financial statements.
<PAGE>
Ranson Defined Funds
Insured Corporate Series 11
Notes to Financial Statements
1. Significant Accounting Policies
Trust Sponsor and Evaluator
Ranson & Associates, Inc., serves as the Trust's sponsor and evaluator.
Valuation of Securities
As of the date of the financial statements and during the Trust's primary
offering period, Corporate Securities and the zero coupon obligation are stated
at ask prices as determined by Ranson & Associates, Inc. At the end of the
primary period (May 22, 1998) and thereafter, the Corporate Securities are
stated at bid prices as determined by Ranson & Associates, Inc. The aggregate
bid prices of the Securities are determined by the Evaluator based on (a)
current bid prices of the Securities, (b) current bid prices for comparable
securities, (c) appraisal, or (d) any combination of the above. (See Note 4 -
Insurance).
Cost of Securities
Cost of the Trust's Securities is based on the offering prices of the Securities
on the dates of deposit of such Securities acquired during the primary sales
period. The premium or discount, if any, is not being amortized. Realized gain
(loss) from Security transactions is reported on an identified cost basis.
Investment Income
Interest income consists of amortization of original issue discount for the zero
coupon obligation and interest accrued as earned on the fixed rate obligations.
2. Unrealized Appreciation and Depreciation
Following is an analysis of net unrealized appreciation at December 31, 1997:
<TABLE>
<CAPTION>
<S> <C>
Gross unrealized appreciation $242,492
Gross unrealized depreciation -
----------
Net unrealized appreciation $242,492
=========
</TABLE>
3. Federal Income Taxes
The Trust is not an association taxable as a corporation for federal income tax
purposes. Each Unitholder is considered to be the owner of a pro rata portion
of the Trust under Subpart E, Subchapter J of Chapter 1 of the Internal Revenue
Code of 1986, as amended. Accordingly, no provision has been made for federal
income taxes.
4. Other Information
Cost to Investors
The cost to original investors of Units of the Trust was based on the aggregate
offering price of the Bonds on the date of an investor's purchase, plus a sales
charge of 4.90% of the Public Offering Price (equivalent to 5.152% of the net
amount invested). The Public Offering Price for secondary market transactions
is based on the aggregate bid price of the Bonds plus or minus a pro rata share
of cash or overdraft in the Principal Account, if any, on the date of an
investor's purchase, plus a sales charge of 4.90% of the Public Offering Price
(equivalent to 5.152% of the net amount invested).
<PAGE>
Ranson Defined Funds
Insured Corporate Series 11
Notes to Financial Statements (continued)
Insurance
Insurance guaranteeing the payment of all principal and interest on the
corporate Bonds in the portfolio has been obtained from an independent company
by the issuer of the Bonds involved or by the Trust's sponsor. Insurance
obtained by the Trust's sponsor or a Bond issuer is effective as long as such
Bonds are outstanding. As a result of such insurance, the Units of Trust have
received a rating of "AAA" by Standard & Poor's Corporation. No representation
is made as to any insurer's ability to meet its commitments.
Distributions
Distributions of net investment income to Unitholders are declared and paid
monthly. Income distributions per Unit on a record date basis, is $.67 for the
period ended December 31, 1997.
<PAGE>
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Independent Auditors"
and to the use of our report dated April 16, 1998, in this Post-Effective
Amendment to the Registration Statement (Form S-6) and related Prospectus of
Ranson Defined Funds Insured Corporate Series 11 dated April 30, 1998.
Ernst & Young LLP
Kansas City, Missouri
April 30, 1998
<PAGE>
Contents of Post-Effective Amendment
To Registration Statement
This Post-Effective amendment to the Registration Statement
comprises the following papers and documents:
The facing sheet
The prospectus
The signatures
The Consent of Independent Accountants
<PAGE>
Signatures
Pursuant to the requirements of the Securities Act of 1933,
The Registrant, Ranson Unit Investment Trusts Series 58,
certifies that it meets all of the requirements for effectiveness
of this registration statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this Amendment to the
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Wichita,
and State of Kansas, on the 30th day of April, 1998.
Ranson Unit Investment Trusts
Series 58
Registrant
By: Ranson & Associates, Inc.
Depositor
By: Robin Pinkerton
President
Pursuant to the requirements of the Securities Act of 1933,
this Amendment to the Registration Statement has been signed
below on April 30, 1998 by the following persons, who constitute
a majority of the Board of Directors of Ranson & Associates, Inc.
