===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
----------------------
AMENDMENT NO. 1
TO
REGISTRATION STATEMENT
ON
FORM S-6
----------------------
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
A. EXACT NAME OF TRUST:
RANSON UNIT INVESTMENT TRUSTS, SERIES 69
B. NAME OF DEPOSITOR:
RANSON & ASSOCIATES, INC.
C. COMPLETE ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES:
250 North Rock Road, Suite 150
Wichita, Kansas 67206-2241
D. NAME AND COMPLETE ADDRESS OF AGENT FOR SERVICE:
Copy to:
ALEX R. MEITZNER MARK J. KNEEDY
Ranson & Associates, Inc. Chapman and Cutler
250 North Rock Road, Suite 150 111 West Monroe Street
Wichita, Kansas 67206-2241 Chicago, Illinois 60603
E. TITLE OF SECURITIES BEING REGISTERED: Units of Beneficial Interest
F. APPROXIMATE DATE OF PROPOSED SALE TO PUBLIC:
As soon as practicable after the effective date
of the Registration Statement.
_
|X| Check box if it is proposed that this filing will become effective at
2:00 P.M. on May 20, 1998 pursuant to paragraph (b) of Rule 487.
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The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
<PAGE>
RANSON UNIT INVESTMENT TRUSTS, SERIES 69
------------------------
CROSS-REFERENCE SHEET
(FORM N-8B-2 ITEMS REQUIRED BY INSTRUCTIONS AS
TO THE PROSPECTUS IN FORM S-6)
<TABLE>
<CAPTION>
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
----------- ---------------------
I. ORGANIZATION AND GENERAL INFORMATION
<S> <C>
1. (a)Name of trust................... ) Prospectus front cover
(b)Title of securities issued...... ) Essential Information
2. Name and address of each depositor. ) General Information--Administration of
) the Trusts
3. Name and address of trustee........ ) *
4. Name and address of principal
underwriters...................... ) General Information-the Sponsor
5. State of organization of trust..... ) The Trust Funds
6. Execution and termination of trust ) The Trust Funds; General Information--
agreement......................... ) Administration of the Trusts
7. Changes of name.................... ) The Trust Funds
8. Fiscal year........................ ) *
9. Litigation......................... ) *
II. GENERAL DESCRIPTION OF THE TRUST AND
SECURITIES OF THE TRUST
10. (a)Registered or bearer securities. ) General Information--Unitholders
(b)Cumulative or distributive
securities........................ ) The Trust Funds
(c)Redemption...................... ) General Information--Redemption
(d)Conversion, transfer, etc....... ) General Information--Unitholders;
) General Information--Market for Units
(e)Periodic payment plan........... ) *
(f)Voting rights................... ) General Information--Unitholders
</TABLE>
-2-
<PAGE>
<TABLE>
<CAPTION>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
----------- ---------------------
<S> <C>
(g)Notice of certificateholders.... ) General Information--Investment Supervision;
) General Information--
) Administration of the Trusts; General
) Information--Unitholders
(h)Consents required............... ) General Information--Unitholders;
) General Information--Administration of
) the Trusts
(i)Other provisions................ ) Insured Corporate Series--Federal Tax
) Status; GNMA Portfolios--Federal Tax
) Status; US Treasury Portfolio Series--
) Federal Tax Status
11. Type of securities comprising ) The Trust Funds; Insured Corporate Series--
units............................. ) Portfolio; GNMA Portfolios--Portfolios;
) US Treasury Portfolio Series--Portfolio
12. Certain information regarding peri-
odic payment certificates......... ) *
13. (a) Load, fees, expenses, etc...... ) General Information--Interest,
) Estimated Long-Term Return
) and Estimated Current Return; General
) Information--Expenses of the Trusts
(b)Certain information regarding
periodic payment certifi-
cates....................... ) *
(c)Certain percentages........... ) Essential Information; Public Offering
) of Units
(d)Certain other fees, etc. pay-
able by holders............. ) General Information--Unitholders
(e)Certain profits receivable by
depositor, principal under-
writers, trustee or affili- ) General Information--Expenses of the
ated persons................ ) Trusts; Public Offering of Units
(f)Ratio of annual charges to in-
come........................ ) *
14. Issuance of trust's securities... ) The Trust Funds;
) General Information--Unitholders
</TABLE>
-3-
<PAGE>
<TABLE>
<CAPTION>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
----------- ---------------------
<S> <C>
15. Receipt and handling of payments
from purchasers................. ) *
16. Acquisition and disposition of ) The Trust Funds; Insured Corporate Series--
underlying securities........... ) Portfolio; GNMA Portfolios--Portfolios;
) US Treasury Portfolio Series--Portfolio;
) General Information--Investment Supervision
17. Withdrawal or redemption......... ) Market for Units;
) General Information--Redemption;
) Public Offering of Units
18. (a)Receipt, custody and disposi-
tion of income.............. ) General Information--Unitholders
(b)Reinvestment of distributions. ) General Information--Distribution
) Reinvestment
(c)Reserves or special funds..... ) General Information--Expenses of the
) Trusts
(d)Schedule of distributions..... ) *
19. Records, accounts and reports.... ) General Information--Unitholders;
) General Information--Redemption;
) Administration of the Trusts
20. Certain miscellaneous provisions
of trust agreement ) General Information--Administration of
(a)Amendment..................... ) the Trusts
(b)Termination................... ) *
(c)and (d) Trustee, removal and ) General Information--Administration of
successor................... ) the Trusts
(e)and (f) Depositor, removal and ) General Information--Administration of
successor................... ) the Trusts
21. Loans to security holders........ ) *
22. Limitations on liability......... ) General Information--Administration of
) the Trusts
23. Bonding arrangements............. ) *
24. Other material provisions of
trust agreement................. ) *
</TABLE>
-4-
<PAGE>
<TABLE>
<CAPTION>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
----------- ---------------------
III. ORGANIZATION, PERSONNEL AND
AFFILIATED PERSONS OF DEPOSITOR
<S> <C>
25. Organization of depositor........ ) General Information--Administration of
) the Trusts
26. Fees received by depositor....... ) See Items 13(a) and 13(e)
27. Business of depositor............ ) General Information--Administration of
) the Trusts
28. Certain information as to offi-
cials and affiliated persons of ) General Information--Administration of
depositor....................... ) the Trusts
29. Voting securities of depos- ) General Information--Administration of the
itor...................... ) Trusts
30. Persons controlling deposi-
tor....................... ) *
31. Payment by depositor for
certain services rendered
to trust.................. ) *
32. Payment by depositor for
certain other services
rendered to trust......... ) *
33. Remuneration of employees
of depositor for certain
services rendered to
trust..................... ) *
34. Remuneration of other per-
sons for certain services
rendered to trust......... ) *
IV. DISTRIBUTION AND REDEMPTION
35. Distribution of trust's se- ) Public Offering of Units
curities by states........
36. Suspension of sales of
trust's securities........ ) *
37. Revocation of authority to
distribute................ ) *
38. (a)Method of distribution.. ) Public Offering of Units;
(b)Underwriting agreements. ) General Information--Market for Units;
(c)Selling agreements...... ) Public Offering of Units
39. (a)Organization of princi- ) General Information--Administration
pal underwriters.......... ) of the Trusts
(b)N.A.S.D. membership of
principal underwriters.... ) *
40. Certain fees received by
principal underwriters.... ) See Items 13(a) and 13(e)
41. (a)Business of principal ) General Information--Administration
underwriters.............. ) of the Trusts
(b)Branch offices of prin-
cipal underwriters........ ) *
(c)Salesmen of principal
underwriters.............. ) *
</TABLE>
-5-
<PAGE>
<TABLE>
<CAPTION>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
----------- ---------------------
<S> <C>
42. Ownership of trust's secu-
rities by certain persons. ) *
43. Certain brokerage commis-
sions received by princi-
pal underwriters.......... ) Public Offering of Units
44. (a)Method of valuation..... ) Public Offering of Units
(b)Schedule as to offering
price..................... ) *
(c)Variation in offering ) Public Offering of Units
price to certain persons..
45. Suspension of redemption
rights.................... ) General Information--Redemption
46. (a)Redemption valuation.... ) General Information--Redemption;
) General Information--Market for Units;
) Public Offering of Units
(b)Schedule as to redemp-
tion price................ ) *
47. Maintenance of position in ) General Information--Market for Units;
underlying securities..... ) Public Offering of Units;
) General Information--Redemption
V. INFORMATION CONCERNING THE TRUSTEE
OR CUSTODIAN
48. Organization and regulation ) General Information--Administration
of trustee................ ) of the Trusts
49. Fees and expenses of trust- ) General Information--Expenses of the Trusts
ee........................
50. Trustee's lien............. ) *
VI. INFORMATION CONCERNING INSURANCE OF
HOLDERS OF SECURITIES
51. Insurance of holders of trust's ) Cover Page; General Information--
securities.................. ) Expenses of the Trusts
</TABLE>
-6-
<PAGE>
<TABLE>
<CAPTION>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
----------- ---------------------
VII. POLICY OF REGISTRANT
<S> <C>
52. (a) Provisions of trust agreement ) The Trust Funds; Insured Corporate
with respect to selection or ) Series--Portfolio; GNMA Portfolios--Portfolios;
elimination of underlying se- ) US Treasury Portfolio Series--Portfolio;
curities..................... ) General Information--Investment Supervision
(b) Transactions involving elimi-
nation of underlying securi-
ties......................... ) *
(c) Policy regarding substitution
or elimination of underlying ) General Information--Investment
securities................... ) Supervision;
(d) Fundamental policy not other-
wise covered................. ) *
53. Tax status of Trust.............. ) Essential Information; Insured Corporate
) Series--Federal Tax Status; GNMA Portfolios--
) Federal Tax Status; US Treasury Portfolio
) Series--Federal Tax Status
VIII. FINANCIAL AND STATISTICAL INFORMATION
Trust's securities during last
54. ten years........................ ) *
55. ) *
56. Certain information regarding pe-
riodic payment certificates..... ) *
57. ) *
58. ) *
59. Financial statements (Instruction
1(c) to Form S-6)............... ) *
</TABLE>
- --------------------
* Inapplicable, omitted, answer negative or not required.
-7-
<PAGE>
RANSON UNIT INVESTMENT TRUSTS, SERIES 69
Insured Corporate Series 12 (the "Insured Corporate Series" or the "Insured
Trusts") was 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, 1984 by utility companies. The Insured
Corporate Series may contain zero coupon U.S. Treasury Obligations. FOR FOREIGN
INVESTORS WHO ARE NOT U.S. CITIZENS OR RESIDENTS, INTEREST INCOME FROM THE TRUST
MAY NOT BE SUBJECT TO FEDERAL WITHHOLDING TAXES IF CERTAIN CONDITIONS ARE MET.
SEE "THE INSURED CORPORATE SERIES-FEDERAL TAX STATUS."
GNMA Portfolio Series 10 and GNMA Portfolio Series 11 ( each a "GNMA Portfolio")
were formed for the purpose of obtaining safety of capital and current monthly
distributions of interest and principal through investment in a portfolio
primarily 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 each series of the GNMA Portfolios but the Units themselves are
not backed by such full faith and credit. The value of the Units, the estimated
current return and the 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.
U.S. Treasury Portfolio Series 20 (the "U.S. Treasury Portfolio") was formed for
the purpose of providing safety of capital and investment flexibility through an
investment in a portfolio of U.S. Treasury Obligations that are backed by the
full faith and credit of the United States government. Interest income, if any,
distributed by the Trust is exempt from state personal income taxes in all
states. The U.S. Treasury Portfolio may be available to non-resident aliens and
the income from such Trust, 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. The value of
the Units, the estimated current return and the estimated long-term return to
new purchasers will fluctuate with the value of the portfolio which will
generally decrease inversely with changes in interest rates.
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 a Trust does not mean
that the Units of the Trust are insured by any governmental or private
organization. The Units are not insured.
Insurance guaranteeing the scheduled payment of principal and interest on all of
the Bonds in the portfolio of each Insured Trust (other than any U.S. Treasury
Obligations) has been obtained directly by the issuer or the Sponsor from MBIA
Insurance Corporation or other insurers. See "Insurance on the Bonds" for each
Insured Trust. Insurance obtained by a Bond issuer is effective so long as such
Bonds are outstanding. THE INSURANCE DOES NOT RELATE TO THE UNITS OF THE
INSURED TRUSTS OFFERED HEREBY OR TO THEIR MARKET VALUE. No representation is
made as to any insurer's ability to meet its commitments.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The investor is advised to read and retain this Prospectus for future reference.
THE DATE OF THIS PROSPECTUS IS MAY 20, 1998.
<PAGE>
SUMMARY
PUBLIC OFFERING PRICE. The Public Offering Price per Unit of a Trust Fund
during the initial offering period is equal to a pro rata share of the offering
prices of the Securities in such Trust Fund plus or minus a pro rata share of
cash, if any, in the Principal Account held or owned by such Trust Fund, plus
accrued interest plus that sales charge indicated under "Essential Information."
The secondary market Public Offering Price per Unit will be based upon a pro
rata share of the bid prices of the Securities in each Trust Fund plus or minus
a pro rata share of cash, if any, in the Principal Account held or owned by such
Trust Fund, plus accrued interest plus the applicable sales charge indicated
under "Public Offering of Units-Public Offering Price." The sales charge is
reduced on a graduated scale for certain sales. The minimum purchase for each
Trust is $1,000.
INTEREST AND PRINCIPAL DISTRIBUTIONS. Distributions of the estimated annual
interest income to be received by each Trust Fund, after deduction of estimated
expenses, will be made monthly. See "Essential Information." Distributions of
funds, if any, in the Principal Account will be made as provided in "General
Information-Unitholders-Distributions to Unitholders."
REINVESTMENT. Each Unitholder of a Trust Fund offered herein may elect to have
distributions of principal or interest or both automatically invested without
charge in shares of certain mutual funds. See "General Information-Distribution
Reinvestment."
ESTIMATED LONG-TERM RETURN AND ESTIMATED CURRENT RETURN. As of the opening of
business on the Initial Date of Deposit, the Estimated Long-Term Return and the
Estimated Current Return, if applicable, for each Trust were as set forth in
"Essential Information." The Estimated Current Return is calculated by dividing
the estimated net annual interest income per Unit by the Public Offering Price.
The estimated net annual interest income per Unit will vary with changes in fees
and expenses of the Trustee, the Sponsor and Evaluator and with the principal
prepayment, redemption, maturity and exchange or sale of Securities while the
Public Offering Price will vary with changes in the offering price of the
underlying Securities and with changes in the accrued interest; therefore, there
is no assurance that the present Estimated Current Return will be realized in
the future. Estimated Long-Term Return is calculated using a formula which (1)
takes into consideration, and determines and factors in the relative weightings
of, the market values, yields (which takes into account the amortization of
premiums and the accretion of discounts) and estimated retirements or average
lives of all of the Securities in the applicable Trust and (2) takes into
account the expenses and sales charge associated with each Trust Unit. Since
the market values and estimated retirements or average lives of the Securities
and the expenses of a Trust will change, there is no assurance that the present
Estimated Long-Term Return will be realized in the future. Estimated Current
Return and Estimated Long-Term Return are expected to differ because the
calculation of Estimated Long-Term Return reflects the estimated date and amount
of principal returned while Estimated Current Return calculations include only
net annual interest income and Public Offering Price.
MARKET FOR UNITS. After the initial offering period, while under no obligation
to do so, the Sponsor intends to, and certain Underwriters may, maintain a
market for the Units and to offer to repurchase such Units at prices subject to
change at any time which are based on the aggregate bid side evaluation of the
Securities in a Trust plus accrued interest.
RISK FACTORS. An investment in the Trusts should be made with an understanding
of the risks associated therewith, including, among other factors, the inability
of the issuer or an insurer, if any, to pay the principal of or interest on a
security when due, volatile interest rates, volatile market value of the
securities, early call provisions, and changes to the tax status of the
Securities. See "The Insured Corporate Series-Risk Factors," "The GNMA
Portfolios-Risk Factors" and "The U.S. Treasury Portfolios-Risk Factors."
2
<PAGE>
RANSON UNIT INVESTMENT TRUSTS, SERIES 69
ESSENTIAL INFORMATION
AS OF THE OPENING OF BUSINESS ON THE INITIAL DATE OF DEPOSIT
SPONSOR AND EVALUATOR: RANSON & ASSOCIATES, INC.
TRUSTEE: THE BANK OF NEW YORK
The income, expense and distribution data set forth below has been calculated
for Unitholders purchasing less than 10,000 Units of a Trust (less than 50,000
Units of a U.S. Treasury Portfolio). Unitholders purchasing 10,000 Units or
more of a Trust (50,000 Units or more of a U.S. Treasury Portfolio) will receive
a slightly higher return because of the reduced sales charge for larger
purchases.
<TABLE>
<CAPTION>
Insured GNMA GNMA U.S. Treasury
Corporate Portfolio Portfolio Portfolio
Series 12 Series 10 Series 11 Series 20
---------- ---------- ---------- -------------
<S> <C> <C> <C> <C>
Cusip 753268580 753268598 753268606 753268614
Public Offering Price per Unit (1)(2) $ 10.108 $ 10.138 $ 10.089 $ 10.023
Principal Amount of Securities per Unit $ 10.000 $ 10.000 $ 10.000 $ 10.000
Estimated Current Return based on Public
Offering Price (3)(4)(5) 6.36% 6.01% 6.50% 5.31%
Estimated Long-Term Return (3)(4)(5) 6.40% 5.93% 6.35% 5.19%
Estimated Normal Annual Distribution per Unit $ .6432 $ -- $ -- $ .5320
Principal Amount of Securities $ 875,000 $ 215,000 $ 215,000 $ 500,000
Number of Units $ 87,500 $ 21,500 $ 21,500 $ 50,000
Fractional Undivided Interest per Unit $ 1/87,500 $ 1/21,500 $ 1/21,500 $ 1/50,000
Calculation of Public Offering Price:
Aggregate Offering Price of Securities $ 841,095 $ 210,332 $ 208,353 $ 491,378
Aggregate Offering Price of Securities per Unit $ 9.613 $ 9.783 $ 9.691 $ 9.828
Plus Sales Charge per Unit (6) $ .495 $ .355 $ .398 $ .195
Public Offering Price per Unit (1)(2) $ 10.108 $ 10.138 $ 10.089 $ 10.023
Redemption Price per Unit $ 9.567 $ 9.771 $ 9.679 $ 9.821
Sponsor's Initial Repurchase Price per Unit $ 9.613 $ 9.783 $ 9.691 $ 9.828
Excess of Public Offering Price per Unit
over Redemption Price per Unit $ .541 $ .367 $ .41 $ .202
Excess of Public Offering Price per Unit
over Sponsor's Initial Repurchase Price per Unit $ .495 $ .355 $ .398 $ .195
Calculation of Estimated Net Annual
Interest Income per Unit(11):
Estimated Annual Interest $ .6670 6.279% 6.744% $ .5505
Less: Estimated Annual Expense $ .0238 .186% .186% $ .0185
Estimated Net Annual Interest Income $ .6432 6.093% 6.558% $ .5320
Estimated Daily Rate of Net Interest Accrual per Unit $ .00179 -- -- $ .00148
Type of GNMA Securities -- Midget Long Term --
Estimated Average Life of GNMA Securities -- 5.8 8.5 --
Minimum Principal Value of the Trust under which
Trust Agreement may be terminated (7) $ 350,000 40% 40% $ 200,000
</TABLE>
Evaluations for purposes of sale, purchase or redemption of Units are made as of
the close of business of the Sponsor (currently 3:15 p.m. Central Time) (the
"Evaluation Time") next following receipt of an order for a sale or purchase of
Units or receipt by the Trustee of Units tendered for redemption.
3
<PAGE>
ESSENTIAL INFORMATION-(CONTINUED)
<TABLE>
<CAPTION>
Insured GNMA GNMA U.S. Treasury
Corporate Portfolio Portfolio Portfolio
Series 12 Series 10 Series 11 Series 20
---------- ---------- ---------- -------------
<S> <C> <C> <C> <C>
Trustee's Annual Fee per $1,000 principal amount
of Securities (8) $ 1.43 $ .86 $ .86 $ 1.20
Interest Payments (9):
First Payment per Unit, representing 5 days $ .0089 $ .0085 $ .0091 $ .0074
Estimated Normal Monthly Distribution per Unit $ .0536 -- -- $ .0443
Estimated Normal Annual Distribution per Unit $ .6432 -- -- $ .5320
Sales Charge (6):
As a percentage of Public Offering Price per Unit 4.900% 3.500% 3.950% 1.950%
As a percentage of net amount invested 5.153% 3.623% 4.108% 1.984%
</TABLE>
<TABLE>
<S> <C>
Date of Trust Agreement May 20, 1998
First Settlement Date May 26, 1998
Mandatory Termination Date January 1, 2030
Estimated Annual Organizational Expenses (10) $.001 per Unit
Evaluator's Annual Evaluation Fee-
Insured Corporate Series Maximum of $0.30 per $1,000 Principal Amount of Securities
Sponsor's Annual Surveillance Fee-
Insured Corporate Series Maximum of $0.25 per $1,000 Principal Amount of Securities
Evaluator's Annual Evaluation Fee-
GNMA Portfolio Maximum of $0.20 per $1,000 Principal Amount of Securities
Sponsor's Annual Surveillance Fee-
GNMA Portfolio Maximum of $0.25 per $1,000 Principal Amount of Securities
Evaluator's Annual Evaluation Fee-
U.S. Treasury Portfolio Maximum of $0.10 per $1,000 Principal Amount of Securities
Sponsor's Annual Surveillance Fee-
U.S. Treasury Portfolio Maximum of $0.15 per $1,000 Principal Amount of Securities
</TABLE>
- --------------------
(1) Anyone ordering Units for settlement after the First Settlement Date
will pay accrued interest from such date to the date of settlement
(normally three business days after order) less distributions from
the Interest Account subsequent to the First Settlement Date. For
purchases settling on the First Settlement Date, no accrued interest
will be added to the Public Offering Price.
(2) Many unit investment trusts issue a number of units such that each unit
represents approximately $1,000 principal amount of underlying securities.
The Sponsor, on the other hand, in determining the number of Units for
each Trust has elected not to follow this format but rather to provide
that number of Units which will establish as close as possible as of the
Initial Date of Deposit a Principal Amount of Securities per Unit of $10.
(3) The Estimated Current Return and Estimated Long-Term Return are
increased for transactions entitled to a reduced sales charge. See
"Public Offering of Units-Public Offering Price."
(4) The Estimated Current Returns are calculated by dividing the estimated
net annual interest income per Unit by the Public Offering Price. The
estimated net annual interest income per Unit will vary with changes in
fees and expenses of the Trustee, the Sponsor and the Evaluator and with
the principal prepayment, redemption, maturity, exchange or sale of
Securities while the Public Offering Price will vary with changes in the
offering price of the underlying Securities and with changes in the
accrued interest; therefore, there is no assurance that the present
Estimated Current Returns indicated above will be realized in the
future. The Estimated Long-Term
4
<PAGE>
Returns are calculated using a formula which (1) takes into consideration,
and determines and factors in the relative weightings of, the market
values, yields (which takes into account the amortization of premiums and
the accretion of discounts) and estimated retirement dates of all of the
Securities in the applicable Trust and (2) takes into account the expenses
and sales charge associated with each Trust Unit. Since the market values
and estimated retirement dates of the Securities and expenses of each
Trust will change, there is no assurance that the present Estimated Long-
Term Returns as indicated above will be realized in the future. The
Estimated Current Returns and Estimated Long-Term Returns are expected to
differ because the calculation of the Estimated Long-Term Returns reflects
the estimated date and amount of principal returned while the Estimated
Current Return calculations include only net annual interest income and
Public Offering Price.
(5) This figure is based on estimated per Unit cash flows. Estimated cash
flows will vary with changes in fees and expenses, with changes in current
interest rates and with the principal prepayment, redemption, maturity,
call, exchange or sale of the underlying Securities. The estimated cash
flows to Unitholders for the Trusts are either set forth under "Estimated
Cash Flows to Unitholders" for each Trust or are available upon request
at no charge from the Sponsor.
(6) Transactions subject to quantity discounts (see "Public Offering of
Units-Public Offering Price") will have reduced sales charges, thereby
reducing all percentages in the table.
(7) The minimum principal value of each Trust (other than a Tax-Exempt
Portfolio) under which the Trust Agreement may be terminated is 40% of the
total aggregate principal amount of securities deposited in each such Trust
during the primary offering period. The minimum principal value of each
Tax-Exempt Portfolio under which the Trust Agreement may be terminated is
20% of the initial aggregate principal amount of securities deposited in
such Trust.
(8) See "General Information-Expenses of the Trusts."
(9) Unitholders will receive interest distributions monthly. The Record
Date is the first day of the month, commencing June 1, 1998, and the
distribution date is the fifteenth day of the month, commencing June 15,
1998.
(10) Each Trust (and therefore Unitholders) will bear all or a portion of its
organizational costs (including costs of preparing the registration
statement, the trust indenture and other closing documents, registering
Units with the Securities and Exchange Commission and states, the initial
audit of the portfolio and the initial fees and expenses of the Trustee,
but not including the expenses incurred in the preparation and printing of
brochures and other advertising materials and any other selling expenses)
as is common for mutual funds. It is intended that total organizational
expenses will be amortized over a five year period or the life of the
related Trust if less than five years. See "General Information-Expenses
of the Trusts" and "Statements of Net Assets." Historically, the sponsors
of unit investment trusts have paid all the costs of establishing such
trusts.
