AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 26, 1998
REGISTRATION NO. 333-_____
CIK #910939
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
----------------------
REGISTRATION STATEMENT
ON
FORM S-6
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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 71
B. NAME OF DEPOSITOR:
RANSON & ASSOCIATES, INC.
C. COMPLETE ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES:
RANSON & ASSOCIATES, INC.
250 North Rock Road, Suite 150
Wichita, Kansas 67206-2241
D. NAME AND COMPLETE ADDRESS OF AGENT FOR SERVICE:
Copy to:
ALEX R. MEITZNER MARK J. KNEEDY
Ranson & Associates, Inc. c/o Chapman and Cutler
250 North Rock Road, Suite 150 111 West Monroe Street
Wichita, Kansas 67206-2241 Chicago, Illinois 60603
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.
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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 71
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<TABLE>
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CROSS-REFERENCE SHEET
(FORM N-8B-2 ITEMS REQUIRED BY INSTRUCTIONS AS
TO THE PROSPECTUS IN FORM S-6)
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
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<S> <C>
I. ORGANIZATION AND GENERAL INFORMATION
1. (a) Name of trust Prospectus front cover
(b) Title of securities issued Essential Information
2. Name and address of each depositor Administration of the Trust
3. Name and address of trustee Administration of the Trust
4. Name and address of principal underwriters *
5. State of organization of trust The Fund
6. Execution and termination of trust agreement The Fund; Administration of the Trust
7. Changes of name The Fund
8. Fiscal year *
9. Litigation *
II. GENERAL DESCRIPTION OF THE TRUST AND
SECURITIES OF THE TRUST
10. (a) Registered or bearer securities Unitholders
(b) Cumulative or distributive securities The Fund
(c) Redemption Redemption
(d) Conversion, transfer, etc. Unitholders; Market for Units
(e) Periodic payment plan *
(f) Voting rights Unitholders
(g) Notice of certificateholders Investment Supervision; Administration of the
Trust; Unitholders
(h) Consents required Unitholders; Administration of the Trust
(i) Other provisions Federal Tax Status
11. Type of securities comprising units The Fund; The Trust Portfolio; Portfolios
12. Certain information regarding periodic payment
certificates *
13. (a) Load, fees, expenses, etc. Essential Information; Public Offering of Units;
Expenses of the Trust
(b) Certain information regarding periodic payment
certificates *
(c) Certain percentages Essential Information; Public Offering of Units
(d) Certain other fees, etc. payable by holders Unitholders
(e) Certain profits receivable by depositor, principal
underwriters, trustee or affiliated persons Expenses of the Trust; Public Offering of Units
(f) Ratio of annual charges to income *
14. Issuance of trust's securities The Fund; Unitholders
ii
<PAGE>
15. Receipt and handling of payments from purchasers *
16. Acquisition and disposition of underlying securities The Fund; The Trust Portfolio; Investment
Supervision; Market for Units
17. Withdrawal or redemption Redemption; Public Offering of Units
18. (a) Receipt, custody and disposition of income Unitholders
(b) Reinvestment of distributions Unitholders
(c) Reserves or special funds Expenses of the Trust
(d) Schedule of distributions *
19. Records, accounts and reports Unitholders; Redemption; Administration of the
Trust
20. Certain miscellaneous provisions of trust agreement
(a) Amendment Administration of the Trust
(b) Termination
(c) and (d) Trustee, removal and successor
(e) and (f) Depositor, removal and successor
21. Loans to security holders *
22. Limitations on liability Administration of the Trust
23. Bonding arrangements *
24. Other material provisions of trust agreement *
III. ORGANIZATION, PERSONNEL AND
AFFILIATED PERSONS OF DEPOSITOR
25. Organization of depositor Administration of the Trust
26. Fees received by depositor See Items 13(a) and 13(e)
27. Business of depositor Administration of the Trust
28. Certain information as to officials and affiliated
persons of depositor Administration of the Trust
29. Voting securities of depositor
30. Persons controlling depositor
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 persons for certain services
rendered to trust *
IV. DISTRIBUTION AND REDEMPTION
35. Distribution of Trust's securities by states Public Offering of Units
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 Market for Units;
(c) Selling Agreements Public Offering of Units
39. (a) Organization of principal underwriters Administration of the Trust
(b) N.A.S.D. membership of principal underwriters
40. Certain fees received by principal underwriters See items 13(a) and 13(e)
iii
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41. (a) Business of principal underwriters Administration of the Trust
(b) Branch offices of principal underwriters *
(c) Salesmen of principal underwriters
42. Ownership of trust's securities by certain persons
43. Certain brokerage commissions received by principal
underwriters Public Offering of Units
44. (a) Method of valuation Public Offering of Units
(b) Schedule as to offering price *
(c) Variation in offering price to certain persons Public Offering of Units
45. Suspension of redemption rights Redemption
46. (a) Redemption valuation Redemption; Market for Units; Public Offering of Units
(b) Schedule as to redemption price *
47. Maintenance of position in underlying securities Market for Units; Public Offering of Units; Redemption
V. INFORMATION CONCERNING THE TRUSTEE
OR CUSTODIAN
48. Organization and regulation of trustee Administration of the Trust
49. Fees and expenses of trustee Expenses of the Trust
50. Trustee's lien
VI. INFORMATION CONCERNING INSURANCE OF
HOLDERS OF SECURITIES
51. Insurance of holders of trust's securities Cover Page; Expenses of the Trust
VII. POLICY OF REGISTRANT
52. (a) Provisions of trust agreement with respect to
selection or elimination of underlying securities The Fund; Investment Supervision
(b) Transactions involving elimination of underlying
securities
(c) Policy regarding substitution or elimination of
underlying securities Investment Supervision
(d) Fundamental policy not otherwise covered *
53. Tax status of Trust Essential Information; Portfolio; Federal Tax
Status
VIII. FINANCIAL AND STATISTICAL INFORMATION
54. Trust's securities during last ten years *
55.
56. Certain information regarding periodic payment
certificates
57.
58.
59. Financial statements (Instruction 1(c) to Form S-6) *
<FN>
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* Inapplicable, answer negative or not required.
iv
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<PAGE>
Preliminary Prospectus Dated June 24, 1998
Subject to Completion
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with
the Securities and Exchange Commission. These securities may not be sold
nor may offers to buy be accepted prior to the time the registration
statement becomes effective. This prospectus shall not constitute an offer
to sell or the solicitation of an offer to buy nor shall there be any sale
of these securities in any State in which such offer, solicitation or sale
would be unlawful prior to registration or qualification under the
securities laws of any such State.
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RANSON UNIT INVESTMENT TRUST, SERIES 71
Telebras Exchange Trust, Series 1 (the "Trust") was formed for the purpose of
permitting investors to hold an investment in the twelve holding companies to be
created under the plan of reorganization and privitization of Telecomunicacoes
Brasileiras, S.A. ("Telebras") in the convenient form of Units of the Trust. As
of the Initial Date of Deposit, Telebras common stock is traded in the United
States in the form of American Depositary Receipts ("ADRs") listed on the New
York Stock Exchange. The twelve companies will include Telesp Fixed, Tele-
Centro/Sul, Tele-Norte/Nordeste, Telesp Cellular, Rio Espirito, Minas Gerais,
Parana/Sanata Catarina, Brasilia, Amazonia, Bahia/Sergipe, Northern States and
Embratel. Units may be acquired in exchange for Telebras ADRs or ADRs of the
separated companies and other required documents pursuant to the Exchange Option
described herein or for cash. It is anticipated that, if after the completion
of the offering of the Units the Trust meets the listing requirements of the
American Stock Exchange, the Units be listed on the American Stock Exchange.
The Trust is not sponsored by or affiliated with Telebras or any of its twelve
units.
Units of the Trust are not deposits or obligations of, or guaranteed by, any
bank and the Units are not federally insured or otherwise protected by the
Federal Deposit Insurance Corporation and involve investment risk including loss
of principal.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION 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 _______, 1998.
<PAGE>
SUMMARY
THE TRUST. Telebras Exchange Trust, Series 1 (the "Trust") is a unit investment
trust included in Ranson Unit Investment Trusts, Series 71 (the "Fund"), an
investment company registered under the Investment Company Act of 1940. The
Trust initially consists of Telebras ADR shares and all rights attendant thereto
pursuant to the plan of reorganization and privitization of Telebras or
otherwise. Upon distribution of the common stock of the twelve holding
companies created pursuant to the plan, the Trust will consist of shares of
common stock of the twelve holding companies which are expected to be held in
ADR form in the United States. The value of all portfolio Securities and,
therefore, the value of the Units will fluctuate in value depending on the full
range of economic and market influences affecting corporate profitability, the
financial condition of issuers and the prices of equity securities in general
and the Securities in particular. Capital appreciation is, of course, dependent
upon several factors including, among other factors, the financial condition of
the issuers of the Securities (see "The Trust Portfolio").
Additional Units may be issued at any time by depositing in the Trust additional
Securities, contracts to purchase additional Securities together with cash or
irrevocable letters of credit, or cash with instructions to purchase additional
Securities. As additional Units are issued by the Trust as a result of the
deposit of additional Securities, the aggregate value of the Securities 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 the Trust from time to time following the Initial Date of
Deposit, provided that such additional deposits will be in amounts which will
maintain, as closely as practicable, the proportionate relationship among each
Security. Thus, although additional Units will be issued, each Unit will
continue to represent approximately the same weighting of each Security. If the
Sponsor deposits cash, existing and new investors may experience a dilution of
their investments and a reduction in their anticipated income because of
fluctuations in the prices of the Securities between the time of the cash
deposit and the purchase of the Securities and because the Trust will pay the
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. See "The Trust Fund."
Each Unit initially offered represents that undivided interest in the Trust
indicated under "Essential Information" (as may be adjusted pursuant to footnote
1 thereto). 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 the Trust represented by
each unredeemed Unit will increase or decrease accordingly, although the actual
interest in the 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.