Signature Title
Douglas K. Rogers Executive Vice and President and Director
Douglas K. Rogers
Alex R. Meitzner Chairman of the Board and Director
Alex R. Meitzner
Robin K. Pinkerton President, Secretary, Treasurer and
Robin K. Pinkerton Director
Robin Pinkerton
An executed copy of each of the related powers of attorney
was filed with the Securities and Exchange Commission in
connection with the Registration Statement on Form S-6 of The
Kansas Tax-Exempt Trust, Series 51 (File No. 33-46376) and
Series 52 (File No. 33-47687) and the same are hereby
incorporated herein by this reference.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM RANSON DEFINED FUNDS U.S. TREASURY PORTFOLIO SERIES 19
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<SERIES>
<NUMBER> 19
<NAME> RANSON DEFINED FUNDS U.S. TREASURY PORTFOLIO SERIES 19
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-END> Dec-31-1997
<INVESTMENTS-AT-COST> 4,619,482
<INVESTMENTS-AT-VALUE> 4,699,965
<RECEIVABLES> 113,542
<ASSETS-OTHER> 4,000
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 4,817,507
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 96,355
<TOTAL-LIABILITIES> 96,355
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4,640,669
<SHARES-COMMON-STOCK> 460,000
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 21,187
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 80,483
<NET-ASSETS> 4,721,152
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 187,260
<OTHER-INCOME> 0
<EXPENSES-NET> 5,343
<NET-INVESTMENT-INCOME> 181,917
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 80,483
<NET-CHANGE-FROM-OPS> 262,400
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (157,302)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,616,054
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 4,721,152
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM RANSON DEFINED FUNDS GNMA PORTFOLIO SERIES 8
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<SERIES>
<NUMBER> 08
<NAME> RANSON DEFINED FUNDS GNMA PORTFOLIO SERIES 8
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-END> Dec-31-1997
<INVESTMENTS-AT-COST> 1,656,337
<INVESTMENTS-AT-VALUE> 1,665,204
<RECEIVABLES> 7,546
<ASSETS-OTHER> 5,146
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,677,896
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,404
<TOTAL-LIABILITIES> 2,404
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,666,625
<SHARES-COMMON-STOCK> 171,513
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 10,288
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 8,867
<NET-ASSETS> 1,675,492
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 34,530
<OTHER-INCOME> 0
<EXPENSES-NET> 4,163
<NET-INVESTMENT-INCOME> 30,367
<REALIZED-GAINS-CURRENT> 167
<APPREC-INCREASE-CURRENT> 8,867
<NET-CHANGE-FROM-OPS> 39,401
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (25,305)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> (14,002)
<NUMBER-OF-SHARES-SOLD> 1,675,398
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,675,492
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM RANSON DEFINED FUNDS GNMA PORTFOLIO SERIES 9
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<SERIES>
<NUMBER> 09
<NAME> RANSON DEFINED FUNDS GNMA PORTFOLIO SERIES 9
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-END> Dec-31-1997
<INVESTMENTS-AT-COST> 1,872,609
<INVESTMENTS-AT-VALUE> 1,893,607
<RECEIVABLES> 11,288
<ASSETS-OTHER> 8,435
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,913,330
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,426
<TOTAL-LIABILITIES> 2,426
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,889,906
<SHARES-COMMON-STOCK> 191,099
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 17,297
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 20,998
<NET-ASSETS> 1,910,904
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 49,074
<OTHER-INCOME> 0
<EXPENSES-NET> 3,571
<NET-INVESTMENT-INCOME> 45,503
<REALIZED-GAINS-CURRENT> (219)
<APPREC-INCREASE-CURRENT> 20,998
<NET-CHANGE-FROM-OPS> 66,282
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (35,690)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> (14,028)
<NUMBER-OF-SHARES-SOLD> 1,894,340
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,910,904
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM RANSON DEFINED FUNDS INSURED CORPORATE SERIES 11
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<SERIES>
<NUMBER> 11
<NAME> RANSON DEFINED FUNDS INSURED CORPORATE SERIES 11
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-END> Dec-31-1997
<INVESTMENTS-AT-COST> 3,889,086
<INVESTMENTS-AT-VALUE> 4,131,578
<RECEIVABLES> 94,991
<ASSETS-OTHER> 8,000
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 4,234,569
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 84,246
<TOTAL-LIABILITIES> 84,246
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,907,831
<SHARES-COMMON-STOCK> 400,000
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 18,745
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 242,492
<NET-ASSETS> 4,150,323
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 167,858
<OTHER-INCOME> 0
<EXPENSES-NET> 8,312
<NET-INVESTMENT-INCOME> 159,546
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 242,492
<NET-CHANGE-FROM-OPS> 402,038
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (139,847)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,888,132
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 4,150,323
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