(11) Estimated annual interest amounts are expressed as percentages for the
GNMA Portfolios due to the prepayment risk associated with GNMA Securities.
See "The Trust Funds" and "General Information-Interest, Estimated Long-
Term Return and Estimated Current Return."
5
<PAGE>
THE TRUST FUNDS
Ranson Unit Investment Trusts, Series 69 includes the following separate unit
investment trusts created by the Sponsor under the name Ranson Unit Investment
Trusts: "Insured Corporate, Series 12," "GNMA Portfolio, Series 10," "GNMA
Portfolio, Series 11" and "U.S. Treasury Portfolio, Series 20". Each of the
Trust Funds is separate and is designated by a different series number. Each of
the Trust Funds was created under the laws of the State of New York pursuant to
a trust indenture dated the Initial Date of Deposit (the "Trust Agreements")
between Ranson & Associates, Inc. (the "Sponsor" and "Evaluator") and The Bank
of New York (the "Trustee").*
The Insured Corporate Series was formed for the purpose of providing a high
level of current income through investment in a fixed portfolio consisting
primarily of long-term corporate debt obligations issued after July 18, 1984 by
utility companies.
The GNMA Portfolios were formed for the purpose of obtaining safety of capital
and current monthly distributions of interest and principal through investment
in a portfolio primarily consisting of mortgage-backed securities of the
modified pass-through type on which all payments of principal and interest are
fully guaranteed by the GNMA. The full faith and credit of the United States is
pledged to the payment of the Securities in each GNMA Portfolio but the Units
themselves are not backed by such full faith and credit.
The U.S. Treasury Portfolio was formed for the purpose of providing safety of
capital and investment flexibility through an investment in a portfolio of U.S.
Treasury Obligations that are backed by the full faith and credit of the United
States government. The U.S. Treasury Portfolio was also 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 value of the Units,
the estimated current return and the estimated long-term return to new
purchasers will fluctuate with the value of the Securities in the portfolio
which will generally decrease or increase inversely with changes in interest
rates.
There is, of course, no guarantee that the Trust Funds' objectives will be
achieved.
As used herein, the terms "Securities" and "Bonds" mean the obligations
initially deposited in the Trusts described under "Portfolio" for each Trust
(including all contracts to purchase such obligations accompanied by an
irrevocable letter of credit sufficient to perform such contracts initially
deposited in the Trusts) and any additional obligations deposited in the Trusts
following the Initial Date of Deposit. As used herein, the term "Corporate
Bonds" means the corporate obligations (and contracts) included in the Insured
Corporate Series. "Portfolio Obligations" means the obligations (and contracts
for the purchase thereof) included in the GNMA Portfolios. As used herein, the
term "U.S. Treasury Obligations" means the obligations (and contracts) included
in the U.S. Treasury Portfolios and any U.S. Treasury obligations included in
the Insured Corporate Series.
On the Initial Date of Deposit, the Sponsor delivered to the Trustee that
aggregate principal amount of Securities or contracts for the purchase thereof
for deposit in the Trust Funds as set forth under "Essential
- --------------------
* Reference is made to the Trust Agreements, and any statements contained herein
are qualified in their entirety by the provisions of the Trust Agreements.
6
<PAGE>
Information." Of such principal amount, the amount specified in "Essential
Information" was deposited in each Trust. In exchange for the Securities so
deposited, the Trustee delivered to the Sponsor documentation evidencing the
ownership of that number of Units for each Trust as indicated under "Essential
Information." Each Trust initially consists of delivery statements (i.e.,
contracts) to purchase obligations. The Sponsor has a limited right of
substitution for such Securities in the event of a failed contract. See
"General Information-Trust Information."
Additional Units of each Trust may be issued from time to time following the
Initial Date of Deposit by depositing in the Trust additional Securities (or
contracts for the purchase thereof together with cash or irrevocable letters of
credit) or cash (including a letter of credit) with instructions to purchase
additional Securities. As additional Units are issued by a Trust as a result of
the deposit of additional Securities by the Sponsor, the aggregate value of the
Securities in the Trust will be increased and the fractional undivided interest
in the Trust represented by each Unit will be decreased. The Sponsor may
continue to make additional deposits of Securities into a Trust following the
Initial Date of Deposit, provided that such additional deposits will be in
principal amounts which will maintain the same original percentage relationship
among the principal amounts of the Securities in such Trust established by the
initial deposit of the Securities. Thus, although additional Units will be
issued, each Unit will continue to represent the same principal amount of each
Security, and the percentage relationship among the principal amount of each
Security in the related Trust will remain the same. If the Sponsor deposits
cash to purchase additional Securities exiting and new investors may experience
a dilution of their investments and a reduction in their anticipated income
because of fluctuations in the prices of the Securities between the time of the
cash deposit and the purchase of the Securities and because the Trust will pay
any associated brokerage fees. To minimize this effect, the Trust will attempt
to purchase the Securities as close to the evaluation time or as close to the
evaluation prices as possible.
Each Unit initially offered represents that undivided interest in the
appropriate Trust indicated under "Essential Information." To the extent that
any Units are redeemed by the Trustee or additional Units are issued as a result
of additional Securities being deposited by the Sponsor, the fractional
undivided interest in a Trust represented by each unredeemed Unit will increase
or decrease accordingly, although the actual interest in such Trust represented
by such fraction will remain unchanged. Units will remain outstanding until
redeemed upon tender to the Trustee by Unitholders, which may include the
Sponsor, or until the termination of the Trust Agreement.
An investment in Units of a Trust Fund should be made with an understanding of
the risks which an investment in fixed rate debt obligations may entail,
including the risk that the value of the portfolio and hence of the Units will
decline with increases in interest rates. The value of the underlying
Securities will fluctuate inversely with changes in interest rates. The
uncertain economic conditions of recent years, together with the fiscal measures
adopted to attempt to deal with them, have resulted in wide fluctuations in
interest rates and, thus, in the value of fixed rate debt obligations generally
and long-term obligations in particular. The Sponsor cannot predict the degree
to which such fluctuations will continue in the future.
7
<PAGE>
REPORT OF ALLEN, GIBBS & HOULIK, L.C.
INDEPENDENT AUDITORS
UNITHOLDERS
RANSON UNIT INVESTMENT TRUSTS, SERIES 69
We have audited the accompanying statements of net assets, including the Trust
portfolios, of Ranson Unit Investment Trusts, Series 69, as of the opening of
business on May 20, 1998, the Initial Date of Deposit. The statements of net
assets are the responsibility of the Sponsor. Our responsibility is to express
an opinion on the statements of net assets 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 statements of net assets are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the statements of net assets. An audit also
includes assessing the accounting principles used and significant estimates
made by the Sponsor, as well as evaluating the overall statements of net
assets presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the statements of net assets referred to above present fairly,
in all material respects, the financial position of Ranson Unit Investment
Trusts, Series 69 as of May 20, 1998, in conformity with generally accepted
accounting principles.
ALLEN, GIBBS & HOULIK, L.C.
Wichita, Kansas
May 20, 1998
8
<PAGE>
RANSON UNIT INVESTMENT TRUSTS, SERIES 69
STATEMENTS OF NET ASSETS
AT THE OPENING OF BUSINESS ON MAY 20, 1998, THE INITIAL DATE OF DEPOSIT
<TABLE>
<CAPTION>
Insured GNMA GNMA U.S. Treasury
Corporate Portfolio Portfolio Portfolio
Series 12 Series 10 Series 11 Series 20
---------- ---------- ---------- -------------
<S> <C> <C> <C> <C>
TRUST PROPERTY
Investment in securities--
Securities deposited in Trust (1) $ 841,095 $ 210,333 $ 208,353 $ 491,378
Accrued interest to Initial Date of Deposit on
Securities (2) 14,499 713 765 7,567
Organizational Costs (3) 10,000 2,500 2,500 5,000
Less distributions payable (2) 14,499 713 765 7,567
Less accrued organizational costs (3) 10,000 2,500 2,500 5,000
---------- ---------- ---------- ----------
Net assets, applicable to outstanding Units of
fractional undivided interest $ 841,095 $ 210,333 $ 208,353 $ 491,378
========== ========== ========== ==========
INTEREST OF UNITHOLDERS
Cost to investors (4) $ 884,432 $ 217,962 $ 216,922 $ 501,150
Less sales charge (4) 43,337 7,629 8,569 9,772
---------- ---------- ---------- ----------
Net proceeds to the Trust, equal to net assets $ 841,095 $ 210,333 $ 208,353 $ 491,378
========== ========== ========== ==========
<FN>
- --------------------
NOTES:
(1) Aggregate cost to the Trust of the Securities listed in the Trust
Portfolio is based on offering side evaluations determined by Muller Data
Corporation.
(2) Pursuant to the Trust Agreement, the Trustee will advance funds in the
amount of $23,495 representing the accrued interest to May 26, 1998 (the
"First Settlement Date") and such advance will be distributed to the Sponsor.
(3) Each Trust will bear all or a portion of its organizational costs, which
the Sponsor intends to defer and amortize over a five year period or over the
life of the related Trust if less than five years. Organizational costs have
been estimated based on a projected Trust size of $20,000,000, $5,000,000,
$5,000,000 and $10,000,000 for Insured Corporate Series 12, GNMA Portfolio
Series 10, GNMA Portfolio Series 11 and U.S. Treasury Portfolio Series 20,
respectively. Organizational costs may be or more or less than this estimate
based upon the actual size of each Trust.
(4) The aggregate cost to investors (exclusive of interest) includes a sales
charge as set forth under "Essential Information" assuming no reduction of
sales charge for quantity purchases.
</TABLE>
9
<PAGE>
PUBLIC OFFERING OF UNITS
PUBLIC OFFERING PRICE. Units of a Trust are offered at the Public Offering
Price thereof. During the initial offering period, the Public Offering Price
per Unit is equal to the aggregate of the offering side evaluations of the
Securities in such Trust (as determined, pursuant to the terms of a contract
with the Evaluator, by Muller Data Corporation, a non-affiliated firm regularly
engaged in the business of evaluating, quoting or appraising comparable
securities), plus or minus a pro rata share of cash, if any, in the Principal
account held or owned by such Trust plus accrued interest plus the applicable
sales charge referred to in the tables below divided by the number of
outstanding Units of such Trust. The Public Offering Price for secondary market
transactions, on the other hand, is based on the aggregate bid side evaluations
of the Securities in a Trust (also, currently, as determined by Muller Data
Corporation), plus or minus cash, if any, in the Principal Account held or owned
by such Trust, plus accrued interest plus a sales charge based upon the dollar
weighted average maturity of such Trust.
For the Insured Corporate Series, the sales charge per Unit will be reduced
during the initial offering period pursuant to the following graduated scale:
<TABLE>
<CAPTION>
Weighted Average Years to Maturity
----------------------------------
15 or More
----------------------------------
Percent of Percent of
Offering Net Amount
Number of Units Price Invested
---------- ----------
<S> <C> <C>
1 to 9,999 Units 4.9% 5.152%
10,000 to 24,999 Units 4.5 4.712
25,000 to 49,999 Units 4.3 4.493
50,000 to 99,999 Units 3.5 3.627
100,000 or more Units 3.0 3.093
</TABLE>
For GNMA Portfolios, the sales charge per Unit will be reduced during the
primary and secondary offering periods pursuant to the following graduated
scale:
<TABLE>
<CAPTION>
Midget Trust Long-Term Trust
------------------------- -------------------------
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
<FN>
- --------------------
* The breakpoint sales charges are also applied on a Unit basis utilizing a
breakpoint equivalent in the above table of $10 per Unit and will be applied
on whichever basis is more favorable to the investor.
** For any transactions in excess of these amounts, contact the Sponsor for the
applicable sales charge.
</TABLE>
10
<PAGE>
The sales charge per Unit for U.S. Treasury Portfolio Series (other than Series
which contain predominantly zero coupon U.S. Treasury Obligations) will be
reduced pursuant to the following graduated scale:
<TABLE>
<CAPTION>
Weighted Average Years to Maturity
----------------------------------
3 to 5.99
----------------------------------
Percent of Percent of
Offering Net Amount
Ticket Size* Price Invested
---------- ----------
<S> <C> <C>
Less than $500,000 1.95% 1.989%
$500,000 to $999,999 1.70 1.729
$1,000,000 to $1,499,999** 1.30 1.317
<FN>
- --------------------
* The breakpoint sales charges are also applied on a Unit basis utilizing a
breakpoint equivalent in the above table of $10 per Unit and will be applied
on whichever basis is more favorable to the investor.
** For any transactions in excess of these amounts, contact the Sponsor for the
applicable sales charge.
</TABLE>
As indicated above, in connection with secondary market transactions the sales
charge is based upon the dollar weighted average maturity of a Trust and is
determined in accordance with the tables set forth below. For purposes of this
computation, Securities will be deemed to mature on their expressed maturity
dates unless: (a) the Securities have been called for redemption or funds or
securities have been placed in escrow to redeem them on an earlier call date, in
which case such call date will be deemed to be the date upon which they mature;
or (b) such Securities are subject to a "mandatory tender," in which case such
mandatory tender will be deemed to be the date upon which they mature. The
effect of this method of sales charge computation will be that different sales
charge rates will be applied to a Trust based upon the dollar weighted average
maturity of such Trust's portfolio, in accordance with the following schedules.
For the Insured Corporate Series, in connection with secondary market
transactions the sales charge per Unit will be reduced as set forth below:
<TABLE>
<CAPTION>
Secondary
-----------------------------------------------
Dollar Weighted Average Years to Maturity*
4 to 7.99 8 to 14.99 15 or more
-----------------------------------------------
Dollar Amount of Trade Sales Charge (Percent of Public Offering Price)
---------------------- -----------------------------------------------
<S> <C> <C> <C>
$1,000 to $99,999 3.50% 4.50% 5.50%
$100,000 to $499,999 3.25 4.25 5.00
$500,000 to $999,999 3.00 4.00 4.50
$1,000,000 or more 2.75 3.75 4.00
<FN>
- ----------
* If the dollar weighted average maturity of a Trust Fund is from 1 to 3.99
years, the sales charge is 2% and 1.5% of the Public Offering Price for
purchases of $1,000 to $249,999 and $250,000 or more, respectively.
</TABLE>
11
<PAGE>
In connection with secondary market transactions of all U.S. Treasury
Portfolios, the sales charge per Unit will be reduced as set forth below:
<TABLE>
<CAPTION>
Secondary
---------------------------------------------------------------------------
Dollar Weighted Average Years to Maturity
---------------------------------------------------------------------------
0-1.99 Yrs. 2-2.99 Yrs. 3-4.99 Yrs. 5-6.99 Yrs. 7-9.99 Yrs.
----------- ----------- ----------- ----------- -----------
Dollar Amount of Trade Sales Charge (Percent of Public Offering Price)
------------------------
<S> <C> <C> <C> <C> <C>
Less than $500,000 1.25% 1.50% 1.75% 2.25% 3.00%
$500,000 to $999,999 1.00 1.25 1.50 1.75 2.50
$1,000,000 to $1,499,999* 1.00 1.00 1.25 1.50 2.00
<FN>
- --------------------
* For any transaction in excess of $1,499,999 contact the Sponsor for the
applicable sales charge.
</TABLE>
The reduced sales charges resulting from quantity discounts as shown in the
tables above will apply to all purchases of Units on any one day by the same
purchaser from the same Underwriter or dealer and for this purpose purchases of
Units of a Trust Fund will be aggregated with concurrent purchases of Units of
any other unit investment trust that may be offered by the Sponsor. In
addition, during the initial offering period only, the reduced sales charges
resulting from quantity discounts as shown in the table above will apply to all
purchases of Units of a single Trust by the same person on such person's initial
purchase date or on any day subsequent to such initial purchase date, provided
that the person purchasing the Units purchased at least 25,000 Units on such
initial purchase date; to determine the applicable sales charge reduction it is
necessary to accumulate all purchases made on the purchaser's initial purchase
date and all purchases made subsequent to such initial purchase date.
For purposes of the reduced sales charges from quantity discounts, Units
purchased in the name of a spouse or child (under 21) of such purchaser will be
deemed to be additional purchases by such purchaser. The reduced sales charges
will also be applicable to a trust or other fiduciary purchasing for a single
trust estate or single fiduciary account.
Units may be purchased in the primary or secondary market at the Public Offering
Price less the concession the Sponsor typically allows to dealers and other
selling agents for purchases (see "Public Distribution of Units") by investors
who purchase Units through registered investment advisers, certified financial
planners or registered broker-dealers who in each case either charge periodic
fees for financial planning, investment advisory or asset management services,
or provide such services in connection with the establishment of an investment
account for which a comprehensive "wrap fee" charge is imposed.
A purchaser desiring to purchase during a 13 month period $500,000 or more of
any combination of series of Ranson Unit Investment Trusts may qualify for a
reduced sales charge by signing a nonbinding Letter of Intent with any single
broker-dealer. After signing a Letter of Intent, at the date total purchases,
less redemptions, of units of any combination of series of Ranson Unit
Investment Trusts by a purchaser (including units purchased in the name of the
spouse of a purchaser or in the name of a child of such purchaser under 21 years
of age) exceed $500,000, the selling broker-dealer, bank or other will credit
the unitholder with cash as a retroactive reduction of the sales charge on such
units equal to the amount which would have been paid for the total aggregated
sale amount. If a purchaser does not complete the required purchases under the
Letter of Intent within the 13 month period, no such retroactive sales charge
reduction shall be made. To qualify as a purchase
12
<PAGE>
under a Letter of Intent each purchase of units of Ranson Unit Investment Trusts
must equal or exceed $100,000.
Unitholders of the various series of Ranson or EVEREN Unit Investment Trusts
Insured Corporate Series who meet the conditions in the next succeeding sentence
may, during the primary offering period of an Investment Grade Series or a High
Yield Series only, acquire Units of such Series at the reduced sales charge
equivalent to purchases during the initial offering period of 100,000 or more
Units. First, the special sales charge discount only applies to purchases
acquired with funds received from distributions of unscheduled principal
payments in connection with units issued in such series and, second, the minimum
purchase must be at least $1,000.
The Sponsor intends to permit officers, directors and employees of the Sponsor
and Evaluator and, at the discretion of the Sponsor, registered representatives
of selling firms to purchase Units of a Trust without a sales charge, although a
transaction processing fee may be imposed on such trades.
Had Units of a Trust been available for sale at the opening of business on the
Initial Date of Deposit, the Public Offering Price would have been as shown
under "Essential Information." The Public Offering Price per Unit of a Trust on
the date of this Prospectus or on any subsequent date will vary from the amount
stated under "Essential Information" in accordance with fluctuations in the
prices of the underlying Securities and the amount of accrued interest on the
Units. On the Initial Date of Deposit, pursuant to an exemptive order from the
Securities and Exchange Commission, the Public Offering Price at which Units
will be sold will not exceed the price determined as of the opening of business
on the Initial Date of Deposit as shown under "Essential Information"; however,
should the value of the underlying Securities decline, purchasers will, of
course, be given the benefit of such lower price. The aggregate bid and
offering side evaluations of the Securities shall be determined (a) on the basis
of current bid or offering prices of the Securities, (b) if bid or offering
prices are not available for any particular Security, on the basis of current
bid or offering prices for comparable bonds, (c) by determining the value of
Securities on the bid or offer side of the market by appraisal, or (d) by any
combination of the above.
The foregoing evaluations and computations shall be made as of the evaluation
time stated under "Essential Information," on each business day commencing with
the Initial Date of Deposit of the Securities, effective for all sales made
during the preceding 24-hour period.
The interest on the Securities deposited in a Trust, less the related estimated
fees and expenses, is estimated to accrue in the annual amounts per Unit set
forth under "Essential Information." The amount of net interest income which
accrues per Unit may change as Securities mature or are redeemed, exchanged or
sold, or as the expenses of a Trust change or the number of outstanding Units of
a Trust changes.
Although payment is normally made three business days following the order for
purchase, payments may be made prior thereto. A person will become the owner of
Units on the date of settlement provided payment has been received. Cash, if
any, made available to the Sponsor prior to the date of settlement for the
purchase of Units may be used in the Sponsor's business and may be deemed to be
a benefit to the Sponsor, subject to the limitations of the Securities Exchange
Act of 1934. If a Unitholder desires to have certificates representing Units
purchased, such certificates will be delivered as soon as possible following his
written request therefor. For information with respect to redemption of Units
purchased, but as to which certificates requested have not been received, see
"General Information-Redemption" below.
13
<PAGE>
ACCRUED INTEREST. Accrued interest is the accumulation of unpaid interest on a
security from the last day on which interest thereon was paid. Interest on
Securities generally is paid semi-annually (monthly in the case of Ginnie Maes,
if any) although a Trust accrues such interest daily. Because of this, a Trust
always has an amount of interest earned but not yet collected by the Trustee.
For this reason, with respect to sales settling subsequent to the First
Settlement Date, the Public Offering Price of Units will have added to it the
proportionate share of accrued interest to the date of settlement. Unitholders
will receive on the next distribution date of a Trust the amount, if any, of
accrued interest paid on their Units.
In an effort to reduce the amount of accrued interest which would otherwise have
to be paid in addition to the Public Offering Price in the sale of Units to the
public, the Trustee will advance the amount of accrued interest as of the First
Settlement Date and the same will be distributed to the Sponsor as the
Unitholder of record as of the First Settlement Date. Consequently, the amount
of accrued interest to be added to the Public Offering Price of Units will
include only accrued interest from the First Settlement Date to the date of
settlement, less any distributions from the Interest Account subsequent to the
First Settlement Date.
Because of the varying interest payment dates of the Securities, accrued
interest at any point in time will be greater than the amount of interest
actually received by the Trusts and distributed to Unitholders. Therefore,
there will always remain an item of accrued interest that is added to the value
of the Units. If a Unitholder sells or redeems all or a portion of his Units,
he will be entitled to receive his proportionate share of the accrued interest
from the purchaser of his Units. Since the Trustee has the use of the funds
held in the Interest Account for distributions to Unitholders and since such
Account is noninterest-bearing to Unitholders, the Trustee benefits thereby.
COMPARISON OF PUBLIC OFFERING PRICE AND REDEMPTION PRICE. While the Initial
Public Offering Price of Units will be determined on the basis of the current
offering prices of the Securities in a Trust, the redemption price per Unit (as
well as the secondary market price per Unit) at which Units may be redeemed (see
"General Information-Redemption") will be determined on the basis of the current
bid prices of the Securities. As of the opening of business on the Initial Date
of Deposit, the Public Offering Price per Unit (based on the offering prices of
the Securities in a Trust and including the sales charge) exceeded the
redemption price at which Units could have been redeemed (based upon the current
bid prices of the Securities in a Trust) by the amount shown under "Essential
Information." Under current market conditions the bid prices for U.S. Treasury
Obligations are expected to be approximately 1/8 to 1/4 of 1% lower than the
offer price of such obligations. In the past, bid prices on securities similar
to those in the Trust Funds have been lower than the offering prices thereof by
as much as 5% or more of principal amount in the case of inactively traded bonds
or as little as 1/2 of 1% in the case of actively traded bonds, but the
difference between such offering and bid prices may be expected to average 3% to
4% of principal amount. For this reason, among others (including fluctuations
in the market prices of the Securities and the fact that the Public Offering
Price includes a sales charge), the amount realized by a Unitholder upon any
redemption of Units may be less than the price paid for such Units.
PUBLIC DISTRIBUTION OF UNITS. The Sponsor intends to qualify the Units for sale
in a number of states (except for an Insured State Trust or uninsured State
Trust which will be qualified for sale only in the state for which such Trust is
named). Units will be sold through dealers who are members of the National
Association of Securities Dealers, Inc. and through others. Sales may be made
to or through dealers at prices which represent discounts from the Public
Offering Price as set forth below. Certain commercial banks are making Units of
the Trust Funds available to their customers on an agency basis. A portion of
the sales charge paid by their
14
<PAGE>
customers is retained by or remitted to the banks in the amount shown in the
tables below. Under the Glass-Steagall Act, banks are prohibited from
underwriting Trust Fund Units; however, the Glass-Steagall Act does permit
certain agency transactions and the banking regulators have indicated that these
particular agency transactions are permitted under such Act. In addition, state
securities laws on this issue may differ from the interpretations of federal law
expressed herein and banks and financial institutions may be required to
register as dealers pursuant to state law. The Sponsor reserves the right to
change the discounts set forth below from time to time. In addition to such
discounts, the Sponsor may, from time to time, pay or allow an additional
discount, in the form of cash or other compensation, to dealers employing
registered representatives who sell, during a specified time period, a minimum
dollar amount of Units of a Trust and other unit investment trusts created by
the Sponsor. The difference between the discount and the sales charge will be
retained by the Sponsor. For Tax-Exempt Portfolios only, any dealer who sells
at least those amounts of Units set forth under "The Tax-Exempt
Portfolios-Underwriting" on the Initial Date of Deposit will be entitled to a
concession or agency commission equal to the corresponding takedown set forth in
that section for those Units sold on the Initial Date of Deposit.