PUBLIC OFFERING PRICE. The Public Offering Price per Unit during the initial
offering period is based on the aggregate underlying value of the Securities,
plus or minus a pro rata portion of the cash, if any, in the Income and Capital
Accounts held or owned by the Trust, plus a sales charge of 1.0% of the Public
Offering Price (equivalent to 1.010% of the net amount invested). The sales
charge is eliminated for sales of $250,000 or more. The minimum purchase is
$1,000.
DISTRIBUTIONS OF INCOME AND CAPITAL. Dividends, if any, received by the Trust
will be distributed quarterly and any funds in the Capital Account will be
distributed annually. See "Unitholders-Distributions to Unitholders."
2
<PAGE>
REINVESTMENT. Each Unitholder may elect to have distributions of income,
capital gains and/or capital on their Units automatically invested into
additional Units of the Trust without a sales charge.
MARKET FOR UNITS. Although not obligated to do so, the Sponsor intends to
maintain a secondary market for Units. If the Trust meets the listing
requirements of the American Stock Exchange after the completion of the offering
of the Units, it is anticipated that the Units will be listed on such Exchange.
If the Units are listed on the Exchange, the Sponsor will no longer maintain a
secondary market for the Units. In addition, Units may be redeemed through the
Trustee at the Redemption Price on the date of tender. See"Redemption".
TERMINATION. No later than the date specified under the Mandatory Termination
Date in "Essential Information," Securities will begin to be sold in connection
with the termination of the Trust and it is expected that all Securities in the
Trust will be sold within a reasonable amount of time after the Mandatory
Termination Date. The Sponsor will determine the manner, timing and execution
of the sale of the underlying Securities. At termination, Unitholders will
receive a cash distribution within a reasonable time after the Trust is
terminated. See "Unitholders-Distributions to Unitholders" and "Administration
of the Trust-Amendment and Termination."
RISK FACTORS. An investment in the Trust should be made with an understanding
of the risks associated therewith, including the possible deterioration of
either the financial condition of the issuers or the general condition of the
stock market and risks related to an investment in the Brazilian
telecommunications industry. For risk considerations related to the Trust, see
"Risk Factors."
3
<PAGE>
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RANSON UNIT INVESTMENT TRUSTS, SERIES 71
ESSENTIAL INFORMATION
AS OF ________, 1998*
SPONSOR, SUPERVISOR AND EVALUATOR: RANSON & ASSOCIATES, INC.
TRUSTEE: THE BANK OF NEW YORK
<S> <C>
Cusip (Cash) _________
Cusip (Reinvest) _________
Number of Units (1) ______
Fractional Undivided Interest Per Unit 1/______
Public Offering Price:
Aggregate Value of Securities in Portfolio (1) $ ______
Aggregate Value of Securities per Unit $ ______
Plus Sales Charge of 1.0% (1.010% of net amount invested) $ ______
Public Offering Price Per Unit (2) $ ______
Redemption Price Per Unit and Sponsor's Initial Repurchase Price Per Unit $ ______
Excess of Public Offering Price Per Unit over Redemption Price Per Unit and
over Sponsor's Initial Repurchase Price Per Unit $ ______
Estimated Annual Offering Expense per Unit (3) $ ______
</TABLE>
<TABLE>
<S> <C>
Minimum Value of a Trust under which Trust Agreement
may be Terminated 40% of aggregate value of Securities at deposit
Mandatory Termination Date ____________
Annual Surveillance and Evaluation Fee Maximum of $0.10% of the net assets
Trustee's Annual Fee $____ per Unit
Evaluation Time 4:00 p.m. Eastern Time
Record and Computation Dates (4) FIRST day of January, April, July and October
Distribution Dates (4) FIFTEENTH day of January, April, July and October
</TABLE>
* The business day prior to the Initial Date of Deposit
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(1) Each Security is valued at the closing sale price on a national
securities exchange or the Nasdaq National Market.
(2) On the Initial Date of Deposit there will be no accumulated dividends in
the Income Account. Anyone ordering Units after such date will pay his pro
rata share of any accumulated dividends in such Income Account.
(3) The Trust (and therefore Unitholders) will bear all or a portion of its
offering 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 this total offering expense will be amortized
over a five year period or the life of the Trust if less than five years.
See "Expenses of the Trust" and "Statement of Condition." Historically, the
sponsors of unit investment trusts have paid all the costs of establishing
such trusts.
(4) Distributions from the Capital Account and capital gains distributions,
if any, will normally be made in December.
4
<PAGE>
THE TRUST FUND
Ranson Unit Investment Trusts, Series 71 (the "Fund") includes one underlying
unit investment trust designated as Telebras Exchange Trust, Series 1 (the
"Trust"). The Fund was created under the laws of the State of New York pursuant
to a trust indenture (the "Trust Agreement") dated the date of this prospectus
(the "Initial Date of Deposit") between Ranson & Associates, Inc. (the
"Sponsor") and The Bank of New York (the "Trustee").*
The Trust initially consists of Telebras ADR shares and upon completion of the
privitization and reorganization of Telebras the Trust will hold ADR shares of
the twelve Telebras holding companies. As used herein, the term "Securities"
means the common stocks (including contracts for the purchase thereof) initially
deposited in the Trust and described in the portfolio and any additional common
stocks acquired and held by the Trust pursuant to the provisions of the Trust
Agreement.
On the Initial Date of Deposit, the Sponsor delivered to the Trustee Securities
or contracts for the purchase thereof for deposit in the Trust. Subsequent to
the Initial Date of Deposit, the Sponsor may deposit additional Securities in
the Trust, contracts to purchase additional Securities along with cash (or a
bank letter of credit in lieu of cash) to pay for such contracted Securities or
cash (including a letter of credit) with instructions to purchase additional
Securities, maintaining, as closely as practicable, the same proportionate
relationship among the Securities in the portfolio. Thus, although additional
Units will be issued, each Unit will continue to represent the same weighting
among the Securities. If the Sponsor deposits cash, existing and new investors
may experience a dilution of their investments and a reduction in their
anticipated income because of fluctuations in the prices of the Securities
between the time of the cash deposit and the purchase of the Securities and
because the Trust will pay the 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.
The Trust consists of (a) the Securities listed under the "Portfolio" as may
continue to be held from time to time in the Trust (b) any additional Securities
acquired and held by the Trust pursuant to the provisions of the Trust Agreement
and (c) any cash held in the Income and Capital Accounts of the Trust. Neither
the Sponsor nor the Trustee shall be liable in any way for any failure in any of
the Securities. However, should any contract for the purchase of any of the
Securities initially deposited hereunder fail, the Sponsor will, unless
substantially all of the moneys held in the Trust to cover such purchase are
reinvested in substitute Securities in accordance with the Trust Agreement,
refund the cash and sales charge attributable to such failed contract to all
Unitholders on the next distribution date.
On the Initial Date of Deposit, the Sponsor delivered to the Trustee Securities
or contracts for the purchase thereof for deposit in the Trust. For the
Securities so deposited, the Trustee delivered to the Sponsor documentation
evidencing the ownership of that number of Units of the Trust set forth under
"Essential Information."
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* Reference is made to the Trust Agreement and any statement contained
herein is qualified in its entirety by the provisions of the Trust
Agreement.
5
<PAGE>
THE OFFER
Investors holding Telebras ADR shares have the option of exchanging their
Telebras shares for Units on the terms and subject to the conditions set forth
herein (the "Exchange Option"). Units may also be purchased for cash at a sales
charge of 1.00% of the Public Offering Price (1.010% of the net amount invested)
(the "Cash Option"). These two options are collectively referred to herein as
the "Offer".
EXCHANGE OPTION. Ranson & Associates, Inc., the Sponsor, is soliciting tenders
of Telebras ADR shares (including the rights attendant thereto pursuant to the
plan of reorganization and privitization or otherwise, or the separate company
shares after their distribution) in exchange for Units of the Trust pursuant to
the Exchange Option on the basis of one Unit for each Telebras ADR share
tendered and accepted by the Sponsor plus a sales charge of 1.00% for exchanges
representing less than $250,000. The minimum tender is 10 Telebras ADR shares.
All tenders of Telebras ADR shares prior to receipt by the tendering shareholder
of the securities of the holding companies must be accompanied by "due bills"
representing the right to receive the securities of the holding companies to be
distributed in respect of the tendered Telebras ADR shares. Tendered Telebras
ADR shares accompanied by due bills will be deposited in the Trust and Units
created thereby will be distributed to the Sponsor to be held until the
securities of the holding companies represented by the due bills are delivered
to the Sponsor. The Units will be delivered to the tendering shareholders only
after the securities represented by the due bills are delivered to the Sponsor.
As of ___________, 1998, there were __________ Telebras ADR shares outstanding.
The Sponsor anticipates accepting at 4:00 p.m. New York time on every Tuesday
from July ________, 1998 to ________, 1998 (and thereafter on ____________,
1998), any and all Telebras ADR shares (subject to the maximum amount stated
below) properly tendered for exchange for Units pursuant to the Exchange Option
until the Sponsor, in its sole discretion, decides to terminate the Offer. The
time and date of any acceptance of Telebras ADR shares is herein referred to as
an "Exchange Date". In no event will the Sponsor accept more than that number
of Telebras ADR shares which would be equal to approximately 4.9% of the
outstanding Telebras ADR shares (the "Maximum"). If a greater number of
Telebras ADR shares is tendered prior to any Exchange Date, the Sponsor will
accept such shares on a pro rata basis. Thus, if more than 4.9% of the Telebras
ADR shares are tendered prior to any Exchange Date, the Sponsor will accept from
each tendering holder that portion of his tendered Telebras ADR shares equal to
the number of the tendered shares multiplied by a fraction, the numerator of
which is the Maximum and the denominator of which is the number of Telebras ADR
shares tendered for exchange on such Exchange Date (with appropriate adjustments
to avoid exchanges of fractional shares).
The Sponsor reserves the right to accept additional Telebras ADR shares in
excess of the Maximum upon compliance with applicable law, if any.
Participation in the Exchange Option is completely voluntary and neither
Telebras nor its board of directors has made any recommendation that holders of
Telebras ADR shares tender or refrain from tendering any or all of their
Telebras ADR shares. Each holder of Telebras ADR shares should consider
carefully his own circumstances and decide for himself whether to tender or
refrain from tendering his shares.
6
<PAGE>
CASH OPTION. Units may be purchased from the Sponsor or broker-dealers for cash
at a sales charge of 1.00% of the Public Offering Price (1.010% of the net
amount invested). The minimum cash purchase is 10 Units. The Sponsor may
create Units for the settlement of cash sales by depositing additional
Securities in the Trust. The settlement for cash sales is normally the third
business day thereafter. Units sold for cash will be subject to the proration
provisions described above as if each day on which the Sponsor deposits
additional Securities in the Trust is considered an Exchange Date.
REASONS FOR THE OFFER. The Trust is designed for investors who would like to
hold an equity investment in Telebras and the separate companies in the
convenient Unit form without the record keeping, custody and other burdens that
might exist with ownership of stock in twelve separate companies. At the same
time, however, holders will forgo the opportunity to dispose directly of any of
the Securities and will not be able to vote the Securities (unless, in each
case, they subsequently redeem their Units for the underlying Securities).
While the Sponsor believes the Trust offers an attractive alternative to owning
separately the stock of the various companies, there can be no assurance that
this will be the case for all investors. Holders should carefully consider the
matters contained herein before deciding whether or not to tender their Telebras
ADR shares or to purchase Units for cash. Investors should note that if Units
are sold to the Sponsor in the secondary market (if the Units are not listed on
the American Stock Exchange) or if Units are redeemed through the Trustee, the
price of such a sale or redemption will be the price next computed after the
sale or tender for redemption at the Evaluation Time on the date of such tender
or sale. See "Market for Units" and "Redemption".
PROCEDURE FOR TENDERING TELEBRAS ADR SHARES. Except as otherwise stated below,
to properly be tendered pursuant to the Exchange Option, Telebras certificates,
due bills representing the right to receive the securities of the twelve
companies (or certificates representing the securities of the companies after
their distribution) and any other required documents must be received by the
Sponsor or broker-dealers. If the certificates are registered in the name of a
person other than the individual tendering the certificates, the certificates
must be endorsed or accompanied by appropriate stock powers, and certain other
legal formalities may be required.
In all cases, delivery of Units in exchange for Telebras ADR shares tendered
pursuant to the Offer will be made by the Sponsor or broker-dealers only after
receipt of certificates for the securities of the separate companies (whether or
not due bills are initially tendered representing these securities) and any
other required documents. Holders without certificates (for example, if shares
are held in street name) must request that certificates representing their
Telebras ADR shares be delivered to the Sponsor. If any tendered shares are not
accepted for exchange, or if fewer than all shares evidenced by certificates are
to be tendered, certificates for shares not so exchanged will be returned
without expense to the tendering shareholder as promptly as practicable
following the applicable Exchange Date.
By validly tendering his shares and subject to acceptance of the shares by the
Sponsor on or after the applicable Exchange Date, a tendering shareholder
irrevocable appoints designees of the Sponsor as his proxy, with full power of
substitution, to the full extent of such shareholder's rights with respect to
the shares tendered by such shareholder. By such action, a tendering
shareholder will also authorize the Trustee to receive for the account of the
Trust all dividends and other distributions with a record date after such
exchange of shares and to exercise all rights in respect thereof. Upon the
acceptance for exchange, all prior proxies given by such shareholder
automatically will be revoked and no subsequent proxies may be given.
7
<PAGE>
The designees of the Sponsor will be empowered to exercise all voting and other
rights of tendering shareholders as they in their discretion may deem proper in
respect to any annual, special or adjourned meeting of shareholders of Telebras
or any of the separate companies, action by written consent or otherwise.
All questions as to the validity, form eligibility (including time of receipt)
and acceptance for exchange of any tendered shares will be determined by the
Sponsor, in its sole discretion, and the Sponsor's determination will be final
and binding. The Sponsor reserves the absolute right to reject any or all
tenders of any shares not in proper form or the acceptance for exchange of which
would, in the opinion of the Sponsor's counsel, be unlawful. Any shares not
accepted for exchange will be returned as promptly as practicable. The Sponsor
also reserves the absolute right to waive any of the conditions of the Offer or
any defect or Offer will be final. Except as aforesaid, no tender of shares
will be deemed to have properly been made until all defects and irregularities
have been cured or waived. Neither the Sponsor, the Trustee of the Trust nor
any other person shall be under any duty to give notification of any defects or
irregularities in tenders nor shall any of them incur any liability for failure
to give such notification.
CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other provision of the
Offer, the Sponsor will not be required to accept for exchange any shares
tendered, and may terminate or amend the Offer, if at any time prior to any
Exchange Date any of the following events shall have occurred:
(a) there shall have occurred (i) any general suspension of or
limitation on prices for or trading in securities on the New York Stock
Exchange or (ii) a commencement of a ware or armed hostilities or other
international or national calamity directly or indirectly involving the
United States; or in the case of any of the foregoing existing at the time
of the commencement of the Offer, a material worsening thereof; or
(b) there shall be threatened, instituted or pending any action or
proceeding before any court or governmental authority, domestic or foreign,
by any government or governmental authority or by any other person,
domestic or foreign, challenging the making of the Offer, or the
acquisition of tendered shares pursuant to the Offer, or otherwise directly
or indirectly relating to the Offer, or otherwise materially adversely
affecting Telebras, any of its subsidiaries or any of the holding
companies; or
(c) there shall be taken any action or shall be proposed, enacted,
issued or entered by any governmental authority or by any court any order
relating to the plan for the privitization and reorganization of Telebras;
which, in the sole judgment of the Sponsor in any such case, and regardless of
the circumstances, makes it inadvisable to proceed with the Offer or with the
acceptance for exchange of shares.
Any determination by the Sponsor concerning the events described above shall be
final and binding upon all parties. The foregoing conditions are for the sole
benefit of the Sponsor and may be waived by the Sponsor in whole or in part.
In addition, the Sponsor reserves the right to amend, modify or terminate the
Offer at any time, in its sole discretion. This Prospectus will be amended to
reflect any material amendment or modification.
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In the event of any termination of the Offer, the Sponsor will return without
cost all certificates for shares theretofore tendered and not accepted for
exchange and neither the Sponsor will have any further obligation or liability
with respect to the Offer. Any termination shall be deemed to be made at the
time of the giving of public notice thereof by the Sponsor.
CERTAIN PROCEDURES. The Offer will be consummated as of the applicable Exchange
Date as to shares tendered prior to such Exchange Date and thereafter on any
subsequent Exchange Date by exchanging that number of Units for an equal number
of accepted Telebras ADR shares plus the sales charge, if any.
FEDERAL TAX CONSEQUENCES. In the opinion of special counsel to the Sponsor, the
exchange of shares for Units of the Trust will generally be tax free. The
distribution of the shares of the holding companies to holders of Telebras ADR
shares on ___________, 1998, the record date for the distribution, is considered
to have occurred on __________, 1998 and the tax consequences of the
distribution apply to such a holder whether or not he exchanges his Telebras ADR
shares for Units.
Investors should note that the Trust is not sponsored, endorsed or promoted by
or affiliated with Telebras.
Although there can be no assurance that such Securities will appreciate in value
over the life of the Trust, over time stock investments have generally out-
performed most other asset classes. However, it should be remembered that
common stocks carry greater risks, including the risk that the value of an
investment can decrease (see "Risk Factors-Certain Investment Considerations"),
and past performance is no guarantee of future results.
RISK FACTORS
An investment in Units of the Trust should be made with an understanding of the
risks inherent in an investment in equity securities, including the risk that
the financial condition of issuers of the Securities may become impaired or that
the general condition of the stock market may worsen (both of which may
contribute directly to a decrease in the value of the Securities and thus, in
the value of the Units) or the risk that holders of common stock have a right to
receive payments from the issuers of those stocks that is generally inferior to
that of creditors of, or holders of debt obligations issued by, the issuers and
that the rights of holders of common stock generally rank inferior to the rights
of holders of preferred stock. Common stocks are especially susceptible to
general stock market movements and to volatile increases and decreases in value
as market confidence in and perceptions of the issuers change. These
perceptions are based on unpredictable factors including expectations regarding
government, economic, monetary and fiscal policies, inflation and interest
rates, economic expansion or contraction, and global or regional political,
economic or banking crises.
Holders of common stock incur more risk than the holders of preferred stocks and
debt obligations because common stockholders, as owners of the entity, have
generally inferior rights to receive payments from the issuer in comparison with
the rights of creditors of, or holders of debt obligations or preferred stock
issued by the issuer. Holders of common stock of the type held by the Trust
have a right to receive dividends only when and if, and in the amounts, declared
by the issuer's Board of Directors and to participate in amounts available for
distribution by the issuer only after all other claims on the issuer have been
paid or provided for. By contrast, holders of preferred stock have the right to
receive dividends at a fixed rate when and as declared by the issuer's Board of
Directors, normally on a cumulative basis, but do not participate in other
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amounts available for distribution by the issuing corporation. Cumulative
preferred stock dividends must be paid before common stock dividends and any
cumulative preferred stock dividend omitted is added to future dividends payable
to the holders of cumulative preferred stock. Preferred stocks are also
entitled to rights on liquidation which are senior to those of common stocks.