For the Insured Corporate Series, the primary and secondary market concessions
or agency commissions are as follows:
<TABLE>
<CAPTION>
Primary Market
-------------------------------------------------------------------------
Volume Discounts per Unit*
---------------------------------------------------------
Regular Firm Sales or Firm Sales or Firm Sales or
Concession or Sale Sale Sale
Agency Arrangements Arrangements Arrangements
Commission 25,000 to 49,999 50,000 to 99,999 100,000 or more
------------- ---------------- ---------------- ---------------
Weighted Average Years to Maturity
15 or 15 or 15 or 15 or
Number of $10 Units more more more more
- ---------------------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
1 to 9,999 Units 3.20% 3.40% 3.50% 3.60%
10,000 to 24,999 Units 3.20 3.30 3.40 3.50
25,000 to 49,999 Units 3.10 3.20 3.20 3.30
50,000 to 99,999 Units 2.40 2.50 2.50 2.50
100,000 or more Units 2.00 2.10 2.10 2.10
<FN>
- --------------------
* Volume concessions of up to the amount shown can be earned as a marketing
allowance at the discretion of the Sponsor during the initial one month
period after the Initial Date of Deposit by firms who reach cumulative firm
sales or sales arrangement levels of at least $250,000. After a firm has met
the minimum $250,000 volume level, volume concessions may be given on all
trades originated from or by that firm, including those placed prior to
reaching the $250,000 level, and may continue to be given during the entire
initial offering period. Firm sales of any primary market Insured Corporate
trust series can be combined for the purposes of achieving the volume
discount. Only sales through the Sponsor qualify for volume discounts and
secondary purchases do not apply. The Sponsor reserves the right to modify
or change those parameters at any time and make the determination of which
firms qualify for the marketing allowance and the amount paid.
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
Secondary Market
----------------------------------------------------
Dollar Weighted Average Years to Maturity*
4 to 7.99 8 to 14.99 15 or more
----------------------------------------------------
Dollar Amount of Trade Discount per Unit (Percent 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
<FN>
- --------------------
* If the dollar weighted average maturity of a Trust Fund is from 1 to 3.99
years, the concession or agency commission is 1.00% of the Public Offering
Price.
</TABLE>
For GNMA portfolios, the primary and secondary market concessions or agency
commissions are as follows:
<TABLE>
<CAPTION>
Midget Trusts
---------------------------------------------------------------------------
Secondary
Primary Market Market
------------------------------------------------------------- ---------
Volume Discounts**
----------------------------------------------
Firm Sales Firm Sales Firm Sales
Regular or Sale or Sale or Sale
Concession Arrangements Arrangements Arrangements
or Agency ($250,000 to ($500,000 to ($1,000,000 All
Dollar Amount of Trade* Commission $499,999) $999,999) or more) Sales
- ----------------------- ---------- ------------ ------------ ------------ ---------
<S> <C> <C> <C> <C> <C>
$0 to $99,999 2.10% 2.15% 2.20% 2.25% 2.10%
$100,000 to $249,999 2.00 2.05 2.10 2.20 2.10
$250,000 to $499,999 1.75 1.80 1.80 1.85 1.80
$500,000 to $999,999*** 1.50 1.55 1.55 1.60 1.55
<CAPTION>
Long Term Trusts
---------------------------------------------------------------------------
Secondary
Primary Market Market
------------------------------------------------------------- ---------
Volume Discounts**
----------------------------------------------
Firm Sales Firm Sales Firm Sales
Regular or Sale or Sale or Sale
Concession Arrangements Arrangements Arrangements
or Agency ($250,000 to ($500,000 to ($1,000,000 All
Dollar Amount of Trade* Commission $499,999) $999,999) or more) Sales
- ----------------------- ---------- ------------ ------------ ------------ ---------
<S> <C> <C> <C> <C> <C>
$0 to $99,999 2.50% 2.60% 2.65% 2.70% 2.60%
$100,000 to $249,999 2.50 2.55 2.60 2.65 2.60
$250,000 to $499,999 2.25 2.30 2.30 2.35 2.30
$500,000 to $999,999*** 2.00 2.05 2.05 2.10 2.05
<FN>
* The breakpoint discount are also applied on a Unit basis utilizing a
breakpoint equivalent in the above table of $1,000 per 100 Units.
16
<PAGE>
** Volume discounts will be given to firms who reach cumulative firm sales or
sales arrangement levels of at least $250,000 during the initial one month
period after the Initial Date of Deposit. After a firm has met the minimum
$250,000 volume level, volume discounts will be given on all trades
originated from or by that firm, including those placed prior to reaching the
$250,000 level, and will continue to be given during the entire initial
offering period.
*** For any transactions in excess of these amounts, contact the Sponsor for
the applicable rates.
</TABLE>
The primary market concessions or agency commissions for U.S. Treasury Portfolio
Series (other than Series which contain predominantly zero coupon U.S. Treasury
Obligations) are as follows:
<TABLE>
<CAPTION>
Primary Market
-----------------------------------------
Volume Discounts**
------------------
Firm Sales
Regular or Sale
Concession Arrangements
or Agency ($1,000,000 or
Commission More
----------------- ------------------
0-2.99 3-4.99 0-2.99 3-4.99
Dollar Amount of Trade* Years Years Years Years
- ----------------------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
$0 to $499,999 1.05% 1.10% 1.05% 1.20%
$500,000 to $999,999 .90 1.00 .95 1.10
$1,000,000 to $1,499,999*** .75 .75 .80 .80
<FN>
* The breakpoint discounts are also applied on a Unit basis utilizing a
breakpoint equivalent in the above table of $1,000 per 100 Units.
** For U.S. Treasury Portfolio Series other than Series which contain
predominantly zero coupon U.S. Treasury Obligations, volume concessions of up
to the amount listed above can be earned as a marketing allowance at the
discretion of the Sponsor during the initial one month period after the
Initial Date of Deposit for firms who reach cumulative firm sales or sales
arrangement levels of at least $1 million. After a firm has met the
respective minimum volume level, volume concessions will be given on all
trades originated from or by that firm, starting on the Initial Date of
Deposit, including those placed prior to reaching the minimum level, and will
continue to be given during the entire initial offering period. Firm sales
of any primary U.S. Treasury Portfolio Series issued can be combined for the
purposes of achieving the volume discount. Only sales through the Sponsor
qualify for volume concessions and secondary purchases do not apply. The
Sponsor reserves the right to modify or change these parameters at any time
and make the determination of which firms qualify for the marketing allowance
and the amount paid.
*** For any transactions in excess of these amounts, contact the Sponsor for
the applicable concessions or agency commissions.
</TABLE>
17
<PAGE>
In connection with secondary market transactions of all U.S. Treasury
Portfolios, the sales charge per Unit will be reduced as set forth below:
<TABLE>
<CAPTION>
Secondary
---------------------------------------------------------------------------
Dollar Weighted Average Years to Maturity
---------------------------------------------------------------------------
0-1.99 Yrs. 2-2.99 Yrs. 3-4.99 Yrs. 5-6.99 Yrs. 7-9.99 Yrs.
----------- ----------- ----------- ----------- -----------
Dollar Amount of Trade 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-$999,999 1.00 1.25 1.50 1.75 2.50
$1,000,000-$1,499,999* 1.00 1.00 1.25 1.50 2.00
<FN>
* For any transaction in excess of $1,499,999 contact the Sponsor for the
applicable sales charge.
</TABLE>
The Sponsor reserves the right to reject, in whole or in part, any order for the
purchase of Units.
PROFITS OF SPONSOR AND UNDERWRITERS. In connection with Trusts other than a
Tax-Exempt Portfolio, the Sponsor will receive gross sales charges equal to the
percentage of the Offering Price of the Units of such Trusts stated under
"Public Offering Price" and will pay a fixed portion of such sales charges to
dealers and agents. As set forth under "The Tax-Exempt
Portfolios-Underwriting," the Underwriters of each Tax-Exempt Portfolio will
receive gross sales charges equal to the percentage of the Public Offering Price
of the Units of such Trust Fund stated under "Public Offering Price" and the
Sponsor will receive a fixed portion of such sales charges. In addition, the
Sponsor may realize a profit or a loss resulting from the difference between the
purchase prices of the Securities to the Sponsor and the cost of such Securities
to a Trust Fund, which is based on the offering side evaluation of the
Securities. See "Portfolio" for each Trust. The Sponsor or Underwriters may
also realize profits or losses with respect to Securities deposited in a Trust
which were acquired from underwriting syndicates of which the Sponsor or any
Underwriter was a member. An underwriter or underwriting syndicate purchases
securities from the issuer on a negotiated or competitive bid basis, as
principal, with the motive of marketing such securities to investors at a
profit. The Sponsor and the Underwriters may realize additional profits or
losses during the initial offering period on unsold Units as a result of changes
in the daily evaluation of the Securities in a Trust.
18
<PAGE>
- -------------------------------------------------------------------------------
THE INSURED CORPORATE SERIES
- -------------------------------------------------------------------------------
THE TRUST PORTFOLIO
Insured Corporate Series 12 was formed for the purpose of providing a high level
of current income through investment in a fixed portfolio consisting primarily
of long-term corporate debt obligations issued after July 18, 1984 by utility
companies. There is, of course, no guarantee that the objective will be
achieved.
The Trust may be appropriate investment vehicle for investors who desire to
participate in a portfolio of long-term taxable fixed income securities issued
primarily by public utilities with greater diversification than investors might
be able to acquire individually. Diversification of the 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 Trust often are not available in
small amounts.
The selection of Bonds for the 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; (e) whether the Bonds were insured or the
availability and cost of insurance for the scheduled payment of principal and
interest on the Bonds; (f) whether the Bonds were issued after July 18, 1984;
(g) the stated maturity of the Bonds; and (h) the call provisions relating to
the Bonds.
As of the Initial Date of Deposit, all of the Bonds in the Trust's portfolio
other than any U.S. Treasury obligations are rated "Aaa" by Moody's Investors
Service, Inc. and "AAA" by Standard & Poor's. Standard & Poor's states that
"bonds rated AAA have the highest rating assigned by Standard & Poor's to a debt
obligation. Capacity to pay interest and principal is extremely strong."
Moody's Investors Service, Inc. states that bonds "which are rated Aaa are
judged to be the best quality. They carry the smallest degree of investment
risk and are generally referred to as 'gilt edge.' Interest payments are
protected by a large or by an exceptionally stable margin and principal is
secure. While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the fundamentally
strong position of such issues. Their safety is so absolute that, with the
occasional exception of oversupply in a few specific instances,
characteristically, their market value is affected solely by money market
fluctuations." See "Insurance on the Bonds." Subsequent to the Initial Date of
Deposit, a Bond may cease to be so rated. If this should occur, a Trust would
not be required to eliminate the Bond from the Trust, but such event may be
considered in the Sponsor's determination to direct the Trustee to dispose of
such investment. See "General Information-Investment Supervision." The Trust
consists of that number of Bonds divided by type and concentrations, if any (and
percentage of principal amount of the Trust) as set forth in the following
table.
INSURED CORPORATE SERIES IC-1
<PAGE>
SERIES INFORMATION
<TABLE>
<CAPTION>
Series 12
---------
<S> <C>
Number of Securities 7
Corporate Bonds(1)(2) 6
U.S. Treasury Obligations(2) 1
Average life of the Bonds in the Trust(3) 29.4
Percentage of "when, as and if issued" or "delayed delivery" Bonds purchased by the Trust None
Syndication(4) None
<FN>
(1) The Corporate Bonds have been issued by public utility companies.
(2) The portfolio percentage in parenthesis represents the principal amount
of such Bonds to the total principal amount of Bonds in the Trust. For a
discussion of the risks associated with investments in the bonds of such
issuers, see "Risk Factors" below.
(3) The average life of the Bonds in a Trust is calculated based upon the
stated maturities of the bonds in such Trust (or, with respect to Bonds for
which funds or securities have been placed in escrow to redeem such Bonds on
a stated call date, based upon such call date). The average life of the
Bonds in a Trust may increase or decrease from time to time as Bonds mature
or are called or sold.
(4) The Sponsor has participated as either the sole underwriter or manager
or a member of underwriting syndicates from which approximately that
percentage listed above of the aggregate principal amount of the Bonds in
such Trust were acquired.
</TABLE>
INSURED CORPORATE SERIES IC-2
<PAGE>
<TABLE>
<CAPTION>
RANSON UNIT INVESTMENT TRUSTS, SERIES 69 INSURED CORPORATE
SERIES 12
PORTFOLIO
AS OF THE INITIAL DATE OF DEPOSIT: MAY 20, 1998
Ratings(2)
------------------
Aggregate Standard Redemption Cost of Bonds
Principal Name of Issuer(1)(5) Coupon Maturity Moody's & Poor's Provisions(3) to Trust(4)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 100,000 Consolidated Edison 7.100% 2/1/2028 Aaa AAA 2008 @ 103.371 $103,400
75,000 New York Telephone 7.000 8/15/2025 Aaa AAA 2003 @ 102.340 75,715
200,000 Pacific Bell 7.500 2/1/2033 Aaa AAA 2003 @ 102.940 209,662
125,000 Pacific Gas 7.250 3/1/2026 Aaa AAA 2003 @ 102.020 128,051
200,000 Texas Utilities 7.375 10/1/2025 Aaa AAA 2003 @ 103.350 206,336
100,000 U. S. West 7.200 11/10/2026 Aaa AAA 2005 @ 103.040 102,838
75,000 U.S. Treasury (6)# 0.000 5/15/2025 N/A N/A Noncallable 15,093
- --------- --------
$ 875,000 $841,095
========= ========
<FN>
- --------------------
See "Notes to Portfolios."
</TABLE>
INSURED CORPORATE SERIES IC-3
<PAGE>
NOTES TO PORTFOLIO:
All Bonds in the Trust except for any U.S. Treasury Obligations are insured only
by MBIA Insurance Corporation. The insurance was obtained either directly by
the issuer of the Bonds or by the Sponsor.
* These Bonds are "when, as and if issued" or "delayed delivery" and have
expected settlement dates after the First Settlement Date.
(1) Contracts to acquire Bonds were entered into by the Sponsor on May 15,
1998. All Bonds are represented by regular way contracts, unless otherwise
indicted, for the performance of which an irrevocable letter of credit has
been deposited with the Trustee.
(2) All the Bonds in the Trusts except for the U.S. Treasury Obligations are
insured by MBIA Insurance Corporation and therefore are rated AAA by
Standard & Poor's and Aaa by Moody's. See "The Trust Portfolio" and
"Insurance on the Bonds."
(3) There is shown under this heading the year in which each issue of Bonds
is initially or currently redeemable and the redemption price for that year;
unless otherwise indicated, each issue continues to be redeemable at
declining prices thereafter, but not below par value. The prices at which
the Bonds may be redeemed or called prior to maturity may or may not include
a premium and, in certain cases, may be less than the cost of the Bonds to a
Trust. In addition, certain Bonds in the portfolio may be redeemed in whole
or in part other than by operation of the stated redemption provisions under
certain unusual or extraordinary circumstances specified in the instruments
setting forth the terms and provisions of such Bonds.
(4) During the initial offering period, evaluations of Bonds are made on the
basis of current offering side evaluations of the Bonds. The aggregate
offering price is greater than the aggregate bid price of the Bonds, which
is the basis on which the Redemption Price will be determined for purposes
of redemption of Units after the initial offering period.
(5) Other information regarding the Bonds in the Trusts, at the opening of
business on the Initial Date of Deposit, is as follows:
<TABLE>
<CAPTION>
Insured
Corporate
Series 12
---------
<S> <C>
Cost of Bonds to Sponsor $ 840,693
Profit or (Loss) to Sponsor $ 402
Annual Interest Income to Trust $ 58,363
Bid Side Value of Bonds $ 837,095
</TABLE>
The Cost of Bonds to Sponsor and Profit or (Loss) to Sponsor reflect
portfolio hedging transaction costs, hedging gains or losses, certain other
carrying costs and the cost of insurance obtained by the Sponsor for
individual Bonds, if any, prior to the date such Bonds are deposited in a
Trust.
"#" indicates that such Bond was issued at an original issue discount. The
tax effect of Bonds issued at an original issue discount is described in
"Federal Tax Status" below.
(6) This Security has been purchased at a deep discount from the par value
because there is little or no stated interest income thereon. Securities
which pay no interest are normally described as "zero coupon" Securities.
Over the life of Securities purchased at a deep discount the value of such
Securities will increase such that upon maturity the holders of such
Securities will receive 100% of the principal amount thereof. Approximately
INSURED CORPORATE SERIES IC-4
<PAGE>
9% of the aggregate principal amount of the Securities in Series 12 are
"zero coupon" Securities.
RISK FACTORS
Public Utility Issues
Certain of the Bonds 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 Units
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 issuers of certain of the Bonds 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 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.,
INSURED CORPORATE SERIES IC-5
<PAGE>
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.
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 issuer 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.
Business conditions of the telephone industry in general may affect the
performance of a Trust. 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 Trusts.
INSURED CORPORATE SERIES IC-6
<PAGE>
Inflation has substantially increased the operating expenses and cost of plant
required for growth, service, improvement and replacement of existing plant.
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 ratemaking proceedings for cost increases, delays may be experienced in
obtaining the necessary rate increases and there can be no assurance that 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 may be "zero coupon" U.S. Treasury obligations. See
footnote (6) in "Notes to Portfolios." 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.
INSURANCE ON THE BONDS
All Bonds (other than U.S. Treasury obligations, if any) are insured as to the
scheduled payment of interest and principal either by the issuer of the Bonds or
by the Sponsor under a financial guaranty insurance policy obtained from MBIA
Insurance Corporation ("MBIA Corporation"). See "Portfolio" and the Notes
thereto. The premium 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 a Trust. 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 any U.S. Treasury
obligations. It does not guarantee the market value of the Bonds or the value
of the Units. 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 is domiciled in the State
of New York and licensed to do business in and subject to regulation under the
laws of all 50 states, the District of Columbia, the Commonwealth of the
Northern Mariana Islands,
INSURED CORPORATE SERIES IC-7
<PAGE>
the Commonwealth of Puerto Rico, the Virgin Islands of the United States and the
Territory of Guam. MBIA Corporation has two European branches, one in the
Republic of France and the other in the Kingdom of Spain. New York has laws
prescribing minimum capital requirements, limiting classes and concentrations of
investments and requiring the approval of policy rates and forms. State laws
also regulate the amount of both the aggregate and individual risks that may be
insured, the payment of dividends by MBIA Corporation, changes in control and
transactions among affiliates. Additionally, MBIA Corporation is required to
maintain contingency reserves on its liabilities in certain amounts and for
certain periods of time.
As of September 30, 1997, MBIA Corporation had admitted assets of $5.1 billion
(unaudited), total liabilities of $3.4 billion (unaudited), and total capital
and surplus of $1.7 billion (unaudited) determined in accordance with statutory
accounting practices prescribed or permitted by insurance regulatory
authorities. As of December 31, 1996 MBIA Corporation had admitted assets of
$4.4 billion (audited), total liabilities of $3.0 billion (audited), and total
capital and surplus of $1.4 billion (audited) determined in accordance with
statutory accounting practices prescribed or permitted by insurance regulatory
authorities. Standard & Poor's has rated the claims paying ability of MBIA
Corporation "AAA." 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.
Moody's Investors Service rates all bond issues insured by MBIA Corporation
"Aaa" and short term loans "MIG 1," both designated to be of the highest
quality. Standard & Poor's rates all new issues insured by MBIA Corporation
"AAA."
Bonds for which insurance has been obtained by the issuer thereof or by the
Sponsor from MBIA Corporation may or may not have a higher yield than uninsured
bonds rated "AAA" by Standard & Poor's or "Aaa" by Moody's Investors Service,
Inc. In selecting Bonds, the Sponsor has applied the criteria hereinbefore
described.
FEDERAL TAX STATUS
For purposes of the following discussions and opinions, it is assumed that the
Bonds are debt for federal income tax purposes and that interest on each of the
Bonds is included in gross income for Federal income tax purposes. In the
opinion of Chapman and Cutler, special counsel for the Sponsor, under existing
law:
Each Trust is not an association taxable as a corporation for United States
Federal income tax purposes.
Each Unitholder will be considered the owner of a pro rata portion of each of
the Trust assets for Federal income tax purposes under Subpart E, Subchapter J
of Chapter 1 of the Internal Revenue Code of 1986 (the "Code"). 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 such 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.
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
INSURED CORPORATE SERIES IC-8
<PAGE>
Unitholders pay for their Units to the extent that 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. Unitholders
should consult their own tax advisors with regard to calculation of basis.
Gain or loss upon the sale or redemption of Units is measured by comparing the
proceeds of such sale or redemption with the adjusted basis of the Units. If
the Trustee disposes of Bonds (whether by sale, exchange, payment on maturity,
redemption or otherwise), gain or loss is recognized to the Unitholder (subject
to various nonrecognition provisions of the Code). The amount of any such gain
or loss is measured by comparing the Unitholder's pro rata share of the total
proceeds from such disposition with his basis for his fractional interest in the
asset disposed of. The basis of each Unit and of each Bond which was issued
with original issue discount (including the U.S. Treasury obligations) (or which
has market discount) must be increased by the amount of accrued original issue
discount (and market discount, if the Unitholder elects to include market
discount in income as it accrues) and the basis of each Unit and of each 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 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 the 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 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 U.S. Treasury
obligations 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 the
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 each 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
INSURED CORPORATE SERIES IC-9
<PAGE>
adjusted gross income (similar limitations also apply to estates and trusts).
Unitholders may be required to treat some or all of the expenses paid by each
Trust as miscellaneous itemized deductions subject to this limitation.
Premium. If a Unitholder's tax basis of his pro rata portion in any Bonds held
by a Trust exceeds the amount payable by the issuer of the Bond with respect to
such pro rata interest upon the maturity of the Bond, such excess would be
considered premium which may be amortized by the Unitholder at the Unitholder's
election as provided in Section 171 of the Code. Unitholders should consult
their tax advisers regarding whether such election should be made and the manner
of amortizing premium.
Original Issue Discount. Certain of the Bonds of a Trust may have been acquired
with "original issue discount." In the case of any Bonds of the Trust acquired
with "original issue discount" that exceeds a "de minimis" amount as specified
in the Code or in the case of the 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 the 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
advisers 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 each Trust, and on the sale by a Unitholder of Units, unless a
Unitholder elects to include the accrued market discount in taxable income as
such discount accrues. If a Unitholder does not elect to annually include
accrued market discount in taxable income as it accrues, deductions for any
interest expense
INSURED CORPORATE SERIES IC-10
<PAGE>
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 each 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 each Trust.
Recognition of Taxable Gain or Loss Upon Disposition of Obligations by the Trust
or Disposition of Units. A Unitholder will recognize taxable capital gain (or
loss) when all or part of his pro rata interest in a Bond is disposed of in a
taxable transaction for an amount greater (or less) than his tax basis therefor,
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 each Trust or the disposition of Units
by a Unitholder will be determined by the period of time the Unitholder held his
Unit and the period of time the Trust held the Bond. The Taxpayer Relief Act of
1997 (the "1997 Act") provides that for taxpayers other than corporations, net
capital gain (which is defined as net long-term capital gain over net short-term
capital loss for the taxable year) is subject to a maximum marginal stated tax
rate of either 28% or 20%, depending upon the holding periods of the capital
assets. Capital gain or loss is long-term if the holding period for the asset
is more than one year, and is short-term if the holding period for the asset is
one year or less. The date on which a Unit is acquired (i.e., the "trade date")
is excluded for purposes for determining the holding period of the Unit.
Generally, capital gains realized from assets held for more than one year but
not more than 18 months are taxed at a maximum marginal stated tax rate
of 28% and capital gains realized from assets (with certain exceptions)
held for more than 18 months are taxed at a maximum marginal stated tax
rate of 20% (10% in the case of certain taxpayers in the lowest tax bracket).
Further, capital gains realized from assets held for one year or less are
taxed at the same rates as ordinary income. Legislation is currently pending
that provides the appropriate methodology that should be applied in netting
the realized capital gains and losses. Such legislation is proposed to be
effective retroactively for tax years ending after May 6, 1997. In addition,
it should be noted that various 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 taxes.
The tax basis reduction requirements of the Code relating to amortization of
bond premium may under some circumstances, result in the Unitholder realizing
taxable gain when his Units are sold or redeemed for an amount equal to or less
than his original cost.
If the Unitholder disposes of a Unit, he is deemed thereby to have disposed of
his entire pro rata interest in all Trust assets including his pro rata portion
of all of the Bonds represented by the Unit. This may result in a portion of
the gain, if any, on such sale being taxable as ordinary income under the market
discount rules (assuming no election was made by the Unitholder to include
market discount in income as it accrues) as previously discussed.
INSURED CORPORATE SERIES IC-11
<PAGE>
In addition, it should be noted that capital gains may be recharacterized as
ordinary income in the case of certain financial transactions that are
"conversion transactions" effective for transactions entered into after April
30, 1993. Unitholders and prospective investors should consult with their tax
advisers regarding the potential effect of this provision on their investment in
Units.