Moreover, common stocks do not represent an obligation of the issuer and
therefore do not offer any assurance of income or provide the degree of
protection of capital debt securities. Indeed, the issuance of debt securities
or even preferred stock will create prior claims for payment of principal,
interest, liquidation preferences and dividends which could adversely affect the
ability and inclination of the issuer to declare or pay dividends on its common
stock or the rights of holders of common stock with respect to assets of the
issuer upon liquidation or bankruptcy. Further, unlike debt securities which
typically have a stated principal amount payable at maturity (whose value,
however, will be subject to market fluctuations prior thereto), common stocks
have neither a fixed principal amount nor a maturity and have values which are
subject to market fluctuations for as long as the stocks remain outstanding.
The value of the Securities in the portfolios thus may be expected to fluctuate
over the entire life of the Trust to values higher or lower than those
prevailing on the Initial Date of Deposit.
Whether or not the Securities are listed on a national securities exchange, the
principal trading market for the Securities may be in the over-the-counter
market. As a result, the existence of a liquid trading market for the
Securities may depend on whether dealers will make a market in the Securities.
There can be no assurance that a market will be made for any of the Securities,
that any market for the Securities will be maintained or of the liquidity of the
Securities in any markets made. In addition, the Trust is restricted under the
Investment Company Act of 1940 from selling Securities to the Sponsor. The
price at which the Securities may be sold to meet redemptions and the value of
the Trust will be adversely affected if trading markets for the Securities are
limited or absent.
The Trust Agreement authorizes the Sponsor to increase the size of the Trust and
the number of Units thereof by the deposit of additional Securities, or cash
(including a letter of credit) with instructions to purchase additional
Securities, in the Trust and the issuance of a corresponding number of
additional Units. If the Sponsor deposits cash, existing and new investors may
experience a dilution of their investments and a reduction in their anticipated
income because of fluctuations in the prices of the Securities between the time
of the cash deposit and the purchase of the Securities and because the Trust
will pay the 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.
From time to time Congress considers proposals to reduce the rate of the
dividends-received deduction. Enactment into law of a proposal to reduce the
rate would adversely affect the after-tax return to investors who can take
advantage of the deduction. Unitholders are urged to consult their own tax
advisers. Further, at any time after the Initial Date of Deposit, litigation
may be initiated on a variety of grounds, or legislation may be enacted with
respect to the Securities in the Trust or the issuers of the Securities. There
can be no assurance that future litigation or legislation will not have a
material adverse effect on the Trust or will not impair the ability of issuers
to achieve their business goals.
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TELEBRAS
Certain information regarding the business and the financial statements of
Telebras is contained in information filed with the Securities and Exchange
Commission. Such information can be inspected at the office of the Commission
at 450 Fifth Street N.W., Washington, D.C. 20549, as well as at the Regional
Offices of the Commission at 219 South Dearborn Street, Chicago, Illinois 60604
and 26 Federal Plaza, New York, New York 10278. Copies of such information can
be obtained by mail from the Public Reference Section of the Commission at
Washington, D.C. 20549 at prescribed rates and may be available on the
Commission's Internet site (www.sec.gov). Reports and other information
concerning Telebras can also be inspected at the offices of the New York Stock
Exchange, 20 Broad Street, New York, New York 10005.
FEDERAL TAX STATUS
The following is a general discussion of certain of the federal income tax
consequences of the purchase, ownership and disposition of the Units. The
summary is limited to investors who hold the Units as "capital assets"
(generally, property held for investment) within the meaning of Section 1221 of
the Internal Revenue Code of 1986 (the "Code"). Unitholders should consult
their tax advisers in determining the federal, state, local and any other tax
consequences of the purchase, ownership and disposition of Units in the Trust.
For purposes of the following discussion and opinions, it is assumed that each
Security is equity for federal income tax purposes.
In the opinion of Chapman and Cutler, special counsel for the Sponsor, under
existing law:
1. The Trust is not an association taxable as a corporation for federal
income tax purposes; each Unitholder will be treated as the owner of a pro
rata portion of each of the assets of the Trust under the Code; and the
income of the Trust will be treated as income of the Unitholders thereof
under 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 the Trust.
2. A Unitholder will be considered to have received all of the dividends
paid on his pro rata portion of each Security when such dividends are
considered to be received by the Trust. Unitholders will be taxed in this
manner regardless of whether distributions from the Trust are actually
received by the Unitholder or are automatically reinvested.
3. Each Unitholder will have a taxable event when the Trust disposes of a
Security (whether by sale, taxable exchange, liquidation, redemption, or
otherwise) or upon the sale or redemption of Units by such Unitholder (except
to the extent an in kind distribution of stock is received by such Unitholder
as described below). The price a Unitholder pays for his Units, generally
including sales charges, is allocated among his or her pro rata portion of
each Security held by the Trust (in proportion to the fair market values
thereof on the valuation date nearest the date the Unitholder purchase his
Units) in order to determine his or her tax basis for his or her pro rata
portion of each Security held by the Trust. Unitholders should consult their
own tax advisers with regard to the calculation of basis. For federal income
tax purposes, a Unitholder's pro rata portion of dividends, as defined by
Section 316 of the Code, paid by a corporation with respect to a Security
held by the Trust are taxable as ordinary income to the extent of such
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corporation's current and accumulated "earnings and profits". A Unitholder's
pro rata portion of dividends paid on such security which exceeds such
current and accumulated earnings and profits will first reduce a Unitholder's
tax basis in such Security, and to the extent that such dividends exceed a
Unitholder's tax basis in such Security shall generally be treated as capital
gain. In general, the holding period for such capital gain will be
determined by the period of time a Unitholder has held his Units.
4. A Unitholder's portion of gain, if any, upon the sale or redemption of
Units or the disposition of Securities held by the Trust will generally be
considered a capital gain (except in the case of a dealer or a financial
institution). A Unitholder's portion of loss, if any, upon the sale or
redemption of Units or the disposition of Securities held by the Trust will
generally be considered a capital loss (except in the case of a dealer or a
financial institution). Unitholders should consult their tax advisers
regarding the recognition of such capital gains and losses for federal income
tax purposes.
DIVIDENDS RECEIVED DEDUCTION. A corporation that owns Units will generally be
entitled to a 70% dividends received deduction with respect to such Unitholder's
pro rata portion of dividends received by the Trust (to the extent such
dividends are taxable as ordinary income, as discussed above, and are
attributable to domestic corporations) in the same manner as if such corporation
directly owned the Securities paying such dividends (other than corporate
Unitholders, such as "S" corporations, which are not eligible for the deduction
because of their special characteristics and other than for purposes of special
taxes such as the accumulated earnings tax and the personal holding corporation
tax). However, a corporation owning Units should be aware that Sections 246 and
246A of the Code impose additional limitations on the eligibility of dividends
for the 70% dividends received deduction. These limitations include a
requirement that stock (and therefore Units) must generally be held at least 46
days (as determined under Section 246(c) of the Code). Final regulations have
been issued which address special rules that must be considered in determining
whether the 46 day holding requirement is met. Moreover, the allowable
percentage of the deduction will be reduced from 70% if a corporate Unitholder
owns certain stock (or Units) the financing of which is directly attributable to
indebtedness incurred by such corporation.
To the extent dividends received by the Trust are attributable to foreign
corporations, a corporation that owns Units will not be entitled to the
dividends received deduction with respect to its pro rata portion of such
dividends, since the dividends received deduction is generally available only
with respect to dividends paid by domestic corporations.
It should be noted that various legislative proposals that would affect the
dividends received deduction have been introduced. Unitholders should consult
with their tax advisers with respect to the limitations on and possible
modifications to the dividends received deduction.
LIMITATIONS ON DEDUCTIBILITY OF TRUST EXPENSES BY UNITHOLDERS. Each
Unitholder's pro rata share of each expense paid by the Trust is deductible by
the Unitholder to the same extent as though the expense had been paid directly
by him. It should be noted that as a result of the Tax Reform Act of 1986,
certain miscellaneous itemized deductions, such as investment expenses, tax
return preparation fees and employee business expenses will be deductible by an
individual only to the extent they exceed 2% of such individual's adjusted gross
income. Unitholders may be required to treat some or all of the expenses of the
Trust as miscellaneous itemized deductions subject to this limitation.
Unitholders should consult with their tax advisers regarding the limitations on
the deductibility of Trust expenses.
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RECOGNITION OF TAXABLE GAIN OR LOSS UPON DISPOSITION OF SECURITIES BY THE TRUST
OR DISPOSITION OF UNITS. As discussed above, a Unitholder may recognize taxable
gain (or loss) when a Security is disposed of by the Trust or if the Unitholder
disposes of a Unit. 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.
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 exclusions) 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 that the date on which a Unit is
acquired (i.e., the "trade date") is excluded for purposes of determining the
holding period of the Unit. 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.
In addition, please note that capital gains may be recharacterized as ordinary
income in the case of certain financial transactions that are considered
"conversion transactions" effective for transactions entered into after April
30, 1993. Unitholders and prospective investors should consult with their tax
advisers regarding the potential effect of this provision on their investment in
Units.
If a Unitholder disposes of a Unit he is deemed thereby to have disposed of his
entire pro rata interest in all assets of the Trust including his pro rata
portion of all Securities represented by a Unit. The Taxpayer Relief Act of
1997 (the "1997 Tax Act") includes provisions that treat certain transactions
designed to reduce or eliminate risk of loss and opportunities for gain (e.g.,
short sales, off-setting 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.
SPECIAL TAX CONSEQUENCES OF IN KIND DISTRIBUTIONS UPON REDEMPTION OF UNITS OR
TERMINATION OF THE TRUST. As discussed in "Rights of Unitholders-Redemption of
Units", under certain circumstances a Unitholder tendering Units for redemption
may request an In Kind Distribution. A Unitholder may also under certain
circumstances request an In Kind Distribution upon the termination of the Trust.