The 1997 Act includes other provisions that treat certain transactions designed
to reduce or eliminate risk of loss and opportunities for gain (e.g., short
sales, offsetting notional principal contracts, futures or forward contracts or
similar transactions) as constructive sales for purposes of recognition of gain
(but not loss) and for purposes of determining the holding period. Unitholders
should consult their own tax advisors with regard to any such constructive sales
rules.
Foreign Investors. A Unitholder of a Trust who is a foreign investor (i.e., an
investor other than a U.S. citizen or resident or a U.S. corporation,
partnership, estate or trust) will not be subject to United States federal
income taxes, including withholding taxes, on interest income (including any
original issue discount) on, or any gain from the sale or other disposition of,
his pro rata interest in any Bond or the sale of his Units provided that all of
the following conditions are met: (i) the interest income or gain is not
effectively connected with the conduct by the foreign investor of a trade or
business within the United States, (ii) if the interest is United States source
income (which is the case for most securities issued by United States issuers),
the Bond is issued after July 18, 1984 (which is the case for most securities
issued by United States issuers), then the foreign investor does not own,
directly or indirectly, 10% or more of the total combined voting power of all
classes of voting stock of the issuer of the Bond and the foreign investor is
not a controlled foreign corporation related (within the meaning of Section
864(d)(4) of the Code) to the issuer of the Bond, or (iii) with respect to any
gain, the foreign investor (if an individual) is not present in the United
States for 183 days or more during his or her taxable year and (iv) the foreign
investor provides all certification which may be required of his status (foreign
investors may contact the Sponsor to obtain a Form W-8 which must be filed with
the Trustee and refiled every three calendar years thereafter). Foreign
investors should consult their tax advisers with respect to United States tax
consequences of ownership of Units.
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 each 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 Stated Federal income taxes;
Unitholders may be subject to state and local taxation in other jurisdictions
(including a foreign investor's country of residence). Unitholders should
consult their tax advisers regarding potential state, local, or foreign taxation
with respect to the Units.
INSURED CORPORATE SERIES IC-12
<PAGE>
TAX REPORTING AND REALLOCATION
Because each Trust receives interest and makes monthly distributions based upon
such Trust's expected total collections of interest and any anticipated
expenses, certain tax reporting consequences may arise. Each Trust is required
to report Unitholder information to the Internal Revenue Service ("IRS"), based
upon the actual collection of interest by such Trust on the securities in such
Trust, without regard to such Trust's expenses or to such Trust's payments to
Unitholders during the year. If distributions to Unitholders exceed interest
collected, the difference will be reported as a return of principal which will
reduce a Unitholder's cost basis in its Units (and its pro rata interest in the
securities in the Trust). A Unitholder must include in taxable income the
amount of income reported by a Trust to the IRS regardless of the amount
distributed to such Unitholder. If a Unitholder's share of taxable income
exceeds income distributions made by a Trust to such Unitholder, such excess is
in all likelihood attributable to the payment of miscellaneous expenses of such
Trust which will not be deductible by an individual Unitholder as an itemized
deduction except to the extent that the total amount of certain itemized
deductions, such as investment expenses (which would include the Unitholder's
share of Trust expenses), tax return preparation fees and employee business
expenses, exceeds 2% of such Unitholder's adjusted gross income. Alternatively,
in certain cases, such excess may represent an increase in the Unitholder's tax
basis in the Units owned. Investors with questions regarding these issues
should consult with their tax advisers.
ESTIMATED CASH FLOWS TO UNITHOLDERS
The table below sets forth the per Unit estimated distributions of interest and
principal to Unitholders. The tables assume no changes in Trust expenses, no
redemptions or sales of the underlying Bonds prior to maturity and the receipt
of all principal due upon maturity. To the extent the foregoing assumptions
change actual distributions will vary.
INSURED CORPORATE SERIES 12
<TABLE>
<CAPTION>
Monthly
- -------
Estimated Estimated Estimated
Interest Principal Total
Dates Distribution Distribution Distribution
------------------------------------ ------------ ------------ ------------
<S> <C> <C> <C>
June 15, 1998 $.0089 $ .0089
July 15, 1998 to January 15, 2003 $.0542 $ .0542
February 15, 2003 $.0542 $2.3529 $2.4071
March 15, 2003 to May 15, 2003 $.0399 $ .0399
June 15, 2003 $.0399 $1.4574 $1.1828
July 15, 2003 to November 15, 2015 $.0314 $ .0314
December 15, 2015 $.0314 $1.1429 $1.1743
January 15, 2016 to January 15, 2018 $.0246 $ .0246
February 15, 2018 $.0246 $1.1429 $1.1675
March 15, 2019 to April 1, 2025 $.0180 $ .0180
May 15, 2025 $.0180 $ .8571 $ .8751
June 15, 2025 to July 15, 2025 $.0182 $ .0182
August 15, 2025 $.0182 $ .8571 $ .8753
September 15, 2025 $.0133 $ .0133
October 15, 2025 $.0138 $2.2857 $2.2995
</TABLE>
INSURED CORPORATE SERIES IC-13
<PAGE>
- -------------------------------------------------------------------------------
THE GNMA PORTFOLIOS
- -------------------------------------------------------------------------------
THE TRUST PORTFOLIO
The purpose and objective of GNMA Portfolio Series 10 and GNMA Portfolio Series
11 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 primarily consisting of Ginnie Maes backed by the full
faith and credit of the United States.
In selecting Securities for deposit in the GNMA Portfolios, 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 traded at a premium or at a discount from par; and (iii) the maturities of
such obligations.
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
Trusts referred to herein might not retain their present size and composition.
GNMA PORTFOLIOS GNMA-1
<PAGE>
<TABLE>
<CAPTION>
GNMA PORTFOLIO SERIES 10 PORTFOLIO
AS OF THE INITIAL DATE OF DEPOSIT: MAY 20, 1998
Government National Mortgage Association, Modified Pass-Through
Mortgage-Backed Securities*
Range of Cost of
Face Stated Securities
Amount Issuer Coupon Maturities(1) to Trust(2)
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 100,000 Government National Mortgage Association 7.00% 2012 to 2014 $101,842
100,000 Government National Mortgage Association 6.50 2012 to 2014 100,066
15,000 U.S. Treasury Strip(3) 0.00 5/15/2008 8,425
- --------- --------
$ 215,000 $210,333
========= ========
<FN>
- --------------------
See "Notes to Portfolio."
</TABLE>
<TABLE>
<CAPTION>
GNMA PORTFOLIO SERIES 11 PORTFOLIO
AS OF THE INITIAL DATE OF DEPOSIT: MAY 20, 1998
Government National Mortgage Association, Modified Pass-Through
Mortgage-Backed Securities*
Range of Cost of
Face Stated Securities
Amount Issuer Coupon Maturities(1) to Trust(2)
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 100,000 Government National Mortgage Association 7.50% 2027 to 2029 $102,716
100,000 Government National Mortgage Association 7.00 2027 to 2029 101,115
15,000 U.S. Treasury Strip(3) 0.00 5/15/2018 4,522
- --------- --------
$ 215,000 $208,353
========= ========
<FN>
See "Notes to Portfolio."
</TABLE>
GNMA PORTFOLIOS GNMA-2
<PAGE>
NOTES TO PORTFOLIOS
(1) The principal amount of Securities listed as having the range of
maturities shown is an aggregate of individual Securities having varying
ranges of maturities within that shown. They are listed as one category of
Securities with a single range of maturities because of current market
conditions that accord no difference in price among the Securities grouped
together on the basis of the difference in their maturity ranges. At some
time in the future, however, the difference in maturity ranges could affect
the market value of the individual Securities.
(2) Some Securities may be represented by contracts to purchase such
Securities. During the initial offering period, evaluations of Securities
are made on the basis of current offering side evaluations of the
Securities. The aggregate offering price is greater than the aggregate
bid price of the Securities, which is the basis on which Redemption Prices
will be determined for purposes of redemption of Units after the initial
offering period. Other information regarding the Securities in the
Trusts, at the opening of business on the Initial Date of Deposit, is as
follows:
<TABLE>
<CAPTION>
GNMA GNMA
Portfolio Portfolio
Series 10 Series 11
--------- ----------
<S> <C> <C>
Cost of Securities to Sponsor $ 210,799 $ 208,362
Profit or (Loss) to Sponsor $ (466) $ (9)
Annual Interest Income to Trust $ 13,500 $ 14,500
Bid Side Value of Securities $ 210,084 $ 208,103
</TABLE>
(3) This Security has been purchased at a deep discount from the par value
because there is little or no stated interest income thereon. Securities
which pay no interest are normally described as "zero coupon"
Securities. Over the life of Securities purchased at a deep discount the
value of such Securities will increase such that upon maturity the
holders of such securities will receive 100% of the principal amount
thereof.
* In addition to the information as to the GNMA modified pass-through
mortgage- backed Securities set forth under "Portfolios," the Trustee
will furnish Unitholders a statement listing the name of issuer, pool
number, interest rate, maturity date and principal amount for each such
Security in the portfolio upon written request.
GNMA PORTFOLIOS GNMA-3
<PAGE>
RISK FACTORS
Each Trust is a unit investment trust whose objectives are to obtain safety of
capital and to provide current monthly distributions of interest and principal
through investment in a fixed portfolio initially consisting primarily 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," 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"). All of the Ginnie Maes in the Trusts consist of
pools of long term mortgages on 1- to 4-family dwellings. Certain GNMA
Portfolio Series may also include certain zero coupon U.S. Treasury Obligations.
An investment in Units of a 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. 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 in respect of 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 Trusts were chosen in part on the basis of their
respective stated maturity dates. The ranges of maturity dates of each of the
Securities contained in the Trusts are shown on the "Portfolios." The stated
mandatory termination date of the GNMA Portfolios are set forth under "Essential
Information." See "Life of the Securities and of the GNMA Trusts" below.
The Trusts may be appropriate mediums 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 amount which is required for a direct
investment in GNMA guaranteed securities. The portfolio of each GNMA Trust
initially consists of contracts to purchase Ginnie Maes, including so-called
Ginnie Mae II's, fully guaranteed as to payments of principal and interest by
the Government National Mortgage Association.
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 within each range specified under "Essential Information."
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 Trust will take into account the maturities of the
individual Securities.
The Trusts 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
GNMA PORTFOLIOS GNMA-4
<PAGE>
issued at currently prevailing interest rates. If such interest rates for newly
issued and otherwise comparable securities increase, the market discount of
previously issued securities will increase and if such 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.
Unitholders 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 "General Information-Interest, Estimated
Current Return and Estimated Long-Term Return."
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 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 of
such Series outstanding at that time since premium Ginnie Maes normally carry
higher interest coupons than par or discount Ginnie Maes. If mortgage rates
decline in the future, such prepayments may occur with increasing frequency
because, among other reasons, mortgagors may be able to refinance their
outstanding mortgages at lower interest rates. See "Life of the Securities and
of the GNMA Trusts."
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 Trusts;
and the expected life of the Ginnie Maes and of the Trusts. The "Portfolios"
contain information concerning the coupon rate and range of stated maturities of
the Ginnie Maes in the Trusts.
Origination. The Ginnie Maes included in each Trust are backed by the
indebtedness secured by underlying mortgage pools of long-term mortgages on 1-
to 4-family dwellings. The pool of mortgages which is to underlie a particular
new issue of Ginnie Maes is assembled by the proposed issuer of such Ginnie
Maes. The issuer is typically a mortgage banking firm, and in every instance
must be a mortgagee approved by and in good standing with the Federal Housing
Administration ("FHA"). In addition, GNMA imposes its own criteria on the
eligibility of issuers, including a net worth requirement.
The mortgages which are to comprise a new Ginnie Mae pool may have been
originated by the issuer itself in its capacity as a mortgage lender or may be
acquired by the issuer from a third party. Such third party may be another
mortgage banker, a banking institution, the Veterans Administration ("VA")
(which in certain instances acts as a direct lender and thus originates its own
mortgages) or one of several 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 GNMA Portfolio Series are mortgages on 1- to 4-family dwellings. 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.
GNMA PORTFOLIOS GNMA-5
<PAGE>
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 detained 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 aggregate unpaid 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 Series, 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 a GNMA Portfolio) of a pro rata share of the
scheduled principal payments on the underlying mortgages, whether or not
collected by the issuers. Such monthly payments will also include, on a pro
rata basis, any prepayments of principal of such mortgages received and interest
(net of the servicing and other charges described above) on the aggregate unpaid
principal balance of such Ginnie Maes, whether or not the interest on the
underlying mortgages has been collected by the issuers.
The Ginnie Maes in the GNMA Portfolio Series 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 Portfolio Series 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 for 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
- --------------------
* 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.
GNMA PORTFOLIOS GNMA-6
<PAGE>
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 Trusts)
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 portfolio and not the Units offered
hereby.
Life of the Securities and of the GNMA Trusts. Monthly payments of principal
will be made, and additional prepayments of principal may be made, to the GNMA
Trusts in respect of the mortgages underlying the Ginnie Maes in each GNMA
Portfolio. All of the mortgages in the pools relating to the Ginnie Maes in
each GNMA Portfolio are subject to prepayment without any significant premium or
penalty at the option of the mortgagors. It has been the experience of the
mortgage industry that the average life of mortgages comparable to those
contained in the GNMA Portfolios, owing to prepayments, refinancings and
payments from foreclosures is considerably less than the stated maturity for
each series set forth in "Essential Information."
In the mid 1970's, 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 1950's to the mid
1970's. 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 it has been
observed that 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 Trusts. 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 Trusts. Therefore, the termination of a Trust
might be accelerated as a result of prepayments made as described herein.
In addition to prepayments as described above, sales of Securities in a Trust
under certain permitted circumstances may result in an accelerated termination
of such 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 a Trust to a size resulting in such termination. Early termination of
a 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,
GNMA PORTFOLIOS GNMA-7
<PAGE>
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 a Trust.
FEDERAL TAX STATUS
In the opinion of Chapman and Cutler, counsel for the Sponsor, under existing
law:
Each Trust is an association taxable as a corporation under the Internal Revenue
Code of 1986, as amended (the Code') and intends to qualify on a continuous
basis for and elect tax treatment as a regulated investment company" under the
Code. If a Trust so qualifies and timely distributes to Unitholders 90% or more
of its taxable income (without regard to its net capital gain, i.e., the excess
of its net long-term capital gain over its net short-term capital loss), it will
not be subject to federal income tax on the portion of its taxable income
(including any net capital gain) that it distributes to Unitholders. In
addition, to the extent a Trust timely distributes to Unitholders at least 98%
of its taxable income (including any net capital gain), it will not be subject
to the 4% excise tax on certain undistributed income of "regulated investment
companies." Each Trust 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
Trust are required by the Indenture.
Each Trust intends to file its federal income tax return on a calendar year
basis. In any taxable year of a Trust, the distributions of its income, other
than distributions which are designated as capital gains dividends, will, to the
extent of the earnings and profits of such Trust, 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 a
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 Trust 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 Trust (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 a Trust as long as the Units of
such Trust 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 a Trust are
held by fewer than 500 persons, additional taxable income may be realized by the
individual Unitholders in excess of the distributions received from such Trust.
Distributions of a Trust's net capital gain which a Trust properly designates as
capital gain dividends will be taxable to Unitholders thereof as long-term
capital gains, regardless of the length of time the Units have been
GNMA PORTFOLIOS GNMA-8
<PAGE>
held by a Unitholder. However, if a Unitholder receives a long-term capital
gain dividend (or is allocated to a portion of a Trust's undistributed long-term
capital gain) and sells his Units at a loss prior to holding them for 6 months,
such loss will be recharacterized as long-term capital loss to the extent of
such long-term capital gain received as a dividend or allocated to a Unitholder.
Distributions in partial liquidation, reflecting the proceeds of prepayments,
redemptions, maturities (including monthly mortgage payments of principal) or
sales of Securities from a Trust (exclusive of net capital gain) will not be
taxable to Unitholders of such Trust 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 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 of 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 during the six-month period or less that the Unitholder owns the
Units. The Taxpayer Relief Act of 1997 (the "1997 Act") provides that for
taxpayers other than corporations, net capital gain (which is defined as net
long-term capital gain over net short-term capital loss for the taxable year) is
subject to a maximum marginal stated tax rate of either 28% or 20%, depending
upon the holding periods of the capital assets. Capital gain or loss is long-
term if the holding period for the asset is more than one year, and is short-
term if the holding period for the asset is one year or less. The date on which
a Unit is acquired (i.e., the "trade date") is excluded for purposes for
determining the holding period of the Unit. Generally, capital gains realized
from assets held for more than one year but not more than 18 months are taxed at
a maximum marginal stated tax rate of 28% and capital gains realized from
assets (with certain exceptions) held for more than 18 months are taxed at a
maximum marginal stated tax rate of 20% (10% in the case of certain taxpayers
in the lowest tax bracket). Further, capital gains realized from assets held
for one year or less are taxed at the same rates as ordinary income.
Legislation is currently pending that provides the appropriate methodology
that should be applied in netting the realized capital gains and losses.
Such legislation is proposed to be effective retroactively for tax years
ending after May 6, 1997. Note, however, that the 1997 Act provides that the
application of the rules described above in the case of pass-through entities
such as the Trust will be prescribed in future Treasury Regulations. The
Internal Revenue Service has released preliminary guidance which provides
that, in general, pass-through entities such as the Trust may designate their
capital gains dividends as either a 20% rate gain distribution or a 28% rate
gain distribution, depending on the nature of the gain received by the pass-
through entity. Unitholders should consult their own tax advisors as to the
tax rate applicable to capital gain dividends.
The 1997 Act includes other provisions that treat certain other transactions
designed to reduce or eliminate risk of loss and opportunities for gain (e.g.,
short sales, offsetting notional principal contracts, futures or forward
contracts or similar transactions) as constructive sales for purposes of
recognition of gain (but not loss) and for purposes of determining the holding
period. Unitholders should consult their own tax advisers with regard to any
such constructive sales rules.
For taxpayers other than corporations, net capital gains are presently subject
to a maximum stated marginal 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.
In addition, it should be noted that capital gains may be recharacterized as
ordinary income in the case of certain financial transactions that are
"conversion transactions" effective for transactions entered into after
GNMA PORTFOLIOS GNMA-9
<PAGE>
April 30, 1993. Unitholders and prospective investors should consult with their
tax advisers regarding the potential effect of this provision on their
investment in Units.
If a Ginnie Mae has been purchased by a Trust at a market discount (i.e., for a
purchase price less than its stated redemption price at maturity (or if issued
with original issue discount, its "revised issue price")) unless the amount of
market discount is "de minimis" as specified in the Code, each payment of
principal on the Ginnie Mae will generally constitute ordinary income to a Trust
to the extent of any accrued market discount unless a Trust elects to include
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 Trust shall receive an annual statement describing the
tax status of the distributions paid by such Trust.
Each Unitholder will be requested to provide the Unitholder's taxpayer
identification number to the Trustee and to certify that the Unitholder has not
been notified that payments to the Unitholder are subject to back-up
withholding. If the proper taxpayer identification number and appropriate
certification are not provided when requested, distributions by a Trust to such
Unitholder (including amounts received upon the redemption of Units) will be
subject to back-up withholding.
A Unitholder who is a foreign investor (i.e., an investor other than a United
States citizen or resident or a United States corporation, partnership, estate
or trust) should be aware that, generally, subject to applicable tax treaties,
distributions from a Trust which constitute dividends for Federal income tax
purposes (other than dividends which a Trust designates as capital gain
dividends) will be subject to United States income taxes, including withholding
taxes. However, distributions received by a foreign investor from a Trust that
are designated by a 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 years thereafter).
Foreign investors should consult their tax advisors with respect to United
States tax consequences of ownership of Units. Units in a Trust and Trust
distributions may also be subject to state and local taxation and Unitholders
should consult their tax advisors in this regard.
Distributions reinvested into additional Units of a Trust will be taxed to a
Unitholder in the manner described above (i.e., as ordinary income, long-term
capital gain or as a return of capital).
The foregoing discussion relates only to the federal income tax status of the
Trusts and to the tax treatment of distributions by the Trusts to United States
Unitholders.
GNMA PORTFOLIOS GNMA-10
<PAGE>
- -------------------------------------------------------------------------------
THE U.S. TREASURY PORTFOLIO SERIES
- -------------------------------------------------------------------------------
THE TRUST PORTFOLIO
U.S. Treasury Portfolio Series 20 was formed for the purpose of providing safety
of capital and investment flexibility through an investment in a portfolio of
U.S. Treasury Obligations that is backed by the full faith and credit of the
United States government. The U.S. Treasury Portfolio Series was also 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 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 a
portfolio which will generally increase or decrease inversely with changes in
interest rates.
The U.S. Treasury Portfolio Series may be an appropriate investment vehicle for
investors who desire to participate in a portfolio of taxable, fixed income
securities offering the safety of capital provided by an investment backed by
the full faith and credit of the United States. In addition, many investors may
benefit from the exemption from state and local personal income taxes that will
pass through the U.S. Treasury Portfolio Series to Unitholders in virtually all
states.
In selecting U.S. Treasury Obligations for deposit in the U.S. Treasury
Portfolio Series, the following factors, among others were, considered by the
Sponsor: (a) the types of such obligations available; (b) the prices and yields
of such obligations relative to other comparable obligations, including the
extent to which such obligations are traded at a premium or at a discount from
par; and (c) the maturities of such obligations.
RISK FACTORS
The Securities are direct obligations of the United States and are backed by its
full faith and credit although the Units of a Trust are not so backed. The
Securities are not rated but in the opinion of the Sponsor have credit
characteristics comparable to those of securities rated "AAA" by nationally
recognized rating agencies.
An investment in Units of a Trust 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 Securities and hence the Units will decline with
increases in interest rates. The high inflation of past 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 debt
obligations generally. The Sponsor cannot predict whether such fluctuations
will continue in the future. For a discussion of other considerations
associated with an investment in Units, see "General Information-Trust
Information."
U.S. TREASURY PORTFOLIO SERIES US-1
<PAGE>
<TABLE>
<CAPTION>
RANSON UNIT INVESTMENT TRUST, SERIES 69
U.S. TREASURY PORTFOLIO, SERIES 20
PORTFOLIO AS OF THE INITIAL DATE OF DEPOSIT: MAY 20, 1998
Cost of
Face Securities
Amount Coupon Maturities to Trust(1)
- -------------------------------------------------------------------
<S> <C> <C> <C>
$ 100,000 6.375% 8/15/2002 $ 102,749
100,000 5.750 8/15/2003 100,500
100,000 7.250 8/15/2004 108,198
50,000 6.500 8/15/2005 52,281
50,000(2) 0.000 8/15/2005 33,129
70,000 7.000 7/15/2006 75,669
30,000(2) 0.000 8/15/2006 18,852
- --------- ---------
$ 500,000 $ 491,378
========= =========
<FN>
- --------------------
See "Notes to Portfolio."
</TABLE>
U.S. TREASURY PORTFOLIO SERIES US-2
<PAGE>
NOTES TO PORTFOLIO:
(1) Some Securities may be represented by contracts to purchase such
Securities. During the initial offering period, evaluations of Securities
are made on the basis of current offering side evaluations of the
Securities. The aggregate offering price is greater than the aggregate
bid price of the Securities, which is the basis on which Redemption Prices
will be determined for purposes of redemption of Units after the initial
offering period. Other information regarding the Securities at the
opening of business on the Initial Date of Deposit, is as follows:
<TABLE>
<CAPTION>
U.S.
Treasury
Series 20
---------
<S> <C>
Cost of Securities to Sponsor $ 490,179
Profit or (Loss) to Sponsor $ 1,199
Annual Interest Income to Trust $ 27,525
Bid Side Value of Securities $ 491,063
</TABLE>
(2) This Security has been purchased at a deep discount from the par value
because there is little or no stated interest income thereon. Securities
which pay no interest are normally described as "zero coupon" Securities.
Over the life of Securities purchased at a deep discount the value of such
Securities will increase such that upon maturity the holders of such
securities will receive 100% of the principal amount thereof.
U.S. TREASURY PORTFOLIO SERIES US-3
<PAGE>
FEDERAL TAX STATUS
The following is a general discussion of certain of the Federal income tax
consequences for the purchase, ownership and disposition of the Units. The
summary is limited to investors who hold the Units as "capital assets"
(generally, property held for investment) within the meaning of Section 1221 of
the Internal Revenue Code of 1986 (the "Code"). Unitholders should consult
their tax advisers in determining the Federal, state, local and any other tax
consequences of the purchase, ownership and disposition of Units in the Trust.
In the opinion of Chapman and Cutler, counsel for the Sponsor, under existing
law:
(1) Each Trust is not an association taxable as a corporation for Federal
income tax purposes and each Unitholder will be treated as the owner of a
pro rata portion of such Trust under the Internal Revenue Code of 1986, as
amended (the "Code") and income of such Trust 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 Trust
asset when such income is considered to be received by the Trust.
(2) Each Unitholder will have a taxable event when a Trust 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 a Trust, if any, on U.S. Treasury Obligations
delivered after the Unitholders pay for their Units to the extent that such
interest accrued on such U.S. Treasury Obligations before the date the Trust
acquired ownership of the U.S. Treasury Obligations (and the amount of this
reduction may exceed the amount of accrued interest paid to the seller) and,
consequently, such Unitholders may have an increase in taxable gain or
reduction in capital loss upon the disposition of such Units. Unitholders
should consult their own tax advisors with regard to calculation of basis.
Gain or loss upon the sale or redemption of Units is measured by comparing
the proceeds of such sale or redemption with the adjusted basis of the
Units. If the Trustee disposes of U.S. Treasury Obligations (whether by
sale, payment on maturity, redemption or otherwise), gain or loss is
recognized to the Unitholder (subject to the various nonrecognition
provisions of the Code). The amount of any such gain or loss is measured
by comparing the Unitholder's pro rata share of the total proceeds from
such disposition with 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 Trust 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 his original cost.
(3) Certain Trusts may contain "zero coupon" 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 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
Stripped Treasury Securities held by a Trust are treated as bonds that
were originally issued at an original issue discount as of the date a
Unitholder purchases a Unit. Because the Stripped Treasury Securities
represent interests in "stripped" U.S. Treasury bonds, a Unitholder's
initial tax basis for his pro rata portion of each Stripped
U.S. TREASURY PORTFOLIO SERIES US-4
<PAGE>
Treasury Security held by a Trust (determined at the time he acquires his
Units, in the manner described above) will be treated as its "purchase
price" by the Unitholder. Original 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 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 relating to stripped
bonds. To the extent the amount of such discount is less than the
respective "de minimis" amount, such discount is generally 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 increase 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 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 U.S. Treasury Obligation that
has not previously been included in taxable income by such Unitholder. A
Unitholder may generally elect to include market discount in income as
such discount accrues. In general, market discount is the excess, if any,
of the Unitholder's pro rata portion of the outstanding principal balance
of a U.S. Treasury Obligation over the Unitholder's initial tax basis for
such pro rata portion, determined at the time such Unitholder acquires his
Units. However, market discount with respect to any U.S. Treasury
Obligation will generally be considered zero if it amounts to less than
.025% 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 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 own 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 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 a Trust, including fees of the Trustee and
the Evaluator but does not include amortizable bond premium on U.S.
Treasury Obligations held by a Trust.
U.S. TREASURY PORTFOLIO SERIES US-5
<PAGE>
A Unitholder of a 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 such 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 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 by July 18,
1984.
Unless an applicable treaty exemption applies and proper certification is made,
amounts otherwise distributable by the Trust 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 discussion relates only to Federal income taxes on distributions
by a Trust. Foreign Unitholders should consult their own tax advisers with
respect to the foreign and United States tax consequences or ownership of Units.
The Sponsor believes that Unitholders who are individuals will not be subject to
any state personal income taxes on the interest received by a Trust and
distributed to them. However, Unitholders (including individuals) may be
subject to state and local taxes on any capital gains (or market discount
treated as ordinary income) derived from a Trust and to other state and local
taxes (including corporate income or franchise taxes, personal property or
intangibles taxes, and estate or inheritance taxes) on their Units or the income
derived therefrom. In addition, individual Unitholders (and any other
Unitholders which are not subject to state and local taxes on the interest
income derived from a Trust) will probably not be entitled to a deduction for
state and local tax purposes for their share of the fees and expenses paid by a
Trust, for any amortized bond premium or for any interest on indebtedness
incurred to purchase or carry their Units. Therefore, even though the Sponsor
believes that interest income from a Trust is exempt from state personal income
taxes in all states Unitholders should consult their own tax advisers with
respect to state and local taxation.
It should be remembered that even if distributions are reinvested, they are
still treated as distributions for income tax purposes.
It should also be remembered that Unitholders may be required for Federal income
tax purposes to include amounts in ordinary gross income in advance of the
receipt of the cash attributable to such income.
Each Unitholder (other than a foreign investor who has properly provided the
certifications described above) will be requested to provide the Unitholder's
taxpayer identification number to the Trustee and to certify that
U.S. TREASURY PORTFOLIO SERIES US-6
<PAGE>
the Unitholder had not been notified that payments to the Unitholder are subject
to back-up withholding. If the proper taxpayer identification number and
appropriate certification are not provided when requested, distributions by a
Trust to such Unitholder will be subject to back up withholding.
The market discount rules do not apply to stripped Treasury Securities because
they are stripped debt instruments subject to special original issue discount
rules. Unitholders should consult their tax advisers as to the amount of
original issue discount which accrues.
If a Unitholder does not elect to annually include accrued market discount in
taxable income as it accrues, deduction for any interest expense incurred by the
Unitholder which is incurred to purchase or carry his Units will be reduced by
such accrued market discount. In general, the portion of any interest expense
which was not currently deductible would ultimately be deductible when the
accrued market discount is included in income. Unitholders should consult their
tax advisers regarding whether an election should be made to include market
discount in income as it accrues and as to the amount of interest expense which
may not be currently deductible.
The tax basis of a Unitholder with respect to his interest in a U.S. Treasury
Obligation is increased by the amount of original issue discount (and market
discount, if the Unitholder elects to include market discount, if any, on the
U.S. Treasury Obligations held by a Trust in income as it accrues) thereon
properly included in the Unitholder's gross income as determined for Federal
income tax purposes and reduced by the amount of any amortized acquisition
premium which the Unitholder has properly elected to amortized under Section 171
of the Code. A Unitholder's tax basis in his Units will equal his tax basis in
his pro rata portion of all of the assets of the Trust.
A Unitholder will recognize capital gain (or loss) when all or part of his pro
rata interest in a U.S. Treasury Obligation is disposed of in a taxable
transaction for an amount greater (or less) than his tax basis thereof. Any
gain recognized on a sale or exchange and not constituting a realization of
accrued "market discount," and any loss will, under current law, generally be
capital gain or loss except in the case of a dealer or financial institution.
As previously discussed, gain realized on the disposition of the interest of a
Unitholder in any U.S. Treasury Obligation deemed to have been acquired with
market discount will be treated as ordinary income to the extent the gain does
not exceed the amount of accrued market discount not previously taken into
income. Any capital gain or loss arising from the disposition of a U.S.
Treasury Obligation by the Trust or the disposition of Units by a Unitholder
will be short-term capital gain or loss unless the Unitholder has held his Units
for more than one year in which case such capital gain or loss will be long-
term. The Taxpayer Relief Act of 1997 (the "1997 Act") provides that for
taxpayers other than corporations, net capital gain (which is defined as net
long-term capital gain over net short-term capital loss for the taxable year) is
subject to a maximum marginal stated tax rate of either 28% or 20%, depending
upon the holding periods of the capital assets. Capital gain or loss is long-
term if the holding period for the asset is more than one year, and is short-
term if the holding period for the asset is one year or less. The date on which
a Unit is acquired (i.e., the "trade date") is excluded for purposes for
determining the holding period of the Unit. Generally, capital gains realized
from assets held for more than one year but not more than 18 months are taxed at
a maximum marginal stated tax rate of 28% and capital gains realized from
assets (with certain exceptions) held for more than 18 months are taxed at a
maximum marginal stated tax rate of 20% (10% in the case of certain taxpayers
in the lowest tax bracket). Further, capital gains realized from assets held
for one year or less are taxed at the same rates as ordinary income.
Legislation is currently pending that provides the appropriate methodology that
should be applied in netting the realized capital gains and losses. Such
legislation is proposed to be effective retroactively for tax years ending
after May 6, 1997.
U.S. TREASURY PORTFOLIO SERIES US-7
<PAGE>
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 costs.
If a Unitholder disposes of a Unit, he is deemed thereby to have disposed of his
entire pro rata interest in all Trust assets including his pro rata portion of
the U.S. Treasury Obligations represented by the Unit. This may result in a
portion of the gain, if any, on such sale being taxable as ordinary income under
the market discount rules (assuming no election was made by the Unitholder to
include market discount in income as it accrues) as previously discussed.
In addition, capital gains may be recharacterized as ordinary income in the case
of certain financial transactions that are "conversion transactions" effective
for transactions entered into after April 30, 1993. Unitholders and prospective
investors should consult with their tax advisers regarding the potential effect
of this provision on their investment in Units.
The 1997 Act includes provisions that treat certain transactions designed to
reduce or eliminate risk of loss and opportunities for gain (e.g., short sales,
offsetting notional principal contracts, futures or forward contracts, or
similar transactions) as constructive sales for purposes of recognition of gain
(but not loss) and for purposes of determining the holding period. Unitholders
should consult their own tax advisors with regard to any such constructive sales
rules.
TAX REPORTING AND REALLOCATION
Because each Trust receives interest and makes monthly distributions based upon
such Trust's expected total collections of interest and any anticipated
expenses, certain tax reporting consequences may arise. Each Trust is required
to report Unitholder information to the Internal Revenue Service ("IRS"), based
upon the actual collection of interest by such Trust on the securities in such
Trust, without regard to such Trust's expenses or to such Trust's payments to
Unitholders during the year. If distributions to Unitholders exceed interest
collected, the difference will be reported as a return of principal which will
reduce a Unitholder's cost basis in its Units (and its pro rata interest in the
securities in the Trust). A Unitholder must include in taxable income the
amount of income reported by a Trust to the IRS regardless of the amount
distributed to such Unitholder. If a Unitholder's share of taxable income
exceeds income distributions made by a Trust to such Unitholder, such excess is
in all likelihood attributable to the payment of miscellaneous expenses of such
Trust which will not be deductible by an individual Unitholder as an itemized
deduction except, as discussed above, to the extent that the total amount of
certain itemized deductions, such as investment expenses (which would include
the Unitholder's share of Trust expenses), tax return preparation fees and
employee business expenses, exceeds 2% of such Unitholder's adjusted gross
income. Alternatively, in certain cases, such excess may represent an increase
in the Unitholder's tax basis in the Units owned. Investors with questions
regarding these issues should consult with their tax advisers.
ESTIMATED CASH FLOWS TO UNITHOLDERS
The tables below set forth the per Unit estimated distributions of interest and
principal to Unitholders. The tables assume no changes in Trust expenses, no
redemptions or sales of the underlying U.S. Treasury Obligations prior to
maturity and the receipt of all principal due upon maturity. To the extent the
foregoing assumptions change actual distributions will vary.
U.S. TREASURY PORTFOLIO SERIES US-8
<PAGE>
<TABLE>
<CAPTION>
U.S. TREASURY PORTFOLIO SERIES 20
Estimated Estimated Estimated
Interest Principal Total
Dates Distribution Distribution Distribution
----------------------------------- ------------ ------------ ------------
<S> <C> <C> <C>
June 15, 1998 $.00738 $.00738
July 15, 1998 to August 15, 2002 $ .0443 $ .0443
September 15, 2002 $ .0443 $2.00 $2.0443
October 15, 2002 to August 15, 2003 $ .0340 $ .0340
September 15, 2003 $ .0340 $2.00 $2.0340
October 15, 2003 to August 15, 2004 $ .0247 $ .0247
September 15, 2004 $ .0247 $2.00 $2.0247
October 15, 2004 to August 15, 2005 $ .0129 $ .0129
September 15, 2005 $ .0129 $2.00 $2.0129
October 15, 2005 to July 15, 2006 $ .0078 $ .0078
August 15, 2006 $ .0078 $2.00 $2.0078
</TABLE>
U.S. TREASURY PORTFOLIO SERIES US-9
<PAGE>
- -------------------------------------------------------------------------------
GENERAL INFORMATION
- -------------------------------------------------------------------------------
TRUST INFORMATION
Because certain of the Securities in certain of the Trusts may from time to time
under certain circumstances be sold or redeemed or will mature in accordance
with their terms and because the proceeds from such events will be distributed
to Unitholders and will not be reinvested, no assurance can be given that a
Trust will retain for any length of time its present size and composition.
Neither the Sponsor nor the Trustee shall be liable in any way for any default,
failure or defect in any Security. In the event of a failure to deliver any
Security that has been purchased for a Trust under a contract, including those
securities purchased on a "when, as and if issued" basis ("Failed Securities"),
the Sponsor is authorized under the Trust Agreement to direct the Trustee to
acquire other securities ("Replacement Securities") to make up the original
corpus of such Trust.
Securities in certain of the Trust Funds may have been purchased on a "when, as
and if issued" or delayed delivery basis with delivery expected to take place
after the First Settlement Date. See "Notes to Portfolios" for each Trust.
Accordingly, the delivery of such Securities may be delayed or may not occur.
Interest on these Securities begins accruing to the benefit of Unitholders on
their respective dates of delivery. To the extent any Municipal Bonds in a Tax-
Exempt Portfolio are actually delivered to such Trust after their respective
expected dates of delivery, Unitholders who purchase Units in such Trust prior
to the date such "when, as and if issued" or "delayed delivery" Municipal Bonds
are actually delivered to the Trustee would, to the extent such income is not
offset by a reduction in the Trustee's fee (or, to the extent necessary, other
expenses), be required to reduce their tax basis in their Units of such Trust
since the interest accruing on such Municipal Bonds during the interval between
their purchase of Units and the actual delivery of such Municipal Bonds would,
for tax purposes, be considered a non-taxable return of principal rather than as
tax-exempt interest. The result of such adjustment, if necessary, would be,
during the first year only, that the Estimated Long-Term Returns may be, and the
Estimated Current Returns would be, slightly lower than those shown herein,
assuming such Trust portfolios and estimated annual expenses do not vary. See
footnote (4) to "Essential Information." Unitholders of all Trusts will be "at
risk" with respect to any "when, as and if issued" or "delayed delivery"
Securities included in their respective Trust (i.e., may derive either gain or
loss from fluctuations in the evaluation of such Securities) from the date they
commit for Units.
The Replacement Securities must be purchased within 20 days after delivery of
the notice that a contract to deliver a Security will not be honored and the
purchase price may not exceed the amount of funds reserved for the purchase of
the Failed Securities. The Replacement Securities (i) must be payable in United
States currency, (ii) must be purchased at a price that results in a yield to
maturity and a current return at least equal to that of the Failed Securities as
of the Initial Date of Deposit, (iii) shall not be "when, as and if issued" or
restricted securities, (iv) must satisfy any rating criteria for Securities
originally included in such Trust, (v) not cause the Units of such Trust to
cease to be rated AAA by Standard & Poor's if the Units were so rated on the
Initial Date of Deposit and (vi) in the case of Insured Trust Funds must be
insured prior to acquisition by a Trust. In connection with an Insured Corporate
Series, an Investment Grade Series or High Yield Series, Replacement Securities
also must be bonds, debentures, notes or other straight debt obligations
(whether secured or unsecured and whether senior or subordinated) without equity
or other conversion features, with fixed maturity dates substantially the same
as those of the Failed Securities having no warrants or subscription privileges
attached and (ii) be issued after July 18, 1984 if interest thereon is United
States source income. In connection with a Tax-Exempt Portfolio only,
Replacement Securities must also (i) be
GENERAL INFORMATION GI-1
<PAGE>
tax-exempt bonds issued by the appropriate state or counties, municipalities,
authorities or political subdivisions thereof and (ii) have a fixed maturity
date of at least 3 years if the bonds are to be deposited in a trust other than
a long-term trust or at least 10 years if the bonds are to be deposited in a
long-term trust. Whenever a Replacement Security is acquired for a Trust, the
Trustee shall, within five days thereafter, notify all Unitholders of the Trust
of the acquisition of the Replacement Security and shall, on the next monthly
distribution date which is more than 30 days thereafter, make a pro rata
distribution of the amount, if any, by which the cost to the Trust of the Failed
Security exceeded the cost of the Replacement Security. Once all of the
Securities in a Trust are acquired, the Trustee will have no power to vary the
investments of the Trust, i.e., the Trustee will have no managerial power to
take advantage of market variations to improve a Unitholder's investment.
If the right of limited substitution described in the preceding paragraphs is
not utilized to acquire Replacement Securities in the event of a failed
contract, the Sponsor will refund the sales charge attributable to such Failed
Securities to all Unitholders of the Trust Fund and the Trustee will distribute
the principal and accrued interest attributable to such Failed Securities not
more than 30 days after the date on which the Trustee would have been required
to purchase a Replacement Security. In addition, Unitholders should be aware
that, at the time of receipt of such principal, they may not be able to reinvest
such proceeds in other securities at a yield equal to or in excess of the yield
which such proceeds would have earned for Unitholders of such Trust Fund.
Whether or not a Replacement Security is acquired, an amount equal to the
accrued interest (at the coupon rate of the Failed Securities) will be paid to
Unitholders of the Trust Fund to the date the Sponsor removes the Failed
Securities from the Trust Fund if the Sponsor determines not to purchase a
Replacement Security or to the date of substitution if a Replacement Security is
purchased. All such interest paid to Unitholders which accrued after the date
of settlement for a purchase of Units will be paid by the Sponsor. In the event
a Replacement Security could not be acquired by a Trust, the net annual interest
income per Unit for such Trust would be reduced and the Estimated Current Return
and Estimated Long-Term Return might be lowered.
Subsequent to the Initial Date of Deposit, a Security may cease to be rated or
its rating may be reduced below any minimum required as of the Initial Date of
Deposit. Neither event requires the elimination of such investment from a
Trust, but may be considered in the Sponsor's determination to direct the
Trustee to dispose of such investment. See "General Information-Investment
Supervision."
The Sponsor may not alter the portfolio of a Trust except upon the happening of
certain extraordinary circumstances. See "General Information-Investment
Supervision." Certain of the Securities may be subject to optional call or
mandatory redemption pursuant to sinking fund provisions, in each case prior to
their stated maturity. A bond subject to optional call is one which is subject
to redemption or refunding prior to maturity at the option of the issuer, often
at a premium over par. A refunding is a method by which a bond issue is
redeemed, at or before maturity, by the proceeds of a new bond issue. A bond
subject to sinking fund redemption is one which is subject to partial call from
time to time at par with proceeds from a fund accumulated for the scheduled
retirement of a portion of an issue to maturity. Special or extraordinary
redemption provisions may provide for redemption at par of all or a portion of
an issue upon the occurrence of certain circumstances, which may be prior to the
optional call dates shown under "Portfolio" for each Trust. Redemption pursuant
to optional call provisions is more likely to occur, and redemption pursuant to
special or extraordinary redemption provisions may occur, when the Securities
have an offering side evaluation which represents a premium over par, that is,
when they are able to be refinanced at a lower cost. The proceeds from
GENERAL INFORMATION GI-2
<PAGE>
any such call or redemption pursuant to sinking fund provisions, as well as
proceeds from the sale of Securities and from Securities which mature in
accordance with their terms from a Trust, unless utilized to pay for Units
tendered for redemption, will be distributed to Unitholders of such Trust and
will not be used to purchase additional Securities for such Trust. Accordingly,
any such call, redemption, sale or maturity will reduce the size and diversity
of a Trust and the net annual interest income of such Trust and may reduce the
Estimated Current Return and the Estimated Long-Term Return. See "General
Information-Interest, Estimated Long-Term Return and Estimated Current Return."
The call, redemption, sale or maturity of Securities also may have tax
consequences to a Unitholder. See "Federal Tax Status" for each Trust.
Information with respect to the call provisions and maturity dates of the
Securities is contained in "Portfolio" for each Trust.
Each Unit of a Trust represents an undivided fractional interest in the
Securities deposited therein, in the ratio shown under "Essential Information."
Units may be purchased and certificates, if requested, will be issued in
denominations of one Unit or any multiple or fraction thereof, subject to each
Trust's minimum investment requirement of one Unit. Fractions of Units will be
computed to three decimal points. To the extent that Units of a Trust are
redeemed, the principal amount of Securities in such Trust will be reduced and
the undivided fractional interest represented by each outstanding Unit of such
Trust will increase. See "General Information-Redemption."
Certain of the Securities in certain of the Trusts may have been acquired at a
market discount from par value at maturity. The coupon interest rates on the
discount securities at the time they were purchased and deposited in the Trusts
were lower than the current market interest rates for newly issued bonds of
comparable rating and type. If such interest rates for newly issued comparable
securities increase, the market discount of previously issued securities will
become greater, and if such interest rates for newly issued comparable
securities decline, the market discount of previously issued securities will be
reduced, other things being equal. Investors should also note that the value of
securities purchased at a market discount will increase in value faster than
securities purchased at a market premium if interest rates decrease.
Conversely, if interest rates increase, the value of securities purchased at a
market discount will decrease faster than securities purchased at a market
premium. In addition, if interest rates rise, the prepayment risk of higher
yielding, premium securities and the prepayment benefit for lower yielding,
discount securities will be reduced. A discount security held to maturity will
have a larger portion of its total return in the form of taxable income and
capital gain and loss in the form of tax-exempt interest income than a
comparable security newly issued at current market rates. See "Federal Tax
Status." Market discount attributable to interest changes does not indicate a
lack of market confidence in the issue. Neither the Sponsor nor the Trustee
shall be liable in any way for any default, failure or defect in any of the
Securities.
Certain of the Securities in certain of the Trust Funds may be "zero coupon"
bonds, i.e., an original issue discount bond that does not provide for the
payment of current interest. Zero coupon bonds are purchased at a deep discount
because the buyer receives only the right to receive a final payment at the
maturity of the bond and does not receive any periodic interest payments. The
effect of owning deep discount bonds which do not make current interest payments
(such as the zero coupon bonds) is that a fixed yield is earned not only on the
original investment but also, in effect, on all discount earned during the life
of such obligation. This implicit reinvestment of earnings at the same rate
eliminates the risk of being unable to reinvest the income on such obligation at
a rate as high as the implicit yield on the discount obligation, but at the same
time eliminates the holder's ability to reinvest at higher rates in the future.
For this reason, zero coupon bonds are subject to substantially greater price
fluctuations during periods of changing market interest rates than are
securities of
GENERAL INFORMATION GI-3
<PAGE>
comparable quality which pay interest currently. For the Federal tax
consequences of original issue discount securities such as the zero coupon
bonds, see "Federal Tax Status" for each Trust.
To the best of the Sponsor's knowledge, there is no litigation pending as of the
Initial Date of Deposit in respect of any Security which might reasonably be
expected to have a material adverse effect on the Trust Funds. At any time
after the Initial Date of Deposit, litigation may be instituted on a variety of
grounds with respect to the Securities. The Sponsor is unable to predict
whether any such litigation may be instituted, or if instituted, whether such
litigation might have a material adverse effect on the Trust Funds. The Sponsor
and the Trustee shall not be liable in any way for any default, failure or
defect in any Security.
RETIREMENT PLANS
Units of the Trusts (other than a Tax-Exempt Portfolio) may be well suited for
purchase by Individual Retirement Accounts, Keogh Plans, pension funds and other
qualified retirement plans. Generally, capital gains and income received under
each of the foregoing plans are deferred from federal taxation. All
distributions from such plans are generally treated as ordinary income but may,
in some cases, be eligible for special income averaging or tax-deferred rollover
treatment. Investors considering participation in any such plan should review
specific tax laws related thereto and should consult their attorneys or tax
advisers with respect to the establishment and maintenance of any such plan.
Such plans are offered by brokerage firms and other financial institutions. The
Trusts will waive the $1,000 minimum investment requirement for IRA accounts.
The minimum investment is $250 for tax-deferred plans such as IRA accounts.
Fees and charges with respect to such plans may vary.
The Trustee has agreed to act as custodian for certain retirement plan accounts.
An annual fee of $12.00 per account, if not paid separately, will be assessed by
the Trustee and paid through the liquidation of shares of the reinvestment
account. An individual wishing the Trustee to act as custodian must complete an
Ranson UIT/IRA application and forward it along with a check made payable to The
Bank of New York. Certificates for Individual Retirement Accounts cannot be
issued.
DISTRIBUTION REINVESTMENT
Each Unitholder of a Trust may elect to have distributions of principal
(including capital gains, if any) or interest or both automatically invested
without charge in shares of certain mutual funds which are registered in such
Unitholder's state of residence and are underwritten or advised by Scudder
Kemper Investments, Inc. (the "Kemper Funds"), other than those Kemper Funds
sold with a contingent deferred sales charge.
If individuals indicate they wish to participate in the Reinvestment Program but
do not designate a reinvestment fund, the Program Agent referred to below will
contact such individuals to determine which reinvestment fund or funds they wish
to elect. Since the portfolio securities and investment objectives of such
Kemper Funds generally will differ significantly from that of the Trusts,
Unitholders should carefully consider the consequences before selecting such
Kemper Funds for reinvestment. Detailed information with respect to the
investment objectives and the management of the Funds is contained in their
respective prospectuses, which can be obtained from the Sponsor upon request.
An investor should read the prospectus of the reinvestment fund selected prior
to making the election to reinvest. Unitholders who desire to have such
distributions
GENERAL INFORMATION GI-4
<PAGE>
automatically reinvested should inform their broker at the time of purchase or
should file with the Program Agent a written notice of election.
Unitholders who are receiving distributions in cash may elect to participate in
distribution reinvestment by filing with the Program Agent an election to have
such distributions reinvested without charge. Such election must be received by
the Program Agent at least ten days prior to the Record Date applicable to any
distribution in order to be in effect for such Record Date. Any such election
shall remain in effect until a subsequent notice is received by the Program
Agent. See "General Information-Unitholders- Distributions to Unitholders."
The Program Agent is The Bank of New York. All inquiries concerning
participation in distribution reinvestment should be directed to the Program
Agent at its corporate trust office.
INTEREST, ESTIMATED LONG-TERM RETURN AND ESTIMATED CURRENT RETURN
As of the opening of business on the Initial Date of Deposit, the Estimated
Long-Term Return and the Estimated Current Return, if applicable, for each
Trust were as set forth in the "Essential Information" for each Trust.