See "Rights of Unitholders-Redemption of Units." As previously discussed, prior
to the redemption of Units or the termination of the Trust, a Unitholder is
considered as owning a pro rata portion of each of the Trust assets for federal
income tax purposes. The receipt of an In Kind Distribution will result in a
Unitholder receiving an undivided interest in whole shares of stock plus,
possibly, cash.
The potential tax consequences that may occur under an In Kind Distribution with
respect to each Security owned by the Trust will depend on whether or not a
Unitholder receives cash in addition to Securities. A "Security" for this
purpose is a particular class of stock issued by a particular corporation. A
Unitholder will not recognize gain or loss if a Unitholder only receives
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Securities in exchange for his or her pro rata portion in the Securities held by
the Trust. However, if a Unitholder also receives cash in exchange for a
fractional share of a Security held by the Trust, such Unitholder will generally
recognize gain or loss based upon the difference between the amount of cash
received by the Unitholder and his tax basis in such fractional share of a
Security held by the Trust.
Because the Trust will own many Securities, a Unitholder who requests an In Kind
Distribution will have to analyze the tax consequences with respect to each
Security owned by the Trust. The amount of taxable gain (or loss) recognized
upon such exchange will generally equal the sum of the gain (or loss) recognized
under the rules described above by such Unitholder with respect to each Security
owned by the Trust. Unitholders who request an In Kind Distribution are advised
to consult their tax advisers in this regard.
COMPUTATION OF THE UNITHOLDER'S TAX BASIS. Initially, a Unitholder's tax basis
in his or her Units will generally equal the price paid by such Unitholder of
his or her Units. The cost of the Units is allocated among the Securities held
in the Trust in accordance with the proportion of the fair market values of such
Securities on the valuation date nearest the date the Units are purchased in
order to determine such Unitholder's tax basis for his pro rata portion of each
Security.
A Unitholder's tax basis in his Units and his or her pro rata portion of a
Security held by the Trust will be reduced to the extent dividends paid with
respect to such Security are received by the Trust which are not taxable as
ordinary income as described above.
GENERAL. 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 by the Internal Revenue Service that payments to the Unitholder
are subject to back-up withholding. If the proper taxpayer identification
number and appropriate certification are not provided when requested,
distributions by the Trust to such Unitholder (including amounts received upon
the redemption of Units) will be subject to back-up withholding. Distributions
by the Trust (other than those that are not treated as United States source
income, if any) will generally be subject to United States income taxation and
withholding in the case of Units held by non-resident alien individuals, foreign
corporations or other non-United States persons. Such persons should consult
their tax advisers.
In general, income that is not effectively connected to the conduct of a trade
or business within the United States that is earned by non-U.S. Unitholders and
derived from dividends of foreign corporations will not be subject to U.S.
withholding tax provided that less than 25 percent of the gross income of the
foreign corporation for a three-year period ending with the close of its taxable
year preceding payment was not effectively connected to the conduct of a trade
or business within the United States. In addition, such earnings may be exempt
from U.S. withholding pursuant to a specific treaty between the United States
and a foreign country. Non-U.S. Unitholders should consult their own tax
advisers regarding the imposition of U.S. withholding on distributions from the
Trust.
It should be noted that payments to the Trust of dividends on Securities that
are attributable to foreign corporations may be subject to foreign withholding
taxes and Unitholders should consult their tax advisers regarding the potential
tax consequences relating to the payment of any such withholding taxes by the
Trust. Any dividends withheld as a result thereof will nevertheless be treated
as income to the Unitholders. Because, under the grantor trust rules, an
investor is deemed to have paid directly his share of foreign taxes that have
been paid or accrued, if any, an investor may be entitled to a foreign tax
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credit or deduction for United States income tax purposes with respect to such
taxes. The 1997 Tax Act imposes a required holding period for such credits.
Investors should consult their tax advisers with respect to foreign withholding
taxes and foreign tax credits.
At the termination of the Trust, the Trustee will furnish to each Unitholder of
the Trust a statement containing information relating to the dividends received
by the Trust on the Securities, the gross proceeds received by the Trust from
the disposition of any Security (resulting from redemption or the sale of any
Security), and the fees and expenses paid by the Trust. The Trustee will also
furnish annual information returns to Unitholders and to the Internal Revenue
Service.
In the opinion of special counsel to the Trust for New York tax matters, the
Trust is not an association taxable as a corporation and the income of the Trust
will be treated as the income of the Unitholders under the existing income tax
laws of the State and City of New York.
The foregoing discussion relates only to the tax treatment of U.S. Unitholders
("U.S. Unitholders") with regard to federal and certain aspects of New York
State and City income taxes. Unitholders may be subject to taxation in New York
or in other jurisdictions and should consult their own tax advisers in this
regard. As used herein, the term "U.S. Unitholder" means an owner of a Unit of
the Trust that (a) is (i) for United States federal income tax purposes a
citizen or resident of the United States, (ii) a corporation, partnership or
other entity created or organized in or under the laws of the United States or
of any political subdivision thereof, or (iii) an estate or trust the income of
which is subject to United States federal income taxation regardless of its
source or (b) does not qualify as a U.S. Unitholder in paragraph (a) but whose
income from a Unit is effectively connected with such Unitholder's conduct of a
United States trade or business. The term also includes certain former citizens
of the United States whose income and gain on the Units will be taxable.
Unitholders should consult their tax advisers regarding potential state or local
taxation with respect to the Units.
PUBLIC OFFERING OF UNITS
PUBLIC OFFERING PRICE. During the initial offering period, Units of the Trust
are offered at the Public Offering Price (which is based on the aggregate
underlying value of the Securities and includes a sales charge of 1.00% of the
Public Offering Price which charge is equivalent to 1.010% of the net amount
invested) plus a pro rata share of any accumulated dividends in the Income
Account of the Trust. Such underlying value shall also include the
proportionate share of any undistributed cash held in the Capital Account of the
Trust. The sales charge is eliminated for transactions of $250,000 or more.
Units may be acquired by delivering Telebras ADRs, shares of the component
companies given in exchange for each Telebras share or cash.
An investor may aggregate purchases of Units of the Trust for purposes of
qualifying for the volume purchase discounts listed above. The reduced sales
charge structure will apply on all purchases of Units in the Trust by the same
person on any one day from any one dealer. Additionally, 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 will be deemed, for purposes of calculating the applicable
sales charge, to be additional purchases by the purchaser. The reduced sales
charges will also be applicable to a trustee or other fiduciary purchasing
securities 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" below) by
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officers, directors and employees of the Sponsor and its affiliates and
registered representatives of selling firms and 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.
As indicated above, the initial Public Offering Price of the Units was
established by dividing the aggregate underlying value of the Securities by the
number of Units outstanding. Such underlying value shall include the
proportionate share of any cash held in the Capital Account. Such price
determination as of the opening of business on the Initial Date of Deposit was
made on the basis of an evaluation of the Securities prepared by the Trustee.
After the opening of business on the Initial Date of Deposit, the Evaluator will
appraise or cause to be appraised daily the value of the underlying Securities
as of the Evaluation Time on days the New York Stock Exchange is open and will
adjust the Public Offering Price of the Units commensurate with such valuation.
Such Public Offering Price will be effective for all orders received at or prior
to the close of trading on the New York Stock Exchange on each such day. Orders
received by the Trustee, Sponsor or any dealer for purchases, sales or
redemptions after that time, or on a day when the New York Stock Exchange is
closed, will be held until the next determination of price.
The value of the Securities is determined on each business day by the Evaluator
based on the closing sale prices on a national securities exchange or The Nasdaq
National Market or by taking into account the same factors referred to under
"Redemption-Computation of Redemption Price."
The minimum purchase in both the primary and secondary markets is _____ Units.
PUBLIC DISTRIBUTION OF UNITS. During the initial offering period, Units of the
Trust will be distributed to the public at the Public Offering Price thereof.
Upon the completion of the initial offering, Units which remain unsold or which
may be acquired in the secondary market (see "Market for Units") may be offered
at the Public Offering Price determined in the manner provided above.
The Sponsor intends to qualify Units of the Trust for sale in a number of
states. Units will be sold through dealers who are members of the National
Association of Securities Dealers, Inc. and through others. Broker-dealers and
others will be allowed a concession or agency commission in connection with the
distribution of Units during the initial offering period of 0.75% of the Public
Offering Price.
Certain commercial banks are making Units of the Trust available to their
customers on an agency basis. A portion of the sales charge paid by their
customers is retained by or remitted to the banks in the amounts shown above.
Under the Glass-Steagall Act, banks are prohibited from underwriting Trust
Units; however, the Glass-Steagall Act does permit certain agency transactions
and the banking regulators have indicated that these particular agency
transactions are permitted under such Act. In addition, state securities laws
on this issue may differ from the interpretations of federal law expressed
herein and banks and financial institutions may be required to register as
dealers pursuant to state law. The Sponsor reserves the right to change the
concessions or agency commissions set forth above from time to time. In
addition to such concessions or agency commissions, the Sponsor may, from time
to time, pay or allow additional concessions or agency commissions, 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
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the Trust and other unit investment trusts underwritten by the Sponsor. At
various times the Sponsor may implement programs under which the sales force of
a broker or dealer may be eligible to win nominal awards for certain sales
efforts, or under which the Sponsor will reallow to any such broker or dealer
that sponsors sales contests or recognition programs conforming to criteria
established by the Sponsor, or participates in sales programs sponsored by the
Sponsor, an amount not exceeding the total applicable sales charges on the sales
generated by such person at the public offering price during such programs.
Also, the Sponsor in its discretion may from time to time pursuant to objective
criteria established by the Sponsor pay fees to qualifying brokers or dealers
for certain services or activities which are primarily intended to result in
sales of Units of the Trust. Such payments are made by the Sponsor out of its
own assets, and not out of the assets of the Trust. These programs will not
change the price Unitholders pay for their Units or the amount that the Trust
will receive from the Units sold. The difference between the discount and the
sales charge will be retained by the Sponsor.