Estimated Current Return is calculated by dividing the estimated net annual
interest income per Unit by the Public Offering Price. The estimated net
annual interest income per Unit will vary with changes in fees and expenses
of the Trustee, the Sponsor and the Evaluator and with the principal
prepayment, redemption, maturity, exchange or sale of the Securities while
the Public Offering Price will vary with changes in the offering price of
the underlying Securities and accrued interest; therefore, there is no
assurance that the present Estimated Current Return will be realized in
the future. Estimated Long-Term Return is calculated using a formula
which (1) takes into consideration, and determines and factors in the
relative weightings of, the market values, yields (which takes into account the
amortization of premiums and the accretion of discounts) and estimated
retirements or average life of all of the Securities in a Trust and (2) takes
into account the expenses and sales charge associated with each Trust Unit.
Since the market values and estimated retirements of the Securities and the
expenses of a Trust will change, there is no assurance that the present
Estimated Long-Term Return will be realized in the future. Estimated Current
Return and Estimated Long-Term Return are expected to differ because the
calculation of Estimated Long-Term Return reflects the estimated date and amount
of principal returned while Estimated Current Return calculations include only
net annual interest income and Public Offering Price.
In order to acquire certain of the Securities contracted for by a Trust, it may
be necessary for the Sponsor or Trustee to pay on the dates for delivery of such
Securities amounts covering accrued interest on such Securities which exceed the
amount which will be made available in the letter of credit furnished by the
Sponsor on the Initial Date of Deposit. The Trustee has agreed to pay any
amounts necessary to cover any such excess and will be reimbursed therefor,
without interest, when funds become available from interest payments on the
Securities deposited in that Trust.
Payments received in respect of mortgages underlying Ginnie Maes in each series
of a GNMA Portfolio will consist of a portion representing interest and a
portion representing principal. Although the aggregate monthly payment made by
the obligor on each mortgage remains constant (aside from optional prepayments
of principal), in the early years most of each such payment will represent
interest, while in later years, the proportion representing interest will
decline and the proportion representing principal will increase. However, by
reason of optional prepayments, principal payments in the earlier years on
mortgages underlying Ginnie
GENERAL INFORMATION GI-5
<PAGE>
Maes may be substantially in excess of those required by the amortization
schedules of such mortgages. Therefore, principal payments in later years may
be substantially less since the aggregate unpaid principal balances of such
underlying mortgages may have been greatly reduced. To the extent that the
underlying mortgages bearing higher interest rates in a GNMA Portfolio are
prepaid faster than the other underlying mortgages, the net annual interest rate
per Unit and the Estimated Current Return on the Units of a GNMA Portfolio can
be expected to decline. Monthly payments to the Unitholders of a GNMA Portfolio
will reflect all of these factors.
MARKET FOR UNITS
After the initial offering period, while not obligated to do so, the Sponsor
intends to, and certain of the Underwriters may, subject to change at any time,
maintain a market for Units of the Trust Funds offered hereby and to
continuously offer to purchase said Units at prices, determined by the
Evaluator, based on the aggregate bid prices of the underlying Securities in
such Trusts, together with accrued interest to the expected dates of settlement.
To the extent that a market is maintained during the initial offering period,
the prices at which Units will be repurchased will be based upon the aggregate
offering side evaluation of the Securities in the Trusts. The aggregate bid
prices of the underlying Securities in each Trust are expected to be less than
the related aggregate offering prices (which is the evaluation method used
during the initial public offering period). Accordingly, Unitholders who wish
to dispose of their Units should inquire of their bank or broker as to current
market prices in order to determine whether there is in existence any price in
excess of the Redemption Price and, if so, the amount thereof.
The offering price of any Units resold by the Sponsor or Underwriters will be in
accord with that described in the currently effective Prospectus describing such
Units. Any profit or loss resulting from the resale of such Units will belong
to the Sponsor and/or the Underwriters. The Sponsor and/or the Underwriters may
suspend or discontinue purchases of Units of any Trust if the supply of Units
exceeds demand, or for other business reasons.
REDEMPTION
A Unitholder who does not dispose of Units in the secondary market described
above may cause Units to be redeemed by the Trustee by making a written request
to the Trustee, The Bank of New York, 101 Barclay Street, New York, New York
10286, and, in the case of Units evidenced by a certificate, by tendering such
certificate to the Trustee, properly endorsed or accompanied by a written
instrument or instruments of transfer in a form satisfactory to the Trustee.
Unitholders must sign the request, and such certificate or transfer instrument,
exactly as their names appear on the records of the Trustee and on any
certificate representing the Units to be redeemed. If the amount of the
redemption is $500 or less and the proceeds are payable to the Unitholder(s) of
record at the address of record, no signature guarantee is necessary for
redemptions by individual account owners (including joint owners). Additional
documentation may be requested, and a signature guarantee is always required,
from corporations, executors, administrators, trustees, guardians or
associations. The signatures must be guaranteed by a participant in the
Securities Transfer Agents Medallion Program ("STAMP") or such other guarantee
program in addition to, or in substitution for, STAMP, as may be accepted by the
Trustee. A certificate should only be sent by registered or certified mail for
the protection of the Unitholder. Since tender of the certificate is required
for redemption when one has been issued, Units represented by a certificate
cannot be redeemed until the certificate representing such Units has been
received by the purchasers.
GENERAL INFORMATION GI-6
<PAGE>
Redemption shall be made by the Trustee on the third business day following the
day on which a tender for redemption is received (the "Redemption Date") by
payment of cash equivalent to the Redemption Price for such Trust, determined as
set forth below under "Computation of Redemption Price," as of the evaluation
time stated under "Essential Information," next following such tender,
multiplied by the number of Units being redeemed. Any Units redeemed shall be
canceled and any undivided fractional interest in the Trust extinguished. The
price received upon redemption might be more or less than the amount paid by the
Unitholder depending on the value of the Securities in the Trust at the time of
redemption.
Under regulations issued by the Internal Revenue Service, the Trustee is
required to withhold a certain percentage of the principal amount of a Unit
redemption if the Trustee has not been furnished the redeeming Unitholder's tax
identification number in the manner required by such regulations. Any amount so
withheld is transmitted to the Internal Revenue Service and may be recovered by
the Unitholder only when filing a tax return. Under normal circumstances the
Trustee obtains the Unitholder's tax identification number from the selling
broker. However, any time a Unitholder elects to tender Units for redemption,
such Unitholder should make sure that the Trustee has been provided a certified
tax identification number in order to avoid this possible "back-up withholding."
In the event the Trustee has not been previously provided such number, one must
be provided at the time redemption is requested.
Any amounts paid on redemption representing interest shall be withdrawn from the
Interest Account for such Trust to the extent that funds are available for such
purpose. All other amounts paid on redemption shall be withdrawn from the
Principal Account for such Trust. The Trustee is empowered to sell Securities
for a Trust in order to make funds available for the redemption of Units of such
Trust. Such sale may be required when Securities would not otherwise be sold
and might result in lower prices than might otherwise be realized. To the
extent Securities are sold, the size and diversity of a Trust will be reduced.
In the case of a U.S. Treasury Portfolio or a GNMA Portfolio, Securities will be
sold by the Trustee so as to maintain, as closely as practicable, the original
percentage relationship between the principal amounts of the Securities in such
Trusts. The Securities to be sold for purposes of redeeming Units will be
selected from a list supplied by the Sponsor. The Securities will be chosen for
this list by the Sponsor on the basis of such market and credit factors as it
may determine are in the best interests of such Trusts. Provision is made under
the related Trust Agreements for the Sponsor to specify minimum face amounts in
which blocks of Securities are to be sold in order to obtain the best price
available. While such minimum amounts may vary from time to time in accordance
with market conditions, it is anticipated that the minimum face amounts which
would be specified would range from $25,000 to $100,000. Sales may be required
at a time when the Securities would not otherwise be sold and might result in
lower prices than might otherwise be realized. Moreover, due to the minimum
principal amount in which U.S. Treasury Obligations and Ginnie Maes may be
required to be sold, the proceeds of such sales may exceed the amount necessary
for payment of Units redeemed. To the extent not used to meet other redemption
requests in such Trusts, such excess proceeds will be distributed pro rata to
all remaining Unitholders of record of such Trusts, unless reinvested in
substitute Securities. See "General Information-Investment Supervision."
The Trustee is irrevocably authorized in its discretion, if an Underwriter does
not elect to purchase any Unit tendered for redemption, in lieu of redeeming
such Units, to sell such Units in the over-the-counter market for the account of
tendering Unitholders at prices which will return to the Unitholders amounts in
cash, net after brokerage commissions, transfer taxes and other charges, equal
to or in excess of the Redemption Price for such
GENERAL INFORMATION GI-7
<PAGE>
Units. In the event of any such sale, the Trustee shall pay the net proceeds
thereof to the Unitholders on the day they would otherwise be entitled to
receive payment of the Redemption Price.
The right of redemption may be suspended and payment postponed (1) for any
period during which the New York Stock Exchange is closed, other than customary
weekend and holiday closings, or during which (as determined by the Securities
and Exchange Commission) trading on the New York Stock Exchange is restricted;
(2) for any period during which an emergency exists as a result of which
disposal by the Trustee of Securities is not reasonably practicable or it is not
reasonably practicable to fairly determine the value of the underlying
Securities in accordance with the Trust Agreements; or (3) for such other period
as the Securities and Exchange Commission may by order permit. The Trustee is
not liable to any person in any way for any loss or damage which may result from
any such suspension or postponement.
Computation of Redemption Price. The Redemption Price for Units of each Trust
is computed by the Evaluator as of the evaluation time stated under "Essential
Information" next occurring after the tendering of a Unit for redemption and on
any other business day desired by it, by:
A.adding: (1) the cash on hand in the Trust other than cash deposited in the
Trust to purchase Securities not applied to the purchase of such Securities;
(2) the aggregate value of each issue of the Securities (including "when
issued" contracts, if any) held in the Trust as determined by the Evaluator
on the basis of bid prices therefor; and (3) interest accrued and unpaid on
the Securities in the Trust as of the date of computation;
B.deducting therefrom (1) amounts representing any applicable taxes or
governmental charges payable out of the Trust and for which no deductions
have been previously made for the purpose of additions to the Reserve Account
described under "General Information-Expenses of the Trusts"; (2) an amount
representing estimated accrued expenses of the Trust, including but not
limited to fees and expenses of the Trustee (including legal and auditing
fees and any insurance costs), the Evaluator, the Sponsor and bond counsel,
if any; (3) cash held for distribution to Unitholders of record as of the
business day prior to the evaluation being made; and (4) other liabilities
incurred by the Trust; and
C.finally dividing the results of such computation by the number of Units of
the Trust outstanding as of the date thereof.
UNITHOLDERS
Ownership of Units. Ownership of Units of any Trust will not be evidenced by
certificates unless a Unitholder, the Unitholder's registered broker/dealer or
the clearing agent for such broker/dealer makes a written request to the
Trustee. Certificates, if issued, will be so noted on the confirmation
statement sent to the Underwriter and broker. Non-receipt of such
certificate(s) must be reported to the Trustee within one year; otherwise, a 2%
surety bond fee will be required for replacement.
Units are transferable by making a written request to the Trustee and, in the
case of Units evidenced by a certificate, by presenting and surrendering such
certificate to the Trustee properly endorsed or accompanied by a written
instrument or instruments of transfer which should be sent registered or
certified mail for the protection of the Unitholder. Unitholders must sign such
written request, and such certificate or transfer instrument, exactly as their
names appear on the records of the Trustee and on any certificate representing
the
GENERAL INFORMATION GI-8
<PAGE>
Units to be transferred. Such signatures must be guaranteed by a participant in
the Securities Transfer Agents Medallion Program ("STAMP") or such other
signature guarantee program in addition to, or in substitution for, STAMP, as
may be accepted by the Trustee.
Units may be purchased and certificates, if requested will be issued in
denominations of one Unit subject to each Trust's minimum investment requirement
of 100 Units or any whole Unit multiple thereof subject to any minimum
requirement established by the Sponsor from time to time. Any certificate
issued will be numbered serially for identification, issued in fully registered
form and will be transferable only on the books of the Trustee. The Trustee may
require a Unitholder to pay a reasonable fee, to be determined in the sole
discretion of the Trustee, for each certificate re-issued or transferred and to
pay any governmental charge that may be imposed in connection with each such
transfer or interchange. The Trustee at the present time does not intend to
charge for the normal transfer or interchange of certificates. Destroyed,
stolen, mutilated or lost certificates will be replaced upon delivery to the
Trustee of satisfactory indemnity (generally amounting to 3% of the market value
of the Units), affidavit of loss, evidence of ownership and payment of expenses
incurred.
Distributions to Unitholders. Interest received by each Trust, including any
portion of the proceeds from a disposition of Securities which represents
accrued interest, is credited by the Trustee to the Interest Account for such
Trust. All other receipts are credited by the Trustee to a separate Principal
Account for the Trust. The Trustee normally has no cash for distribution to
Unitholders until it receives interest payments on the Securities in the Trust.
Since interest usually is paid semiannually (monthly in the case of a GNMA
Portfolio), during the initial months of the Trusts, the Interest Account of
each Trust, consisting of accrued but uncollected interest and collected
interest (cash), will be predominantly the uncollected accrued interest that is
not available for distribution. On the dates set forth under "Essential
Information" for each Trust, the Trustee will commence distributions, in part
from funds advanced by the Trustee.
Thereafter, assuming the Trust retains its original size and composition, after
deduction of the fees and expenses of the Trustee, the Sponsor and Evaluator and
reimbursements (without interest) to the Trustee for any amounts advanced to a
Trust, the Trustee will normally distribute on each Interest Distribution Date
(the fifteenth of the month) or shortly thereafter to Unitholders of record of
such Trust on the preceding Record Date (which is the first day of each month).
Unitholders of the Trusts will receive an amount substantially equal to one-
twelfth of such holders' pro rata share of the estimated net annual interest
income to the Interest Account of such Trust. However, interest earned at any
point in time will be greater than the amount actually received by the Trustee
and distributed to the Unitholders. Therefore, there will always remain an item
of accrued interest that is added to the daily value of the Units. If
Unitholders of a Trust sell or redeem all or a portion of their Units, they will
be paid their proportionate share of the accrued interest of such Trust to, but
not including, the third business day after the date of a sale or to the date of
tender in the case of a redemption.
In order to equalize distributions and keep the undistributed interest income of
the Trusts at a low level, all Unitholders of record in such Trust on the first
Record Date will receive an interest distribution on the first Interest
Distribution Date. Because the period of time between the first Interest
Distribution Date and the regular distribution dates may not be a full period,
the first regular distributions may be partial distributions.
Unitholders of a U.S. Treasury Portfolio which contains Stripped Treasury
Securities should note that Stripped Treasury Securities are sold at a deep
discount because the buyer of those securities obtains only the right to receive
a future fixed payment on the security and not any rights to periodic interest
payments thereon.
GENERAL INFORMATION GI-9
<PAGE>
Purchasers of these Securities acquire, in effect, discount obligations that are
economically identical to the "zero-coupon bonds" that have been issued by
corporations. Zero coupon bonds are debt obligations which do not make any
periodic payments of interest prior to maturity and accordingly are issued at a
deep discount. Under generally accepted accounting principles, a holder of a
security purchased at a discount normally must report as an item of income for
financial accounting purposes the portion of the discount attributable to the
applicable reporting period. The calculation of this attributable income would
be made on the "interest" method which generally will result in a lesser amount
of includible income in earlier periods and a correspondingly larger amount in
later periods. For Federal income tax purposes, the inclusion will be on a
basis that reflects the effective compounding of accrued but unpaid interest
effectively represented by the discount. Although this treatment is similar to
the "interest" method described above, the "interest" method may differ to the
extent that generally accepted accounting principles permit or require the
inclusion of interest on the basis of a compounding period other than the semi-
annual period. See "Federal Tax Status" for the U.S. Treasury Portfolios, if
any.
Persons who purchase Units between a Record Date and a Distribution Date will
receive their first distribution on the second Distribution Date following their
purchase of Units. Since interest on Bonds in the Trusts is payable at varying
intervals, usually in semi-annual installments, and distributions of income are
made to Unitholders at different intervals from receipt of interest, the
interest accruing to a Trust may not be equal to the amount of money received
and available for distribution from the Interest Account. Therefore, on each
Distribution Date the amount of interest actually deposited in the Interest
Account of a Trust and available for distribution may be slightly more or less
than the interest distribution made. In order to eliminate fluctuations in
interest distributions resulting from such variances, the Trustee is authorized
by the Trust Agreements to advance such amounts as may be necessary to provide
interest distributions of approximately equal amounts. The Trustee will be
reimbursed, without interest, for any such advances from funds available in the
Interest Account for such Trust.
The Trustee will distribute on each Distribution Date or shortly thereafter, to
each Unitholder of record of a Trust on the preceding Record Date, an amount
substantially equal to such holder's pro rata share of the cash balance, if any,
in the Principal Account of such Trust computed as of the close of business on
the preceding Record Date. However, no distribution will be required if the
balance in the Principal Account is less than $.01 per Unit. Notwithstanding
the foregoing, the Trustee will make a distribution to Unitholders of all
principal relating to maturing U.S. Treasury Obligations in any U.S. Treasury
Portfolio or GNMA Portfolio within twelve business days of the date of such
maturity.
In connection with GNMA Portfolios only, the terms of the Ginnie Maes provide
for payment to the holders thereof (including a GNMA Portfolio) on the fifteenth
day of each month of amounts collected by or due to the issuers thereof with
respect to the underlying mortgages during the preceding month. The Trustee
will collect the interest due a GNMA Portfolio on the Securities therein as it
becomes payable and credit such interest to a separate Interest Account for such
GNMA Portfolio created by the Indenture. Distributions will be made to each
Unitholder of record of a GNMA Portfolio on the appropriate Distribution Date
(see "Essential Information") and will consist of an amount substantially equal
to such Unitholder's pro rata share of the cash balances, if any, in the
Interest Account, the Principal Account and any Capital Gains Account of such
GNMA Portfolio, computed as of the close of business on the preceding Record
Date.
GENERAL INFORMATION GI-10
<PAGE>
Statements to Unitholders. With each distribution, the Trustee will furnish or
cause to be furnished to each Unitholder a statement of the amount of interest
and the amount of other receipts, if any, which are being distributed, expressed
in each case as a dollar amount per Unit.
The accounts of each Trust are required to be audited annually, at the Trust's
expense, by independent auditors designated by the Sponsor, unless the Sponsor
determines that such an audit would not be in the best interest of the
Unitholders of such Trust. The accountants' report will be furnished by the
Trustee to any Unitholder of such Trust upon written request. Within a
reasonable period of time after the end of each calendar year, the Trustee shall
furnish to each person who at any time during the calendar year was a Unitholder
of a Trust a statement, covering the calendar year, setting forth for the
applicable Trust:
A. As to the Interest Account:
1. The amount of interest received on the Securities (and for Tax-Exempt
Portfolios, the percentage of such amount by states and territories in which
the issuers of such Securities are located);
2. The amount paid from the Interest Account representing accrued interest
of any Units redeemed;
3. The deductions from the Interest Account for applicable taxes, if any,
fees and expenses (including auditing fees) of the Trustee, the Sponsor, the
Evaluator, and, if any, of bond counsel;
4. Any amounts credited by the Trustee to the Reserve Account described
under "General Information- Expenses of the Trusts";
5. The net amount remaining after such payments and deductions, expressed
both as a total dollar amount and a dollar amount per Unit outstanding on
the last business day of such calendar year; and
B. As to the Principal Account:
1. The dates of the maturity, liquidation or redemption of any of the
Securities and the net proceeds received therefrom excluding any portion
credited to the Interest Account;
2. The amount paid from the Principal Account representing the principal of
any Units redeemed;
3. The deductions from the Principal Account for payment of applicable
taxes, if any, fees and expenses (including auditing fees) of the Trustee,
the Sponsor, the Evaluator, and, if any, of bond counsel;
4. The amount of when-issued interest treated as a return of capital, if
any;
5. Any amounts credited by the Trustee to the Reserve Account described
under "General Information- Expenses of the Trusts";
6. The net amount remaining after distributions of principal and
deductions, expressed both as a dollar amount and as a dollar amount per
Unit outstanding on the last business day of the calendar year; and
GENERAL INFORMATION GI-11
<PAGE>
C. The following information:
1. A list of the Securities as of the last business day of such calendar
year;
2. The number of Units outstanding on the last business day of such
calendar year;
3. The Redemption Price based on the last evaluation made during such
calendar year;
4. The amount actually distributed during such calendar year from the
Interest and Principal Accounts (and Capital Gains Account, if applicable)
separately stated, expressed both as total dollar amounts and as dollar
amounts per Unit outstanding on the Record Dates for each such distribution.
Rights of Unitholders. A Unitholder may at any time tender Units to the Trustee
for redemption. The death or incapacity of any Unitholder will not operate to
terminate a Trust nor entitle legal representatives or heirs to claim an
accounting or to bring any action or proceeding in any court for partition or
winding up of a Trust.
No Unitholder shall have the right to control the operation and management of
any Trust in any manner, except to vote with respect to the amendment of the
Trust Agreements or termination of any Trust.
INVESTMENT SUPERVISION
The Sponsor may not alter the portfolios of the Trusts by the purchase, sale or
substitution of Securities, except in the special circumstances noted below and
as indicated earlier under "General Information- Trust Information" regarding
the substitution of Replacement Securities for any Failed Securities. Thus,
with the exception of the redemption or maturity of Securities in accordance
with their terms, the assets of the Trusts will remain unchanged under normal
circumstances.
The Sponsor may direct the Trustee to dispose of Securities the value of which
has been affected by certain adverse events including institution of certain
legal proceedings or decline in price or the occurrence of other market factors,
including advance refunding, so that in the opinion of the Sponsor the retention
of such Securities in a Trust would be detrimental to the interest of the
Unitholders. The proceeds from any such sales, exclusive of any portion which
represents accrued interest, will be credited to the Principal Account of such
Trust for distribution to the Unitholders.
The Sponsor is required to instruct the Trustee to reject any offer made by an
issuer of Securities to issue new obligations in exchange or substitution for
any of such Securities pursuant to a refunding financing plan, except that the
Sponsor may instruct the Trustee to accept or reject such an offer or to take
any other action with respect thereto as the Sponsor may deem proper if (1) the
issuer is in default with respect to such Securities or (2) in the written
opinion of the Sponsor the issuer will probably default with respect to such
Securities in the reasonably foreseeable future. Any obligation so received in
exchange or substitution will be held by the Trustee subject to the terms and
conditions of the Trust Agreement to the same extent as Securities originally
deposited thereunder. Within five days after deposit of obligations in exchange
or substitution for underlying Securities, the Trustee is required to give
notice thereof to each Unitholder, identifying the Securities eliminated and the
Securities substituted therefor.
GENERAL INFORMATION GI-12
<PAGE>
The Trustee may sell Securities, designated by the Sponsor, from a Trust for the
purpose of redeeming Units of such Trust tendered for redemption and the payment
of expenses.
ADMINISTRATION OF THE TRUSTS
The Trustee. The Trustee is The Bank of New York, a trust company organized
under the laws of New York. The Bank of New York has its offices at 101 Barclay
Street, New York, New York 10286, telephone 1-800-701-8178. The Bank of New
York is subject to supervision and examination by the Superintendent of Banks of
the State of New York and the Board of Governors of the Federal Reserve System,
and its deposits are insured by the Federal Deposit Insurance Corporation to the
extent permitted by law.
The Trustee, whose duties are ministerial in nature, has not participated in
selecting the portfolio of any Trust. For information relating to the
responsibilities of the Trustee under the Trust Agreements, reference is made to
the material set forth under "General Information-Unitholders."
In accordance with the Trust Agreements, the Trustee shall keep records of all
transactions at its office. Such records shall include the name and address of,
and the number of Units held by, every Unitholder of each Trust. Such books and
records shall be open to inspection by any Unitholder of such Trust at all
reasonable times during usual business hours. The Trustee shall make such
annual or other reports as may from time to time be required under any
applicable state or Federal statute, rule or regulation. The Trustee shall keep
a certified copy or duplicate original of the Trust Agreements on file in its
office available for inspection at all reasonable times during usual business
hours by any Unitholder, together with a current list of the Securities held in
each Trust. Pursuant to the Trust Agreements, the Trustee may employ one or
more agents for the purpose of custody and safeguarding of Securities comprising
the Trusts.
Under the Trust Agreements, the Trustee or any successor trustee may resign and
be discharged of its duties created by the Trust Agreements by executing an
instrument in writing and filing the same with the Sponsor.
The Trustee or successor trustee must mail a copy of the notice of resignation
to all Unitholders then of record, not less than 60 days before the date
specified in such notice when such resignation is to take effect. The Sponsor
upon receiving notice of such resignation is obligated to appoint a successor
trustee promptly. If, upon such resignation, no successor trustee has been
appointed and has accepted the appointment within 30 days after notification,
the retiring Trustee may apply to a court of competent jurisdiction for the
appointment of a successor. The Sponsor may at any time remove the Trustee,
with or without cause, and appoint a successor trustee as provided in the Trust
Agreements. Notice of such removal and appointment shall be mailed to each
Unitholder by the Sponsor. Upon execution of a written acceptance of such
appointment by such successor trustee, all the rights, powers, duties and
obligations of the original Trustee shall vest in the successor. The Trustee
shall be a corporation organized under the laws of the United States, or any
state thereof, which is authorized under such laws to exercise trust powers.
The Trustee shall have at all times an aggregate capital, surplus and undivided
profits of not less than $5,000,000.
The Evaluator. Ranson & Associates, Inc., the Sponsor, also serves as
Evaluator. The Evaluator may resign or be removed by the Trustee in which event
the Trustee is to use its best efforts to appoint a satisfactory successor.
Such resignation or removal shall become effective upon acceptance of
appointment by the successor evaluator. If upon resignation of the Evaluator no
successor has accepted appointment within 30
GENERAL INFORMATION GI-13
<PAGE>
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,
Muller Data Corporation, a non-affiliated firm regularly engaged in the business
of evaluating, quoting or appraising comparable securities, provides, for both
the initial offering period and secondary market transactions, portfolio
evaluations of the Securities in the Trusts which are then reviewed by the
Evaluator. In the event the Sponsor is unable to obtain current evaluations
from Muller Data Corporation, it may make its own evaluations or it may utilize
the services of any other non-affiliated evaluator or evaluators it deems
appropriate.
Amendment and Termination. The Trust Agreements may be amended by the Trustee
and the Sponsor without the consent of any of the Unitholders: (1) to cure any
ambiguity or to correct or supplement any provision which may be defective or
inconsistent; (2) to change any provision thereof as may be required by the
Securities and Exchange Commission or any successor governmental agency; or (3)
to make such provisions as shall not adversely affect the interests of the
Unitholders. The Trust Agreements with respect to the Trusts may also be
amended in any respect by the Sponsor and the Trustee, or any of the provisions
thereof may be waived, with the consent of the holders of Units representing 66
2/3% of the Units then outstanding of such Trust, provided that no such
amendment or waiver will reduce the interest of any Unitholder thereof without
the consent of such Unitholder or reduce the percentage of Units required to
consent to any such amendment or waiver without the consent of all Unitholders
of such Trust. In no event shall any Trust Agreement be amended to increase the
number of Units of a Trust issuable thereunder or to permit, except in
accordance with the provisions of such Trust Agreement, the acquisition of any
Securities in addition to or in substitution for those initially deposited in a
Trust. The Trustee shall promptly notify Unitholders of the substance of any
such amendment.
The Trust Agreements provide that the Trusts shall terminate upon the maturity,
redemption or other disposition of the last of the Securities held in a Trust.
If the value of a Trust shall be less than the applicable minimum value stated
under "Essential Information," the Trustee may, in its discretion, and shall,
when so directed by the Sponsor, terminate the Trust. A Trust may be terminated
at any time by the holders of Units representing 66 2/3% of the Units thereof
then outstanding. In the event of termination of a Trust, written notice
thereof will be sent by the Trustee to all Unitholders of such Trust. Within a
reasonable period after termination, the Trustee will sell any Securities
remaining in such Trust and, after paying all expenses and charges incurred by
the Trust, will distribute to Unitholders thereof (upon surrender for
cancellation of certificates for Units, if issued) their pro rata share of the
balances remaining in the Interest and Principal Accounts (and Capital Gains
Account, if applicable) of such Trust.
Limitations on Liability. The Sponsor: The Sponsor is liable for the
performance of its obligations arising from its responsibilities under the Trust
Agreements, but will be under no liability to the Unitholders for taking any
action or refraining from any action in good faith pursuant to the Trust
Agreements or for errors in judgment, except in cases of its own gross
negligence, bad faith or willful misconduct. The Sponsor shall not be liable or
responsible in any way for depreciation or loss incurred by reason of the sale
of any Securities.
The Trustee: The Trust Agreements provide that the Trustee shall be under no
liability for any action taken in good faith in reliance upon prima facie
properly executed documents or for the disposition of monies, Securities or
certificates except by reason of its own negligence, bad faith or willful
misconduct, nor shall the Trustee be liable or responsible in any way for
depreciation or loss incurred by reason of the sale by the Trustee
GENERAL INFORMATION GI-14
<PAGE>
of any Securities. In the event that the Sponsor shall fail to act, the Trustee
may act and shall not be liable for any such action taken by it in good faith.
The Trustee shall not be personally liable for any taxes or other governmental
charges imposed upon or in respect of the Securities or upon the interest
thereon. In addition, the Trust Agreements contain other customary provisions
limiting the liability of the Trustee.
The Evaluator: The Trustee and Unitholders may rely on any evaluation furnished
by the Evaluator and shall have no responsibility for the accuracy thereof. The
Trust Agreements provide that the determinations made by the Evaluator shall be
made in good faith upon the basis of the best information available to it,
provided, however, that the Evaluator shall be under no liability to the Trustee
or Unitholders for errors in judgment, but shall be liable only for its gross
negligence, lack of good faith or willful misconduct.
EXPENSES OF THE TRUSTS
The Sponsor will charge the Trusts a surveillance fee for services performed for
the Trusts in an amount not to exceed that amount set forth in "Essential
Information" but in no event will such compensation, when combined with all
compensation received from other unit investment trusts for which the Sponsor
both acts as sponsor and provides portfolio surveillance, exceed the aggregate
cost to the Sponsor for providing such services. Such fee shall be based on the
total number of Units of the related Trust outstanding as of the January Record
Date for any annual period. The Sponsor will receive a portion of the sales
commissions paid in connection with the purchase of Units and will share in
profits, if any, related to the deposit of Securities in the Trusts.
The Trustee receives for its services fees set forth under "Essential
Information." The Trustee fee which is calculated monthly is based on the
largest aggregate principal amount of Securities in a Trust at any time during
the period. In no event shall the Trustee be paid less than $2,000 per Trust in
any one year. Funds that are available for future distributions, redemptions
and payment of expenses are held in accounts which are non-interest bearing to
Unitholders and are available for use by the Trustee pursuant to normal trust
procedures; however, the Trustee is also authorized by the Trust Agreements to
make from time to time certain non-interest bearing advances to the Trusts.
During the first year the Trustee has agreed to lower its fees and absorb
expenses by the amount set forth under "Essential Information." The Trustee's
fee will not be increased in future years in order to make up this reduction in
the Trustee's fee. The Trustee's fee is payable on or before each Distribution
Date.
For evaluation of Securities in each Trust, the Evaluator shall receive a fee,
payable monthly, calculated on the basis of that annual rate set forth under
"Essential Information," based upon the largest aggregate principal amount of
Securities in such Trust at any time during such monthly period.
The Trustee's and Evaluator's fees are deducted first from the Interest Account
of a Trust to the extent funds are available and then from the Principal
Account. Such fees may be increased without approval of Unitholders by amounts
not exceeding a proportionate increase in the Consumer Price Index entitled "All
Services Less Rent of Shelter," published by the United States Department of
Labor, or any equivalent index substituted therefor. In addition, the Trustee's
fee may be periodically adjusted in response to fluctuations in short-term
interest rates (reflecting the cost to the Trustee of advancing funds to a Trust
to meet scheduled distributions).
GENERAL INFORMATION GI-15
<PAGE>
Expenses incurred in the establishing of each Trust, including the cost of the
initial preparation of documents relating to such Trust (including the
Prospectus, Trust Agreement and certificates), federal and state registration
fees, the initial fees and expenses of the Trustee, legal and accounting
expenses, payment of closing fees and any other out-of-pocket expenses, will be
paid by such Trust and it is intended that such expenses be amortized over a
five year period or the life of the Trust if less than five years. The
following additional charges are or may be incurred by the Trusts: (a) fees for
the Trustee's extraordinary services; (b) expenses of the Trustee (including
legal and auditing expenses and insurance costs for Insured Trust Funds, but not
including any fees and expenses charged by any agent for custody and
safeguarding of Securities) and of bond counsel, if any; (c) various
governmental charges; (d) expenses and costs of any action taken by the Trustee
to protect a Trust or the rights and interests of the Unitholders; (e)
indemnification of the Trustee for any loss, liability or expense incurred by it
in the administration of a Trust not resulting from gross negligence, bad faith
or willful misconduct on its part; (f) indemnification of the Sponsor for any
loss, liability or expense incurred in acting in that capacity without gross
negligence, bad faith or willful misconduct; and (g) expenditures incurred in
contacting Unitholders upon termination of the Trusts. The fees and expenses
set forth herein are payable out of the appropriate Trust and, when owing to the
Trustee, are secured by a lien on such Trust. Fees or charges relating to a
Trust shall be allocated to each Trust in the same ratio as the principal amount
of such Trust bears to the total principal amount of all Trusts. Fees or
charges relating solely to a particular Trust shall be charged only to such
Trust.
Fees and expenses of the Trusts shall be deducted from the Interest Account
thereof, or, to the extent funds are not available in such Account, from the
Principal Accounts. The Trustee may withdraw from the Principal Account or the
interest Account of any Trust such amounts, if any, as it deems necessary to
establish a reserve for any taxes or other governmental charges or other
extraordinary expenses payable out of the Trust. Amounts so withdrawn shall be
credited to a separate account maintained for a Trust known as the Reserve
Account and shall not be considered a part of the Trust when determining the
value of the Units until such time as the Trustee shall return all or any part
of such amounts to the appropriate account.
THE SPONSOR
Ranson & Associates, Inc., the Sponsor of the Trusts, is an investment banking
firm created in 1995 by a number of former owners and employees of Ranson
Capital Corporation. On November 26, 1996, Ranson & Associates, Inc. purchased
all existing unit investment trusts sponsored by EVEREN Securities, Inc.
Accordingly, Ranson & Associates Inc. is the successor sponsor to unit
investments trusts formerly sponsored by EVEREN Unit Investment Trusts, a
service of EVEREN Securities, Inc. Ranson & Associates, Inc. is also the
sponsor and successor sponsor of Series of The Kansas Tax-Exempt Trust and
Multi-State Series of The Ranson Municipal Trust. Ranson & Associates, Inc.
is the successor to a series of companies, the first of which was originally
organized in Kansas in 1935. During its history, Ranson & Associates, Inc.
and its predecessors have been active in public and corporate finance and have
sold bonds and unit investment trusts and maintained secondary market activities
relating thereto. At present, Ranson & Associates, Inc., which is a member of
the National Association of Securities Dealers, Inc., is the Sponsor to each of
the above-named unit investment trusts and serves as the financial advisor and
as an underwriter for issuers in the Midwest and Southwest, especially in
Kansas, Missouri and Texas. The Sponsor's offices are located at 250 North Rock
Road, Suite 150, Wichita, Kansas 67206-2241.
GENERAL INFORMATION GI-16
<PAGE>
If at any time the Sponsor shall fail to perform any of its duties under the
Trust Agreements or shall become incapable of acting or shall be adjudged a
bankrupt or insolvent or shall have its affairs taken over by public
authorities, then the Trustee may (a) appoint a successor sponsor at rates of
compensation deemed by the Trustee to be reasonable and not exceeding such
reasonable amounts as may be prescribed by the Securities and Exchange
Commission, or (b) terminate the Trust Agreements and liquidate the Trusts as
provided therein, or (c) continue to act as Trustee without terminating the
Trust Agreements.
The foregoing financial information with regard to the Sponsor relates to the
Sponsor only and not to these Trusts. Such information is included in this
Prospectus only for the purpose of informing investors as to the financial
responsibility of the Sponsor and its ability to carry out its contractual
obligations with respect to the Trusts. More comprehensive financial
information can be obtained upon request from the Sponsor.
LEGAL OPINIONS
The legality of the Units offered hereby and certain matters relating to Federal
tax law have been passed upon by Chapman and Cutler, 111 West Monroe Street,
Chicago, Illinois 60603, as counsel for the Sponsor.
INDEPENDENT AUDITORS
The statements of net assets, including the Trust portfolios, of the Trusts at
the Initial Date of Deposit, appearing in this Prospectus and Registration
Statement have been audited by Allen, Gibbs & Houlik, L.C., independent
auditors, as set forth in their report appearing elsewhere herein, and are
included in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
GENERAL INFORMATION GI-17
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
------
<S> <C>
SUMMARY 2
ESSENTIAL INFORMATION 3
THE TRUST FUNDS 6
REPORT OF INDEPENDENT
AUDITORS 8
STATEMENTS OF NET ASSETS 9
PUBLIC OFFERING OF UNITS 10
Public Offering Price 10
Accrued Interest 14
Comparison of Public Offering Price and
Redemption Price 14
Public Distribution of Units 14
Profits of Sponsor and Underwriters 18
THE INSURED CORPORATE SERIES IC-1
The Trust Portfolio IC-1
Series Information IC-2
Portfolio IC-3
Notes to Portfolio IC-4
Risk Factors IC-5
Insurance on the Bonds IC-7
Federal Tax Status IC-8
Tax Reporting and Reallocation IC-13
Estimated Cash Flows to Unitholders IC-13
THE GNMA PORTFOLIOS GNMA-1
The Trust Portfolio GNMA-1
Portfolios GNMA-2
Notes to Portfolios GNMA-3
Risk Factors GNMA-4
Federal Tax Status GNMA-8
THE U.S. TREASURY PORTFOLIO SERIES US-1
The Trust Portfolio US-1
Risk Factors US-1
Portfolio US-2
Notes to Portfolio US-3
Federal Tax Status US-4
Tax Reporting and Reallocation US-8
Estimated Cash Flows to Unitholders US-8
GENERAL INFORMATION GI-1
Trust Information GI-1
Retirement Plans GI-4
Distribution Reinvestment GI-4
Interest, Estimated Long-Term Return
and Estimated Current Return GI-5
Market for Units GI-6
Redemption GI-6
Unitholders GI-8
Investment Supervision GI-12
Administration of the Trusts GI-13
Expenses of the Trusts GI-15
The Sponsor GI-16
Legal Opinions GI-17
Independent Auditors GI-17
</TABLE>
--------------------
This Prospectus does not contain all of the information set forth in the
registration statement and exhibits relating thereto, filed with the Securities
and Exchange Commission Washington, D.C. under the Securities Act of 1933 and
the Investment Company Act of 1940, and to which reference is made.
--------------------
No person is authorized to give any information or to make any representations
not contained in this Prospectus and any information or representation not
contained herein must not be relied upon as having been authorized by the
Trusts, the Trustee, or the Sponsor. The Trusts are registered as unit
investment trusts under the Investment Company Act of 1940. Such registration
does not imply that the Trusts or the Units have been guaranteed, sponsored,
recommended or approved by the United States or any state or any agency or
officer thereof.
--------------------
This Prospectus does not constitute an offer to sell, or a solicitation of an
offer to buy, securities in any state to any person to whom it is not lawful to
make such offer in such state.
<PAGE>
---------------
RANSON
UNIT
INVESTMENT
TRUSTS
---------------
Ask for a
RANSON
& ASSOCIATES, INC.
Trust
- -------------------------------------------------------------------------------
PROSPECTUS MAY 20, 1998
- -------------------------------------------------------------------------------
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents.
The facing sheet
The Cross-Reference sheets
The Prospectus
The Signatures
The following exhibits.
1.1(a). Trust Agreement applicable to Insured Corporate, Series 11.
1.1(b). Trust Agreement applicable to GNMA Portfolio, Series 8 and
Series 9.
1.1(c). Trust Agreement applicable to U.S. Treasury Portfolio, Series
19.
1.1.1(a). Standard Terms and Conditions of Trust applicable to Insured
Corporate, Series 11. Reference is made to Exhibit 1.1.1 to
Ranson Unit Investment Trusts, Series 54 (File No. 333-20717)
as filed on February 4, 1997.
1.1.1(b). Standard Terms and Conditions of Trust applicable to GNMA
Portfolio, Series 8 and Series 9 and U.S. Treasury Portflio,
Series 19. Reference is made to Exhibit 1.1.1 to EVEREN Unit
Investment Trusts, Series 47 (File No. 333-03141) as filed on
May 8, 1996.
2.1. Form of Certificate of Ownership (pages three and four of the
Standard Terms and Conditions of Trust included as Exhibit
1.1.1).
3.1. Opinion of counsel to the Sponsor as to legality of the
securities being registered including a consent to the use of
its name under "Legal Opinions" in the Prospectus.
3.2. Opinion of counsel to the Sponsor as to the tax status of the
securities being registered.
4.1. Consent of Independent Auditors.
4.2. Consent of Independent Evaluator.
EX-27.Financial Data Schedules.
S-1
<PAGE>
SIGNATURES
The Registrant, Ranson Unit Investment Trusts, Series 69, hereby
identifies Ranson Unit Investment Trusts, Series 53, Kemper Defined
Funds, Series 9, Kemper Defined Funds, Series 45, Kemper Defined Funds
Insured National Series 1, Kemper Insured Corporate Trust, Series 1,
Kemper Tax-Exempt Insured Income Trust, Multi-State Series 19, and Kemper
Government Securities Trust, Series 39 (GNMA Portfolio), Series 40 (GNMA
Portfolio) and Series 41 (U.S. Treasury Portfolio) for purposes of the
representations required by Rule 487 and represents the following: (1)
that the portfolio securities deposited in the series as to the
securities of which this Registration Statement is being filed do not
differ materially in type or quality from those deposited in such
previous series; (2) that, except to the extent necessary to identify the
specific portfolio securities deposited in, and to provide essential
financial information for, the series with respect to the securities of
which this Registration Statement is being filed, this Registration
Statement does not contain disclosures that differ in any material
respect from those contained in the registration statements for such
previous series as to which the effective date was determined by the
Commission or the staff; and (3) that it has complied with Rule 460 under
the Securities Act of 1933.
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Ranson Unit Investment Trusts, Series 69 has duly caused this
Registration Statement to be signed on its behalf by the undersigned
thereunto duly authorized, in the City of Wichita, and State of Kansas,
on the 20th day of May, 1998.
RANSON UNIT INVESTMENT TRUSTS, SERIES 69,
Registrant
By: RANSON & ASSOCIATES, INC., Depositor
By: ALEX R. MEITZNER
---------------------------------------
Alex R. Meitzner
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on May 20, 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 )
- --------------------- President and Director )
Douglas K. Rogers
ALEX R. MEITZNER Chairman of the Board )
- --------------------- of Directors )
Alex R. Meitzner
ROBIN K. PINKERTON President, Secretary, )
- --------------------- Treasurer and Director ) ALEX R. MEITZNER
Robin K. Pinkerton -----------------------
Alex R. Meitzner
- ------------------------------------------------------------------------------
An executed copy of each of the related powers of attorney was filed with the
Securities and Exchange Commission in connection with the Registration Statement
on Form S-6 of The Kansas Tax-Exempt Trust, Series 51 (File No. 33-46376) and
Series 52 (File No. 33-47687) and the same are hereby incorporated herein by
this reference.
S-2
Exhibit 1.1(a)
RANSON UNIT INVESTMENT TRUSTS, SERIES 69
TRUST AGREEMENT
Dated: May 20, 1998
This Trust Agreement between Ranson & Associates, Inc., as Depositor
and Evaluator, and The Bank of New York, as Trustee, sets forth certain
provisions in full and incorporates other provisions by reference to the
document entitled "Standard Terms and Conditions of Trust for Corporate
Bond Trusts Sponsored by Ranson & Associates, Inc., Effective: February
4, 1997" (herein called the "Standard Terms and Conditions of Trust") and
such provisions as are set forth in full and such provisions as are
incorporated by reference constitute a single instrument. All references
herein to Articles and Sections are to Articles and Sections of the
Standard Terms and Conditions of Trust.
WITNESSETH THAT:
In consideration of the premises and of the mutual agreements herein
contained, the Depositor and the Trustee and the Evaluator agree as
follows:
PART I
STANDARD TERMS AND CONDITIONS OF TRUST
Subject to the Provisions of Part II hereof, all the provisions
contained in the Standard Terms and Conditions of Trust are herein
incorporated by reference in their entirety and shall be deemed to be a
part of this instrument as fully and to the same extent as though said
provisions had been set forth in full in this instrument.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
The following special terms and conditions are hereby agreed to:
(a) The Bonds defined in Section 1.01(4), listed in Schedule A
hereto, have been deposited in trust under this Trust Agreement.
(b) The fractional undivided interest in and ownership of each
Trust Fund represented by each Unit is the amount set forth under
"Essential Information-Fractional Undivided Interest per Unit" in
the Prospectus.
(c) The number of Units in each Trust is that amount set forth
under "Essential Information-Number of Units" in the Prospectus.
(d) The "First General Record Date" shall be the first "Record
Date" set forth under "Essential Information" in the Prospectus.
<PAGE>
(e) The amount of the second distribution of funds from the
Interest Account shall be that amount set forth under "Essential
Information-Interest Payments-First Payment per Unit" for each Trust
in the Prospectus.
(f) The term "Trust" as defined in Section 1.01(2) shall
include "Insured Corporate, Series 11" as defined in the Prospectus.
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed.
RANSON & ASSOCIATES, INC., Depositor
and Evaluator
By ROBIN K. PINKERTON
----------------------------------
President
THE BANK OF NEW YORK, Trustee
By JEFFREY BIESELIN
----------------------------------
Vice President
-3-
<PAGE>
SCHEDULE A
BONDS INITIALLY DEPOSITED
RANSON UNIT INVESTMENT TRUSTS, SERIES 69
(Note: Incorporated herein and made a part hereof is the
"Portfolio" as set forth in the Prospectus for each Trust.)
-4-
Exhibit 1.1(b)
RANSON UNIT INVESTMENT TRUSTS, SERIES 69
TRUST AGREEMENT
Dated: May 20, 1998
This Trust Agreement between Ranson & Associates, Inc., as Depositor
and Evaluator, and The Bank of New York, as Trustee, sets forth certain
provisions in full and incorporates other provisions by reference to the
document entitled "Standard Terms and Conditions of Trust for Government
Securities Trusts Sponsored by EVEREN Unit Investment Trusts, a service
of EVEREN Securities, Inc., Effective: May 8, 1996" (herein called the
"Standard Terms and Conditions of Trust") and such provisions as are set
forth in full and such provisions as are incorporated by reference
constitute a single instrument. All references herein to Articles and
Sections are to Articles and Sections of the Standard Terms and
Conditions of Trust.
WITNESSETH THAT:
In consideration of the premises and of the mutual agreements herein
contained, the Depositor and the Trustee and the Evaluator agree as
follows:
PART I
STANDARD TERMS AND CONDITIONS OF TRUST
Subject to the Provisions of Part II hereof, all the provisions
contained in the Standard Terms and Conditions of Trust are herein
incorporated by reference in their entirety and shall be deemed to be a
part of this instrument as fully and to the same extent as though said
provisions had been set forth in full in this instrument.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
The following special terms and conditions are hereby agreed to:
(a) The Securities defined in Section 1.01(15), listed in
Schedule A hereto, have been deposited in trust under this Trust
Agreement.
(b) The fractional undivided interest in and ownership of each
Trust Fund represented by each Unit is the amount set forth under
"Essential Information-Fractional Undivided Interest per Unit" in
the Prospectus.
(c) The number of Units in each Trust is that amount set forth
under "Essential Information-Number of Units" in the Prospectus.
<PAGE>
(d) The "First General Record Date" shall be the first "Record
Date" set forth under "Essential Information" in the Prospectus.
(e) The amount of the second distribution of funds from the
Interest Account shall be that amount set forth under "Essential
Information-Interest Payments-First Payment per Unit" for each Trust
in the Prospectus.
(f) The term "Trust" as defined in Section 1.01(17) shall
include "GNMA Portfolio, Series 8" and GNMA Portfolio, Series 9" as
defined in the Prospectus.
(g) Sections 1.01(4) and (6) shall be replaced with the
following:
(4) "Depositor" shall mean Ranson & Associates, Inc. and
its successors in interest, or any successor depositor
appointed as hereinafter provided.
(6) "Evaluator" shall mean Ranson & Associates, Inc. and
its successors in interest, or any successor evaluator
appointed as hereinafter provided.
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed.
RANSON & ASSOCIATES, INC., Depositor
and Evaluator
By ROBIN K. PINKERTON
----------------------------------
President
THE BANK OF NEW YORK, Trustee
By JEFFREY BIESELIN
----------------------------------
Vice President
-2-
<PAGE>
SCHEDULE A
SECURITIES INITIALLY DEPOSITED
RANSON UNIT INVESTMENT TRUSTS, SERIES 69
(Note: Incorporated herein and made a part hereof is the
"Portfolio" as set forth in the Prospectus for each Trust.)
-4-
Exhibit 1.1(c)
RANSON UNIT INVESTMENT TRUSTS, SERIES 69
TRUST AGREEMENT
Dated: May 20, 1998
This Trust Agreement between Ranson & Associates, Inc., as Depositor
and Evaluator, and The Bank of New York, as Trustee, sets forth certain
provisions in full and incorporates other provisions by reference to the
document entitled "Standard Terms and Conditions of Trust for Government
Securities Sponsored by EVEREN Unit Investment Trusts, a service of
EVEREN Securities, Inc., Effective: May 8, 1996" (herein called the
"Standard Terms and Conditions of Trust") and such provisions as are set
forth in full and such provisions as are incorporated by reference
constitute a single instrument. All references herein to Articles and
Sections are to Articles and Sections of the Standard Terms and
Conditions of Trust.