The Sponsor reserves the right to reject, in whole or in part, any order for the
purchase of Units.
SPONSOR PROFITS. The Sponsor will receive gross sales charges equal to the
percentage of the Public Offering Price of the Units of the Trust as stated
under "Public Offering Price." In addition, the Sponsor may realize a profit (or
sustain a loss) as of the Initial Date of Deposit resulting from the difference
between the purchase prices of the Securities to the Sponsor and the cost of
such Securities to the Trust, which is based on the evaluation of the Securities
on the Initial Date of Deposit. Thereafter, on subsequent deposits the Sponsor
may realize profits or sustain losses from such deposits. See "Portfolio." The
Sponsor may realize additional profits or losses during the initial offering
period on unsold Units as a result of changes in the daily market value of the
Securities.
MARKET FOR UNITS
After the initial offering period, while not obligated to do so, the Sponsor
intends to, subject to change at any time, maintain a market for Units of the
Trust offered hereby and to continuously offer to purchase said Units at prices,
determined by the Evaluator, based on the value of the underlying Securities.
Unitholders who wish to dispose of their Units should inquire of their 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 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. The Sponsor may suspend or discontinue purchases of Units if the
supply of Units exceeds demand, or for other business reasons.
At the completion of the initial offering period, if the Trust is able to comply
with the listing requirements of the American Stock Exchange, the Sponsor
intends to apply to such Exchange to list the Units of the Trust for trading
thereon. If so listed, the Sponsor would cease to maintain a secondary market
for the Units since Unitholders would be able to sell their Units at any time on
the American Stock Exchange. Additionally, as discussed below, Unitholders
could in the alternative redeem their Units and receive an in kind distribution
of the underlying Securities then in the Trust.
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REDEMPTION
GENERAL. 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 at its Unit Investment Trust Division office in
the city of New York and, in the case of Units evidenced by a certificate, by
tendering such certificate to the Trustee properly endorsed or accompanied by a
written instrument or instruments of transfer in form satisfactory to the
Trustee. Unitholders must sign the request, and such certificate or transfer
instrument, exactly as their names appear on the records of the Trustee and on
any certificate representing the Units to be redeemed. If the amount of the
redemption is $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 signature
guaranty program in addition to, or in substitution for, STAMP, as may be
accepted by the Trustee. A certificate should only be sent by registered or
certified mail for the protection of the Unitholder. Since tender of the
certificate is required for redemption when one has been issued, Units
represented by a certificate cannot be redeemed until the certificate
representing such Units has been received by the purchasers.
Redemption shall be made by the Trustee on the third business day following the
day on which a tender for redemption is received (the "Redemption Date") by
payment of cash equivalent to the Redemption Price for a 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 related 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 at the
time of redemption. If at any time the Units are being traded on a national
securities exchange, Unitholders would, in lieu of a cash payment, receive an in
kind distribution of the underlying Securities in the Trust upon redemption.
Under regulations issued by the Internal Revenue Service, the Trustee is
required to withhold a specified 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 unpaid dividends shall be withdrawn
from the Income Account of the Trust to the extent that funds are available for
such purpose. All other amounts paid on redemption shall be withdrawn from the
Capital Account for the Trust. The Trustee is empowered to sell Securities in
order to make funds available for the redemption of Units. Such sale may be
required when Securities would not otherwise be sold and might result in lower
prices than might otherwise be realized.
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To the extent that Securities are sold, the size and diversity of the Trust will
be reduced but each remaining Unit will continue to represent approximately the
same proportional interest in each Security. Sales may be required at a time
when Securities would not otherwise be sold and may result in lower prices than
might otherwise be realized. The price received upon redemption may be more or
less than the amount paid by the Unitholder depending on the value of the
Securities in the portfolio at the time of redemption.
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 Agreement; or (3) for such other period
as the Securities and Exchange Commission may by order permit. The Trustee is
not liable to any person in any way for any loss or damage which may result from
any such suspension or postponement.
COMPUTATION OF REDEMPTION PRICE. The Redemption Price per Unit (as well as the
secondary market Public Offering Price) will generally be determined on the
basis of the last sale price of the Securities. On the Initial Date of Deposit,
the Public Offering Price per Unit (which includes the sales charge) exceeded
the value at which Units could have been redeemed by the amount shown under
"Essential Information." The Redemption Price per Unit is the pro rata share of
each Unit in the Trust determined on the basis of (i) the cash on hand in the
Trust or moneys in the process of being collected and (ii) the value of the
Securities less (a) amounts representing taxes or other governmental charges
payable out of the Trust, (b) any amount owing to the Trustee for its advances
and (c) the accrued expenses of the Trust. The Evaluator may determine the
value of the Securities in the following manner: if the Security is listed on a
national securities exchange or the Nasdaq National Market, the evaluation will
generally be based on the last sale price on the exchange or Nasdaq (unless the
Evaluator deems the price inappropriate as a basis for evaluation). If the
Security is not so listed or, if so listed and the principal market for the
Security is other than on the exchange or Nasdaq, the evaluation will generally
be made by the Evaluator in good faith based on the last bid price on the over-
the-counter market (unless the Evaluator deems such price inappropriate as a
basis for evaluation) or, if a bid price is not available, (1) on the basis of
the current bid price for comparable securities, (2) by the Evaluator's
appraising the value of the Securities in good faith at the bid side of the
market or (3) by any combination thereof. See "Public Offering of Units-Public
Offering Price."
RETIREMENT PLANS
The Trust 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 Trust 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.
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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 a
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.
UNITHOLDERS
OWNERSHIP OF UNITS. Ownership of Units of the 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. 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 by registered or
certified mail for the protection of the Unitholder. Unitholders must sign such
written request, and such certificate or transfer instrument, exactly as their
names appear on the records of the Trustee and on any certificate representing
the Units to be transferred. Such signatures must be guaranteed as stated under
"Redemption-General."
Units may be purchased and certificates, if requested, will be issued in
denominations of one Unit or any multiple thereof, subject to the minimum
investment requirement of $1,000. Fractions of Units, if any, will be computed
to three decimal places. 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. Income received by a Trust is credited by the
Trustee to the Income Account of the Trust. Other receipts are credited to the
Capital Account of the Trust. Income received by the Trust will be distributed
on or shortly after the 15th day of January, April, July and October of each
year on a pro rata basis to Unitholders of record as of the preceding record
date (which will be the first day of the related month). All distributions will
be net of applicable expenses. There is no assurance that any actual
distributions will be made since all dividends received may be used to pay
expenses. In addition, amounts from the Capital Account of the Trust, if any,
will be distributed at least annually to the Unitholders then of record.
Proceeds received from the disposition of any of the Securities after a record
date and prior to the following distribution date will be held in the Capital
Account and not distributed until the next distribution date applicable to the
Capital Account. The Trustee shall be required to make a distribution from the
Capital Account if the cash balance on deposit therein available for
distribution shall be sufficient to distribute at least $1.00 per 10 Units. The
Trustee is not required to pay interest on funds held in the Capital or Income
Accounts (but may itself earn interest thereon and therefore benefits from the
use of such funds). The Trustee is authorized to reinvest any funds held in the
Capital or Income Accounts, pending distribution, in U.S. Treasury obligations
which mature on or before the next applicable distribution date. Any
obligations so acquired must be held until they mature and proceeds therefrom
may not be reinvested.
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The distribution to the Unitholders as of each record date will be made on the
following distribution date or shortly thereafter and shall consist of an amount
substantially equal to such portion of the Unitholders' pro rata share of the
dividend distributions then held in the Income Account after deducting estimated
expenses. Because dividends are not received by the Trust at a constant rate
throughout the year, such distributions to Unitholders are expected to
fluctuate. Persons who purchase Units will commence receiving distributions
only after such person becomes a record owner. A person will become the owner
of Units, and thereby a Unitholder of record, on the date of settlement provided
payment has been received. Notification to the Trustee of the transfer of Units
is the responsibility of the purchaser, but in the normal course of business
such notice is provided by the selling broker-dealer.
As of the first day of each month, the Trustee will deduct from the Income
Account of the Trust and, to the extent funds are not sufficient therein, from
the Capital Account of the Trust amounts necessary to pay the expenses of the
Trust (as determined on the basis set forth under "Expenses of the Trust"). The
Trustee also may withdraw from said accounts such amounts, if any, as it deems
necessary to establish a reserve for any governmental charges payable out of the
Trust. Amounts so withdrawn shall not be considered a part of the Trust's
assets until such time as the Trustee shall return all or any part of such
amounts to the appropriate accounts. In addition, the Trustee may withdraw from
the Income and Capital Accounts of the Trust such amounts as may be necessary to
cover redemptions of Units.
DISTRIBUTION REINVESTMENT. Unitholders may elect to have distributions of
capital (including capital gains, if any) or dividends or both automatically
invested into additional Units of the Trust without a sales charge. Unitholders
who desire to have such distributions automatically reinvested should inform
their broker at the time of purchase or should file with the Program Agent
referred to below 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 "Unitholders-Distributions to Unitholders."
The Program Agent is The Bank of New York. All inquiries concerning
participating in distribution reinvestment should be directed to The Bank of New
York at its Unit Investment Trust Division office.
STATEMENTS TO UNITHOLDERS. With each distribution, the Trustee will furnish or
cause to be furnished to each Unitholder a statement of the amount of income 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 the Trust are required to be audited annually, at the Trust's
expense, by independent public accountants designated by the Sponsor, unless the
Sponsor determines that such an audit would not be in the best interest of the
Unitholders. The accountants' report will be furnished by the Trustee to any
Unitholder 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 the Trust a statement,
covering the calendar year, setting forth:
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(A) As to the Income Account:
(1) Income received;
(2) Deductions for applicable taxes and for fees and expenses of the Trust
and for redemptions of Units, if any; and
(3) The balance remaining after such distributions and deductions,
expressed in each case both as a total dollar amount and as a dollar
amount representing the pro rata share of each Unit outstanding on
the last business day of such calendar year; and
(B) As to the Capital Account:
(1) The dates of disposition of any Securities and the net proceeds
received therefrom;
(2) Deductions for payment of applicable taxes and fees and expenses of
the Trust held for distribution to Unitholders of record as of a
date prior to the determination; and
(3) The balance remaining after such distributions and deductions
expressed both as a total dollar amount and as a dollar amount
representing the pro rata share of each Unit outstanding on the
last business day of such calendar year; and
(C) The following information:
(1) A list of the Securities as of the last business day of such calendar
year;
(2) The number of Units outstanding on the last business day of such
calendar year;
(3) The Redemption Price based on the last evaluation made during such
calendar year;
(4) The amount actually distributed during such calendar year from the
Income and Capital Accounts 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 the Trust nor entitle legal representatives or heirs to claim an
accounting or to bring any action or proceeding in any court for partition or
winding up of the Trust.
No Unitholder shall have the right to control the operation and management of
the Trust in any manner, except to vote with respect to the amendment of the
Trust Agreement or termination of the Trust.
INVESTMENT SUPERVISION
The Trust is a unit investment trust and is not an "actively managed" fund.
Traditional methods of investment management for a managed fund typically
involve frequent changes in a portfolio of securities on the basis of economic,
financial and market analyses. The portfolio of the Trust, however, will not be
actively managed and therefore the adverse financial condition of an issuer will
not necessarily require the sale of its securities from the portfolio.
The Trust Agreement provides that the Sponsor may (but need not) direct the
Trustee to dispose of a Security in certain events such as the issuer having
defaulted on the payment on any of its outstanding obligations or the price of a
Security has declined to such an extent or other such credit factors exist so
that in the opinion of the Sponsor the retention of such Securities would be
detrimental to a Trust. Pursuant to the Trust Agreement and with limited
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exceptions, the Trustee may sell any securities or other properties acquired in
exchange for Securities such as those acquired in connection with a merger or
other transaction. It offered such new or exchanged securities or property, the
Trustee shall reject the offer. However, in the event such securities or
property are nonetheless acquired by a Trust, they may be accepted for deposit
in such Trust and either sold by the Trustee or held in such Trust pursuant to
the direction of the Sponsor. Proceeds from the sale of Securities (or any
securities or other property received by a Trust in exchange for Securities) are
credited to the Capital Account for distribution to Unitholders or to meet
redemptions. Except as stated under "The Fund" for failed securities or under
"Unitholders-Distributions to Unitholders" for short term investment in U.S.
Treasury obligations and as provided herein, the acquisition by a Trust of any
securities other than the Securities is prohibited. 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 TRUST
THE TRUSTEE. The Trustee is The Bank of New York, a trust company organized
under the laws of New York. The Bank of New York has its Unit Investment Trust
Division offices at 101 Barclay Street, New York, New York 10286, telephone 1-
800-701-8178. The Bank of New York is subject to supervision and examination by
the Superintendent of Banks of the State of New York and the Board of Governors
of the Federal Reserve System, and its deposits are insured by the Federal
Deposit Insurance Corporation to the extent permitted by law.
The Trustee, whose duties are ministerial in nature, has not participated in
selecting the portfolio of the Trust. For information relating to the
responsibilities of the Trustee under the Trust Agreement, reference is made to
the material set forth under "Unitholders."
In accordance with the Trust Agreement, 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. Such books and records shall
be open to inspection by any Unitholder 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 Agreement 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 the Trust. Pursuant to the Trust
Agreement, the Trustee may employ one or more agents for the purpose of custody
and safeguarding of Securities comprising the Trust.
Under the Trust Agreement, the Trustee or any successor trustee may resign and
be discharged of the trust created by the Trust Agreement 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 sixty days before the date
specified in such notice when such resignation is to take effect. The Sponsor
upon receiving notice of such resignation is obligated to appoint a successor
trustee promptly. If, upon such resignation, no successor trustee has been
appointed and has accepted the appointment within thirty days after
notification, the retiring Trustee may apply to a court of competent
jurisdiction for the appointment of a successor. If the Trustee becomes
incapable of acting or becomes bankrupt or its affairs are taken over by public
authorities, the Sponsor may remove the Trustee and appoint a successor as
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provided in the Trust Agreement. 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 must be a corporation organized under the laws of the
United States, or any state thereof, be authorized under such laws to exercise
trust powers and have at all times an aggregate capital, surplus and undivided
profits of not less than $5,000,000.
THE SPONSOR. Ranson & Associates, Inc., the Sponsor of the Trust, is an
investment banking firm created in 1995 by a number of former owners and
employees of Ranson Capital Corporation. In 1996, Ranson & Associates, Inc.
purchased all existing unit investment trusts sponsored by EVEREN Securities,
Inc. Accordingly, Ranson & Associates, Inc. is the successor sponsor to unit
investment trusts formerly sponsored by EVEREN Unit Investment Trusts, a service
of EVEREN Securities, Inc. Ranson & Associates, Inc., is also the sponsor and
successor sponsor of Series of The Kansas Tax-Exempt Trust and Multi-State
Series of The Ranson Municipal Trust. Ranson & Associates, Inc. is the
successor to a series of companies, of first of which was originally organized
in Kansas in 1935. During its history, Ranson & Associates, Inc. and its
predecessors have been active in public and corporate finance and have sold
bonds and unit investment trusts and maintained secondary market activities
relating thereto. At present, Ranson & Associates, Inc., which is a member of
the National Association of Securities Dealers, Inc., is the Sponsor to each of
the above-named unit investment trusts and serves as the financial advisor and
as an underwriter for Kansas municipalities. The Sponsor's offices are located
at 250 North Rock Road, Suite 150, Wichita, Kansas 67206-2241.
If at any time the Sponsor shall fail to perform any of its duties under the
Trust Agreement 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 Agreement and liquidate the Trust as
provided therein, or (c) continue to act as Trustee without terminating the
Trust Agreement.
The foregoing financial information with regard to the Sponsor relates to the
Sponsor only and not to the Trust. Such information is included in this
Prospectus only for the purpose of informing investors as to the financial
responsibility of the Sponsor and its ability to carry out its contractual
obligations with respect to the Trust. More comprehensive financial information
can be obtained upon request from the Sponsor.
THE EVALUATOR. Ranson & Associates, Inc., the Sponsor, also serves as
Evaluator. The Evaluator may resign or be removed by the Trustee in which event
the Trustee is to use its best efforts to appoint a satisfactory successor.
Such resignation or removal shall become effective upon acceptance of
appointment by the successor evaluator. If upon resignation of the Evaluator no
successor has accepted appointment within thirty days after notice of
resignation, the Evaluator may apply to a court of competent jurisdiction for
the appointment of a successor. Notice of such registration or removal and
appointment shall be mailed by the Trustee to each Unitholder.
AMENDMENT AND TERMINATION. The Trust Agreement 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 Agreement may also be amended in any respect by the
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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 the 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 the Trust. In no event shall
the Trust Agreement be amended to increase the number of Units issuable
thereunder or to permit the acquisition of any Securities in addition to or in
substitution for those initially deposited in the Trust, except in accordance
with the provisions of the Trust Agreement. The Trustee shall promptly notify
Unitholders of the substance of any such amendment.
The Trust Agreement provides that the Trust shall terminate upon the
liquidation, redemption or other disposition of the last of the Securities held
in the Trust but in no event is it to continue beyond the Mandatory Termination
Date set forth under "Essential Information." If the value of the Trust shall be
less than the applicable minimum value stated under "Essential Information" (40%
of the aggregate value of the Securities-based on the value at the date of
deposit of such Securities into the Trust), the Trustee may, in its discretion,
and shall, when so directed by the Sponsor, terminate the Trust. The Trust may
be terminated at any time by the holders of Units representing 66 2/3% of the
Units thereof then outstanding.
No later than the Mandatory Termination Date set forth under "Essential
Information," the Trustee will begin to sell all of the remaining underlying
Securities on behalf of Unitholders in connection with the termination of the
Trust. The Sponsor has agreed to assist the Trustee in these sales. The sale
proceeds will be net of any incidental expenses involved in the sales.
The Sponsor will attempt to sell the Securities as quickly as it can during the
termination proceedings without in its judgment materially adversely affecting
the market price of the Securities, but it is expected that all of the
Securities will in any event be disposed of within a reasonable time after the
Trust's termination. The Sponsor does not anticipate that the period will be
longer than one month, and it could be as short as one day, depending on the
liquidity of the Securities being sold. The liquidity of any Security depends
on the daily trading volume of the Security and the amount that the Sponsor has
available for sale on any particular day. It is expected (but not required)
that the Sponsor will generally follow the following guidelines in selling the
Securities: for highly liquid Securities, the Sponsor will generally sell
Securities on the Mandatory Termination Date; for less liquid Securities, on
each of the first two days of the termination proceedings, the Sponsor will
generally sell any amount of any underlying Securities at a price no less than
1/2 of one point under the last closing sale price of those Securities.
Thereafter, the price limit will increase to one point under the last closing
sale price. After four days, the Sponsor currently intends to sell at least a
fraction of the remaining underlying Securities, the numerator of which is one
and the denominator of which is the total number of days remaining (including
that day) in the termination proceedings without any price restrictions. Of
course, no assurances can be given that the market value of the Securities will
not be adversely affected during the termination proceedings.
In the event of termination of the Trust, written notice thereof will be sent by
the Trustee to all Unitholders of the Trust. Within a reasonable period after
termination, the Trustee will sell any Securities remaining in the 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 Income and
Capital Accounts of the Trust.