WITNESSETH THAT:
In consideration of the premises and of the mutual agreements herein
contained, the Depositor and the Trustee and the Evaluator agree as
follows:
PART I
STANDARD TERMS AND CONDITIONS OF TRUST
Subject to the Provisions of Part II hereof, all the provisions
contained in the Standard Terms and Conditions of Trust are herein
incorporated by reference in their entirety and shall be deemed to be a
part of this instrument as fully and to the same extent as though said
provisions had been set forth in full in this instrument.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
The following special terms and conditions are hereby agreed to:
(a) The Securities defined in Section 1.01(15), listed in
Schedule A hereto, have been deposited in trust under this Trust
Agreement.
(b) The fractional undivided interest in and ownership of each
Trust Fund represented by each Unit is the amount set forth under
"Essential Information-Fractional Undivided Interest per Unit" in
the Prospectus.
(c) The number of Units in each Trust is that amount set forth
under "Essential Information-Number of Units" in the Prospectus.
<PAGE>
(d) The "First General Record Date" shall be the first "Record
Date" set forth under "Essential Information" in the Prospectus.
(e) The amount of the second distribution of funds from the
Interest Account shall be that amount set forth under "Essential
Information-Interest Payments-First Payment per Unit" for each Trust
in the Prospectus.
(f) The term "Trust" as defined in Section 1.01(17) shall
include "U.S. Treasury Portfolio, Series 19" as defined in the
Prospectus.
(g) Sections 1.01(4) and (6) shall be replaced with the
following:
(4) "Depositor" shall mean Ranson & Associates, Inc. and
its successors in interest, or any successor depositor
appointed as hereinafter provided.
(6) "Evaluator" shall mean Ranson & Associates, Inc. and
its successors in interest, or any successor evaluator
appointed as hereinafter provided.
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed.
RANSON & ASSOCIATES, INC., Depositor
and Evaluator
By ROBIN K. PINKERTON
----------------------------------
President
THE BANK OF NEW YORK, Trustee
By JEFFREY BIESELIN
----------------------------------
Vice President
-3-
<PAGE>
SCHEDULE A
SECURITIES INITIALLY DEPOSITED
RANSON UNIT INVESTMENT TRUSTS, SERIES 69
(Note: Incorporated herein and made a part hereof is the
"Portfolio" as set forth in the Prospectus for each Trust.)
-4-
EXHIBIT 3.1
CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
May 20, 1998
Ranson & Associates, Inc.
250 North Rock Road, Suite 150
Wichita, Kansas 67206
Re: Ranson Unit Investment Trusts Series 69
---------------------------------------
Gentlemen:
We have served as counsel for Ranson & Associates, Inc., as Sponsor
and Depositor of Ranson Unit Investment Trusts Series 69 (the "Fund"), in
connection with the preparation, execution and delivery of Trust
Agreements dated the date of this opinion between Ranson & Associates,
Inc., as Depositor, and The Bank of New York, as Trustee, pursuant to
which the Depositor has delivered to and deposited the Bonds listed in
the Schedules to the Trust Agreements with the Trustee and pursuant to
which the Trustee has issued to or on the order of the Depositor a
certificate or certificates representing all the Units of fractional
undivided interest in, and ownership of, the Fund, created under said
Trust Agreements.
In connection therewith we have examined such pertinent records and
documents and matters of law as we have deemed necessary in order to
enable us to express the opinions hereinafter set forth.
Based upon the foregoing, we are of the opinion that:
1. The execution and delivery of the Trust Agreements and
the execution and issuance of certificates evidencing the Units
of the Fund have been duly authorized; and
2. The certificates evidencing the Units of the Fund, when
duly executed and delivered by the Depositor and the Trustee in
accordance with the aforementioned Trust Agreements, will
constitute valid and binding obligations of the Fund and the
Depositor in accordance with the terms thereof.
<PAGE>
-2-
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement (File No. 333-52521) relating to the Units
referred to above and to the use of our name and to the reference to our
firm in said Registration Statement and in the related Prospectus.
Respectfully submitted,
CHAPMAN AND CUTLER
EXHIBIT 3.2
CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
May 20, 1998
Ranson & Associates, Inc.
250 North Rock Road, Suite 150
Wichita, Kansas 67206
The Bank of New York
101 Barclay Street
New York, New York 10286
Re: Ranson Unit Investment Trusts, Series 69
(Insured Corporate, Series 12)
Gentlemen:
We have acted as counsel for Ranson Unit Investment Trusts, a
service of Ranson & Associates, Inc., as Sponsor and Depositor of Ranson
Unit Investment Trusts Series 69 (the "Fund") including Insured
Corporate, Series 12 (the "Trust"), in connection with the issuance of
Units of fractional undivided interest in the Trust, under a Trust
Agreement dated May 20, 1998 (the "Indenture") between Ranson &
Associates, Inc., as Depositor and Evaluator, and The Bank of New York,
as Trustee.
In this connection, we have examined the Registration Statement, the
Prospectus, the Indenture, and such other instruments and documents as we
have deemed pertinent. The assets of the Trust will consist of
portfolios of intermediate and long-term corporate debt Bonds issued by
utility companies (the "Corporate Bonds") and "Zero coupon" U.S. Treasury
bonds (the "Treasury Bonds") (collectively, the "Bonds") as set forth in
the Prospectus. All Bonds have been issued after July 18, 1984. For
purposes of the opinions set forth below, we have assumed that each of
the Bonds is debt and that interest on each of the Bonds is includable in
gross income for federal income tax purposes.
Based upon the foregoing and upon an investigation of such matters
of law as we consider to be applicable, we are of the opinion that, under
existing Federal income tax law:
(i) The Trusts are not associations taxable as corporations
for Federal income tax purposes but will be governed by the
provisions of subpart E, subchapter J (relating to trusts) of
chapter 1, Internal Revenue Code of 1986 (the "Code").
<PAGE>
-2-
(ii) Each Unitholder will be considered as owning a pro rata
share of each asset of the Trusts for Federal income tax
purposes. Under subpart E, subchapter J of chapter 1 of the
Code, income of the Trusts will be treated as income of each
Unitholder. Each Unitholder will be considered to have
received his pro rata share of income derived from each Trust
asset when such income is considered to be received by the
Trust. Each Unitholder will also be required to include in
taxable income for Federal income tax purposes, original issue
discount with respect to his interest in any Bond held by the
Trust at the same time and in the same manner as though the
Unitholder were the direct owner of such interest. Original
issue discount will be treated as zero with respect to
Corporate Bonds if it is "de minimis" within the meaning of
Section 1273 of the Code and, based upon a Treasury Regulation
(the "Regulation") which was issued on December 28, 1992
regarding the stripped bond rules of the Code, original issue
discount with respect to a Treasury Bond will be treated as
zero if it is "de minimis" as determined thereunder. If a
Corporate Bond is a "high-yield discount obligation" within the
meaning of Section 163(e)(5) of the Code, certain special rules
may apply. A Unitholder may elect to include in taxable income
for Federal income tax purposes, market discount as it accrues
with respect to his interest in any Corporate Bond held by a
Trust which he is considered as having acquired with market
discount at the same time and in the same manner as though the
Unitholder were the direct owner of such interest.
(iii) The price a Unitholder pays for his Units, generally
including sales charges, is allocated among his pro rata
portion of each Bond held by a Trust (in proportion to the fair
market values thereof on the valuation date closest to the date
the Unitholder purchases his Units), in order to determine his
tax basis for his pro rata portion of each Bond held by such
Trust. The Treasury Bonds are treated as bonds that were
originally issued at an original issue discount. Because the
Treasury Bonds represent interests in "stripped" U.S. Treasury
bonds, a Unitholder's initial cost for his pro rata portion of
each Treasury Bond 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. Under the
special rules relating to stripped bonds, original issue
discount applicable to the Treasury Bonds 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
Treasury 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 greater than or equal to the "de minimis" amount
described below. To the extent the amount of such discount is
<PAGE>
-3-
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 Treasury Bonds this method will generally result
in an increasing amount of income to the Unitholders each year.
(iv) Each Unitholder will have a taxable event when the
Trustee disposes of a Trust asset (whether by sale, exchange,
liquidation, redemption, payment on maturity or otherwise) or
when the Unitholder redeems or sells his Units. A Unitholder's
tax basis in his Unit 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 his Units among each of the
Trust assets according to their values as of the valuation date
nearest the date on which he purchased such 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 that
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 redemption or sale with the adjusted basis of the Units.
If the Trustee disposes of Bonds (whether by sale, exchange,
payment on maturity, redemption or otherwise), gain or loss is
recognized to the Unitholder (subject to various nonrecognition
provisions of the Code). The amount of any such gain or loss
is measured by comparing the Unitholder's pro rata share of the
total proceeds from such disposition with his basis for his
fractional interest in the asset disposed of. The basis of
each Unit and of each Obligation which was issued with original
issue discount (including the Treasury Bonds) (or which had
market discount) must be increased by the amount of accrued
original issue discount (and market discount if the Unitholder
elects to include market discount in income as it accrues) and
the basis of each Unit and of each 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.
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, certain miscellaneous itemized deductions, such
as investment expenses, tax return preparation fees and employee business
<PAGE>
-4-
expenses will be deductible by an individual only to the extent they
exceed 2% of such individual's adjusted gross income (similar limitations
also apply to estates and trusts). Unitholders may be required to treat
some or all of the expenses of the Trust as miscellaneous itemized
deductions subject to this limitation.
The Code provides a complex set of rules governing the accrual of
original issue discount, including special rules relating to "stripped"
debt instruments such as the Treasury Bonds. These rules provide that
original issue discount generally accrues on the basis of a constant
compound interest rate over the term of the Bonds. Special rules apply
if the purchase price of a Bond exceeds its original issue price plus the
amount of original issue discount which would have previously accrued,
based upon its issue price (its "adjusted issue price"). Similarly,
these special rules would apply to a Unitholder if the tax basis of his
pro rata portion of an Bond issued with original issue discount exceeds
his pro rata portion of its adjusted issue price. In addition, as
discussed above, the Regulation provides that the amount of original
issue discount on a stripped bond is considered zero if the actual amount
of original issue discount on such stripped bond as determined under
Section 1286 of the Code is less than a "de minimis" amount, which, the
Regulation provides, is the product of (i) 0.25 percent of the stated
redemption price at maturity and (ii) the number of full years from the
date the stripped bond is purchased (determined separately for each new
purchaser thereof) to the final maturity date of the bond.
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 corporations.
If a Unitholder's tax basis in his pro rata portion of any Corporate
Bond held by a Trust is less than his allocable portion of such Corporate
Bond's stated redemption price at maturity (or, if issued with original
issue discount, his allocable portion of its revised issue price), such
difference will constitute market discount unless the amount of market
discount is "de minimis" as specified in the Code. To the extent the
amount of such discount is less than the respective "de minimis" amount,
such discount shall be treated as zero. Market discount accrues daily
computed on a straight line basis, unless the Unitholder elects to
calculate accrued market discount under a constant yield method. The
market discount rules do not apply to Treasury Bonds because they are
stripped debt instruments subject to special original issue discount
rules as discussed in paragraph (iii).
Accrued market discount is generally includible in taxable income of
the Unitholders as ordinary income for Federal tax purposes upon the
receipt of serial principal payments on Corporate Bonds held by a Trust,
on the sale, maturity or disposition of such Corporate Bonds by the Trust
and on the sale of a Unitholder's Units unless a Unitholder elects to
<PAGE>
-5-
include the accrued market discount in taxable income as such discount
accrues. If a Unitholder does not elect to annually include accrued
market discount in taxable income as it accrues, deductions of any
interest expense incurred by the Unitholder to purchase or carry his
Units will be reduced by such accrued market discount. In general, the
portion of any interest which is not currently deductible would
ultimately be deductible when the accrued market discount is included in
income.
The tax basis of a Unitholder with respect to his interest in a Bond
is increased by the amount of original issue discount (and market
discount, if the Unitholder elects to include market discount, if any, on
the Bonds held by the Trust in income as it accrues) thereon properly
included in the Unitholder's gross income as determined for Federal
income tax purposes and reduced by the amount of any amortized premium
which the Unitholder has properly elected to amortize under Section 171
of the Code. A Unitholder's tax basis in his Units will equal his tax
basis in his pro rata portion of all of the assets of the Trust.
A Unitholder will recognize taxable gain (or loss) when all or part
of the pro rata interest in an Obligation is disposed of for an amount
greater (or less) than his tax basis therefor in a taxable transaction
subject to various non-recognition provisions of the Code.
As previously discussed, gain attributable to any Corporate Bond
deemed to have been acquired by the Unitholder with market discount will
be treated as ordinary income to the extent the gain does not exceed the
amount of accrued market discount not previously taken into income. The
tax basis reduction requirements of the Code relating to amortization of
bond premium may, under certain circumstances, result in the Unitholder
realizing a taxable gain when his Units are sold or redeemed for an
amount equal to or less than his original cost.
If a Unitholder disposes of a Unit, he is deemed thereby to have
disposed of his entire pro rata interest in all Trust assets including
his pro rata portion of all of the Corporate Bonds represented by the
Unit. This may result in a portion of the gain, if any, on such sale
being taxable as ordinary income under the market discount rules
(assuming no election was made by the Unitholder to include market
discount in income as it accrues) as previously discussed.
In addition, it should be noted that capital gains may be
recharacterized as ordinary income in the case of certain financial
transactions that are "conversion transaction" effective for transactions
entered into after April 30, 1993.
A Unitholder who is a foreign investor (i.e., an investor other than
a U.S. citizen or resident or U.S. corporation, partnership, estate or
trust) will not be subject to United States Federal income taxes,
including withholding taxes on interest income (including any original
issue discount) on, or any gain from the sale or other disposition of his
pro rata interest in any Bond held by a Trust or the sale of his Units
provided that all of the following conditions are met:
<PAGE>
-6-
(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, 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.
It should be noted that the "Revenue Reconciliation Act of 1993,"
includes a provision which eliminates the exemption from United States
taxation, including withholding taxes, for certain "contingent interest."
This provision applies to interest received after December 31, 1993. No
opinion is expressed herein regarding the potential applicability of this
provision and whether United States taxation or withholding taxes could
be imposed with respect to income derived from the Units as a result
thereof.
The scope of this opinion is expressly limited to the matters set
forth herein, and, except as expressly set forth above, we express no
opinion with respect to any other taxes, including foreign, state or
local taxes or collateral tax consequences with respect to the purchase,
ownership and disposition of Units.
Very truly yours
CHAPMAN AND CUTLER
MJK/md
EXHIBIT 3.2
CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
May 20, 1998
Ranson & Associates, Inc.
250 North Rock Road, Suite 150
Wichita, Kansas 67206
The Bank of New York
101 Barclay Street
New York, New York 10286
Re: Ranson Unit Investment Trusts Series 69
U.S. Treasury Portfolio, Series 20
Gentlemen:
We have acted as counsel for Ranson Unit Investment Trusts, a
service of Ranson & Associates, Inc., Depositor of Ranson Unit Investment
Trusts Series 69 (the "Fund") including U.S. Treasury Portfolio, Series
20 (the "Trust Fund"), in connection with the issuance of Units of
fractional undivided interest in the Trust Fund, under a Trust Agreement,
dated May 20, 1998 (the "Indenture"), between Ranson & Associates, Inc.,
as Depositor, and The Bank of New York, as Trustee.
In this connection, we have examined the Registration Statement, the
form of Prospectus proposed to be filed with the Securities and Exchange
Commission, the Indenture and such other instruments and documents as we
have deemed pertinent. The opinions expressed herein assume that each
Trust will be administered, and investments by a Trust from proceeds of
subsequent deposits, if any, will be made, in accordance with the terms
of the Indenture. Each Trust holds Treasury Bonds and may include
"stripped U.S. treasury bonds" (the "Stripped Treasury Securities").
Based upon the foregoing and upon an investigation of such matters
of law as we consider to be applicable we are of the opinion that, under
existing Federal income tax law:
(i) The Trust is not an association taxable as a corporation
but will be governed by the provisions of Subchapter J (relating to
trusts) of Chapter 1, Internal Revenue Code of 1986 (the "Code").
(ii) Each Unitholder will be considered the owner of a pro rata
portion of each U.S. Treasury Obligation in the Trust and will be
considered to have received the interest on his pro rata portion of
<PAGE>
-2-
each U.S. Treasury Obligation when interest on such U.S. Treasury
Obligation is received by the Trust. Each Unitholder will also be
required to include in taxable income for federal income tax
purposes, original issue discount with respect to his interest in
any U.S. Treasury Obligation held by the Trust which was issued with
original issue discount at the same time and in the same manner as
though the Unitholder were the direct owner of such interest.
Original issue discount will be treated as zero with respect to the
U.S. Treasury Bonds if it is "de minimis" within the meaning of
Section 1273 of the Code and, based upon a Treasury Regulation (the
"Regulation") which was issued on December 28, 1992 regarding the
stripped bond rules of the Code, original issue discount with
respect to a Stripped Treasury Security will be treated as zero if
it is "de minimis" as determined thereunder.
(iii) Each Unitholder will be considered the owner of a pro
rata portion of each asset in the Trust. The total cost to a
Unitholder of his Units, including sales charges, is allocated among
his pro rata portion of each asset held by the Trust Fund (in
proportion to the fair market values thereof on the valuation date
closest to the date the Unitholder purchases Units) in order to
determine his initial tax basis for his pro rata portion of each
asset held by the Trust. The Stripped Treasury Securities are
treated as bonds that were originally issued at an original issue
discount. Because the Stripped Treasury Securities represent
interests in "stripped" U.S. Treasury bonds, a Unitholder's initial
basis for his pro rata portion of each Stripped Treasury Security
held by the Trust (determined at the time he acquires his Units, in
the manner described above) shall be treated as its "purchase price"
by the Unitholder. Under the special rules relating to stripped
bonds, original issue discount applicable to the Stripped Treasury
Securities 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 Trust as such original
issue discount accrues and will in general be subject to Federal
income tax with respect to the total amount of such original issue
discount that accrues for such year even though the income is not
distributed to the Unitholders during such year to the extent it is
greater than or equal to the "de minimis" amount described above.
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 Stripped
Treasury Securities this method will generally result in an
increasing amount of income to the Unitholders each year. A
Unitholder's tax basis for his pro rata portion of each asset held
by the Trust may be subject to adjustment as discussed in paragraph
(v) hereof.
<PAGE>
-3-
(iv) 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 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
U.S. Treasury Obligation that has not previously been included in
taxable income by such Unitholder. A Unitholder may generally elect
to include market discount in income as such discount accrues. In
general, market discount is the excess, if any, of the Unitholder's
pro rata portion of the outstanding principal balance of a U.S.
Treasury Obligation over the Unitholder's initial tax basis for such
pro rata portion, determined at the time such Unitholder acquires
his Units. However, market discount with respect to any U.S.
Treasury Obligation will generally be considered zero if it amounts
to less than .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 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, no opinion is expressed herein regarding the
precise manner in which market discount accrues. 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 deducible would be ultimately deductible when the accrued
market discount is included in income.
(v) As discussed in paragraph (iv) hereof, if a Unitholder
sells his Units, gain, if any, will constitute ordinary income to
the extent of the aggregate of the accrued market discount (which
has not previously been included in such Unitholder's taxable
income) with respect to the Unitholder's pro rata portion of each
U.S. Treasury Obligation held by the Trust. Any other gains (or
losses) will be capital gains (or losses) except in the case of a
dealer or a financial institution, and will be long-term if the
Unitholder has held his Units for more than one year. A Unitholder
will recognize taxable gains (or losses) (a) upon redemption or sale
of his Units, (b) if the Trustee disposes of an asset or (c) upon
receipt by the Trustee of payments of principal on the U.S. Treasury
Bonds. The amount of any such gain (or loss) is measured by
comparing the Unitholder's pro rata share of the total proceeds from
the transaction with his adjusted tax basis in his Units or his pro
rata interest in the asset as the case may be, and then reducing
such gain, if any, to the extent characterized as ordinary income
resulting from accrued market discount as discussed above. A
Unitholder's tax basis in his Units and his pro rata portion of each
of the underlying assets of the Trust may be adjusted to reflect the
accrual of market discount (if the Unitholder has elected to include
such discount in income as it accrues), original issue discount and
<PAGE>
-4-
amortized bond premium, if any. 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 his original cost. In addition, Unitholders must reduce the tax
basis of their Units and their pro rata portion of the underlying
assets of the Trust for their share of accrued interest received by
the Trust, if any, on U.S. Treasury Bonds delivered after the
Unitholders pay for their Units to the extent that such interest
accrued on such U.S. Treasury Bonds before the date the Trust
acquired ownership of the U.S. Treasury Bonds (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 or such U.S. Treasury Bonds.
(vi) The Code provides that "miscellaneous itemized deductions"
are allowable only to the extent that they exceed two percent of an
individual taxpayer's adjusted gross income. Miscellaneous itemized
deductions subject to this limitation under present law include a
Unitholder's pro rata share of expenses paid by the Trust, including
fees of the Trustee and the Evaluator but does not include
amortizable bond premium on U.S. Treasury Bonds held by the Trust.
The Code provides a complex set of rules governing the accrual of
original issue discount, including special rules relating to "stripped"
debt instruments such as the Stripped Treasury Securities. These rules
provide that original issue discount generally accrues on the basis of a
constant compound interest rate over the term of the Stripped Treasury
Security. Special rules apply if the purchase price of a U.S. Treasury
Obligation exceeds its original issue price plus the amount of original
issue discount which would have previously accrued, based upon its issue
price (its "adjusted issue price"). Similarly, these special rules would
apply to a Unitholder if the tax basis of his pro rata portion of a U.S.
Treasury Obligation issued with original issue discount exceeds his pro
rata portion of its adjusted issue price. In addition, as discussed
above, the Regulation provides that the amount of original issue discount
on a stripped bond is considered zero if the actual amount of original
issue discount on such stripped bond as determined under Section 1286 of
the Code is less than a "de minims" amount, which the Regulation
provides, is the product of (i) 0.25 percent of the stated redemption
price at maturity and (ii) the number of full years from the date the
stripped bond is purchased (determined separately for each new purchaser
thereof) to the final maturity date of the bond.
A Unitholder who is a foreign investor (i.e., an investor other than
a U.S. citizen or resident or a U.S. corporation, partnership, estate or
trust) will not be subject to United States Federal income taxes,
including withholding taxes on interest income (including any original
issue discount) on, or any gain from the sale or other disposition of his
pro rata interest in any U.S. Treasury Obligation held by the Trust or
the sale of his Units provided that all of the following conditions are
met:
<PAGE>
-5-
(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 his or her taxable year;
(iii) the U.S. Treasury Obligation was issued after July 18,
1984; and
(iv) the foreign investor provides all certification which may
be required of his status and of the matters contained in clauses
(i) and (ii) above.
The "Revenue Reconciliation Act of 1993" (the "Tax Act") raised tax
rates on ordinary income above rates at which capital gains are sub ject
to tax in certain circumstances. Because some of all capital gains are
taxed at a comparatively lower rate under the 1993 Tax Act, the 1993 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.
The scope of this opinion is expressly limited to the matters set
forth herein, and, except as expressly set forth above, we express no
opinion with respect to any other taxes, including foreign, state or
local taxes or collateral tax consequences with respect to the purchase,
ownership and disposition of Units.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement (File No. 333-26809) relating to the Units
referred to above and to the use of our name and to the reference to our
firm in said Registration Statement and in the related Prospectus.
Very truly yours,
CHAPMAN AND CUTLER
EXHIBIT 4.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm as experts under the caption
"General Information-Independent Auditors" and to the use of our report
dated May 20, 1998 in Amendment No. 1 to the Registration Statement (Form
S-6 File No. 333-52521) and related Prospectus of Ranson Unit Investment
Trusts, Series 69.
ALLEN, GIBBS & HOULIK, L.C.
Wichita, Kansas
May 20. 1998
EXHIBIT 4.2
MULLER DATA CORPORATION
395 HUDSON STREET
NEW YORK, NEW YORK 10014-3622
(212) 807-3800
May 20, 1998
Ranson & Associates, Inc.
250 North Rock Road, Suite 150
Wichita, Kansas 67206
Re: RANSON UNIT INVESTMENT TRUST SERIES 69
Consisting of: Insured Corporate Series 12
U.S. Treasury Portfolio Series 20
GNMA Portfolio Series 10
GNMA Portfolio Series 11
Gentlemen:
We have examined the Registration Statement No. 333-52521 for the
referenced Trust and acknowledge that Muller Data Corporation is
currently acting as the evaluator for the Ranson Unit Investment Trust
Series 69. Subsequently, we hereby consent to the reference of Muller
Data Corporation as Trust evaluator.
You are hereby authorized to file a copy of this letter with the
Securities and Exchange Commission.
Sincerely,
MULLER DATA CORPORATION
By: RON VALINOTI
------------------------------
Senior Vice President
Acknowledged and Agreed:
RANSON & ASSOCIATES, INC.
By: ROBIN K. PINKERTON
---------------------------
Robin K. Pinkerton
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<NAME> RANSON UNIT INVESTMENT TRUSTS SERIES 69 - GNMA 11
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<NAME> RANSON UNIT INVESTMENT TRUSTS SERIES 69 - DTRES 20
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