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LIMITATIONS ON LIABILITY. The Sponsor: The Sponsor is liable for the
performance of its obligations arising from its responsibilities under the Trust
Agreement, 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
Agreement or for errors in judgment, except in cases of its own gross
negligence, bad faith or willful misconduct or its reckless disregard for its
duties thereunder. 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 Agreement provides that the Trustee shall be under no
liability for any action taken in good faith in reliance upon prima facie
properly executed documents or for the disposition of moneys, Securities or
certificates except by reason of its own negligence, bad faith or willful
misconduct, or its reckless disregard for its duties under the Trust Agreement,
nor shall the Trustee be liable or responsible in any way for depreciation or
loss incurred by reason of the sale by the Trustee of any Securities. In the
event that the Sponsor shall fail to act, the Trustee may act and shall not be
liable for any such action taken by it in good faith. The Trustee shall not be
personally liable for any taxes or other governmental charges imposed upon or in
respect of the Securities or upon the interest thereof. In addition, the Trust
Agreement contains other customary provisions limiting the liability of the
Trustee.
The Evaluator: The Trustee and Unitholders may rely on any evaluation furnished
by the Evaluator and shall have no responsibility for the accuracy thereof. The
Trust Agreement provides 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 for its gross
negligence, bad faith or willful misconduct or its reckless disregard for its
obligations under the Trust Agreement.
EXPENSES OF THE TRUST
The Sponsor will not charge the Trust any fees for services performed as
Sponsor. The Sponsor will receive a portion of the sale commissions paid in
connection with the purchase of Units and will share in profits, if any, related
to the deposit of Securities in the Trust.
The Trustee receives for its services that fee set forth under "Essential
Information." However, in no event shall such fee amount to less than $2,000 in
any single calendar year. The Trustee's fee which is calculated monthly is
based on the largest number of Units of the Trust outstanding during the
calendar year for which such compensation relates. The Trustee's fees are
payable monthly on or before the fifteenth day of the month from the Income
Account to the extent funds are available and then from the Capital Account.
The Trustee benefits to the extent there are funds for future distributions,
payment of expenses and redemptions in the Capital and Income Accounts since
these Accounts are non-interest bearing and the amounts earned by the Trustee
are retained by the Trustee. Part of the Trustee's compensation for its
services to the Trust is expected to result from the use of these funds.
In its capacity as Supervisor and Evaluator, the Sponsor will charge the Trust a
fee for services performed for the Trust 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
and evaluation services exceed the aggregate cost to the Sponsor for providing
such services.
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For evaluation of the Securities, the Evaluator shall receive that fee set forth
under "Essential Information", payable monthly, based upon the largest number of
Units of the Trust outstanding during the calendar year for which such
compensation relates.
The Trustee fee and the Supervisor and Evaluator fee are deducted from the
Income Account of the Trust to the extent funds are available and then from the
Capital Account. Each such fee may be increased without approval of Unitholders
by amounts not exceeding a proportionate increase in the Consumer Price Index or
any equivalent index substituted therefor.
Expenses incurred in establishing the Trust, including the cost of the initial
preparation of documents relating to
the 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 the Trust (out of the Capital Account) 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 Trust: (a) fees for the Trustee's extraordinary services;
(b) expenses of the Trustee (including legal and auditing expenses, but not
including any fees and expenses charged by an agent for custody and safeguarding
of Securities) and of counsel, if any; (c) various governmental charges; (d)
expenses and costs of any action taken by the Trustee to protect the 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 the
Trust not resulting from negligence, bad faith or willful misconduct on its part
or its reckless disregard for its obligations under the Trust Agreement; (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 or its reckless disregard for its obligations under the Trust
Agreement; and (g) expenditures incurred in contacting Unitholders upon
termination of the Trust. The fees and expenses set forth herein are payable
out of the Trust and, when owing to the Trustee, are secured by a lien on the
Trust. Since the Securities are all common stocks, and the income stream
produced by dividend payments, if any, is unpredictable, the Sponsor cannot
provide any assurance that dividends will be sufficient to meet any or all
expenses of the Trust. If the balances in the Income and Capital Accounts are
insufficient to provide for amounts payable by the Trust, the Trustee has the
power to sell Securities to pay such amounts. These sales may result in capital
gains or losses to Unitholders. See "Federal Tax Status."
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 statement of net assets, including the Trust portfolio, of the Trust 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.
--------------------
27
<PAGE>
REPORT OF INDEPENDENT AUDITORS
UNITHOLDERS
RANSON UNIT INVESTMENT TRUSTS, SERIES 71
We have audited the accompanying statement of net assets, including the Trust
portfolio, of Ranson Unit Investment Trusts, Series 71, as of _______, 1998.
The statement of net assets is the responsibility of the Sponsor. Our
responsibility is to express an opinion on the statement 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 statement of net assets is free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and disclosures in the statement of net assets. Our procedures
included confirmation of a letter of credit or cash deposited to purchase
Securities by correspondence with the Trustee. An audit also includes assessing
the accounting principles used and significant estimates made by the Sponsor, as
well as evaluating the overall statement of net assets presentation. We believe
our audit provides a reasonable basis for our opinion.
In our opinion, the statement of net assets referred to above presents fairly,
in all material respects, the financial position of Ranson Unit Investment
Trusts, Series 71 as of _______, 1998, in conformity with generally accepted
accounting principles.
ALLEN, GIBBS & HOULIK, L.C.
Wichita, Kansas
_______, 1998
28
<PAGE>
<TABLE>
<CAPTION>
RANSON UNIT INVESTMENT TRUSTS, SERIES 71
STATEMENT OF NET ASSETS
AT THE OPENING OF BUSINESS ON _______, 1998, THE INITIAL DATE OF DEPOSIT
TRUST PROPERTY
<S> <C>
Contracts to purchase Securities (1) (2) $________
Offering costs (3) ________
Total $________
NUMBER OF UNITS ________
</TABLE>
<TABLE>
LIABILITY AND INTEREST OF UNITHOLDERS
<S> <C>
Liability-
Accrued organizational costs (3) $________
Interest of Unitholders-
Cost to investors (4) ________
Less: Gross underwriting commission (4) ________
Net interest to Unitholders (1) (2) (4) ________
Total $________
</TABLE>
- --------------------
Notes:
(1) Aggregate cost of the Securities is based on the last sale price
evaluations as determined by the Trustee.
(2) An irrevocable letter of credit issued by The Bank of New York or cash
has been deposited with the Trustee covering the funds (aggregating
$________) necessary for the purchase of the Securities in the Trust
represented by purchase contracts.
(3) The Trust will bear all or a portion of its offering costs, which the
Sponsor intends to defer and amortize over five years or the life of the
Trust if less than five years. Offering costs have been estimated based
on a projected Trust size of $__________. To the extent the Trust is
larger or smaller, the estimate will vary.
(4) The aggregate cost to investors includes the applicable sales charge
assuming no elimination of the sales charge for purchases of $250,000 or
more.
29
<PAGE>
RANSON UNIT INVESTMENT TRUSTS, SERIES 71
TELEBRAS EXCHANGE TRUST, SERIES 1
PORTFOLIO AS OF _______, 1998
NOTES TO PORTFOLIO
(1) All or a portion of the Securities may have been deposited in the Trust.
Any undelivered Securities are represented by "regular way" contracts for the
performance of which an irrevocable letter of credit has been deposited with
the Trustee. At the Initial Date of Deposit, the Sponsor has assigned to the
Trustee all of its rights, title and interest in and to such undelivered
Securities. Contracts to purchase Securities were entered into on ________,
1998 and all have expected settlement dates of __________, 1998 (see "The
Trust Fund"). The market value of each Security is based on the last sale
price of the Securities respective Market. As of the Initial Date of Deposit
other information regarding the Securities is as follows: Cost to Sponsor:
$________; Profit (Loss) to Sponsor: ($________).
30
<PAGE>
<TABLE>
<CAPTION>
Contents Page
<S> <C>
SUMMARY 2
ESSENTIAL INFORMATION 4
THE TRUST FUND 5
THE OFFER 6
RISK FACTORS 9
TELEBRAS 11
FEDERAL TAX STATUS 11
PUBLIC OFFERING OF UNITS 15
Public Offering Price 15
Public Distribution of Units 16
Sponsor Profits 17
MARKET FOR UNITS 17
REDEMPTION 18
General 18
Computation of Redemption Price 19
RETIREMENT PLANS 19
UNITHOLDERS 20
Ownership of Units 20
Distributions to Unitholders 20
Distribution Reinvestment 21
Statements to Unitholders 21
Rights of Unitholders 22
INVESTMENT SUPERVISION 22
ADMINISTRATION OF THE TRUST 23
The Trustee 23
The Sponsor 24
The Evaluator 24
Amendment and Termination 24
Limitations on Liability 26
EXPENSES OF THE TRUST 26
LEGAL OPINIONS 27
INDEPENDENT AUDITORS 27
REPORT OF INDEPENDENT AUDITORS 28
STATEMENT OF NET ASSETS 29
PORTFOLIO 30
NOTES TO PORTFOLIO 30
</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 Trust,
the Trustee, or the Sponsor. The Trust is registered as a unit investment trust
under the Investment Company Act of 1940. Such registration does not imply that
the Trust 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
- --------------------
PROSPECTUS ____________, 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. Trust Agreement.
1.1.1. Standard Terms and Conditions of Trust. Reference is made to
Exhibit 1.1.1 to the Registration Statement on Form S-6 for Ranson
Unit Investment Trusts, Series 53 (File No. 333-17811) as filed on
January 7, 1997.
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.
S-1
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Ranson Unit Investment Trusts, Series 71, 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 26th day of
June, 1998.
RANSON UNIT INVESTMENT TRUSTS, SERIES 71,
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 June 26, 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
